WHITE MOUNTAIN TITANIUM CORP - FORM 10-Q

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EX-31.2 - WHITE MOUNTAIN TITANIUM CORP	v222706_ex31-2.htm
EX-31.1 - WHITE MOUNTAIN TITANIUM CORP	v222706_ex31-1.htm
EX-32.1 - WHITE MOUNTAIN TITANIUM CORP	v222706_ex32-1.htm
EX-32.2 - WHITE MOUNTAIN TITANIUM CORP	v222706_ex32-2.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2011

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ____________ to ___________________

Commission File Number 333-129347

WHITE MOUNTAIN TITANIUM CORPORATION

(Name of small business issuer in its charter)

NEVADA	87-0577390
(State of incorporation or organization)	(IRS Identification No.)

Augusto Leguia 100, Oficina 812

Las Condes, Santiago

Chile

(Address of principal executive offices)

(56 2) 657-1800

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed under Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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.


Large Accelerate Filer o	Accelerated Filer o

Non-Accelerated Filer (Do not check if a smaller reporting company) o	Smaller Reporting Company x

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

Yes o No x

55,910,941 shares of the issuer’s common stock, $.001 par value, were outstanding at May 13, 2011.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4. Controls and Procedures	19
PART II. OTHER INFORMATION	20
Item 6. Exhibits	20
SIGNATURES	20

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Balance Sheets

(US Funds)


	March 31, 2011			December 31, 2010
	(Unaudited)

Assets
Current
Cash and cash equivalents	$	4,204,110		$	3,766,959
Prepaid expenses		65,610			64,209
Receivables		14,087			47,342
Total Current Assets		4,283,807			3,878,510
Property and Equipment (Note 2)		47,991			56,383
Mineral Properties		651,950			651,950
Technology Rights		2,644,444			2,722,222

Total Assets	$	7,628,192		$	7,309,065

Liabilities
Current
Accounts payable and accrued liabilities	$	157,182		$	493,814
Total Current Liabilities		157,182			493,814
Other Liabilities – Warrants (Note 3(d))		-			2,006,850

Total Liabilities		157,182			2,500,664

Stockholders’ Equity
Common Stock and Paid-in Capital in Excess
of $0.001 Par Value (Note 3(a))
100,000,000 shares authorized
55,816,635 (December 31, 2010 – 49,766,636) shares issued and outstanding		36,991,136			30,834,680
Subscription Receivable		-			(32,500	)
Deficit Accumulated During the Exploration Stage		(29,520,126	)		(25,993,779	)

Total Stockholders’ Equity		7,471,010			4,808,401

Total Liabilities and Stockholders’ Equity	$	7,628,192		$	7,309,065

See notes to unaudited consolidated condensed financial statements.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Statements of Operations

(US Funds)

(Unaudited)


	Three Months Ended						Cumulative From Inception on November 13, 2001
	March 31,						Through
	2011			2010			March 31, 2011
Expenses
Advertising and promotion	$	39,699		$	4,587		$	357,946
Amortization		86,171			6,896			334,170
Bank charges and interest		9,378			2,468			47,754
Consulting fees (Note 3(c))		130,884			102,829			2,319,174
Consulting fees – directors and officers (Note 3(c))		662,430			521,130			5,578,269
Engineering consulting		(26,606	)		-			711,029
Exploration		990,613			75,288			6,322,786
Filing fees		1,527			4,892			76,849
Insurance		24,740			10,477			322,902
Investor relations, net		32,180			-			802,504
Licenses, taxes and filing fees, net		(3,911	)		(2,415	)		376,036
Management fees (Note 3(c))		537,476			329,820			2,693,755
Office (Note 3(c))		73,865			48,218			381,576
Professional fees		65,517			24,971			1,827,261
Research and development		88,071			-			254,873
Rent		19,195			20,716			486,958
Telephone		5,315			3,414			113,142
Transfer agent fees		2,591			921			23,157
Travel and vehicle		55,822			23,692			1,197,377

Loss before other items		(2,794,957	)		(1,177,904	)		(24,227,518	)

Gain on sale of marketable securities		-			-			87,217
Loss on sale of assets		-			-			*19,176
Adjustment to market for marketable securities		-			-			(67,922	)
Foreign exchange loss		(189,170	)		(9,189	)		(424,537	)
Dividend income		-			-			4,597
Interest income		930			3,014			349,321
Change in fair value of warrants (Note 3(d))		(543,150	)		970,700			(2,748,999	)
Change in fair value of preferred stock		-			180,000			(240,000	)
Financing agreement penalty		-			-			(330,000	)

Net loss and comprehensive loss for the period		(3,526,347	)		(33,379	)		(27,617,017	)
Preferred stock dividends		-			-			(1,537,500	)

Net Loss Available for Distribution	$	(3,526,347	)	$	(33,379	)	$	(29,154,517	)

Basic and Diluted Loss Per Share (Note 4)	$	(0.07	)	$	(0.00	)

Weighted Average Number of Common Shares Outstanding		51,308,969			36,752,972

See notes to unaudited consolidated condensed financial statements.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(US Funds)

(Unaudited)

	Three Months Ended March 31,						Cumulative Period from Inception on November 13, 2001 Through March 31,
	2011			2010			2011
Operating Activities
Net loss for period	$	(3,526,347	)	$	(33,379	)	$	(27,617,017	)
Items not involving cash
Amortization		86,171			6,896			334,171
Stock-based compensation		65,456			-			4,535,076
Loss on sale of assets		-			-			19,176
Fair value of common stock issued for services		1,161,000			828,000			3,504,030
Change in fair value of warrants		543,150			(970,700	)		2,748,999
Change in fair value of preferred stock		-			(180,000	)		240,000
Financing agreement penalty		-			-			330,000
Adjustment to market on marketable securities		-			-			67,922
Gain on sale of marketable securities		-			-			(87,217	)
Non-cash resource property expenditures		-			-			600,000
Changes in non-cash working capital
Prepaid expenses		(1,402	)		(113,858	)		(74,912	)
Receivables		33,255			(5,109	)		(6,805	)
Marketable securities		-			-			19,295
Accounts payable and accrued liabilities		(336,632	)		(134,540	)		91,335

Cash Used in Operating Activities		(1,975,349	)		(602,690	)		(15,295,947	)

Investing Activities
Additions to property and equipment, net		-			(1,471	)		(232,000	)
Additions to mineral property		-			-			(651,950	)

Cash Used in Investing Activities		-			(1,471	)		(883,950	)

Financing Activities
Repayment of long-term debt		-			-			(100,000	)
Issuance of preferred stock for cash		-			-			5,000,000
Issuance of common stock for cash		2,380,000			-			15,230,171
Stock subscriptions received		32,500			60,000			263,500
Working capital acquired on acquisition		-			-			171

Cash Provided by Financing Activities		2,412,500			60,000			20,393,842

Foreign Exchange Effect on Cash		-			-			(9,835	)

Inflow (Outflow) of Cash and CashEquivalents		437,151			(544,161	)		4,204,110
Cash and Cash Equivalents,
Beginning of Period		3,766,959			1,343,994			-

Cash and Cash Equivalents, End of Period	$	4,204,110		$	799,833		$	4,204,110

Supplemental Cash Flow Information
Income tax paid	$	-		$	-		$	-
Interest paid	$	-		$	-		$	-

Shares Issued for
Settlement of debt	$	-		$	-		$	830,000
Services	$	1,161,000		$	164,000		$	2,785,630
Mineral properties	$	-		$	-		$	600,000
Issuance of common stock on conversion of preferred shares	$	-		$	-		$	500,000

See notes to unaudited consolidated condensed financial statements.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficit)

(US Funds)

	Shares of Common Stock		Common Stock and Paid-In Capital in Excess of Par Value		Shares of Preferred Stock			Preferred Stock and Paid-in Capital in Excess of Par Value		Share Subscriptions Received/ Obligation to Issue Shares			Accumulated Deficit			Total Stockholders’ Equity (Deficit)

Balance, December 31, 2009		36,400,972	$	21,660,100		625,000		$	-	$	-		$	(23,747,499	)	$	(2,087,399	)
Stock-based compensation (Note 3(c))		-		120,409		-			-		-			-			120,409
Obligation to issue shares		-		-		-			-		(32,500	)		-			(32,500	)
Warrants exercised (Note3(d))		2,193,040		1,315,824		-			-		-			-			1,315,824
Options exercised (Note 3(b))		50,000		25,000		-			-		-			-			25,000
Private placement (Note 3(b))		5,384,624		3,186,947		-			-		-			-			3,186,947
Shares issued for services		738,000		986,400		-			-		-			-			986,400
Shares issued for technology		4,000,000		2,800,000		-			-		-			-			2,800,000
Shares issued upon conversion of preferred shares		1,000,000		740,000		(625,000	)		-		-			-			740,000
Net loss for the year		-		-		-			-		-			(2,246,280	)		(2,246,280	)
Balance, December 31, 2010		49,766,636		30,834,680		-			-		(32,500	)		(25,993,779	)		4,808,401
Stock-based compensation (Note 3(c))		-		65,456		-			-		-			-			65,456
Obligation to issue shares		-		-		-			-		32,500			-			32,500
Common stock issued for services (Note 3(c))		1,290,000		1,161,000		-			-		-			-			1,161,000
Additional paid in capital recognized on warrant conversion (Note 3(d))		-		2,550,000		-			-		-			-			2,550,000
Warrants exercised (Note3(d))		4,250,000		2,125,000		-			-		-			-			2,125,000
Options exercised (Note 3(b))		509,999		255,000		-			-		-			-			255,000
Net loss for the period		-		-		-			-		-			(3,526,347	)		(3,526,347	)
Balance, March 31, 2011 (Unaudited)		55,816,635	$	36,991,136		-		$	-	$	-		$	(29,520,126	)	$	7,471,010

See notes to unaudited consolidated condensed financial statements.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficit)

(US Funds)

1.	NATURE OF BUSINESS AND BASIS OF PRESENTATION

White Mountain Titanium Corporation (the “Company”) is in the business of exploring for titanium deposits or reserves on its Cerro Blanco mining concessions. Its principal business is to advance exploration and development activities on the Cerro Blanco rutile (titanium dioxide) Property (“Cerro Blanco”) located in Region III of northern Chile. The Company is considered an exploration stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities.

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2011 and for the period then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s December 31, 2010 audited consolidated financial statements included in the Company’s 2010 annual report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”). The results of operations for the period ended March 31, 2011 are not necessarily indicative of the operating results for the full year.

2.	PROPERTY AND EQUIPMENT


	March 31, 2011
		Cost		Accumulated Amortization		Net
Vehicles	$	54,153	$	47,055	$	7,098
Office furniture		18,268		6,928		11,340
Office equipment		11,903		9,021		2,882
Computer equipment		8,197		7,251		946
Computer software		1,541		1,009		532
Field equipment		70,287		45,094		25,193

	$	164,349	$	116,358	$	47,991

	December 31, 2010
		Cost		Accumulated Amortization		Net
Vehicles	$	54,153	$	45,080	$	9,073
Office furniture		18,268		5,689		12,579
Office equipment		11,903		6,168		5,735
Computer equipment		8,197		6,842		1,355
Computer software		1,541		933		608
Field equipment		70,287		43,254		27,033

	$	164,349	$	107,966	$	56,383

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

3.	CAPITAL STOCK

(a)	Common stock

During the three months ended March 31, 2011:

·	1,290,000 shares of common stock were issued for services with a fair value of $1,161,000 Note 3(c));

·	4,250,000 shares of common stock were issued upon the exercise of warrants (Note 3(d)); and

·	509,999 shares of common stock were issued upon the exercise of stock options (Note 3(b)).

(b)	Stock options

The Company has a stock option plan adopted in 2005 and a Stock Option/Stock Issuance Pan adopted in 2010 (individually the “2005 Plan” and the “2010 Plan” and, collectively, the “Plans”). Under the Plans, the Company is authorized to grant options to executive officers and directors, employees and consultants of the Company. The 2005 Plan was originally authorized to grant 3,140,000 shares; the 2010 Plan was originally authorized to issue 4,901,740 shares, which amount is increased at the end of each year to represent 10% of the total outstanding shares at year-end. The Company has also adopted a Management Compensation Pool for the benefit of officers, directors and employees of the Company. The pool will consist of 1% of the outstanding shares at the end of each year. The terms of any stock option granted under the 2005 Plan may not exceed five years and ten years under the 2010 plan.

During the year ended December 31, 2010, no stock options were granted. Options totaling 50,000 shares were exercised for gross proceeds of $25,000.

During the period ended March 31, 2011, no stock options were granted. Options for 509,999 (Note 3(a)) shares exercisable at $0.50 per share were exercised.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

3.	CAPITAL STOCK (continued)

(b)	Stock options (continued)

The following table represents service based stock option activity during the three months ended March 31, 2011 and the year ended December 31, 2010.

	March 31, 2011					December 31, 2010
	Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price

Outstanding - beginning of period		2,740,000		$	0.53		2,790,000		$	0.53
Expired		(1	)	$	0.50		-			-
Exercised		(509,999	)	$	0.50		(50,000	)	$	0.50

Outstanding – end of period		2,230,000		$	0.54		2,740,000		$	0.53
Exercisable – end of period		2,230,000		$	0.54		2,740,000		$	0.53

As at March 31, 2011 and December 31, 2010, the following stock options were outstanding:

	Exercise		March 31,		December 31,
Expiry Date	Price		2011		2010

January 31, 2011	$	0.50		-		400,000
May 31, 2011	$	0.50		600,000		600,000
August 1, 2011	$	0.50		200,000		200,000
August 31, 2011	$	0.50		190,000		300,000
August 31, 2012	$	0.50		1,075,000		1,075,000
June 23, 2013	$	1.00		165,000		165,000

				2,230,000		2,740,000

The shares under option at March 31, 2011 were in the following exercise price ranges:

Weighted Average Exercise Price		Number of Shares under Option		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life in Years

$	0.50		2,065,000	$	1,259,650		0.83
$	1.00		165,000		18,150		2.23

$	0.54		2,230,000	$	1,277,800		0.93

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

3.	CAPITAL STOCK (continued)

(c)	Stock-based compensation

During the year ended December 31, 2010, the total stock-based compensation for the 2,000,000 warrants issued to directors and officers recognized under the fair value method charged to management fees was $120,409. The maximum stock-based compensation to be recognized is $944,959. The remaining unamortized balance of $824,550 will be amortized through December 31, 2015. In the period ended March 31, 2011, $65,456 was expensed.

These warrants were fair valued using a trinomial barrier pricing model with the following weighted average assumptions: exercise price of $1.50, risk-free interest rate of 1.89%, expected life of 3.4 years, an expected volatility factor of 75.90%, a dividend yield of 0.00% and a probability of 11%. The Company estimated the exercisability of these warrants using a Monte Carlo probability calculator. The weighted average probability of exercisability of these warrants is 11%.

During the 3 month period ended March 31, 2011, the Company issued 1,290,000 shares of common stock (Note 3(a)) at a fair value of $1,161,000 valued at the market value at the time of issuance, to management, employees and consultants, under the Management Compensation Pool.

During the 3 month period ended March 31, 2010, the total stock-based compensation recognized under the fair value method was $828,000.

The total stock-based compensation recognized for shares issued, warrants granted and options granted for services was as follows:

	March 31,		March 31,
	2011		2010

Consulting fees	$	90,000	$	62,100
Consulting fees - directors and officers		576,000		434,700
Management fees		497,456		289,800
Office		63,000		41,400

	$	1,226,456	$	828,000

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

3.	CAPITAL STOCK (continued)

(d)

Warrants

Details of stock purchase warrant activity is as follows:

	March 31, 2011					December 31, 2010
	Number of Warrants			Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price

Outstanding - beginning of period		8,515,111		$	0.78		10,587,385		$	0.56
Issued		-			-		3,775,326		$	1.10
Exercised		(4,250,000	)	$	0.50		(2,193,040	)	$	0.60
Expired		-			-		(3,654,560	)	$	0.60

Outstanding - end of period		4,265,111		$	1.05		8,515,111		$	0.78

As at March 31, 2011and December 31, 2010, the following share purchase warrants were outstanding:

Expiry Date	Exercise Price		March 31, 2011		December 31, 2010

April 1, 2011	$	0.50		-		4,250,000
April 15, 2011 (note 6)	$	0.90		104,785		104,785
June 30, 2011	$	0.75		150,000		150,000
June 30, 2012	$	0.50		235,000		235,000
June 30, 2012	$	0.65		1,775,326		1,775,326
December 31, 2015	$	1.50		2,000,000		2,000,000

				4,265,111		8,515,111

During the year ended December 31, 2010, 2,000,000 warrants were issued to two officers and directors of the Company as compensation, as approved by the Board in January 2010. These warrants are exercisable at $1.50 per share expiring December 31, 2015 (Note 3(c)). These warrants vest only upon occurrence of one of the following events and are exercisable in full upon the first of the following events:

(i)	If on or before June 30, 2011, the closing price of the common stock of the Company is at least $2.00 per share for five consecutive trading days;

(ii)	If on or before December 31, 2012, the closing price of the common stock of the Company is at least $2.50 per share for five consecutive trading days; and

(iii)

If on or before December 31, 2015, the closing price of the common stock of the Company is at least $3.00 per share for five consecutive trading days.

These prices shall be subject to reasonable adjustment upon occurrence of certain conditions.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

3. CAPITAL STOCK (continued)

(d)	Warrants (continued)

Effective January 1, 2009, the Company adopted the provisions of Emerging Issues Task Force (“EITF”) 07-05, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock, which was primarily codified into ASC Topic 815, Derivatives and Hedging. ASC 815 applies to any freestanding financial instrument or embedded feature that has the characteristics of a derivative and to any freestanding financial instruments that is potentially settled in an entity’s own common stock.

As a result of adopting ASC 815, warrants to purchase 6,875,000 shares of common stock previously treated as equity pursuant to the derivative treatment exemption were no longer afforded equity treatment. The warrants had an exercise price of $0.50 per warrant and expire in July and September 2009, of which 4,250,000 warrants were extended to April 2011. Effective January 1, 2009, the Company reclassified the fair value of these 4,250,000 warrants to purchase common stock, which had exercise price reset features, from equity to liability status as if these warrants were treated as a derivative liability since their date of issue. On January 1, 2009, the Company reclassified $1,084,375 to beginning deficit and $1,084,375 to other liabilities - warrants to recognize the fair value of such warrants on such date.

As of March 31, 2010, the remaining 4,250,000 warrants were fair valued using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 1.63%, expected life of 1 year, an expected volatility factor of 53.19% and a dividend yield of 0.0%. The fair value of these warrants to purchase common stock decreased to $1,986,025 as of March 31, 2010. As such, the Company recognized a $970,700 non-cash income from the change in fair value of these warrants for the period ended March 31, 2010.

As of March 31, 2011, the 4,250,000 warrants had been exercised (Note 3(a)). Accordingly, the Company recognized a $543,150 non-cash loss from the change in fair value of these warrants, and $2,550,000 was added to paid-in capital on the common stock issued upon conversion.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

4.	LOSS PER SHARE

Basic and diluted loss per share is computed using the weighted average number of common shares outstanding as follows:

	Three Months Ended March 31,
	2011			2010

Net loss for period	$	(3,526,347	)	$	(33,379	)

Net loss available for distribution	$	(3,526,347	)	$	(33,379	)

Allocation of undistributed loss

Common shares (100%, 2010 – 100.00 %)		(3,526,347	)		(33,379	)

	$	(3,526,347	)	$	(33,379	)
Basic loss per share amounts Undistributed amounts loss per common share	$	(0.07	)	$	(0.001	)

Weighted average number of shares:

	Three Months Ended March 31,
	2011		2010

Weighted average number of shares for undistributed amounts:
Common stock		51,308,969		36,752,972

As at March 31, 2011, potentially dilutive securities not included in diluted weighted average shares outstanding include shares underlying 2,230,000 in outstanding options and 4,265,111 warrants.

WHITE MOUNTAIN TITANIUM CORPORATION

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2011 and 2010

(Unaudited)

(US Funds)

5.	FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist of cash and cash equivalents, receivables, and accounts payable and accrued liabilities. The carrying amounts of these instruments approximate their respective fair values due to the short maturities of those instruments.

The three levels of the fair value hierarchy are described below:

(i)	Level 1 -	quoted prices (unadjusted) in active markets for identical assets or liabilities;
(ii)	Level 2 -	inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
(iii)	Level 3 -	inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table summarizes fair value measurement by level at March 31, 2011 and December 31, 2010 for assets and liabilities measured at fair value on a recurring basis.

March 31, 2011		Level 1				Level 2				Level 3				Total
Cash and cash equivalents		$	4,204,110			$	-			$	-			$	4,204,110

December 31, 2010	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	3,766,959	$	-	$	-	$	3,766,959
Other liabilities – warrants	$	-	$	2,006,850	$	-	$	2,006,850

6.	SUBSEQUENT EVENT

The Company has evaluated its activities subsequent to March 31, 2011 and has concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated condensed financial statements, except as follows:

On April 15, 2011, 94,306 broker warrants were exercised at a price of $0.90 per share for proceeds of $84,875. A further 10,479 warrants expired unexercised (Note 3(d)).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes thereto as filed with this report.

Forward Looking Statements

The statements contained in this report that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, need for financing, competitive position, potential growth opportunities, potential operating performance improvements, ability to retain and recruit personnel, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “will,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.

Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed in this report. While it is not possible to identify all factors, we continue to face many risks and uncertainties including, but not limited to, the cyclicality of the titanium dioxide industry, global economic and political conditions, global productive capacity, customer inventory levels, changes in product pricing, changes in product costing, changes in foreign currency exchange rates, competitive technology positions and operating interruptions (including, but not limited to, labor disputes, leaks, fires, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities). Mining operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental protection controls, all of which are subject to change and are becoming more stringent and costly to comply with. Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those expected. We disclaim any intention or obligation to update publicly or revise such statements whether as a result of new information, future events or otherwise.

There may also be other risks and uncertainties that we are unable to predict at this time or that we do not now expect to have a material adverse impact on our business.

Background

We are a mineral exploration company. We hold mining concessions composed of 33 registered mining exploitation concessions, and 5 exploration concessions, over approximately 8,225 hectares located approximately 39 kilometers west of the City of Vallenar in the Atacama, or Region III, geographic region of northern Chile (hereinafter referred to as “Cerro Blanco”). We are in the exploration stage, which means we are engaged in the search for mineral deposits or reserves which could be economically and legally extracted or recovered. Our primary expenditures at this stage consist of acquisition and exploration costs and general and administration expenses. We have produced no revenues, have achieved losses since inception, have no operations, and currently rely upon the sale of our securities to fund our operations.

Plan of Operation and Financial Condition

We completed the acquisition of an undivided interest in Cerro Blanco in September 2005. Exploration drilling by us and the previous owner has defined rutile mineralization. Metallurgical test work performed by Lakefield Research has demonstrated that this mineralization can be concentrated to a level meeting buyer specifications and can be produced using a conventional milling and flotation process.

Over the next twelve to eighteen months we intend to advance the project towards a final engineering feasibility level. We will also continue to investigate the commercial viability of producing a feldspar co-product. The feldspar could find applications in the glass and ceramics industries.

We now have a considerable body of engineering design and process engineering work completed, both by us and previous owners, for the development of a large open pit mine and milling operation. The extent to which this engineering work could be incorporated into a feasibility study will depend on factors such as optimal plant sizing and configuration based on product volumes and specifications set out in off-take contracts and process design, the latter to be determined by refinements coming out of the metallurgical test work and pilot scale testing completed last year. With commencement of our marketing plan to seek suitable off-take contracts, we intend to undertake a program of drilling to provide data for mine planning and design, for an environmental impact assessment and permitting program, and to commission a feasibility study. As some of these activities would be undertaken in tandem, we believe a feasibility study could be completed by the end of 2011, subject to the availability of funds, personnel and equipment. We estimate the cost to take the project to the point of completing a final engineering feasibility study at approximately $3,810,000, including general and administrative and marketing expenses. As of May 10, 2011, our cash position was approximately $4,000,000. We believe we have sufficient capital to complete this plan, however we may acquire additional financing to do so.

On October 1, 2010 the Company issued 4,000,000 shares of common stock pursuant to the terms of the non-exclusive, sublicensing agreement of the titanium metal technology developed by Chinuka Limited plc (“Chinuka” or the “Chinuka Process”). The Company now has access to the Chinuka Process for the Cerro Blanco project. La Serena Technologies Ltd. (“La Serena”) executed the sublicensing agreement as holder of the Chinuka Process master license. As consideration for the sublicense, the terms of the agreement between the Company and La Serena are:

4,000,000 restricted shares of common stock were issued to Chinuka and La Serena (800,000 to Chinuka and 3,200,000 to La Serena). These shares are to be released from escrow over 24 months with 500,000 shares released to each Chinuka and La Serena on closing and the balance released from escrow at the end of each subsequent fiscal quarter on the basis of 37,500 to Chinuka and 337,500 to La Serena. The Company may cancel the sublicense agreement (and related escrow share releases) at any time following the initial release of shares;

The expenditure of $5,000,000 by the Company within five years of closing to advance development of the Chinuka Process towards commercialization;

A 2% gross royalty payment to La Serena on any revenue generated by the Cerro Blanco project, which is attributable to the Chinuka Process, and to make advance minimum royalty payments to La Serena of $200,000 per year commencing 5 years after closing; and

Commercial production of titanium metal using the Chinuka Process and feed stock derived from the Cerro Blanco project within nine years after closing.

The Chinuka Process was developed under the direction of Dr. Derek Fray, Professor and Director of Research, Materials Science and Metallurgy, University of Cambridge, UK. Unlike the industry-standard, multi-step Kroll batch process which uses titanium pigment as a feed stock to produce titanium sponge metal, the Chinuka Process is essentially a one-step process and uses titanium ores and concentrates as a feed stock. By replacing a multi-step process with a process in which refining and electro-deposition take place simultaneously and substituting ores and concentrates as a feed stock, the Chinuka Process holds forth potentially significant cost and production time saving over the Kroll process.

We anticipate the sublicensing of the Chinuka Process will create an opportunity to add value to the Cerro Blanco project, particularly with respect to the planned minus 53 micron titanium concentrate product.

In the first quarterly progress report since licensing a new titanium metal technology in September, 2010, we were advised that lab scale test work continued at the University of Cambridge in the UK under the direction of Professor Derek Fray into the refining and electrolytic deposition of pure titanium from lower grade concentrate. Small quantities of sponge were successfully produced using Ultra-fine concentrate feedstock sourced from the Company’s

Cerro Blanco project in Chile.

The focus for the research has now shifted to an investigation of the possibility of adapting the new technology to produce titanium metal powder, a higher value product than sponge. Consideration will also be given to testing lower grade concentrate as a feedstock for the new metal technology; feedstock of a quality that would not normally find application for use in the production of titanium pigment, currently the major outlet for titanium concentrates. We are very encouraged by the results to date of the new metal technology. Should we continue to have success with this technology at a lab scale, we may consider building a pilot plant to scale up the test work.

Since October, 2010 the Company has announced that it has signed four Letters of Intent for off-take agreements with pigment producers for the supply of standard grade rutile concentrate. The Letters of Intent, which at this stage are non-binding on the parties and subject to the successful completion of a bankable feasibility study, are covered by a non-disclosure agreement.

Results of Operations

The Company recorded a loss of $3,526,347 for the three months ended March 31, 2011 ($0.07 per weighted average common share outstanding) compared to a loss of $33,379 ($0.001 per share) for the comparable interim period in 2010.

The loss in the first quarter of both 2011 and 2010 is materially affected by the adoption of Emerging Issues Task Force (“EITF”) 07-05, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock, which was primarily codified into ASC Topic 815, Derivatives and Hedging. ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.

ASC Topic 815 was effective January 1, 2009 resulted in a cumulative adjustment of $1,084,375 to accumulated deficit as of January 1, 2009. For the three months ended March 31, 2011 the Company recorded a fair value change (loss) of $543,150 on the warrants. For the three months ended March 31, 2010, the Company recorded a gain of $970,700 on the warrants and a gain of $180,000 on the preferred stock. The preferred stock was converted into common stock on August 24, 2010.

The Company foreign exchange loss of $189,170 in Q1 of 2011 compared to a loss of $9,189 in the same quarter of 2010. This is a direct result of the weakening of the US dollar compared to the Chilean Peso.

Excluding the above, our loss from operations was $2,794,957 in the first quarter of 2011, compared to a loss of $1,177,904 in the same quarter of 2010.

Generally many expenses continue to be comparable this quarter to the comparable quarter of 2010, except for the following material items:

·	During the quarter, stock-based compensation of $1,226,456 (2010: $828,000) was recognized as follows:


	March 31,		March 31,
	2011		2010

Consulting fees	$	90,000	$	62,100 72,900
Consulting fees - directors and officers		576,000		434,700
Management fees		497,456		298,800
Office		63,000		41,400

	$	1,226,456	$	828,000

·	Advertising and Promotion of 39,699 (2010: 4,587), Investor relations of $32,180 (2010: $nil), and Travel of $55,822 (2010: 23,692) were all up significantly as the Company engaged outside advisors to provide market awareness and information dissemination services;

·	Amortization of $86,171 (2010: $6,896) reflects normal amortization of fixed assets plus the amortization of the technology rights which commenced in late 2010;

·	Engineering consulting reflects a significant refund received in the quarter from a supplier;

·	Exploration of $990,613 (2010:$75,288) reflects the drilling program underway in the quarter;

·	Professional fees of $65,517 (2010: $24,971) are as a result of 2010 audit and tax preparation fees in excess of accruals in 2010;

·	Research and development of $88,071 (2010: $nil) is the total of payments in the quarter to further our technology;

Recent Accounting Pronouncements

In January 2010, the FASB issued an update to the Fair Value topic. This update requires new disclosures for (1) transfers in and out of levels 1 and 2; and (2) activity in level 3, by requiring the reconciliation to present separate information about purchases, sales, issuance and settlements. Also, this update clarifies the disclosures related to the fair value of each class of assets and liabilities, and the input and valuation techniques for both recurring and non-recurring fair value measurements in levels 2 and 3. The effective date for the disclosures and clarifications is for interim and annual reporting periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances and settlements, which is effective for fiscal years beginning after December 15, 2010. The Company’s adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset de-recognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company’s adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU 2010-13, Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance or service condition. Therefore, an entity would not classify such an award as liability if it otherwise qualifies as equity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company’s adoption of this standard did not have a material effect on the Company’s consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our President and our CFO, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Rule 15d-15 (e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective to provide assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act) that occurred during our most recent quarter ended March 31, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their stated goals under all potential future conditions.

PART II. OTHER INFORMATION

Item 6. Exhibits

The following exhibits are furnished with this report:

31.1 Rule 15d-14(a) Certification by Principal Executive Officer

31.2 Rule 15d-14(a) Certification by Chief Financial Officer

32.1 Section 1350 Certification of Principal Executive Officer

32.2 Section 1350 Certification of Chief Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		White Mountain Titanium Corporation


Date:	May 13, 2011	By	/s/ M. P. Kurtanjek
			Michael P. Kurtanjek, President
			(Principal Executive Officer)



Date:	May 13, 2011	By	/s/ C.E. Jenkins
			Charles E. Jenkins, Chief Financial Officer
			(Principal Financial Officer)

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