UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON
D.C. 20549


____________________





FORM
10-K/A


(Amendment
No. 1)





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


For the
fiscal year ended: June 30, 2009





or





£
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
transition period from _________ to _________





Commission
file number: 333-141505





Volcan
Holdings, Inc.


(Exact
Name of Registrant as Specified in its Charter)





Delaware
            
            98-0554790(State
      or Other Jurisdiction of Incorporation)
            
            (I.R.S.
      Employer Identification No.)





Level
      34, 50 Bridge Street
              Sydney,
      Australia
            
            2000(Address
      of Principal Executive Offices)
            
            (Zip
      Code)





Registrant’s
telephone number, including area code: + 61-2-8216-0777





Securities
registered pursuant to Section 12(b) of the Exchange Act: None





Securities
registered pursuant to Section 12(g) of the Exchange
Act:  None





____________________________(Title
      of Class)


________________





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes £  No
R





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes R  No
£





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 £ No R





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 during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes R No £





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. R














Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer,” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.


(check
one)





Large
      accelerated filer.
            o
            Accelerated
      filer
            oNon-accelerated
      filer   (Do not check if a smaller reporting
      company)
            £
            Smaller
      reporting company
            þ





Indicate
by check mark whether the registrant is a shell company (as defined by Rule
12b-2 of the Exchange Act). Yes £  No
R





The
aggregate market value of the voting and non-voting common equity of the
registrant held by non-affiliates, computed by reference to the average bid and
asked price of such stock, as of December 31, 2008 was approximately$1,725,057,213(for purposes of
determination of the aggregate market value, only directors, executive officers
and 10% or greater stockholders have been deemed affiliates.)





The
number of shares outstanding of the registrant’s common stock, par value $0.001
per share, as of October 29, 2009was
103,995,765 shares.














TABLE
OF CONTENTS








PagePART
      IItem
      1.
            Business
            1Item
      1A.
            Risk
      Factors
            15Item
      2.
            Properties
            21Item
      3.
            Legal
      Proceedings
            21Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            21PART
      IIItem
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters
      and  Issuer Purchases of Equity Securities
            21Item
      7.
            Management’s
      Discussion and Analysis of Financial Condition
      and   Results of Operations
            22Item
      8.
            Financial
      Statements and Supplementary Data
            27Item
      9.
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
            27Item
      9A(T).
            Controls
      and Procedures
            27PART
      IIIItem
      10.
            Directors,
      Executive Officers and Corporate Governance
            28Item
      11.
            Executive
      Compensation
            30Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            31Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            32Item
      14.
            Principal
      Accountant Fees and Services
            33PART
      IVItem
      15.
            Exhibits
      and Financial Statement Schedules
            34SIGNATURES
            37








i





PART
I


Item
1 Business.





Corporate
History





Our
wholly owned operating subsidiary, Volcan Australia Corporation Pty Ltd, an
Australian proprietary company (“VAC”), was formed in Australia on June 11, 2008
for the purpose of conducting bauxite and other mineral exploration
activities.  Dunn Mining Inc. (“Dunn Mining”) was incorporated on
April 4, 2006 in Nevada, for the purpose of acquiring and exploring mineral
properties for economically recoverable reserves. Dunn Mining previously owned a
100% interest in one mineral claim that had lapsed and was reviewing other
potential acquisitions in the resource and non-resource sectors.  On
September 11, 2008, Dunn Mining was merged with and into Volcan Holdings, Inc.,
a Delaware corporation (“Holdings”), for the purpose of changing its state of
incorporation to Delaware from Nevada, changing its name and effectuating a
1-for-6.1728395 forward stock-split, all pursuant to a Certificate of Ownership
and Merger and Articles of Merger, each dated September 11, 2008 and approved by
stockholders on September 11, 2008.





On
September 12, 2008, Holdings entered into a Share Exchange Agreement (the
“Exchange Agreement”) by and among Holdings, VAC and L’Hayyim Pty Ltd as trustee
for The L’Hayyim Trust, the holder of all of the outstanding capital stock of
VAC (the “VAC Shareholder”). Upon closing of the transaction contemplated under
the Exchange Agreement (the “Share Exchange”), on September 12, 2008, the VAC
Shareholder transferred all of the issued and outstanding capital stock of VAC
to Holdings in exchange for 90,000,000 newly issued shares of common stock of
Holdings and the right to receive the $1,500,000 in cash at the end of any
fiscal quarter in which Holdings has cash on hand of at least $5,000,000. Such
Share Exchange caused VAC to become a wholly owned subsidiary of
Holdings.  In connection with the Share Exchange, Holdings sold
36.3143 of its “Units” in a private placement offering to accredited investors
(the “Private Placement”), with each Unit consisting of 100,000 shares of common
stock of Holdings and a five year warrant to purchase 100,000 shares of common
stock for $1.00 per share, for a purchase price of $35,000 per
Unit.  Immediately following the Share Exchange, under the terms of a
split-off agreement, Holdings transferred all of its pre-Share Exchange assets
and liabilities to its wholly owned subsidiary, Dunn Mining Holdings, Inc.
(“SplitCo”), a Delaware corporation.   Thereafter, pursuant to a
stock purchase agreement, Holdings transferred all of the outstanding capital
stock of SplitCo to its then-majority stockholder in exchange for the
cancellation of such stockholder’s interest in Holdings.





After
the Share Exchange and the split-off, Holdings succeeded to the business of VAC
as its sole line of business, the size of Holdings’ Board of Directors was
increased from one director to three directors, Holdings’ then-current sole
officer and director resigned and Pnina Feldman, Sholom Feldman and Paul
Stephenson were appointed to Holdings’ Board of Directors.  Pnina
Feldman was appointed as Chief Executive Officer, President and Chairman of the
Board of Directors and Sholom Feldman was appointed as Principal Accounting
Officer, Treasurer and Secretary.





Overview





We
are a mineral exploration company that intends to explore prospective bauxite
deposits in New South Wales, Australia and Queensland, Australia. We are an
exploration stage company that has not generated any revenue to date and we do
not expect to start generating any revenue in the immediate future.





The
New South Wales Department of Primary Industries granted VAC the exclusive right
to explore approximately 5,000 square kilometers of prospective ground along the
eastern Australian Great Dividing Range.  In addition, VAC has applied
for the right to explore an additional 4,000 square kilometers of land along the
eastern Australian Great Dividing Range in Queensland from the Queensland
Department of Mines and Energy. While our geologists have identified prospective
deposits within these regions that we believe may contain a substantial amount
of high grade bauxite, the extent of such bauxite has not been identified to
standards issued by Australia’s Joint Ore Reserves Committee (“JORC”). We intend
to work with a reputable independent geological consulting firm in conducting a
field assessment program aimed at defining a JORC compliant
resource.




1





About
Bauxite





Bauxite
is a naturally occurring, heterogeneous material composed primarily of one or
more aluminum hydroxide minerals, plus various mixtures of silica, iron oxide,
titania, aluminosilicate, and other impurities in minor or trace amounts. The
principal aluminum hydroxide minerals found in varying proportions with bauxites
are gibbsite and the polymorphs boehmite and diaspore. Bauxites are typically
classified according to their intended commercial application: abrasive, cement,
chemical, metallurgical, refractory, etc. According to the United States
Geological Survey, the bulk of world bauxite production (approximately 85%) is
used as feed for the manufacture of alumina through a wet chemical caustic leach
method commonly known as the Bayer process. Subsequently, the majority of the
resulting alumina produced from this refining process is in turn employed as the
feedstock for the production of aluminum metal by the electrolytic reduction of
alumina in a molten bath of natural or synthetic cryolite (Na3AlF6), the
Hall-Héroult process.





General
Bauxite Formation





Because
it is a mixture of minerals, bauxite itself is a rock, not a mineral. Bauxite is
reddish-brown, white, tan, and tan-yellow. It is dull to earthy in luster and
can look like clay or soil. Bauxite forms when silica in aluminum-bearing rocks
(that is, rocks with a high content of the mineral feldspar) is washed away
(leached). This alteration process occurs in tropical and subtropical weathering
climates, or in a volcanic environment.





Lateritic
bauxites (silicate bauxites) are distinguished from karst bauxites (carbonate
bauxites). The early discovered carbonate bauxites occur predominantly in Europe
and Jamaica above carbonate rocks (limestone and dolomite), where they were
understood to be formed by lateritic weathering and residual accumulation of
intercalated clays or of clayey dissolution residues of the
limestone.





The
lateritic bauxites occur in many countries of the tropical belt. They were
understood to be formed by lateritization of various silicate rocks such as
granite, gneiss, basalt, syenite and shale. Compared with iron-rich laterites,
the formation of bauxites demands even more intense weathering conditions with a
very good drainage. This enables dissolution of kaolinite and precipitation of
gibbsite. Zones with highest aluminium content are frequently located below a
ferruginous surface layer. The aluminium hydroxide in the lateritic bauxite
deposits is almost exclusively gibbsite.





Production
Trends





In
2008, Australia was the top producer of bauxite with almost one-third of the
world’s share, followed by China, Brazil, India and Guinea.





Our
Bauxite Prospects





Our
granted exploration tenement in New South Wales comprises two separate project
areas along the eastern Australian Great Dividing Range, which include the New
England Project (over 1,000 km2 granted on February 23, 2009) and the Monaro
Project (over 3,500 km2
granted February 13, 2009). We have also applied for a license to commence
exploration activities on approximately 4,000 square kilometers in Queensland,
consisting of the following projects: the Atherton (390 km2), Kingaroy (2,814 km2), Childers (31 km2), Pittsworth (1,422 km2) and Ravenshoe (108 km2).





Previous
Geological Work





Discovery
of bauxitic laterite deposits in the eastern Australian Great Dividing Range
dates back to 1875. In the 1940s, the New South Wales Geological Survey took an
assessment of New South Wales’ resources. This state survey was followed by an
Australia-wide survey by the Department of National Development in the 1950s
resulting in the identification of numerous bauxite deposits along the length of
the Great Dividing Range. As part of this work, several hundred samples were
analyzed from numerous shafts and exposures. We believe that the results of this
work suggest that high-quality bauxite containing moderate to high soluble
alumina and low silica has the potential to be widespread throughout our
tenement areas. However, we believe that, when the classical, deeply weathered,
large tonnage pisolitic bauxite deposits at Weipa, Gove and in the Darling
Ranges were discovered during the 1950s, interest in the eastern Australian
deposits largely waned.




2




Bauxite
Resource Potential at Great Dividing Range





Recent
scientific work on the geological environment in the eastern Great Dividing
Range has revealed that there is an extensive bauxite depositional system, which
we believe is fundamentally different from the classical bauxite formational
environments currently being explored in other regions of Australia. In
particular, preliminary geological analysis of the land we are exploring has
lead us to believe that the alteration and weathering of Tertiary basaltic
volcanic rocks near the surface has resulted in the formation of gibbsite-rich
bauxite deposits. In addition, as a result of field investigations and the
analysis and interpretation of multi-spectral satellite data, we believe that we
have identified large areas of potentially rich bauxite deposits.





We
believe that the soluble alumina content of the bauxite deposits occurring
within our current and proposed tenement areas will compare favorably to the
bauxite deposits currently being mined near the Darling Ranges in southwestern
Australia. Furthermore, we believe that the bauxite deposits in our current and
proposed tenement areas will have relatively low silica contents which are
considered desirable for economic alumina production using the Bayer process to
generate powdered alumina for smelting in Australia, and/or for overseas export.
Moreover, we believe that the deposits in our current and proposed tenement
areas will be surface deposits and will, therefore, be relatively easy and
inexpensive to mine.





We
intend to explore our current and proposed tenement areas using an advanced
volcanostratigraphic and palaeogeographic geo-formational model to identify
areas considered prospective for drilling and bulk sampling.





Prospect
Description, Location and Access





Our
current and proposed tenement areas total just under 10,000 square kilometers
and their details are set forth in the table below. Access to the properties is
by major and minor roads and they are accessible year round. There are no
weather related conditions preventing access to the property on a year round
basis. We know of no environmental or archaeological issues related to these
properties. Access to some parts of the properties may be affected by native
title under Australian law. For more information, please refer to the summary of
native title in "Compliance with Government Regulation”.





Current
      and Proposed Tenement AreasTenement
      Number
              Units
              Area
      (sq km)
              Status
              Project
      Name and StateEL
      7301
              336
              1008
              granted
      23/2/2009
              Inverell
      East, New South WalesEL
      7302
              282
              846
              granted
      23/2/2009
              Inverell
      East, New South WalesEL
      7291
              238
              714
              granted
      13/2/2009
              Monaro,
      New South WalesEL
      7292
              250
              750
              granted
      13/2/2009
              Monaro,
      New South WalesEL
      7293
              234
              702
              granted
      13/2/2009
              Monaro,
      New South WalesEL
      7294
              231
              693
              granted
      13/2/2009
              Monaro,
      New South WalesEL
      7295
              227
              681
              granted
      13/2/2009
              Monaro,
      New South WalesEPMA
      18139
              100
              300
              offered
      23/10/2009
              Atherton,
      QueenslandEPMA
      18138
              31
              93
              offered
      23/10/2009
              Atherton,
      QueenslandEPMA
      13186
              93
              279
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18141
              99
              297
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18134
              85
              255
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18149
              98
              294
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18152
              86
              258
              offered
      23/10/2009
              Kingaroy,
      Queensland
    3
    EPMA
      18133
              100
              300
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18131
              100
              300
              offered
      23/10/2009
              Kingaroy
      QueenslandEPMA
      18144
              100
              300
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18153
              100
              300
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18142
              62
              186
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18143
              15
              45
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18132
              31
              93
              offered
      23/10/2009
              Kingaroy,
      QueenslandEPMA
      18135
              96
              288
              offered
      23/10/2009
              Pittsworth,
      QueenslandEPMA
      18155
              100
              300
              offered
      23/10/2009
              Pittsworth,
      QueenslandEPMA
      18156
              73
              219
              offered
      23/10/2009
              Pittsworth,
      QueenslandEPMA
      18137
              96
              288
              offered
      23/10/2009
              Pittsworth,
      QueenslandEPMA
      18146
              75
              225
              offered
      23/10/2009
              Pittsworth,
      QueenslandEPMA
      18145
              34
              102
              offered
      23/10/2009
              Pittsworth,
      QueenslandEPMA
      18140
              36
              108
              offered
      23/10/2009
              Ravenshoe,
      QueenslandTOTAL
              3,126
              9,378





Proposed
Exploration Program





We
are currently carrying out a structured exploration program over our current and
proposed tenement areas by working outwards from known bauxite deposits, and
mapping the structural and stratigraphic setting of bauxitic rocks to define
their aerial extent and thickness. Our proposed exploration program will also
use an advanced mineral mapping process utilizing the HyMap system. This mapping
program will be used to identify targets for drilling and bulk sampling. Samples
will be analyzed for reactive silica content, soluble alumina and physical and
mineralogical properties to inform later beneficiation studies.





Plan
of Operation





To
fund our further exploration and development activities, we may seek to raise
additional funds through public or private offerings of our securities during
the next three months. If we are unable to raise additional funds on a timely
basis or at all, any progress with respect to our exploration activities may be
adversely affected. In addition to self funding these activities, we are
actively seeking strategic partners that would fund the development of some of
our projects.





Provided
that we are successful in securing sufficient capital or a strategic partner, we
anticipate that we will spend approximately $27 millionon our research and
development efforts during our fiscal year ending June 30, 2010 to explore the
geology of our current and proposed tenement areas, through:





·
            aerial
      photo and remote data
interpretation;




·
            pre-volcanic
      and intra-volcanic paleotopographic and paleodrainage
      analysis;




·
            high
      resolution image based mapping and target
  selection;




·
            drilling,
      sampling and sub-surface mapping;
and




·
            bulk
      sampling of identified bauxite
deposits.







Our
other expected uses of cash during fiscal 2010 are for conducting negotiations
with landholders regarding land access agreements, conducting an economic
resource assessment, commissioning independent geological reports and for
general and administrative expenses.







4




We
do not expect any purchases of plant and equipment we make during fiscal 2010 to
be material. Nor do we intend to engage in any material sales and marketing
efforts during such period. As our current and proposed tenement areas are in
the exploration phase, we do not expect to generate any revenues from operations
in fiscal 2010.





Competitive
Factors





The
mineral exploration and mining business is competitive in all phases of
exploration, development, production and financing. We compete with a number of
other entities, many of which have greater financial resources than we do, in
the search for and the acquisition and financing of productive mineral
properties. As a result of this competition, if we seek to expand our asset
base, we may be unable to acquire licenses to explore properties in the future
on terms we consider acceptable.





In
addition, we compete with other companies for the recruitment and retention of
qualified employees. These factors could result in competitors exploring mineral
properties of greater quality and interest to prospective investors who may
finance additional exploration and development. This competition could have an
adverse impact on our ability to finance further exploration and to achieve the
financing necessary for us to develop our mineral properties.





There
are several mineral exploration companies in Australia, many of which, unlike
us, also have mining operations. Because (a) we do not expect to produce any
minerals in the near future, and (b) our tenements give us, or upon grant will
give us, a monopoly for exploration in each area, we therefore expect to compete
with these companies primarily for financing, equipment, contractors and
personnel.





Management
Services Agreement





Australian
Gemstone Mining PTY Ltd. (“AGM”) is an Australian proprietary company owned and
controlled by Pnina Feldman, a member of our Board of Directors and our Chief
Executive Officer. We and AGM are parties to a Management Services Agreement,
dated as of July 1, 2008, pursuant to which four individuals (each a “Key
Person”) provide executive and corporate services to us, including geological
and technical expertise. During the term of the Management Services Agreement,
we will pay AGM a retainer of $175,000 per annum (plus the required Goods and
Services Tax (“GST”)) with respect to each Key Person, being the two chief
geoscientists, Dr. Simon Pecover and Dr. Robert Coenraads, and the two executive
directors, Pnina Feldman and Sholom Feldman, for an aggregate amount of $700,000
(plus GST) per annum. However, the directors of AGM have agreed not to take any
money for the wages of the Key Persons until further funds are raised and the
project has an independently verified resource statement
completed.  In addition, we are not required to pay any additional
fees, including directors’ fees, to AGM or the Key Persons personally with
respect to the services to be provided by the Key Persons to us. Should we need
further executive personnel, or if our operations expand to require further
services than currently required from the Key Persons as set out in the
Management Services Agreement, then AGM may provide such additional services to
us on reasonable arm’s-length terms as approved by our independent director(s)
or by our shareholders in a general meeting.





Neither
we nor AGM may terminate the Management Services Agreement prior to July 1,
2010, except that we may terminate the Management Services Agreement immediately
if any of the following events occur:





·
            AGM
      or any of its directors, officers, employees or agents is guilty of gross
      misconduct in relation to the provision of the services to
    us;


·
            AGM
      suffers an Insolvency Event (as defined in the Management Services
      Agreement);


·
            the
      Key Persons engage in any willful or grossly negligent conduct which is
      likely, in our reasonable opinion, to be detrimental to us;
    or


·
            AGM
      is guilty of any gross default, breach, non-observance or non-performance
      of any of the terms and conditions contained in the Management Services
      Agreement.





However,
no provision of the Management Services Agreement precludes any of our Key
Persons from terminating their services to us at any time and for any or for no
reason by terminating their employment with AGM. Furthermore, if any of our Key
Persons do terminate their employment with AGM, the Management Services
Agreement does not grant us the authority to require AGM to hire a replacement
that is acceptable to us.




5




The
Management Services Agreement requires that AGM provide us with suitable fully
serviced offices, which are located at Level 34, 50 Bridge Street, Sydney,
Australia 2000.  We are obligated to pay AGM a one time fee of $27,187
for use of the offices and monthly rent of $8,760.  The directors of
AGM have agreed to defer payment of these amounts until we raise further
funds.





The
offices and any additional administrative services, such as secretarial and
accounting services, are provided on reasonable arm’s-length terms as approved
by our independent director(s). During the fiscal year ended June 30, 2009, AGM
did not charge us for any such administrative services.





The
fees payable by us to AGM will be adjusted on July 1 of each year based on the
increase in the consumer price index for the preceding twelve months. No
adjustments, however, were made on July 1, 2009.





Employees





We
have no direct employees. Our officers and five other persons performing
services for us on a day-to-day basis, pursuant to the Management Services
Agreement, are paid by AGM. The following Key Persons provide executive and
corporate services to us, including geological and technical expertise, pursuant
to the Management Services Agreement:





·
            Pnina
      Feldman – Executive Director of
AGM;




·
            Sholom
      Feldman – Executive of AGM;




·
            Dr.
      Simon Pecover – Head Geoscientist of AGM;
and




·
            Dr.
      Robert Coenraads – Geoscientist of
AGM.





Compliance
with Government Regulations





Federal,
state and local authorities regulate the bauxite mining industry with respect to
matters such as prospecting for and mining minerals, inspection of mines to
regulate the treatment of the products of such mines, employee health and
safety, protection of the environment, reclamation and restoration of mining
properties after mining is completed, the discharge of materials into the
environment, surface subsidence from underground mining and native
title.  Numerous governmental permits and approvals are required for
mining operations.





Interests
in tenements in Australia are governed by the respective State legislation and
are evidenced by the granting of permits, licenses or leases.  Each
permit, license or lease is for a specific term and carries with it annual
expenditure and reporting commitments, as well as other conditions requiring
compliance.  Consequently, we could lose title to or our interest in
tenements if such conditions are not met or if insufficient funds are available
to meet expenditure commitments.





It
is also possible that, in relation to tenements in which we have an interest or
will in the future acquire such an interest, there may be areas over which
legitimate common law native title rights of Aboriginal Australians
exist.  If native title rights do exist, our ability to gain access to
tenements (through obtaining consent of any relevant landowner), or to progress
from the exploration phase to the development and mining phases of operations
may be adversely affected.





The
possibility exists that new legislation and/or regulations and orders may be
adopted that may materially adversely affect our mining operations, our cost
structure and/or our customers' ability to use bauxite.  New
legislation or administrative regulations (or judicial interpretations of
existing laws and regulations), including proposals related to the protection of
the environment that would further regulate the mining industry, may also
require us to change operations significantly or incur increased
costs.





6




New
South Wales





Mining Act 1992 (New South
Wales) (“NSW Mining Act”). The NSW Mining Act regulates the mining
industry and makes provision for exploration licenses, assessment leases and
mining leases to be granted to applicants for the purposes of prospecting for
and mining minerals, including bauxite.





In
New South Wales, Australia, exploration licenses are granted by the New South
Wales Department of Primary Industries (the “NSW Department”) under the
provisions of the NSW Mining Act. The holder of an exploration license is
authorized to explore for only those mineral groups specified in the exploration
license within the tenement area.





In
New South Wales, the NSW Mining Act provides for two types of exploration
licenses:





·
            “standard”
      licenses; and




·
            low
      impact exploration licenses.





A
low-impact exploration license is excluded from the “right to negotiate”
provisions of the Native Title Act (1993) but authorizes only a limited range of
prospecting operation. For further information on native title including the
“right to negotiate”, see “Aboriginal Heritage” below.





Prior
to the granting of an exploration license, newspaper advertisements giving
notice of the application must be placed by the applicant on the request of the
NSW Department. Exploration licenses may be for a period not exceeding five
years (but, consistent with current policy, are usually granted for a period of
two years), after which time they can be renewed for a further term of up to
five years (but, again, current policy is to renew for two year periods), with
the opportunity for subsequent renewals. Normally, exploration licenses are
required to be reduced by 50% on each renewal. This is to ensure that
exploration ground is ‘turned over’ and made available for other explorers to
apply their own concepts, skills or technologies to such areas. For an
exploration license to be renewed the following criteria in relation to
exploration activity should be satisfied:





·
            the
      expenditure and reporting conditions of the license have been
      satisfactorily complied with;




·
            the
      license area has been explored effectively;
and




·
            a
      satisfactory proposed program for the renewal period has been
      submitted.





Failure
to comply with the expenditure requirements of a license may lead to forfeiture
of that license. The expenditure requirement is set by the NSW Department based
on the area covered by the license. Under each of our licenses we have a minimum
expenditure requirement of $590,000. To date, we have exceeded the minimum
expenditure requirement.  In addition, until our tenement application
in Queensland is approved, we will not be in a position to estimate the
expenditure requirements we will have at such time.





In
addition to expenditure requirements, an exploration license is subject to such
other license conditions as the Minister may impose. These conditions generally
include conditions relating to the exploration activities, the protection of the
environment, the protection of public and private interests, rehabilitation of
the land, reporting requirements and the posting of security to cover
obligations under the license.





The
holder of an exploration license is required to enter into an access agreement
with the landholder before carrying out any exploration activities on private
land within the tenement area. A landholder is entitled to be compensated for
any loss suffered or likely to be suffered as a result of the exploration
activities. If no agreement can be reached between the landholder and the
tenement holder, the matter may be referred to arbitration and finally can be
determined by the Minister. A separate access arrangement may be required with
native title holders in certain circumstances. As of the date of this report, we
have yet to enter into any access agreements with the landowners of our current
and proposed tenement areas.





The
holder of an exploration license may apply for an assessment lease, mining lease
or mineral claim over the land the subject of the exploration
license.





7




An
assessment lease is designed to allow retention of rights over an area in which
a significant deposit has been identified, if mining the deposit is not
commercially viable in the short term but there is a reasonable prospect that it
will be in the longer term. The holder is allowed to continue prospecting
operations and to recover minerals in the course of assessing the viability of
commercial mining. Assessment leases may be granted for up to five years and may
be renewed for further periods of up to five years.  We are not
currently a party to any assessment leases.





A
mining lease provides the holder with the right to mine for and recover
particular mineral deposits on the tenement. Mining leases may be granted for a
term of up to 21 years and may be renewed for further periods of 21 years or,
with the consent of the Premier of New South Wales, a longer period. Royalties
are payable to the Crown (New South Wales) for minerals extracted. The current
rate for bauxite is A$0.35 per ton.





Aboriginal
Heritage.There may be sites of Aboriginal heritage or
significance located on our tenement properties.





In
New South Wales, the National Parks and Wildlife Act of 1974 (“NPWA”) covers the
major requirements for protection of Aboriginal objects, Aboriginal places and
Aboriginal remains. It is an offence to knowingly destroy, deface or damage an
Aboriginal object, place or remains without the consent of the Director-General
of the Department of Environment and Conservation.





Native
Title.In June 1992, the High Court of Australia held in Mabo
v Queensland that the common law of Australia recognizes a form of native title.
In order to maintain a native title claim the persons making such claim must
show that they enjoyed certain customary rights and privileges in respect of a
particular area of land and that they have maintained their traditional
connection with that land. Such a claim will not be recognized if the native
title has been extinguished, either by voluntary surrender to the Crown
(Commonwealth of Australia), death of the last survivor of a community entitled
to native title, abandonment of the land in question by that community or the
granting of an “inconsistent interest” in the land by the Crown. An example of
an inconsistent interest would be the granting of a freehold or certain
leasehold interest in the land. The granting of a lesser form of interest will
not extinguish native title unless it is wholly inconsistent with native
title.





After
the Mabo case, considerable uncertainty existed surrounding the validity of
proprietary rights in Australia, including mining tenements and as a consequence
the Native Title Act (1993) (the “NTA”) was enacted by the Commonwealth
Parliament. In summary, the NTA:





·
            provides
      for the recognition and protection of native
  title;




·
            establishes
      a regime by which claims for native title and compensation can be
      determined by the Federal Court of Australia (the “Federal
      Court”);




·
            provides
      procedures by which any future act affecting native title (such as the
      granting of a mining tenement) may be validly undertaken and by which
      registered native title claimants and native title holders may be afforded
      certain procedural rights including the “right to
    negotiate”;




·
            makes
      valid certain “past acts” which would otherwise be invalidated because of
      native title;




·
            extinguishes
      native title by the grant of private freehold title and exclusive
      possession tenures such as freeholding
leases;




·
            establishes
      the position of a Native Title Registrar with responsibility to consider
      whether claims filed pass the native title requirements, maintain
      registers of native title claims, native title determinations and
      indigenous land use agreements, and provide mediation services to parties
      to native title applications; and




·
            establishes
      the National Native Title Tribunal (the “Tribunal”), with responsibility
      to assist the Native Title Registrar and provide services and support to
      parties to native title claims.




The
Native Title (New South Wales) Act (1994) was subsequently enacted to complement
the NTA and validate certain acts attributable to the State
government.







8




The
NTA provides for procedures whereby a claimant may file an application for a
determination of native title with the Federal Court. Once a native title claim
has been filed, the Federal Court will refer the claim to the Native Title
Registrar who must determine whether the claim meets certain conditions
concerning the merits of the claim, and certain procedural and other
requirements established by the NTA (the “Registration Test”). If a native title
claim is successfully proved, the then current holder of any mining tenement may
be liable for compensation for any effect the grant of that tenement has on the
native title proved to have existed.




The
NTA provides registered native title claimants/native title holders with
procedures for future grants of exploration licenses that are collectively known
as the future act regime. After registration of their native title claim,
claimants will be entitled to the “right to negotiate” with respect to certain
proposed future acts (such as the grant of tenements) that may affect native
title.





Grants
of “standard” exploration licenses are subject to the applicant selecting either
to follow the right to negotiate procedure under the NTA or the Minister
imposing a license condition requiring the Minister’s consent prior to carrying
out exploration activities on potential native title land. Risk
factors





The
possible existence of native title and/or native title claims in relation to
some of the land on which our tenement properties are located may have an
adverse impact on our activities and our abilities to fund these
activities.  It is impossible at this stage to quantify the impact
that these matters may have on our operations but the main risks
include:





·
            delays
      or difficulties in obtaining the grant of our Applications, renewals or
      conversions of our tenement interests, or further applications as a result
      of the right to negotiate process, as this process can take as long as two
      years;




·
            we
      may be liable for the payment of compensation as a result of agreements
      made pursuant to the right to negotiate or alternative process or as a
      result of a compensation order made by the Federal Court in the event
      native title has been determined to exist.  The amount of such
      compensation is not quantifiable at this
stage;




·
            if
      native title is found to exist the nature of the native title may be such
      that consent to mining is required from the native title holders but is
      withheld or only granted on conditions unacceptable to us;
    and




·
            the
      risk that Aboriginal sites and objects exist on the land the subject of
      our Applications and the existence of such sites and objects may preclude
      or limit mining activities in certain areas.  Further, the
      disturbance of such sites and objects is likely to be an offence under the
      applicable legislation, potentially exposing us to fines and other
      penalties.





Mine
Safety.The following statutes are applicable to mining and
exploration activities in New South Wales: Occupational Health and Safety Act
2000, Mine Health and Safety Act 2004 and Explosives Act 2003.  These
statutes and their supporting regulations set out requirements for ensuring that
New South Wales mines are safe and healthy. These requirements spell out the
duties of different groups of people who play a role in workplace health and
safety. Where a conflict arises, the Occupational Health and Safety Act 2000
prevails.





Environmental Laws.We
are subject to various federal and state environmental laws which regulate the
particular environmental aspects of mining operations.  In New South
Wales, a tenement must be granted by the Minister under the NSW Mining Act
before anyone can prospect, explore for or mine publicly owned minerals, whether
on unalienated Crown (New South Wales) or private land. Before a tenement can be
granted, development consent/project approval must be obtained under the
Environmental Planning and Assessment Act 1979 (the “EP&A
Act”).





The
NSW Mining Act empowers the Minister for Mineral Resources to impose conditions
on tenements. Environmental and rehabilitation performance is enforced and
regulated through tenement conditions. Other government agencies may have
additional requirements.





Exploration
tenements’ standard conditions require companies to seek approval for activities
which disturb the surface of the land and to submit a security
deposit.







9




Mining
tenements’ standard conditions require companies to submit a Mining Operations
Plan (“MOP”) prior to commencing operations, subsequent Annual Environmental
Management Reports (“AEMR”) and a security deposit.





All
mining and petroleum projects and most exploration activities require
environmental assessment under the EP&A Act before they can be carried out.
Development that is wholly prohibited by an environmental planning instrument
cannot be carried out in any circumstance. Mining, petroleum and exploration
related activities declared to be exempt developments in the State Environmental
Planning Policy (Mining Petroleum and Extractive Industries) of 2007 do not
require any environmental assessment under the EP&A Act; however, they may
still require approval under other legislation, including the Mining Act, before
they can be carried out. Approval will not be given if the relevant approval
agency considers that the environmental impacts of the project are
unacceptable.





The
following sets out the most common environmental assessment requirements for
mining and exploration activities under the EP&A Act. The following comments
generally apply to all new mining projects and most exploration activities. The
environmental assessment requirements for modifications and expansions to
existing mining projects may be different to those identified below due to
transitional provisions associated with planning reforms. Independent expert
advice should always be obtained regarding the environmental assessment
requirements for approvals related to mining projects and large exploration
projects.





·
            Exploration Proposals.
      The Department is the determining and approval authority for all
      exploration proposals other than those identified in Schedule 1 of the
      State Environmental Planning Policy (Major Projects) 2005. In most cases a
      Review of Environmental Factors should accompany an exploration proposal.
      If the assessment process indicates that there is a likelihood of
      significant environmental impact then an Environmental Impact Statement
      must be prepared by the proponent.




·
            Mining Proposals. New
      mining projects and any expansion of existing projects requiring the grant
      of a mining lease will require either development consent under Part 4 or
      project approval under Part 3A of the EP&A Act, depending on the scale
      and location of the project and, in some circumstances, the existing
      approvals applying to the project. The expansion of mining operations on
      some existing lease areas may not currently require approval under either
      Parts 3A or 4 due to transitional provisions associated with the
      introduction of Part 3A of the EP&A
Act.





All
applications for approval of mining proposals under Parts 3A or 4 of the
EP&A Act must be accompanied by an environmental impact assessment. In the
case of Part 3A, this is called an “environmental assessment”. The environmental
assessment must address the matters identified by the Minister for Planning. For
mines requiring consent under Part 4, the environmental impact assessment may be
either a Statement of Environmental Effects or an Environmental Impact
Statement, depending on the scale and location of the activity. A Species Impact
Statement may also be required in some circumstances. In all cases the
environmental impact assessment and applications are publicly exhibited, and
public submissions are sought, before the application is determined by the
appropriate authority.





Queensland





Mineral Resources Act
1989 (Queensland)
(the “MRA”).  The MRA
governs the mining industry and makes provision for mining tenements to be
granted to applicants for the purposes of prospecting for and mining minerals,
including bauxite.





The
MRA provides the legislative framework for exploration, development and mining
tenure in the State of Queensland. The MRA is administered by the Department of
Mines and Energy (Queensland) (the “QSD Department”). The types of mining
tenements that are granted and administered under the MRA include prospecting
permits, exploration permits, mineral development licenses, mining claims and
mining leases.





A
prospecting permit entitles the holder to prospect for and/or hand-mine for
minerals (excluding coal) and/or peg a mining lease or mining claim on the
available land specified.  There are two types of prospecting
permits:





·
            a
      parcel prospecting permit which can be granted for a particular parcel for
      a term of three months; and




10




·
            a
      district prospecting permit which can be granted for all available land
      within a mining district for a term of 1-12 months and is subject to the
      holder obtaining the written consent of the land owner for access to
      occupied land.





Different
exploration permits are required for minerals and for coal. An exploration
permit:





·
            is
      issued for the purpose of
exploration;




·
            allows
      the holder to take action to determine the existence, quality and quantity
      of minerals on, in or under land by methods which include prospecting,
      geophysical surveys, drilling, and sampling and testing of materials to
      determine mineral bearing capacity or properties of
      mineralisation;




·
            may
      eventually lead to an application for a mineral development licence or
      mining lease;




·
            can
      be granted for a period of up to five years;
and




·
            can
      be renewed.





A
mineral development license:





·
            allows
      the holder to undertake geoscientific programs (e.g. drilling, seismic
      surveys), mining feasibility studies, metallurgical testing and marketing,
      environmental, engineering and design studies to evaluate the development
      potential of the defined resource;




·
            can
      be granted to the holder of an exploration permit for a period of up to
      five years where there is a significant mineral occurrence of possible
      economic potential; and




·
            can
      be renewed.





A
person can hold or have an interest in a maximum of two mining claims at any one
time. A mining claim:





·
            is
      granted to holders of prospecting permits to carry out small-scale
      operations with limited use of
machinery;




·
            can
      be up to one hectare in area;




·
            entitles
      the holder to prospect and hand-mine for specified
    minerals;




·
            must
      have an initial term not exceeding ten years;
  and




·
            is
      granted for minerals other than
coal.





A
mining lease:





·
            is
      granted for mining operations;




·
            entitles
      the holder to machine-mine specified minerals and carry out activities
      associated with mining or promoting the activity of
  mining;




·
            is
      not restricted to a maximum term - this is determined in accordance with
      the amount of reserves identified and the projected mine life;
      and




·
            can
      be granted for those minerals specified in either the prospecting permit,
      exploration permit or mineral development licence held prior to the grant
      of the lease.





The
MRA does not specifically define the area or shape of land that can be granted
under a lease although these must be justifiable.





Our Tenements.Our tenement interest
comprises 21 exploration permit applications which are currently being
processed by the QSD Department. We have provided the QSD Department with all
relevant information for the purposes of processing the
applications.





11






Once
the Department is satisfied that the applications satisfy the requirements of
the MRA, a recommendation will be made to the Queensland Mines and Energy
Minister (“QSD Minister”) to grant our exploration permits subject to any
conditions imposed by the QSD Minister. We submitted our applications on
October 23, 2009.





Once
the exploration permits are granted, we will need to provide the QSD Minister
with the following reports in respect of each permit:





·
            an
      annual report to the QSD Minister, within one month after each
      anniversary of the day the exploration permit takes
  effect;




·
            a
      report about the reduction in the area of the exploration permit, given
      within two months after the reduction takes effect;
    and




·
            a
      report summarising the results of exploration for the whole term of the
      exploration permit given within two months after the exploration
      permit ends.





The
QSD Minister also has the discretion to request any further reports or request
any materials to be obtained.





The
exploration permits may be renewed by application. For an exploration permit to
be renewed the following criteria should be satisfied:





·
            the
      expenditure and reporting conditions of the licence have been
      satisfactorily complied with;




·
            the
      licence area has been explored effectively;
and




·
            the
      application for the renewal of an exploration permit must be accompanied
      by a statement describing the program of work proposed to be carried out
      under the authority of the exploration permit (if renewed) and detailing
      the estimated human, technical and financial resources to be used to carry
      out the exploration work during each year of the term of the exploration
      permit (if renewed) and detailing the applicant’s financial and technical
      resources for carrying out the
work.





The
QSD Minister has the power to request further information for renewal where the
QSD Minister is not satisfied with the information contained in the application
for a renewal of an exploration permit.





The
holder of an exploration permit must expend certain amounts on exploration
activities during the term, with failure to do this leading to possible
forfeiture of the permit.





In
addition to expenditure requirements, an exploration permit is subject to such
other license conditions as the QSD Minister may impose.  These
conditions generally include conditions relating to the exploration activities,
the protection of the environment, the protection of public and private
interests, rehabilitation of the land, reporting requirements and the lodgment
of security to cover obligations under the permit.





The
holder of an exploration permit is required to enter into an access agreement
with the landholder before carrying out any exploration activities on the
tenement area.  A landholder is entitled to be compensated for any
loss suffered or likely to be suffered as a result of the exploration
activities.  If no agreement can be reached between the landholder and
the tenement holder, the matter may be referred to arbitration and finally can
be determined by the Minister.  An access arrangement may be required
with native title holders in certain circumstances.





The
holder of an exploration permit may apply for a mineral development license or
mining lease over the land the subject of the exploration permit.





Aboriginal
Heritage.In Queensland, the Aboriginal Cultural Heritage Act
1974 (Queensland) (the “ACHA”) covers the major requirements for protection of
Aboriginal objects, Aboriginal places and Aboriginal remains. The ACHA provides
that there exists a cultural heritage duty of care and therefore, all reasonable
and practical measures must be taken to ensure that an activity does not cause
harm to Aboriginal cultural heritage. This is regardless of whether the
Aboriginal cultural heritage site is recorded in a register, or on private land,
or not yet discovered. The Cultural Heritage Duty of Care Guidelines, published
by Gazette on April 16, 2004, outline how the cultural heritage duty of care
requirement is met.




12




It
is an offence to knowingly destroy, deface or damage an Aboriginal object, place
or remains. Penalties apply for breach of this duty.





In
addition to the ACHA which protects Aboriginal cultural heritage, the Queensland Heritage Act 1992
(Queensland) allows authorised persons to inspect places or objects of cultural
heritage significance.





Native Title
Claims.  The Native Title (Queensland) Act 1993 was enacted to
complement the NTA and validate certain acts attributable to the state
government.  Please see above for a discussion of the Mabo case and
the NTA.





The
right to negotiate procedure requires, in respect of our applications, the State
of Queensland to give notice of its intention to grant an exploration permit to
any registered native title claimants, prescribed bodies corporate and the
public.  Generally, in relation to applications for exploration
licenses, the State will issue a notice including a statement that the tenement
should be granted under the expedited procedure.  This means the
tenement will be granted without negotiations with any native title
claimants/native title holders.  Registered native title
claimants/native title holders may lodge an objection to this and if there are
no objections lodged within a four month period, the State may proceed to grant
the tenement in accordance with the relevant mining legislation.  If
one or more objections are lodged the matter is referred to the Tribunal which
will determine the matter if no agreement is reached.





Indigenous Land Use
Agreements.  The QSD Department will grant mining tenements
over land on which native title is conclusively extinguished under the NTA and
the state legislation. An application for a mining tenement over land on which
native title has not been conclusively extinguished must first undertake the
right to negotiate process (as set out above) with the registered title
claimants or be a party to an indigenous land use agreement (the
“ILUA”).





An
ILUA is a voluntary agreement between a native title claimant group and others
about the use and management of land and waters which is binding once
registered.





Mine
Safety.  The following are the relevant mine safety legislation
applicable to mines in Queensland:





·
            Mining and Quarrying Safety
      and Health Act 1999. This law relates to safety and health in
      metalliferous mining and quarrying operations, and to mineral exploration
      other than exploration for coal, oil and
gas;




·
            Coal Mining Safety and Health
      Act 1999. The law relates to safety and health in the coal mining
      industry, including exploration for coal;
and




·
            Workplace Health and Safety
      Act 1995. This law covers all occupational health and safety
      matters in Queensland except where the two laws set out above
      apply.





These
acts and their supporting regulations apply to everyone who may affect the
safety or health of persons at a mine, everyone who may affect the safety or
health of persons as a result of operations or coal mining activities and any
person whose safety and health may be affected while at a mine or as a result of
operations or coal mining activities.





The
objectives of the acts are to protect the safety and health of persons at mines
and persons who may be affected by mining operations or activities and require
that the risk of injury or illness to any person resulting from mining
operations or activities is at an acceptable level.





Environmental
Laws.  We are subject to various federal and state
environmental laws which regulate the particular environmental aspects of mining
operations.







13




In
Queensland, a tenement must be granted by the Minister under the MRA before
anyone can prospect, explore for or mine publicly owned minerals, whether on
Crown (Commonwealth of Australia) or private land.  Before a tenement
can be granted, the requisite consents and approvals must be obtained under the
Environmental Protection Act 1994 (the “EPA”). The EPA provides for the issue of
environmental authorities for mining activities.





Under
the Environmental Protection and Other Legislation Amendment Act 2000,
provisions in the MRA relating to environmental management of mines were
transferred, with amendments, to the EPA. Chapter 5 of the EPA was further
amended in 2004 to simplify approval procedures for low impact mining
projects.





The
EPA is responsible for:





·
            setting
      environmental conditions;




·
            setting
      levels of environmental assessment for amendment
    applications;




·
            monitoring
      performance;




·
            conducting
      inspections and audits;




·
            ensuring
      adequate rehabilitation; and




·
            enforcing
      compliance with environmental
controls.





The
MRA facilitates the operation of the EPA in the mining and resources sector. The
Department is responsible for:





·
            accepting
      and processing all mining tenure applications and referring the relevant
      sections to the EPA forenvironmental
      impact assessment;




·
            issuing
      tenures under the MRA;




·
            issuing
      environmental authorities for prospecting permits and mining
      claims;




·
            promoting
      and facilitating industry commitment to environmental best practice;
      and




·
            monitoring
      and managing the rehabilitation of abandoned mine
  sites.





The
MRA empowers the QSD Mines Minister to impose conditions on tenements.
Environmental and rehabilitation performance is enforced and regulated through
tenement conditions.  Other government agencies may have additional
requirements.





Exploration
tenements' standard conditions require companies to seek approval for activities
which disturb the surface of the land and to submit a security
deposit.





Item
      1A.
            Risk
      Factors.





Risks
Related to Our Business





Since
we lack a meaningful operating history, it is difficult for potential investors
to evaluate our business.





We
were incorporated in June 2008. Our limited operating history makes it difficult
for potential investors to evaluate our business or prospective operations.
Since our formation, we have not generated any revenue and we do not expect to
generate revenue for the foreseeable future. As a startup, we are subject to all
the risks inherent in the initial organization, financing, expenditures,
complications and delays inherent in a new business. Investors should evaluate
an investment in us in light of the uncertainties encountered by start-up
companies in a competitive environment. Our efforts may not be successful and we
may not be able to attain profitability.







14




We
need additional financing to continue operations, which additional financing may
not be available on reasonable terms or at all.





We
have very limited funds and have not yet raised the funds that we require to
adequately develop our projects. The proceeds from the private placements that
we have conducted to date have been exhausted and we need to raise capital or
enter into a joint venture with respect to our current and proposed tenement
areas in order to continue our operations. Additional funds, however, may not be
available or, if available, may not be available on terms that are acceptable to
us.





We
may be required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings. Future
financings through equity investments are likely to be dilutive to existing
stockholders. Also, the terms of securities we may issue in future capital
transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, the issuance of
warrants or other derivative securities, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital
and/or financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition.





Our
ability to obtain needed financing may be impaired by such factors as the
capital markets, both generally and specifically in the mineral exploration
industry, and the fact that we are not profitable and do not generate any
revenue, which could impact the availability or cost of future financings. If we
are not able to raise capital in the near future and do not generate any
revenue, we may be required to cease operations.





We
are dependent upon key personnel whose loss may adversely impact our
business.





We
rely heavily on the expertise, experience and continued services of the two
geological specialists as well as other individuals on the management team we
engage through our Management Services Agreement with AGM. The loss of either of
the geological specialists engaged by AGM on our account, or an inability to
attract or retain other key individuals, either directly or through our
management services provider, could materially adversely affect us. Through our
Management Services Agreement, we seek to compensate and motivate our
executives, as well as other individuals providing services to us, but these
arrangements may not allow us to obtain or retain the services of key
individuals. As a result, if either of the geological specialists or other key
individuals on the management team engaged on our account were to cease
providing their services to us through AGM, we could face substantial difficulty
in securing a qualified successor and could experience a loss in productivity
while a successor obtains the necessary training and experience.





We
retain the services of our key personnel through a Management Services
Agreement, but our key personnel are not precluded from terminating their
services to us at any time, and for any, or no reason.





Our
key personnel provide executive and corporate services to us, including
geological and technical expertise, pursuant to a Management Services Agreement
between us and AGM, dated July 1, 2008. Except in certain limited circumstances,
neither we nor AGM may terminate the Management Services Agreement prior to July
1, 2010. However, no provision of the Management Services Agreement precludes
any of our key personnel from terminating their services to us at any time and
for any or for no reason by terminating their employment with AGM. Furthermore,
if any of our key personnel do terminate their employment with AGM, the
Management Services Agreement does not grant us the authority to require AGM to
hire a qualified successor. As a result, if any of our key personnel were to
cease providing their services for us through AGM, we could experience a
negative effect on our productivity until a qualified successor is
obtained.





Risks
Relating to Our Industry





Because
we solely engage in exploration stage activities, we have no mining operations
and our future operations are subject to substantial risks, including not being
able to conduct future mining operations.







15




We
are not a mining company, but rather an exploration company at the beginning
stage of our exploration operations. Our business is exploring for bauxite and
other minerals. We may be unable to generate revenues or make profits unless we
actually mine deposits. We would need to either mine the bauxite or other
minerals ourselves, find some other entity to mine the property on our behalf or
sell our rights in our properties.





Because
the amount of mineable bauxite found in our current and proposed tenement areas
is uncertain, any funds that we spend on exploration may be lost.





The
amount of deposits of bauxite in our current and proposed tenement areas that
may be mined at a profit is uncertain. Whether we or our surrogates or
successors will be able to mine these properties or claims at a profit, will
depend upon many factors, including:





·
            the
      size and grade of the deposits;




·
            whether
      we can obtain sufficient financing on acceptable terms to conduct our
      exploration activities;




·
            volatile
      and cyclical price activity of bauxite;
and




·
            the
      cost, personnel, and time burdens of domestic and foreign governmental
      regulation, including taxes, royalties, land use, importing and exporting
      of minerals, and environmental
protection.




If
our current and proposed tenement areas are unable to be mined at a profit
because the deposits may not be of sufficient quality or size or because it may
not be economically feasible to extract bauxite from the deposits, any funds
spent on exploration activities may be lost.





In
the event that we obtain estimates of reserves, those estimates may be subject
to uncertainty.





We
have no estimates of reserves pertaining to any of our current and proposed
tenement areas, and we may never obtain any such reserve estimates. If we obtain
a reserve estimate, it could be subject to uncertainty. Estimates are arrived at
by using standard acceptable geological techniques, and are based on
interpretive geological data obtained from drill holes, sampling techniques,
assaying, surveying, and mapping.





Feasibility
studies are used to derive estimates of cash operating costs based on
anticipated tonnage and grades of ore to be mined and processed, predicted
configuration of ore bodies, expected recovery rates of metal from ore,
operating costs, and other factors. Actual cash operating costs and economic
returns may differ significantly from original estimates due to:





·
            fluctuations
      in current prices of metal commodities extracted from the
      deposits;




·
            changes
      in fuel prices and equipment;




·
            labor
      rates; and




·
            changes
      in permit requirements.





Any
one or a combination of these factors may negatively affect the relative
certainty or uncertainty of geological reports or reserve
estimates.





Bauxite
mining operations are subject to comprehensive regulation, which may cause
substantial delays or require capital outlays in excess of those anticipated,
causing an adverse effect on us.





Australian
federal, state and local authorities regulate the bauxite mining industry with
respect to matters such as prospecting for and mining minerals, inspection of
mines to regulate the treatment of the products of such mines, employee health
and safety, protection of the environment, reclamation and restoration of mining
properties after mining is completed, the discharge of materials into the
environment, surface subsidence from underground mining and native title.
Numerous governmental permits and approvals are required for mining operations.
Our failure to acquire all required permits and approvals, or successfully
comply with the pertinent federal and state regulations will negatively impact
our operations. The costs, liabilities and requirements associated with these
regulations may be costly and time-consuming and may delay commencement or
continuation of exploration or production operations.







16




Interests
in tenements in Australia are governed by the respective State legislation and
are evidenced by the granting of licenses or leases. Each license or lease is
for a specific term and carries with it annual expenditure and reporting
commitments, as well as other conditions requiring compliance. Consequently, we
could lose title to or our interest in tenements if license conditions are not
met or if insufficient funds are available to meet expenditure
commitments.





Bauxite
mineral exploration and development and mining activities are subject to certain
environmental regulations which may prevent or delay the commencement or
continuance of our operations.





Bauxite
mineral exploration and development and future potential bauxite mining
operations are or will be subject to stringent Australian federal, state,
provincial, and local laws and regulations relating to improving or maintaining
environmental quality. Environmental laws often require parties to pay for
remedial action or to pay damages regardless of fault. Environmental laws also
often impose liability with respect to divested or terminated operations, even
if the operations were terminated or divested of many years ago.





Future
potential bauxite mining operations and current exploration activities are or
will be subject to extensive Australian laws and regulations governing
prospecting, development, production, exports, taxes, labor standards,
occupational health, waste disposal, protection and remediation of the
environment, protection of endangered and protected species, mine safety, toxic
substances and other matters. Bauxite mining is also subject to risks and
liabilities associated with pollution of the environment and disposal of waste
products occurring as a result of mineral exploration and production. Compliance
with these Australian laws and regulations will impose substantial costs on us
and will subject us to significant potential liabilities.





Costs
associated with environmental liabilities and compliance are expected to
increase with the increasing scale and scope of operations and we expect these
costs may increase in the future. We believe that our operations comply, in all
material respects, with all applicable Australian environmental regulations.
However, we are not insured at the current date against possible environmental
risks.





Any
change to government regulation/administrative practices may have a negative
impact on our ability to operate and our profitability.





The
laws, regulations, policies or current administrative practices of any
government body, organization or regulatory agency in Australia or any other
applicable jurisdiction, may be changed, applied or interpreted in a manner
which will fundamentally alter our ability to carry on business. New legislation
and/or regulations and orders may be adopted that may materially adversely
affect our mining operations, our cost structure and/or our customers' ability
to use bauxite. New legislation or administrative regulations (or judicial
interpretations of existing laws and regulations), including proposals related
to the protection of the environment that would further regulate the mining
industry in Australia, may also require us to change operations significantly or
incur increased costs. The actions, policies or regulations, or changes to the
actions, policies or regulations, of any government body or regulatory agency,
or other special interest groups, may have a detrimental effect on us. Any or
all of these situations may have a negative impact on our ability to operate
and/or our profitability.





The
existence of native title and/or native title claims in relation to our proposed
tenement holdings may have an adverse impact on our activities and our abilities
to fund these activities.





If
native title is determined to exist on our proposed tenement holdings, the grant
of our application to explore such tenement holdings may be delayed and we may
be liable for certain payments. In addition, if it is determined that Aboriginal
sites and objects exist on our proposed tenement holdings, we may be precluded
or limited from conducting any future mining activities. Further, the
disturbance of such sites and objects could potentially expose us to fines and
other penalties. To date, we are not aware of any native title and/or native
title claims in relation to our proposed tenement holdings.







17




We
do not carry any property or casualty insurance and do not intend to carry such
insurance in the near future, and liabilities for such hazards may negatively
affect our financial condition.





The
search for valuable minerals exposes us to numerous hazards. As a result, we may
become subject to liability for such hazards, including environmental pollution,
cave-ins, unusual or unexpected geological conditions, ground or slope failures,
changes in the regulatory environment and natural phenomena such as inclement
weather conditions, floods and earthquakes or other hazards that we cannot
insure against or against which we may elect not to insure. Such occurrences
could result in loss of or damage to our properties, personal injury or death,
environmental damage, delays, monetary losses and possible legal liability. You
could lose all or part of your investment if any such catastrophic event occurs.
We do not carry any insurance at this time, nor do we intend to carry property
or casualty insurance in the future, except that we will carry all insurance
that we are required to by law. Even if we do obtain insurance, it may not cover
all of the risks associated with our operations and may have limits that are
substantially less than our actual liabilities. We will not carry title
insurance. Should any events against which we are not insured actually occur, we
may become subject to substantial losses, costs and liabilities that will
adversely affect our financial condition.





Risks
Relating to Our Organization and Our Common Stock





If
we fail to maintain an effective system of internal control, we may not be able
to report our financial results accurately or to prevent fraud. Any inability to
report and file our financial results accurately and timely could harm our
reputation and adversely impact the trading price of our common
stock.





It
may be time consuming, difficult and costly for us to implement the internal
controls and reporting procedures required by the Sarbanes-Oxley Act. We may
need to hire additional financial reporting, internal controls and other finance
personnel in order to develop and implement appropriate internal controls and
reporting procedures. Effective internal control is necessary for us to provide
reliable financial reports and prevent fraud. If we cannot provide reliable
financial reports or prevent fraud, we may not be able to manage our business as
effectively as we would if an effective control environment existed, and our
business and reputation with investors may be harmed. In addition, if we are
unable to comply with the internal controls requirements of the Sarbanes-Oxley
Act, then we may not be able to obtain the independent accountant certifications
required by such act, which may preclude us from keeping our filings with the
SEC current and may adversely affect any market for, and the liquidity of, our
common stock.





Public
company compliance may make it more difficult for us to attract and retain
officers and directors.





The
Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have
required changes in corporate governance practices of public companies. As a
public company, we expect these new rules and regulations to increase our
compliance costs and to make certain activities more time consuming and costly.
As a public company, we also expect that these new rules and regulations may
make it more difficult and expensive for us to obtain director and officer
liability insurance in the future and we may be required to accept reduced
policy limits and coverage or incur substantially higher costs to obtain the
same or similar coverage. As a result, it may be more difficult for us to
attract and retain qualified persons to serve on our Board of Directors or as
executive officers.





Because
VAC became public by means of a reverse acquisition with Holdings, we may not be
able to attract the attention of major brokerage firms.





There
may be risks associated with VAC becoming public through a "reverse
acquisition." Securities analysts of major brokerage firms may not provide
coverage of us since there is no incentive to brokerage firms to recommend the
purchase of our common stock. No assurance can be given that brokerage firms
will, in the future, want to conduct any secondary offerings on our
behalf.





Our
stock price may be volatile.





The
market price of our common stock is likely to be highly volatile and could
fluctuate widely in price in response to various factors, many of which are
beyond our control, including the following:






18





·
            changes
      in our industry;




·
            competitive
      pricing pressures;




·
            our
      ability to obtain working capital
financing;




·
            additions
      or departures of key personnel;




·
            limited
      "public float" in the hands of a small number of persons whose sales or
      lack of sales could result in positive or negative pricing pressure on the
      market price for our common stock;




·
            sales
      of our common stock;




·
            our
      ability to execute our business
plan;




·
            operating
      results that fall below
expectations;




·
            loss
      of any strategic relationship;




·
            regulatory
      developments;




·
            economic
      and other external factors; and




·
            period-to-period
      fluctuations in our financial
results.







In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially and
adversely affect the market price of our common stock.





We
have not paid dividends in the past and may not pay dividends in the future. Any
return on investment may be limited to the value of our common
stock.





We
have never paid cash dividends on our common stock and do not anticipate doing
so in the foreseeable future. The payment of dividends on our common stock will
depend on earnings, financial condition and other business and economic factors
affecting us at such time as our Board of Directors may consider relevant. If we
do not pay dividends, our common stock may be less valuable because a return on
your investment will only occur if our stock price appreciates.





There
is currently no liquid trading market for our common stock and we cannot ensure
that one will ever develop or be sustained.





To
date there has been no liquid trading market for our common stock. We cannot
predict how liquid the market for our common stock might become. As soon as is
practicable, we anticipate applying for listing of our common stock on either
the NYSE Amex Equities, The Nasdaq Capital Market or other national securities
exchange, assuming that we can satisfy the initial listing standards for such
exchange. We currently do not satisfy the initial listing standards, and cannot
ensure that we will be able to satisfy such listing standards or that our common
stock will be accepted for listing on any such exchange. Should we fail to
satisfy the initial listing standards of such exchanges, or our common stock is
otherwise rejected for listing and remains quoted on the OTC Bulletin Board or
is suspended from the OTC Bulletin Board, the trading price of our common stock
could suffer and the trading market for our common stock may be less liquid and
our common stock price may be subject to increased volatility.





Furthermore,
for companies whose securities are quoted on the OTC Bulletin Board, it is more
difficult (1) to obtain accurate quotations, (2) to obtain coverage for
significant news events because major wire services generally do not publish
press releases about such companies, and (3) to obtain needed
capital.





Our
common stock may be deemed a "penny stock," which would make it more difficult
for our investors to sell their shares.







19




Our
common stock may be subject to the "penny stock" rules adopted under Section
15(g) of the Exchange Act. The penny stock rules generally apply to companies
whose common stock is not listed on The Nasdaq Stock Market or other national
securities exchange and trades at less than $5.00 per share, other than
companies that have had average revenue of at least $6,000,000 for the last
three years or that have tangible net worth of at least $5,000,000 ($2,000,000
if the company has been operating for three or more years). These rules require,
among other things, that brokers who trade penny stock to persons other than
"established customers" complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning
trading in the security, including a risk disclosure document and quote
information under certain circumstances. Many brokers have decided not to trade
penny stocks because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such
securities is limited. If we remain subject to the penny stock rules for any
significant period, it could have an adverse effect on the market, if any, for
our securities. If our securities are subject to the penny stock rules,
investors will find it more difficult to dispose of our securities.





Offers
or availability for sale of a substantial number of shares of our common stock
may cause the price of our common stock to decline.





If
our stockholders sell substantial amounts of our common stock in the public
market, including shares issued in a private placement upon the effectiveness of
a registration statement with respect to such shares, or upon the expiration of
any statutory holding period under Rule 144, or issued upon the exercise of
outstanding options or warrants, it could create a circumstance commonly
referred to as an "overhang" and in anticipation of which the market price of
our common stock could fall. The existence of an overhang, whether or not sales
have occurred or are occurring, also could make more difficult our ability to
raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that we deem reasonable or
appropriate.





Because
our executive officers and two of our directors are affiliated with our majority
stockholder, they may have actual or potential interests that may depart from
those of our stockholders.





Our
executive officers and two of our directors are affiliated with our majority
stockholder. As a result, in addition to their board seats and offices, such
persons will have significant influence over and control all corporate actions
requiring stockholder approval, irrespective of how our other stockholders may
vote, including the following actions:





·
            to
      elect or defeat the election of our
directors;




·
            to
      amend or prevent amendment of our Certificate of Incorporation or
      By-laws;




·
            to
      effect or prevent a merger, sale of assets or other corporate transaction;
      and




·
            to
      control the outcome of any other matter submitted to our stockholders for
      vote.





Such
persons' stock ownership may discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn
could reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.





Item
2.  Properties.





The
Management Services Agreement requires that AGM provide us with suitable fully
serviced offices, which are located at Level 34, 50 Bridge Street, Sydney,
Australia 2000. We have obtained rights to the shared use of this office space,
which consists of approximately 2,000 square feet. We are obligated to pay AGM
$8,760.23 per month for the use of our office space for the fiscal year ended
June 30, 2009 and for the fiscal year ended June 30, 2010. The directors of AGM
have agreed to defer payment of these amounts until we raise further
funds.





Item
3.  Legal Proceedings.





There
is no currently pending legal proceeding and, as far as we are aware, no
governmental authority is contemplating any proceeding to which we are a party
or to which any of our properties is subject.




20





Item
4.  Submission of Matters to a Vote of Security Holders.





No
matters were submitted during the fourth quarter of the fiscal year covered by
this report to a vote of our stockholders through the solicitation of proxies or
otherwise.





PART
II





Item
5.  Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer      Purchases of Equity
Securities.





Our
common stock has been quoted on the OTC Bulletin Board since October 19, 2007.
From October 19, 2007 through September 26, 2008, our trading symbol was DUNM.OB
and since September 29, 2008 our trading symbol has been VOHO.OB. To date, there
has not been an active market for our common stock. The following table sets
forth the high and low bid prices for our common stock for the periods
indicated, as reported by the OTC Bulletin Board. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions.





Common
      Stock$
      HIGH
            $
      LOWFiscal
      Year Ending June 30, 2010Second
      Quarter (through October 22, 2009)
            2.00
            2.00First
      Quarter
            5.20
            5.20Fiscal
      Year Ending June 30, 2009Fourth
      Quarter
            7.50
            7.50Third
      Quarter
            7.40
            7.40Second
      Quarter
            6.20
            6.20First
      Quarter
            0.00
            0.00Period
      from June 11, 2008 to June 30, 2008
            0.00
            0.00





As
of October 29, 2009, there were 103,995,765 shares of common stock issued and
held of record by approximately 56 holders (inclusive of those brokerage firms,
clearing houses, banks and other nominee holders, holding common stock for
clients, with each such nominee being considered as one holder).





We
have not paid cash dividends on our common stock. We currently intend to retain
future earnings, if any, to finance operations and expand our business and,
therefore, do not expect to pay any dividends on our common stock in the
foreseeable future.





On
September 12, 2008, our Board of Directors adopted, and our stockholders
approved, the Volcan Holdings, Inc. 2008 Equity Incentive Plan, pursuant to
which 40,000,000 shares of our common stock are reserved for issuance as awards
to employees, directors, consultants, and other service providers.





The
following table sets forth information as of June 30, 2009, with respect to
compensation plans under which shares of our common stock may be
issued.






21





Plan
            
            Number
      of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
      and Rights
            
            
            Weighted-Average
      Exercise Price of Outstanding Options, Warrants and Rights
            
            
            Number
      of Securities Remaining Available for Future Issuance Under Equity
      Compensation PlansEquity
      Compensation Plans Approved by Security Holders
            
            
            20,000,000
            
            
            $
            1.00
            
            
            
            20,000,000Equity
      Compensation Plans Not Approved by Security Holders
            
            
            --
            
            
            
            --
            
            
            
            --





Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations.





CAUTIONARY
STATEMENTS REGARDING FORWARD LOOKING STATEMENTS





This Annual Report contains certain
forward-looking statements regarding management’s plans and objectives for
future operations including plans and objectives relating to our marketing
efforts and future economic performance. Any statement in this Annual Report and
in the documents incorporated by reference into this Annual Report that is not a
statement of an historical fact constitutes a “forward-looking statement.”
Further, when we use the words “may,” “expect,” “anticipate,” “plan,” “believe,”
“seek,” “estimate,” “intend,” and similar words, we intend to identify
statements and expressions that may be forward-looking statements. We believe it
is important to communicate certain of our expectations to our investors. The
forward-looking statements and associated risks set forth in this Annual Report
include or relate to, among other things, (a) our projected sales and
profitability, (b) our growth strategies, (c) anticipated trends in our
industry, (d) our ability to obtain and retain sufficient capital for future
operations, (e) our anticipated needs for working capital, and (f) the
outcome of any litigation against us.  These statements may be found
under Item 7, “MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS” and Item 1,
“DESCRIPTION
OF BUSINESS,” as well
as in this Annual Report generally. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of
various factors, including, without limitation, the risks outlined under Item
1A,”RISK
FACTORS” and matters
described in this Annual Report generally.





Reverse
Merger





On
September 12, 2008, we completed a share exchange, pursuant to which we acquired
all of the capital stock of VAC and VAC became our wholly owned subsidiary. In
connection with this share exchange, we discontinued our former business and
succeeded to the business of VAC as our sole line of business. The share
exchange is being accounted for as a reverse acquisition and recapitalization.
VAC is the acquiror for accounting purposes and we were the acquired company.
Accordingly, VAC's historical financial statements for periods prior to the
acquisition became our financial statements retroactively restated for, and
giving effect to, the number of shares received in the Share Exchange. The
accumulated deficit of VAC is carried forward after the acquisition. Operations
reported for periods prior to the Share Exchange are those of VAC.





Overview





We
are a mineral exploration company that intends to explore prospective bauxite
deposits in New South Wales, Australia. We are in the exploration stages with no
revenue being generated now or in the near future. Our inception for accounting
purposes was June 11, 2008.





Critical
Accounting Policies





The
discussion and analysis of our financial condition presented in this section is
based upon our financial statements that have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of our financial statements and related disclosures requires us to make
estimates, assumptions and judgments that affect the reported amount of assets,
liabilities, revenue, costs and expenses, and related disclosures. We believe
that the estimates, assumptions and judgments involved in the accounting
policies described below have the greatest potential impact on our financial
statements and, therefore, consider these to be our critical accounting
policies. On an ongoing basis, we will evaluate our estimates and judgments and
the related financial statement impact.







22




Among
the estimates we have made in the preparation of the financial statements is an
estimate of our cash flows in making the disclosures about our liquidity in this
report. As an exploration stage company, many variables may affect our estimates
of cash flows that could materially alter our view of our liquidity and capital
requirements as our business develops.





Use
of Estimates





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





Going
Concern Consideration





These
financial statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that might be
necessary should we be unable to continue as a going concern. Our audited
financial statements have been prepared assuming we are a “going concern”. We
will continue to implement our business plan, attempt to raise debt and/or
equity based capital from related parties and/or third parties and seek out the
most efficient processes that will allow for the generation of positive cash
flows. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





Income
Taxes





We
account for income taxes under the liability method in accordance with Statement
of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS
No. 109”) under this method, deferred income tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to
reverse.





We
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109” (“FIN
48”). FIN 48 contains a two-step approach to recognizing and measuring uncertain
tax positions. The first step is to evaluate the tax position for recognition by
determining if the weight of available evidence indicates it is more likely than
not, that the position will be sustained on audit, including resolution of
related appeals or litigation processes, if any. The second step is to measure
the tax benefit as the largest amount, which is more than 50% likely of being
realized upon ultimate settlement. We consider many factors when evaluating and
estimating our tax positions and tax benefits, which may require periodic
adjustments. We did not record any liabilities for uncertain tax positions for
the fiscal year ended June 30, 2009 and for the period from June 11, 2008
(inception) to June 30, 2008.


Exploration
Stage Company





The
SEC's Exchange Act Guide 7 “Description of Property by Issuers Engaged or to be
Engaged in Significant Mining Operations” requires that mining companies in the
exploration stage should not refer to themselves as development stage companies
in their financial statements, even though such companies should comply with
Financial Accounting Board Statement No. 7, if applicable. We are an exploration
stage company under the SEC's Guide 7 and accordingly, we have not been referred
to as a development stage company in our financial statements. The balance
sheet, statement of operations, statement of equity and statement of cash flows
are all presented as those of an exploration stage company for the fiscal year
ended June 30, 2009 and for the period from June 11, 2008 (inception) to June
30, 2008.





Accounting
for Mineral Rights, Mineral Claim Payments and Exploration Costs





We
are primarily engaged in the acquisition, exploration and development of mineral
properties. Mineral property acquisition costs are initially capitalized as
tangible assets when purchased. At each fiscal quarter end, we intend to assess
these carrying costs for impairment. If proven and probable reserves are
established for a property and it has been determined that a mineral property
can be economically developed, capitalized costs will be depleted using the
units-of-production method over the estimated life of the probable
reserve.




23




We
expense all costs as incurred related to the acquisition and exploration of
mineral properties in which we have secured exploration rights prior to
establishment of proven and probable reserves. These costs include general
exploration costs and costs to maintain rights and leases associated with any
properties under exploration. Currently, the Company has capitalized costs as
incurred related to the acquisition of and exploration of mineral properties as
exploration rights have been secured and a probable resource has been
established albeit not yet to Australasian Joint Ore Reserves Committee
standards.





Upon
our review of EITF No. 04-2, “Whether Mineral Rights are Tangible or Intangible
Assets”. EITF No. 04-2 establishes mineral rights as tangible assets, whereby
the aggregate carrying amount of such mineral rights should be reported as a
separate component of property, plant, and equipment. We had no such tangible
assets nor any related depletion expense for the fiscal year ended June 30, 2009
and for the period from June 11, 2008 (inception) to June 30, 2008.





The
term mineral rights is defined as the legal right to explore, extract, and
retain at least a portion of the benefits from mineral deposits.





Environmental
Remediation Costs





Environmental
remediation costs are accrued based on estimates of known environmental
remediation exposure. Such accruals are recorded even if significant
uncertainties exist over the ultimate cost of the remediation. It is reasonably
possible that our estimates of reclamation liabilities, if any, could change as
a result of changes in regulations, extent of environmental remediation
required, means of reclamation or cost estimates. Ongoing environmental
compliance costs, including maintenance and monitoring costs, are expensed as
incurred. There were no environmental remediation costs accrued at June 30, 2009
and June 30, 2008.





Financial
Statement Impact of these Critical Accounting Policies and
Estimates





We
are still in the exploration stage and have had nominal operations to date.
These critical policies and estimates have not materially impacted our financial
statements given our limited operations.





There
has been no change in any critical policies or estimates since our
inception.





Results
of Operations





Fiscal
Year Ended June 30, 2009 Compared to the Period from June 11, 2008 (inception)
to June 30, 2008





Revenues. For the fiscal year
ended June 30, 2009 and for the period from June 11, 2008 (inception) to June
30, 2008, we did not recognize any revenues.





Expenses. For the
fiscal year ended June 30, 2009, we incurred $1,227,433 in expenses, which
consisted of stock compensation of $420,000, professional fees of $534,414 and
general and administrative expenses of $273,019.  For the period from
June 11, 2008 (inception) to June 30, 2008, we incurred $214,909 in expenses,
which consisted of one-time expenses relating to the initial setup of
VAC.





Income Tax Expense. We
did not recognize any income tax expense for the fiscal year ended June 30, 2009
and for the period from June 11, 2008 (inception) to June 30, 2008.





Other Accounts Payable.
For the fiscal year ended June 30, 2009, we had other accounts payable of
approximately $765,000, which consisted of amounts due to a related party, AGM,
for the purchase of exploration and prospecting information and administration
services.  These amounts largely related to work done by the
geological team in making this current discovery and in identifying this
opportunity for VAC.  The reimbursement of these amounts are important
to retain the geological expertise that is currently available to VAC for VAC's
future development of these projects, which require specialist expert knowledge
of this particular area and geology.





24





The
geological team is mindful of the current cash position of VAC and therefore
have agreed to a staggered payment plan that the directors believe will not
materially affect the ability of VAC to carry out its initial objectives in
securing an independent verification of inferred JORC resources on VAC's
tenement. It is the view of the directors, that such a resource statement should
in normal market conditions make VAC eligible for larger institutional
funding. For
the period from June 11 (inception) to June 30, 2008, we had other accounts
payable of $1,449,905 consisting of amounts due to AGM for the purchase of
exploration and prospecting information and administration
services.





Liquidity
and Capital Resources





For
the fiscal year ended June 30, 2009, we had cash and cash equivalents
of  $92,062. Based on our cash flow projections, we believe that we
have sufficient cash to satisfy our cash needs for approximatelythreemonths.
We will need to raise additional capital of at least $250,000 to enable us to
have sufficient capital liquidity to complete the initial field program to a
level where we should be able to secure an independent resource statement to
JORC standard, which should in ordinary market conditions make VAC eligible for
larger institutional funding. If we are unable to raise additional funds on a
timely basis or at all, any progress with respect to our exploration activities
may be adversely affected.





Over
the next twelve months, we intend to use our cash on hand, together with any
cash we are able to raise in the future, on exploring the geology of our
tenement holdings through:





·
            Aerial photo and remote data
      interpretation.We intend to spend approximately $132,000 to
      conduct and interpret airborne and/or satellite surveys of our proposed
      tenement holdings.





·
            High resolution image based
      mapping and target selection.We intend to spend approximately
      $203,300 to conduct ground-based geological mapping and target
      selection of the bauxite and other mineral deposits on our proposed
      tenement holdings.





·
            Drilling, sampling and
      sub-surface mapping. We intend to spend approximately
      $6,596,993 million to perform drilling and sampling of bauxite
      deposits that we identify on our tenement
  holdings.





·
            Bulk sampling of identified
      Bauxite deposits.We intend to spend approximately $707,080 to
      conduct bulk sampling of bauxite deposits that we identify on our proposed
      tenement holdings.





Payment to Shareholder.Pursuant to the terms of the Share Exchange, we have agreed to pay $1.5
million to L'Hayyim Pty Ltd as trustee for The L'Hayyim Trust, our principal
shareholder, at the end of the first fiscal quarter in which we have cash on
hand of at least $5 million. It is unlikely for this to be achieved over the
next twelve months, and therefore unlikely that any such payment will be made in
this initial period.





Related Party
Transaction. We have paid approximately $200,000 to AGM for the provision
of exploration and prospecting information. The remaining funds will be paid
when more funds are raised, and/or when our liquidity allows.





Other expected uses of
proceeds.Our other expected uses of cash during the next twelve months
are for our general and administrative expenses, including approximately
$455,000 of payments to AGM pursuant to our Management Services Agreement
for rent, the wages of the expert geological team and their basic office
expenses. In addition, we are obligated to pay AGM an additional $350,000 for
the services of our executive officers. Finally, we are obligated to make
payments to one of our directors in the amount of $50,000 per year. To date, in
light of our current financial situation, AGM has agreed to defer any payments
to it with respect to the services of our officers. In addition, the director
has agreed to defer any payments owed to him until our liquidity situation
improves





To
the extent our cash on hand, together with any cash we are able to raise in the
future, does not cover the amount of our planned expenditures above, the
expenditures listed above will be reduced pro rata.







25




We
do not expect any purchases of plant and equipment we make during fiscal 2010 to
be material. Nor do we intend to engage in any material sales and marketing
efforts during such period. As our prospects are in the early exploration phase,
we do not anticipate generating any revenues from operations for several years,
if ever. We may also consider selling the project if management determines that
an appropriate price can be obtained.  For the period from June 11
(inception) to June 30, 2008, we had cash and cash equivalents of
$96.




We have
experienced difficulties in obtaining financing for our business.  We have
shifted some of our focus to investigating other possible strategies to have the
exploration conducted on the property. Those strategies include possible joint
venture arrangements or leasing our property to another exploration company.
 There can be no assurance that these efforts in exploring possible leasing
arrangement or joint venture arrangements will come to fruition.
 Additionally, if any new ventures are successfully negotiated, there can
be no assurance that such new venture will have enough financial resources to
undertake exploration of our property.




If we cannot generate
sufficient revenues to continue operations, we will suspend or cease operations.
 By virtue of our inability to generate revenues over the preceding year,
we will begin to seek out other sources of cash, including new investors, joint
venture and strategic partners or loans from our officers or directors.  If
we cease operations, we do not know what we would do subsequently and we have no
plans to do anything in such event.  We have no plans to dissolve
statutorily at this time, under any circumstances.  We are not engaged in
general discussions with any companies who may be interested in acquiring us.
 As of this date there is no definitive agreement signed and there is no
assurance that any acquisition will be feasible in the future and in the event
there is an acquisition, there is no assurance that it will be in the best
interest of our shareholders.




Off-Balance
Sheet Arrangements





We
did not engage in any off balance sheet arrangements during the fiscal year
ended June 30, 2009 and the period from June 11, 2008 (inception) to June 30,
2008.





Recent
Accounting Pronouncements





In
January 2008, the SEC released Staff Accounting Bulletin (“SAB”) No. 110, which
amends SAB No. 107 which provided a simplified approach for estimating the
expected term of a “plain vanilla” option, which is required for application of
the Black-Scholes option pricing model (and other models) for valuing share
options. At the time, the staff of the SEC (the “Staff”) acknowledged that, for
companies choosing not to rely on their own historical option exercise data
(i.e., because such data did not provide a reasonable basis for estimating the
term), information about exercise patterns with respect to plain vanilla options
granted by other companies might not be available in the near term; accordingly,
in SAB No. 107, the Staff permitted use of a simplified approach for estimating
the term of plain vanilla options granted on or before December 31, 2007. The
information concerning exercise behavior that the Staff contemplated would be
available by such date has not materialized for many companies. Thus, in SAB No.
110, the Staff continues to allow use of the simplified rule for estimating the
expected term of plain vanilla options until such time as the relevant data
becomes widely available. We do not expect its adoption of SAB No. 110 to have a
material impact on our financial position, results of operations or cash
flows.





Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date and
are not expected to have a material impact on the financial statements upon
adoption.





Item 8.  Financial
Statements and Supplementary Data.





Please
see our financial statements beginning on page F-1.





Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.





There
have been no disagreements with our accountants since our formation that are
required to be disclosed pursuant to Item 304(b) of Regulation
S-K.  On October 1, 2009, we changed auditors as reported in our Form
8-K filed on October 1, 2009.






26





Item
9A(T).  Controls and Procedures.





Evaluation
of Disclosure Controls and Procedures





As
required by Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), our Chief Executive Officer and Principal Accounting
Officer carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report. Based on the
foregoing evaluation, we have concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in our periodic filings with the SEC and to ensure that
information required to be disclosed in our periodic filings with the SEC is
accumulated and communicated to our management, including our Chief Executive
Officer and Principal Accounting Officer, to allow timely decisions regarding
required disclosures.





Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with Rules
13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the
(i) effectiveness and efficiency of operations, (ii) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, and (iii) compliance
with applicable laws and regulations. Our internal controls framework is based
on the criteria set forth in the Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Management’s
assessment of our internal control over financial reporting is as of the year
ended June 30, 2009. We believe that internal control over financial reporting
is effective. We have not identified any, current material weaknesses
considering the nature and extent of our current operations and any risks or
errors in financial reporting under current operations.





This
annual report on Form 10-K/A does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the SEC that permits us to
provide only management’s report in this annual report.





Changes
in Internal Control Over Financial Reporting





There
were no changes in our internal control over financial reporting during the
fourth quarter of the fiscal year ended June 30, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.





Item
9B.  Other Information.





None.





PART
III





Item
10.  Directors, Executive Officers and Corporate
Governance.





Our
Board of Directors consists of three directors. Our bylaws allow for the number
of directors to be set by the Board of Directors. Directors are elected annually
to serve one-year terms.





Set
forth below is information concerning our directors and executive
officers:






27





Name
            Age
            PositionPnina
      Feldman
            63
            Director,
      Chief Executive Officer, President and ChairmanSholom
      Feldman
            33
            Director,
      Secretary, Treasurer and Principal Accounting OfficerPaul
      Stephenson
            49
            Director





Directors
and Officers





Pnina Feldman has served
as our Chief Executive Officer and President since the consummation of the Share
Exchange on September 12, 2008. Mrs. Feldman co-founded VAC in June 2008. Mrs.
Feldman has served as a Director of AGM since April 1996 and she and her husband
are the only shareholders of AGM. Mrs. Feldman has been active in the mineral
exploration industry for 15 years, during which time she has sourced,
negotiated, and developed exploration and resource projects across Australia and
internationally. She was the founder and executive Chairperson from 1997 to 2005
of Diamond Rose NL, a company that is listed on the Australian Securities
Exchange. She has been deeply involved with numerous communal, educational,
charitable and women's awareness initiatives, and in 2007 received the Wentworth
Community Award for outstanding community service. Mrs. Feldman is the current
Chair and an Executive Director of Australian Gold Investments Limited, an
Australian Securities Exchange listed company, which she founded in April
2007.





Sholom Feldman has
served as our Secretary, Treasurer and Principal Accounting Officer since the
consummation of the Share Exchange on September 12, 2008. Mr. Feldman co-founded
VAC in June 2008. Mr. Feldman has been an employee of AGM since 1999 and his
services have been contracted out by AGM to manage various companies,
investments and projects. Mr. Feldman has extensive experience in general
commercial management, has performed advisory and company secretarial work for
companies listed on the Australian Securities Exchange as well as unlisted
companies, and has managed both private and Australian listed exploration
companies. Between 1999 and 2005, Mr. Feldman was General Manager of Diamond
Rose NL. Mr. Feldman has been involved in negotiating, financing, developing and
managing many exploration projects internationally, including the negotiating
and sale to Murchison Metals Limited of iron ore tenements comprising the
Pilbara Iron Ore Project and purchase of the Guanaco Mine in Chile from the
Canadian Kinross Corporation, and subsequently their Australian gold assets
including the Norseman and Broads Dam Gold Projects. Mr. Feldman is an Executive
Director and Company Secretary of Australian Gold Investments Limited, an
Australian Securities Exchange listed company, and he currently serves as a
director and manager of a number of private companies.





Paul Stephenson has
served as a member of our Board of Directors since the consummation of the Share
Exchange on September 12, 2008. Mr. Stephenson has degrees in law and the arts
(history) and is a partner with the Australian national law firm, HWL Ebsworth
Lawyers. He practices in the areas of public and private fundraising, initial
public offerings and mergers and acquisitions involving both public and private
companies. He has also worked for companies listed in multiple jurisdictions.
Mr. Stephenson has a wide experience in industry sectors including pay
television, retailing, mining and resources, financial markets, mobile
telephony, automated teller machines and listed investment companies and trusts.
Of particular relevance to us, he has worked on the initial public offerings of
mining resource companies and has also worked for these clients in relation to
other commercial, corporate, fundraising and compliance work.





Key
Service Providers





Dr. Simon Pecover, M.Sc.,
Ph.D. Dr. Pecover is an employee of AGM, and he provides services to us
as our Head Geoscientist through our Management Services Agreement. Dr. Pecover
is a geoscientist with over 30 years of experience in the minerals industry. His
qualifications include a Ph.D. from the University of Sydney. He has held a wide
variety of positions including as minerals project geologist in the New South
Wales Geological Survey, chief geologist and directorship positions in both
public and private companies, senior ecologist and project manager for a large
environmental consultancy, and as lecturer in economic geology and ore deposit
formation at the University of Technology, Sydney. He has also worked on
exploration and mine development projects in Thailand and China.




28




Dr. Robert Coenraads, B.Sc.,
Ph.D. Dr. Robert Coenraads is an employee of AGM, and he provides
services to us as a Geoscientist through our Management Services Agreement. Dr.
Coenraads is a qualified geologist, geophysicist and gemologist with over 30
years experience in exploration and mining worldwide. He has written four
internationally published books on geology, over 40 scientific papers, and
numerous unpublished independent and company reports. Dr. Coenraads is a Fellow
of the Australasian Institute of Mining and Metallurgy (AusIMM) and Fellow of
the Gemmological Association of Australia (GAA). He completed his Ph.D. at
Macquarie University, Sydney, his Diploma in Gemmology at the GAA, his M.Sc. at
the University of British Columbia, Vancouver and his B.A. with honors in
geology and geophysics at Macquarie University.





There
are no family relationships among any of our directors and executive officers,
except that Pnina Feldman and Sholom Feldman are mother and son.





Code
of Ethics





We
intend to adopt a code of ethics that applies to our officers, directors and
employees, including our Chief Executive Officer and Principal Accounting
Officer, but have not done so to date due to our relatively small
size.





Board
Committees





We
expect our Board of Directors, in the future, to appoint an audit committee,
nominating committee and compensation committee, and to adopt charters relative
to each such committee. We intend to appoint such persons to committees of the
Board of Directors as are expected to be required to meet the corporate
governance requirements imposed by a national securities exchange, although we
are not required to comply with such requirements until we elect to seek listing
on a national securities exchange.





2008
Equity Incentive Plan





We
have adopted the Volcan Holdings, Inc. 2008 Equity Incentive Plan, pursuant to
which 40,000,000 shares of our common stock are reserved for issuance as awards
to employees, directors, consultants, and other service providers. The purpose
of the 2008 Plan is to provide an incentive to attract and retain directors,
officers, consultants, advisors and employees whose services are considered
valuable, to encourage a sense of proprietorship and to stimulate an active
interest of such persons into our development and financial success. Under the
2008 Plan, we are authorized to issue incentive stock options intended to
qualify under Section 422 of the Code, non-qualified stock options and
restricted stock. The 2008 Plan will be administered by our Board of Directors
until such time as such authority has been delegated to a committee of the Board
of Directors. Options to purchase 20,000,000 shares of our common stock at $1.00
per share were granted to AGM pursuant to the 2008 Plan on September 12,
2008.





Management
Incentive Warrants





We
have agreed to grant to L'Hayyim Pty Ltd Management Incentive Warrants to
purchase up to an aggregate of 100,000,000 shares of our common stock upon
achieving certain major milestones.





To
the extent vested, the Management Incentive Warrants will be exercisable for
five years after the applicable vesting date at an exercise price of $1.00 per
share. The Management Incentive Warrants shall vest, with respect to 20% of the
shares, upon each conclusion of an independent report that gives us an inferred
JORC resource of at least 100 million, 200 million, 300 million, 400 million and
500 million tons of bauxite.





Director
Compensation





The
following table sets forth director compensation for the fiscal year ended June
30, 2009.





Name
            Fees
      earned or paid in cash ($)
            Total
      ($)Paul
      Stephenson
            $50,000
      (1)
            $50,000
      (1)






29




(1)
            Mr.
      Stephenson’s compensation of $50,000 was accrued during the fiscal year
      ended June 30, 2009 and not paid.  Mr. Stephenson has agreed to
      defer any payments owed to him until our liquidity situation
      improves.





Directors’
and Officers’ Indemnity





We
have entered into indemnification agreements with key officers and directors and
such persons shall also have indemnification rights under applicable laws, and
our certificate of incorporation and bylaws.





Item
11.  Executive Compensation.





The following table sets
forth the annual compensation and long-term compensation awards for the fiscal
year ended June 30, 2009 for Pnina Feldman and Sholom Feldman (collectively, the
“NEOs”) during the fiscal year ended June 30, 2009 and the period from June 11,
2008 to June 30, 2008.





Name
      and principal position
            Year
            All
      Other Compensation  ($)
            Total
      ($)Pnina
      Feldman, Chief Executive Officer and President
            Fiscal
      year ended June 30, 2009
            $175,000
      (1)
            $175,000
      (1)The
      period from June 11, 2008 (Inception) through June 30,
2008
            $0
            $0Sholom
      Feldman, Treasurer and Secretary
            Fiscal
      year ended June 30, 2009
            $175,000
      (1)
            $175,000
      (1)The
      period from June 11, 2008 (Inception) through June 30,
2008
            $0
            $0




(1)
            We
      have agreed to pay AGM a retainer of $175,000 with respect to each of Ms.
      Feldman and Mr. Feldman during the year ended June 30,
      2009.  However, AGM has agreed to defer any payments owed to it
      until our liquidity situation
improves.





Ms.
Feldman and Mr. Feldman did not receive any compensation from us or from AGM
during the period from June 11, 2008 through June 30, 2008.





Outstanding
Equity Awards At Fiscal Year-End





The
following table provides certain information concerning unexercised options,
stock that has not vested, and equity incentive plan awards held by each of our
Named Executive Officers that were outstanding as of June 30, 2009.





Name
            Number
      of
              Securities
      Underlying Unexercised Options
              (#)
              Exercisable
            Number
      of Securities Underlying Unexercised Options
              (#)
              Unexercisable
            Option
      Exercise Price
              ($)
            Option
      Expiration DatePnina
      Feldman
            6,666,667
            13,333,333
            $1.00
            September
      12, 2018





We
granted options to purchase 20,000,000 shares of our common stock at $1.00 per
share to AGM pursuant to the Volcan Holdings, Inc. 2008 Equity Incentive
Plan.  One third of these options vest on each of September 12, 2009,
September 12, 2010 and September 12, 2011.  Ms. Feldman and her
husband are the sole owners of AGM.






30




Item
12.  Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.





The
following tables set forth certain information as of October 29, 2009 regarding
the beneficial ownership of our common stock by (i) each person or entity who,
to our knowledge, beneficially owns more than 5% of our common stock; (ii) each
executive officer; (iii) each director; and (iv) all of our officers and
directors as a group. Unless otherwise indicated in the footnotes to the
following table, each of the stockholders named in the table has sole voting and
investment power with respect to the shares of our common stock beneficially
owned. The address of each of the stockholders listed below is: c/o Volcan
Holdings, Inc, Level 34, 50 Bridge Street, Sydney 2000, Australia.





Common
      StockName
      of Beneficial Owner
            
            Shares
      Beneficially Owned (1)
            
            Percent
      of Class(2)Directors
      and Executive OfficersPnina
      Feldman
            
            96,666,667
      (3)(4)(7)
            
            87.55%Sholom
      Feldman
            
            0
            
            0%Paul
      Stephenson
            
            0
            
            0%Directors
      and Executive Officers as a Group (3 persons)
            
            96,666,667
      (3)(4)(7)
            
            87.55%Certain
      PersonsL’Hayyim
      Pty Ltd as trustee for The L’Hayyim Trust (7)
            
            90,000,000
      (3)
            
            81.51%Australia
      Gemstone Mining Services Pty Limited (7)
            
            6,666,667
      (5)
            
            6.04%




(1)
            Unless
      otherwise indicated, includes shares owned by a spouse, minor children,
      and relatives sharing the same home, as well as entities owned or
      controlled by the named beneficial
owner.





(2)
            Based
      on 103,364,337 shares of our common stock
  outstanding.





(3)
            Does
      not include 100,000,000 shares of our common stock issuable to L'Hayyim
      Pty Ltd as trustee for The L’Hayyim Trust upon exercise of Management
      Incentive Warrants that are subject to certain significant vesting
      milestones that have not been achieved as of October 26,
    2009.





(4)
            Includes
      (i) 90,000,000 shares of our common stock held by L’Hayyim Pty Ltd as
      trustee for The L’Hayyim Trust and (ii) 6,666,667 shares of our common
      stock issuable upon exercise of options granted under our 2008 Equity
      Incentive Plan to AGM.





(5)
            Includes
      6,666,667 shares of our common stock issuable upon exercise of currently
      exercisable options granted under our 2008 Equity Incentive
      Plan.





(6)
            The
      sole stockholders of each of L’Hayyim Pty Ltd and AGM are Pnina Feldman
      and her husband, Pinchus Feldman, who have dispositive and voting control
      over the shares owned by these
entities.




31


Item
13.  Certain Relationships and Related Transactions, and Director
Independence.





Management
Services Agreement





General





We
are party to that certain Management Services Agreement, dated as of July 1,
2008, with AGM, which is owned and controlled by Pnina Feldman, a member of our
Board of Directors and our Chief Executive Officer. Pursuant to the Management
Services Agreement, four Key Persons provide executive and corporate services to
us, including geological and technical expertise. During the term of the
Management Services Agreement, we will pay AGM a retainer of $175,000 per annum
(plus the required GST) with respect to each Key Person, being the two chief
geoscientists, Dr. Simon Pecover and Dr. Robert Coenraads, and the two executive
directors, Pnina Feldman and Sholom Feldman, for an aggregate amount of $700,000
(plus GST) per annum. However, the directors of AGM have agreed not to take any
money for the wages of the Key Persons until further funds are raised. In
addition, we are not required to pay any additional fees, including director’s
fees, to AGM or the Key Persons personally with respect to the services to be
provided by the Key Persons to us. Should we need further executive personnel,
or if our operations expand to require further services than currently required
from the Key Persons as set out in the Management Services Agreement, then AGM
may provide such additional services to us on reasonable arm’s-length terms as
approved by our independent directors or by our shareholders in a general
meeting.





Neither
we nor AGM may terminate the Management Services Agreement prior to July 1,
2010, except that we may terminate the Management Services Agreement immediately
if any of the following events occur:





·
            AGM
      or any of its directors, officers, employees or agents is guilty of gross
      misconduct in relation to the provision of the services to
    us;




·
            AGM
      suffers an Insolvency Event (as defined in the Management Services
      Agreement);




·
            the
      Key Persons engage in any willful or grossly negligent conduct which is
      likely, in our reasonable opinion, to be detrimental to us;
    or




·
            AGM
      is guilty of any gross default, breach, non-observance or non-performance
      of any of the terms and conditions contained in the Management Services
      Agreement.





However,
no provision of the Management Services Agreement precludes any of our Key
Persons from terminating their services to us at any time and for any or for no
reason by terminating their employment with AGM. Furthermore, if any of our Key
Persons do terminate their employment with AGM, the Management Services
Agreement does not grant us the authority to require AGM to hire a replacement
that is acceptable to us.





AGM
may also provide additional administrative services to us, such as secretarial,
accounting and office management services. These services will be provided on
reasonable arm’s-length terms as approved by our independent
directors.





Property





The
Management Services Agreement requires that AGM provide us with suitable fully
serviced offices, which are located at Level 34, 50 Bridge Street, Sydney,
Australia 2000. We have obtained rights to the shared use of this office space,
which consists of approximately 2,000 square feet. We pay AGM $8,760.23 per
month for the use of our office space for the fiscal years ended June 30, 2009
and June 30, 2010. The directors of AGM have agreed to defer payment of these
amounts until we raise further funds.





Repayment
of Obligations to AGM





When
we generate sufficient revenue, we plan to use approximately $1.4 million to
repay our obligations to AGM under the Management Services Agreement, arising
out of the purchase of exploration and prospecting information and
administration services and rental fees. As detailed in "Other Accounts Payable"
on page 25above,
AGM had paid for the license application and had access to all the intellectual
property relating to these licenses that was procured as a result of all the
work done in that area by members of AGM’s geological team. AGM made this
intellectual property available to VAC in return for the payment mentioned
above.




32




Relationship
with Paul Stephenson





Mr.
Stephenson has served as a member of our Board of Directors since the
consummation of the Share Exchange. Mr. Stephenson is a partner with the
Australian national law firm, HWL Ebsworth Lawyers, which serves as our
principal counsel in Australia. From the date of his appointment, Mr. Stephenson
has not provided legal services to us on behalf of HWL Ebsworth Lawyers. He
serves as a member of our Board of Directors in his personal capacity, not in
his capacity as a partner of HWL Ebsworth Lawyers. HWL Ebsworth Lawyers does not
receive any consideration in connection with Mr. Stephenson’s service on our
Board of Directors.





Item
14.  Principal Accountant Fees and Services.





Fees
billed for services provided by Li & Company, PC (“Li”) and Nexia Court
& Co., Chartered Accountants (“Nexia”) relating to the fiscal year ended
June 30, 2009 and the period from June 11, 2008 to June 30, 2008 were as
follows:





Audit
Fees





Li
has not yet billed us for audit services relating to the fiscal year ended June
30, 2009.  We appointed Li as our independent registered public
accounting firm on October 1, 2009.





Audit
fees billed by Nexia for the fiscal year ended June 30, 2009 and for the period
from June 11, 2008 to June 30, 2009 totaled approximately
$29,965.  These fees were billed for professional services rendered
for the review of our quarterly financial statements and review of our financial
statements for the period from June 11, 2008 to June 30, 2008.  We
terminated the engagement of Nexia as our independent registered public
accounting firm as of October 1, 2009.





Audit-Related
Fees





Li
has not yet billed us for audit-related services for the fiscal year ended June
30, 2009.  Audit-related fees billed by Nexia for the fiscal year
ended June 30, 2009 and for the period from June 11, 2008 to June 30, 2009
totaled approximately $10,000.





Tax
Fees





No
tax fees have been paid to either Li or Nexia for any period.





All
Other Fees





No
other fees other than those set out above have been paid to either Li or
Nexia.





PART
IV





Item
15.  Exhibits and Financial Statement Schedules.





We
have filed the following documents as part of this report on Form
10-K:





1.
Financial Statements.
The audited consolidated financial statements of Volcan Holdings, Inc. required
by Part II, Item 8, of this report on Form 10-K/A, which are listed on page
F-1 of this annual report on Form 10-K/A, including the notes thereto and the
report of our independent registered public accounting firm.





2.
Financial Statement
Schedules. We have not filed any financial statement schedules as part of
this report on Form 10-K/A because these schedules are not required or because
the information required to be included in these schedules has been included in
our audited consolidated financial statements or the notes thereto.







33




3.
Exhibits. The following
exhibits have been filed as part of or incorporated by reference in this annual
report on Form 10-K:





EXHIBIT
      NUMBER
            
            DESCRIPTION2.1
            
            Share
      Exchange Agreement, dated as of September 12, 2008, by and among Volcan
      Holdings, Inc., Volcan Australia Corporation Pty Ltd and the sole
      shareholder of Volcan Australia Corporation Pty
      Ltd  (Incorporated herein by reference from Exhibit 2.1 to our
      Form 8-K filed with the SEC on September 17, 2008).3.1
            
            Certificate
      of Incorporation (Incorporated herein by reference from Exhibit 3.1 to our
      Form 8-K filed with the SEC on September 12, 2008)3.2
            
            Bylaws
      (Incorporated herein by reference from Exhibit 3.2 to our Form 8-K filed
      with the SEC on September 12, 2008)10.1
            
            Form
      of Subscription Agreement for September 12, 2009 Private Placement
      (Incorporated herein by reference from Exhibit 10.1 to our Form 8-K filed
      with the SEC on September 17, 2008).10.2
            
            Form
      of Investor Warrant for September 12, 2009 Private Placement (Incorporated
      herein by reference from Exhibit 10.2 to our Form 8-K filed with the SEC
      on September 17, 2008)10.3
            
            Form
      of Directors and Officers Indemnification Agreement (Incorporated herein
      by reference from Exhibit 10.3 to our Form 8-K filed with the SEC on
      September 17, 2008).10.4
            
            Management
      Service Agreement, dated July 1, 2008, by and between Volcan Australia
      Corporation Pty Ltd and Australian Gemstone Mining Pty Ltd. (Incorporated
      herein by reference from Exhibit 10.4 to our Form 8-K filed with the SEC
      on September 17, 2008).10.5
            
            Volcan
      Holdings, Inc. 2008 Equity Incentive Plan (Incorporated herein by
      reference from Exhibit 10.5 to our Form 8-K filed with the SEC on
      September 17, 2008).10.6
            
            Form
      of 2008 Incentive Stock Option Agreement (Incorporated herein by reference
      from Exhibit 10.6 to our Form 8-K filed with the SEC on September 17,
      2008).10.7
            
            Form
      of 2008 Non-Qualified Stock Option Agreement (Incorporated herein by
      reference from Exhibit 10.7 to our Form 8-K filed with the SEC on
      September 17, 2008).10.8
            
            Agreement
      of Conveyance, Transfer and Assignment of Assets and Assumptions of
      Obligations, dated as of September 12, 2008, between Volcan Holdings, Inc.
      and Dunn Mining Holdings, Inc. (Incorporated herein by reference from
      Exhibit 10.8 to our Form 8-K filed with the SEC on September 17,
      2008).    34
  10.9
            
            Stock
      Purchase Agreement, dated as of September 12, 2008 between Volcan
      Holdings, Inc. and Gregory Paul Byrne (Incorporated herein by reference
      from Exhibit 10.9 to our Form 8-K filed with the SEC on September 17,
      2008).10.10
            
            Form
      of Management Incentive Warrant (Incorporated herein by reference from
      Exhibit 10.11 to our Form 8-K filed with the SEC on September 17,
      2008).10.11
            
            Form
      of Subscription Agreement (Incorporated herein by reference from Exhibit
      10.1 to our Form 8-K filed with the SEC on March 9,
  2009).10.12
            
            Form
      of Warrant (Incorporated herein by reference from Exhibit 10.2 to our Form
      8-K filed with the SEC on March 9, 2009).21.1
            
            Subsidiaries
      of Volcan Holdings, Inc. (Incorporated herein by reference from Exhibit
      21.1 to our Form 10-K filed with the SEC on October 29,
    2009).31.1*
            
            Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2*
            
            Certification
      of Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1*
            
            Certification
      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2*
            
            Certification
      of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.


____________





*           Filed
herewith











35





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Form 10-K to be signed on its behalf
by the undersigned, thereunto duly authorized.











VOLCAN
      HOLDINGS, INC.January
      15, 2010
            /s/
      Pnina FeldmanPnina
      Feldman, President and Chief Executive Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates as in





Signature
            
            Capacity
      in which Signed
            
            Date/s/
      Pnina FeldmanPnina
      Feldman
            
            President
      and Chief Executive Officer
              (Principal
      Executive Officer)
            
            January
      15, 2010/s/
      Sholom FeldmanSholom
      Feldman
            
            Treasurer
      and Secretary
              (Principal
      Financial Officer)
            
            January
      15, 2010Paul
      Stephenson
            
            Director
            
            January
      15, 2010








36





VOLCAN
HOLDINGS, INC.





Index to
Financial Statements








Report
      of Independent Registered Public Accounting Firm
            F-2Balance
      Sheets at June 30, 2009 and 2008
            F-3Statements
      of Operations for the Fiscal Year Ended June 30, 2009, for the Period from
      June 11, 2008 (Inception) through June 30, 2008 and for the Period from
      June 11, 2008 (Inception) through June 30, 2009
            F-4Statement
      of Stockholders’ Equity (Deficit) for the Period from June 11, 2008
      (Inception) through June 30, 2009
            F-5Statements
      of Cash Flows for the Fiscal Year Ended June 30, 2009, for the Period from
      June 11, 2008  (Inception) through June 30, 2008, and for the
      Period from June 11, 2008 (Inception) through June 30,
      2009
            F-6Notes
      to the Financial Statements
            F-8













F-1




REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and Stockholders of


Volcan
Holdings, Inc.


(An
exploration stage company)


Sydney,
Australia





We have
audited the accompanying consolidated balance sheets of Volcan Holdings, Inc.
(an exploration stage company) (the “Company”) as of June 30, 2009 and 2008 and
the related statement of operations, stockholders equity (deficit) and cash
flows for the fiscal year ended June 30, 2009, for the period from June 11, 2008
(Inception) through June 30, 2008 and for the period from June 11, 2008
(Inception) through June 30, 2009.  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
audit.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit 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 audit 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 audit provides 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 the Company as of June 30, 2009 and
2008 and the results of its operations and its cash flows for the fiscal year
ended June 30, 2009, for the period from June 11, 2008 (Inception) through June
30, 2008 and for the period from June 11, 2008 (Inception) through June 30, 2009
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 3 to the
financial statements, the Company had a negative working capital and a deficit
accumulated during the exploration stage at June 30, 2009 and had a net loss and
cash used in operations for the fiscal year ended June 30, 2009, with no
revenues during the period.  These factors raise substantial doubt
about the Company’s ability to continue as a going concern. Management’s plans
in regards to these matters are also described in Note 3.  The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.








/s/Li & Company,
PC


Li &
Company, PC


Skillman,
New Jersey


October
27, 2009






F-2






VOLCAN
HOLDINGS, INC.


(An
Exploration Stage Company)


Consolidated
Balance Sheets





June
      30,
            
            
            June
      30,2009
            
            
            2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            92,062
            
            
            $
            96Other
      receivables
            
            
            131,602
            
            
            
            130,624Deposit
            
            
            115,080
            
            
            
            -Total
      current assets
            
            
            338,744
            
            
            
            130,720Exploration
      permits and licenses
            
            
            1,473,189
            
            
            
            1,101,027TOTAL
      ASSETS
            
            $
            1,811,933
            
            
            $
            1,231,747LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      liabilitiesAccounts
      payable
            
            $
            1,564,199
            
            
            $
            1,449,905Advances
      from stockholder
            
            
            86,258
            
            
            
            -Common
      stock to be issued
            
            
            13,300
            
            
            
            -Total
      current liabilities
            
            
            1,663,757
            
            
            
            1,449,905Stockholders'
      Equity (Deficit):Common
      stock: $0.001 par value; 300,000,000 shares authorized; 103,995,765 and
      100,000,000 shares issued and outstanding, respectively
            
            
            103,996
            
            
            
            100,000Additional
      paid-in capital
            
            
            1,588,953
            
            
            
            (99,904
            )Deferred
      compensation
            
            
            (87,500
            )
            
            
            -Deficit
      accumulated during the exploration stage
            
            
            (1,433,240
            )
            
            
            (214,909
            )Accumulated
      other comprehensive income (loss):Foreign
      currency translation gain (loss)
            
            
            (24,033
            )
            
            
            (3,345
            )Total
      stockholder’s equity (deficit)
            
            
            148,176
            
            
            
            (218,158
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
            
            $
            1,811,933
            
            
            $
            1,231,747





See
accompanying notes to the financial statements.





F-3





VOLCAN
HOLDINGS, INC.


(An
Exploration Stage Company)


Consolidated
Statements of Operations





For
      The
            
            
            For
      ThePeriod
      From
            
            
            Period
      FromFor
      The
            
            
            June
      11, 2008
            
            
            June
      11, 2008Fiscal
      Year
            
            
            (Inception)
            
            
            (Inception)Ended
            
            
            Through
            
            
            ThroughJune
      30,
            
            
            June
      30,
            
            
            June
      30,2009
            
            
            2008
            
            
            2009Management
      services (including stock compensation of $420,000)
            
            $
            741,877
            
            
            $
            -
            
            
            $
            741,877Professional
      fees
            
            
            212,537
            
            
            
            -
            
            
            
            212,537General
      and administrative
            
            
            273,019
            
            
            
            214,909
            
            
            
            487,928Total
      operating expenses
            
            
            1,227,433
            
            
            
            214,909
            
            
            
            1,442,342Other
      (income) expenses:(Gain)
      on foreign exchange transactions
            
            
            (3,544
            )
            
            
            -
            
            
            
            (3,544
            )Interest
      (income)
            
            
            (5,558
            )
            
            
            -
            
            
            
            (5,558
            )Net
      loss
            
            $
            (1,218,331
            )
            
            $
            (214,909
            )
            
            $
            (1,433,240
            )Net
      loss per common share - basic and diluted
            
            $
            (0.01
            )
            
            $
            (0.00
            )
            
            $
            (0.01
            )Weighted
      average number of common shares outstanding – basic and
      diluted
            
            
            102,946,529
            
            
            
            100,000,000
            
            
            
            102,800,737





See
accompanying notes to the financial statements.






F-4





VOLCAN
HOLDINGS, INC.


(An
Exploration Stage Company)





Consolidated
Statement of Stockholders’ Equity (Deficit)


For
the Period from June 11, 2008 (Inception) through June 30, 2009


Common
                Shares
            
            
            Amount
            
            
            Additional
      Paid-in Capital
            
            
            Deferred
      Compen-sation
            
            
            Deficit
                Accumulated
                During
      the
                Exploration
                Stage
            
            
            Other
                Comprehensive
                Income
      (Loss)
                Foreign
                Currency
                Translation
                Gain
      (Loss)
            
            
            TotalBalance,
      June 11, 2008 (inception)
            
            
            5,620,000
            
            
            $
            5,620
            
            
            
            19,380
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            25,000Effect
      of 1 for 6.1728395 forward stock split
            
            
            29,071,358
            
            
            
            29,071
            
            
            
            (29,071
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Issuance
      of common stock in connection with reverse acquisition
            
            
            90,000,000
            
            
            
            90,000
            
            
            
            (114,904
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (24,904
            )Cancellation
      of common stock in connection with reverse acquisition
            
            
            (24,691,358
            )
            
            
            (24,691
            )
            
            
            24,691
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Comprehensive
      lossNet
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (214,909
            )
            
            
            
            
            
            
            (214,909
            )Foreign
      currency translation loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,345
            )
            
            
            (3,345
            )Total
      comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (218,254
            )Balance
      June 30, 2008
            
            
            100,000,000
            
            
            
            100,000
            
            
            
            (99,904
            )
            
            
            -
            
            
            
            (214,909
            )
            
            
            (3,345
            )
            
            
            (218,158
            )Issuance
      of common stock for cash (net of costs of $125,666)
            
            
            3,745,765
            
            
            
            3,746
            
            
            
            1,145,038
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,148,784Issuance
      of warrants in connection with common stock
            
            
            
            
            
            
            
            
            
            
            36,569
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            36,569Options
      issued for services
            
            
            
            
            
            
            
            
            
            
            420,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            420,000Common
      stock issued for
              Future
      services
            
            
            250,000
            
            
            
            250
            
            
            
            87,250
            
            
            
            (87,500
            )
            
            
            
            
            
            
            
            
            
            
            -Comprehensive
      lossNet
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,218,331
            )
            
            
            
            
            
            
            (1,218,331
            )Foreign
      currency translation loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (20,688
            )
            
            
            (20,688
            )Total
      comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,239,019
            )Balance,
      June 30, 2009
            
            $
            103,995,765
            
            
            $
            103,996
            
            
            $
            1,588,953
            
            
            $
            (87,500
            )
            
            $
            (1,433,240
            )
            
            $
            (24,033
            )
            
            $
            148,176





See
accompanying notes to the financial statements.







F-5




VOLCAN
HOLDINGS, INC.


(An
Exploration Stage Company)


Condensed
Consolidated Statements of Cash Flows





For
      The
            
            
            For
      ThePeriod
      From
            
            
            Period
      FromFor
      The
            
            
            June
      11, 2008
            
            
            June
      11, 2008Fiscal
      Year
            
            
            (Inception)
            
            
            (Inception)Ended
            
            
            Through
            
            
            ThroughJune
      30,
            
            
            June
      30,
            
            
            June
      30,2009
            
            
            2008
            
            
            2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
            
            $
            (1,218,331
            )
            
            $
            (214,909
            )
            
            $
            (1,433,240
            )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activitiesStock
      compensation
            
            
            420,000
            
            
            
            
            
            
            
            420,000Changes
      in operating assets and liabilitiesDeposit
            
            
            (115,080
            )
            
            
            
            
            
            
            (115,080
            )Other
      receivables
            
            
            (24,229
            )
            
            
            (130,624
            )
            
            
            (154,853
            )Accounts
      payable
            
            
            372,377
            
            
            
            348,974
            
            
            
            721,351Common
      stock to be issued
            
            
            13,300
            
            
            
            
            
            
            
            13,300Net
      Cash Provided By (Used In) Operating Activities
            
            
            (551,963
            )
            
            
            3,441
            
            
            
            (548,522
            )CASH
      FLOWS FROM INVESTING ACTIVITIESExploration
      and prospecting
            
            
            (568,145
            )
            
            
            -
            
            
            
            (568,145
            )CASH
      FLOWS FROM FINANCING ACTIVITIESSale
      of common stock, net of costs
            
            
            1,185,353
            
            
            
            
            
            
            
            1,185,353Loan
      payable shareholder
            
            
            86,258
            
            
            
            
            
            
            
            86,258Net
      Cash Provided By Financing  Activities
            
            
            1,271,611
            
            
            
            -
            
            
            
            1,271,611EFFECT
      OF EXCHANGE RATE CHANGES ON CASH
            
            
            (59,537
            )
            
            
            (3,345
            )
            
            
            (62,882
            )NET
      INCREASE IN CASH
            
            
            91,966
            
            
            
            
            
            
            
            92,062CASH
      AT BEGINNING OF PERIOD
            
            
            96
            
            
            
            
            
            
            
            -CASH
      AT END OF PERIOD
            
            $
            92,062
            
            
            $
            -
            
            
            $
            92,062








See
accompanying notes to financial statements





F-6





VOLCAN
HOLDINGS, INC.


(AN EXPLORATION STAGE COMPANY)


JUNE
30, 2009 AND 2008


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS





NOTE
– 1 ORGANIZATION AND OPERATIONS





Volcan
Holdings, Inc. (formerly Dunn Mining, Inc.) (the “Company”) was incorporated on
April 4, 2006 in the State of Nevada, for the purpose of acquiring and exploring
mineral properties for economically recoverable reserves. On September 11, 2008,
Dunn Mining was merged with and into Volcan Holdings, Inc., a Delaware
corporation (the "Company"), for the purpose of changing its state of
incorporation to Delaware from Nevada, changing its name and effectuating a
1-for-6.1728395 forward stock-split, all pursuant to a Certificate of Ownership
and Merger and Articles of Merger, each dated September 11, 2008 and approved by
stockholders on September 11, 2008.





On
September 12, 2008, the Company entered into a Share Exchange Agreement (the
"Exchange Agreement") by and among the Company, Volcan Australia Corporation Pty
Ltd, an Australian proprietary company ("VAC"), and L'Hayyim Pty Ltd as trustee
for The L'Hayyim Trust, the holder of all of the outstanding capital stock of
VAC (the "VAC Shareholder"). Upon closing of the transaction contemplated under
the Exchange Agreement (the "Share Exchange"), on September 12, 2008, the VAC
Shareholder transferred all of the issued and outstanding capital stock of VAC
to the Company in exchange for 90,000,000 newly issued shares of common stock of
the Company and a right to receive $1,500,000 in cash at the end of any fiscal
quarter in which the Company has cash on hand of at least $5,000,000. Such Share
Exchange caused VAC to become a wholly owned subsidiary of the
Company.





Following
the Share Exchange, under the terms of an Agreement of Conveyance, Transfer and
Assignment of Assets and Assumption of Obligations, the Company transferred all
of its pre-Share Exchange assets and liabilities to its wholly owned subsidiary,
Dunn Mining Holdings, Inc., a Delaware corporation ("SplitCo"). Thereafter,
pursuant to a stock purchase agreement, the Company transferred all of the
outstanding capital stock of SplitCo to its former president in exchange for
cancellation of an aggregate of 24,691,358 shares of the Company’s common stock
held by such person (the "Split-Off").





As
a result of the ownership interest of the former shareholder of VAC, for
financial statement reporting purposes, the merger between the Company and VAC
has been treated as a reverse acquisition with VAC deemed the accounting
acquirer and the Company deemed the accounting acquiree under the purchase
method of accounting in accordance with Statement of Financial Accounting
Standards No. 141 “Business
Combinations”(“SFAS No. 141”).  The reverse merger is deemed a
capital transaction and the net assets of VAC (the accounting acquirer) are
carried forward to the Company (the legal acquirer and the reporting entity) at
their carrying value before the combination.  The acquisition process
utilizes the capital structure of the Company and the assets and liabilities of
VAC which are recorded at historical cost.  The equity of the Company
is the historical equity of VAC retroactively restated to reflect the number of
shares issued by the Company in the transaction.





VAC
is an exploration stage company and its principal operation is the conducting of
exploration for Bauxite and other minerals in Australia. The current focus is on
the exploration for bauxite and other mineral deposits on tenements near
Inverell and Cooma in New South Wales, Australia. VAC has not determined whether
these tenements contain reserves that are economically recoverable. The
recoverability of costs incurred for acquisition and exploration of the property
will be dependent upon the discovery of economically recoverable reserves,
confirmation of VAC’s interests in the underlying properties, the ability of VAC
to obtain the necessary financing to satisfy the expenditure requirements and to
complete the development of the property and upon future production or proceeds
for the sale thereof.





As
a result of the Share Exchange and Split Off, the Company succeeded to the
business of VAC as its sole line of business.





F-7





NOTE
– 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation





The
company’s consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“U.S. GAAP”).





The
consolidated financial statements include the accounts of Volcan Holdings, Inc.
and its wholly-owned subsidiary Volcan Australia Corporation Pty Ltd
(collectively,  Corporation Pty Ltds include the accounts of Volcan
Holdings, Inc. and its wholly-owned subs





Exploration
Stage Company





The
Company is an exploration stage company as defined by Statement of Financial
Accounting Standards No. 7“Accounting and Reporting by Development Stage Enterprises”(“SFAS No.
7”).  The Company is still devoting substantially all of its efforts
on establishing the business and its planned principal operations have not
commenced.  All losses accumulated since inception have been
considered as part of the Company’s exploration stage activities.





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 assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates.





Fiscal
Year End





The
Company has elected June 30 as its fiscal year ending date.





Cash
Equivalents





The
Company considers all highly liquid investments with maturities of three months
or less at the time of purchase to be cash equivalents.





Mineral
property and related mineral rights - bauxite claims





The
Company follows Statement of Financial Accounting Standards No. 19 “Financial Accounting and Reporting
by Oil and Gas Producing Companies” (“SFAS No. 19”) and American
Institute of Certified Public Accountants (“AICPA”) Statement of Position 98-5
“Reporting on the Costs of Start-Up Activities” (“SOP 98-5”) for its
mineral property and related mineral rights - bauxite claims.  Mineral
property and related mineral rights acquisition costs are capitalized pending
determination of whether the drilling has found proved reserves.  If a
mineral ore body is discovered, capitalized costs will be amortized on a
unit-of-production basis following the commencement of
production.  Otherwise, capitalized acquisition costs are expensed
when it is determined that the mineral property has no future economic
value.  Exploration costs, including rights of access to lands for
geophysical work and salaries, equipment, and supplies for geologists and
geophysical crews are expensed as incurred where exploration rights have not
been secured or where proven or probable reserves or resources have not been
established  When it is determined in the view of the directors that a
deposit could be economically extracted or produced based on established proven
and probable reserves or resources, even if not yet established to Australian
JORC standard, further exploration costs and development costs as well as
interest costs relating to exploration and development projects that require
greater than six (6) months to be readied for their intended use incurred after
such determination will be capitalized.







F-8




Upon
commencement of commercial production, capitalized costs will be transferred to
the appropriate asset categories and amortized on a unit-of-production
basis.  Capitalized costs, net of salvage values, relating to a
deposit which is abandoned or considered uneconomic for the foreseeable future
will be written off.  Upon becoming fully amortized, the related cost
and accumulated amortization are removed from the accounts.  The sale
of a partial interest in a proved property is accounted for as a cost recovery
and no gain or loss is recognized as long as this treatment does not
significantly affect the unit-of-production amortization rate.  A gain
or loss will be recognized for all other sales of proved properties and will be
classified in other operating revenues.  Maintenance and repairs are
charged to expense, and renewals and betterments are capitalized to the
appropriate property and equipment accounts.





The
provision for depreciation, depletion and amortization (“DD&A”) of mineral
properties is calculated on a property-by-property basis using the
unit-of-production method.  Taken into consideration in the
calculation of DD&A are estimated future dismantlement, restoration and
abandonment costs, which are net of estimated salvage values.





Impairment
of Long-lived Assets





The
Company follows Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets”(“SFAS No. 144”) for its long-lived
assets. The Company’s long-lived assets, which include mineral property and
related mineral rights, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable.





The
Company assesses the recoverability of its long-lived assets by comparing the
projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful lives
against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those
assets.  Fair value is generally determined using the asset’s expected
future discounted cash flows or market value, if readily
determinable.  If long-lived assets are determined to be recoverable,
but the newly determined remaining estimated useful lives are shorter than
originally estimated, the net book values of the long-lived assets are
depreciated over the newly determined remaining estimated useful
lives.





The
Company periodically reviews its proved mineral properties for impairment
whenever events and circumstances indicate a decline in the recoverability of
their carrying value may have occurred.  The Company estimates the
expected undiscounted future cash flows of its mineral properties and compares
such undiscounted future cash flows to the carrying amount of the mineral
properties to determine if the carrying amount is recoverable.  If the
carrying amount exceeds the estimated undiscounted future cash flows, the
Company will adjust the carrying amount of the mineral properties to fair
value.  The factors used to determine fair value include, but are not
limited to, recent sales prices of comparable properties, estimates of proved
reserves, future commodity pricing, future production estimates, anticipated
capital expenditures, and a discount rate commensurate with the risk associated
with realizing the expected cash flows projected.





Unevaluated
properties are assessed periodically on a property-by-property basis and any
impairment in value is charged to expense.  If the unevaluated
properties are subsequently determined to be productive, the related costs are
transferred to proved mineral properties.  Proceeds from sales of
partial interests in unproved leases are accounted for as a recovery of cost
without recognizing any gain until all costs are recovered.





The
Company determined that there were no impairments of long-lived assets as of
June 30, 2009 or 2008.





Fair
Value of Financial Instruments





The
Company follows Statement of Financial Accounting Standards No. 107 “Disclosures about fair value of
Financial Instruments” (“SFAS No. 107”) for disclosures about fair value
of its financial instruments and has adopted Financial Accounting Standards
Board (“FASB”) No. 157 “Fair
Value Measurements” (“SFAS No. 157”) to measure the fair value of its
financial instruments.  SFAS No. 157 establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, SFAS No. 157
establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three (3) broad
levels.  The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs.  The three (3) levels of
fair value hierarchy defined by SFAS No. 157 are described below:







F-9




Level
      1
            
            Quoted
      market prices available in active markets for identical assets or
      liabilities as of the reporting date.Level
      2
            
            Pricing
      inputs other than quoted prices in active markets included in Level 1,
      which are either directly or indirectly observable as of the reporting
      date.Level
      3
            
            Pricing
      inputs that are generally observable inputs and not corroborated by market
      data.





As
defined by SFAS No. 107, the fair value of a financial instrument is the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale, which was further
clarified as the price that would be received to sell an asset or paid to
transfer a liability (“an exit price”) in an orderly transaction between market
participants at the measurement date.  The carrying amounts of the
Company’s financial assets and liabilities, such as cash, other receivables,
deposit, accounts payable, loan payable stockholder and common stock to be
issued, approximate their fair values because of the short maturity of these
instruments.





The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at June
30, 2009 or 2008, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the fiscal year ended June 30, 2009 or for the period from June 11, 2008
(Inception) through June 30, 2008 and for the period from June 11, 2008
(Inception) through June 30, 2009.





Revenue
Recognition





The
Company follows the guidance of the United States Securities and Exchange
Commission’s Staff Accounting Bulletin (“SAB”) No. 101 “Revenue Recognition” (“SAB
No. 101”), as amended by SAB No. 104 (“SAB No. 104”) for revenue
recognition.  The Company recognizes revenue when it is realized or
realizable and earned less estimated future doubtful accounts.  The
Company considers revenue realized or realizable and earned when all of the
following criteria are met: (i) persuasive evidence of an arrangement exists,
(ii) the product has been shipped or the services have been rendered to the
customer, (iii) the sales price is fixed or determinable, and (iv)
collectability is reasonably assured.





The
Company will derive its revenue from sales contracts with customers with
revenues being generated upon the shipment of mineral ores upon the Company
commencing exploration operations.  Persuasive evidence of an
arrangement is demonstrated via invoice, product delivery is evidenced by
warehouse shipping log as well as a signed bill of lading from the trucking
company or third party carrier and title transfers upon shipment, based on free
on board (“FOB”) warehouse; the sales price to the customer is fixed upon
acceptance of the purchase order and there is no separate sales rebate,
discount, or volume incentive.





Stock-based
compensation for employees and equity instruments issued to parties other than
employees for acquiring goods or services





The
Company accounted for its stock based compensation under the recognition and
measurement principles of the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment” (“SFAS
No. 123R”) using the modified prospective method for transactions in which the
Company obtains employee services in share-based payment transactions and the
Financial Accounting Standards Board Emerging Issues Task Force Issue
No. 96-18“Accounting For
Equity Instruments That Are Issued To Other Than Employees For Acquiring, Or In
Conjunction With Selling Goods Or Services” (“EITF No. 96-18”) for
share-based payment transactions with parties other than employees provided in
SFAS No. 123R.  All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable.  The
measurement date used to determine the fair value of the equity instrument
issued is the earlier of the date on which the third-party performance is
complete or the date on which it is probable that performance will
occur.






F-10





Income
Taxes





The
Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 “Accounting
for Income Taxes” (“SFAS No. 109”).  Deferred income tax assets
and liabilities are determined based upon differences between the financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.  Deferred tax assets are reduced by a valuation
allowance to the extent management concludes it is more likely than not that the
assets will not be realized.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in the statements of operations in the period that includes
the enactment date.





The
Company adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation No. 48 “Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No. 109” (“FIN
48”).  FIN 48 addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the
financial statements.  Under FIN 48, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position.  The tax benefits
recognized in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement.  FIN 48 also
provides guidance on de-recognition, classification, interest and penalties on
income taxes, accounting in interim periods and requires increased
disclosures.  The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
FIN 48.





Net
Loss per Common Share





Net
loss per common share is computed pursuant to Statement of Financial Accounting
Standards No. 128.  "Earnings per Share" ("SFAS No. 128").  Basic net
loss per common share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Diluted net loss
per common share is computed by dividing net loss by the weighted average number
of shares of common stock and potentially outstanding shares of common stock
during each period. There were 20,000,000 options and 3,745,767 warrants
outstanding as of June 30, 2009, which were excluded from the calculation
because their effect would be anti-dilutive.





Foreign
Currency Translation





Transactions
and balances originally denominated in U.S. dollars are presented at their
original amounts.  Transactions and balances in other currencies are
converted into U.S. dollars in accordance with Statement of Financial Accounting
Standards No. 52 “Foreign Currency Translation” (“SFAS No. 52”) and are included
in determining net income or loss.





The
financial records of VAC, the operating subsidiary of  the Company,
are maintained in its local currency, the Australian Dollar, which is the
functional currency.  Assets and liabilities are translated from the local
currency into the reporting currency, U.S. dollars, at the exchange rate
prevailing at the balance sheet date. Revenues and expenses are translated at
weighted average exchange rates for the period to approximate translation at the
exchange rates prevailing at the dates those elements are recognized in the
combined and consolidated financial statements.  Foreign currency
translation gain (loss) resulting from the process of translating the local
currency financial statements into U.S. dollars are included in determining
accumulated other comprehensive income in the combined and consolidated
statement of stockholders’ equity.






F-11





Recently
Issued Accounting Pronouncements





In
June 2003, the Securities and Exchange Commission (“SEC”) adopted final rules
under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended
by SEC Release No. 33-9072 on October 19, 2009.  Commencing with its
annual report for the fiscal year ending June 30, 2010, the Company will be
required to include a report of management on its internal control over
financial reporting. The internal control report must include a
statement





·
            of
      management’s responsibility for establishing and maintaining adequate
      internal control over its financial
reporting;




·
            of
      management’s assessment of the effectiveness of its internal control over
      financial reporting as of year end;
and




·
            of
      the framework used by management to evaluate the effectiveness of the
      Company’s internal control over financial
  reporting.





Furthermore,
it is required to file the auditor’s attestation report separately on the
Company’s internal control over financial reporting on whether it believes that
the Company has maintained, in all material respects, effective internal control
over financial reporting.





In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009.  The Codification does not
change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place.  All existing accounting standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15,
2009.  The adoption of this standard did not have a material impact on
its consolidated financial position, results of operations or cash
flows.





Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.





NOTE
– 3 GOING CONCERN





As
reflected in the accompanying financial statements, the Company had a deficit
accumulated during the exploration stage of $1,433,240 at June 30, 2009 and had
a net loss and cash used in operations of $1,218,331 and $551,963 for the fiscal
year ended June 30, 2009, respectively, with no revenues since
inception.





While
the Company is attempting to commence operations and generate revenues, the
Company’s cash position may not be significant enough to support the Company’s
daily operations.  Management intends to raise additional funds by way
of a public or private offering.  Management believes that the actions
presently being taken to further implement its business plan and generate
revenues provide the opportunity for the Company to continue as a going
concern.  While the Company believes in the viability of its strategy
to generate revenues and in its ability to raise additional funds, there can be
no assurances to that effect.  The ability of the Company to continue
as a going concern is dependent upon the Company’s ability to further implement
its business plan and generate revenues.  The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.





NOTE
– 4 EXPLORATION PERMITS & LICENCES





The
Company is primarily engaged in the acquisition, exploration and development of
mineral properties. Mineral property acquisition costs and related capitalizable
expenses of $1,473,189 are initially capitalized as tangible assets when
purchased. At each fiscal quarter end, these carrying costs are assessed for
impairment. If proven and probable reserves are established for a property and
it has been determined that a mineral property can be economically developed,
capitalized costs will be depleted using the units-of-production method over the
estimated life of the probable reserve.







F-12




Currently,
the Company has capitalized costs as incurred related to the acquisition and
exploration of mineral properties in which they have secured exploration rights
due to the establishment of a probable resourcealthough not yet to Australian
JORC standard. These costs include general exploration costs and costs to
maintain rights and leases associated with any properties under
exploration.





The
Company did not record depletion of mineral properties as it has not started to
explore its mining claims.  Depletion expense for the next five (5)
fiscal years is undeterminable as the Company is still an exploration stage
company and its planned principal operations have not commenced.





NOTE
– 5 OTHER RECEIVABLES





Other
receivables of $131,602 represent a GST refund from the Australian Taxation
Office.





NOTE
– 6 ADVANCES FROM STOCKHOLDER





Advances
from stockholder of $86,258 are payable on demand and bear no
interest.





NOTE
– 7 STOCKHOLDERS’ EQUITY (DEFICIT)





Common
Stock





On
September 11, 2008, the shareholders of the Company authorized a 1 for 6.1728395
forward stock split. All share and per share data in the financial statements
and related notes have been restated to give retroactive effect to the reverse
stock split.





Issuance
of Common Stock for Financing





On
September 12, 2008, the Company completed a private placement, pursuant to which
3,631,430 shares of common stock and five-year warrants to purchase 3,631,430
shares of common stock were issued at an initial exercise price of $1.00 per
share for aggregate net proceeds of $1,271,000 (the Private Placement”). All
costs associated with the Share Exchange, other than financing related costs in
connection with Private Placement, were expensed as incurred.





On March 3, 2009, the
Company entered into a subscription agreement with Eliezer Labkowsky pursuant to
which the Company sold Mr. Labkowsky (i) 31,429 shares of common stock and (ii)
a five-year warrant to purchase 31,429 shares of common stock at an exercise
price of $1.00 per share in exchange for aggregate gross proceeds of
$11,000.





On March 3, 2009, the
Company entered into a subscription agreement with Schneur Z. Schapiro pursuant
to which the Company sold Mr. Schapiro (i) 35,714 shares of common stock and
(ii) a five-year warrants to purchase 35,714 shares of common stock at an
exercise price of $1.00 per share in exchange for aggregate gross proceeds of
$12,500.





In
addition to the sales of the Company’s common stock and warrants on March 3,
2009, the Company sold an additional 47,194 shares of common stock for
$16,518.





In
April 2009 the Company sold an additional 17,051 shares of common stock for
$13,300. These shares have not yet been issued and are reflected in the
financial statements in current liabilities as common stock to be
issued.





On
June 24, 2009, the Company issued 250,000 shares of its common stock under a
Finders Agreement signed on such date. The common stock was valued at its fair
market value on the date of issuance of $87,500. The amount is being shown as
deferred compensation at June 30, 2009 with the services to be performed over a
three month period commencing July 2009.







F-13




Stock
Options





On
September 12, 2008, stockholders of the Company approved, by majority written
consent, the adoption of the 2008 Stock Incentive Plan (the “Plan”). Under the
Plan, 40,000,000 shares of common stock are reserved for the issuance of
incentive stock options, non-qualified stock options, stock appreciation rights,
performance shares, restricted stock and long term incentive awards. The purpose
of the plan is to provide an incentive to attract and retain officers,
consultants, advisors and employees whose services are considered valuable, as
well as to stimulate an active interest of such persons into our development and
financial success.





On
September 12, 2008, Holdings granted to Australian Gemstone Mining Services Pty
Ltd, its management services company ("AGM"), immediately vesting five-year
options to purchase an aggregate of 20,000,000 shares of Holdings' common stock,
at an exercise price of $1.00 per share, under such plan. In addition, Holdings
has agreed to grant to L'Hayyim Pty Ltd warrants (the "Management Incentive
Warrants") to purchase up to an aggregate of 100,000,000 shares of Holdings'
common stock upon achieving certain major milestones. The Management Incentive
Warrants shall vest, with respect to 20% of the shares, upon independent
verification of inferred resources of at least 100 million, 200 million, 300
million, 400 million and 500 million tons of bauxite at VAC's tenement in
accordance with standards prescribed in Australia by the Joint Ore Reserves
Committee ("JORC"). To the extent vested, the Management Incentive Warrants will
be exercisable for five years after the applicable vesting date at an exercise
price of $1.00 per share.





The
fair value of the options issued to AGM, valued using the Black-Scholes
valuation model, on the date of issuance, was $420,000.





The
table below summarizes the Company’s stock option activity for the year ended
June 30, 2009:





Number of
              Option Shares
            Exercise Price Range
              Per Share
            Weighted Average
      Exercise Price
            
            Fair
      Value
              at
      Date of Grant
            Aggregate
              Intrinsic
              ValueBalance,
      June 30, 2008
              Balance,
      December 31, 2007
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -Granted
            
            
            20,000,000
            
            
            
            1.00
            
            
            
            1.00
            
            
            
            420,000
            
            
            
            *Cancelled
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            -Expired
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            -Balance,
      June 30, 2009
            
            
            20,000,000
            
            
            $
            1.00
            
            
            $
            1.00
            
            
            
            420,000
            
            
            $
            -Vested
      and exercisable, June 30, 2009
            
            
            20,000,000
            
            
            $
            1.00
            
            
            $
            1.00
            
            
            
            420,000
            
            
            $
            -Unvested,
      June 30, 2009
            
            
            -
            
            
            $
            1.00
            
            
            $
            1.00
            
            
            
            
            
            
            $
            -





The
following table summarizes information concerning outstanding and exercisable
stock options as of June 30, 2009:





Options
      Outstanding
            
            Options
      ExercisableRange
      of Exercise Prices
            
            Number
      Outstanding
            
            Average
      Remaining Contractual Life  (in years)
            
            Weighted
      Average Exercise Price
            
            Number
      Exercisable
            
            Average
      Remaining Contractual Life  (in years)
            
            Weighted
      Average Exercise Price$1.00
            
            
            20,000,000
            
            
            4.67
            
            $
            1.00
            
            
            20,000,000
            
            
            4.67
            
            $
            1.00$1.00
            
            
            20,000,000
            
            
            4.67
            
            $
            1.00
            
            
            20,000,000
            
            
            4.67
            
            $
            1.00






F-14





Warrants





In
connection with the private placements on September 12, 2008 and March 3, 2009,
the Company issued warrants for 3,745,767 shares, all of which have been earned
upon issuance.  The fair value of these warrants granted, estimated on
the date of grant, was $0, using the Black-Scholes option-pricing model with the
following weighted-average assumptions:





Expected
      option life (year)
            
            
            5.00Expected
      volatility
            
            
            100.00
            %Risk-free
      interest rate
            
            
            2.08
            %Dividend
      yield
            
            
            0.00
            %





The
table below summarizes the Company’s warrants activity for the year ended June
30, 2009:





Number of
              Warrant Shares
            
            
            Exercise Price Range
              Per Share
            
            
            Weighted Average
      Exercise Price
            
            Fair
      Value at Date of Issuance
            
            
            Aggregate
              Intrinsic
              ValueBalance,
      December 31, 2007
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Granted
            
            
            3,745,767
            
            
            
            1.00
            
            
            
            1.00
            
            
            
            0
            
            
            
            -Canceled
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance,
      December 31, 2008
            
            
            3,745,767
            
            
            $
            1.00
            
            
            $
            1.00
            
            
            
            0
            
            
            $
            -Earned
      and exercisable, December 31, 2008
            
            
            3,745,767
            
            
            $
            1.00
            
            
            $
            1.00
            
            
            
            0
            
            
            $
            -Unvested,
      December 31, 2008
            
            
            -
            
            
            $
            
            
            
            
            
            
            
            
            -
            
            
            $
            -





The
following table summarizes information concerning outstanding and exercisable
warrants as of June 30, 2009:





Warrants
      Outstanding (*)
            
            Warrants
      Exercisable (*)Range
      of Exercise Prices
            
            Number
      Outstanding
            
            Average
      Remaining Contractual Life  (in years)
            
            Weighted
      Average Exercise Price
            
            Number
      Exercisable
            
            Average
      Remaining Contractual Life  (in years)
            
            Weighted
      Average Exercise Price$1.00
            
            
            3,745,767
            
            
            4.12
            
            $
            1.00
            
            
            3,745,767
            
            
            4.12
            
            $
            1.00$1.00
            
            
            3,745,767
            
            
            4.12
            
            $
            1.00
            
            
            3,745,767
            
            
            4.12
            
            $
            1.00





NOTE
– 8 INCOME TAXES





Volcan
Holdings is a non-operating holding company.  VAC, the Company’s
Australian subsidiary is subject to Australian income taxes.





United
States Income Tax





Volcan
Holdings, Inc. is incorporated in the State of Delaware and is subject to United
States of America tax law.  Volcan Holdings, Inc. did not have any
taxable income for the year ended June 30, 2009 and 2008 and no provision for
income taxes has been made in the United States.







F-15




NOTE
– 9 RELATED PARTIES





The
company is a related party to Australian Gemstone Mining Services Pty Ltd
(“AGM”), an entity owned and controlled by a member of the Board (Pnina
Feldman). During the fiscal year ended June 30, 2009, the company paid $500,000
to AGM, arising out of the purchase of exploration and prospecting information
and administration services, AGM’s cost basis. The remaining funds will be
repaid when more funds are raised, and/or when liquidity allows.




NOTE
– 10 COMMITMENTS AND CONTINGENCIES





The
Company has an obligation to pay the vendors of Volcan Australia Pty Ltd an
amount of $1,500,000 as additional consideration in relation to the acquisition
of that entity.





The
Company acquired Volcan Australia Pty Ltd in exchange for  90,000,000 newly
issued shares of common stock together with Volcan’s right to receive $1,500,000
in cash at the end of any fiscal quarter in which the Company has cash on hand
of at least $5,000,000.





Management
Services Agreement





The
Company has entered into a Management Services Agreement with Australian
Gemstone Mining Services Pty Ltd, a company owned and controlled by Pnina
Feldman, a member of the Board.





The
Management Services Agreement was entered into as of July 1, 2008, pursuant to
which 4 individuals (each a key person) provide executive and corporate
services, including geological and technical expertise, to the
Company.





During
the term of the Management Services Agreement the Company will pay a retainer of
$175,000 per annum with respect to each key person, being the two chief
geoscientists and the two executive directors for an aggregate amount of
$700,000 per annum. However, the directors of Australian Gemstone Mining
Services Pty Ltd have agreed not to take any payment for the two executive
directors until further funds are raised and the Project has an independently
verified resource statement completed.





The
Company is not required to pay any additional fees, including director’s fees,
to Australian Gemstone Mining Services Pty Ltd or the key persons personally
with respect to the services to be provided by the key persons.





The
Agreement also requires that Australian Gemstone Mining Services Pty Ltd
provides the Company with suitable fully serviced   offices. The
Company has obtained rights to shared office space for an amount of $14,500 per
month. The directors have agreed to accept only 50% of this amount per month
until further funds are raised and the Project has an independently verified
resource statement verified.





Australian
Gemstone Mining Services Pty Ltd may also provide additional administrative
services to the Company, such as secretarial, accounting and office management
services. These services will be provided on reasonable arm's-length terms as
approved by the Company's independent directors.





During
the year the following amounts have been paid, or are  payable to,
Australian Gemstone Mining Services Pty Ltd in  accordance with the
Agreement:





Paid
      at June 30, 2009
            
            $
            500,000Payable
      during the next 12 months from the balance date for:General
      and administrative
      expenses
            
            $
            440,000Executive
      officers services
            
            $
            350,000







F-16




Finders
Agreement





On
June 24, 2009, the Company entered into a Finders Agreement with GDR Privee,
Inc. (GDR). GDR shall provide the Company with the names and contact information
for investors that it believes may be interested in purchasing the securities of
the Company.








In
addition to the issuance of 250,000 shares of Company common stock, the Company
shall, upon the closing of each sale of securities to a Designated Investor (a
"Closing"), pay to GDR in immediately available funds a cash fee equal to (i)
five percent (5%) of the gross proceeds from the sale of equity securities to a
Designated Investor and (ii) one and one-half percent (1.5%) of the gross
proceeds from any sale of debt securities to a Designated Investor; provided,
however, that, at the option of GDR, the Company shall pay GDR the foregoing
compensation by issuing GDR shares of common stock (in lieu of cash), with each
share of common stock being valued at the price per share of any common stock
sold to Designated Investors at such Closing.





NOTE
- 11 FOREIGN OPERATIONS





Substantially
all of the Company’s operations are carried out and all of its assets are
located in Australia.  Accordingly, the Company’s business, financial
condition and results of operations may be influenced by the political, economic
and legal environments in Australia.  The Company’s business may be
influenced by changes in governmental policies with respect to laws and
regulations, anti-inflationary measures, currency fluctuation and remittances
and methods of taxation, among other things.





NOTE
- 12 SUBSEQUENT EVENTS





The
company has evaluated all events that occurred after the balance sheet date
through October 27, 2009, the date these financial statements were issued. The
management of the Company is not aware of any subsequent events to be
disclosed.