UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 20-F





[   ]
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES

EXCHANGE ACT OF 1934OR[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934



For the fiscal year ended April 30, 2012(with other information to August 20, 2012, except where noted)OR[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934OR[   ]
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934



Date of event requiring this shell company report:For the transition period from __________________________ to ___________________________





000-53617


(Commission file number)





COASTAL PACIFIC MINING CORP.


(Exact name of Registrant as specified in its charter)





Alberta, Canada


(Jurisdiction of incorporation or organization)





927 Drury Avenue NE, Calgary, Alberta T2E 0M3


(Address of principal executive offices)





J. Bucci, 927 Drury Avenue NE, Calgary, Alberta T2E 0M3


Telephone: (403) 612-3001, Facsimile: (403) 313-5449


(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)





Securities registered or to be registered pursuant to Section 12(b) of the Act.





Title of each class

None

Name of each exchange on which registered

Not Applicable





Securities registered or to be registered pursuant to Section 12(g) of the Act.





Common Shares without Par Value(Title of Class)











Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.





None(Title of Class)





Indicate the number of outstanding shares of each of the issuer’s capital or common stock as of the close of the period covered by the annual report.





226,976,985shares of common stock as at April 30, 2012





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.





Yes [  ]  No [X]





If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.





Yes [  ]  No [X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.





Yes [X]  No [  ]





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).





Yes [ X ]  No [  ]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.





Large accelerated filer
[  ]
Accelerated filer
[  ]
Non-accelerated filer
[X]





Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:





U.S. GAAP
[X]
International Financial Reporting Standards as issued  by the International Accounting Standards Board
[  ]
Other
[  ]





If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.





Item 17 [  ]   Item 18 [  ]





If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).





Yes [  ]  No [X]


2


TABLE OF CONTENTSIntroduction
4Measurement and Currency
4Forward-looking Statements
5Cautionary Note to United States Investors
5Further Particulars of the Property
5PART IItem 1.
Identity of Directors, Senior Management and Advisors
6Item 2.
Offer Statistics and Expected Timetable
6Item 3.
Key Information
6Risk Factors
7Item 4.
Information on the Company
13Item 4A.
Unresolved Staff Comments
32Item 5.
Operating and Financial Review and Prospects
32Item 6.
Directors, Senior Management and Employees
35Item 7.
Major Shareholders and Related Party Transactions
39Item 8.
Financial Information
40Item 9.
The Offer and Listing
40Item 10.
Additional Information
41Item 11.
Quantitative and Qualitative Disclosures about Market Risk
46Item 12.
Description of Securities Other than Equity Securities
4646PART IIItem 13.
Defaults, Dividend Arrearages and Delinquencies
46Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
46Item 15.
Controls and Procedures
46Item 16.
[Reserved]
48Item 16A.
Audit Committee Financial Expert
48Item 16B.
Code of Ethics
48Item 16C.
Principal Accountant Fees and Services
48Item 16D.
Exemptions from the Listing Standards for Audit Committees
49Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
49Item 16F.
Change in Registrant’s Certifying Accountant
49Item 16G.
Corporate Governance
50Item 16H.
Mine Safety Standards
50PART IIIItem 17.
Financial Statements
50Item 18.
Financial Statements
68Item 19.
Exhibits
68Signatures
69


3


Introduction





As used in this annual report, the terms "we", "us" and "our" and “Company” mean Coastal Pacific Mining Corp., unless otherwise indicated.





You should rely only on the information contained in this Annual Report. We have not authorized anyone to provide you with information that is different. The information in this Annual Report may only be accurate on the date of this Annual Report or on or as at any other date provided with respect to specific information.





Measurement & Currency





Conversion of metric units into imperial equivalents is as follows:





Metric Units
Multiply by
Imperial Unitshectares
2.471
= acresmeters
3.281
= feetkilometers
0.621
= miles (5,280 feet)grams
0.032
= ounces (troy)tonnes
1.102
= tons (short) (2,000 lbs)grams/tonne
0.029
= ounces (troy)/ton





All transactions undertaken by us and currency amounts in this Annual Report on Form 20-F are stated in Canadian dollarsunless otherwise indicated.  Therefore, this Annual Report may contain conversions of certain amounts in Canadian dollars into United States dollars based upon the exchange rate in effect at the end of the month or of the fiscal year to which the amount relates, or the exchange rate on the date specified.  For such purposes, the exchange rate means the noon buying rate for United States dollars from the Bank of Canada.  These translations should not be construed that the Canadian dollar amounts actually represent such United States dollar amounts or that Canadian dollars could be converted into United States dollars at the rate indicated or at any other rate.





These exchange rate tables illustrate the US dollar equivalent of one Canadian dollar. The nominal rate for a Canadian dollar as of August 20, 2012 was US$1.0111.





The following table sets out the US dollar exchange rates, based on the noon rate at the Bank of Canada for the fiscal years ended 2008 through 2012.





2012

$
2011

$
2010

$
2009

$
2008

$Average for Period
1.0070
0.9884
0.9363
0.8767
0.9841





The high and low noon nominal exchange rates in Canadian dollars for each month during the previous six  months are:





July 2012

$
June 2012

$
May 2012

$
April 2012

$
March 2012

$
February 2012

$High for period
0.9986
0.9825
1.0164
1.0197
1.0153
1.0136Low for period
0.9790
0.9599
0.9663
0.9961
0.9985
0.9984


4





Cautionary Statement Regarding Forward-Looking Information





Except for the statements of historical fact contained herein, some information presented in this annual report constitutes forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934.  These statements relate to future events or our future financial performance.  When used in this annual report, the words "estimate", "project", "believe", "anticipate", "intend", "expect", "predict", "may", "should", the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include those discussed in the section entitled "Risk Factors".  Although we have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause actual results not to be as anticipated, estimated or intended.  There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, prospective investors should not place undue reliance on forward-looking statements.  The forward-looking statements in this annual report speak only as to the date hereof.  We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.





Cautionary Note to United States Investors





We caution U.S. investors that the Company may have materials in the public domain that may use terms that are recognized and permitted under Canadian regulations, however the U.S. Securities and Exchange Commission (“S.E.C.”) may not recognize such terms.  We have detailed below the differences in the SEC regulations as compared to the Canadian Regulations under National Instrument NI 43-101.





S.E.C. Industry Code
National Instrument 43-101 (“NI 43-101”)Reserve:That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.  The United States Securities and Exchange Commission requires a final or full Feasibility Study to be completed in order to support either Proven or Probable Reserves and does not recognize other classifications of mineralized deposits.  Note that for industrial mineral properties, in addition to the Feasibility Study, “sales” contracts or actual sales may be required in order to prove the project’s commerciality and reserve status.
Mineral Reserve:The economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility study.  This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.Proven Reserves:Reserves for which a quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, grade and/or quality are computed from the results of detailed sampling; the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, share, depth and mineral content of reserves are well established.
Proven Mineral Reserve:The economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility study.  This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.Probable Reserves:  Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced.  The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Probable Mineral Reserve:The economically mineable part of an indicated, and in some circumstances, a Measured Mineral Resource, demonstrated by at least a Preliminary Feasibility Study.  This study must include adequate information on mining, processing, metallurgical, and economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.








5





PART I





ITEM 1.               IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS





Not Applicable.





ITEM 2.               OFFER STATISTICS AND EXPECTED TIMETABLE





Not Applicable.





ITEM 3.               KEY INFORMATION





Selected Financial Data





The following tables summarize selected financial data for our Company, which are stated in Canadian dollars and prepared in accordance with United States generally accepted accounting principles for the years ended April 30, 2012, 2011, 2010, 2009 and 2008.  We were incorporated on March 27, 2007 and are presenting five years of selected financial data.  The information in the table was extracted from the financial statements and related notes included in this annual report and the previously filed reports, and should be read in conjunction with such financial statements.





Statement of Operations Data

As at April 30

(Canadian dollars)2012

$
2011

$
2010

$
2009

$
2008

$Operating Revenues

Nil
Nil
Nil
NilIncome (loss) from Operations
(749,968)
(1,488,725)
(206,200)
(134,019)
(86,195)Net Income (loss)
391,069
(2,987,687)
(210,191)
(140,425)
(98,796)Net Income (loss) from Operations, per share
0.00
(0.01)
(0.00)
(0.00)
(0.00)





Balance Sheet Data

As at April 30

(Canadian dollars)2012

$
2011

$
2010

$
2009

$
2008

$Total Assets
215,923
373,423
2,108
3,702
167,272Total Liabilities
422,289
1,290,858
269,729
108,132
131,277Total Stockholders' Equity (Deficit)
(206,366)
(917,435)
(267,621)
(104,430)
35,995Capital Stock
1,561,873
1,561,873
224,400
177,400
177,400Number of Shares  Outstanding
226,976,985
226,976,985
90,875,000
89,500,000
89,500,000





Information on the exchange rate differentials between the US and Canadian dollars are provided in the introductory section of this Form 20-F, under Measurement and Currency, on page 4.





Capitalization and Indebtedness





Not Applicable.





6


Reasons for the Offer and Use of Proceeds





Not Applicable.





Risk Factors





An investment in our securities should be considered highly speculative due to various factors, including the nature of our business and the present stage of our development.  An investment in our securities should only be undertaken by persons who have sufficient financial resources to afford the total loss of their investment.  In addition to the usual risks associated with investment in a business, the following is a general description of significant risk factors which should be considered.  You should carefully consider the following material risk factors and all other information contained in this Annual Report before deciding to invest in our Common Shares.  If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected.  Additional risks and uncertainties we do not presently know or that we currently deem immaterial may also impair our business, financial condition or operating results.





RISKS RELATING TO OUR BUSINESS





We currently have no source of operating cash flow and we have a history of operating losses.





We have no revenues from operations, our mineral property interests are in the exploration stage and we have a history of operating losses.  We will not receive revenues from operations at any time in the near future, and we have no prior year’s history of earnings or cash flow.  We have incurred losses. We have not paid dividends on shares at any time since incorporation and we do not anticipate doing so in the foreseeable future.    There can be no assurance that our operations will ever generate sufficient revenues to fund our continuing operations or that we will ever generate positive cash flow from our operations.  Further, we can give no assurance that we will attain or sustain profitability in any future period.





Mineral exploration is highly speculative in nature and there can be no certainty of our successful development of profitable commercial mining operations.





The exploration and development of mineral properties involve significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate.  While the discovery of an ore body may result in substantial rewards, few explored properties develop into producing mines.  Substantial expenses may be incurred to locate and establish mineral reserves, develop metallurgical processes, and construct mining and processing facilities at a particular site.  Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are:  the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; metals prices which are highly cyclical; drilling and other related costs that appear to be rising; and government regulations, including those related to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals, and environmental protection.  The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital.





Although we do not currently operate any mines, we intend to pursue the development of our two current mining properties under option, subject to being able to complete the funding required to fund the projects.  There is no certainty that the expenditures made by us towards the exploration and evaluation of mineral deposits will result in discoveries of commercial quantities of ore.





The Company may be unable to obtain the funds necessary to finalize our property option agreements or to undertake exploration on our Hotstone Claims and the Santa Rita Claims.





Under the terms of our option agreement for Hotstone, we were required to pay the vendor a total of $100,000 in cash payments, which payments have been paid in full.  Further we are required to raise a total of $1,500,000 for a work program on the Property.As of the date of filing of this Annual Report, we do not have sufficient funds to undertake the exploration program.





Under the terms of our option agreement for Santa Rita, we are required to pay the vendor a total of $500,000 in cash payments, of which $150,000 has been paid as of the date of filing of this Annual Report.  Further cash payments which were required to be paid in the amount of $175,000 by


7





November 1, 2011 and $175,000 by November 1, 2012 were to be paid pursuant to the terms of a mining acquisition and production agreement with Royal Sovereign Internationale, who had agreed to expend a total of $5,000,000, including the $350,000 in cash payments to earn its interest in the Santa Rita mining concessions.    Further, pursuant to our agreement  with Plata Litoral Inc. should Royal Sovereign Internationale default on their obligations, the payment requirements would fall to Plata Litoral Inc.  We have been unable to conclude the agreement with Royal Sovereign Internationale and Plata Litoral Inc., while funding minimal operations does not presently as of the date of this filing have the funds available to pay the required $350,000 payments and fund the exploration program.   Plata Litoral Inc. and the Company are presently reviewing their options to source funding for the Santa Rita option.  Currently, we do not have sufficient funds to pay the cash payments or to expend the exploration funds required under the amended option agreement.





We have been successful in obtaining financing for operations by way of loans but as an exploration company it is often difficult to obtain adequate financing when required, and it is not necessarily the case that the terms of such financings will be favorable.  If we fail to obtain additional financing on a timely basis, we could forfeit our mineral property interests and/or reduce or terminate operations.





Because our business involves numerous operating hazards, we may be subject to claims of a significant size, which would cost a significant amount of funds and resources to rectify.  This could force us to cease our operations.





Our operations are subject to the usual hazards inherent in exploring for minerals, such as general accidents, explosions, chemical exposure and cratering.  The occurrence of these or similar events could result in the suspension of operations, damage to or destruction of the equipment involved and injury or death to personnel.  Operations also may be suspended because of machinery breakdowns, abnormal climatic conditions, failure of subcontractors to perform or supply goods or services or personnel shortages.  The occurrence of any such contingency would require us to incur additional costs, which would adversely affect our business.





Damage to the environment could also result from our operations.  If our business is involved in one or more of these hazards, we may be subject to claims of a significant size that could force us to cease our operations.





Mineral resource exploration, production and related operations are subject to extensive rules and regulations of federal, provincial, state and local agencies.  Failure to comply with these rules and regulations can result in substantial penalties.  Our cost of doing business may be affected by the regulatory burden on the mineral industry.  Although we intend to substantially comply with all applicable laws and regulations, because these rules and regulations frequently are amended or interpreted, we cannot predict the future cost or impact of complying with these laws.





Environmental enforcement efforts with respect to mineral operations have increased over the years, and it is possible that regulations could expand and have a greater impact on future mineral exploration operations.  Although our management intends to comply with all legislation and/or actions of local, provincial, state and federal governments, non-compliance with applicable regulatory requirements could subject us to penalties, fines and regulatory actions, the costs of which could harm our results of operations.  We cannot be sure that our proposed business operations will not violate environmental laws in the future.





Our operations and properties are subject to extensive federal, state, provincial and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to health and safety.  These laws and regulations may do any of the following:  (i) require the acquisition of a permit or other authorization before exploration commences; (ii) restrict the types, quantities and concentration of various substances that can be released in the environment in connection with exploration activities; (iii) limit or prohibit mineral exploration on certain lands lying within wilderness, wetlands and other protected areas; (iv) require remedial measures to mitigate pollution from former operations; and (v) impose substantial liabilities for pollution resulting from our proposed operations.





The exploration of mineral reserves are subject to all of the usual hazards and risks associated with mineral exploration, which could result in damage to life or property, environmental damage, and possible legal liability for any or all damages.  Difficulties, such as unusual or unexpected rock formations encountered by workers but not indicated on a map, or other conditions may be encountered in the gathering of samples and information, and could delay our exploration program.  Even though we are at liberty to obtain insurance against certain risks in such amounts we deem adequate, the nature of those risks is such that liabilities could exceed policy limits or be excluded from coverage.  We do not currently carry insurance to protect against these risks and there is no assurance that we will obtain such insurance in the future. There are also risks against that we cannot, or may not elect to insure. The costs, which could be associated with any liabilities, not covered byinsurance or in excess of insurance coverage or compliance with applicable laws and regulations may cause substantial delays and require significant capital outlays, adversely affecting our financial position, future earnings, and/or competitive positions.


8





One of our directors and officers may face a possible conflict of interest as the Optionor of the Hotstone Claims, which could have a material adverse effect on our business.





Mr. David Gibson, who is the Optionor of the Hotstone claims is also a director and vice president of exploration for the Company. As such, it is possible that he may face a conflict of interest in regard to the exploration of the Hotstone which may result in a material adverse effect to our business.





The prices of metals are highly volatile and a decrease in metal prices can have a material adverse effect on our business.





The profitability of natural resource operations are directly related to the market prices of the underlying commodities.  The market prices of metals fluctuate significantly and are affected by a number of factors beyond our control, including, but not limited to, the rate of inflation, the exchange rate of the dollar to other currencies, interest rates, and global economic and political conditions.  Price fluctuations in the metals market from the time exploration for a mine is undertaken and the time production can commence can significantly affect the profitability of a mine.  Accordingly, we may begin to develop a minerals property at a time when the price of the underlying metals make such exploration economically feasible and, subsequently, incur losses because metal prices have decreased.  Adverse fluctuations of metals market prices may force us to curtail or cease our business operations.





RISKS ASSOCIATED WITH MINING AND EXPLORATION





Mining operations generally involve a high degree of risk.





Mining operations are subject to all the hazards and risks normally encountered in the exploration, development and production of base or precious metals, including unusual and unexpected geological formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability.  Mining operations could also experience periodic interruptions due to bad or hazardous weather conditions and other acts of God.  Milling operations are subject to hazards such as equipment failure or failure of retaining dams around tailing disposal areas, which may result in environmental pollution and consequent liability.





If any of these risks and hazards adversely affect our mining operations or our exploration activities, they may:  (i) increase the cost of exploration to a point where it is no longer economically feasible to continue operations; (ii) require us to write down the carrying value of one or more mines or a property; (iii) cause delays or a stoppage in the exploration of minerals; (iv) result in damage to or destruction of mineral properties or processing facilities; and (v) result in personal injury, death or legal liability.  Any or all of these adverse consequences may have a material adverse effect on our financial condition, results of operations, and future cash flows.





We may not be able to compete with current and potential exploration companies, some of whom have greater resources and experience than we do in developing mineral reserves.





The natural resource market is intensely competitive, highly fragmented and subject to rapid change.  We may be unable to compete successfully with our existing competitors or with any new competitors.  We will be competing with many exploration companies that have significantly greater personnel, financial, managerial and technical resources than we do.  This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business.





9


We may not have access to all of the supplies and materials we need to begin exploration, which could cause us to delay or suspend operations.





Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies and certain equipment such as bulldozers and excavators that we might need to conduct exploration.  We have not attempted to locate or negotiate with any suppliers of products, equipment or materials.  We will attempt to locate products, equipment and materials prior to undertaking exploration programs.  If we cannot find the products, equipment and materials we need, we will have to suspend our exploration plans until we do find the products, equipment and materials.





We are an exploration stage company, and there is no assurance that a commercially viable deposit or “reserve” exists in the property in which we have claim.





We are an exploration stage company and cannot assure you that a commercially viable deposit, or “reserve,” exists on our mineral properties.  Therefore, determination of the existence of a reserve will depend on appropriate and sufficient exploration work and the evaluation of legal, economic and environmental factors.  If we fail to find commercially viable deposits, our financial condition and results of operations will be materially adversely affected.





It is possible that there may be native or aboriginal claims to our Hotstone property, which could result in us incurring additional expenses to explore the Hotstone Prospect.





Although we believe that we have the right to explore the Hotstone Prospect, we cannot substantiate that there are not native or aboriginal claims to the Hotstone Prospect.  If a native or aboriginal claim is made to this property, it could negatively affect our ability to explore this property as we would possibly have to incur significant legal fees to protect our right to explore the property.  We may also have to pay third parties to settle such claims.  If it is determined that there is a legitimate claim to this property, then we may be forced to return this property without adequate consideration.  Even if there is no legal basis for such claim, the costs involved in resolving such matters may force us to delay or curtail our exploration completely.





It is possible that there may be indigenous people claims to our Santa Rita mining concessions, which could result in us incurring additional expenses to explore the Santa Rita.





The property is at an early exploration stage and  there is no formal surface rights agreement with the Huitoco community at this time and we will be required to enter into such an agreement to progress our exploration on the Santa Rita.  It is possible that we may not be able to negotiate the formal surface rights agreement on terms that are favorable to the Company and we may incur additional expense to do so.





In order to undertake our planned exploration on the Santa Rita we will be required to obtain approvals from the Peruvian Ministry of Energy and Mines in our mining district of Huancavelica, which include some environmental baseline studies.





Before any work involving mechanical disturbance of the ground can be initiated on the Santa Rita Property, both a Declaracion de Impacto Ambiental (DIA) and a Plan de Minado need to be approved by the the Ministerio de Energía y Minas (Peruvian Ministry of Energy and Mines) in the Huancavelica Mining District.





The DIA provides an overview of the property, including description of property location, geographic and geological setting, description of ecological and environmental setting, brief description of the proposed exploration program (with geographic coordinates for the areas in which work is proposed to be undertaken), anticipated impacts of the program and proposed reclamation to address any impacts.  The DIA also requires initial, limited archeological assessment and environmental baseline studies (predominantly water).





The Plan de Minado provides details of the proposed exploration program, a review of pertinent regulations and the manner in which the proposed program complies with those regulations.  Furthermore, the Plan de Minado provides details with respect to camp size, the number and dimensions of the buildings proposed for the camp, power source(s) for the camp, proposed methods for managing grey and black water and any other details they may determine to be related to the camp construction.





10





RISKS RELATING TO AN INVESTMENT IN OUR SECURITIES





Our Common Stock Price May be Volatile





The trading price of our common stock may fluctuate substantially.  The price of our common stock, at any given time, may be higher or lower than the price you pay for your shares, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance.  These factors include the following: (i) price and volume fluctuations in the overall stock market from time to time; (ii) volatility resulting from trading in derivative securities related to our common stock including puts, calls, long-term equity anticipation securities, or leaps, or short trading positions; (iii) actual or anticipated changes in our earnings or fluctuations in our operating results or changes in the expectations of securities analysts; (iv) general economic conditions and trends; (v) loss of a major funding source; or (vi) departures of key personnel.





Because of the early stage of development and the nature of our business, our securities are considered highly speculative.





Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development.  We are engaged in the business of exploring and, if warranted and feasible, developing natural resource properties.  Our mining claims are in the exploration stage only and are without proven reserves of natural resources.  Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term.  Any profitability in the future from our business will be dependent upon locating and developing economic reserves of natural resources, which itself is subject to numerous risk factors as set forth herein.  Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.








We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.





Our Articles of Incorporation authorize the issuance of an unlimited number of common shares without par value and an unlimited number of Preferred Shares without par value.  The future issuance of our unlimited authorized common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders.  We may value any common shares issued in the future on an arbitrary basis.  The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.





Market for Penny Stock Has Suffered In Recent Years From Patterns Of Fraud And Abuse and our Stock has been Volatile





Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.  Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.





Our management is aware of the abuses that have occurred historically in the penny stock market. Our common stock has experienced volatility due to a number of paid promotions by outside stockholders.  Management is not  in a position to dictate the behavior of the market or of broker-dealers who participate in the market, however, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.  The occurrence of these patterns or practices have in the past and could in the future increase the volatility of our share price.


11





Our common shares are subject to the “Penny Stock” Rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.





The SEC has adopted regulations that generally define a "penny stock" to be any equity security other than a security excluded from such definition by Rule 3a51-1 under the Securities Exchange Act of 1934, as amended.  For the purposes relevant to our Company, it is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.





Our common shares are currently regarded as a “penny stock”, since our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, to the extent the market price for its shares is less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction.  To the extent these requirements may be applicable; they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.





Despite an active market shareholders may not be able to sell their shares at a profit or at all.





Although, we are a reporting company and our common shares are quoted on the OTCQB under the symbol “CPMCF”, no active market has been maintained for our common stock and an active trading market may not develop again or, if it does develop, may not be maintained.  Failure to develop or maintain an active trading market will have a generally negative effect on the price of our common stock, and you may be unable to sell your common stock or any attempted sale of such common stock may have the effect of lowering the market price and therefore your investment could be a partial or complete loss.





Our common stock has experienced extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.





Our common stock has been highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to): (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel;  (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-trading and particularly , microcap companies.





Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value.  The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes.  These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company.  In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities.  Although there is no such shareholder litigation currently pending or threatened against the Company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business.  Moreover, and as noted below, our shares are currently traded on the OTC-QB and, further, are subject to the penny stock regulations.  Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.





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Since we are a “Foreign Private Issuer” under United States Securities Laws, our stockholders may have less complete and timely data about us.





We are considered a “foreign private issuer” under the Securities Act of 1933, as amended.  As an issuer incorporated in Alberta, Canada, we are exempt from Section 14 proxy rules and Section 16 of the Securities Exchange Act of 1934, as amended.  The submission of proxy and annual meeting of stockholders information (prepared to Canadian standards) on Form 6-K and the exemption from Section 16 rules regarding sales of common shares by insiders may result in stockholders having less complete and timely data as compared to information that may be available about U.S. issuers.





We have not and do not intend to pay any cash dividends on our common shares and, consequently, our stockholders will not be able to receive a return on their shares unless they sell them.





We intend to retain any future earnings to finance the development and expansion of our business.  We have not, and do not, anticipate paying any cash dividends on our common shares in the foreseeable future.  Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.





We may, in the future, issue additional common shares or other securities, including our preferred shares, which would reduce investors’ percentage ownership and may dilute the value of our shares.





Our Articles of Incorporation authorize the issuance of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.  We may value any securities issued in the future on an arbitrary basis.  The issuance of additional securities for future services or acquisitions or other corporate actions may also have the effect of diluting the value of the shares held by our investors and might have an adverse effect on the trading market for our common shares.





Our Board of Directors may issue, without stockholder approval, preferred shares that have rights and preferences superior to those of common shares and that may delay or prevent a change of control.  After the offering, there may be no preferred shares outstanding.  However, our Board of Directors may set the rights and preferences of any class of preferred shares in its sole discretion without the approval of the holders of common shares.  The rights and preferences of these preferred shares may be superior to those of the common shares.  Accordingly, the issuance of preferred shares may adversely affect the rights of holders of common shares.  The issuance of preferred shares also could have the effect of delaying or preventing a change of control of Coastal Pacific.





We may be deemed to be a Passive Foreign Investment Company and, as a result, United States investors in Coastal Pacific could suffer adverse tax consequences.





A passive foreign investment company, or PFIC, is a non-U.S. corporation that meets an income test and/or an asset test.  The income test is met if 75% or more of a corporation’s gross income is “passive income” (generally dividends, interest, rents, royalties, and gains from the disposition of passive assets) in any taxable year.  The asset test is met if at least 50% of the average value of a corporation’s assets produce, or are held for the production of, passive income.  We have not determined whether or not the IRS would treat us as a PFIC for U.S. federal income tax purposes.  If we were treated as a PFIC, a U.S. holder of our common shares could be subject to a substantially increased tax liability, possibly including an interest charge, upon the sale or other disposition of the U.S. holder’s common shares or upon the receipt of “excess distributions” from us.  In the alternative, if we were treated as a PFIC, U.S. holders may enter into certain U.S. tax elections that may result in current Federal tax liability prior to any distribution or disposition of the shares, and without the assurance of any eventual distribution or successful disposition.





ITEM 4.               INFORMATION ON THE COMPANY





History and Development of the Company





Our legal name is Coastal Pacific Mining Corporation, and we were incorporated on March 27, 2007 under the Business Corporations Act of Alberta, Canada.  Our head office and principal place of business is located at 927 Drury Avenue NE, Calgary, Alberta, T2E 0M3, Canada.  Our telephone number is (403) 612-3001, our facsimile number is (403) 313-5449, our website is www.coastalpacificminingcorp.com and our e-mail address is: info@coastalpacificminingcorp.com.  The information on our website is not a part of this Annual Report.


13


Since our inception, we have been an exploration stage company engaged in the identification, acquisition, and, where feasible, the exploration of mineral properties.  We have entered into a number of option / joint venture agreements for exploration prospects, all of which, with the exception of two option agreements, have been terminated either due to a lack of funds for undertaking required exploration / work programs or the difficulty in undertaking an exploration project due to terrain or weather constraints.





Since May 1, 2007 to April 30, 2012, we have incurred $1,362,065 in costs associated with acquiring mineral properties and exploration expenses on those properties.  These costs were associated with the entering into agreements and having undertaken exploration programs.  To date, we have been involved the following projects:





-
We previously held a 100% interest in Tenure Number 530021 registered with the Government of British Columbia, Ministry of Energy, Mines and Petroleum Resources, known as the Violet East Claim, Axe Property, Liard Mining Division, located in the Stikine region of northwestern British Columbia, Canada, approximately 118 miles (190 km) north of Stewart, British Columbia.  We originally acquired this mineral claim for a payment of $40,000 USD.  This claim was intentionally not renewed by us in 2009 due to the excessive challenges in undertaking exploration activities, the terrain and short exploration season.





-
On May 15, 2009, the Company entered into an Option Agreement with Trio Gold Corp (“Trio”), a company incorporated in the Province of Alberta, Canada. Trio had leased and granted the Company an option to purchase a 100% interest in 29 unpatented mining claims located in Nevada within the Carlin Gold Trend. On July 15, 2009, the parties agreed to amend the Option Agreement whereby we were granted a non-exclusive extension until October 15, 2009. While not formally extended further, the Option Agreement remained in effect until April 2010, at which time the Option Agreement was ended as the requisite terms had not been met.





-
On May 27, 2009, we entered into a joint venture and option agreement with Warrior Ventures Incorporated to acquire an interest in the McNeil Gold Property (the “Warrior Agreement”).  Warrior was the recorded and beneficial holder of a 100% un-divided interest in certain mining claims/property situated in McNeil and Robertson Townships located south-east of Timmins, Ontario. Under the terms of the joint venture/option agreement, the Company would earn a 40% interest in the McNeil Gold Property.  Subsequent to April 30, 2010, after a review of the prospect and upon being presented with an opportunity to acquire the Hotstone Property (as described below), which is our current mining exploration asset, we determined not to pursue the McNeil Gold Property, and the parties mutually agreed to the dissolution, termination and cancelation of joint venture/option agreement.





-
On November 6, 2009, we executed a Letter Of Intent to enter into a definitive Exploration Joint Venture with Lenagold Limited, holder of the prospecting license for a property in Ireland located in the North West of Ireland near the towns of Laghey and Ballintra, County Donegal.   The Company was unable to raise the required funds under the Letter of Intent, and a definitive Joint Venture Agreement was not entered into, resulting in dissolution of the Letter of Intent.







-
On October 6, 2010, we entered into an option agreement with David L. Gibson, an officer and director of our Company for the rights to acquire a 50% interest in Mr. Gibson’s 100% un-divided interest in certain mining claims/property(the “Hotstone”) situated in Greenlaw Township located south-east of Chapleau, Ontario.  We have paid the required cash payments totaling $100,000 on the Hotstone.  We are required to undertake exploration work on the Hotstone totaling $1,500,000.






-
On October 30, 2010, effective November 1, 2010, we entered into an Option Agreement with Hans Peter Flueck to acquire a 50% interest in certain mining concessions situated in the District of Acobambilla, Province of Huancavelica, Department of Huancavelica, in the Republic of Peru; approximately 200 km southeast of Lima.  The two (2) subject claims (“Santa Rita”) cover an area of 1200 hectares and are named:





-
Celeste No 3 (200 Hectares)


-
Nueva Santa Rita (1000 Hectares)





-
On March 29, 2011, we entered into an amended option with David L. Gibson, an officer and director of our Company to extend the exploration expenditures to December 31, 2012.


14




-
On May 16, 2011, we entered into an amended option agreement with Hans Peter Flueck and Rimpago Company Limited Peru S.A.C. (the trustee holder of the Santa Rita Mining Concessions), whereby we amended our agreement to the following terms:




(i)   $50,000 cash payment and 1,000,000 shares which had been paid under the prior option agreement;


(ii)  $100,000 cash payment which had been paid under the prior option agreement;


(iii) $175,000 cash payment on or before October 30, 2011 and a total of 2,000,000 payment shares on November 1, 2011;


(iv)  $175,000 cash payment on or before October 30, 2012 and a total of 2,000,000 payment shares on November 1, 2012.





Further, the following exploration expenditures were to be completed as follows:





(a) $1,500,000 on or before September 30, 2012; and


(b) $1,500,000 on or before April 30, 2013.





Under the agreement we have the right to earn 25% upon expenditure of the first $1,500,000 and the remaining 25% upon the second $1,500,000 being expended.  The $3,000,000 required expenditures are inclusive of the cash payments to Flueck.





The concessions are for metallic minerals giving the titleholder the right to explore and exploit metallic minerals within the bounds of the concessions.





On July 15, 2011 we received notification of an assignment of $1,000,000 of convertible notes with the Company to Plata Litoral Inc. (“Litoral”) which was incorporated by the note holders to hold the notes.   On August 1, 2011, Litoral noticed us that the notes were in default and were subject to immediate payment.  On September 10, 2011, Litoral and the Company reached a settlement agreement whereby the Company would assign to Litoral ninety percent (90%) of its interest in and to the property in exchange for Plata assuming all of the remaining payment obligations under the Option Agreement, except for the issuance of shares which would remain the responsibility of Coastal, in exchange for the forgiveness of the notes plus all accrued interest, the payment of $50,000 to Coastal by Litoral and the issuance of 75,659,000 shares of Litoral common stock to Coastal which Coastal may dividend to its stockholders of record as at October 31, 2011 at the sole election of Coastal.   Coastal did not effect a dividend of the shares of Litoral and holds the shares of Litoral as of the date of the filing of this report.





On October 6, 2011, Coastal and Litoral entered into a mining acquisition and production agreement with Royal Sovereign Internationale (“Royal”), Hans Peter Flueck (the vendor of the Santa Rita mining concessions), and Minera Rimpago Peru S.A.C. (the trustee for the claims), whereby Royal would expend a minimum of $5,000,000 by way of exploration and production financing to earn a 50% interest in and to the Santa Rita mining concessions. The agreement was to be redrafted to comply with Peruvian law and was expected to be finalized on or before November 20, 2011. Pursuant to the agreement, Litoral agreed to assign to Coastal a further interest in the Santa Rita mining concessions and Flueck agreed to dilute to a 25% interest in the Santa Rita mining concessions, such that the final ownership upon the $5,000,000 funding completing will be:





Royal – 50%


Hans Peter Flueck -25%


Litoral – 20%


Coastal  – 5%





Coastal or its stockholders hold approximately 38% of the total issued and outstanding shares of Litoral.  Further, Coastal is to manage and undertake all exploration on the Santa Rita mining concessions.


15





Under the terms of the agreement, Coastal and Litoral would earn as payments are made which total their obligations under the original option agreement, as amended. As of the date of this filing, the final agreement to be drafted and executed subject to Peruvian law has not been completed. Royal has not funded any of the required payments to be made or demonstrated that the funds are available. It is unclear, whether the Royal agreement, which superseded the amended option agreement is the governing agreement.  If that agreement is the governing agreement then until such time as a formal agreement is entered into or the parties to the agreement receive formal notice with a cure provision, then the option is in full force and effect.   However, any notice of default may result in litigation to maintain Coastal’s rights under the agreements.   Coastal currently does not have funds available to fund such litigation and would look to Litoral to provide such funding.  Should a determination be made that the amended option agreement as executed on May 16, 2011, is the governing agreement then the agreement may be deemed to be in default.





In order to earn the 25% interest assignable under the amended Option Agreement, expenditures of $1,500,000 must be made.  To the date of this filing, approximately $683,315 has been expended by Coastal and Litoral, therefore upon a further expenditure of approximately $816,684, Coastal and Litoral will have earned 25%.  On the expenditure of a further $1,500,000, Coastal and Litoral will earn their 50% interest in and to the Santa Rita mining concessions.   In order for Royal to get assignment of their interest of 25% from Coastal and Litoral they will be required to expend the entire $5,000,000.





As of the date of this filing, Coastal and Litoral are in default of the amended mining option agreement.  In order to cure the default the following payments and share issuances will have to be made:





·
$816,684, to be expended before September 30, 2012, which includes the $175,000 in cash payments as below.




·
$175,000 cash payment which was due on October 30, 2011;




·
2,000,000 shares to be issued to Peter Flueck due on November 1, 2011;




Further, the following payments will need to be made in order to ensure the agreement does not fall into further default:





·
$175,000 cash payment which was due on October 30, 2012;




·
2,000,000 shares to be issued to Peter Flueck on November 1, 2012;




·
$1,325,000 to be expended on or before April 30, 2013.




Under the terms of the agreement, Coastal could pay the required expenditures to Flueck by way of a cash payment in order to maintain the Option (the “Shortfall Payment”).  Such payment would be required to include an administration fee of 5% of the Shortfall Payment.





Litoral has advised that they do not have sufficient funds to be able to fund the cash payments and exploration expenditures in order to cure the default.





On January 6, 2012, we entered into an option agreement with Gibson and Associates, Inc. and Trio Gold Corp.,  whereby Trio was granted the right to acquire a 50% interest in the Hotstone claims.  Under the agreement Trio was to demonstrate on or before April 30, 2012 that it had $700,000CDN available for expenditure on the property.   Trio could not demonstrate the availability of such funding and therefore the option was considered null and void and the amended option agreement entered into on March 29, 2011 is the governing agreement whereby Coastal will earn its interest in the Hotstone.





We have substantial ongoing commitments in order to earn our 50% interest in the Hotstone project and the Santa Rita project.  At this time we do not have sufficient funds to undertake our commitments on the Hotstone project or the Santa Rita project and to continue to meet our obligations as they become due.  We will have to raise additional capital to do so.  To date, funding has been provided by Litoral, by way of loans to the Company.  However, there can be no assurance that such funding will continue to be available or that we will have any other means to raise the required funding.  If we are unable to do so, we will lose our interests in our mining properties under option.





On March 21, 2011, the Company filed an F-1 registration with the Securities and Exchange Commission (“SEC”) pursuant to a draw down equity line.   The Company received notification from the SEC to withdraw the registration statement as they did not recognize the OTC-QB for the purpose of equity lines and only those companies trading on the OTCBB could file registration statements pursuant to equity lines.   The Company did not withdraw the registration statement as were working with OTC Markets to get recognition of the OTC-QB for equity lines.   However, as of the date of this filing, the Company does not expect that such funds would be available under the registration statement and it intends to effect a withdrawal of the registration statement as requested by the SEC.


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At the present time, the Company has no access to the cash in its bank account.  During May, 2011, the Company’s bank accounts were frozen by the Alberta Securities Commission (“ASC”), and the Company has received information indicating that the Alberta Securities Commission is investigating suspicious trades in the Company’s shares that occurred in and around November, 2010.  The Company’s own investigation reveals that the Directors and Officers of the Company did not trade any shares in or around November, 2010, amidst an otherwise unusual trading volume and share price spike.   The Company has had no further communication with the ASC in regard to the investigation as of the date of this filing and the funds remain frozen and not available in the Company’s bank account.   The Company carries directors and officers insurance which will cover all but the first $100,000 of the legal fees in regard to this investigation should the Company be required to retain legal counsel to act on its behalf.





Further, the British Columbia Securities Commission (“BCSC”) has cease traded the Company until such time as it files all of its filings with the BCSC.  The Company has not yet completed the required filings with the BCSC.  However, due to new updated regulations brought in by the majority of the Canadian regulators, including the ASC, the Company is required to file in the Province of Alberta.  In making these filings the Company intends to complete the filings with the BCSC and bring all jurisdictions where it is required to file into compliance.





We have limited finances and will require additional funding in order to accomplish our exploration objectives.  There is no assurance that we will have revenues in the future or that we will be able to secure other funding necessary for our future growth and expansion.  There is also no assurance that our mineral exploration activities will produce commercially viable reserves.  Our efforts to extract minerals may be unprofitable.





We may seek relationships with other mineral exploration and development companies that will allow us to exploit idle and/or undeveloped resources.





Business Overview





We are an exploration stage company engaged in the identification, acquisition, and, where feasible, the exploration of mineral properties.  Our joint venture / option agreements entered into through to the end of our fiscal year, as of the date of this report, have been terminated due to lack of feasibility or financial resources.  We have options on two exploration projects at year end.





Santa Rita Prospect





On October 30, 2010 and effective November 1, 2010, we entered into a mining option agreement with Hans Peter Flueck to acquire a 50% interest in certain mining claims situated in the District of Acobambilla, Province of Huancavelica, Department of Huancavelica, in the Republic of Peru; approximately 200 km southeast of Lima.  On May, 16, 2011 we entered into an amended mining option agreement more particularly described above.   On October 31, 2011, we ratified an agreement with Litoral whereby we assigned 90% of our rights to Litoral in exchange for Litoral assuming all obligations under the amended mining option agreement of May 16, 2011.  On October 31, 2011, we also ratified a mining and production agreement between Flueck, Litoral, Rimpago, and Royal whereby Royal agreed to expend a total of $5,000,000 on the mining concessions to earn a fifty percent (50%) interest in and to the concessions.





Required Payments on Santa Rita





In consideration of the grant of the Option, we were required to pay certain cash payments.  We paid a $50,000 cash payment and issued a total of 1,000,000 shares upon execution of the agreement and we paid a further $100,000 cash payment on January 1, 2011.  Pursuant to the agreements with Royal and Litoral, we were required to issue 2,000,000 shares of our common stock on November 1, 2011 and 2,000,000 shares of our common stock on November 1, 2012.  All other obligations were to be assumed by Royal.   Should Royal default on their agreement then Litoral would assume responsibility for the payments.  However, should both Royal and Litoral default then we would be required to meet the obligations under the agreement. As of April 30, 2012, we had expended a total of $651,980 towards the initial $1,500,000 to be expended.  As of the date of filing of this annual report, approximately $683,315 has been expended towards the initial $1,500,000.


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Maintenance of the Option





In order to maintain in force our option and to earn our 50% interest we must incur exploration expenditures in an aggregate amount of $3,000,000, with the first $1,500,000 expended on or before September 30, 2012 and an additional $1,500,000 on or before April 30, 2013. During the option period,  we are required to keep the Property in good standing by paying all taxes, assessments and other charges and by doing all other acts and things that may be necessary in that regard., which payments shall be made from the expenditures as detailed above.




If incurred expenditures are less than the required expenditures we must pay to the optionor an amount equal to the difference between the required expenditures and the expenditures actually incurred. The payment is required to be made by certified cheque by the respective dates specified in order to maintain the Option, in addition to the payment of an administration fee equal to five (5) percent of the Shortfall Payment.




Upon the required cash and stock payments and the completion of the first year exploration program in the amount of $1,500,000, we will earn an irrevocable twenty-five percent (25%) interest in Santa Rita.





Should Royal or Litoral default there is no assurance that we will be able to raise the funds required to earn our 50% interest in the Santa Rita mining concessions, nor is there any assurance that if we are able to raise such funds that further exploration of the Santa Rita mining concessions will result in the discovery of economically viable mineral reserves or generate any revenue.





Hotstone Prospect





On October 6, 2010, we entered into an option agreement (the “Hotstone Agreement”) to earn a 50% undivided interest in a gold exploration prospect, known as the Hotstone property.  Under the terms of the Hotstone Agreement, Coastal Pacific will issue 1,000,000 restricted shares of common stock and make cash payments of $100,000, with the first payment of $50,000 due within 60 days of entering into the Agreement, and the second payment due within six months of the date of the Hotstone Agreement.   The initial agreement required that we fund a $1,500,000 work program.    On March 29, 2011, we amended the Hotstone Agreement to require the $1,500,000 to be expended on or before December 31, 2012.   We have paid the $100,000 required under the agreements and issued the 1,000,000 shares.  This agreement was entered into with Mr. David L. Gibson, an officer and director of the Company.  Mr. Gibson abstained from voting on the acquisition.





There is no assurance that we will be able to raise the funds required to earn our 50% interest in the Hotstone property, nor is there any assurance that if we are able to raise such funds that further exploration of the Hotstone property will result in the discovery of economically viable mineral reserves or generate any revenue.





At the time of this report, we have no known reserves on our mineral claims.





At present, we do not hold any interest in any exploration reserve property that is in production.  Our visibility and potential success will require that we successfully explore, exploit and eventually generate revenue from mineral reserves underground.  There can be no assurance that such revenues will be obtained.  The exploration of mineral reserves generally involves a high risk over a long period of time, even with careful evaluation, experience and knowledge this long period may persist.





The exploration of mineral reserves are subject to all of the usual hazards and risks associated with mineral exploration, which could result in damage to life or property, environmental damage, and possible legal liability for any or all damages.





Competition





The natural resource market is intensely competitive in all its phases, highly fragmented and subject to rapid change.  We will encounter strong competition from many other natural resource companies, including many that possess substantial financial resources, in acquiring economically desirable producing properties and exploratory drilling prospects, and in obtaining equipment and labor to operate and maintain the properties.  We may be unable to compete successfully with our existing competitors or with any new competitors.  We compete with many exploration companies which have significantly greater personnel, financial, managerial, and technical resources than we do.  This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business.


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Seasonality





As the Hotstone Prospect is located in southeast Ontario, we are subject to the seasonality of the area and may not be able to gain access to the property during the winter months and we may have difficulty undertaking exploration activities during the spring months due to ground conditions.  We will conduct our exploration programs, weather permitting, when the ground is suitable for such activities.





The Santa Rita claims are accessible year round, although the rainy season which falls from September to April is usually accompanied with road wash-outs and lightning hazards.





Marketing





As any mineral resources that we may be able to extract in the future are of a commodity nature, we do not anticipate the requirement for any particular marketing efforts.





Intellectual Property / Contracts





We are not dependent upon any form of intellectual property or other license agreements.  Upon our commencing exploration programs, and ultimately production if we are successful in doing so, we will be entering into contracts at that juncture; however, these are not yet applicable.





Regulation and Environment Matters





Mineral resource exploration, production and related operations are subject to extensive rules and regulations of federal, provincial, and local agencies.  Failure to comply with these rules and regulations can result in substantial penalties.  Our cost of doing business may be affected by the regulatory burden on the mineral industry.  Although we intend to substantially comply with all applicable laws and regulations, when we begin our operations and exploration activities because these rules and regulations frequently are amended or interpreted, we cannot predict the future cost or impact of complying with these laws.





Environmental enforcement efforts with respect to mineral operations have increased over the years, and it is possible that regulations could expand and have a greater impact on future mineral exploration operations.  Although our management intends to comply with all legislation and/or actions of local, provincial, and federal governments, non-compliance with applicable regulatory requirements could subject us to penalties, fines and regulatory actions, the costs of which could harm our results of operations.  We cannot be sure that our proposed business operations will not violate environmental laws in the future.





Our operations and properties are subject to extensive federal, provincial and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health.  These laws and regulations may do any of the following: (i) require the acquisition of a permit or other authorization before exploration commences, (ii) restrict the types, quantities and concentration of various substances that can be released in the environment in connection with exploration activities, (iii) limit or prohibit mineral exploration on certain lands lying within wilderness, wetlands and other protected areas, (iv) require remedial measures to mitigate pollution from former operations and (v) impose substantial liabilities for pollution resulting from our proposed operations.





There are no costs to us at the present time in connection with compliance with environmental laws.  However, since we do anticipate engaging in natural resource projects, these costs could and likely will occur.  Costs could extend into the millions of dollars for which we could be liable.  Any significant liability could wipe out our assets and resources.





Organizational Structure





We do not have any subsidiaries at this time.  We intend to incorporate a Peruvian subsidiary to undertake operations in Peru.




All operations are currently undertaken by us directly, or, in the future, by a designated operator.




19


Property, Plants and Equipment





Santa Rita mining concessions





Location and Means of Access





The Santa Rita is situated in the District of Acobambilla, Province of Huancavelica, Department of Huancavelica in the Republic of Peru on the continent of South America; approximately 200km southeast of Lima.  The claims are centered on Universal Transverse Mercatator (“UTM”) coordinate system, Provisional South American Datum 1956 (“PSAD56”) zone 18L, 456480 meters East and 854570 meters North (Santa Rita) and 455500 meters East and 8559740 meters North (Celeste N°3); or geographic coordinate system 75°24’ 15” of west Longitude and 12°41’ 11” of south Latitude (Celeste N°2).  The Santa Rita mining concessions are comprised of two claims which cover an area of 1200 hectares located within the Central Cordillera of the Peruvian Andes in rugged terrain typical of the Andean highlands.  The elevation on the claims ranges between 4200 m to 4800 m above sea level.  The landscape includes steep weathered mountaintops emerging from the wide grassy valleys carved by glacial activity and covered by a thick layer of glacio-fluvial sediments.   Access to the claims is by road from the city of Lima.  There are two access routes:  (i) Lima-Huancayo-Huancavelica and (ii) Lima-Pisco-Huancavelica.  The best route is via the Central Highway to Huancayo.  This route is 300km long and takes about 5.5 hours by truck.  From Huancayo to the property, the route is 150km long on a maintained gravel road for the first 60 km and a drivable gravel road for the last 90 km.  The travel time to the property from Huancayo is about 5 hours.





20











Option Agreement





We have an option for the Santa Rita mining concessions from the current property owner who holds a 100% undivided interest in Santa Rita, which he acquired in 1996 from a prior owner.





In Peru mineral claims are applied for and awarded according to the grid-based system and are single claims for exploration and exploitation.  They can be granted for metallic or non-metallic minerals and no overlap between them is allowed.  The Santa Rita claims are for metallic minerals giving us the right to explore and exploit metallic minerals within the bounds of the claims, subject to the payment of annual fees established by Peruvian Mining Law. In order to maintain the mineral claims in good standing, the holders must comply with the payment of a license fee equal to USD$3.00 per hectare per year.


21




Claim holders must reach an annual production of at least US$100 per hectare in gross sales within six (6) years from January 1st of the year following the date the title was granted.  If there is no production on the claim within that period, the claim holder must pay a penalty of USD$6.00 per hectare under the general regime.  From the 12th year onwards the penalty is equal to USD$20 per hectare under the general regime.   The claim holder is exempt from the penalty if exploration expenditures incurred during the previous year was ten (10) times the amount of the applicable penalty. Failure to pay the license fees or the penalty for two consecutive years will result in forfeiture of the mineral claims.  The optionor of the property has advised the Company that he is current with all of the required fees.





Mineral rights and surface rights in Peru are severed.  The surface rights are granted for an indefinite term and are freely transferable, in whole or in part, and can be optioned, leased, or given as collateral or mortgage, with no need for approval from any governmental agency.   There is no formal surface rights agreement with the Huitoco community at this time and we will be required to enter into such an agreement to progress our exploration on the Santa Rita.  According to Luc Pigeon the geologist that prepared the most current NI43-101 report on the property during October, 2009, based on his experience and discussions with the community president, the surface right agreement should be easily negotiated.   Mineral agreements (such as an option to acquire, a mining lease or transfer of a mineral claim) must be formalized through a deed  issued by a notary public and must be recorded with the Public Registry to create enforceability against third parties and the Peruvian State.  We have not yet recorded our option agreement.





Peru established a sliding scale mining royalty late in 2004.  Calculation of the royalty payable is made monthly and is based on the value of the concentrate sold (or its equivalent) using international metal prices as the base for establishing the value of metal.  The sliding scale is applied as follows: (i) first stage:  up to US$60 million annual value, the royalty is 1.0%; (ii) second stage:  in excess of US$60 million up to US$120 million annual value, the royalty is 2.0%; and (iii) third stage:  in excess of US$120 million annual value, the royalty is 3.0%. Should we produce metals from the Santa Rita we will be required to pay these royalties.





Previous Operations





The Optionor of Santa Rita purchased the claims from a Mr. Limaco in 1996.  The Santa Rita has a very limited history of previous exploration and mining which is mostly based on word of mouth.  The adits and galleries developed on the Humaspunco Mountain vein system are pre-1983 and were likely executed by Compania Minera el Altiplano S.A.  No systematic mapping or geological exploration has been done on the property.  However, several geologists have visited and briefly studied the property’s geology.  Zegarra (1983) produced summary geological maps and collected 48 samples.  Salinas (1997) collected 14 samples and Pasminco (2000) took 40 samples.  All the geologists report silver-rich polymetallic mineralization associated with barite veining.





Present Operations





The Santa Rita mining concessions has no known reserves and the proposed program will be an exploration program. We undertook exploration programs on the property with our officers, directors and geological consultants during fiscal 2011 and 2012.




Phase 1 Exploration  Program




We  have completed a Phase I exploration program on the Santa Rita property, comprised of soil sampling, prospecting, geological mapping and sampling of the vein system exposed near the crest of Humaspunco Mountain.  In addition, a Real Time Kinematic Global Positioning System (RTK-GPS) survey was also completed in conjunction with the soil survey so as to provide a regularly spaced grid of points from which to derive topographic contours for the area of interest.  Topographic control will be required for planning the locations of an access road to facilitate drilling on Humaspunco Mountain, as well as for sub-surface control of the drill holes (i.e. surface elevation of the drill collars).  Previous work (summarized and amended by a NI 43-101 compliant report) documented a series of at least 6 high grade, silver-enriched base metal veins and an associated manto horizon.  Work completed by the Company in Phase I resulted in the identification of additional, high grade, silver-enriched base metal veins and at least two silver-bearing, base metal-enriched manto horizons.




22





A total of 904 “B Horizon” soil samples were collected on the property in April, 2011.  Samples were collected from a variably developed “B” horizon using a soil auger, with sample depths ranging between 2 and 25 cm below surface.





A total of 262 rock samples were recovered from the property in April.  The majority of rock samples were collected from vein and, to a lesser degree, manto horizons exposed at surface and/or in underground workings from the upper portion of Humaspunco Mountain.





From the samples recovered in April, 2011, a total of 181 were described as vein samples, 73 as from manto occurrences and 7 representing alteration.  Representative samples were taken of mineralization in an attempt to ascertain the average grade of mineralization.  As such, some samples represent silver-rich, base metal mineralization, while others represent alteration haloes and/or barren samples.  Sampling was undertaken by 7 separate individuals and is, therefore, subjective.





Many of the shallow trenches and pits developed on mineralized occurrences, particularly the veins, have sloughed in and no longer expose the mineralized veins.  Representative samples were taken from hand-cobbed material adjacent to the trenches.  In situ mineralized veins were sampled only in very few instances.





Quality Controls/Quality Assurance Undertaken on the Santa Rita Phase I Exploration Program.





Before the samples from the Santa Rita property were taken to the Acme Analytical Laboratories preparation facility, they were under the direct supervision of either D. Gibson, Vice President of Exploration, and/or R. Walker, Chief Geologist, at all times.  Samples were delivered directly to Acme Analytical Laboratories in Lima, Peru for analysis by standard fire assay for gold and an aqua-regia digestion and ICP analysis for 37 elements.





As part of their analytical procedure, Acme Analytical Laboratories Ltd, an International Organization for Standardization (“ISO” 9001:2000) certified laboratory, utilizes a well-defined internal quality control protocol, as follows:





“Samples submitted are analyzed with the strictest quality control.  Blanks (analytical and method), duplicates and standard reference materials inserted in the sequences of client samples provide a measure of background noise, accuracy and precision.  QA/QC protocol incorporates a granite or quartz sample-prep blank(s) carried through all stages of preparation and analysis as the first sample(s) in the job. Typically an analytical batch will be comprised of 34-36 client samples, a pulp duplicate to monitor analytical precision, a -10 mesh reject duplicate to monitor sub-sampling variation (drill core only), a reagent blank to measure background and an aliquot of Certified Reference Material (CRM) or Inhouse Reference Material to monitor accuracy.  In the absence of suitable CRMs Inhouse Reference Materials are prepared and certified against internationally certified reference materials  such as CANMET and USGS standards where possible and will be externally verified at a minimum of 3 other commercial laboratories.  Using these inserted quality control samples each analytical batch and complete job is rigorously reviewed and validated prior to release. All the reported results were within acceptable detection ranges (less than 2 standard deviation variation).” (Acme web-site at http://acmelab.com).





Sample preparation, security and analytical procedures utilized by Acme Analytical Laboratories Ltd are considered to be adequate for this due diligence property evaluation and for the mineralization type encountered on the Property.




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Phase II Work Program




Subject to receiving additional funding required, we intend to commence the Phase II program, comprised of diamond drilling.  Construction of a semi-permanent camp will also be required in support of Phase II drilling and, subsequently, anticipated bulk sampling.




Budget for Phase II Exploration Program




2 Marookas





2
$15,000.00
$30,000Internet - Satellite system




1
$4,500.00
$4,500CampFood Services Officer and Assistant60
days at $120 / day



60
$120.00
$7,200Food Ration771
days at $20 / day



771
$20.00
$15,420Base Facility - Up to 20 person camp56
days at $150 / day



56
$150.00
$8,400Program Manager and NI 43-101 Qualified Person8
days at $400 / day



8
$400.00
$3,200Camp Captain56
days at $135 / day



56
$135.00
$7,560Translator40
days at $50 / day



40
$50.00
$2,000Trucks + Drivers
93
days at $130 / day


93
$130.00
$12,090Campesinos
154
days at $50 / day


140
$50.00
$7,000Ground Geophysical ProgramMagnetics




1
$12,000.00
$12,000Surface Mapping - 18 days at $850 / dayGeologist + Assistant



41
$780.00
$31,980Prep
300
samples at $8 / sample
300
$8.00
$2,400Analysis
300
samples at $12 / sample
300
$12.00
$3,600Over-Limits (Ag, Pb, Zn - per element)300
analyses at $12.00 / analysis

300
$12.00
$3,600  24
  Underground MappingGeologist + Assistant14
days at $600 / day



14
$600.00
$8,400Rock (Panel Samples on Veins - u/g)18
days at $260 / day



18
$260.00
$4,680Prep
100
samples at $8 / sample
100
$8.00
$800Analysis
100
samples at $12 / sample
100
$12.00
$1,200Over-Limits (Ag, Pb, Zn - per element)100
analyses at $12.00 / analysis

100
$12.00
$1,200ExcavatorMob - De-Mob - Low-Bed - Huancayo



$10,000Road-Building3
days at $1650 / day


3
$1,650.00
$4,950Trenching - Veins7
days at $1650 / day


7
$1,650.00
$11,550GeochemistrySoils - PropertyPrep
1800
samples at $2.44 / sample
1800
$2.44
$4,392Analysis
1800
samples at $12 / sample
1800
$12.00
$21,600Disposal
1800
samples at $0.50 / sample
1800
$0.50
$900Over-Limits (Ag, Pb, Zn - per element)1500
analyses at 12.00 / analysis

1500
$12.00
$18,000Silts - PropertyPrep
30
samples at $2.44/ sample
30
$2.44
$73Analysis
30
samples at $12 / sample
30
$12.00
$360Disposal
30
samples at $0.50 / sample
30
$0.50
$15Water Samples2
man-days at $250 / day

2
$250.00
$50010
samples at $150 / sample

10
$150.00
$1,500Rock (Samples on Veins - surface)Prep
200
samples at $8 / sample
200
$8.00
$1,600Analysis
200
samples at $12 / sample
200
$12.00
$2,400Over-Limits (Ag, Pb, Zn - per element)200
analyses at $12.00 / analysis

200
$12.00
$2,400Drill ProgramMob - De-Mob - Huancayo





$10,000Drilling
3000
m at $100 / m


3000
$100.00
$300,000Geologist + Assistant85
days at $500 / day


85
$500.00
$42,500Prep
1000
samples at $8 / sample
1000
$8.00
$8,000Analysis
1000
samples at $12 / sample
1000
$12.00
$12,000Over-Limits (Ag, Pb, Zn - per element)1000
analyses at $12.00 / analysis

1000
$12.00
$12,000  25
  Field Supplies206
man-days at $25 / day


206
$25.00
$5,150Sub-
Total


$637,120Peruvian IGV Tax
19.00%
$121,053Total
$758,173






All continuing work on the Santa Rita property will be under the supervision of Rick Walker, Chief Geologist for the Company.  Richard (Rick) Walker is a professional geoscientist registered in the province of British Columbia. Rick received both his B.Sc. (1986) and M.Sc. (1990) from the University of Calgary and has worked in the Mineral Exploration Industry since then.  Over the past twenty years, Rick has worked in many diverse jurisdictions, including Alberta, the Yukon, the Northwest Territories and Nunavut, Alaska, Montana, New Brunswick and Brazil. In the course of his career, he has successfully completed contracts for the Government of the Northwest Territories (MIDA), the Geological Survey of Canada, as well as junior to major mining companies.  Working predominantly as a Consulting Geologist, Rick has worked on a diverse suite of metal and/or commodity types, hosted by a wide variety of mineral deposit models , including (but not limited to) diamonds, base metals (vein / manto, sedimentary exhalative (SEDEX) and volcanogenic massive sulphide (VMS)), precious metals (SEDEX, VMS, skarn-type and veintype), industrial minerals (graphite, barite, dimension stone). Most recently, the majority of his work has been directed toward evaluation of both bulk tonnage porphyry-style mineralization (copper + molybdenum ± silver ± gold ± tungsten) and low tonnage, high grade manto and / or vein -type mineralization.





We do not presently have the funding to undertake this Phase II exploration program and unless we can raise the funding we are at risk of the option being placed in default and the loss of the project.





Rock Formations and Mineralization





Four formations and one group outcrop within the property: (i) lower-Cretaceous Chulec-Pariatambo Formation; (ii) mid-creataceous Jumasha Formation limestones;  (iii)upper Cretaceous Casapalca


Formation redbeds;      (iv)                                           Tertiary-Eocene Sacsaquero Group volcanic extrusive rocks; and     (v)Tertiary-Oligoncene Castrovirreyna Formation pyroclastic rocks.





Following is a brief description of these rock formations:





Chulec-Pariatamb.The Chulec-Pariatambo Formation is composed of gray massive limestone similar to the Jumasha Formation; however it is more thinly bedded compared to the latter.  It outcrops near Chilicocha Lake and is also more extensively exposed at higher altitudes northeast of the lake.





Jumasha.The Jumasha Formation comprises a massive to thick-bedded sequence of limestone inter-bedded with minor dolomites.  The Jumasha Formation is an important formation in central Peru where it hosts skarn deposits.  More than 3⁄4 of the Antamina exoscarn is hosted within this Formation (Love et al., 2004).  The Jumasha Formation strikes 290-300 and dips 25 towards the southwest.





Casapalca.The Casapalca Formation which outcrops south of the road leading to the property comprises continental siliciclastic redbeds mostly composed of medium to coarse-grained red-colored arenites.  Calcareous conglomerate beds are also interbedded within this formation.





Sacsaquero Group.The Sacsaquero Group is a thick volcano sedimentary sequence comprised of andesitic flows inter-bedded with welded tuff and reworked volcanic material.  It is also interbedded with arenite, calcareous siltstone and laucustrine limestone.


26




Castrovirreyna Formation.The Castrovirreyna Formation is a pseudo-stratification of explosive breccias, agglomerates and lapilli tuffs, concordantly overlying the Sacsaquero Formation and occupying the higher elevations (Mann, 1997).





Mineralization.Mineralization on the property is associated with sub-vertical barite, galena and sphalerite veins and breccias.  The mineralizing fluids also have infiltrated a 1-2m thick permeable bed within the limestone sequence forming manto-type mineralization containing high grade zones near the vein/breccias intersections and irregularly distributed high grade bodies within the mineralized bed.  An alteration halo with disseminated mineralization surrounds the high grade mineralization.





The mineralization occurs with the Jumasha Formation on the west limb of an important anticlinal structure striking northwest which exposes the lower-Cretaceous Chulec-Pariatambo limestones west of Chilicocha Lake.  Normal faults parallel to the fold axis have developed on both limbs producing the rugged topography observed in the area.  Transversal  northeast-striking normal faults have also formed in response to the intense folding and faulting.





The Santa Rita mining concessions’s geological setting (limestone, major structures such as an anticline and normal faults) is favorable for several types of intrusion-related hydrothermal deposits such as vein, manto and skarn deposit types.  The property appears to hold both vein and manto deposit types; however skarn mineralization in the Jumasha, Chulec and Pariatambo Formations limestone is also a possibility if a felsic body was intruded nearby (1-2km).  These deposit types belong to a continuum of genetically related deposits which includes many individual occurrences with mixed characteristics.





Hotstone Property





Location and Means of Access





The Hotstone property is comprised of a 5 claim unit totaling approximately 120 hectares within the Greenlaw Township, located 50 km southeast of Chapleau, Ontario, and 130 km west-southwest of Timmins, Ontario, Canada.  The Hotstone property is located in the Swayze Greenstone Belt, which is an extension of the well-known Abitibi Greenstone Belt – home of producing gold camps such as Kirkland Lake, Matachewan, Porcupine (Timmins) and the emerging West Porcupine Gold Mining Camp. The property is accessible by a gravel road running to the property.









27














Option Agreement





We have on option to acquire a 50% interest in the Hotstone property from the current property owner who holds a 100% undivided interest in Hotstone. Land in Ontario, Canada, is comprised of both publicly and privately held title.  Privately held title may include both surface and mineral rights on a fee-simple basis, or may be severed so that title to the surface rights is held by one owner and title to the mineral rights is held by a separate owner.  Publicly held lands typically comprise title to the mineral rights of a given tract of land and are administered by the Government of Ontario, Ministry of Northern Development, Mines and Forestry (www.mndm.gov.on.ca).  These mineral rights are typically acquired by the process of claim staking that confers the right to explore and exploit minerals to the individual or corporate staker.  Where the mineral rights are held by one entity and the surface rights by another, an agreement with the surface rights holder, containing provisions relating to such terms as access and damage compensation, is typically secured prior to commencement of exploration activities.





Our option terms are more particularly described under Business Overview above.





Previous Operations





Our valuation of the Hotstone claims and our decision to enter into the Hotstone Agreement was based on publicly accessible information on the history of the various claims and management’s analysis of that information relative to the future prospects of the property.  The Hotstone claims hold the potential for gold and base metals deposits.  Numerous historical gold showings, new discoveries and geophysical and geochemical anomalies outlined by groundwork programs conducted in the area by Warrior Ventures Incorporated, the Ontario Geological Survey (OGS), and Geological Survey of Canada (GSC), speak to the property’s potential.  To date, the property development has included geophysics, geochemistry, surveying and drilling.  Further detail on previous operations is supplied below:


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-
In 1941 V.B. Meen reported free gold in a trench within the highly altered carbonate zone.


-
In 1942, a Cobalt prospector by the name of Kenty performed extensive trenching and gold panning on quartz veins within the large carbonate zone on mining claims S34780, S34720, S36208 and S36346. Some 50 trenches were completed with gold documented in quartz veins.


-
The Kenty brothers were noted for the discovery of many gold showings in the Swayze greenstone belt, notably the Kenty Mines in near-by Swayze Township that returned highly anomalous gold assays.


-
In 1946 Hotstone Minerals Limited conducted further trenching and drilled 26 EX diamond core holes on the Hotstone Gold Property and reported one drill hole of 4.1 feet at .26 oz/ton and .47 oz/ton in sludge over 30 feet. The exact location of the hole on the property is unknown due to incomplete records/reports submitted by the company.


-
During 1983 Kirkland Resources Incorporated /International Rhodes merged their land holdings in the Hotstone Lake area and explored with Noranda as the operator. The latter company completed extensive geological mapping, humus and soil sampling, as well as detailed trenching, surface channel sampling, and eight diamond drill holes (1022m) to test the carbonate shear zone for its economic gold potential. Drilling yielded anomalous but erratic gold values.


-
In 1994 B. McDonough completed magnetic-VLF surveys, mapping, rock sampling and trenching in an effort to investigate the extent of the Hotstone Lake carbonate zone and to locate the source of the quartz boulders having elevated anomalous gold values.


-
In 1997 Orezone Resources Inc. conducted a property visit and took samples of the high-grade pits and the shear/alteration zone. Anomalous gold values can be found throughout the alteration zone, with the best assays from the high-grade pits of  2,415.7 ppm Au over 40 cm.


-
In 1998 D. Gibson performed grid construction and conducted magnetic and E.M. surveys. From the surveys numerous magnetic anomalies, magnetic lows, were outlined along with a large Fraser Filter V.L.F. anomaly. The Fraser Filter E.M. anomaly can be traced for 1200 meters on the property and has been found to be coincidental with the location of the porphyry unit drilled by Noranda.


-
In 2006, D. Gibson performed Magnetic, Gravity and Soil Geochemical Surveys within the Hotstone Gold Property to further identify the gold bearing structures. From the Exploration Program and number of gold in soil geochemical trends were outlined coincidental with gravity anomalies. Gold within the Hotstone Gold Property is found within a large quartz-carbonate fuchsite alteration zone, which spans the extent of the property from the east to the west. The alteration zone can be traced for over 1600 meters across the Hotstone Gold Property, and was stripped on Hotstone Gold Property for 600 meters by Noranda in the early 1980’s. Anomalous gold values can be found throughout the alteration zone, with the best assays from quartz lenses, veins and the gold-bearing pits. A number of quartz veins and lenses found within the shear zone carry high gold values. Lenses within the shear zone vary in size from 8 feet long and 2 feet wide to 200 feet long and 4 feet wide with high, but erratic gold values. Two gold-bearing pits exist on a large quartz vein within the alteration zone. In 1997 Orezone Resource Inc. obtained samples of 2,415.7 ppm over 40 cm from the high-grade vein.


-
Within the Hotstone Gold Property there exists a large porphyry unit, which is coincidental with the alteration zone and a Fraser Filter E.M. anomaly.  This anomaly runs the near extent of the Hotstone Gold Property, 1200 meters, and is also associated with a drill hole put down by Noranda in the 1980’s, which intersected 100 feet of well-mineralized quartz-feldspar porphyry. Drill logs exist yet Noranda, never published assay values, which was a common practice by the company at that time.





Present Operations





The Hotstone Property has no known reserves and the proposed program will be an exploration program.





We have not undertaken any work on the property having acquired the claims on October 6, 2010.    Our Vice-President of Exploration, David Gibson, will be preparing a proposed initial exploration program on the Hotstone which we expect to have prior to December 31, 2012.  Commencement of the program will depend on our ability to raise the required funds.




Phase I Exploration Program





Previous work completed on the Hotstone property by a variety of operators, including the property vendor (David Gibson), have documented significantly gold values, from a large hydrothermal alteration quartz-carbonate fuschite shear zone trending east-west for over 5000 feet through the property. The proposed $1.5 Million Dollar Phase I exploration program is intended to evaluate the surface and sub-surface data (including geological, geophysical, geochemical data and previous diamond drilling results).  In particular geophysical results document the east-west orientation of the zone of quartz-carbonate alteration which hosts known gold showings.




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The proposed Hotstone Field Budget is estimated to take approximately 3 months to complete, with permitting, authorizations, fieldwork, data compilation, drilling and final results.





Hotstone Field BudgetKM/Meters
RateMan Days / UnitsField Management and supervision

100
$1,050.00
$105,000.00Truck Rental


100
$150.00
$15,000.00Fuel and Maintenance, Trucks and Quads
1
$12,000.00
$12,000.00Quad rental

100
$80.00
$8,000.00Surveying
Chain surveying

75
$450.00
$33,750.00Pre-flagging

75
$250.00
$18,750.00GeophysicsIP survey

75
$2,000.00
$150,000.00Line Cutting


75
$800.00
$60,000.00Drilling


5000
$155.00
$775,000.00Core Splitter

60
$150.00
$9,000.00GeologicalField Mapping

35
$1,000.00
$35,000.00Data interpretation, modeling, structural analysis and core logging,Field assistant
60
$1,000.00
$60,000.00Compilation and Report Writing

21
$1,000.00
$21,000.00Assaying


1
$50,000.00
$50,000.00Shipping


1
$10,000.00
$10,000.00$1,362,500.00Miscellaneous and administration 10%



$136,250.00Hotstone Budget

$1,498,750.00





During the $1.5 Million Dollar Phase I exploration program, ground work will consist of establishing a north-south survey control grid over the entire east-west extent of the Quartz-Carbonate Alteration zone. A ground Geophysical IP Survey will be performed over the survey grid, with detailed Geological Field mapping. A complete data compilation of historical data and the results of the ground IP Survey, and the Field mapping, will be performed to define a drilling program. The overall purpose of the exploration program will be to evaluate previous geological, geophysical, geochemical and previous drilling results.  Following the results of the Phase I program, management will make a decision on the next Phase of exploration on the Hotstone Property. The Phase I program will follow Canadian National Instrument NI 43-101 protocols for the aspects of conducting an exploration program.


30




The $1.5 Million Dollar Phase I program will be conducted under the direct supervision of the Vice-President of Exploration for the Company, David Gibson.  David Gibson is a graduate of Georgian College in Business Administration specializing in Marketing. In 1998 David was a founding member of Diatreme Explorations , which eventually was rolled into Mantis Minerals Corporation (MINE. CNQ) in 2007. Previously in 1989 Mr. Gibson formed Gibson and Associates Services Company to provide services to the Mining, Oil and Gas as well as Environmental sectors. In 2008 Mr. Gibson formed Norquest Drilling to provide contract diamond drilling services to the mining industry.  David Gibson began working in the mining industry in 1982, in the northern mining districts of Ontario and Quebec performing geotechnical, geophysical and geochemical surveys for junior and major mining companies. Gibson and Associates, a highly successful business to date, was founded to provide exploration services, which today including geomatics, geophysics and geochemistry to the Environmental, Mining and Oil and Gas sectors. Mr. Gibson has worked in collaboration with the Ontario Geological Survey and the Geological Survey of Canada investigating the circular vegetative phenomenon found in the James Bay Lowlands of Ontario and was published for his efforts and involvement.  Throughout his career he has performed contract field services, along with contract diamond drilling through his drilling company namely Norquest Drilling.  Also assisting numerous junior mining companies and major mining companies in Canada and the United States. Mr. Gibson also provided advanced exploration technical consulting services of geomatics, geophysics, geochemistry and geotechnical design, implementation, and management for the exploration for Gold and Silver, Diamonds, Base metals and Platinum Group Elements.




Mr. Gibson brings over 28 years of mineral exploration experience and mining acumen with strong business and management skills to Coastal Pacific Mining.




The Company does not currently have sufficient funding to fund the Phase I exploration program which must be funded by December 31, 2012.  Unless the Company can raise the funds or get an extension on the option, the option will be in default and the Company is at risk of losing the property.





Rock Formations and Mineralization





Formations and Mineralization





The Hotstone Gold Property is found within the Swayze Greenstone Belt, an extension of the Abitibi Greenstone Belt and the western extent of the Cadillac Larder Lake Break; both of which have accounted for significant amounts of gold production in the past and present.  The regional geology has been described by Jackson and Fyon (1991), Heather (1993), Heather and van Breemen (1994), Heather, Shore and van Breemen (1995 and 1996).





The Swayze Greenstone Belt is Neoarchean of 2.8 - 2.6 Ga supracrustal sequence, bounded by the Kenogamissi Batholith to the east, by the Ramsay - Algoma gneissic complex to the south and the Kapuskasing granulite terrain to the west. Thin partitions of supracrustal rocks connect the Swayze Greenstone Belt to the Abitibi Greenstone Belt in the east.   The southern part of the Swayze greenstone belt, south of Coppell, Newton and Dale townships, can be subdivided into five main assemblages (after Jackson and Fyon, 1991).  These assemblages are: Garnet - Tooms, Hong Kong, Marion, Halcrow-Swayze and Ridout.  Of the most regional significance to the Greenlaw Gold Property are the Garnet-Tooms, Halcrow-Swayze and Ridout assemblages.  The Garnet-Tooms assemblage underlies much of Tooms and southern Greenlaw townships. It lies between the Ridout assemblage to the north and a unit of oxide facies iron formation, which forms the top of the Hong Kong assemblage to the south. The main rock units within this assemblage are tholeiitic basalt, intermediate to felsic calc-alkalic flows and komatiitic flows with minor oxide facies iron formation. The basaltic rocks are often cut by coarser grained dioritic to gabbroic phases which may be intrusions or coarse flows. Generally, the massive to pillowed tholeiitic basalts form the base of the assemblage and the upper part consists of calc-alkalic feldspar porphyritic basalts and andesites.  Rocks comprising the Ridout assemblage consist of turbidites, arkose and conglomerates with minor interbeded units of metavolcanics and iron formation. The conglomerates contain pebbles of chert, quartz veins, basalts, andesite, porphyritics, rhyolites and jasper fragments. Parts of Tooms, Greenlaw and Garnet townships are underlain by the Ridout assemblages in the western portion of the south Swayze Greenstone Belt. It is believed that the Ridout assemblage is temporally and tectonically related to the Temiskaming assemblage of the Kirkland Lake area.  The Halcrow-Swayze assemblage is the most regionally extensive group of lithologies in the southern Swayze Greenstone Belt, underlying the southern parts of Halcrow, Denyes, Swayze, Dore and Heenan townships and much of Garnet and Benton townships. The primary lithologies comprising this assemblage are komatiitic flows, tholeiitic basalt and intermediate to felsic calc-alkalic volcanics interlayered with oxide facies iron formation. The komatiitic to tholeiitic phases tend to occur along the margins of the assemblage with intermediate to felsic rocks occupying the core (ie. in





31





Denyes and Swayze Townships).  Carbonatite-associated rare earths and industrial minerals are present west of the Swayze Greenstone Belt associated with Kapuskasing Structural Zone.  Gold mineralization in Swayze Greenstone Belt is typically found in quartzlode variety generally accompanied by shearing, fracturing and associated sulphide mineralization and carbonatization. Sulphides often and typically include pyrite along with pyrrhotite, chalcopyrite, galena and sphalerite.  Gold is present in a wide variety of lithological and structural sequences.





Corporate Operations





All corporate operations are undertaken from the home office of our President, in Alberta, Canada.  The fees for rent, telephone and management are all inclusive in the management fee paid to Ox Financial Corp., the company which provides services under a management agreement and is owed by our President.





ITEM 4A.            UNRESOLVED STAFF COMMENTS





Not Applicable.





ITEM 5.               OPERATING AND FINANCIAL REVIEW AND PROSPECTS





Certain statements contained in this report, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, our directors or officers, primarily with respect to the future operating performance of Coastal Pacific and the sources of revenue we may expect to obtain and other statements contained herein regarding matters that are not historical facts, but are “forward-looking” statements.  Future filings with the SEC, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.





All forward-looking statements speak only as of the date on which they are made.  We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.





Unless otherwise stated, all amounts shown in this “Operating and Financial Review” section of this report are in Canadian Dollars.





Overview





As a natural resource exploration company, our focus is to locate prospective properties that may host mineral reserves that could eventually be put into mining production.  With this in mind, based on the lack of current properties at the end of the reporting period, we have, subsequent to the end of the reporting period, entered into option agreements in respect to the Hotstone and Santa Rita properties.  We do not presently have any employees,  we currently use outside consulting for part-time clerical and administrative assistance and preparation of financial information on an as-needed basis.  We have a consulting contract with Ox Financial, a private company of which our Chief Executive Officer and Chief Financial Officer is the sole shareholder.  The contract was for a two year period commencing November 2008 and verbally extended on a month to month basis from November 30, 2010.  Under the contract, Mr. Bucci provides management services to the Company.   Additional outside advisors, attorneys or consultants are used if they can be obtained for a minimal cost or on a deferred payment basis.  The majority of the fees from consultants and Ox Financial for fiscal 2010 were settled by way of a debt settlement undertaken subsequent to the period covered by this report.





As of the date of this filing, and for the next twelve months we will require approximately $4,320,000 for operations and to fund the obligations under our current option agreement on Hotstone and Santa Rita.  From the $4,320,000 we expect to spend approximately $500,000 for corporate operations, including management fees, legal and audit fees, filing fees, sourcing of new property acquisitions and general administration.  The remaining $3,820,000 will be spent for exploration on Hotstone and Santa Rita with $1,500,000 expended on Hotstone and $2,320,000 expended on the Santa Rita.





We will be required to raise the $4,320,000 to meet all of our planned operations over the next twelve months.  We may not be able to raise additional funds as required for our planned operations and therefore we may be unable to meet our ongoing obligations.


32


Should Royal and/or Litoral default on the commitments then Coastal would be required to find the funding or would lose its rights and interest which is not yet earned to the Santa Rita.   Should we be unable to raise the required $1,500,000 for the option on the Hotstone we may lose our rights and interest to the Hotstone.





If we cannot raise such funds then we will be unable to meet our commitments for the next twelve months.  We risk losing the properties if we cannot raise the additional funding required.





Results of Operations for Fiscal Years Ended April 30, 2012, 2011, and 2010.





From formation on March 27, 2007, we have concentrated on formative activities, entering into option / joint venture agreements, and actively evaluating other prospects for expanding our portfolio of agreements.





Net losses from operations for the period ending April 30, 2012 were  $749,968 (2011 - $1,488,725 and 2010 - $206,200) and relate mainly to an impairment on mineral properties of Nil as compared to $933,330 impairments for  fiscal 2011 and no impairments for fiscal 2010, exploration expenditures of $167,316 ($204,203 – 2011 and $47,000 - 2010), professional fees of $62,159 ($115,660 – 2011 and $12,724 – 2010) management fees for fiscal 2012 of $120,000  ($120,000 – 2011 and $120,000 - 2010), stock-based compensation of $320,000 ($Nil – 2011 and 2010)  and administrative expenses of $80,493 ($115,532 – 2011 and $26,476 – 2010).  The decrease in professional and administrative expenses resulted mainly from the company transfer its mineral interest to its associate, as compared to minimal operations in prior years.  The impairment of mineral properties and expenditures decreasing was due to decreased activity on our properties.





There have been no material foreign currency translation adjustments since our inception.


We did not earn any revenues during fiscal years 2012, 2011, or 2010.  We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties.  We can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.





Liquidity and Capital Resources





At April 30, 2012, our total current assets of $11,863 (2011 - $373,423; 2010 - $2,108) were less than our current liabilities of $422,289 (2011 - $1,290,858; 2010 - $269,729).  The decrease in our liabilities in fiscal 2012 over 2011 related mainly to the notes holders forgiveness of the convertible notes and warrants with including accrued interest negotiated in September 2011 which decreased our liabilities by $1,057,278 with an offset to accounts payable which increased to $241,782 (2012) from $25,278 (2011) due to the Company’s associate providing operating funds to the Company.





During the fiscal year ended April 30, 2012, we negotiated the settlement of $1,000,000 in promissory notes plus accrued interest and the cancellation of Class A and B warrants by way of an agreement to assign a portion of our interest in the Santa Rita mining concessions.





We will be required to raise a minimum of $4,320,000 over the next twelve months to meet all of our cash requirements. We do not currently have sufficient capital to meet our commitments.   We currently have approximately $204,060 restricted cash in our bank account however we currently do not have access to that capital.  We have been dependent on loans from Litoral to fund our operations.  There is no guarantee that Litoral will continue to fund our operations or will provide the required funding for the Santa Rita.





The Company cannot accurately state at this time whether it will be required to purchase any plant or equipment or have any significant changes in the number of employees, as at this time these requirements would ensue from positive outcomes of the exploration programs on our two mineral properties.  It however does not anticipate making any such purchases or hiring any employees until such time as it has undertaken the required exploration programs and results indicate the need to do so.





We expect to continue to incur losses for the foreseeable future and there can be no assurance that we will achieve or maintain revenues or profitability, or establish or sustain future growth.


33





Our financial statements are reported in U.S. GAAP, however, despite the requirements, all of our business operations may be conducted in Canadian dollars and therefore our financial statements and the information in this report is presented in Canadian dollars unless otherwise stated.  We have provided a summary regarding historical exchange rates between these currencies in the introductory section of this report.





Research and Development, Patents and Licenses, etc.





We do not undertake any research and development activities.





Trend Information





We are an exploration stage company with an objective of acquiring, exploring, and if warranted and feasible in the future, developing natural resource properties.  Our primary focus in the natural resource sector is gold and silver.





To take a resource property that hosts a viable ore deposit into mining production, takes a considerable amount of time and money, and the subsequent return on investment for our stockholders would likely be long-term.  We would consider, if beneficial to do so and viable under then existing agreements, selling any ore bodies that may be proven to be of merit to a major mining company.  Most major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies.  Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine.  By selling a deposit found by us and/or our partners to these major mining companies, it would provide an immediate return to our stockholders without the long time frame and cost of putting a mine into operation ourselves, and would also provide capital for us to continue operations.





The search for valuable natural resources as a business is extremely risky.  We can provide investors with no assurance that the Hotstone Prospect in Ontario, Canada or the Santa Rita Prospect in Peru, contain commercially exploitable reserves.  Exploration for natural reserves is a speculative venture involving substantial risk.  Few properties that are explored develop into producing commercially feasible reserves.  Problems such as unusual or unexpected formations, and other conditions, are involved in mineral exploration and often result in unsuccessful exploration efforts.  In such a case, we would be unable to complete our business plan and any money spent on exploration would be lost.





Our annual operating results are likely to fluctuate significantly in the future as a result of numerous factors, including and not limited to:





·
The availability of adequate financing;


·
Our ability to develop an organization infrastructure and effective management systems;


·
The success of our exploration and development programs;


·
The adoption of new disclosure and/or corporate governance requirements associated with the maintenance of our status as a publicly reporting issuer;


·
Potential lawsuits involving our exploration activities or other matters; and


·
Fluctuations in commodity prices.





We do not believe that inflation has had a material effect on our business at this time.





Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements as of the date of this Report.





Contractual Obligations





This table does not include our obligations under our mining options, as the agreements are option agreements which have either been assigned to others to meet the obligations and the Company while bound by these agreements in order to earn is not contractual obligated to expend the funds as they have the right to terminate the option at their election.  The payment requirements under the option agreement are disclosed in this annual report.   We do not currently have any contractual obligations.   We have advances from Litoral however, the funds are booked as accounts payable as there are no loan agreements and there is no fixed term of repayment.


34







DISCLOSURE OF CONTRACTUAL OBLIGATIONS, as at April 30, 2012Payments Due by PeriodContractual Obligations
Total

$
Less than

1 year

$
1-3 years

$
3-5 years

$
More than

5 years

$0
0
0
0
00
0
0
0
0





ITEM 6.               DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES





Directors and Senior Management





All of our directors hold office until the next annual general meeting of the shareholders or until their successors are elected and qualified. Our officers are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal. Our directors and executive officers, and positions held are as follows:





Name
Position
Date ElectedJoseph Bucci

927 Drury Avenue NE

Calgary, AB  T2E 0M3
Director
June 15, 2010Joseph Bucci

927 Drury Avenue NE

Calgary, AB  T2E 0M3
Chief Executive Officer, President, Secretary
August 26, 2010David Gibson

258 Mount Douglas Circle SE

Calgary, AB  T2Z 3N9
Director
August 27, 2010David Gibson

258 Mount Douglas Circle SE

Calgary, AB  T2Z 3N9
Vice-President Exploration
August 27, 2010Richard Thomas Walker

2601 42nd Avenue South

Cranbrook, B.C. V1C 7H3
Director, Chief Geologist
January 20, 2011





Joseph Bucci





Mr. Bucci is a self-employed corporate business consultant with Ox Financial Corp., a company involved in mining management operations amongst other activities.  Mr. Bucci has been with Ox Financial Corp. for the past five years.  He has sat on the board of directors of several public reporting issuers in the past, with this being Mr. Bucci’s only current board position.  Mr. Bucci has provided consulting services to the Company through Ox Financial Corp.





David L. Gibson





Mr. David Gibson studied engineering at the University of Windsor with a minor in geology and geophysics, and was a graduate of Georgian College in Business Administration Marketing.  He brings over 25 years of mineral exploration experience and mining acumen with strong business and management skills.





Mr. Gibson began his career in the mining industry in 1982 working in the northern mining districts of Ontario and Quebec, performing geophysical and geochemical surveys for junior and major mining companies.  In 1989, he founded Gibson and Associates Services Company, a successful business to date, originally to provide exploration services, and today includes geomatics, geophysics and geochemistry services to the mining, oil and gas, and environmental industries. In 1998, Mr. Gibson was a founding member of Diatreme Explorations, which was rolled into Mantis Minerals Corporation (MINE.CNQ) in 2007.





35





His additional achievements include collaboration with the Ontario Geological Survey and the Geological Survey of Canada investigating the circular vegetative phenomenon found in the James Bay Lowlands of Ontario, and he was published for his contribution.  Throughout his career, Mr. Gibson performed contract field services for junior companies such as Actuate Resources, Temex Resources, and Avalon Ventures.  The major mining companies he contracted to included Noranda, Inco, Cameco, and Goldcorp.  Mr. Gibson provided advanced exploration and technical consulting services of geomatics, geophysics, geochemistry and geotechnical design, implementation, and management for mineral projects including gold, diamonds, base metals, and platinum group elements.





Richard Walker





Mr. Walker is an experienced consulting geologist and has operated his own private consulting firm since 1996 with extensive field experience and proven organizational / management ability, having completed contracts with the Department of Indian and Northern Affairs (NWT) and the Geological Survey of Canada, as well as considerable experience with junior to major resources companies active in Canada, the US and South America.  Mr. Walker has managed exploration programs for a diverse suite of possible commodities in a wide variety of settings. Experience in exploration programs for precious metals (predominantly gold), base metals (copper, lead, molybdenum and zinc), as well as industrial minerals (graphite, mica, dimension stone).  Additional major qualifications include:





•
Qualified Person under National Instrument 43-101




•
M.Sc. in geology with an emphasis in Structural Geology (1989)




•
Professional geologist registered with APEGBC (P.Geo.)




•
Over twenty years geological mapping experience in BC, AB, NWT, YT, NB, Montana and Brazil




•
Industry member of committee to develop first edition of B.C.’s Mineral Exploration Code




•
Past-President of the East Kootenay Chamber of Mines (EKCM) 1994 - 2006




•
Director of the BC and Yukon Chamber of Mines (now AMEBC) February, 1999 - 2004




•
Fellow of the Society of Economic Geologists (SEG)




•
President of Dynamic Exploration Ltd since 1996




We currently have three directors and two officers, and have no employees upon whose work we are dependent.  There are no family relationships among our officers, directors, or persons nominated for such positions.  We have no arrangements or understandings with any major shareholder, customer, supplier, or others, regarding our officers and directors being selected.





Other than as detailed herein we are not aware of any material legal proceedings that have occurred within the past five years concerning any director, officer, director nominee, or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.





Compensation





Save for the options disclosed below, none of our officers or directors have received or earned any compensation or bonus for services rendered as directors and officers for the fiscal year 2012. Mr. Bucci is not, as of the date of this report, receiving compensation for his officer or director roles, on top of the compensation received through the consulting agreement with Ox Financial, as is disclosed above.  Neither Mr. Walker nor Mr. Gibson, other than as disclosed below in the stock option table,  receiving compensation for their  roles as officers and/or directors.  Mr. Gibson has received a total of $100,000 from the Company under the Hotstone Option Agreement.





During fiscal 2012, we maintained directors and officers insurance for our executive officers and directors. We do not currently have any long-term compensation plans or profit sharing plans.  We did not set aside or accrue any amounts to provide pension, retirement, or similar benefits.


36





On June 10, 2009, the Board of Directors approved the Company’s 2009 stock option plan, for 5,000,000 options, no options have been granted under this plan. On October 22, 2011, the Board of Directors approved the Company’s 2011 stock option plan for 22,000,000 incentive stock options, to be granted to our directors, officers, employees and/or consultants, with the option prices, vesting and other terms to be determined upon grant by the administrator(s) thereof.     A total of 16,000,000 stock options have been granted under the plan to vest immediately, of which 12,000,000 were granted to each of the officers and directors as disclosed below and 4,000,000 were granted to a consultant of the Company, leaving a total of 6,000,000 stock options yet to be granted under the 2011 plan.





Option Grants to Officers and DirectorsName
Number of Securities Underlying Unexercised Options

(#) Exercisable
Number of Securities Underlying Unexercised Options

(#) Unexercisable
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
Option

Exercise Price

($)
Option Expiration DateJoseph Bucci
4,000,000
-0-
-0-
0.05
October 22, 2021Richard Walker
4,000,000
-0-
-0-
0.05
October 22, 2021David Gibson
4,000,000
-0-
-0-
0.05
October 22, 2021





No arrangements are presently in place regarding compensation to directors for their services as directors or for committee participation or special assignments.





Board Practices





The directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected.  Executive officers serve at the discretion of the Board of Directors.





We have a management services contract with Ox Financial Corp., a company owned by one of our directors and officers, Joseph Bucci.  Under the terms of the contract, Ox Financial Corp. accrues monthly fees of $10,000 per month and is paid when we have available funds.





The Board of Directors has not yet formed any committees, including an audit committee.





Employees





As of the date of this annual report, we have no direct employees, nor have we had any since inception.  All of our operations are carried out by our officers and directors on a part-time basis, together with Ox Financial who works full time on the business of the Company, and is owned by an officer and director of the Company.   There has been no salary or cash compensation paid, earned, or accrued to any of the officers and directors for their services as officers and directors and there are no plans to pay, earn, or accrue any compensation until such time as we have sufficient capital and/or revenues to do so, of which there is no assurance.  We have retained outside accounting and consulting for all accounting and required regulatory filings.  These consultants are compensated on an hourly basis for their work.





37


Share Ownership





The following table sets forth information, as of August 20, 2012, with respect to the beneficial ownership of the Company’s Common Stock by each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable 5% stockholders have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.





Beneficial Owner
Common Shares
Percent of total issued (1)Joseph Bucci
66,206,960 common shares held directly, which includes 4,000,000 incentive stock options
29.17%David Gibson
5,000,000 common shares held directly, which includes 4,000,000 incentive stock options
2.20%Richard Walker
4,000,000 common shares held directly, all of which are incentive stock options
1.76%All executive officers and directors as a group (3 persons)
75,206,960
33.13%





(1)
Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. All shares of common stock subject to options or warrants exercisable within 60 days of August 20, 2012 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding beneficially owned for the purpose of computing the percentage ownership of any other person. Subject to the paragraph above, the percentage ownership of outstanding shares is based on 226,976,985shares of common stock outstanding as of August 20, 2012.





On June 10, 2009, the Board of Directors approved the Company’s 2009 stock option plan, for 5,000,000 options, no options have been granted under this plan.   On October 22, 2011, the Board of Directors approved the Company’s 2011 stock option plan for 22,000,000 incentive stock options, to be granted to our directors, officers, employees and/or consultants, with the option prices, vesting and other terms to be determined upon grant by the administrator(s) thereof.     A total of 16,000,000 stock options have been granted under the plan to vest immediately, of which 12,000,000 were granted to each of the officers and directors as disclosed above and 4,000,000 were granted to a consultant of the Company, leaving a total of 6,000,000 stock options yet to be granted under the 2011 plan.




38


ITEM 7.MAJOR STOCKHOLDERS AND RELATED PARTY TRANSACTIONS





Major Stockholders





The following table sets forth certain information, as of August 20, 2012, concerning the ownership of our common shares by each person who, to the best of our knowledge, beneficially owned on that date more than 5% of our outstanding common shares.





Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  In accordance with SEC rules, shares of common shares issuable upon the exercise of options or warrants which are currently exercisable or which become exercisable within 60 days following the date of the information in this table are deemed to be beneficially owned by, and outstanding with respect to, the holder of such option or warrant.  Except as indicated by footnote, and subject to community property laws where applicable, to our knowledge, each person listed is believed to have sole voting and investment power with respect to all shares of common shares owned by such person.





Beneficial Owner
Common Shares
Percent of total issued (1)Joseph Bucci
66,206,960 common shares held directly
29.17%Blue Sky Resort Management Group Inc.
30,000,000 shares held directly
13.2%(1)Based on 226,976,985 common shares issued and outstanding on August 20, 2012.





On June 16, 2010, we entered into a debt settlement agreement with Ox Financial Corp.  Pursuant to the settlement of debt, the Company issued a total of 92,206,960 shares of the Company, or 41.02% of the then total issued and outstanding shares at the time of the issuance to Ox Financial Corp. to settle US$184,413.92 of debt.  This settlement to Ox Financial Corp. resulted in a change in control of the Company.  On November 3, 2011, Ox Financial disposed of its shares of which it transferred a total of 62,206,960 to Mr. Bucci, a director and officer of the Company, who was the sole shareholder of Ox Financial Corp.    This transfer did not effect a change in control of the Company.





Prior to this issuance to Ox Financial, 961266 Alberta Inc. was the controlling shareholder, holding a total 51.4% of the ownership.   Subsequent to the issuance, and inclusive of other debt settlements which occurred at the same time which in aggregate amounted to 133,901,985 shares, 961266 Alberta Inc. was diluted to holding 20.6% of the issued and outstanding common shares issued and outstanding.   As of June 25, 2010, 961266 Alberta Inc. held no shares of the Company.





Our major stockholders do not have voting rights that differ from the other holders of shares of our common shares.





As at August 20, 2012, the Company is able to determine that there are five registered holders of our common stock in the host country, representing 33.36% of our issued and outstanding common stock.  One of the registered holders of our common stock is Cede & Co., a company that operates as a depository company and holds the shares as nominee on behalf of brokerage firms, mutual funds, and other active traders. We do not have any information on how many shareholders may be represented by the 113,765,825 shares held by Cede & Co.





There are no arrangements in place that are known to the Company which may at a subsequent date result in a change in control of the Company.




39


Related Party Transactions





No director or senior officer, and no associate or affiliate of the foregoing persons, and no insider has or has had any material interest, direct or indirect, in any transactions, or in any other proposed transaction during the years ended April 30, 2012, and up to and including the filing of this annual report, except as noted below.





On October 6, 2010, we entered into an Option Agreement (the “Agreement”), amended on March 29, 2011, to earn a 50% undivided interest in a gold exploration property, known as the Hotstone property. The Hotstone property is comprised of a 5 claim unit totaling approximately 120 hectares within the Greenlaw Township, located 50 km southeast of Chapleau, Ontario, and 130 km west-southwest of Timmins, Ontario, Canada. Mr. David L. Gibson, a director and officer of the Company was the optionor of the Hotstone property. Under the terms of the Agreement, Mr. Gibson received $100,000 in cash and 1,000,000 restricted shares of common stock. (refer Note – 4)





On November 1, 2008, we entered into a two year management service agreement payable at $10,000 monthly with Ox Financial Corp., a company controlled by a director and officer of the Company. During the fiscal year ended April 30, 2012, we incurred $120,000 (2011 - $120,000), (2010 - $120,000) in management fees under this agreement and $83,606 for expenses.  The Company made cash payments of $113,248.  As at April 30, 2012 an amount of $100,719 (2011- $10,361) was owing and is reflected on the balance sheets as accounts payable – related parties.





Mr. David L. Gibson, a director and officer of the Company invoiced and was paid a total of 33,890 (2011 - $16,065) for consulting services provided during the fiscal year ended April 30, 2012 in respect of evaluation of the Santa Rita mining concession.   The Company also reimbursed Mr. Gibson a total of $2,655 (2011 - $5,414) in respect of travel and incidental expenses incurred as a result of the evaluation.





Dynamic Exploration Ltd. (“Dynamic”), a company controlled by Richard Thomas Walker, a director and the Company’s chief Geologist, invoiced the Company $22,932 (2011 - $33,735) for consulting services provided during the fiscal year ended April 30, 2011.  Dynamic also invoiced the Company a total of $5,279(2011 - $4,736) for reimbursement of travel and incidental expenses incurred as a result of the services provided.   During the fiscal year ended April 30, 2012, the Company made cash payment in full including amount of $14,917 due and payable to Dynamic as of April 30, 2011.





During the fiscal year ended April 30, 2012, the Company’s associates made payments in the accumulated amount of $141,063 (USD$143,789) on our behalf for our operating expenses. We did not repay any of the amounts paid; leaving the amount of $141,063 reflected on the balance sheets as accounts payable – related parties.





Interests of Experts and Counsel





Not required.





ITEM 8.               FINANCIAL INFORMATION





Financial Statements and Other Financial Information





The required audited financial statements are provided at the end of this report starting on Page F-1.





Significant Changes





Other than as disclosed herein, no significant change has occurred in our financial statements since the fiscal year ended April 30, 2012.





ITEM 9.               THE OFFER AND LISTING





Stock Price History





Our common stock is quoted for trading on the OTC Markets - QB under the symbol "CPMCF".  Our common stock was approved for quotation on October 7, 2008 with no trades prior to that date.  We have no other classes of stock quoted on any markets.   All prices are reflective of stock splits that have occurred through to the date of this report.




40





Following are the annual high and low market prices for our common stock presented for the noted fiscal years.





Period
High

$
Low

$Fiscal Year  2008 (May 07 – Apr 08)
n/a
n/aFiscal Year 2009 (May 08 – Apr 09)
0.17
0.002Fiscal Year 2010 (May 09 – Apr 10)
0.22
0.0008Fiscal Year 2011 (May 10 – Apr 11)
0.51
0.0031Fiscal Year 2012 (May 11- Apr 12)
0.049
0.0121





Following are the high and low market prices for our common stock presented for each full financial quarter for the two most recent fiscal years and subsequent periods.





Period
High

$
Low

$May 2010 to July 2010
0.20
0.0031August 2010 to October 2010
0.329
0.03November 2010 to January 2011
0.51
0.055February 2011 to April 2011
0.08
0.03May 2011 to July 2011
0,049
0.024August 2011 to October 2011
0.032
0.022November 2011 to April 2012
0.029
0.0121May 2012 to July 2012
0.016
0.007





Following are the high and low market prices for each of the most recent full six months.





Month
High

$
Low

$February 2012
0.0269
0.02March 2012
0.0225
0.0158April 2012
0.02
0.014May 2012
0.016
0.01June 2012
0.016
0.0082July 2012
0.014
0.007





Markets





Our common stock is quoted for trading on the OTC Markets - QB under the symbol "CPMCF".  Our common stock was approved for quotation on October 7, 2008.  We have no other classes of stock quoted on any markets.





ITEM 10.             ADDITIONAL INFORMATION





Share Capital





Not required.





Memorandum and Articles of Association





Incorporated by reference to disclosure provided in our Form F-1 filed with the Securities and Exchange Commission on August 27, 2007.





Material Contracts





There are no other material contracts that have not been otherwise disclosed in this annual report.




41





Exchange Controls





We are incorporated pursuant to the laws of the Province of Alberta, Canada.  The Company is not aware of any Canadian federal or provincial laws, decrees or regulations that restrict the export or import of capital, including foreign exchange controls or that affect the remittance of interest, dividends or other payments to a non-resident holder of our common stock, other than the withholding tax requirements detailed herein. Dividends paid to U.S. residents, are subject to a 15% withholding tax or a 5% withholding tax for dividends if the stockholder is a corporation owning at least 10% of the outstanding voting shares of our company pursuant to Article X of the reciprocal tax treaty between Canada and the U.S. (see Item 10E "Taxation" below).





Except as provided in the Investment Canada Act, which has provisions that restrict the holding of voting shares by non-Canadians, there are no limitations specific to the rights of non-Canadians to hold or vote our common shares under the laws of Canada or Alberta, or in our charter documents.  The following summarizes the principal features of the Investment Canada Act for non-Canadian residents proposing to acquire our common shares.





This summary is of a general nature only and is not intended to be, and should not be construed to be, legal advice to any holder or prospective holder of our common shares, and no opinion or representation to any holder or prospective holder of our common shares is hereby made.  Accordingly, holders and prospective holders of our common shares should consult with their own legal advisors with respect to the consequences of purchasing and owning our common shares.





The Investment Canada Act governs the acquisition of Canadian businesses by non-Canadians.  Under the Investment Canada Act, non-Canadian persons or entities acquiring "control" (as defined in the Investment Canada Act) of a corporation carrying on business in Canada are required to either notify, or file an application for review with, Industry Canada.  Industry Canada may review any transaction which results in the direct or indirect acquisition of control of a Canadian business, where the gross value of corporate assets exceeds certain threshold levels (which are higher for investors from members of the World Trade Organization, including United States residents, or World Trade Organization member-controlled companies) or where the activity of the business is related to Canada’s cultural heritage or national identity.  No change of voting control will be deemed to have occurred, for purposes of the Investment Canada Act, if less than one-third of the voting control of a Canadian corporation is acquired by an investor.





If an investment is reviewable under the Investment Canada Act, an application for review in the form prescribed is normally required to be filed with Industry Canada prior to the investment taking place, and the investment may not be implemented until the review has been completed and the Minister responsible for the Investment Canada Act is satisfied that the investment is likely to be of net benefit to Canada.  If the Minister is not satisfied that the investment is likely to be of net benefit to Canada, the non-Canadian applicant must not implement the investment, or if the investment has been implemented, may be required to divest itself of control of the Canadian business that is the subject of the investment.





Certain transactions relating to our common stock would be exempt from the Investment Canada Act, including:





(a)
the acquisition of our common stock by a person in the ordinary course of that person’s business as a trader or dealer in securities;


(b)
the acquisition of control of our company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Canada Act; and


(c)
the acquisition of control of our company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of our company, through ownership of our common stock, remains unchanged.





Taxation





ALL PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES OF THE COMPANY.





42





Material Canadian Federal Income Tax Consequences





We consider that the following general summary fairly describes the principal Canadian federal income tax consequences applicable to a holder of our common stock who is a resident of the United States, who is not, will not be and will not be deemed to be a resident of Canada for purposes of the Income Tax Act(Canada) and any applicable tax treaty and who does not use or hold, and is not deemed to use or hold, his common stock in the capital of our company in connection with carrying on a business in Canada (a "non-resident holder").





This summary is based upon the current provisions of the Income Tax Act, the regulations thereunder (the "Regulations"), the current publicly announced administrative and assessing policies of the Canada Revenue Agency and the Canada- United States Tax Convention (1980), as amended (the "Treaty").  This summary also takes into account the amendments to the Income Tax Act and the Regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the "Tax Proposals") and assumes that all such Tax Proposals will be enacted in their present form.  However, no assurances can be given that the Tax Proposals will be enacted in the form proposed, or at all.  This summary is not exhaustive of all possible Canadian federal income tax consequences applicable to a holder of our common stock and, except for the foregoing, this summary does not take into account or anticipate any changes in law, whether by legislative, administrative or judicial decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from the Canadian federal income tax consequences described herein.





This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax advice to any particular holder or prospective holder of our common stock, and no opinion or representation with respect to the tax consequences to any holder or prospective holder of our common stock is made.  Accordingly, holders and prospective holders of our common stock should consult their own tax advisors with respect to the income tax consequences of purchasing, owning and disposing of our common stock in their particular circumstances.





Dividends





Dividends paid on our common stock to a non-resident holder will be subject under the Income Tax Act to withholding tax which tax is deducted at source by our company.  The withholding tax rate for dividends prescribed by the Income Tax Act is 25% but this rate may be reduced under the provisions of an applicable tax treaty. Under the Treaty, the withholding tax rate is reduced to 15% on dividends paid by our company to residents of the United States and is further reduced to 5% where the beneficial owner of the dividends is a corporation resident in the United States that owns at least 10% of the voting stock of our company.





The Treaty provides that the Income Tax Act standard 25% withholding tax rate is reduced to 15% on dividends paid on stock of a corporation resident in Canada (such as our company) to residents of the United States, and also provides for a further reduction of this rate to 5% where the beneficial owner of the dividends is a corporation resident in the United States that owns at least 10% of the voting stock of the corporation paying the dividend.





Capital Gains





A non-resident holder is not subject to tax under the Income Tax Act in respect of a capital gain realized upon the disposition of a common share of our company unless such share is "taxable Canadian property" (as defined in the Income Tax Act) of the non-resident holder.  Our common stock generally will not be taxable Canadian property of a non-resident holder unless the non-resident holder alone or together with non-arm’s length persons owned, or had an interest in an option in respect of, not less than 25% of the issued stock of any class of our capital stock at any time during the 60 month period immediately preceding the disposition of the stock.  In the case of a non-resident holder resident in the United States for whom stock of our company is taxable Canadian property, no Canadian taxes will generally be payable on a capital gain realized on such stock by reason of the Treaty unless the value of such stock is derived principally from real property situated in Canada.





Material United States Federal Income Tax Consequences





The following is a general discussion of certain possible United States Federal foreign income tax matters under current law, generally applicable to a U.S. Holder (as defined below) of our common stock who holds such stock as capital assets.  This discussion does not address all aspects of United States Federal income tax matters and does not address consequences peculiar to persons subject to special provisions of Federal income tax law, such as those described below as excluded from the definition of a U.S. Holder.  In addition, this discussion does not cover any state, local or foreign tax consequences.  See "Certain Canadian Federal Income Tax Consequences" above.





The following discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time.  In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.  No assurance can be given that the IRS will agree with such statements and conclusions, or will not take, or a court will not adopt, a position contrary to any position taken herein.





43





The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal, business or tax advice to any holder or prospective holder of our common stock, and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made.  Accordingly, holders and prospective holders of common shares are urged to consult their own tax advisors with respect to Federal, state, local, and foreign tax consequences of purchasing, owning and disposing of our common shares.





U.S. Holders





As used herein, a "U.S. Holder" includes a holder of less than 10% of our common shares who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, any entity which is taxable as a corporation for United States tax purposes and any other person or entity whose ownership of our common stock is effectively connected with the conduct of a trade or business in the United States.  A U.S. Holder does not include persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of our common stock is not effectively connected with the conduct of a trade or business in the United States and stockholders who acquired their stock through the exercise of employee stock options or otherwise as compensation.





Distributions





The gross amount of a distribution paid to a U.S. Holder will generally be taxable as dividend income to the U.S. Holder for United States federal income tax purpose to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles.  Distributions which are taxable dividends and which meet certain requirements will be "unqualified dividend income" and taxed to U.S. Holders at a maximum United States federal rate of 15%.  Distributions in excess of our current and accumulated earnings and profits will be treated first as a tax-free return of capital to the extent the U.S. Holder’s tax basis in the common stock and, to the extent in excess of such tax basis, will be treated as a gain from a sale or exchange of such stock.





Capital Gains





In general, upon a sale, exchange or other disposition of common stock, a U.S. Holder will generally recognize a capital gain or loss for United States federal income tax purposes in an amount equal to the difference between the amounts realized on the sale or other distribution and the U.S. Holder’s adjusted tax basis in such stock.  Such gain or loss will be a United States source gain or loss and will be treated as a long-term capital gain or loss if the U.S. Holder’s holding period of the stock exceeds one year.  If the U.S. Holder is an individual, any capital gain will generally be subject to United States federal income tax at preferential rates if specified minimum holding periods are met.  The deductibility of capital losses is subject to significant limitations.





Foreign Tax Credit





A U.S. Holder who pays (or has had withheld from distributions) Canadian income tax with respect to the ownership of our common stock may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax.  This election is made on a year-by-year basis and generally applies to all foreign income taxes paid by (or withheld from) the U.S. Holder during that year.  There are significant and complex limitations which apply to the tax credit, among which is an ownership period requirement and the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States





44





income tax liability that the U.S. Holder’s foreign source income bears to his or its worldwide taxable income.  In determining the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources.  Complex rules govern this classification process.  There are further limitations on the foreign tax credit for certain types of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income.  The availability of the foreign tax credit and the application of these complex limitations on the tax credit are fact specific and holders and prospective holders of our common stock should consult their own tax advisors regarding their individual circumstances.





Passive Foreign Investment Corporation





We do not believe that we are a passive foreign investment corporation (a "PFIC") because we have realized no income, domestic or foreign.  However, since PFIC status depends upon the composition of a company’s income and assets and the market value of its assets and stock from time to time, there is no assurance that we will not be considered a PFIC for any taxable year.  If we were treated as a PFIC for any taxable year during which a U.S. Holder held stock, certain adverse tax consequences could apply to the U.S. Holder.If we are treated as a PFIC for any taxable year, gains recognized by such U.S. Holder on a sale or other disposition of stock would be allocated ratably over the U.S. Holder’s holding period for the stock.  The amount allocated to the taxable year of the sale or other exchange and to any year before we became a PFIC would be taxed as ordinary income.  The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as applicable, and an interest charge would be imposed on the amount allocated to such taxable year.  Further, any distribution in respect of stock in excess of 125% of the average of the annual distributions on stock received by the U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation as described above.  Certain elections may be available to U.S. Holders that may mitigate some of the adverse consequences resulting from PFIC status.  However, regardless of whether such elections are made, dividends paid by a PFIC will not be "qualified dividend income" and will generally be taxed at the higher rates applicable to other items of ordinary income.





We will establish an office for the Company in the U.S. and engage in a U.S. trade or business for U.S. tax purposes.  Therefore, future foreign source income should not result in the Company being classified as a PFIC.





U.S. Holders and prospective holders should consult their own tax advisors regarding the potential application of the PFIC rules to their ownership of our common stock.





Dividends and Paying Agents





Not required.





Statements by Experts





Not required.





Documents on Display





Documents and agreements concerning our Company may be viewed by appointment during regular business hours at the offices of the Company at Calgary, Alberta.





Subsidiary Information





None.





45


ITEM 11.             QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not required.





ITEM 12.             DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES





The Company does not have any securities represented by American Depository Receipts.





PART II





ITEM 13.             DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES





The Company defaulted on its commitments to repay $1,000,000 in convertible promissory notes, plus accrued interest thereon which were due and payable on May 4, 2011.  On August 1, 2011 the Company received a notice of default from the noteholder.    The Company and the noteholder negotiated a settlement under which the notes plus all accrued interest were forgiven in exchange for the Company assigning ninety percent of its interest in and to the Santa Rita mining concessions.  Pursuant to the assignment of interest, the noteholder agreed to pay to the Company $50,000 and to issue a total of 75,679,000 shares of the noteholder and to assume all obligations under the amended mining option agreement, which obligations totaled approximately $2,400,000 at the time of the assignment.





ITEM 14.             MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS





There have been no material modifications to the rights of security holders.





Use of Proceeds





On January 7, 2008 our Registration Statement on Form F-1 under Commission file number 333-145707 was declared effective, enabling us to offer up to 5,500,000 shares of common stock of our company at a price of $0.03 per share.  On March 18, 2008 we accepted subscriptions for the entire offering from 18 investors, raising a total of $165,000.  No commissions were paid on any of the above issuance.   All funds were expended by the end of fiscal year ending April 30, 2009.





ITEM 15.             CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Our Principal Executive Officer who is also our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e).  Based upon this evaluation, he concluded that, as of April 30, 2012, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.





Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.





Management’s Annual Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.





46


All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation.  In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.





Management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2012.  In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.   Based on its assessment, management concluded that, as of April 30, 2012, the Company’s internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.





As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of April 30, 2012:





1.
Lack of an independent audit committee or audit committee financial expert. We do not have any independent directors and we do not have an audit committee.  These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;





2.
Inadequate staffing and supervision within our bookkeeping operations.  We have one consultant involved in bookkeeping functions, who provides a single staff member.  The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews which may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC;





3.
Outsourcing of the accounting operations of our Company.   Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm.  The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management.  This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the firm;





4.
Insufficient installation of information technology to assist in our accounting functions.  Because of a lack of working capital and personnel, we do not have any information technology software and hardware to assist in providing effective controls;





5.
Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements;





6.
Ineffective controls over period end financial disclosure and reporting processes.





Changes in Internal Control over Financial Reporting





As of April 30, 2012, management assessed the effectiveness of our internal control over financial reporting and based on that evaluation, they concluded that during the year ended April 30, 2012 and to date, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting.  However, management believes these weaknesses did not have an effect on our financial results.  During the course of the evaluation, we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.





47


Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses.  We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so.   We will implement further controls as circumstances, cash flow, and working capital permit.  Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 20-F for the fiscal year ended April 30, 2011, fairly presents our financial position, results of operations and cash flows for the years covered thereby in all material respects.





Management believes that the material weaknesses set forth above were the result of the scale of our operations and are intrinsic to our small size.   Management believes these weaknesses did not have an effect on our financial results.We are committed to improving our financial organization.   As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources.  We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements as necessary and as funds allow.





This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.





There were no changes in our internal control over financial reporting during the year ended fiscal April 30, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





ITEM 16.             [RESERVED]





ITEM 16A.          AUDIT COMMITTEE FINANCIAL EXPERT





We presently do not have an audit committee nor an audit committee member who qualifies as an "audit committee financial expert" or who is "independent" as that is defined by Rule 4200(a)(15) of the NASDAQ Market Place Rules.  Our board of directors performs the same functions as an audit committee.  Since there are insufficient independent members of the board, it is not feasible at this time to have an audit committee.





ITEM 16B.          CODE OF ETHICS





We have not adopted a written code of ethics.  We have not seen any need to adopt a written code of ethics on the basis that our corporate culture effectively deters wrongdoing and promotes honest and ethical conduct, full, fair and accurate, timely, and understandable disclosure in reports and documents, the compliance with applicable governmental laws, rules and regulations, and prompt internal reporting.





ITEM 16C.          PRINCIPAL ACCOUNTANT FEES AND SERVICES





Our independent auditors for the fiscal year ended April 30, 2012 is Anderson Bradshaw PLLC.    Our independent auditors for the fiscal years ended ended 2011 and 2010 were Child, Van Wagoner & Bradshaw, PLLC of Salt Lake City, Utah.





Audit Fees





The audit fees bill by Anderson Bradshaw PLLC for professional services rendered for the audit of our financial statements for the fiscal year ended April 30, 2012 are $12,000.   The fees billed by Child, Van Wagoner & Bradshaw, PLLC for professional services rendered for the audit of our annual financial statements for the fiscal years ended April 30, 2011 was $15,000 and for 2010 was $9,000.





48


Audit Related Fees





The fees billed for assurance and related services by Anderson Bradshaw , PLLC relating to the performance of the audit or review of our financial statements for the fiscal years ended April 30, 2011, which are not reported under the heading “Audit Fees” above were Nil.    Child, Van Wagoner & Bradshaw, PLLCrelating to the performance of the audit or review of our financial statements for the fiscal years ended April 30, 2011 and 2010, which are not reported under the heading "Audit Fees" above, were Nil.





Tax Fees





For the fiscal years ended April 30, 2012, 2011 and 2010, the aggregate fees billed for tax compliance, tax advice and tax planning were Nil.





All Other Fees





For the fiscal year ended April 30, 2012 we did not pay any other fees to Anderson Bradshaw, PLLC.  For the fiscal year ended April 30, 2011, we paid the amount of $2,160 for review fees related to our prospectus filing on Form F-1 to Child, Van Wagoner & Bradshaw, PLLC .   For the fiscal years ended April 30 2010 and 2009, the aggregate fees billed by Child, Van Wagoner & Bradshaw, PLLCas applicable, for products and services, other than the services set out above, were Nil.





Audit Committee Pre-Approved Procedures





Our board of directors pre-approves all services provided by our principal accountant.  All of the services and fees described under the heading "Audit Fees", "Audit Related Fees", "Tax Fees" and "All Other Fees" above were reviewed and approved by our board of directors before the respective services were rendered and none of such services were approved by our board of directors pursuant to paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X.





ITEM 16D.          EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES





Not applicable.





ITEM 16E.           PURCHASES OF EQUITY SECURITIES BY OUR COMPANY AND AFFILIATED PURCHASERS





Not applicable.





ITEM 16F.           CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT





On or about August 1, 2012, Child, Van Wagoner & Bradshaw, PLLC (“CVB”), the principal accountant for Coastal Pacific Mining Corp. (the "Company") ceased its accounting practice for SEC reporting companies. At or about the same time Anderson Bradshaw PLLC (“Anderson Bradshaw”) was established as a successor firm to CVB to continue performing audits for SEC reporting companies. As Anderson Bradshaw is viewed as a separate legal entity, the Company dismissed CVB as its principal accountant and engaged Anderson Bradshaw, as the Company's principal accountant for the Company's fiscal year ending April 30, 2012. As the Company does not have an audit committee, the decision to change principal accountants was approved by a meeting of the Company's Board of Directors.





None of the reports of CVB, on the Company's financial statements for either of the past two years or subsequent interim periods contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles except that the reports of CVB included in our Form 20-F for 2011 and 2010 did include a paragraph disclosing uncertainty about our Company’s ability to continue as a going concern.





There were no disagreements between the Company and CVB, for the fiscal years ending April 30, 2010 and April 30, 2011 and any subsequent period through to the fiscal year ending April 30, 2012 and the interim periods ended August 13, 2012 (date of dismissal) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of CVB, would have caused them to make reference to the subject matter of the disagreement in connection with its report. Further, CVB has not advised the Registrant that:





49





1) internal controls necessary to develop reliable financial statements did not exist; or





2) information has come to the attention of CVB which made it unwilling to rely upon management's representations, or made it unwilling to be associated with the financial statements prepared by management; or





3) the scope of the audit should be expanded significantly, or information has come to the attention of CVB that they have concluded will, or if further investigated , might materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements, or the financial statements issued or to be issued covering the fiscal year ended April 30, 2012.





On or about August 14, 2012 the Registrant engaged Anderson Bradshaw as its principal accountant to audit the Registrant's financial statements as successor to CVB. During the Registrant's fiscal years ended April 30, 2010 and April 30, 2011 or the subsequent fiscal year ended April 30, 2012 or subsequent interim period, the Registrant has not consulted with the entity of Anderson Bradshaw regarding the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Registrant's financial statements, nor did the entity of Anderson Bradshaw provide advice to the Registrant, either written or oral, that was an important factor considered by the Registrant in reaching a decision as to the accounting, auditing or financial reporting issue.





Further, during the Registrant's fiscal years ended April 30, 2010 and April 30, 2011 or the subsequent fiscal year ended April 30, 2012 or subsequent interim period, the Registrant has not consulted the entity of Anderson Bradshaw on any matter that was the subject of a disagreement or a reportable event.





ITEM 16G.          CORPORATE GOVERANCE





Not applicable.





ITEM 16H.          MINE SAFETY STANDARDS





Not applicable





PART III





ITEM 17.             FINANCIAL STATEMENTS





Our audited financial statements for the fiscal years ended April 30, 2012, 2011 and 2010 are provided herein starting on page F-1.


50





COASTAL PACIFIC MINING CORP.


FINANCIAL STATEMENTS


FOR THE PERIOD FROM INCEPTION (MARCH 27, 2007) TO


FISCAL YEAR END APRIL 30, 2012





REPORTED IN CANADIAN DOLLARS








PageAudited Financial StatementsReport of Independent Registered Public Accounting Firm
52Balance Sheets
53Statements of Operations
54Statements of Stockholders’ Equity (Deficit)
55Statements of Cash Flows
56Notes to Financial Statements
57 to 67







51


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Officers and Directors
  Coastal Pacific Mining Corp.
  We have audited the accompanying balance sheets of Coastal Pacific Mining Corp. (the Company)  as of April 30, 2012, 2011 and 2010,  and the related statements of operations, statements of stockholders’ equity (deficit), and cash flows for the years ended April 30, 2012, 2011 and 2010, and for the period from inception (March 27, 2007) to April 30, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coastal Pacific Mining Corp. as of April 30, 2012, 2011 and 2010,   and the results of its operations and its cash flows for the years ended April 30, 2012, 2011 and 2010, and for the period from inception (March 27, 2007) to April 30, 2012, in conformity with accounting principles generally accepted in the United States of America.
  The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses from operations, has a liquidity problem, and requires funds for its operational activities. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  
  Anderson Bradshaw PLLC
  Salt Lake City, Utah
 August 31, 2012


52


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


Balance Sheets


REPORTED IN CANADIAN DOLLARS





Fiscal Year

Ended

April 30, 2012


Fiscal Year

Ended

April 30, 2011


Fiscal Year

ended

April 30, 2010ASSETSCurrentCash

$
-


$
313,587


$
-Prepaid expenses


171



49,320



-Other receivables


11,692



10,516



2,108Total Current Assets


11,863



373,423



2,108Restricted cash


204,060



-



-TOTAL ASSETS

$
215,923


$
373,423


$
2,108LIABILITIESCurrent LiabilitiesAccount overdraft

$
-


$
-


$
7Accounts payable


56,881



84,676



40,156Accounts payable – related parties


241,782



25,278



170,612Convertible notes, net of discount


-



929,025



-Warrant derivative liability


-



128,253



-Short term loans


123,626



-



12,705Short term loans  – related parties


-



123,626



46,249422,289



1,290,858



269,729Total Liabilities


422,289



1,290,858



269,729STOCKHOLDERS’ EQUITY (DEFICIT)Common stock,An unlimited number of common shares with no par value.Issued and outstanding 226,976,985  shares as at April 30, 2012, 226,976,985 shares as at April 30, 2011, and 90,875,000 as at April 30, 2010


1,561,873



1,561,873



224,400Preferred stock, An unlimited number of preferred shares with no par value, no shares have been issued


-



-



-Additional paid in capital


1,320,400



1,000,400



-Accumulated deficit


(3,088,639
)


(3,479,708
)


(492,021
)Total Stockholders’ Equity (Deficit)


(206,366
)


(917,435
)


(267,621
)TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$
215,923


$
373,423


$
2,108





See accompanying notes.


53


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


Statements of Operations


REPORTED IN CANADIAN DOLLARS





Fiscal Year ended

April 30,2012


2011


2010


From Inception

(March 27, 2007)

to

April 30, 2012Revenues

$
-


$
-


$
-


$
-Operating ExpensesExploration expenses


167,316



204,203



47,000



435,935Impairment on mineral properties


-



933,330



-



933,330Management fees


120,000



120,000



120,000



420,000Professional fees


62,159



115,660



12,724



228,085Stock-based compensation


320,000



-



-



320,000Administrative expenses


80,493



115,532



26,476



370,366749,968



1,488,725



206,200



2,707,716Income (Loss) from Operations


(749,968
)


(1,488,725
)


(206,200
)


(2,707,716
)Interest expense


(63,151
)


(2,611,467
)


(4,068
)


(2,697,712
)Loss on debt settlements


-



(367,357
)


-



(367,357
)Changes in derivative liabilities


6,110



1,505,257



-



1,511,367Foreign currency transaction gain (loss)


(121,558
)


(25,395
)


77



(146,857
)Gain on disposal of mineral property


1,319,636



-



-



1,319,636Net Income (Loss)

$
391,069


$
(2,987,687
)

$
(210,191
)

$
(3,088,639
)Net Income (Loss) per Share

$
0.00


$
(0.014
)

$
(0.00
)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING


226,976,985



208,658,927



90,672,603





See accompanying notes.




54


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


Statements of Stockholders’ Equity (Deficit)


REPORTED IN CANADIAN DOLLARS





Common Stock


Additional





Total Stockholders’ EquityShares


Amount

$


Paid in Capital

$


Accumulated Deficit

$


(Deficit)

$Balance at  March 27, 2007 (Date of Inception)


-



-



-



-



-Issuance of common stock at no par value


12,400,000



12,400



-



-



12,400Issuance of common stock at no par value in connection with 2-for-1 stock split


12,400,000



-



-



-



-Issuance of common stock at no par value in connection with 2.5-for-1 stock split


37,200,000



-



-



-



-Net loss for the period


-



-



-



(42,609
)


(42,609
)Balance at April 30, 2007


62,000,000



12,400



-



(42,609
)


(30,209
)Issuance of common stock at no par value


5,500,000



165,000



-



-



165,000Issuance of common stock at no par value in connection with 2-for-1 stock split


5,500,000



-



-



-



-Issuance of common stock at no par value in connection with 2.5-for-1 stock split


16,500,000



-



-



-



-Net loss for the period


-



-



-



(98,796
)


(98,796
)Balance at April 30, 2008


89,500,000



177,400



-



(141,405
)


35,995Net loss for the period


-



-



-



(140,425
)


(140,425
)Balance at April 30, 2009


89,500,000



177,400



-



(281,830
)


(104,430
)Issuance of common stock at no par value


1,375,000



47,000



-



-



47,000Net loss for the period


-



-



-



(210,191
)


(210,191
)Balance at April 30, 2010


90,875,000



224,400



-



(492,021
)


(267,621
)Shares issued for mineral option agreements


2,000,000



683,330



-



-



683,330Shares issued for debt settlements


133,901,985



645,343



-



-



645,343Shares issued for services


200,000



8,800











8,800Convertible discount


-



-



1,000,400



-



1,000,400Net loss for the period


-



-



-



(2,987,687
)


(2,987,687
)Balance at April 30, 2011


226,976,985



1,561,873



1,000,400



(3,479,708
)


(917,435
)Stock options issued










320,000







320,000Net income for the period


-



-



-



391,069



391,069Balance at April 30, 2012


226,976,985



1,561,873



1,320,400



(3,088,639
)


(206,366
)





See accompanying notes.








55


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


Statements of Cash Flows


REPORTED IN CANADIAN DOLLARS


Fiscal Year Ended April 30,


From Inception (March 27,2012


2011


2010


2007) to April 30, 2012Cash flow used in operating activitiesNet income (loss) for the period

$
391,069


$
(2,987,687
)

$
(210,191
)

$
(3,088,639
)Adjustments to reconcile net loss to net cash used in operating activities:Gain in transfer of  mineral interest


(1,267,191
)


-



-



(1,267,191
)Stock-based compensation


320,000



-



-



320,000Stock issued for mineral property claim costs


-



-



47,000



47,000Non-cash interest expense – warrants


-



1,633,510



-



1,633,510Impairment on mineral properties


-



933,330



-



933,330Accrued interest expenses


41,005



48,962



4,068



94,035Loss on debt settlements


-



367,357



-



367,357Discount on convertible notes


21,005



929,025



-



950,030Change in derivate liabilities


(6,110
)


(1,505,257
)


-



(1,511,367
)Shares issued for services


-



8,800



-



8,800Changes in operating assets:Prepaid expenses


49,149



(49,320
)


-



(171
)Other receivables


(1,176
)


(8,408
)


(821
)


(11,692
)Accounts payable - related parties


216,503



25,278



120,612



412,393Accounts payable


18,652



43,978



29,119



102,786Restricted cash


(204,060
)


-



-



(204,060
)Net cash used in operating activities


(421,154
)


(560,432
)


(10,213
)


(1,213,879
)Cash flow provided (required) by investing activitiesMineral property option costs


-



(250,000
)


-



(250,000
)Net cash provided (required) by financing activities


-



(250,000
)


-



(250,000
)Cash flow provided (required) by financing activitiesBank overdraft


-



(7
)


7



-Proceeds from related party loans


-



123,626



-



254,308Repayments of related parties loans


-



-



(4,914
)


(88,501
)Proceeds from convertible notes


-



950,020



-



950,020Proceeds from short term loans


-



-



12,705



12,705Stock issued for cash


-



-



-



177,400Net cash provided (required) by financing activities


-



1,073,639



7,798



1,305,932Foreign change on cash


107,567



50,380



-



157,947Cash Increase (Decrease)


(313,587
)


313,587



(2,415
)


-Cash, Beginning of period


313,587



-



2,415



-Cash, End of period

$
-


$
313,587


$
-


$
-Supplemental disclosure of cash flow information:Cash paid for:Interest

$
-


$
-


$
-


$
17,521Income taxes

$
-


$
-


$
-


$
-Supplemental disclosure of non-cash transactions:Shares issued for settlement of accounts payable – related parties

$
-


$
190,268


$
-


$
190,268Shares issued for settlement of accounts payable


-



27,908



-



27,908Shares issued for settlement of loans


-



12,704



-



12,704Shares issued for settlement of loans – related parties


-



47,106



-



47,106$
-


$
277,986


$
-


$
277,986


See accompanying notes.


56


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS




1.
Basis of presentation and Continuance of Operations




The Company was incorporated in the Province of Alberta, Canada on March 27, 2007.  The Company is an Exploration Stage Company as defined by ASC Topic 915.  These financial statements have been prepared on a going concern basis.  We have incurred losses since inception resulting in an accumulated deficit of $3,088,639 and further losses are anticipated in the development of our business raising substantial doubt about our ability to continue as a going concern.  Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due.  Management intends to address the going concern issue by funding future operations through the sale of equity capital, and by third party or related party loans, if available.




On March 26, 2009, the Company undertook a 2-for-1 common stock split in the form of a 100% stock dividend.  On March 30, 2009, the Company distributed 17.9 million common shares with no par value to stockholders of record on March 26, 2009. On July 7, 2010, the Company undertook a 2.5-for-1 common stock split in the form of a 100% stock dividend.   On July 9, 2010, the Company distributed 134,866,191 common shares with no par value to stockholders of record as of July 7, 2010.  The effect of both of the stock splits has been recognized retroactively in the stockholders’ equity accounts as of April 30, 2007, and in all shares and per share data in the financial statements and the notes to the financial statements.




2.
Summary of Significant Accounting Policies




a)           Basis of Presentation




Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in Canadian Dollars, which is the Company’s functional currency.  The Company’s fiscal year-end is April 30.




b)           Use of Estimates




The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.




c)           Mineral Property Costs




Mineral property acquisition costs are initially capitalized when incurred. These costs are then assessed for impairment when factors are present to indicate the carrying costs may not be recoverable. Mineral exploration costs are expensed when incurred.




Our tests include the evaluation of the following factors:





(1) Does the Company currently have cash flow and/or does the Company expect cash flow in the immediate future;


(2) Are there existing reserves which have been valued by a third party valuation and on which value we can conduct a future discounted cash flow analysis;


(3) Have we previously monetized any mineral assets; and


(4) Do we presently have resources on hand to allow us to conduct our business plan as stated.





57


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





2.           Summary of Significant Accounting Policies (continued)




c)           Mineral Property Costs (continued)




Upon completion of our evaluation of our mineral properties, management has determined the assets evaluated fail the impairment test.  With no existing or immediately anticipated cash flows, no prior history of successful mineral operations from which to support current asset value and insufficient resources to undertake our presently proposed operations, we have determined to fully impair the asset acquisition costs of all properties in the amount of $933,330.




d)           Investments in Associates




Associates are enterprises over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are measured according to the equity method of accounting so that the carrying amount of the investment represents the group’s proportionate share of the enterprises’ net assets using rules of ASC Topic 323-10 (pre-codification: APB Opinion No. 18), The Equity Method of Accounting for Investments in Common Stock.




e)           The Fair Value of Financial Instruments




The carrying value of cash and prepaid expenses approximate their fair value because of the short-term maturity of these instruments.  Our operations are in Canada and primary operations are carried out in the functional currency of Canada





f)           Stock-Based Compensation





The Company follows the guidance included in ASC 718 Compensation-Stock Compensation (“ASC 718”) using the modified prospective transition method. The Company recognizes compensation expense in the financial statements for share-based awards based on the grant date fair value of those awards.





g) Share based payment arrangements


The Company follows the guidance provided in ASC 505-50 – Equity Based Payments to Non-Employees (“ASC 505-50”) in respect to the valuation of shares issued for receipt of goods or services rendered.





h)
Impairment of Long-lived Assets





The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.





i)            Foreign Currency Translation





Our functional and reporting currency is the Canadian dollar.  Occasional transactions may occur in United States dollars and management has adopted ASC Topic 830 - “Foreign Currency Translation”.  Monetary assets denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date.  Average monthly rates are used to translate revenues and expenses.  We have not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.




58


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





2.           Summary of Significant Accounting Policies (continued)





j)           Income Taxes





Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not.  We have adopted ASC Topic 740 as of its inception.  Pursuant to ASC Topic 740, we are required to compute tax asset benefits for net operating losses carried forward.  Potential benefit of net operating losses have not been recognized in the financial statements because we cannot be assured it is more likely than not we will utilize the net operating losses carried forward in future years.





k)           Basic and Diluted Net Income (Loss) Per Share





We compute net income (loss) per share in accordance with “Earnings per Share”.  ASC Topic 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement.  Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.  In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.





l)           Recently Issued Accounting Pronouncements





The Company does not expect that the adoption of any recent accounting pronouncements will have a material impact on its financial statements.





3.           Income Taxes





We follow applicable FASB Codification regarding Accounting for Income Taxes. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.





The provision (benefit) for income taxes for the years ended April 30, 2012, April 30, 2011, and 2010 by applying the statutory income tax rate of 25% (2011 – 26.5%, 2010 – 28.5%) was as follows:




April 30,


April 30,


April 30,2012


2011


2010Deferred tax asset attributable to:Current operations

$
97,767


$
(791,737
)

$
(59,904
)Less: loss on debt settlement


-



97,350



-Gain in transfer of mineral interest


(329,909
)Change in derivative liabilities


(1,527
)


(398,893



-Warrant liabilities


-



432,880



-Amortization of Beneficial Conversion Feature


5,251



246,192



-Stock-based compensation


80,000Valuation allowance


148,418



414,208



59,904Net refundable amount

$
-


$
-


$
-


59


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





3.           Income Taxes (continued)





We have relied on the provisions of section 40(2) (e.1) of the Canadian Income Tax Act (the “Act”) when considering the allowances available for the finance related costs including the warrant liabilities, amortization of the beneficial conversion feature and the loss incurred on debt settlements. The Company believes the provisions of the Act would deny any amounts of deductions or losses as a result of the aforementioned transactions.





The composition of the Company’s deferred tax assets as at April 30, 2012, April 30, 2011 and April 30, 2010 is as follows:


April 30,


April 30,


April 30,2012


2011


2010Deferred tax assets:Net operating loss carry forward

$
(391,069
)

$
2,987,708


$
210,191Less: loss on debt settlement


-



(367,357
)


-Gain in transfer mineral interest


1,319,636Change in derivative liability


6,110



1,505,257



-Warrant liability


-



(1,633,510
)


-Amortization on BCF


(21,006
)


(929,025
)


-Stock-based compensation


(320,000
)


-



-Valuation allowance


(593,671
)


(1,563,073
)


(210,191
)Total deferred tax asset

$
-


$
-


$
-





The potential income tax benefit of these losses has been offset by a full valuation allowance.





As at April 30, 2012, the Company had estimated non-capital losses for Canadian tax purposes of $2,648,765, which may be carried forward to offset future years’ taxable income. These losses will expire as follows:




Year of Expiry

Taxable Losses2027

$
42,6092028


98,7962029


140,4252030


210,1912031


1,563,0732032


593,671$
2,648,765





4.           Mineral Claims





a.)
Hotstone Property:





On October 6, 2010, we entered into an Option Agreement (the “Agreement”) to earn a 50% undivided interest in a gold exploration property, known as the Hotstone property. The Hotstone property is comprised of a 5 claim unit totaling approximately 120 hectares within the Greenlaw Township, located 50 km southeast of Chapleau, Ontario, and 130 km west-southwest of Timmins, Ontario, Canada. On March 29, 2011, we entered into an amended option with David L. Gibson, an officer and director of our Company to extend the exploration expenditures to December 31, 2012 (the “Amended Agreement”).  Under the terms of the Agreement, the Company is required to pay





$100,000 by way of cash payments which were paid in November 2010 and March 2011, issue 1,000,000 restricted shares of common stock which were issued upon execution of the Agreement,  and, pursuant to the Amended Agreement, on or before December 31, 2012 expend $1,500,000 upon the property in the form of a work program to be agreed upon by the parties and to be conducted by the Operator.








60


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





4.           Mineral Claims (continued)





a)   Hotstone Property - continued:





In respect of the above Option Agreement the Company recorded acquisition costs totaling $263,232, which costs it tested as at April 30, 2011 and determined to impair the total acquisition costs of $263,232.





On January 6, 2012, the Company, the Optionor and Trio Gold Corporation (“Trio”) entered into an option agreement, whereby Trio agreed to undertake the funding of the exploration program, however, Trio was unable to raise the required funding and pursuant to that agreement, the amended property agreement is the governing agreement in regard to the Hotstone.





b)
Santa Rita mining concessions:





On October 30, 2010, the Company entered into an Option Agreement with Hans Peter Flueck to earn a 50% undivided interest in the Santa Rita mining concessions. On May 16, 2011, we entered into an amended option agreement with Hans Peter Flueck and Rimpago Company Limited Peru S.A.C. (the trustee holder of the Santa Rita Mining Concessions). Under the amended terms of the agreement the Company was required to:





1.
Make cash payments of $500,000 over a two-year period


a.
Initial cash payment of $50,000 which was paid during November 2010;


b.
A further payment of $100,000 which was paid during December 2010;


c.
A further cash payment of $175,000 on or before November 1, 2011;


d.
Final cash payment of $175,000 on or before November 1, 2012.





2.
Issue a total of  5,000,000 shares of the Company’s common stock over a two-year period


a.
1,000,000 shares of common stock were issued upon execution of the agreement;


b.
A total of 2,000,000 shares of common stock on November 1, 2011;


c.
A total of 2,000,000 shares of common stock on November 1, 2012.





Further, the following exploration expenditures were to be completed as follows:


(a) $1,500,000 on or before September 30, 2012; and


(b) $1,500,000 on or before April 30, 2013.





Under the agreement the Company was granted the right to earn 25% upon expenditure of the first $1,500,000 and the remaining 25% upon the second $1,500,000 being expended.  The $3,000,000 required expenditures are inclusive of the cash payments to Flueck.





On July 15, 2011 we received notification of an assignment of $1,000,000 of convertible notes issued by the Company to four investors to Plata Litoral Inc. (“Litoral”) which was incorporated by the note holders to hold the notes.   On August 1, 2011, Litoral noticed us that the notes were in default and were subject to immediate payment.  On September 10, 2011, Litoral and the Company reached a settlement agreement whereby the Company would assign to Litoral ninety percent (90%) of its interest in and to the property in exchange for Plata assuming all of the remaining payment obligations under the amended option agreement, except for the issuance of shares which would remain the responsibility of Coastal, in exchange for the forgiveness of the notes plus all accrued interest, the payment of $50,000 to Coastal by Litoral and the issuance of 75,659,000 shares of Litoral common stock to Coastal which Coastal may dividend to its stockholders of record as at October 31, 2011 at the sole election of Coastal.   Coastal did not effect a dividend of the shares of Litoral and holds the shares of Litoral.


61


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





4.
Mineral Claims (continued)





b)
Santa Rita mining concessions:





On October 6, 2011, Coastal and Litoral entered into a mining acquisition and production agreement  (the “Royal Agreement”) with Royal Sovereign Internationale (“Royal”), Hans Peter Flueck (the vendor of the Santa Rita mining concessions), and Minera Rimpago Peru S.A.C. (the trustee for the claims), whereby Royal would expend a minimum of $5,000,000 by way of exploration and production financing to earn a 50% interest in and to the Santa Rita mining concessions. The Royal agreement required that Royal make cash payments of $2,400,000 by way of $175,000 to Fluek on November 1, 2011, $725,000 on or before January 1, 2012 to be expended on the property by September 30, 2012, $1,325,000 in trust on or before October 1, 2012 to be expended on the property by April 30, 2013; $175,000 to Flueck on October 30, 2012.  Further, Royal was required to prepare a work program on or before March 31, 2012 to construct and fit a 350ton per day processing plant to be in operation on or before April 30, 2013.   Under the agreement, Coastal was required to issue and shares of common stock to be issued to Flueck.  The agreement required that the parties redraft such agreement to comply with Peruvian law.  Litoral agreed to assign to Coastal Pacific a further interest in the Santa Rita mining concessions and Flueck agreed to dilute to a 25% interest in the Santa Rita mining concessions, such that the final ownership upon the $5,000,000 funding completing would be:





Royal – 50%


Hans Peter Flueck -25%


Litoral – 20%


Coastal – 5%





Coastal or its stockholders also hold approximately 38% of the total issued and outstanding shares of Litoral.  Further, Coastal will manage and undertake all exploration on the Santa Rita mining concessions.





Under the terms of the agreement, Coastal and Litoral would earn as payments are made which total their obligations under the amended option agreement.  In order to earn the 25% interest assignable under the amended Option Agreement, expenditures of $1,500,000 must be made.





Under the terms of our amended option agreement for Santa Rita, we are required to pay the vendor a total of $500,000 in cash payments, of which $150,000 has been paid. Further cash payments which were required to be paid in the amount of $175,000 by November 1, 2011 and $175,000 by November 1, 2012 were to be paid pursuant to the Royal agreement. As of April 30, 2012, the final agreement to be drafted and executed subject to Peruvian law had not been completed. Royal had not funded any of the required payments to be made or demonstrated that the funds are available. It is unclear, whether the Royal agreement, which superseded the amended option agreement is the governing agreement.  If that agreement is the governing agreement then until such time as a formal agreement is entered into or the parties to the agreement receive formal notice with a cure provision, then the option is in full force and effect.   However, any notice of default may result in litigation to maintain the Company’s rights under the agreements.   The Company currently does not have funds available to fund such litigation and would look to Litoral to provide such funding.  Should a determination be made that the amended option agreement as executed on May 16, 2011, is the governing agreement then the agreement may be deemed to be in default.  As of April 30, 2012, the Company had not issued the 2,000,000 shares as required under the amended option agreement to be issued on November 1, 2011, thus this may be deemed to be an effect of default under the amended option agreement and the Royal Agreement.


62


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





4.
Mineral Claims (continued)





c)
Santa Rita mining concessions (continued):





During the fiscal year ended April 30, 2011, the Company recorded acquisition costs totaling $670,098. As at April 30, 2011 the Company has tested its Santa Rita mining property acquisition costs in the amount of $670,098 for indications of impairment.





The concessions are for metallic minerals giving the titleholder the right to explore and exploit metallic minerals within the bounds of the concessions.  We have paid a total of $150,000 against the option payments on the Santa Rita as of the fiscal year ended April 30, 2012,  there have been total expenditures on exploration and other expenses, including insurance related to the Santa Rita or $501,980 of which  $433,616  has been paid by Coastal and the balance has been paid by Litoral.





5.           Investment in associates




The Company has an investment in Litoral pursuant to the assignment agreement discussed above, so that the Company holds 38% of the issued and outstanding shares of Litoral’s common stock.  Investments in associates are measured according to the equity method of accounting so that the carrying amount of the investment represents the Company’s proportionate share of the enterprises’ net assets using rules of ASC Topic 323-10 (pre-codification: APB Opinion No. 18), The Equity Method of Accounting for Investments in Common Stock.




Both at the date of our initial investment in Litoral and as at April 30, 2012 Litoral reports a Shareholder’s Deficit so that our investment in Litoral is reflected as $0 (zero).




Carrying amount of investment:October 4, 2011

$
-Additions during the year


-Balance, April 30, 2012


-





Litoral has provided the following summary of its enterprise value as of April 30, 2012:





Associate

Assets


Liabilities


Shareholders’Deficit


Revenue


Lossfor the yearPlata Litoral

$
202,114


$
376,931


$
(174,817
)

$
-


$
(1,253,410
)





63


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





6.           Convertible notes and warrant liabilities





On November 4, 2010, Coastal Pacific Mining Corp. (“Coastal” or the “Company”) entered into Stock Purchase Agreements (the “Purchase Agreements”) with four independent investors (the “Investors”) who collectively purchased USD$1,000,000 in convertible notes issued by the Company pursuant to an offering conducted by the Company (the “Offering”).  The Purchase Agreements provided for the purchase by the Investors of a total of 2,857,143 shares of the Company’s Common Stock at a price of USD$0.35 per share, or for an aggregate purchase price of USD$1,000,000 (the “Shares”).  In addition to the Shares, the Company also agreed to issue Warrants to purchase 4,285,714 shares of the Company’s Common Stock at an exercise price of USD$0.40 per share for 1,428,571 Class A Warrants and at an exercise price of USD$0.50 per share for the remaining 2,857,143 Class B Warrants.  Each of the Warrants has a five year term.   The Warrants cannot be exercised within six (6) months of closing and thereafter a total of 25% combining Class A and Class B warrants can be exercised for the following six months, at the end of twelve (12) months from closing all Class A and Class B warrants become exercisable.





On July 15, 2011 we received notification of an assignment of $1,000,000 of convertible notes with the Company to Plata Litoral Inc. (“Litoral”) which was incorporated by the note holders to hold the notes.   On August 1, 2011, Litoral noticed us that  the notes were in default and were subject to immediate payment.  On September 10, 2011, Litoral and the Company reached a settlement agreement whereby the Company would assign to Litoral ninety percent (90%) of its interest in and to the property in exchange for Plata assuming all of the remaining payment obligations under the Option Agreement, except for the issuance of shares which would remain the responsibility of Coastal, in exchange for the forgiveness of the notes plus all accrued interest, the cancellation of the warrants and the payment of $50,000 to Coastal by Litoral and the issuance of 75,659,000 shares of Litoral common stock to Coastal which Coastal may dividend to its stockholders of record as at October 31, 2011 at the sole election of Coastal.   Coastal did not effect a dividend of the shares of Litoral and holds the shares of Litoral.





The Company accounted for the conversion options embedded in the Purchase Agreements in accordance with “Accounting for Derivative Instruments and Hedging Activities”, FASB ASC 815-10, and “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, FASB ASC 815-40. FASB ASC 815-10 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments in accordance with FASB ASC 815-40. FASB ASC 815-40 states that if the conversion option requires net cash settlement in the event of circumstances that are not solely within the Company’s control, then the notes should be classified as a liability measured at fair value on the balance sheet. The Company recorded an initial discount of $1,000,040 (USD$1,000,000), equal to the face value of the convertible notes, which is being amortized over the life of the notes through their maturity dates. During the fiscal year ended April 30, 2012, $21,006 (USD$22,099) ((2011 - $ 929,025 (USD$977,901) was amortized and recorded as interest expense.





The Company recorded the liability for the warrants at a fair value of $1,633,510 on November 4, 2010, based upon a Black-Scholes calculation.





Roll-forward of Derivative Net LiabilitiesDerivative balance at issuance (November 4, 2010)

$
1,633,510Change due to fair market value


(1,505,257
)Balance at April 30, 2011


128,253Change due to fair market value


(6,110
)Balance at September 10, 2011


122,143





The warrant liability was marked-to-market and an amount of $6,110 (2011- $1,505,257) was credited to expense in a manner similar to the conversion feature at each reporting date until all the criteria for permanent equity were met. On September 10, 2011, the warrants were canceled and the revised fair-market valuation of the warrant liability was calculated at $122,143, which extinguish the derivative liability resulting in gain of $122,143 from transfer mineral property.





64


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





6.           Convertible notes and warrant liabilities (continued)





The warrant liability was valued at September 10, 2011, April 30, 2011 and November 4, 2010 using the Black-Scholes valuation model with the following assumptions:





Inception


April 30, 2011


September 10, 2011Warrants to purchase common stock:

CLASS A

Warrant

Derivate


CLASS B

Warrant

Derivate


CLASS A

Warrant

Derivate


CLASS B

Warrant

Derivate


CLASS A

Warrant

Derivate


CLASS B

Warrant

DerivateStrike price

$
0.40


$
0.50


$
0.40


$
0.50


$
0.40


$
0.50Volatility


596.03
%


596.03
%


480.18
%


480.18
%


424.85
%


424.85
%Term (years)


5



5



5



5



5



5Risk-free rate


1.04
%


1.04
%


1..04
%


1.04
%


1..04
%


1.04
%Dividends


-



-



-



-



-



-





During the fiscal year ended April 30, 2011, the Company accrued interest in the amount of $41,005 (2011- $48,449). At September 10, 2011, the Company did not make any cash payments to the principal and accrued interest, leaving $1,145,049 (USD$977,901) owed to the notes holders. Pursuant to the assignment agreement between the Company and Litoral, the Company recorded gains on the transfer of the mineral interest in the amount of $1,197,449, which included cash received in the amount of $52,445.





7.           Stockholders’ Equity





We are authorized to issue an unlimited number of shares of common stock with no par value and an unlimited number of preferred shares with no par value.   We have not issued any preferred shares to date.  We declared a 2-for-1 stock split effected in the form of a 100% stock dividend issued in March, 2009. We declared a 2.5-for-1 stock split effected in the form of a 100% stock dividend issued in July 2010.





During the fiscal year ended April 30, 2012, the Company did not issue any shares of common stock.   As at the fiscal year ended April 30, 2012, we had a total of 226,976,985 shares of common stock issued and outstanding.





8.           Related Party Transactions





a)           Acquisition of Mineral Claim





On October 6, 2010, we entered into an Option Agreement (the “Agreement”), amended on March 29, 2011, to earn a 50% undivided interest in a gold exploration property, known as the Hotstone property. The Hotstone property is comprised of a 5 claim unit totaling approximately 120 hectares within the Greenlaw Township, located 50 km southeast of Chapleau, Ontario, and 130 km west-southwest of Timmins, Ontario, Canada. Mr. David L. Gibson, a director and officer of the Company was the optionor of the Hotstone property. Under the terms of the Agreement, Mr. Gibson received $100,000 in cash and 1,000,000 restricted shares of common stock. (refer Note – 4).





b)           Management service agreement





On November 1, 2008, we entered into a two year management service agreement payable at $10,000 monthly with Ox Financial Corp., a company controlled by a director and officer of the Company. During the fiscal year ended April 30, 2012, we incurred $120,000 (2011 - $120,000), (2010 - $120,000) in management fees under this agreement and $83,606 for expenses.  The Company made cash payments of $113,248.  As at April 30, 2012 an amount of $100,719 (2011- $10,361) was owing and is reflected on the balance sheets as accounts payable – related parties.





65


COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





8.           Related Party Transactions (continued)





c)           Consulting services





Mr. David L. Gibson, a director and officer of the Company invoiced and was paid a total of $33,890 (2011 - $16,065) for consulting services provided during the fiscal year ended April 30, 2012 in respect of evaluation of the Santa Rita mining concession.   The Company also reimbursed Mr. Gibson a total of $2,655 (2011 - $5,414) in respect of travel and incidental expenses incurred as a result of the evaluation.





Dynamic Exploration Ltd. (“Dynamic”), a company controlled by Richard Thomas Walker, a director and the Company’s chief Geologist, invoiced the Company $22,932 (2011 - $33,735) for consulting services provided during the fiscal year ended April 30, 2012.  Dynamic also invoiced the Company a total of $5,279(2011 - $4,736) for reimbursement of travel and incidental expenses incurred as a result of the services provided.   During the fiscal year ended April 30, 2012, the Company made cash payments in full including the amount of $14,917 due and payable to Dynamic as of April 30, 2011.





d)           Associates





During the fiscal year ended April 30, 2012, the Company’s associate, Plata Litoral Inc. made payments in the accumulated amount of $141,063 (USD$143,789) on our behalf for our operating expenses. We did not repay any of the amounts paid, leaving the amount of $141,063 reflected on the balance sheets as accounts payable – related parties.





9.           Short term loan





On October 27, 2010, the Company received a loan of US$60,000 for working capital and on November 2, 2010 the Company received a further US$50,000 by way of a working capital loan.  The loans were short term loans bearing no interest and to be repaid upon the Company closing a convertible loan offering of US$2,000,000.  During the fiscal year ended April 30, 2012, the Company did not make any cash payments, leaving $123,626 (USD$110,000) on the balance sheets asshort term loans.





10.Stock options





On June 10, 2009, the Board of Directors approved the Company’s 2009 stock option plan, whereby the Company could grant up to 5,000,000 options to its directors, officers, employees and key consultants.  No options have been issued under the 2009 plan.The exercise price of each option is $0.05 and an option’s term is ten years.





On October 22, 2011, the Board of Directors approved the Company’s 2011 stock option plan for 22,000,000 incentive stock options, to be granted to our directors, officers, employees and/or consultants, with the option prices, vesting and other terms to be determined upon grant by the administrator(s) thereof. A total of 16,000,000 stock options have been granted under the plan to vest immediately, of which 12,000,000 were granted to each of the officers and directors as disclosed above and 4,000,000 were granted to a consultant of the Company, leaving a total of 6,000,000 stock options yet to be granted under the 2011 plan. The exercise price of the options is $0.05 per share of common stock and the term of the option’s granted is ten years from the date of grant.  The Company recorded the value of the stock options granted in the amount of $320,000 in stock-based compensation expense using the Black-Scholes option pricing model.





66




COASTAL PACIFIC MINING CORP.


(An Exploration Stage Company)


NOTES TO FINANCIAL STATEMENTS


For the period from Inception (March 27, 2007) to April 30, 2012


REPORTED IN CANADIAN DOLLARS





10.Stock options (continued)





The following summarizes the status of the stock option plan as of April 30, 2012, and the changes during the fiscal year ended April 30, 2012:




April 30, 2012


April 30, 2011Stockoptions


WeightedAverage

Exerciseprice


Stockoptions


WeightedAverage

ExercisepriceOutstanding, beginning of year


-


$
-



-


$
-Granted


16,000,000



0.05



-Outstanding, end of year


16,000,000


$
0.05



-


$
-Exercisable, end of year


16,000,000


$
0.05



-


$
-





As at April 30, 2012, the stock options have a weighted average remaining life of 9.48 years with additional information as follows:





Grant Date
Stock Options
Exercise Price
Expiry DateOctober 22, 2011
16,000,000
$      0.05
October 22, 2021





The compensation expense for options granted was determined based on the fair value of the stock options at the grant date with the following assumptions:




2012Volatility rate

420.78%Risk-free interest rate

2.23%Dividend yield rate

0.0%Weighted average life

10 yearWeighted average fair value per option granted

$0.02





11.Subsequent events





The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there are no additional events to disclose.




67


ITEM 18.             FINANCIAL STATEMENTS





The financial statements are presented in Item 17, above.





ITEM 19.             EXHIBITS





Number
Description3.1
Articles of Incorporation
Incorporated by reference to the  Exhibits filed with the Company’s Form F-1 filed with the SEC on August 27, 20073.2
Bylaws
Incorporated by reference to the Exhibits filed with the  Company’s Form F-1 filed with the SEC on August 27, 20074.1
Form of Securities Purchase Agreement
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 5, 20104.2
Form of Registration Rights Agreement
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 5, 20104.3
Form of Convertible Note
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 5, 20104.4
Form of Class A Warrant
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 5, 20104.5
Form of Class B Warrant
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 5, 201010.1
Management Services Agreement by and between the Company and Ox Financial Corp. dated November 1, 2008
Incorporated by reference to the Exhibits filed with the Company’s Form 20-F filed with the SEC on July 29, 200910.2
Joint Venture/Option Agreement dated May 27, 2009 by and between the Company and Warrior Ventures
Incorporated by reference to the Exhibits filed with the Company’s Form 20-F filed with the SEC on July 29, 200910.3
Option Agreement between the Company and Trio Gold Corp. dated May 15, 2009
Incorporated by reference to the Exhibits filed with the Company’s Form 20-F filed with the SEC on July 29, 200910.4
Coastal Pacific Mining Corp. 2009 Stock Option and Stock Award Plan dated June 10, 2009.
Filed herewith10.5
Extended Option Agreement dated July 15, 2009, between the Company and Trio Gold Corp.
Incorporated by reference to the Exhibits filed with the Company’s Form 20-F filed with the SEC on July 29, 2009


68


10.6
Hotstone Property Option Agreement between the Company and David L. Gibson dated October 6, 2010
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on October 19, 2010.10.7
Santa Rita mining concessions Option Agreement between the Company and Hans Peter Flueck dated October 30, 2010
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 1, 2010.10.8
Drawdown Equity Finance Agreement dated January 14, 2011between the Company and Auctus Private Equity Fund, LLC
Incorporated by reference to the Exhibits filed with the Company’s Form F-1 filed with the SEC on March 21, 2011.10.9
Registration Rights Agreement dated January 14, 2011 between the Company and Auctus Private Equity Fund, LLC
Incorporated by reference to the Exhibits filed with the Company’s Form F-1 filed with the SEC on March 21, 2011.10.10
Amended Hotstone Property Agreement dated March 29, 2012
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on November 1, 2010.10.11
Amended Santa Rita option agreement dated May 16, 2011
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on May 25, 2011.10.12
Assignment agreement between the Company and Plata Litoral Inc. for the Santa Rita Claims
Incorporate by reference to the Exhibits filed with the Company’s Form 20-F filed with the SEC on November 15, 2011.10.13
Mining and production agreement between the Company, Hans Peter Flueck, Plata Litoral Inc. Royal Sovereign Internationale, Minera Rimpago Company Limited Peru S.A.C. and Rimpago Company Ltd.
Incorporated by reference to the Exhibits filed with the Company’s Form 20-F filed with the SEC on November 15, 2011.10.14
Hotstone Gold Property Option Agreement between the Company, David L. Gibson and Trio Gold Corp. dated January 6, 2012
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on January 13, 2012.16.1
Letter from Child Van Wagoner, dated August 15, 2012 regarding a change in certifying account.
Incorporated by reference to the Exhibits filed with the Company’s Form 6-K filed with the SEC on August 16, 2012.12.1
Certification required by Rule 13a-14(a) or Rule 15d-14(a) – Chief Executive Officer and Principal Financial Officer
Filed herewith13.1
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States code (18 U.S.C. 1350) – Chief Executive Officer and Principal Financial Officer
Filed herewith





69


SIGNATURES





The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.








COASTAL PACIFIC MINING CORP.By:
/s/Joseph BucciName:
Joseph BucciTitle:
CEO, President, Chief Financial Officer, Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer)





Date:   August 31, 2012





70