[TEXT]
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 September 30, 1995
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 1-9904
VANDERBILT GOLD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 88-0224117
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4625 Wynn Road, Suite 103, Building C, Las Vegas NV 89103
(Address of principal executive offices)
(Zip Code)
(702) 362-3152
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common stock outstanding on November 30, 1995: 32,093,135 shares
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VANDERBILT GOLD CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands)
September December
30, 31,
1995 1994
Unaudited
Current Assets:
Cash and Cash Equivalents $ 2 $ 153
Accounts Receivable - Trade 2 68
Inventories 838 867
Prepaid Expenses 7 3
Other 3 2
Total Current Assets 852 1,093
Plant and Equipment - Net 2,622 2,159
Other Assets:
Due from Related Parties 23 40
Due from Former Employee 20 -
Total Assets $ 3,517 $ 3,292
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Balance Sheets, Continued
(In Thousands)
September December
30, 31,
1995 1994
Unaudited
Current Liabilities:
Accounts Payable $ 1,156 $ 1,062
Accrued Expenses 199 156
Accrued Salaries and Wages 499 480
Contract Payable - Rosarence (Note 2) 120 -
Loans Payable 1 -
Deferred Revenue - Gold Sales 95 95
Gold Loan Payable 38 38
Total Current Liabilities 2,108 1,831
Long Term Liabilities:
Accrued Reclamation Expense 45 45
Due to Related Parties 4 -
Shareholders' Equity:
Preferred Stock, Par Value $.01 Per Share;
Authorized 5,000,000 Shares;
Issued and Outstanding 0 Shares - -
Common Stock, Par Value $.01 Per Share;
Authorized 45,000,000 Shares; Issued
and Outstanding: 30,293,135 Shares
at September 30, 1995 and
28,976,210 at December 31, 1994 303 290
Common Stock Subscribed but Unissued:
2,006,520 Shares at September 30, 1995 and
825,546 Shares at December 31, 1994 - (Note 2) 363 133
Additional Paid in Capital 24,594 24,411
Accumulated Deficit (23,900) (23,418)
Net Shareholders' Equity 1,360 1,416
Total Liabilities and Shareholders' Equity $ 3,517 $ 3,292
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
1995 1994 1995 1994
Unaudited Unaudited
Revenues:
Bullion Sales $ - $ - $ 29 $ 14
Total Revenues - - 29 14
Expenses:
Direct Cost of Sales (1) - 21 -
Leaching, Refining and Shipping Costs 4 - 36 10
Reclamation & Environmental Expenses 6 75 97 132
Claim Lease/Rentals & Property Taxes 16 10 16 39
Debt Restructuring Expenses - - - 13
Depreciation and Amortization 16 14 48 43
Exploration Costs 6 2 113 3
General and Administrative Expenses 101 32 224 304
Total Expenses 148 133 555 544
Operating Loss 148 133 526 530
Interest Expense 3 1 10 30
Dividend Income - - 1 -
Gain on Termination of Joint Venture - 32 - 32
Debt Cancellation Income 53 - 53 11
Net Loss $ 98 $ 102 $ 482 $ 517
Net Loss Per Share $ 0.00 $ 0.00 $ 0.02 $ 0.02
Weighted Average Number of Shares
Outstanding Used in Calculation of
Loss Per Share 30,711 26,085 30,116 24,850
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statement of Cash Flows
(in thousands)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1994
Unaudited Unaudited
Cash Flows from Operating Activities:
Net Loss $ (482) $ (517)
Adjustments for Noncash Items Included
in Net (Loss):
Depreciation and Amortization 48 44
Payments for Accrued Reclamation Costs - (2)
Deferred Revenue Settled with Common Stock - 13
Current Period Expenses Settled with
Common Stock - 45
Income from Cancellation of Debt (53) (11)
Changes in Current Assets and Liabilities:
Accounts Receivable 66 (2)
Employee Advances - (14)
Due from Related Parties - (17)
Inventories 29 (5)
Other Current Assets (5) 2
Accounts Payable 147 165
Accrued Expenses 43 (7)
Accrued Salaries and Wages 19 84
Net Cash (Used in) Operating
Activities (188) (222)
Cash Flows from Investing Activities:
Purchase of Fixed Assets (54) (7)
Increase in Other Assets (3) -
Net Cash (Used in) Investing
Activities (57) (7)
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Condensed Consolidated Statement of Cash Flows, Continued
(in thousands)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1994
Unaudited Unaudited
Cash Flows from Financing Activities:
Proceeds from Common Stock Sold
and Subscribed 89 204
Payment of Notes Payable - Other - (4)
Increase in Loans Payable 1 -
Increase in Amounts Due Related Parties 8 -
Payment of Amounts Due Related Parties (4) (5)
Net Cash Provided by Financing
Activities 94 195
Increase (Decrease) in Cash and Cash Equivalents (151) (34)
Cash and Cash Equivalents at Beginning of Period 153 36
Cash and Cash Equivalents at End of Period $ 2 $ 2
Supplemental Information:
Settlement of Forward Gold Sale with Common
Stock (Subscribed) - 25
Payment of Notes Payable - Other with Common
Stock (Subscribed) - 10
Payment of Accounts Payable with Common Stock
(Subscribed) - 112
Interest Paid with Common Stock (Subscribed) - 25
Interest Paid - 1
Noncash Investment in Joint Venture - 50
Purchase of Fixed Assets with Common Stock
Subscribed 338 -
Purchase of Fixed Assets with Contract Payable 120 -
See Accompanying Notes to Condensed Consolidated Financial Statements
See Accompanying Accountant's Disclaimer Letter
<PAGE>
VANDERBILT GOLD CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 1995
Unaudited
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The Condensed Consolidated Balance Sheet as of September 30, 1995, and the
related Condensed Consolidated Statements of Operations for the three and
nine months ended September 30, 1995 and 1994 and Condensed Consolidated
Statements of Cash Flows for the nine months ended September 30, 1995 and
1994 have been prepared without audit. The Condensed Consolidated Balance
Sheet as of December 31, 1994 was taken from the audited financial
statements of that date. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position as of September 30, 1995, and the results of
operations and cash flows for the three and nine months ended September
30, 1995 and 1994 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, including Statements
of Cash Flows for the three months ended September 30, 1995 and 1994. It
is intended that these condensed consolidated financial statements be read
in conjunction with the audited financial statements and notes thereto
included in the Company's December 31, 1994 Form 10-K. The results of
operations for the three and nine months ended September 30, 1995 and 1994
are not necessarily indicative of the operating results for a full year.
For 1994, these condensed consolidated financial statements include the
accounts of the Company and its proportionate share of the assets,
liabilities, income and expenses of a joint venture in which it was a 50%
member.
Loss per common share is computed based upon the weighted average number
of shares outstanding during each period, including common stock
subscribed for which the Company has been fully paid. The effect on the
loss per common share resulting from the exercise of outstanding options
would be antidilutive.
Inventories of ores on the heap leach pad and gold-in-process are stated
at the lower of average cost or market. Operating materials and supplies
are stated at the lower of cost (as determined under the first-in
first-out method) or market. The $837,000 inventory amount shown on the
September 30, 1995 balance sheet is composed of $835,000 for ore in
process on the heap leach pad and metals in solution and $2,000 for
operating supplies. The $867,000 shown as inventories on the balance
sheet as of December 31, 1994 consists of $856,000 for ore in process on
the heap leach pads and metals in solution and $11,000 for operating
supplies.
<PAGE>
Certain reclassifications have been made to the 1994 financial statements
for comparability to 1995. Such reclassifications had no effect on the
amount of net loss.
The Company's consolidated financial statements have been prepared on the
going concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company's continued existence is dependent upon its ability to achieve
profitable operations, reduce its accounts payable and accrued expenses,
realize its investment in inventories and to obtain additional financing.
Accordingly, the consolidated financial statements do not include any
adjustments relating to the overall recoverability and classification of
recorded asset amounts or the amount and classification of liabilities or
any other adjustments that might be necessary should the Company be unable
to continue as a going concern in its present form.
The Company has reported recurring net losses for the years ended December
31, 1994, 1993 and 1992 and the nine months ended September 30, 1995.
Further, the current liabilities exceed current assets by $1,256,000 at
September 30, 1995, $738,000 at December 31, 1994 and $726,000 at December
31, 1993. Those factors as well as the uncertain capability of the Company
to produce gold in sufficient quantities at the Morning Star Mine to
fulfill the requirements of the gold loan, to meet the delivery schedules
for the deferred revenue contracts (which are in default) and to generate
sufficient revenues from operations to fund day to day operations and meet
its funding and payment obligations under the new Rosarence Agreement (of
September 27, 1995) create substantial uncertainty about the Company's
ability to continue as a going concern. The Company is exploring
alternative financing arrangements via direct loans, private placements,
restructuring debt or by joint venture arrangement(s) to provide the
capital with which to commence full operations and meet contractual
obligations.
2. New Rosarence Agreement - September 27, 1995
Pursuant to a Board of Directors Resolution in its meeting of October 4,
1995, the Registrant entered into a Revised Agreement, effective September
27, 1995, with Compania Minera Rosarence S. A. de C. V. ("Rosarence"), a
Mexican Corporation which, amongst other issues, provides:
1. The Revised Agreement supersedes the prior agreement between the
parties (refer to the December 31, 1994 Form 10-K).
2. The Registrant purchases the mineral exploitation Concession,
known as the La Sierra Concession, located in the State of
Durango, Mexico consisting of approximately 32,000 acres.
<PAGE>
3. The Registrant purchases all of the shares of Compania Minera
Rosarence S. A. de C. V.
4. The purchase price is $120,000 cash plus 1,800,000 shares of the
Registrant's common stock.
a. The $120,000 is to be paid as follows: $30,000 within 10
days of the signing of the Revised Agreement and three
additional payments of $30,000 on a quarterly basis
following the first payment,
b. Vanderbilt agrees to provide all funds necessary to keep the
Concession in force with the government of Mexico until the
final closing of the purchase,
c. The 1,800,000 shares of common stock are to be issued within
30 days following the signing of the Agreement and are to be
issued under Regulation S.
1. The 1,800,000 shares of Vanderbilt's common stock must
achieve an average value of US$1.00 for a 15 day cycle
within one year of the time of issuance. If this does
not occur, the seller may elect to receive the
remainder of the purchase price in cash or in the form
of additional shares of the Registrant's common stock.
If the seller elects to receive the remainder in cash,
Vanderbilt shall pay the amount due in equal monthly
installments beginning 15 months from the date of the
signing of the Agreement (October 4, 1994) and paid
over the following 12 month period.
d. Until the purchase price is paid in full, title to the
Concession shall be held in trust and released to Vanderbilt
if the purchase price is paid or to Rosarence or assignee if
Vanderbilt is unable to complete the payment of the purchase
price.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL:
The company is moving forward with its plans to produce precious metals from
its interests in Mexico while continuing efforts to bring the Morning Star Mine
in San Bernardino County, California, back into full production. At its Board
Meeting held on October 4, 1995, the purchase of the La Sierra Concession in
the State of Durango, Mexico, was approved. This gold and silver bearing
concession was previously held by Vanderbilt under an option to purchase. As
to the Morning Star Mine, funding is being sought to complete an improved
facility which has been approved by the California Water Quality Control
Board. These changes in the mining and processing of the ore is expected to
improve and speed up the overall gold and silver recoveries. In addition to
the foregoing, funding is being sought to purchase a participating interest in
another mining property in the State of Durango, Mexico. This additional
property can be brought into production in a relatively short time. An
agreement in principle has been reached but formal approval is still pending
for both parties.
RESULTS OF OPERATIONS:
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1995 TO THREE MONTHS ENDED
SEPTEMBER 30, 1994:
The Company realized a net loss of $98,000 for the three months ended September
30, 1995 which is $4,000 less than the $102,000 net loss for the three months
ended September 30, 1994. General and Administrative Expenses were $101,000
for the quarter ended September 30, 1995 as compared to $32,000 for the same
period in 1993. This increase for 1995 is due to legal fees incurred to deal
with environmental matters and the initial appeal of the Company's conviction
and fines in San Bernardino County, California as well as legal fees incurred
for ongoing environmental compliance issues. During the quarter ended
September 30, 1995, the Company's management reviewed its older accounts
payable and authorized the "write off" of many older payables thus giving rise
to some $53,000 in Debt Cancellation income. As described in the section
entitled "General" above, most of the Registrant's efforts in the third quarter
of 1995 were directed to positioning itself to commence operations in Mexico,
dealing with older and current environmental issues and exploring methods to
develop funding for all of its projects.
The following financial and operational highlights summarize the Company's
results of operations and financial position, for the periods indicated:
<PAGE>
Three months ended
September 30,
1995 1994
(in thousands except
percentages, per share,
ounces, and per ounce
amounts)
(Unaudited)
Overburden and waste removed (tons) 0 0
Ore mined (tons) 0 0
Payable gold (troy ounces):
Produced 0 0
Sold 0 0
Payable Silver (troy ounces):
Produced 0 0
Sold 0 0
Average realization:
Gold (per payable ounce) $ N/A $ N/A
Silver (per payable ounce) N/A N/A
Estimated ounces of recoverable gold
remaining on heap leach pads 2,373 2,449
Estimated Percentage of Recoverable
Gold Remaining on the heap leach pads 4.39% 4.52%
Bullion Sales 0 0
Operating Loss 148 133
Net Loss 98 102
Loss Per Common Share .00 .00
Total Assets 3,517 2,992
Total Liabilities 2,157 1,744
Accumulated Deficit 23,900 23,226
Shareholders' Equity 1,360 1,248
Working Capital (Deficit) (1,256) (799)
The detoxification of heap leach pad #1 at the Morning Star Mine, which holds
about 70% of the ore that the Company has mined and leached, has been
completed. Vanderbilt has now been given approval by the regulatory
authorities to recontour the detoxified material on that pad (about 1.4 million
tons of spent ore) and to backfill the former pregnant pond associated with it.
During both 1995 and 1994, Vanderbilt continued to improve the mine site. In
1994, the clean up efforts were focused on the removal of used equipment and
various hazardous waste. Used equipment and parts and materials abandoned by
former contractors as well as hazardous waste, primarily diesel fuel, motor
oil, and filters have been removed in accordance with current environmental
regulations. Vanderbilt believes it has met or exceeded the requirements
imposed by the regulations of all environmental governmental agencies.
<PAGE>
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1995 TO NINE MONTHS ENDED
SEPTEMBER 30, 1994:
The Company realized a net loss of $482,000 for the nine months ended September
30, 1995 which is $35,000 less than the $517,000 net loss for the nine months
ended September 30, 1994. The Company spent $113,000 in Exploration Expenses
during the nine months ended September 30, 1995 on its concessions in Mexico
contrasted to $3,000 in exploration expenditures during the same period in
1994. General and Administrative Expenses for the nine months ended September
30, 1995 were $80,000 lower than the same period in 1994 because the Company
accrued additional legal and accounting costs bringing its filings current with
the United States Securities and Exchange Commission in 1994.
The following financial and operational highlights summarize the Company's
results of operations and financial position, for the periods indicated:
Nine months ended
September 30
1995 1994
(in thousands except
percentages, per share,
ounces, and per ounce
amounts)
(Unaudited)
Overburden and waste removed (tons) 0 0
Ore mined (tons) 0 0
Payable gold (troy ounces):
Produced 76 ** 0
Sold 76 36*
Payable Silver (troy ounces):
Produced 7 0
Sold 7 ** 33*
Average realization:
Gold (per payable ounce) $ 384.42 $ 373.10
Silver (per payable ounce) 4.35 5.16
Estimated ounces of recoverable gold
remaining on heap leach pads 2,373 2,442
Estimated Percentage of Recoverable
Gold Remaining on the heap leach pads 4.39% 4.52%
Bullion Sales $ 29 $ 14
Operating Loss 526 530
Net Loss 482 517
Loss Per Common Share .02 .02
Cash Flow Used in Operations 188 222
Cash Flow Used in Investing Activities 57 7
Cash Flow Provided by Financing Activities 94 195
* Metals recovered from spent carbon removed from the recovery tanks.
** Metals produced and recovered from heap leach pad #2 solutions as part of
the detoxification process.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
The Company financed its operations and exploration activities through small
private placements and loans for both 1994 and 1995.
Like other companies, Vanderbilt is subject to the existing and evolving
standards relating to the protection of the environment. It has established a
reserve for the reclamation costs it can reasonably estimate that it will incur
when the operations at the Morning Star Mine finally cease. However, the
Company is subject to contingencies as a result of changing environmental laws
and regulations. The related future costs are indeterminable due to such
factors as the unknown timing and extent of corrective actions which may be
required and due to the application of joint and several liability. Vanderbilt
believes that those costs, if and when incurred, will not have a material
adverse effect on its operations or financial position. Management believes
that the Company's environmental liabilities have been substantially reduced
due to the fact that the 1.4 million tons of spent ore on heap leach pad #1
have been reclassified as nontoxic by the environmental regulatory authorities.
The Company's continued existence and resumption of operations at the Mine and
the possible continuation of evaluation, exploration and development of other
mineral properties is dependent upon its ability to raise additional capital
through joint ventures, by restructuring debt, private placements, and other
financing mechanisms.
OTHER:
As described in note 2 to the financial statements, the Registrant negotiated a
restructured agreement with Rosarence whereby Vanderbilt exercised its option
to purchase the La Sierra Concession and converted it to an exploitation
concession.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 18, 1995, an action entitled Patricia R. Eubank and James C.
Reeder vs Vanderbilt Gold Corporation, A California Corporation was filed in
the Santa Barbara Superior Court, Santa Maria Judicial District (California) -
Case Number SM93578 wherein the plaintiffs seek $67,000 plus property taxes for
the alleged failure of Vanderbilt to pay rent due plus property taxes on leased
mining claims. Management does not expect the Company to suffer any material
liability as a result of this suit.
<PAGE>
With regard to the matter of The People of the State of California vs
Vanderbilt Gold Corporation and John F. Jordan, Jr., on or about November 15,
1995, the Fourth Appellate District, Division Two, in the Supreme Court of
California denied the registrant's petition for review. Refer to the Form 10-K
for the year ended December 31, 1994 and the Form 10-Q for the period ended
June 30, 1995 for additional information on this matter. Management is
currently evaluating its options relative further avenues of appeal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
(10.1 Material Contract: Agreement between Registrant and Compania
Minera Rosarence S. A. de C. V., effective September 27, 1995,
concerning the purchase of the La Sierra Concession in the State of
Durango, Mexico. Exhibit A referred to in the Agreement has not been
prepared and therefore is not included.
(B) Reports on Form 8-K:
None
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
VANDERBILT GOLD CORPORATION
(Registrant)
Dated: December 1, 1995 By /S/ Keith Fegert
Keith Fegert, Interim President
and Interim Chief Financial
Officer
<PAGE>
CONFORMED COPY
OF
AGREEMENT
EFFECTIVE
SEPTEMBER 27, 1995
BETWEEN
VANDERBILT GOLD CORPORATION
AND
COMPANIA MINERA ROSARENCE S. A. de C. V.
Exhibit 10.1 (5 pages)
<PAGE>
AGREEMENT
THIS AGREEMENT is made as of September 27, 1995 (the "Effective Date") by
and between VANDERBILT GOLD CORPORATION, a Delaware Corporation, ("VANDERBILT")
whose address is 7625 Wynn Road, Las Vegas, Nevada 89103, facsimile telephone
number 702-362-8313, and Compania Minera Rosarence S.A. de C.V. ("ROSARENCE"),
a Mexican Corporation of Culiacan, Sinaloa, Mexico, whose address is Carratera
Culiacan-Eldorado KM 0.600 Interior 3, Culiacan, Sinaloa, Mexico, facsimile
telephone number 011-52-696-50306.
RECITALS
ROSARENCE is the owner of a certain mineral exploration concession known as
the La Sierra Concession located in Durango, Mexico, which is more particularly
described in the attached Exhibit "A" (the "CONCESSION").
The parties desire to enter into an agreement which will supersede any
earlier agreements and whereby VANDERBILT purchases the CONCESSION and all the
shares of ROSARENCE.
This agreement is intended to be legally binding but the parties recognize
that they may be required under Mexican law to enter into a more formal
agreement to give full effect to the rights and obligations of both parties.
1. Purchase of Concession. ROSARENCE hereby grants to VANDERBILT an
exclusive and irrevocable right to purchase the CONCESSION described in
Exhibit "A", attached hereto. ROSARENCE further grants VANDERBILT the right to
purchase all of the shares of ROSARENCE as part of the same purchase and for no
additional consideration. The purchase of ROSARENCE shall solely be the shell
corporation and the CONCESSION.
2. Consideration. The consideration for the purchase of the CONCESSION
is as follows:
a. VANDERBILT shall pay to ROSARENCE the sum of $120,000.00.
Payments shall be as follows: $30,000 within 10 days of the execution of this
Agreement. If this initial payment is not made by VANDERBILT, this agreement
may be cancelled, at the option of ROSARENCE without further obligation on the
part of either party. Three additional payments of $30,000 shall be paid on a
quarterly basis following the first payment.
b. VANDERBILT shall provide all sums necessary to keep the
CONCESSION in force with the government of Mexico until he final closing of the
purchase of the CONCESSION by VANDERBILT.
c. Within 30 days of the execution of this agreement, VANDERBILT
will issue to ROSARENCE the amount of 1,800,000 (One Million Eight Hundred
Thousand) shares of VANDERBILT restricted shares of common stock to ROSARENCE,
which shall be deemed a private placement, however, said shares shall be freely
transferable within 45 days from the date of issuance pursuant to Regulation S.
Until the purchase price is paid in full, title to the CONCESSION
shall be held in trust and released to VANDERBILT upon its completion of
payment of the purchase price or to ROSARENCE if VANDERBILT does not complete
the payment of the purchase price pursuant to the terms and conditions of this
Agreement.
<PAGE>
3. Representations of Rosarence. ROSARENCE represents that to the best of
its knowledge and belief:
a. There is no condition or impediment that legally prevents it from
entering into this agreement.
b. There are no liens or encumbrances against the CONCESSION.
c. There are no environmental problems, no reclamation problems, no
existing labor disputes nor any labor contracts nor any other legal or
governmental matters that would significantly impair the ability of ROSARENCE
or VANDERBILT to explore, develop, process minerals and produce minerals from
the CONCESSION.
d. ROSARENCE has clear title to the CONCESSION and that it may
legally transfer the CONCESSION to VANDERBILT upon the exercise by VANDERBILT
of its option hereunder.
4. Vanderbilt's Due Diligence. VANDERBILT has been previously provided
with information concerning title to the CONCESSION. VANDERBILT may continue,
at its own expense, to conduct whatever investigations and inquiries it deems
necessary related to their examination of title and other legal matters during
a period not to exceed (30) from and after the execution of this Agreement. If
VANDERBILT identifies any legal defects that would impair security of its
investment or the ability to mine and process ore from the CONCESSION, it shall
notify ROSARENCE of same. If ROSARENCE cannot cure such defect or defects
within fifteen (15) days of notification of same, then VANDERBILT shall have
the option to cancel the Agreement without further obligation.
5. Geological Information. ROSARENCE has previously delivered or
communicated to VANDERBILT certain geological and engineering information
including reserve ore calculations regarding the CONCESSION. ROSARENCE makes
no representations as to the validity of accuracy of such information,
calculation or any conclusions that might be inferred therefrom and shall not
be responsible for any loss or damage suffered by VANDERBILT in reliance upon
such information. VANDERBILT acknowledges that such information was supplied as
a courtesy by ROSARENCE and at the request of VANDERBILT and that the decision
of VANDERBILT to enter into this agreement was not based upon the information
supplied by ROSARENCE or any statements made by employees, consultants or other
representatives for or on behalf of ROSARENCE, but solely upon the
investigations and testing conducted by VANDERBILT.
6. Effect of Agreement. Upon execution of this Agreement, it shall be
binding upon the parties unless and until the parties agree to a more formal
agreement if the same is deemed advisable by Mexican legal counsel to
accomplish the intention of the parties under the laws of Mexico. This
Agreement supersedes all prior agreement or understandings between the parties.
<PAGE>
7. General Provisions.
a. The rights of VANDERBILT in this Agreement shall not be assigned
without having first obtained the written consent of ROSARENCE which consent
shall not be unreasonably withheld. ROSARENCE may freely assign its interest in
this Agreement at any time.
b. Any notice or communication required or permitted hereunder shall
be effective when personally delivered or deposited, postage prepaid, with
Federal Express or DHL (or any other courier as the parties may agree upon in
advance) to the address specified above. Any such notice shall be effective
three (3) days after deposit with such a courier. Any party may, by notice
given to the other as given aforesaid, change its mailing address for future
notices.
c. All references to payment of money in this agreement shall be in
UNITED STATES DOLLARS.
8. Further Assurances. The parties intend that this Agreement be a
binding and enforceable contract, but they further understand that it may be
necessary to enter into other further agreements to memorialize or otherwise
give legal effect to the terms and conditions of this Agreement and agreed to
do so. If any provision of this Agreement is in violation of the laws of
Mexico, such invalidity shall not effect the remainder of this Agreement and
such remaining portions of this Agreement shall be interpreted to give the
maximum possible effect to the intention of the parties to sell the CONCESSION
while maintaining for the parties the economic benefit expressed herein.
IN WITNESS WHEREOF, the parties hereto have executes this Agreement on
the dates indicated below, effective as of the Effective Date.
VANDERBILT GOLD CORPORATION
Dated: September 27, 1995 /s/ KEITH W. FEGERT
President
ROSARENCE
Dated: October 2, 1995 /s/ ALEJANDRO CANELOS
President
<PAGE>
ADDENDUM TO AGREEMENT
This Addendum to Agreement is made on October 4, 1995 by and between
Vanderbilt Gold Corporation, ("VANDERBILT"), a Delaware Corporation and
Compania Minera Rosarence, S.A. de C.V. ("ROSARENCE"), a Mexican Corporation of
Culiacan, Sinaloa, Mexico.
This Addendum modifies that certain Agreement dated September 27, 1995
relating to the La Sierra Concession in Durango, Mexico. The agreement is
modified relative to paragraph 2c. and the issuance of 1,800,000 (one million
eight hundred thousand) shares of VANDERBILT restricted common stock which
shall be deemed a private placement, however, said shares shall be freely
transferable within 45 days from the date of issuance as long as Regulation S
is satisfied and the transfer is to a Mexican corporation.
Within one year of the time such issuance of the shares, the shares shall
have an average value of $1.00 (U.S.) for a 15 day cycle during the one year
period as determined by the bid/ask price on the electronic bulletin board
trading system in the United States. If during the one year period the average
value of each share does not reach $1.00, ROSARENCE may elect to receive the
difference between the highest average value for a 15 day cycle and the $1.00
as the remainder of the purchase price in cash or by additional shares of
VANDERBILT stock. If ROSARENCE elects to receive the remainder of the purchase
price in cash, such funds shall be paid to ROSARENCE in equal monthly
installments beginning 15 months from the signing of this agreement and paid in
equal payments over the following 12 month period.
An additional paragraph is added to the Agreement as follows:
In the event of default by VANDERBILT under the terms of the Agreement,
ROSARENCE shall give written notice of the nature of said default by registered
mail to VANDERBILT'S corporate office. VANDERBILT shall have 20 business days
from the receipt of said notice to cure the default. the default is not cured
within the 20 business day time period, this Agreement shall terminate without
further action on the part of ROSARENCE.
VANDERBILT
Dated: October 4, 1995 /s/ Keith W. Fegert
President
ROSARENCE
Dated: October 4, 1995 /s/ Alejandro Canelos
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 2
<ALLOWANCES> 0
<INVENTORY> 838
<CURRENT-ASSETS> 852
<PP&E> 9123
<DEPRECIATION> 6942
<TOTAL-ASSETS> 3517
<CURRENT-LIABILITIES> 2108
<BONDS> 0
<COMMON> 303
0
0
<OTHER-SE> 1057
<TOTAL-LIABILITY-AND-EQUITY> 3517
<SALES> 29
<TOTAL-REVENUES> 29
<CGS> 21
<TOTAL-COSTS> 21
<OTHER-EXPENSES> 534
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> (482)
<INCOME-TAX> 0
<INCOME-CONTINUING> (482)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (482)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
