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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form For Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AURORA GOLD CORPORATION
(Name of Small Business Issuer in its Charter)
Delaware 13-3945947
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1505-1060 ALBERNI STREET, VANCOUVER, B.C., CANADA V6E 4K2
(Address of principal executive offices) Zip Code
(604) 687-4432
(Issuer's Telephone Number)
Securities to be Registered under Section 12(b) of the Act: NONE
Securities to be Registered under Section 12(g) of the Act: COMMON STOCK, $.001
PAR VALUE PER SHARE
PAGE 1 OF 94
INDEX TO EXHIBITS IS ON PAGE 58
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AURORA GOLD CORPORATION
Registration Statement on Form 10 SB
Part I
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Item 1. Description of Business 3
A. General
B. Risk Factors Related to the Company's Business
Item 2. Managements' Discussion and Analysis or Plan of Operation 11
Item 3. Description of Property 13
Item 4. Security Ownership of Certain Beneficial Owners and Management 22
Item 5. Directors, Executive Officers, Promoter and Control Persons 23
Item 6. Executive Compensation 24
Item 7. Certain Relationship Alterations 26
Item 8. Description of Securities 27
Part II
Item 1. Market Price and Dividends on the Registrants'
Common Equity and other Shareholder Matters 28
Item 2. Legal Proceeding 29
Item 3. Changes in and Disagreements with Accountants 29
Item 4. Recent Sales of Unregistered Securities 29
Item 5. Indemnifications of Directors and Officers Financial Statements 30
Part F/S
Financial Statements 33
Part III
Item 1. Index to Exhibits 56
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ITEM 1. DESCRIPTION OF BUSINESS
The Company was incorporated under the laws of the State of Delaware on
October 10, 1995, under the name "Chefs Acquisition Corp." Initially formed for
the purpose of engaging in the food preparation business, it redirected its
business efforts in late 1995, to the acquisition, exploration and, if
warranted, development of mineral resource properties. Since its redirection,
the Company's activities have been limited primarily to the acquisition of
rights to certain mineral properties and the sale of shares for working capital
purposes. SEE "ITEM 3. DESCRIPTION OF PROPERTY."
The Company is engaged in the location, acquisition, exploration and, if
warranted, development of mineral resource properties. All of the mineral
properties in which the Company has an interest or a right to acquire an
interest in are currently in the exploration stage. None of the properties have
a known body of ore. The Company's primary objective is to explore for gold,
silver and base metals and, if warranted, to develop those existing mineral
properties. Its secondary objective is to locate, evaluate, and acquire other
mineral properties, and to finance their exploration and development either
through equity financing, by way of joint venture or option agreements or
through a combination of both.
In Guatemala the State is the owner of all deposits that exist within
the territory of the Republic, its continental platform and its exclusive
economic zone. The Guatemala Mining Law requires titleholders of either
reconnaissance or exploration licenses to provide a mitigation study related to
the mining operations to be carried out in the authorized area. The study must
be presented to the Mining Directorate before beginning any work and describes
the reconnaissance and exploration operations and the consequences of such
operations for the environment, with a view to protection and conservation. If
the Directorate fails to respond to the technical report within thirty days, the
study will be deemed accepted.
Although compliance with such laws is not presently a significant factor
in the Company's operations, there is no assurance that compliance with future
changes in environmental regulation, if any, will not adversely affect the
Company's operations. SEE "RISK FACTORS OF THE COMPANY'S BUSINESS."
Failure to comply with applicable laws, regulations and permitting
requirements may result in enforcement actions including orders issued by
regulatory or judicial authorities causing operations to cease or be curtailed
and may include corrective measures requiring capital expenditures, installation
of additional equipment, or remedial actions. Amendments to current laws,
regulations and permits governing operations and activities of mining companies,
or more stringent implementation thereof, could have a material adverse impact
on the Company and cause increases in capital expenditures or production costs,
or a reduction in levels of production at producing properties, or require
abandonment or delays in development of new mining properties. Changes to
environmental regulations could have an adverse impact on the profitability or
feasibility of the Company's projects. The Company is not aware of any specific
environmental legislation proposed in any of the jurisdictions where it holds
property, and
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accordingly, it is not possible to assess the potential impact of such possible
future regulations.
Parties engaged in mining operations may be required to compensate those
suffering loss or damage by reason of the mining activities and may have civil
or criminal fines or penalties imposed for violations of applicable laws or
regulations.
The Constitution of the Republic of Guatemala, the Mining Law, the
actual government policies and other Guatemalan laws, guarantee national and
international investments in the following ways: (i) It is not necessary to have
a local partner to make investments. (ii) There are no restrictions for foreign
investors repatriating benefits or capital from investments. (iii) Foreign
companies established in Guatemala can purchase in foreign currency without
restrictions and have access to local credit lines. (iv) The Constitution of the
Republic recognizes private property rights. (v) Concessions for mineral
exploration and exploitation are granted by the Ministry of Energy and Mines.
The Mining Law permits the participation of national and international
companies. (vi) The owner of a mining right can import free of tax and tariff
rights the goods that are utilized in the mining operations, such as machinery,
equipment, spare parts, accessories, materials and explosives, whenever they are
not produced in the country in quantities and qualities required. (vii) Free
market policies that promote and guarantee foreign investment through fiscal
incentives, international and bilateral agreements.
The new Mining Law of Guatemala provides for the following three types
of concessions: (i) A Reconnaissance concession is granted for a period of six
months, and can be extended for another six months. It covers a minimum area of
500 square kilometers and a maximum of 3,000 square kilometers. The following
fees are paid for the reconnaissance concessions (a) US$215 when granted (b)
land fees of US$20 per square kilometer for every six month period. Work in the
area must begin within thirty days of the concession being granted. (ii)
Exploration concession is granted for a period of three years, and can be
extended for two periods of two or more years for a total of seven years. For
the first extension, the original exploration area has to be reduced by 50%. For
the second extension, the area must be reduced by an additional 50%. The
following fees are paid for the exploration concessions. (a) When granted US$215
(b) Land fees are charged in "UNITS" per squared kilometer. Their value will be
between US$35 and US$185. Land fees are charges as follows - 3 Units per square
kilometer per year for the first three years, 6 Units per square kilometer per
year for the first two year extension, 9 Units per square kilometer per year for
the second two year extension (c) Exploration work must commence within 90 days
of the concession being granted. (iii) Exploitation concessions are granted for
a period of twenty-five years and a single twenty-five year extension if
necessary. The land fees for exploitation concessions are 12 Units per square
kilometer per year. Exploitation work must begin within 90 days of the
concession being granted.
The Company believes that it is in substantial compliance with all
material laws and regulations which currently apply to its mining and
exploration activities and has all the required permits for its current
operations. There can be no assurance that all permits which the Company may
require for the construction of mining facilities and the conduct of mining
operations will be obtainable on reasonable terms and that such laws and
regulations would not
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have an adverse effect on any activity it might undertake. There is also no
assurance that the Company will obtain approval for the acquisition of
additional concessions or property interests.
The Company is in the development stage and has a limited operating
history. No representation is made, nor is any intended, that the Company will
be able to carry on its activities profitably. Moreover, the likelihood of the
success of the Company must be considered in light of the expenses,
difficulties, and delays frequently encountered in connection with mineral
resource exploration and development and with the formation of a new business.
Further, no assurance can be given that the Company will have the ability to
acquire assets, businesses, or properties with any value to the Company.
The Company is in the process of completing its assessment of its
properties for exploration and over the course of the next twelve months, to
initiate the recommended exploration programs. None of the Company's properties
contain any known reserves.
The Company's offices are located at 1505 - 1060 Alberni Street, Vancouver,
British Columbia Canada V6E 4K2.
B. RISK FACTORS RELATED TO THE COMPANY'S BUSINESS
1. GENERAL RISKS
A. RECENTLY ORGANIZED COMPANY
The Company was only recently organized and has no operating history.
The Company, therefore, must be considered promotional and in its early
formative and development stage. Prospective investors should be aware of the
difficulties normally encountered by a new enterprise. There is nothing at this
time upon which to base an assumption that the Company's business plan will
prove successful, and there is no assurance that the Company will be able to
operate profitably. The Company has limited assets and has had no revenues to
date.
B. EXPERIENCE OF MANAGEMENT
Although the Company's management ("Management") has general business
experience, prospective investors should be aware that Management has limited
experience in the mining industry and in particular with respect to the
acquisition, exploration and development of mineral resource properties. See
"Directors and Officers."
C. POTENTIAL FUTURE 144 SALES
Of the 50,000,000 shares of the Company's Common Stock authorized, there
are presently issued and outstanding 10,870,384; all but approximately 4,780,383
shares are "restricted securities" as that term is defined under the Act, and in
the future may be sold in
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compliance with Rule 144 of the Act, pursuant to a registration statement filed
under the Act, or other applicable exemptions from registration thereunder. Rule
144 provides, in essence, that a person holding restricted securities for a
period of one (1) year may sell those securities in unsolicited brokerage
transactions or in transactions with a market maker, in an amount equal to one
percent (1%) of the Company's outstanding Common Stock every three (3) months.
Additionally, Rule 144 requires that an issuer of securities make available
adequate current public information with respect to the issuer. Such information
is deemed available if the issuer satisfies the reporting requirements of
Sections 13 or 15(d) of the Exchange Act and of Rule 15c2-11 thereunder. Rule
144 also permits, under certain circumstances, the sale over a period without
any quantity limitation and whether or not there is adequate current public
information available. Investors should be aware that sales under Rule 144, or
pursuant to a registration statement filed under the Act, may have a depressive
effect on the market price of the Company's securities in any market that may
develop for such shares.
D. PENNY STOCK RULES
Under Rule 15g-9 under the Exchange Act, a broker or dealer may sell a
"penny stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny
stock by any person unless:
(1) such sale or purchase is exempt from Rule 15g-9; or
(2) prior to the transaction the broker or dealer has (a) approved the
person's account for transaction in penny stocks in accordance with Rule
15g-9 and (b) received from the person a written agreement to the
transaction setting forth the identity and quantity of the penny stock
to be purchased.
The Commission adopted regulations that generally define a penny stock
to be any equity security other than a security excluded from such definition by
Rule 3a51-1. Such exemptions include, but are not limited to (a) an equity
security issued by an issuer that has (i) net tangible assets of at least
$2,000,000, if such issuer has been in continuous operations for at least three
years, (ii) net tangible assets of at least $5,000,000, if such issuer has been
in continuous operation for less than three years, or (iii) average revenue of
at least $6,000,000, for the preceding three years; (b) except for purposes of
Section 7(b) of the Exchange Act and Rule 419, any security that has a price of
$5.00 or more; and (c) a security that is authorized or approved for
authorization upon notice of issuance for quotation on the NASDAQ Stock Market,
Inc.'s Automated Quotation System.
It is likely that the Company's Common Stock will be subject to the
regulations on penny stocks; consequently, the market liquidity for the
Company's Common Stock may be adversely affected by such regulations limiting
the ability of broker/dealers to sell the Company's Common Stock and the ability
of purchasers in the offering to sell their securities in the secondary market.
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E. FORWARD LOOKING STATEMENTS
This registration statement includes "forward-looking statements" within
the meaning of Section 27a of the act and Section 21e of the securities and
exchange act of 1934, as amended (the "exchange act"). All statements other than
statement of historical facts included in this registration statement,
including, without limitation, the statements under and located elsewhere herein
regarding industry prospects and the company's financial position are
forward-looking statements. Although the company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectation will prove to have been correct. Important
factors that could cause actual results to differ materially from the
expectations ("cautionary statements") are disclosed in this registration
statement, including, without limitation, in conjunction with the
forward-looking statements included in this registration statement section
entitled "Risk Factors Related to the Company's Business." All subsequent
written and oral forward-looking statements attributable to the company or
persons acting on its behalf are expressly qualified in their entirety by the
cautionary statements.
2. RISK FACTORS OF THE COMPANY'S MINING BUSINESS
Resource exploration and development is a speculative business,
characterized by a number of significant risks including, among other things,
unprofitable efforts resulting not only from the failure to discover mineral
deposits, but from finding mineral deposits which, though present, are
insufficient in quantity and quality to return a profit from production. The
marketability of minerals acquired or discovered by the Company may be affected
by numerous factors which are beyond the control of the Company and which cannot
be accurately predicted, such as market fluctuations, the proximity and capacity
of mining facilities, mineral markets and processing equipment, and such other
factors as government regulations, including regulations relating to royalties,
allowable production, importing and exporting of minerals, and environmental
protection; any combination of these factors may result in the Company not
receiving an adequate return of investment capital.
A. EXPLORATION AND DEVELOPMENT RISKS
All of the Company's properties are in the exploration stages only and
are without a known body of commercial ore. Development of these properties will
only follow if satisfactory exploration results are obtained. Mineral
exploration and development involves a high degree of risk and few properties
which are explored are ultimately developed into producing mines. There is no
assurance that the Company's mineral exploration and development activities will
result in any discoveries of commercial bodies of ore. The long-term
profitability of the Company's operations will be in part directly related to
the cost and success of its exploration programs, which may be affected by a
number of factors.
Substantial expenditures are required to establish ore reserves through
drilling, to develop metallurgical processes to extract the metal from the ore
and, in the case of new properties, to develop the mining and processing
facilities and infrastructure at any site chosen for mining.
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Although substantial benefits may be derived from the discovery of a major
mineralized deposit, no assurance can be given that minerals will be discovered
in sufficient quantities and grades to justify commercial operations or that the
funds required for development can be obtained on a timely basis. Estimates of
reserves, mineral deposits and production costs can also be affected by such
factors as environmental permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected
geological formations and work interruptions. In additions, the grade of ore
ultimately mined may differ from that indicated by drilling results. Short term
factors relating to the reserves, such as the need for orderly development of
ore bodies or the processing of new or different grades, may also have and
adverse effect on mining operations and on the results of operations. Material
changes in ore reserves, grades, stripping ratios or recovery rates may affect
the economic viability of any project. Reserves are reported as general
indicators of mine life. Reserves should not be interpreted as assurances of
mine life or of the profitability of current or future operations.
B. OPERATING HAZARDS AND RISKS
Mineral exploration involves many risks, which even a combination of
experience, knowledge and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest will be
subject to all the hazards and risks normally incidental to exploration,
development and production of gold and other metals, such as unusual or
unexpected formations, cave-ins, pollution, all of which could result in work
stoppages, damages to property, and possible environmental damages. The Company
does not have general liability insurance covering its operations and does not
presently intend to obtain liability insurance as to such hazards and
liabilities. Payment of any liabilities as a result could have a materially
adverse effect upon the Company's financial condition.
C. LIMITED OPERATING HISTORY AND LACK OF CASH FLOW
None of the Company's properties has commenced commercial production and
the Company has no history of earnings or cash flow from its operations. As a
result, there can be no assurance that the Company will be able to develop any
of its property profitably or that its activities will generate positive cash
flow. The Company has not declared or paid dividends on its shares since
incorporation and does not anticipate doing so in the foreseeable future. The
only present source of funds available to the Company is through the sale of its
Common Stock. Even if the results of exploration are encouraging, the Company
may not have sufficient funds to conduct the further exploration that may be
necessary to determine whether or not a commercially mineable deposit exists on
any property. While the Company may attempt to generate additional working
capital through the operation, development, sale or possible joint venture
development of its properties, there is no assurance that any such activity will
generate funds that will be available for operations.
D. TITLE RISKS
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The Company has not obtained an opinion of counsel as to title to its
properties nor has it obtained title insurance. Any of the Company's properties
may be subject to prior unregistered agreements of transfer.
E. CONFLICTS OF INTEREST
Certain of the directors of the Company are directors of other mineral
resource companies and, to the extent that such other companies may participate
in ventures in which the Company may participate, the directors of the Company
may have a conflict of interest in negotiating and concluding terms regarding
the extent of such participation. In the event that such a conflict of interest
arises at a meeting of the directors of the Company, a director who has such a
conflict will abstain from voting for or against the approval of such a
participation or such terms. In appropriate cases, the Company will establish a
special committee of independent directors to review a matter in which several
directors, or Management, may have a conflict. From time to time several
companies may participate in the acquisition, exploration and development of
natural resource properties thereby allowing for their participating in larger
programs, permitting involvement in a greater number of programs and reducing
financial exposure with respect to any one program. It may also occur that a
particular company will assign all or a portion of its interest in a particular
program to another of these companies due to the financial position of the
company making the assignment. In determining whether the Company will
participate in a particular program and the interest therein to be acquired by
it, the directors will primarily consider the potential benefits to the Company,
the degree of risk to which the Company may be exposed and its financial
position at that time. Other than as indicated, the Company has no other
procedures or mechanisms to deal with conflicts of interest.
F. COMPETITION AND AGREEMENTS WITH OTHER PARTIES
The mineral resources industry is intensely competitive and the Company
competes with many companies that have greater financial resources and technical
facilities than itself. Significant competition exists for the limited number of
mineral acquisition opportunities available in the Company's sphere of
operations. As a result of this competition, the Company's ability to acquire
additional attractive gold mining properties, on terms it considers acceptable,
may be adversely affected.
The Company may be unable in the future to meet its share of costs
incurred under agreements to which it is a party and the Company may have its
interests in the properties subject to such agreements reduced as a result.
Furthermore, if other parties to such agreements do not meet their share of such
costs, the Company may be unable to finance the costs required to complete the
recommended programs.
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G. FLUCTUATING MINERAL PRICES
The mining industry in general is intensely competitive and there is no
assurance that, even if commercial quantities of mineral resources are
developed, a profitable market will exist for the sale of such minerals. Factors
beyond the control of the Company may affect the marketability of any minerals
discovered. Moreover, significant price movements in mineral prices over short
periods of time may be affected by numerous factors beyond the control of the
Company, including international economic and political trends, expectations of
inflation, currency exchange fluctuations (specifically, the U.S. dollar
relative to other currencies), interest rates and global or regional consumption
patterns, speculative activities and increased production due to improved mining
and production methods. The effect of these factors on the price of minerals
and, therefore, the economic viability of any of the Company's exploration
projects cannot accurately be predicted. As the Company is in the development
stage, the above factors have had no material impact on operations or income.
H. ENVIRONMENTAL REGULATION
All phases of the Company's operations in Guatemala are subject to
environmental regulations. Environmental legislation in Guatemala is involving
in a manner which will require stricter standards and enforcement, increased
fines and penalties of non-compliance, more stringent environmental assessments
of proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees. Although the Company believes it is in
compliance with all applicable environmental legislation, there is no assurance
that future changes in environmental regulation, if any, will not adversely
affect the Company's operations.
I. ADEQUATE LABOR AND DEPENDENCE UPON KEY PERSONNEL
The Company will depend upon recruiting and maintaining qualified
personnel to staff its operations. The Company believes that such personnel are
currently available at reasonable salaries and wages in the geographic areas in
which the Company intends to operate. There can be no assurance, however, that
such personnel will always be available in the future. In addition, it cannot be
predicted whether the labor staffing at any of the Company's projects will be
unionized. The success of the operations and activities of the Company is
dependent to a significant extent on the efforts and abilities of its
Management. The loss of services of any of its Management could have a material
adverse effect on the Company.
J. POLITICAL RISKS
There are significant political risks involving the Company's investment
in Central America. These risks include, but are not limited to political,
economic and social uncertainties in such countries. A change in policies by the
government of the countries in which the company operates could adversely affect
the Company's interest by, among other things, change in laws, regulations, or
the interpretations thereof, confiscatory taxation, restriction on currency
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conversions, imports and sources of supplies, or the expropriation of private
enterprises. Although management of the Company does not believe that the
political factors described above have affected the Company's activities to
date, these factors may make it more difficult for the Company to raise funds
for the development of its mineral interests in such developing countries.
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Aurora Gold Corporation is a mineral exploration company based in
Vancouver, Canada engaged in the exploration of base and precious metals world
wide. The Company was incorporated under the laws of the State of Delaware on
October 10, 1995, under the name "Chefs Acquisition Corp." and is a development
stage company. The Company had limited operations for the year ended December
31, 1995.
Since commencement of its exploration operations in 1996, the Company
has undertaken a review of world mining properties with the objective of
acquisitions, exploration and development.
In addition to Guatemala, primary regions under investigation by the
Company include Argentina, Canada, Egypt, Mexico, United States of America, West
Africa and South Africa.
The management of the Company has developed the following exploration
objectives, the acquisition of properties with large scale potential, to
minimize capital costs on leases or concessions, the acquisition of properties
adjacent or in close proximity to recent discoveries of large scale mineral
reserves, to be the first-in staking where possible, secured repatriation on
mineral rights and royalties and to establish joint ventures and/or partnerships
with established companies that possess the resources to complete mine
development. All of the Company's properties are in the preliminary exploration
stage without any presently known body of ore.
In April 1996, the Company entered into a letter agreement whereby it
obtained an option to earn a 49% interest in 59 mineral claims located in the
South Mining District in the Northwest Territories, Canada. The terms of the
agreement required the Company to pay a total of $73,525 before July 15, 1996,
issue 300,000 restricted common shares of the Company upon signing the agreement
and expend a total of $730,000 over three years on the mineral properties. Once
the Company has earned their 49% interest they can elect to acquire an
additional 16% interest in the property by expending an additional $750,000.
Once an interest has been acquired by the Company it will be subject to a net
smelter return royalty equal to 1.5% of the net smelter returns from the
property.
At December 31, 1996, the Company issued 300,000 restricted common
shares and paid $18,250 in cash for the property.
In March 1997 the Company abandoned its interest in the property and
deferred
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exploration costs of $21,810 were charged to income.
In June, 1996 the Company entered into a letter agreement whereby the
Company obtained an option to earn a 100% undivided interest in three groups of
mineral claims totaling 95 claims located in the Victoria and Inverness counties
of Nova Scotia, Canada. The Terms of the agreement require the Company to pay a
total of $51,000 over a three year period, of which $14,600 was paid in June
1996, issue 200,000 free trading common shares in June, 1999 and expend minimum
of $18,250 per year for three years on each group of claims. Each interest
acquired by the Company will be subject to a net smelter return royalty equal to
2% of the net smelter returns from each relevant group of claims.
During the period May 1, 1997 to September 30, 1997 the Company spent
$96,186 on an exploration program on the three groups of mineral claims. In
September 1997 the Company abandoned its interest in the properties and deferred
exploration costs of $113,786 were charged to income.
During the period May 1, 1997 to June 30, 1997 the Company incurred
$26,600 in exploration expenditures on the Al Uwaynat area of southwestern
Egypt. The Company abandoned its interest in the properties and exploration
costs of $26,600 were charged to income.
In July, 1997, the Company entered into a letter agreement, which was
revised in November of 1997, whereby the Company obtained an option to earn a
100% undivided interest in four mineral concessions in Guatemala. The terms of
the agreement are subject to (i) the Company completing its due diligence (ii)
the Guatemala Governments approval of the applications for the four mineral
concessions and (iii) the Company's payment of a total of $5,000 and issuance
1,500 common shares per concession for a total of 6,000 shares. The applications
for the four mineral concessions have been presented to the Guatemala Government
and Governmental approval is expected in the second quarter of 1998.
In August, 1997, the Company entered into a letter agreement, which was
revised in November of 1997, whereby the Company obtained an option to earn a
100% undivided interest in eight mineral concessions and two mineral
reconnaissance concessions in Guatemala. The Terms of the agreement are subject
to (i) the Company completing its due diligence (ii) the Guatemala Government's
approval of the applications for the eight mineral concessions and two mineral
reconnaissance concession and (iii) the Company's payment of $5,000 and issuance
of 1,500 common shares per concession for a total of 15,000 shares. The
applications for the eight mineral concessions and two reconnaissance
concessions have been presented to the Guatemala Government and Governmental
approval is expected in the second quarter of 1998.
Both the July 1997 and the August 1997 letters of agreement and their
respective revisions in November 1997 require that each distinct mineral deposit
per mineral concession acquired by the Company will be subject to a net smelter
return royalty equal to 1% of the net smelter returns payable to the Government
of Guatemala.
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In 1996 the Company raised an aggregate of $408,000 ($355,000 through
the issuance of 5,800,000 shares in common stock of the Company and $50,000
through the issue of notes) which netted $392,920 after deducting offering
expenses of $15,080. The Company also issued 300,000 restricted common shares
($3,000) upon signing the letter of agreement whereby the Company acquired an
option to earn a 49% undivided interest in 59 mineral claims in the South Mining
District in the Northwest Territories. In Fiscal 1997, the Company raised
$750,000 through the issuance of 750,000 common shares at a price of $1.00 per
share versus $355,000 in Fiscal 1996. Subsequent to Fiscal 1997, the Company
raised an additional $250,000 through the issuance of 200,000 common shares at a
price of $1.25 per share.
TWELVE MONTHS ENDED DECEMBER 31, 1997 ("FISCAL 1997") VERSUS TWELVE
MONTHS ENDED DECEMBER 31, 1996 ("FISCAL 1996").
Net loss in Fiscal 1997 increased by $208,772 over Fiscal 1996 to
$569,980 as compared to $361,208 in Fiscal 1996, due primarily to (1) the
Company's write off of certain mineral properties in the amount of $135,596.
(See "Description of Properties");
(2) increased legal and accounting fees of $19,200 ($71,455 in Fiscal
1997 as compared to $52,225 in Fiscal 1996); and
(3) increased payments to consultants ($46,378 in Fiscal 1997 as
compared to $7,255 in Fiscal 1996).
In Fiscal 1997 the Company incurred property acquisition costs and
exploration expenditures of $172,585 versus $39,410 in Fiscal 1997.
FISCAL 1996 VERSUS THE FISCAL YEAR ENDED DECEMBER 31, 1995
The Company had a three month fiscal period in 1995 without any
financial activity other than as related to organizational expenses.
Although the Company believes that it has sufficient working capital to
(i) pay its administrative and general operating expenses through December 31,
1999 and (ii) to conduct its preliminary exploration programs, without cash flow
from operations it may need to obtain additional funds (presumably through
equity offerings and/or debt borrowings) in order, if warranted, to implement
additional exploration programs on its properties. Failure to obtain such
additional financing may result in a reduction of the Company's interest in
certain properties or an actual foreclosure of its interest.
ITEM 3. DESCRIPTION OF PROPERTY
All of the Company's properties are in the preliminary exploration stage
and do not contain any known body of ore.
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(A) ACQUISITION OF PROPERTY INTERESTS OR OPTIONS TO ACQUIRE PROPERTY
INTERESTS
The Company is currently a party to two exploration and property
development agreements with respect to Guatemala Mineral Concessions. Two former
Agreements, the Northwest Territories Agreement, and the Cape Bretton Island,
Nova Scotia Agreement have been terminated.
1. NORTHWEST TERRITORIES AGREEMENT
The Northwest territories Agreement was entered into in April 1996 (the
"NT Agreement"). The parties to the Agreement are the Company as Optionee, and
Camphor Ventures, Inc. as the Optionor. The NT Agreement encompasses mineral
claims located in the South Mining District in the Northwest Territories, (the
"NT Property"). The Company abandoned the Northwest Territories Mineral Claims
in March 1997.
2. CAPE BRETON ISLAND, N.S. AGREEMENT
The Cape Breton Agreement was entered into in June 1996 (the "CB
Agreement"). The parties to the CB Agreement are the Company as Optionee, and
Gaye Johnson, Danford G. Kelley and Gordon R. Cranton as the Optionors. The CB
Agreement encompasses mineral claims located in Victoria and Inverness Counties
in Cape Breton, Nova Scotia (collectively, the "CB Properties"). The Company
abandoned the CB Properties in September 1997.
3. GUATEMALA, AGREEMENTS
(i) Agreement dated July 7, 1997 as revised November 3, 1997 (the
"Guatemala Agreement July 1997)
The parties to the Guatemala Agreement of July 1997 are the Company as
Optionee, and Mineral Montagua S.A. as the Optionor. The agreement covers four
mineral concessions: El Triunfo, El Rejon, Bola de Oro and Carmona.
The Guatemala Agreement of July 1997 allows the Company the option, upon
the completion of the Company's due diligence and the Guatemala Government
approval of the applications for the four mineral concessions, of acquiring 100%
undivided interest in the mineral concessions, pursuant to the requirements of
the Guatemala Agreement of July 1997.
The granting by the Guatemala Government of a reconnaissance license
confers to the titleholder the exclusive rights to identify and locate possible
areas for exploration, within the license's territorial limits and to unlimited
depth in the subsoil. The granting by the Guatemala Government of an exploration
license confers to the titleholder the exclusive right to locate, study, analyze
and evaluate the deposits which have been granted, within the licenses'
territorial limits and to unlimited depths in the subsoil.
14
<PAGE> 15
The Guatemala Agreement of July 1997 provides the Company with the
option to acquire a 100% undivided interest in the four Guatemala mineral
concessions. The Company, as Optionee will be granted an option to acquire a
100% undivided interest in the four Guatemala mineral concessions upon
completion of the following three requirements. (1) Cash payment of US$5,000 on
July 21, 1997; (2) issuance of 1,500 common shares per mineral concession for a
total of 6,000 common shares upon completion of due diligence by the Company and
the Guatemala Government approval of the four mineral concession applications;
and (3) each distinct mineral deposit per mineral concession acquired by the
Company will be subject to a net smelter return royalty equal to 1% of the net
smelter returns payable to the Government of Guatemala.
The application for the four mineral concessions have been presented to
the Guatemala Government and Governmental approval is expected in the second
quarter of 1998.
(ii) Agreement dated August 16, 1997 as revised November 3, 1996 (the
"Guatemala Agreement August 1997")
The parties to the Guatemala Agreement of August 1997 are the Company as
Optionee, and Mineral Montagua S.A. as the Optionor. The agreement covers eight
mineral concessions: Los Cipreses, Chiyax, Los Angeles, La Union, Barranquillo,
El Rancho, El Jicaro, Monjitas and two mineral reconnaissance concessions:
Atitlan and San Diego.
The Guatemala Agreement of August 1997 allows the Company the option,
upon the completion of the Company's due diligence and the Guatemala government
approval of the applications for the eight mineral concessions and two
reconnaissance concessions, of acquiring a 100% undivided interest in the
mineral concessions and the reconnaissance concessions, pursuant to the
requirements of the Guatemala Agreement of August 1997.
The granting by the Guatemala Government of a reconnaissance license
confers to the titleholder the exclusive right to identify and locate possible
areas for exploration, within the license's territorial limits and to unlimited
depth in the subsoil. The granting by the Guatemala Government of an exploration
license confers to the titleholder the exclusive right to locate, study, analyze
and evaluate the deposits which have been granted, within the licenses'
territorial limits and to unlimited depths in the subsoil.
The Guatemala Agreement of August 1997 provides the Company with the
option to acquire a 100% undivided interest in the eight mineral concessions and
two reconnaissance concessions. The Company, as Optionee will be granted and
option to acquire a 100% undivided interest in the eight Guatemala mineral
concessions and two Guatemala reconnaissance concessions upon completion of the
following three requirements: (1) Cash payment of US$5,000 on August 18, 1997;
(2) issuance of 1,500 common shares per concession for a total of 15,000 common
shares upon completion of due diligence by the Company and the Guatemala
Government approval of the applications for the eight mineral concession and two
reconnaissance concessions; and (3) each distinct mineral deposit per mineral
concession acquired by the
15
<PAGE> 16
Company will be subject to a net smelter return royalty equal to 1% of the net
smelter returns payable to the Government of Guatemala.
The application for the eight mineral concessions and two reconnaissance
concessions have been presented to the Guatemala Government and governmental
approval is expected in the second quarter of 1998.
(B) PROPERTY DESCRIPTIONS
(1) GUATEMALA PROPERTIES
In July and August 1997 the Company entered into letters of intent,
which were revised in November of 1997, with Mineral Motague S.A. ("Motague") of
Guatemala, to acquire a 100% interest from Motague in twelve mineral concessions
and two reconnaissance concessions in south central Guatemala for which approval
by the Guatemala Government is pending. The fourteen concessions encompass a
number of gold and silver mines that were operated in Central America and date
as far back as 1657. All the concessions are located within the South Volcanic
Belt in Guatemala, which is considered to be the geological setting with the
greatest mineral potential in the country.
The concessions were chosen based on current geological information and
historical information obtained from the General Archive of Central America,
which is a library which saves and preserves all documentation available from
the colonial period in Central America and the Ministry of Energy and Mines of
the Government of Guatemala.
The July 18, 1997 agreement covers the four mineral concessions of: El
Triunfo, El Rejon, Bola de Oro and Carmona. The August 16, 1997 agreement covers
the eight mineral concessions: Los Cipreses, Chiyax, Los Angeles, La Union,
Barranquillo, El Rancho, El Jicaro, Monjitas and the two mineral reconnaissance
Atitlan and San Diego.
The geology of Guatemala is diverse especially due to the tectonic
interaction of the Cocos, Caribbean and North American plates, those over which
Guatemala is located. The geologic environment is favorable for the formation of
different types of mineral deposits, either of hydrothermal character, magnetic
segregation, igneous-metamorphic, sedimentary and others. In general, the
country can be divided in four important physiographic provinces, the Pacific
Costal Plain, Volcanic Province, Metamorphic and Peten Lowlands which define the
geomorphologic features.
All the Company's concessions are located within the South Volcanic Belt
in Guatemala, which is considered to be the geological setting with the greatest
mineral potential in the country. The Volcanic Province is represented by a
Quaternary chain of active volcanoes to the south and Tertiary igneous rocks to
the north. In the Tertiary area, ignimbrites and ryolites crop out, as well as
acidic tuffs and several intrusives. Gold-silver deposits are expected to be
found in granites and in quartz veins within the tuffs. The epithermal type of
precious and basic metallic
16
<PAGE> 17
deposits and also the presence of lithofilic elements are associated with the
geology of this area. In the eastern part of the volcanic province the most
common mineralogy is pyrite and arsenopyrite with chalcopyrite, covelite and
native gold as associated minerals, and it is related to epithermal processes
associated with intrusive igneous bodies. Important deposits of
copper-lead-zinc-silver, gold-silver and lead-zinc mineralization occur in veins
emplaced in fractures within Tertiary volcanic rocks, typical features of
epithermal deposits filling fissures that originated from tensional stresses.
The mineralization consists mainly of zinc sulfides, lead-silver and copper with
calcite and quartz as gangue minerals. Other deposits of economic importance are
formed by a series of iron oxide bodies. it is important to note that most of
this province has not yet been explored and evaluated, but it is one of the more
important zones of interest due to its favorable geological environment for
mineralization.
Atitlan
The Atitlan concession is a mineral reconnaissance concession located in
the Sacatepequez, Chimaltenango, and Solola provinces in western Guatemala. It
covers an area of 600 square kilometers. The Atitlan concession was requested
based on the geological setting of the region and on several references from the
Archives of Central America pointing to gold, silver and copper mineral
occurrences in the area. These occurrences have yet to be located precisely.
Geologically Atitlan is located within the central tertiary volcanic belt of
southern Guatemala, which presents the best characteristics for epithermal
mineralization in the country.
The mineral reconnaissance application was presented to the Ministry of
Energy and Mines on July 23, 1997.
San Diego
The San Diego is a mineral reconnaissance concession located in the
Zacapa and Chiquimula province in eastern Guatemala, some 150 kilometers east of
Guatemala City. Due to its reconnaissance status it covers a larger area than an
exploration concession, namely 800 square kilometers. The San Diego
reconnaissance concession was requested with the purpose of covering a large
area of good prospective land in eastern Guatemala. The main feature of the
reconnaissance concession is the fact that it completely surrounds the El Pato
gold and silver mineral reserve, which is the best understood exploration
project in Guatemala to date. The area has been studied by the General Mining
Directorate and by the United Nations Revolving Fund for Natural Resources
Exploration during the years 1990 and 1991. Geologically, due to its size this
concession contains several geological settings. Most important is the presence
of the Motagua Fault to the North and the Chiguimula Pluton (intrusive) on the
eastern half of the concession.
The mineral reconnaissance concession application was presented to the
Ministry of Energy and Mines on July 24, 1997.
17
<PAGE> 18
Monjitas
The Monjitas concession is located in central Guatemala some 10
kilometers east of Guatemala City. It covers a total area of 20 square
kilometers. The Monjitas concession was requested based on historical references
obtained from the Archives of Central America. The concession is located in the
mountains to the east of Guatemala City. This area is marked by the presence of
a N-S fault, which is the eastern border of the Asuncion Valley. Tertiary
volcanic rocks are predominant in the area. Several outcrops of silicified,
oxidized and altered volcanic rocks have been located.
The mineral reconnaissance concession application was presented to the
Ministry of Energy and Mines on June 2, 1997.
El Rancho
The El Rancho concession is located in the El Progreso and Zacapa
provinces in eastern Guatemala, some 95 kilometers east of Guatemala City. It
covers a area of 90 square kilometers. The Archives of Central America refer to
the presence of several copper, gold, silver and iron mineral deposits in the El
Rancho mountains south of El Rancho. Geology is very similar to that found in
the El Barranquillo and El Jicaro concessions, although El Rancho, is closest to
the Motagua Valley and fault. On the other side of the Motagua River to the
North of El Rancho, the Ministry of Energy and Mines has declared a mineral
reserve area called San Agustin. The reserve was declared based on studies
performed by a Korean prospecting mission which discovered several gold
anomalies at San Agustin.
The mineral exploration application was presented to the Ministry of
Energy and Mines on June 26, 1997.
Barranquillo
The Barranquillo concession is located in the El Progreso province in
eastern Guatemala, some 70 kilometers east of Guatemala City. It covers an area
of 96 square kilometers. The Archives of Central America refer to the existence
of an old copper-gold mine 10 kilometers east of the town of Barranquillo, on
the road to Guastatoya. The geology of the concession is very similarly to that
found in the Jicaro concession, which bounds Barranquillo to the east.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 2, 1997.
Los Cipreses
The Los Cipreses concession is located in the Totonicapan province in
western Guatemala, 200 kilometers west of Guatemala City. It covers and area of
56 square kilometers. The Archives of Central America refer to the existence of
a silver and gold mine on the road
18
<PAGE> 19
from Momostenango to San Francisco el Alto. The Archives also mention a vein
with an east west orientation on a hill called Trece. Assays yielded 3 ounces of
silver per 100 pounds of rock and some gold. Geologically the area is located
within the tertiary volcanic terrain close to several igneous bodies. It is
important to recognize that the Motagua Fault is lost when it comes into contact
with the tertiary volcanic rocks in the this particular area. It can be inferred
that the Fault was buried but is still capable of controlling mineralization in
the area in later tectonic events.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on April 24, 1997.
Chiyax
The Chiyax concession is located in the Totonicapan province of western
Guatemala some 210 kilometers northwest of Guatemala City. It covers an area of
48 square kilometers. The Archives of Central America refer to the existence of
gold and silver mines on the hills next to the town of Totonicapan. Special
reference is made to the mines called Parrasqui and Choatulum. The geology of
the area is very similar to that found at the Los Cipreses area due to their
proximity.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997.
El Jicaro
The El Jicaro concession is located in the El Progreso province of
eastern Guatemala, some 80 kilometers east of Guatemala City. It covers an area
of 90 square kilometers. The Archives of Central America refer to the presence
of copper and gold bearing minerals on the Anchuga Mountain, close to the town
of Guastatoya. This mountain is covered within the El Jicaro concession. The
geology of the region is marked by the presence of the Motagua Fault, the
largest east-west structure in Guatemala, which extends all the way to the
Caribbean. Due to the proximity of such a large structure, geology is complex
and is characterized by the presence of several rock types, including
intrusives, tertiary rhyolites and redbeds of the Cretaceous age.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 2, 1997.
Los Angeles 1 & La Union 1
The Los Angeles 1 and La Union 1 concessions are both located in the
Zacapa province in eastern Guatemala close to the Honduras border. They cover an
area of 180 square kilometers. The Los Angeles 1 and La Union 1 areas were
requested based on the geological environment surrounding them and a very
prominent topographic structure. The areas are
19
<PAGE> 20
bounded to the north by the Managua area which was explored by the UN and the
Ministry of Energy and Mines during the 1980's. Their combined findings yielded
results of copper, lead, silver and gold. Geographically the area is located on
Paleozoic metamorphic rocks in contact with an intrusive body and tertiary
volcanic terrain. The Los Angeles 1 and La Union 1 area correspond to one
concession but were divided in order to avoid an extremely large concession.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on April 24, 1997.
El Rejon
The El Rejon concession is located in the Sacatepeques and Chimaltenango
provinces in central Guatemala approximately 3 kilometers west of Guatemala
City. It covers an area of 77 square kilometers. The Archives of Central America
refer to the presence of gold and silver mines located on the El Rejon hill
close to Antigua Guatemala and the Parramos hill next to the town of Parramos
which is located west of the El Rejon mine. The concession is located on
tertiary volcanic terrain.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on April 30, 1997.
Carmona
The Carmona concession is located in the central part of the country
close to the city of Antigua, some 30 kilometers south of Guatemala City. It
covers an area of 72 square kilometers. The archives of Central America refer to
the presence of a gold mine close to the former town of San Bartolome Carmona on
top of the Carmona Mountain. The geology of the area is not well known but the
mountain is located on the tertiary volcanic terrain, next to the Agua Volcano.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997.
Bola De Oro
The Bola De Oro concession is located in the Chimaltenango province in
western Guatemala some 60 kilometers west of Guatemala City. It covers an area
of 110 square kilometers. The Archives of Central America refer to the presence
of a mine close to the town of Comalapa which produced 2.25 ounces of silver per
100 pounds of rock and dome gold (not specified). The concession is located
within the territory volcanic belt of Central Guatemala.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on April 30, 1997.
20
<PAGE> 21
El Triunfo 1
The El Triunfo 1 concession is located in the Chimaltenango province in
western Guatemala some 60 kilometers west of Guatemala City. It covers an area
of 64 square kilometers.
Historical information on file with the Ministry of Energy and Mines
suggest that there have been approximately eight gold claims obtained on this
concession and the archives of Central America refer to a gold mine close to the
town of San Martin Jilotepeque which lies in this concession.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on April 24, 1997.
21
<PAGE> 22
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 30, 1998 by (i)
each person who is known by the Company to own beneficially more than five
percent (5%) of the Company's outstanding Common Stock; (ii) each of the
Company's directors and officers; and (iii) all directors and officers of the
Company as a group. As at April 30, 1998 there were 10,870,384 shares of Common
Stock issued and outstanding.
<TABLE>
<CAPTION>
NAME OF SHARES OF COMMON APPROXIMATE
BENEFICIAL STOCK BENEFICIALLY PERCENTAGE
OWNER OWNED OWNED
----- ----- -----
<S> <C> <C>
Globe Entertech Ltd. 2,000,000 18.4%
P.O. Box 209
Providencials,
Turk & Caicos Islands, BWI
Carrington International Limited 1,000,000 9.2%
Suite 2402
Bank of America Tower
12 Harcourt Road
Central, Hong Kong
Officers and Directors
David E. Jenkins 125,000 1.2%
1505-1060 Alberni Street
Vancouver, B.C. Canada V6E 4K2
Antonino G. Cacace 8,333 *
Crud-y-Gloyat
Carswell Bay
Swansea Wales, U.K.
John James 24,000 *
64 West Street
Torrensville, South Australia
Australia, 5031
A. Cameron Richardson Nil *
1505-1060 Alberni Street
Vancouver, B.C. Canada V6E 4K2
Officers and Directors (4 persons) 157,333 1.4%
</TABLE>
* Less than 1%.
22
<PAGE> 23
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTER AND CONTROL PERSONS
The following persons are the directors and executive officers of the
Company:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
David E. Jenkins President and Director since October, 1995
John A. A. James Vice President and Director since October, 1996
Antonino G. Cacace Director since October, 1995
A. Cameron Richardson Controller since October 1997, and Secretary since
April 1, 1998
</TABLE>
All directors and officers of the Company are elected annually to serve
for one year or until their successors are duly elected and qualified.
Management's business experience during the past five years is as
follows:
DAVID E. JENKINS, President & Director
Mr. Jenkins is the founder of Aurora Gold Corporation and the company's
president. He is also President of a business consulting firm, specializing in
venture capital. Prior to forming his consulting firm, Mr. Jenkins spent over
ten years with a large investment bank, serving in corporate finance and asset
management. Additionally, he has been a principle in a residential real estate
development company in Vancouver, Canada.
JOHN A.A. JAMES, Vice-President & Director
Mr. James, Aurora Gold's Vice-President, is a Fellow of the Australasia
Institute of Mining and Metallurgy as well as a member of the Society for
Mining, Metallurgy and Exploration, Inc. and of the Colorado Mining Association.
He is a certified mining engineer, specializing in mine planning and project
management. For over 30 years, Mr. James has served in senior management and on
Boards of Directors of mining companies in North America, South America and
Australia. He has been involved in base and precious metal projects around the
world, and has developed detailed programs for a number of mines now in
operation. He has brought mines into production for international engineering
firms such as James Askew Associates, as well as for small independents.
ANTONINO G. CACACE, Director
Mr. Cacace is a founder and current Managing Director of Stelax
Industries, a medium-sized steel and stainless steel mill facility in the United
Kingdom. In this capacity, Mr. Cacace applies skills and insights acquired in
degree work in mechanical engineering and graduate work in business
administration.
23
<PAGE> 24
A. CAMERON RICHARDSON, Secretary and Controller
Mr. Richardson has been employed as Controller of Aurora Gold
Corporation since October 1997. From 1992 to 1997, Mr. Richardson held senior
financial positions with a number of different publicly listed companies. From
1981 to 1992, he was employed by International Corona Corporation, a senior
North American mining company, in various financial positions, most recently as
mine controller at the company's Nickel Plate Gold Mine in Penticton B.C.
Canada. He holds a bachelor's degree from York University and is a Certified
Management Accountant. Mr. Richardson receives a monthly compensation from
Aurora Gold Corporation in the amount of Cdn$1,250 per month.
ITEM 6. EXECUTIVE COMPENSATION
GENERAL
The following table sets forth information concerning the compensation
of the named executive officers for each of the registrant's last three
completed fiscal year:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------------------------------
Awards Payments
--------------------------------------------------------
Securities
Other Under- All
Annual Restricted Lying other
Name And Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonuses sation Award(s) SARs Payouts sation
($) ($) ($) ($) (=) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Jenkins 1998(1) 15,000 -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
1997 60,000 -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
1996 60,000 -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
James A. James 1998(1) -0- -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
1997 34,713 -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
1996 -0- -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Richard Bullock(2) 1998 -0- -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
1997 -0- -0- -0- None None None -0-
-----------------------------------------------------------------------------------------------------------
1996 24,000(3) -0- -0- None None None -0-
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Through March 31, 1998.
(2) Mr. Bullock resigned as officer and director of the Company on April 6,
1998.
(3) Of this amount 14,879 was payable as of December 31, 1996, which payment
was waived by Mr. Bullock in 1997.
24
<PAGE> 25
OPTIONS/SAR GANTS TABLE
The following table sets forth information concerning individual grants
of stock options (whether or not in tandem with stock appreciation rights
("SARs")), and freestanding SARs made during the last completed fiscal year to
each of the named executive officers;
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
=======================================================================================================
Percent Of
Number of Total Options/
Securities SARs Granted
Underlying To Employees Exercise Or
Option/SARs In Fiscal Base Price
Name Granted (#) Year ($/Sh) Expiration Date
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
None None None None None
- -------------------------------------------------------------------------------------------------------
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth information concerning each exercise of
stock options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options and SARs, on an aggregated basis:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
=======================================================================================================
Number of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Shares Options/SARs Options/SARs
Acquired Value At FY-End($) At FY-End($)
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
None None None None None
- -------------------------------------------------------------------------------------------------------
</TABLE>
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE
The following table sets forth information regarding each award made to
a named executive officer in the last completed fiscal year under any LTIP:
25
<PAGE> 26
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
=========================================================================================================
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
-----------------------------------------------------
NUMBER
OF SHARES, PERFORMANCE
UNITS OR OR OTHER
OTHER PERIOD UNIT
RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
(A) (B) (C) (D) (E) (F)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
None None None None None None
- ---------------------------------------------------------------------------------------------------------
</TABLE>
None of the Company's officers and directors are currently party to an
employment agreement with the Company. Mr. Jenkins had been party to a written
agreement which was terminated January 1, 1998 pursuant to which he received
$5,000 per month. It is anticipated that aggregate compensation to all directors
and officers in the Fiscal year ending in 1998 will not exceed $75,000. In
addition, directors and/or officers will receive expense reimbursement for
expenses reasonably incurred on behalf of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The proposed business of the Company raises potential conflicts of
interests between the Company and certain of its officers and directors.
Certain of the directors of the Company are directors of other mineral
resource companies and, to the extent that such other companies may participate
in ventures in which the Company may participate, the directors of the Company
may have a conflict of interest in negotiating and concluding terms regarding
the extent of such participation. In the event that such a conflict of interest
arises at a meeting of the directors of the Company, a director who has such a
conflict will abstain from voting for or against the approval of such a
participation or such terms. In appropriate cases the Company will establish a
special committee of independent directors to review a matter in which several
directors, or Management, may have a conflict. From time to time several
companies may participate in the acquisition, exploration and development of
natural resource properties thereby allowing for their participation in larger
programs, involvement in a greater number of programs and reduction of the
financial exposure with respect to any one program. It may also occur that a
particular company will assign all or a portion of its interest in a particular
program to another of these companies due to the financial position of the
company making the assignment. In determining whether the Company will
participate in a particular program and the interest therein to be acquired by
it, the directors will primarily consider the potential benefits to the Company,
the degree of risk to which the Company may be exposed and its financial
position at that time. Other than as indicated, the Company has no other
procedures or mechanisms to deal with conflicts of interest. The
26
<PAGE> 27
Company is not aware of the existence of any conflict of interest as described
herein.
During the fiscal years ended December 31, 1997 and 1996 consulting
fees, salaries and wages aggregating, respectively, $79,825 and $97,276 were
paid or are payable to directors or corporations controlled by directors in
connection with managerial, engineering and administrative services provided as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
David Jenkins 15,000 60,000 60,000
John A James Nil 34,713 Nil
</TABLE>
In addition, directors and/or officers will receive expense
reimbursement for expenses reasonably incurred on behalf of the Company.
Included in accounts payable at March 31, 1998 is $31,055 (December 31,
1997 - $45,532, December 31, 1996 - $84,642) due to directors and a corporation
controlled by a director in respect of salaries, consulting fees and expenses.
The Company believes that the amounts paid are comparable to amounts
that would have been paid to at arms length third party providers of such
services.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 50,000,000 shares of Common Stock, of
which 10,870,384 shares were issued and outstanding as of the date of this
Memorandum. Each outstanding share of Common Stock entitles the holder to one
vote, either in person or by proxy, on all matters that may be voted upon by the
owners thereof at meetings of the stockholders.
The holders of Common Stock (i) have equal rights to dividends from
funds legally available therefor, when, and if, declared by the Board of
Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to the holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company; (iii)
do not have preemptive, subscription or conversion rights, and (iv) are entitled
to one non-cumulative vote per share on all matters on which stockholders may
vote at all meetings of stockholders.
The holders of shares of Common Stock of the Company do not have
cumulative voting rights, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect all
directors of the Company if they so choose and, in such event, the holders of
the remaining shares will not be able to elect any of the Company's
27
<PAGE> 28
directors. The present officers and directors of the Company own approximately
1.4% of the outstanding shares of the Company.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANTS 1 COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The Common Stock of the Company has been quoted on the OTC Bulletin
Board since December 5, 1996. The following table sets forth high and low bid
prices for the Common Stock for the calendar quarters indicated as reported by
the OTC Bulletin Board from December 5, 1996 through March 31, 1998. These
prices represent quotations between dealers without adjustment for retail
markup, markdown or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
Quarter Ending: High Low Volume
- --------------- ---- --- ------
<S> <C> <C> <C>
December 31, 1996(1) 1.37 0.31 149,000
March 31, 1997 3.50 1.40 1,052,485
June 30, 1997 4.50 2.87 1,057,070
September 30, 1997 3.66 2.50 645,113
December 31, 1997 3.375 1.25 872,118
March 31, 1998 2.875 1.75 673,884
</TABLE>
- ----------------------
(1) From December 5, 1996
No assurance can be given that a market for the Company's Common Stock
will be sustained or that the Common Stock will continue to be quoted on the OTC
Bulletin Board.
On April 30, 1998, the closing price of the Company's Common Stock as
reported on the OTC Bulletin Board was $2.00 per share.
DIVIDENDS
The Company has not declared any dividends since inception, and has no
present intention or paying any cash dividends on its Common Stock in the
foreseeable future. The payment by the Company of dividends, if any, in the
future, rests within the discretion of its Board of Directors and will depend,
among other things, upon the Company's earnings, its capital requirements and
its financial condition, as well as other relevant factors.
28
<PAGE> 29
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any litigation, and has no knowledge of
any pending or threatened litigation against it.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Since inception the Registrant has sold securities in the manner set
forth below without registration under the Securities Act of 1933, as amended
(the "Act").
(1) On October 10, 1995, the Company issued in an exchange
transaction 3,830,383 shares (adjusted for a 3 for 1 reverse
stock split) at a price of $.001 per share in accordance with
Rule 504 of Regulation D
(2) In August, 1996, the Company issued 300,000 shares at a price of
$.01 per share in connection with its acquisition of certain
mineral properties in Canada.
(3) In August, 1996, the Company issued 5,800,000 shares for an
aggregate consideration of $355,000 in off shore transactions
pursuant to Regulation S;
(4) On February 28, 1997, the Company issued 750,000 shares at a
price of $1.00 per share for an aggregate consideration of
$750,000 pursuant to Rule 504 of Regulation D; and
(5) On March 31, 1998, the Company issued 200,000 shares at a price
of $1.25 per share for an aggregate consideration of $250,000
pursuant to Rule 504 of Regulation D.
Except for shares issued pursuant to Rule 504, such shares are
"restricted securities," as that term is defined in the rules and regulations
promulgated under the Securities Act of 1933, as amended, subject to certain
restrictions regarding resale. Certificates evidencing all of the
above-referenced securities have been stamped with a restrictive legend and will
be subject to stop transfer orders.
The Registrant believes that each of the above-referenced transaction
was exempt from registration under the Act, pursuant to Section 4(2) of the Act
and the rules and regulations promulgated thereunder as a transaction by an
issuer not involving any public offering.
29
<PAGE> 30
ITEM 5. INDEMNIFICATIONS OF DIRECTORS AND OFFICERS
Except as hereinafter set forth there is no charter provision, bylaw,
contract, arrangement or statute under which any officer or director of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such.
STATUTORY INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of The Delaware General Corporation Law, as amended,
provides for the indemnification of the Company's officers, directors and
corporate employees and agents under certain circumstances as follows:
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEE AND AGENTS; INSURANCE
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys' fee),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding, by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he if or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person if fairly and reasonably
30
<PAGE> 31
entitled to indemnity for such expenses which the Court of Chancery or such
court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of the directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even, if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of any
undertaking by or on behalf of such director to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses including attorneys'
fees incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) a corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
including (any constituent of a constituent) absorbed in a consolidation or
merger which, if separate existence had continued,
31
<PAGE> 32
would have had power and authority to indemnify its directors, officers and
employees or agents so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, reference to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
services as a director, officer, employee or agent of the corporation which
imposes duties on, or involve services by, such director, officer, employee, or
agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
THE SECURITIES AND EXCHANGE COMMISSION'S POLICY ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defenses of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
32
<PAGE> 33
PART F/S
FINANCIAL STATEMENTS
Aurora Gold Corporation
(Formerly Chefs' Acquisition Corporation)
<TABLE>
<S> <C>
Audited Financial Statements:
Report of Independent Accountants 34
Balance Sheet as at December 31, 1997 and 1996
Statements of Operations and Accumulated Deficit
Statements of Cash Flows for the year ended
December 31, 1997, 1996 and for the
three month period ended December 31, 1995
Summary of Significant Accounting Policies
Notes to the Financial Statements
Unaudited Financial Statements (Prepared by Management): 51
Balance Sheet as at March 31, 1998 and 1997
Statement of Operations and Accumulated Deficit for the
three months ended March 31, 1998 and 1997
Statements of Cash Flows for the three months
ended March 31, 1998 and 1997
Notes to Financial Statements
</TABLE>
33
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Shareholders
Aurora Gold Corporation
We have audited the Balance Sheets of Aurora Gold Corporation (formerly Chefs'
Acquisition Corp.), as at December 31, 1997 and 1996 and the related Statements
of Operations and Accumulated Deficit and Cash Flows for the years ended
December 31, 1997 and 1996 and the three month period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these financial statements referred to above present fairly, in
all material respects, the financial position of Aurora Gold Corporation as at
December 31, 1997 and 1996 and the results of its operations and its cash flows
for the years ended December 31, 1997 and 1996 and the three month period ended
December 31, 1995 in conformity with generally accepted accounting principles in
the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and the satisfaction of liabilities in the
normal course of business. As discussed in Note 1 to the financial statements,
the Company has incurred a loss from operations and lacks current liquidity
which raises substantial doubt about its ability to pay the current liabilities,
and, therefore, continue as a going concern. Management's plans concerning these
matters are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Vancouver, British Columbia CHARTERED ACCOUNTANTS
March 6, 1998 (INTERNATIONALLY BDO BINDER)
34
<PAGE> 35
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Balance Sheets
(Expressed in U.S. Dollars)
DECEMBER 31 December 31
For the Periods Ended 1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 122,921 $ 70,649
Non-trade accounts receivable 12,326 51,364
---------------------------------
135,247 122,013
FIXED ASSETS (Note 2) 18,662 6,441
MINERAL PROPERTIES AND EXPLORATION EXPENDITURES (Note 3) 76,399 39,410
ORGANIZATION COSTS (Note 4) 6,909 9,211
---------------------------------
$ 237,217 $ 177,075
- -----------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' SURPLUS (DEFICIENCY)
LIABILITIES
CURRENT
Accounts payable (Note 7) $ 68,866 $ 133,902
Notes payable (Note 5) -- 50,000
---------------------------------
68,866 183,902
---------------------------------
STOCKHOLDERS' SURPLUS (DEFICIENCY) (Note 6)
Share capital
Authorized
50,000,000 common shares, par value $0.001
Issued
10,670,384 (1996 - 9,920,384) 10,670 9,920
Paid in capital 1,088,869 344,461
Deficit (931,188) (361,208)
---------------------------------
168,351 (6,827)
---------------------------------
$ 237,217 $ 177,075
- -----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements. Approved on behalf of the Board:
___________________________Director ___________________________ Director
35
<PAGE> 36
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Statements of Operations and Accumulated Deficit
(Expressed in U.S. Dollars)
DECEMBER 31 December 31 December 31
1997 1996 1995
For the Periods Ended (12 MONTHS) (12 Months) (3 Months)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ADMINISTRATIVE EXPENSES
Amortization $ 6,923 $ 3,817 $ -
Bank charges and interest income, net (13,508) (675) -
Transfer agents, listing and filing fees 23,267 6,144
Shareholder relations, advertising and
promotions 41,340 18,340 -
Salaries and wages 49,440 97,276 -
Office and miscellaneous 74,409 36,534 -
Professional fees (legal and accounting) 71,455 52,255 -
Consultants 46,378 7,255 -
Rent and other 16,828 25,191 -
Travel 28,917 7,323 -
Property development and examinations 73,429 93,751 -
Telephone 15,506 13,997 -
-------------------------------------
NET LOSS FOR THE PERIOD BEFORE
WRITE-OFF OF MINERAL PROPERTIES 434,384 361,208 -
WRITE-OFF OF MINERAL PROPERTIES 135,596 - -
-------------------------------------
NET LOSS FOR THE PERIOD 569,980 361,208 -
ACCUMULATED DEFICIT, beginning
of period 361,208 - -
-------------------------------------
ACCUMULATED DEFICIT, end of period $931,188 $361,208 $ -
- ------------------------------------------------------------------------------------------
LOSS PER SHARE
- basic (Note 8) $ (0.05) $ (0.06) $ -
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
36
<PAGE> 37
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Statements of Cash Flows
(Expressed in U.S. Dollars)
DECEMBER 31 December 31 December 31
1997 1996 1995
For the Periods Ended (12 MONTHS) (12 Months) (3 Months)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED (USED) BY:
OPERATING ACTIVITIES
Net loss for the period $(569,980) $(361,208) $ -
Items not involving cash
Amortization 6,923 3,817 -
Write-off of mineral properties 135,596 - -
-------------------------------------
(427,461) (357,391) -
Changes in non-cash working capital balances
(Decrease) increase in accounts payable (65,036) 133,852 50
Decrease (increase) in accounts receivable 39,038 (51,364) -
-------------------------------------
(453,459) (274,903) 50
-------------------------------------
FINANCING ACTIVITIES
Proceeds from the issuance of common stock 745,158 342,920 11,461
Notes payable (50,000) 50,000 -
-------------------------------------
695,158 392,920 11,461
-------------------------------------
INVESTING ACTIVITIES
Purchase of fixed assets (16,842) (7,958) -
Mineral properties (172,585) (39,410) -
Incorporation costs - - (11,511)
-------------------------------------
(189,427) (47,368) (11,511)
-------------------------------------
INCREASE IN CASH FOR THE PERIOD 52,272 70,649 -
CASH, beginning of period 70,649 - -
-------------------------------------
CASH, end of period $122,921 $ 70,649 $ -
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
37
<PAGE> 38
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
PRINCIPLES OF ACCOUNTING
These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States.
FIXED ASSETS
Fixed assets are recorded at cost less accumulated amortization. Amortization is
provided as follows:
Computer equipment - straight-line basis over two years
Office equipment
and furniture - straight-line basis over five years
MINERAL PROPERTIES AND EXPLORATION EXPENDITURES
Non-producing mineral interests are initially recorded at acquisition cost. The
cost basis of mineral interests include acquisition cost and the cost of
exploration and development.
Management evaluates the carrying value of mineral interests in unproven
properties on a regular basis for possible impairment. Management evaluation
considers all the facts and circumstances known about each property including
the results of drilling and other exploration activities to date, the
desirability and likelihood that additional future exploration activities will
be undertaken by the Company or by others, the land holding costs including work
commitments, the ability and likelihood of joint venturing the property with
others, and, if producing, the cost and revenue of continued operations.
Unproven properties are considered fully or partially impaired, and are fully or
partially abandoned, at the earliest of the time that geological mapping,
surface sample assays or drilling results fail to confirm the geological
concepts involved at the time the property was acquired, a decision is made not
to perform the work commitments or to make the lease payments required to retain
the property, the Company discontinues its efforts to find a joint venture
partner to fund exploration activities and has decided not to fund those costs
itself, or the time the property interest terminates by contract or by operation
of law.
Upon commencement of commercial production, properties will be amortized using
the units-of-production method. If properties are abandoned, sold or do not
merit further development, related acquisition costs and exploration
expenditures will be charged to income in the year.
38
<PAGE> 39
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
December 31, 1997
- -------------------------------------------------------------------------------
MINERAL PROPERTIES AND EXPLORATION EXPENDITURES - CONTINUED
Exploration activities conducted jointly with others are reflected at the
Company's proportionate interest in such activities.
RECLAMATION AND DECOMMISSIONING COSTS
Costs related to site restoration programs are accrued over the life of the
project.
TRANSLATION OF FOREIGN CURRENCIES
The Corporation has adopted the United States dollar as its reporting currency.
The Company translates monetary assets and liabilities denominated in foreign
currencies at period end exchange rates. Non-monetary assets have been
translated using historical rates of exchange. Expenses have been translated at
the average rates of exchange during the periods except for charges relating to
non-monetary assets which have been translated at the same rates as the related
assets.
Foreign exchange gains and losses on monetary assets and liabilities are
included in operations.
ORGANIZATION COSTS
The Company capitalized all costs directly incurred in the formation of the
Corporation. These costs are being amortized on a straight-line basis over five
years.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
39
<PAGE> 40
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
December 31, 1997
- -------------------------------------------------------------------------------
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
non-trade accounts receivable, accounts payable and notes payable. Fair values
were assumed to approximate carrying values for these financial instruments,
except where noted, since they are short term in nature and their carrying
amounts approximate fair values or they are receivable or payable on demand.
Management is of the opinion that the Company is not exposed to significant
interest, credit, or currency risks arising from these financial instruments.
INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
109, which requires the Company to recognize deferred tax liabilities and assets
for the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. Under this method, deferred
tax liabilities and assets are determined based on the difference between the
financial statement carrying amounts and tax bases of assets using enacted rates
in effect in the years in which the differences are expected to reverse.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130"), which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS 130 requires
that all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements.
SFAS 130 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to be
restated. Because of the recent issuance of this standard, management has been
unable to fully evaluate the impact, if any, SFAS 130 may have on future
financial statement disclosures. Results of operations and financial position,
however, will be unaffected by implementation of this standard.
40
<PAGE> 41
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
which supersedes SFAS No. 14, Financial Reporting for Segments of a Business
Enterprise. SFAS 131 establishes standards for the way that public companies
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS 131 defines operating segments as components of a company about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 131 is effective for financial statements for periods beginning after
December, 15, 1997 and requires comparative information for earlier years to be
restated. Because of the recent issuance of SFAS 131, management has been unable
to fully evaluate the impact of SFAS 131, if any, it may have on future
financial statement disclosures. Results of operations and financial position,
however, will be unaffected by implementation of this standard.
41
<PAGE> 42
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND GOING CONCERN
The Corporation was formed on October 10, 1995 under the laws of the
State of Delaware as Chef's Acquisition Corp. and is in the exploration
stage. On May 20, 1996, the Corporation changed its name to Aurora Gold
Corporation. The Company is in the business of developing mineral
properties. The recovery of the amounts shown for interests in mineral
properties and exploration costs is dependent upon the discovery of
economically recoverable reserves or proceeds from the disposition
thereof, confirmation of the Company's interest in the underlying
mineral claims, the ability of the Company to obtain financing to
complete development of the properties and on future profitable
operations.
These financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. The
Company requires additional funds to meet its obligations and maintain
its operations. Management's plans in this regard are to raise equity
financing as required. These matters raise substantial doubt about the
Company's ability to continue as a going concern. These financial
statements do not include any adjustments that might result from this
uncertainty.
- -------------------------------------------------------------------------------
2 FIXED ASSETS
<TABLE>
<CAPTION>
1997 1996
Accumulated Accumulated
Cost Amortization Cost Amortization
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Furniture $ 5,229 $ 350 $ - $ -
Computer equipment 11,554 4,695 4,837 1,207
Office equipment 8,017 1,093 3,121 310
---------------------------------------------------------------
24,800 6,138 7,958 1,517
---------------------------------------------------------------
Cost less accumulated
amortization $18,662 $ 6,441
---------------------------------------------------------------
</TABLE>
The estimated useful life of the fixed assets varies between two and
five years.
42
<PAGE> 43
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
3. MINERAL PROPERTIES AND EXPLORATION EXPENDITURES
Mineral properties consist of:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
(a) Cape Bretton Mineral Claims (Note 3) (d)
Acquisition costs $ 14,600 $ 14,600
Exploration expenditures 99,186 3,000
Abandoned during period (113,786) -
----------------------
$ - $ 17,600
----------------------
(b) Northwest Territories Mineral Claims (Note 3) (e)
Acquisition costs $ 21,810 $ 21,810
Abandoned during period (21,810) -
----------------------
$ - $ 21,810
======================
(c) Guatemala Mineral Claims (Note 3) (f)
Acquisition costs $ 30,499 $ -
Exploration expenditures 45,900 -
----------------------
$ 76,399 $ -
======================
Total $ 76,399 $ 39,410
======================
</TABLE>
43
<PAGE> 44
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
3. MINERAL PROPERTIES - CONTINUED
(d) Cape Bretton Mineral Claims
During 1997, the Company abandoned the Cape Bretton Mineral
Claims.
(e) Northwest Territories Mineral Claims
During 1997, the Company abandoned the Northwest Territories
Mineral Claims.
(f) Guatemala Mineral Claims
In July 1997, the Company entered into a letter agreement,
which was revised in November 1997, whereby the Company
obtained an option to earn a 100% undivided interest in four
mineral concessions: El Triunfo, El Rejon, Bola de Oro and
Carmona. The agreement is subject to the completion of the
Company's due diligence and the Guatemala Government's approval
of the applications for the four mineral concessions. This
option will be earned once the Company pays the following
consideration:
(i) Cash payments of:
US$ 5,000 on July 21, 1997 (Paid)
(ii) Issuance of 1,500 common shares per concession for a
total of 6,000 shares upon completion of the Company's
due diligence and governmental approval of the four
applications.
Each distinct mineral deposit per mineral concession acquired
by the Company will be subject to a net smelter return royalty
equal to 1% of the net smelter returns payable to the
Government of Guatemala.
44
<PAGE> 45
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
3. MINERAL PROPERTIES - CONTINUED
In August 1997, the Company entered into a letter agreement,
which was revised in November 1997, whereby the company
obtained an option to earn a 100% undivided interest in eight
mineral concessions: Los Cipreses, Chiyax, Los Angelas, La
Union, Barranquillo, El Rancho, El Jicarco, Manjita and two
mineral reconnaissance concessions Atitlan and San Diego. The
agreement is subject to the completion of the Company's due
diligence and the Guatemala Government's approval of the ten
applications. This option will be earned once the Company pays
the following consideration:
(i) Cash payments:
US$ 5,000 on August 18, 1997 (Paid)
(ii) Issuance of 1,500 common shares per concession for a
total of 15,000 shares upon completion of the Company's
due diligence and governmental approval of the ten
applications.
Each distinct mineral deposit per mineral concession acquired
by the Company will be subject to a net smelter return equal to
1% of the net smelter returns payable to the Government of
Guatemala.
In November 1997, the Company advanced a further $20,000 for
locating additional concessions.
- -------------------------------------------------------------------------------
4. ORGANIZATION COSTS
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cost $11,511 $11,511
Accumulated amortization 4,602 2,300
--------------------
$ 6,909 $ 9,211
====================
</TABLE>
45
<PAGE> 46
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
5. NOTES PAYABLE
The Company had the following notes payable to shareholders which were
repaid during 1997:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Note payable to C & P Leonard,
unsecured, non-interest bearing
and due on demand $ - $12,500
Note payable to R & B Friesen,
unsecured, non-interest bearing
and due on demand - 12,500
Note payable to Sunview Investments
Ltd., unsecured, non-interest
bearing and due on demand - 25,000
------------------------
$ - $50,000
------------------------
</TABLE>
- -------------------------------------------------------------------------------
6. STOCKHOLDERS' SURPLUS (DEFICIENCY)
Share capital
<TABLE>
<CAPTION>
1997 1996
------------------------------------------------
Number Number
of Shares Amount of Shares Amount
------------------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of year 9,920,384 $ 9,920 11,461,150 $ 11,461
Adjustment for reverse
stock split - - (7,640,766) (7,641)
Issued for cash
Private placement 750,000 750 5,800,000 5,800
Issued for asset
Resource property
payment - - 300,000 300
------------------------------------------------
10,670,384 $10,670 9,920,384 $ 9,920
------------------------------------------------
</TABLE>
46
<PAGE> 47
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
6. STOCKHOLDERS' SURPLUS (DEFICIENCY) - CONTINUED
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Paid in capital
Balance, beginning of year $ 344,461 $ -
Adjustment for reverse stock split - 7,641
Private placement 749,250 349,200
Resource property - 2,700
-------------------------
1,093,711 359,541
Share issue costs (4,842) (15,080)
-------------------------
$ 1,088,869 $344,461
-------------------------
Deficit
Balance at beginning of year $ (361,208) $ -
Net loss for the period (569,980) (361,208)
-------------------------
Balance at end of year $ (931,188) $(361,208)
-------------------------
Shareholders' surplus (deficiency) $168,351 $ (6,827)
-------------------------
</TABLE>
- -------------------------------------------------------------------------------
7. RELATED PARTY TRANSACTIONS
(a) Included in accounts payable is $45,532 (December 31, 1996 -
$84,642) due to directors and a corporation controlled by a
director in respect of salaries, consulting fees and
reimbursement for operating expenses.
(b) During the year consulting fees, salaries and wages of $79,825
(December 31, 1996 - $97,276) were paid or are payable to
directors or corporations controlled by directors.
(c) Non-trade accounts receivable are due from companies sharing a
common director, are without interest and are due on demand.
47
<PAGE> 48
- -------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- -------------------------------------------------------------------------------
8. LOSS PER SHARE
Loss per share was computed by dividing the net loss for the period
by the weighted average number of shares of common stock outstanding
during the period. At December 31, 1997 10,528,717 common shares were
outstanding (December 31, 1996 - 5,859,288).
- --------------------------------------------------------------------------------
9. NON-CASH TRANSACTIONS
(a) Organization costs of $11,461 were paid by former directors
during 1995, these former directors received 3,820,383
shares in respect of these expenses.
(b) During 1996, the Company issued 300,000 shares at $0.01 as
part of the acquisition cost of a mineral property (Note
3(b)).
(c) During 1997, the Company wrote off its Northwest Territories
Mineral Properties in the amount of $21,810 and wrote off
its Cape Bretton Mineral Properties in the amount of
$113,786.
The above non-cash transactions have not been included on the
Statements of Cash Flows.
- --------------------------------------------------------------------------------
10. COMMITMENTS
The Company entered into a management contract with the President of
the Company. The contract requires the Company to pay management fees
totalling $5,000 per month together with an annual performance bonus.
The contract can be terminated by either party with three months
notice. This management contract was terminated on January 1, 1998
with the last payment being made March 1, 1998.
48
<PAGE> 49
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- --------------------------------------------------------------------------------
11. INCOME TAXES
(a) The Company has net losses for tax purposes totalling
approximately $927,559 which may be applied against future
taxable income. Accordingly, there is no tax expense for the
years ended December 31, 1997 and 1996. The potential tax
benefits arising from these losses have not been recorded in
the financial statements. The Company evaluates its
valuation allowance requirements on an annual basis based on
projected future operations. When circumstances change and
this causes a change in management's judgement about the
realizability of deferred tax assets, the impact of the
change on the valuation allowance is generally reflected in
current income.
The right to claim these losses expires as follows:
<TABLE>
<CAPTION>
<S> <C>
2011 $360,459
2012 567,100
--------
$927,559
--------
</TABLE>
(b) Deferred Tax Assets (Liabilities), December 31, 1997
<TABLE>
<CAPTION>
Statutory
Tax Rate $
--------------------------------------
<S> <C> <C> <C>
Tax asset related to depreciation $ 4,461 34% $ 1,517
Tax benefit of loss carry-forwards $927,559 34% 315,370
Valuation allowance (316,887)
---------
$ -
---------
</TABLE>
Deferred Tax Assets (Liabilities), December 31, 1996
<TABLE>
<CAPTION>
Statutory
Tax Rate $
---------------------------------------
<S> <C> <C> <C>
Tax asset related to depreciation $ 1,755 34% $ 597
Tax benefit of loss carry-forwards $374,226 34% 127,237
Valuation allowance (127,834)
---------
$ -
---------
</TABLE>
49
<PAGE> 50
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- --------------------------------------------------------------------------------
12. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform
with the current period presentation. Certain amounts totalling $54,715
accrued and payable at the option of the Company as at December 31,
1996 in connection with a mineral property abandoned in 1997 have been
reversed and, accordingly, accounts payable and mineral properties have
been restated as at December 31, 1996.
50
<PAGE> 51
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Balance Sheet
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
MARCH 31 March 31
FOR THE PERIODS ENDED 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 297,140 $ 793,442
FIXED ASSETS 16,555 8,647
MINERAL PROPERTIES AND EXPLORATION EXPENDITURES 111,393 22,439
ORGANIZATION COSTS 6,506 8,635
---------------------------
$431,594 $833,163
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' SURPLUS (DEFICIENCY)
LIABILITIES
CURRENT
Accounts payable $ 45,677 $ 167,483
Notes payable - 50,000
---------------------------
45,677 217,483
---------------------------
STOCKHOLDERS' DEFICIENCY
Share capital
Authorized
50,000,000 common shares, par value $0.01
Issued
10,870,384 (1996 - 10,670,384) 10,920 10,670
Paid in capital 1,338,619 1,088,869
Deficit (963,622) (483,859)
---------------------------
385,917 615,680
---------------------------
$ 431,594 $ 833,163
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Approved on behalf of the Board:
- ----------------------------- -----------------------------------
Director Director
51
<PAGE> 52
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Statements of Operations and Accumulated Deficit
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
MARCH 31 March 31
1998 1997
FOR THE PERIODS ENDED (3 MONTHS) (3 Months)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ADMINISTRATIVE EXPENSES
Amortization $ 2,510 $ 1,387
Bank charges and interest income, net (556) (3,288)
Transfer agents, listing and filing fees 2,749 4,593
Shareholder relations, advertising and
promotions 2,144 11,246
Salaries and wages 13,112 16,841
Office and miscellaneous 7,779 9,696
Professional fees (legal and accounting) 2,791 18,696
Consultants - 340
Rent and other 824 4,350
Travel - 5,641
Property development and examinations 477 27,159
Telephone 604 3,645
---------------------------
NET LOSS FOR THE PERIOD BEFORE WRITE-OFF
OF MINERAL CLAIMS 32,434 100,306
WRITE-OFF OF MINERAL PROPERTIES - 22,345
---------------------------
NET LOSS FOR THE PERIOD 32,434 122,651
ACCUMULATED DEFICIT, beginning of period 931,188 361,208
---------------------------
ACCUMULATED DEFICIT, end of period $963,622 $483,859
- -------------------------------------------------------------------------------------------------------------------
LOSS PER SHARE
- basic and diluted $ 0.003 $ 0.01
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 53
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Statements of Cash Flows
(Unaudited -- Prepared by Management)
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
MARCH 31 March 31
1998 1997
FOR THE PERIODS ENDED (3 MONTHS) (3 Months)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED (USED) BY:
OPERATING ACTIVITIES
Net loss for the period $(32,434) $(100,306)
Item not involving cash
Amortization 2,510 1,387
---------------------------
(29,924) (98,919)
Changes in non-cash working capital balances
Decrease in accounts payable (23,189) (21,134)
Decrease in accounts receivable 12,326 1,364
---------------------------
(40,787) (118,689)
---------------------------
FINANCING ACTIVITY
Proceeds from the issuance of common stock 250,000 795,158
---------------------------
INVESTING ACTIVITIES
Purchase of fixed assets - (3,017)
Mineral properties (34,994) 49,341
---------------------------
(34,994) 46,324
---------------------------
INCREASE IN CASH FOR THE PERIOD 174,219 722,793
CASH, beginning of period 122,921 70,649
---------------------------
CASH, end of period $297,140 $ 793,442
</TABLE>
53
<PAGE> 54
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Unaudited Financial Statements
(Expressed in U.S. Dollars)
- --------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND GOING CONCERN
The Corporation was formed on October 10, 1995 under the laws of the
State of Delaware as Chef's Acquisition Corp. and is in the
exploration stage. On May 20, 1996, the Corporation changed its name
to Aurora Gold Corporation. The Company is in the business of
developing mineral properties. In the opinion of the Company these
unaudited financial statements include all adjustments (which consist
only of normally recurring items) to present fairly the financial
position as of March 31, 1998 and the reserves of operation and cash
flows for the three month period ended March 31, 1998. The results
for the three month period ended March 31, 1998 are not necessarily
indicative of the result to be expected for the year.
2. MINERAL PROPERTIES AND EXPLORATION EXPENDITURES
All of the Company's property interests are located in Guatemala and consist
of:
<TABLE>
<CAPTION>
1998
<S> <C>
Acquisition Costs: $ 30,499
Exploration Expenditures 80,894
------
$111,393
</TABLE>
3. ORGANIZATION COSTS
<TABLE>
<CAPTION>
1998
<S> <C>
Cost $11,511
Accumulated amortization 5,005
-------
$ 6,506
</TABLE>
4. CAPITALIZATION
<TABLE>
<CAPTION>
Share capital 1998
Number
of Shares Amount
--------------------------
<S> <C> <C>
Balance, beginning of year 10,670,384 $ 10,670
Issued for cash
Private placement 200,000 200
--------------------------
10,870,384 10,870
--------------------------
</TABLE>
54
<PAGE> 55
- --------------------------------------------------------------------------------
AURORA GOLD CORPORATION
Notes to Financial Statements
(Expressed in U.S. Dollars)
December 31, 1997
- --------------------------------------------------------------------------------
5. RELATED PARTY TRANSACTIONS
Included in accounts payable is $31,055 due to a director
for reimbursement of expenses.
6. LOSS PER SHARE
Loss per share was computed by dividing the net loss for the period
by the weighted average number of shares of common stock outstanding
during the period. At March 31, 1998 10,670,834 common shares were
outstanding.
7. NON-CASH TRANSACTIONS
(a) Organization costs of $11,461 were paid by former directors
during 1995, these former directors received 3,820,383
shares in respect of these expenses.
(b) During 1996, the Company issued 300,000 shares at $0.01 as
part of the acquisition cost of a mineral property.
(c) During 1997, the Company wrote off its Northwest Territories
Mineral Properties in the amount of $21,810 and wrote off
its Cape Bretton Mineral Properties in the amount of
$113,786.
The above non-cash transactions have not been included on the
Statements of Cash Flows.
8. COMMITMENTS
The Company entered into a management contract with the President of
the Company. The contract requires the Company to pay management fees
totalling $5,000 per month together with an annual performance bonus.
The contract can be terminated by either party with three months
notice. This management contract was terminated on January 1, 1998
with the last payment being made March 1, 1998.
55
<PAGE> 56
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
1.1 Certificate of Incorporation
1.2 Certificate of Amendment to the Certificate of Incorporation
1.3 Certificate of Restoration and Renewal of Certificate of Incorporation
1.4 Amended and Restated By-laws
3.1 Agreement dated July 18, 1997 between The Company and Minera Motagua, S.A.
3.2 Agreement dated August 16, 1997 between the Company and Minera Motagua, S.A.
3.3 Agreement dated November 3, 1997 between the Company and Minera Motagua, S.A.
27.1 Financial Data Schedule
ITEM 2. DESCRIPTION OF EXHIBITS
Not Applicable
</TABLE>
56
<PAGE> 57
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: May 29, 1998
Aurora Gold Corporation
By: /s/ David Jenkins
--------------------------
David Jenkins, President
57
<PAGE> 58
REGISTRATION STATEMENT ON FORM 10SB
AURORA GOLD CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1.1 Certificate of Incorporation 59
1.2 Certificate of Amendment to the Certificate
of Incorporation 61
1.3 Certificate of Restoration and Revival of
Certificate of Incorporation 63
1.4 Amended and Restated By-laws 64
3.1 Agreement dated July 18, 1997 between The Company
and Minera Motagua, S.A. 72
3.2 Agreement dated August 16, 1997 between the Company
and Minera Motagua, S.A. 80
3.3 Agreement dated November 3, 1997 between the Company
and Minera Motagua, S.A. 92
27.1 Financial Data Schedule 94
</TABLE>
58
<PAGE> 1
CERTIFICATE OF INCORPORATION
OF
CHEFS ACQUISITION CORP.
FIRST: The name of this corporation is CHEFS ACQUISITION CORP.
SECOND: Its registered office in the State of Delaware is to be located at Three
Christina Centre, 201 N. Walnut Street, Wilmington DE 19801. County of New
Castle. The registered agent in charge thereof is The Company Corporation,
address "same as above".
THIRD: The nature of the business and, the objects and purposes proposed to be
transacted, promoted and carried on are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this corporation is
divided into 20,000.00 shares of stock at .0010 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, Three Christina Centre, 201 N. Walnut St., Wilmington DE
19801
SIXTH: The Directors shall have power to make and to alter or amend the By-Laws:
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings
and keep the books, documents and papers of the Corporation outside of the State
of Delaware, at such places as may be from time designated by the By-Laws or by
resolution of the stockholders or
59
<PAGE> 2
directors, except as otherwise required by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholder for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purposes of forming a Corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true; and I have accordingly hereunto set my hand
DATED: OCTOBER 10, 1995 ------------------------------------
60
<PAGE> 1
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
CHEFS ACQUISITION CORP.
David Jenkins and Richard Bullock certify that:
They are the President and Secretary, respectively, of Chefs
Acquisition Corp., a Delaware corporation (the "Company").
1. Article First of the Certificate of Incorporation is amended by
substituting the following in lieu thereof:
"First: the name of the corporation is "Aurora Gold
Corporation".
2. Article Fourth of the Certificate of Incorporation is amended by
changing the reference to 20,000,000 shares therein, to 50,000,000.
3. Article Fourth of the Certificate of Incorporation of the Company is
amended to add the following at the end thereof:
"Effective on the date of the filing with the Secretary of
Delaware of a Certificate of Amendment to the Certificate of
Incorporation of the Company with respect hereto ("Effective
Date"), every three shares of the Company's Common Stock
outstanding immediately prior to such time shall be
reclassified into one share of Common Stock. Stockholders who,
as a result of the reverse stock split, own a fraction of a
whole share of Common Stock, shall be entitled to receive from
the Company one full share therefor upon the surrender of
certificates representing Common Shares owned prior to the
Effective Date."
4. The foregoing Certificate of Amendment of the Certificate of
Incorporation has been duly approved by the Board of Directors.
5. The foregoing Certificate of Amendment of the Certificate of
Incorporation has been duly approved by written consent of the majority of
stockholders of the Company and written notice of such consent was given to
non-consenting stockholders in accordance with Section 228(c) of the General
Corporation Law of the State of Delaware, all in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
61
<PAGE> 2
6. The capital of the Company will not be reduced under, or by reason
of, the foregoing Amendments to the Certificate of Incorporation of the Company.
We further declare under penalty of perjury under the laws of the State
of Delaware that the matters set forth in the foregoing Certificate are true and
correct to our knowledge.
IN WITNESS WHEREOF, this Certificate of Amendment is executed by David
Jenkins, President and Richard Bulloch, Secretary, this 19th day of July, 1996.
Chefs Acquisition corp.
By:
--------------------------------------
David Jenkins
Title: President
By:
--------------------------------------
Richard Bulloch
Title: Secretary
62
<PAGE> 1
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION
OF
AURORA GOLD CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation")
is AURORA GOLD CORPORATION.
2. The corporation was organized under the provisions of the General
Corporation Law of the State of Delaware. The date of filing of its original
Certificate of Incorporation with the Secretary of State of the State of
Delaware is October 10, 1995.
3. The address, including the street, city, and county, of the
registered office of the corporation in the State of Delaware and the name of
the registered agent at such address are as follows: Corporation Service
Company, 1013 Centre Road, Wilmington, Delaware 19805.
County of New Castle.
4. The corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March 1, 1997
for failure to file annual reports and non-payment of taxes payable to the State
of Delaware.
5. The certificate of incorporation of the corporation, which provides
for and will continue to provide for, perpetual duration, shall, upon the filing
of this Certificate of Restoration and Revival of the Certificate of
Incorporation in the Department of State of the State of Delaware, be restored
and revived and shall become fully operative on February 28, 1997.
6. This Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors as prescribed
by Section 312 of the General Corporation Law of the State of Delaware.
Signed on May 14, 1997 -----------------------------------
David E. Jenkins
President
63
<PAGE> 1
AMENDED AND RESTATED
BYLAWS OF AURORA GOLD CORPORATION
ARTICLE I--Offices
The principal office of the corporation shall be located in the Province of
British Columbia, Canada. The corporation may have such other offices, either
within or outside the State of Delaware, as the Board of Directors may designate
or as the business of the corporation may require from time to time. The
registered office of the corporation may be, but need not be, identical with the
principal office, and the address of the registered office may be changed from
time to time by the Board of Directors.
ARTICLE II--Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be held
at in the month of May in each year, beginning with the year 1997. If the day
fixed for the annual meeting shall be a legal holiday, such meeting shall be
held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose, unless otherwise prescribed by statute, may be called by the president
or by the Board of Directors, and shall be called by the president at the
request of the holders of not less than one-tenth of all the outstanding shares
of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any place as
the place for any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders entitled to vote at
a meeting may designate any place as the place for such meeting. If no
designation is made, or if a special meeting shall be called otherwise than by
the Board, the place of meeting shall be the registered office of the
corporation.
Section 4. Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting, and, in case of a special meeting, the purposes for
which the meeting is called, shall be delivered not less than ten nor more than
fifty days before the date of the meeting, either personally or by mail, by or
at the direction of the president, or the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting, except that if the authorized capital stock is to be increased at least
thirty days notice shall be given. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid. If requested by the person or persons lawfully
calling such meeting, the secretary shall give notice thereof at corporate
expense.
64
<PAGE> 2
Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty days, and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of the
closing has expired.
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
For a period of ten days prior to such meeting, this list shall be kept on file
at the principal office of the corporation and shall be subject to inspection by
any shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
Section 7. Quorum. Thirty-three and one third Percent (33-1/3%) of the
outstanding shares of the corporation entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders. If less than a
quorum of the outstanding shares are represented at a meeting, a majority of the
shares so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The shareholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
65
<PAGE> 3
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number of
voting by classes is required by law or the articles of incorporation.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder or his or her duly authorize
attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Voting of Shares. Each outstanding share, regardless of class, shall
be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
shareholders. Cumulative voting shall not be allowed.
Section 10. Voting of shares by Certain Holders. Neither treasury shares, nor
shares of its own stock held by the corporation in a fiduciary capacity, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of Directors of such other corporation is held by this
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executer, guardian or conservator may
be voted by him or her, either in person or by proxy, without a transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted by him or her, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver, and shares held
by or under the control of a receiver may be voted by such receiver without the
transfer thereof into his or her name if authority to do so be contained in an
appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 11. Informal action by Shareholders. Any action required to be taken at
any annual or special meeting of the stockholders or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by
66
<PAGE> 4
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in this State,
its principal place of business, or an officer or agent of the Company having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Company's registered office shall be by hand or
by certified or registered mail, return receipt requested.
ARTICLE III--Board of Directors
Section 1. General Powers. The business and affairs of the corporation shall be
managed by its Board of Directors, except as otherwise provided by statute or
the articles of incorporation.
Section 2. Number, Tenure and Qualifications. The number of Directors of the
corporation shall be not less than three nor more than five, unless a lesser
number is allowed by statute. Directors shall be elected at each annual meeting
of shareholders. Each director shall hold office until the next annual meeting
of shareholders and thereafter until his or her successor shall have been
elected and qualified.
Directors need not be residents of this state [Delaware] or
shareholders of the corporation. Directors shall be removable in the manner
provided by statute.
Section 3. Vacancies. Any director may resign at any time by giving written
notice to the president or to the secretary of the corporation. Any vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though not less than a quorum. A director
elected to fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office. Any Directorship to be filled by the affirmative vote of
a majority of a Directors then in office or by an election at an annual meeting
or at a special meeting of shareholders called for that purpose, and a director
so chosen shall hold office for the term specified in Section 2 above.
Section 4. Regular Meeting. A regular meeting of the Board of Directors shall be
held without other notice than this bylaw immediately after and at the same
place as the annual meeting of shareholders. The Board of Directors may provide
by resolution the time and place for the holding of additional regular meetings
without other notice than such resolution. Any such meeting may be held by
telephone conference.
Section 5. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the president or any two Directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place as the place for holding any special meeting of the Board of Directors
called by them. Any such meeting may be held by telephone conference.
67
<PAGE> 5
Section 6. Notice. Notice of any special meeting shall be given at least seven
days previous thereto by written notice delivered personally or mailed to each
director at his or her business address, or by notice given at least two days
previously by telegraph. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any director
may waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice of waiver of notice of such
meeting.
Section 7. Quorum. A majority of the number of Directors fixed by Section 2
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
Section 8. Manner of Acting. The act of the majority of the Directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors.
Section 9. Compensation. By resolution of the Board of Directors, any director
may be paid any one or more of the following: expenses, if any, of attendance at
meetings; a fixed sum for attendance at each meeting; or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 10. Informal Action by Directors. Any action required or permitted to be
taken at a meeting of the Directors may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
Directors.
ARTICLE IV--Officers and Agents
Section 1. General. The officers of the corporation shall be a president, one or
more vice presidents, a secretary and a treasurer. The salaries of all of the
officers of the corporation shall be fixed by the Board of Directors.
One person may hold any two offices, except that no person may
simultaneously hold the offices of president and secretary.
Section 2. Election and Term of Office. The officers of the corporation shall be
elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the shareholders.
68
<PAGE> 6
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby.
Section 4. Vacancies. A vacancy in any office, however occurring, may be filled
by the Board of Directors for the unexpired portion of the term.
Section 5. President. The president shall:
(a) subject to the direction and supervision of the Board of Directors,
be the chief executive officer of the corporation;
(b) shall have general and active control of its affairs and business
and general supervision of its officers, agents and employees; and
(c) the president shall have custody of the treasurer's bond, if any.
Section 6. Vice Presidents. The vice presidents shall:
(a) assist the president; and
(b) shall perform such duties a may be assigned to them by the
president or by the Board of Directors.
Section 7. Secretary. The secretary shall:
(a) keep the minutes of the proceedings of the shareholders and the
Board of Directors;
(b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
corporation and affix the seal to all documents when authorized by the Board of
Directors;
(d) keep at its registered office or principal place of business a
record containing the names and addresses of all shareholders and the number and
class of shares held by each, unless such a record shall be kept at the office
of the corporation's transfer agent or registrar;
(e) sign with the president, or a vice president, certificates for
shares of the corporation the issuance of which shall have been authorized by
resolution or the Board of Directors;
(f) have general charge of the stock transfer books of the corporation,
unless the corporation has a transfer agent; and
69
<PAGE> 7
(g) in general, perform all duties incident to the office as secretary
and such other duties as from time to time may be assigned to him or her by the
president or by the Board of Directors.
Section 8. Treasurer. The treasurer shall:
(a) be the principal financial officer of the corporation;
(b) perform all other duties incident to the office of the treasurer
and, upon request of the Board, shall make such reports to it as may be required
at any time;
(c) be the principal accounting officer of the corporation; and
(d) have such other powers and perform such other duties as may be from
time to time prescribed by the Board of Directors or the president;
ARTICLE V--Stock
Section 1. Certificates. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the corporation by its
president or a vice president and the secretary, and shall be sealed with the
seal of the corporation, or with a facsimile thereof. No certificate shall be
issued until the shares represented thereby are fully paid.
Section 2. Consideration for Shares. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof, if
any) as shall be fixed from time to time by the Board of Directors. Such
consideration may consist, in whole or in part of money, other property,
tangible or intangible, or in labor or services actually performed for the
corporation, but neither promissory notes nor future services shall constitute
payment for shares.
Section 3. Transfer of Share. Upon surrender to the corporation or to a transfer
agent of the corporation of a certificate of stock duly endorsed or accompanied
by proper evidence of succession, assignment or authority to transfer, and such
documentary stamps as may be required by law, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, and
cancel the old certificate. Every such transfer of stock shall be entered on the
stock book of the corporation which shall be kept at its principal office, or by
its registrar duly appointed.
Section 4. Transfer Agents, Registrars and Paying Agents. The Board may at its
discretion appoint one or more transfer agents, registrars and agents for making
payment upon any class of stock, bond, debenture or other security of the
corporation.
70
<PAGE> 8
ARTICLE VI--Indemnification of Officers and Directors
Each director and officer of this corporation shall be indemnified by the
corporation against all costs and expenses actually and necessarily incurred by
him or her in connection with the defense of any action, suit or proceeding in
which he or she may be involved or to which he or she may be made a party by
reason of his or her being or having been such director or officer, except in
relation to matters as to which he or she shall be finally adjudged in such
action, suit or proceeding to be liable for negligence or misconduct in the
performance of duty.
ARTICLE VII--Miscellaneous
Section 1. Waivers of Notice. Whenever notice is required by law, by the
articles of incorporation or by these bylaws, a waiver thereof in writing signed
by the director, shareholder or other person entitled to said notice, whether
before or after the time stated therein, or his or her appearance at such
meeting in person or (in the case of a shareholders' meeting) by proxy, shall be
equivalent to such notice.
Section 2. Seal. The corporate seal of the corporation shall be in the form
impressed on the margin hereof.
Section 3. Fiscal Year. The fiscal year of the corporation shall be as
established by the Board of Directors.
Section 4. Amendments. The Board of Directors shall have power to make, amend
and repeal the bylaws of the corporation at any regular meeting of the Board or
at any special meeting called for the purpose.
APPROVED:
DATED: October 12, 1995
--------------------------------------------
Director
--------------------------------------------
Director
--------------------------------------------
Director
71
<PAGE> 1
AURORA GOLD CORPORATION
1400-400 Burrand Street
Vancouver, B.C., Canada
V6C 2W2
July 18, 1997
Minera Motagua, S.A.
30 calle 13-48
Zone 5
Guatemala City
Guatemala
Attention: Mr. Roberto Destarac & Mr. Roberto Velasquez
Gentlemen,
We agree to the terms of our last discussion and the revisions of your proposal
of July 7, 1997. The new proposed agreement is as follows:
1. Aurora would make two cash payments: $5,000 USF on July 21, 1997 and
$10,000 USF upon completion of our due diligence on the four mineral
concessions. The combined total of these two payments if $15,000 USF.
These two payments would be a one time cash payment.
2. Upon completion of our due diligence and governmental approval of the
four applications, 10,000 common shares of Aurora Gold Corporation per
mineral concession (a total of 40,000 common shares) will be issued to
Minera Motagua, S.A.
3. A 2% Net Smelter Royalty Interest (NSR) will be granted to Minera
Motagua, S.A. for each distinct mineral deposit per mineral concession.
This NSR is exclusive of the mandatory 1% NSR granted to the Government
of Guatemala.
4. 100,000 common shares of Aurora Gold Corporation will be issued to
Minera Motagua, S.A. upon a positive feasibility report for each
distinct mineral deposit per mineral concession that is deemed to be
economically viable.
72
<PAGE> 2
5. Aurora Gold Corporation shall have the First Right of Refusal for a
period of twenty (20) days on terms mutually acceptable to Aurora Gold
Corporation and Minera Motagua, S.A. on any other mineral concessions
that Minera Motagua, S.A. has applied for and/or has been granted. This
First Right of Refusal is exclusive of two pending transactions with
BWI Resources and Megastar Ventures.
6. Aurora Gold Corporation or its wholly owned subsidiary Aurora Gold
Corporation (B.V.I.) Limited or its nominees will be the party named in
the final agreement.
7. Upon completion of our due diligence and governmental approval of
applications for the four mineral concessions Aurora Gold Corporation
and Minera Motagua, S.A. will enter into a final agreement transferring
100% ownership of each of the four mineral concessions to Aurora Gold
Corporation and/or its subsidiary.
8. Aurora Gold Corporation will assume the payment of all fees and be
responsible for maintaining the title to the concessions in accordance
with the newly instituted mining law of Guatemala.
The above mentioned terms and references are supported on the following
knowledge of the four mineral concessions.
EL TRIUNFO
Is located in the Chimaltenango Province in Western Guatemala some sixty
kilometers west of Guatemala City, and covers an area of 64 square kilometers.
For UTM coordinates see appendix "A".
EL REJON
Is located on the borders of Sacatepequez and Chimaltenango Provinces in central
Guatemala approximately 30 kilometers west of Guatemala City, and covers an area
of 77 square kilometers. For UTM coordinates see appendix "A".
BOLA DE ORO
Is located in the Chimaltenango Province in Western Guatemala 60 kilometers west
of Guatemala City, and covers an area of 110 square kilometers. For UTM
coordinates see appendix "A".
CARMONA
Is located in the Guatemala Province in the central part of the County, close to
the city of Antigua 30 kilometers south of Guatemala City, and covers an area of
72 square kilometers. For UTM coordinate see appendix "A".
73
<PAGE> 3
Please sign below and return this letter to my attention, at which time we will
begin drafting a formal Agreement.
Yours truly,
Aurora Gold Corporation
David E. Jenkins
President
The terms outlined above are accepted by Minera Motagua, S.A., this 21st day of
July, 1997.
Minera Motagua, S.A.
Per:
------------------------------------
Roberto Destarac
Per:
------------------------------------
Roberto Velasquez
DEJ:sg
Enclosure
74
<PAGE> 4
APPENDIX "A"
Please see attached five (5) pages containing properties descriptions
and a general location map.
75
<PAGE> 5
"EL TRIUNFO 1"
Is located in the Chimaltenano province in western Guatemala some sixty
kilometers west of Guatemala City, and covers an area of 64 sq. kms. Its UTM
coordinates are:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,636,000 738,000
2 1,644,000 738,000
3 1,644,000 746,000
4 1,636,000 746,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The "El Triunfo" concession was requested based on historical
information obtained at the Ministry of Energy and Mines. A compilation prepared
in the Mining Investigation department of the ministry which lists claims
presented up to date, indicate approximately eight gold claims obtained in
different periods of time on the area requested. There is also one more
reference obtained from the General Archive of Central America, which is the
library that saves and preserves all documents available from the colonial
period in Central America, indicating the existence a gold mine close to the
town of San Martin Jilotepeque, which lies within the area requested.
The mineral concession application was presented in the Ministry of
Energy and Mines on April 24, 1997. The area is plotted on the GUATEMALA
1:250,000 scale map included.
76
<PAGE> 6
"EL REJON"
Is located on the Sacatepequez and Chimaltenango provinces in central
Guatemala approximately 30 kms. west of Guatemala city. It covers an area of 77
sq. kms, and its UTM coordinates are:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,619,000 748,000
2 1,618,000 748,000
3 1,618,000 749,000
4 1,615,000 749,000
5 1,615,000 751,000
6 1,613,000 751,000
7 1,613,000 749,000
8 1,611,000 749,000
9 1,611,000 745,000
10 1,613,000 745,000
11 1,613,000 743,000
12 1,612,000 743,000
13 1,612,000 739,000
14 1,617,000 739,000
15 1,617,000 743,000
16 1,619,000 743,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The "El Rejon" area was requested based on historical references
obtained at the General Archives of Central America. A "Royal" mine existed at
the site which produced gold and silver for several years. There are a total of
seven references dating from 1657 through 1869 of a mine state: "Mr. Prudencio
Castellanos, claims a native silver mine located close to Antigua Guatemala on a
hill called El Rejon, which belongs to the country of Jocotenango. Its ore
contains 52% silver."(1869) Reference is also made in 1657 to a mine located on
the Parramos hill next to the town of Parramos which is located west of the El
Rejon mine. The concession is located on tertiary volcanic terrain.
The mineral concession application was presented in the Ministry of
Mines on April 30, 1997. It is plotted on the GUATEMALA 1:250,000 scale map
included.
77
<PAGE> 7
"BOLA DE ORO"
Is located in the Chimaltenango province in western Guatemala some 60
kms. west of Guatemala City. It covers an area of 110 sq. kms. Its UTM
coordinates are:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,635,000 728,000
2 1,635,000 738,000
3 1,624,000 738,000
4 1,626,000 728,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Bola de Oro (Golden Ball) concession was requested based on
historical references obtained at the General Archives of Central America. An
1824 reference states the existence of a mine close to the town of Comalapa
which produced 2.25 ounces of silver per 100 pounds of rock and some gold (not
specified). There are presently two towns with the word mine in their names
close to Comalapa. The presence of the word mine in a name usually makes
reference to late mining operation.
The concession is located within the Tertiary volcanic belt of Central
Guatemala.
The mineral exploration concession application was presented in the
Ministry of Energy and Mines on April 30, 1997. The area is plotted on the
GUATEMALA 1:250,000 scale map included.
78
<PAGE> 8
"CARMONA"
Is located on the Guatemala province on the central part of the
Country, close to the city of Antigua Guatemala (Guatemalas Capital city until
the 1800's), some 30 kms. south of Guatemala City. It covers an area of 72 sq.
kms. and is bounded by the following UTM coordinates:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,610,000 746,000
2 1,604,000 746,000
3 1,604,000 748,000
4 1,600,000 748,000
5 1,600,000 754,000
6 1,610,000 754,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Carmona property was requested based on two historical references
from the Archives of Central America. The 1680 references mention the existence
of a gold mine close to the now extinguished to town of San Bartolome Carmona on
the top of the Carmona Mountain. There is a peak on the mountain called Cerro
Las Minas, another one called Cerro Monterrico, and a river called Las Minas.
The geology of the area is not well known but the mountain is located
on tertiary volcanic terrain, next to the Agua Volcano.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997. The area is plotted on the
GUATEMALA 1:250,000 scale map provided.
79
<PAGE> 1
AURORA GOLD CORPORATION
1400-400 Burrand Street
Vancouver, B.C., Canada
V6C 2W2
August 16, 1997
Minera Motagua, S.A.
30 calle 13-38
Zone 5
Guatemala City
Guatemala
Attention: Mr. Roberto Destarac
Dear Mr. Destarac,
We agree to the terms of this agreement, as follows:
1. Aurora would make two cash payments: $5,000 USF on August 18, 1997 and
$10,000 USF upon completion of our due diligence on the ten mineral
concessions. The combined total of these two payments is $15,000 USF.
These two payments would be a onetime cash payment.
2. Upon completion of our due diligence and governmental approval of the
ten applications, 11,500 common shares of Aurora Gold Corporation per
mineral concession (a total of 115,000 common shares) will be issued to
Minera Motagua, S.A.
3. A 2% Net Smelter Royalty Interest (NSR) will be granted to Minera
Motagua, S.A. for each distinct mineral deposit per mineral concession.
This NSR is exclusive of the mandatory 1% NSR granted to the government
of Guatemala.
4. 100,000 common shares of Aurora Gold Corporation will be issued to
Minera Motagua, S.A. upon a positive feasibility report for each
distinct mineral deposit per mineral concession that is deemed to be
economically viable.
80
<PAGE> 2
5. Aurora Gold Corporation shall have the First Right of Refusal for a
period of twenty (20) days on terms mutually acceptable to Aurora Gold
Corporation and Minera Motagua, S.A. on any other mineral concessions
that Minera Motagua, S.A. has applied for and/or has been granted. This
First Right of Refusal is exclusive of two pending transactions with
BWI Resources and Megastar Ventures.
6. Aurora Gold Corporation or its wholly owned subsidiary Aurora Gold
Corporation (B.V.I.) Limited or a wholly owned Guatemalan subsidiary or
its nominees will be the party named in the final agreement.
7. Upon completion of our due diligence and Governmental approval of
applications for the four mineral concessions Aurora Gold Corporation
and Minera Motagua, S.A. will enter into a final agreement transferring
100% ownership of each of the ten mineral concessions to Aurora Gold
Corporation and/or its subsidiary.
8. Aurora Gold Corporation will assume the payment of all fees and be
responsible for maintaining the title to the concessions in accordance
with the newly instituted mining law of Guatemala.
The above mentioned terms and references are supported on the following
knowledge of the ten mineral concessions.
The following is a list of the ten mineral concession (lease see Appendix "A"
for a complete property descriptions): LOS CIPRESES, CHIYAX, ATITLAN, LOS
ANGELES, LA UNION, SAN DIEGO, BARRANQUILLO, EL RANCHO, EL JICARO AND MONJITAS.
Please sign below and return this letter to my attention, at which time we will
begin drafting a formal Agreement.
Yours truly,
Aurora Gold Corporation
David E. Jenkins
President
The terms outlined above are accepted by Minera Motagua, S.A., this 16th day of
August 1997.
Minera Motagua, S.A.
Per:
------------------------------------
Roberto Destarac
81
<PAGE> 3
APPENDIX "A"
Please see attached ten (10) pages containing properties descriptions and a
general location map.
82
<PAGE> 4
"MONJITAS"
Is located on the Guatemala province in central Guatemala some 10
kilometers east of Guatemala City. It covers a total area of 20 sq. Kms. and is
bounded by the following UTM coordinates;
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,627,000 769,000
2 1,627,000 776,600
3 1,632,000 776,000
4 1,632,000 769,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Monjitas concession was requested based on historical references
obtained from the Archives of Central America. One of them dating from 1892
states: "Mr Benito Vega, claims that in the place called Monjitas, in Santa
Rosita, he discovered a gold and silver mine, which he pretends to name El
Socorro."
The concession is located on the mountains to the east of Guatemala
City. This area is marked by the presence of a N-S fault, which is the eastern
border of the Asuncion valley. Tertiary volcanic rocks are predominant in the
area. Several outcrops of silicified, oxidized and altered volcanic rocks have
been located.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 2, 1997. The concession is located within
the GUATEMALA 1:250,000 scale base map.
83
<PAGE> 5
"EL RANCHO"
Is located on the El Progreso and Zacapa provinces in eastern
Guatemala, some 95 kilometers east of Guatemala City. It covers an area of 90
sq., Kms. and is bounded by the following UTM coordinates:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,638,000 824,500
2 1,638,000 832,000
3 1,650,000 832,000
4 1,650,000 824,500
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The El Rancho exploration concession was requested based on references
obtained from the Archives of Central America. The references in general state
the presence of several copper, gold, silver, and iron mineral deposits on the
El Rancho mountains south of a town with the same name.
Geology is very similar to that one found in El Barranquillo and El
Jicarro concessions, although El Rancho is closest to the Motagua valley and
fault. On the other side of the Motagua River, to the north of El Rancho, the
Ministry of Energy and Mines has declared a mineral reserve area called San
Agustin. The reserve was declared based on studies performed a Korean
prospecting mission which performed sediments sampling all around Guatemala and
obtained several gold anomalies at San Agustin.
The mineral exploration concession was presented to the Ministry of
Energy and Mines on June 26, 1997. The concession can be plotted on the
CHIQUIMULA 1:250,000 base map.
84
<PAGE> 6
"BARRANQUILLO"
Is located on the El Progreso province in eastern Guatemala, some 70
kilometers east of Guatemala City. It covers an area of 96 sq. Kms. and is
bounded by the following UTM coordinates:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,637,000 805,000
2 1,637,000 817,000
3 1,645,000 817,000
4 1,645,000 805,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Barranquillo concession was requested based on references obtained
at the Archives of Central America. These references mention the existence of an
old copper-gold mine 10 kilometers east of the town of Barranquillo, on the road
to Guastatoya. All the locations mentioned are within the El Barranquillo
concession.
The geology of the concession is very similar to that found in the
Jicaro concession, which bounds Barranquillo to the east.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 2, 1997. The concession can be plotted on
the GUATEMALA 1:250,000 base map.
85
<PAGE> 7
"LOS CIPRESES"
Is located in the Totonicapan province in western Guatemala 200 kms.
west of Guatemala City. It covers an area of 56 sq. kms. Its UTM coordinates
are:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,653,000 675,000
2 1,653,000 666,000
3 1,662,000 666,000
4 1,662,000 675,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Los Cipreses concession was requested based on references from the
Archives of Central America. Two references state the existence of a silver and
gold mine on the road from Momostenango to San Francisco el Alto. They mention a
vein with an east west orientation on a hill called Trece. Assays yielded 3
ounces of silver per 100 pounds of rock and some gold. Geologically the area is
located within tertiary volcanic terrain close to several igneous bodies. It is
important to recognize that the Motagua Fault is lost when it come into contact
with tertiary volcanic rocks at this particular area. It can be inferred that
the Fault was buried but is still capable of controlling mineralization in the
area on later tectonic events.
The mineral exploration concession was presented to the Ministry of
Mines on May 7, 1997. The area is plotted on the bottom-left corner of the
COBAN, and on the upper-left corner of the GUATEMALA 1:250,000 maps provided.
86
<PAGE> 8
"CHIYAX"
Is located in the Totonicapan province of western Guatemala some 210
kms. northwest of Guatemala City. It covers an area of 48 sq. kms. and is
bounded by the following UTM coordinates:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,652,000 678,000
2 1,646,000 678,000
3 1,646,000 686,000
4 1,652,000 686,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Chiyaz area was requested based on several references obtained from
the Archives of Central America. At least four references dating from 1796
through 1892 mention gold and silver mines on the hills next to the town of
Totonicapan. Special reference is made to the mines called Parrasqui and
Choatulum. The geology of the area is very similar to that found at the Los
Cipreses area due to their proximity.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997. The area is plotted on the
upper-left-hand corner of the GUATEMALA 1:250,000 scale map provided.
87
<PAGE> 9
"EL JICARO"
Is located in the El Progreso province in eastern Guatemala, some 80
kilometers east of Guatemala City. It covers an area of 90 sq. Kms. and is
bounded by the following UTM coordinates:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,638,000 817,000
2 1,638,000 824,500
3 1,650,000 824,500
4 1,650,000 817,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The El Jicaro concession was requested based on a reference obtained
from the Archives of Central America. The reference mentions the presence of
copper and gold bearing minerals on the Anchuga Mountain, close to the town of
Guastatoya. This mountain is covered within the El Jicaro concession.
The geology of the region is marked by the presence of the Motagua
Fault, the largest east-west structure in Guatemala, which extends all the way
to the Caribbean. Due to the proximity of such a large structure, geology is
complex and is characterized by the presence of several rock types, including
intrusives, tertiary rhyolites and redbeds of Cretaceous age.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 2, 1997. The concession can be plotted on
the GUATEMALA and CHIQUIMULA 1:250,000 scale base maps.
88
<PAGE> 10
"LOS ANGELES 1" & "LA UNION 1"
Both are located in the Zacapa province in eastern Guatemala close to
the border with Honduras, they cover an area of 180 sq. kms. Their UTM
coordinates are:
LOS ANGELES 1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,645,000 236,000
2 1,655,000 236,000
3 1,655,000 245,000
4 1,645,000 245,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
LAN UNION 1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,646,000 245,000
2 1,646,000 254,000
3 1,648,000 254,000
4 1,648,000 257,000
5 1,657,000 257,000
6 1,657,000 254,000
7 1,653,000 254,000
8 1,653,000 245,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Los Angeles 1 and La Union 1 areas were requested based on the
geological environment surrounding it and a very prominent topographic
structure. The area are bounded to the north by the Managua area which was
explored by the UN and the Ministry of Energy and Mines during the 1980s and
yielded results for copper, lead, silver, and gold. Geologists from the Ministry
strongly recommend the area for exploration. A complete report of the Managua
project is included for its review.
Geologically, the area is located at on Paleozoic metamorphic rocks in
contact with an intrusive body and tertiary volcanic terrain.
The Los Angeles 1 area and the La Union 1 area correspond to one
concession but were divided in order to avoid an extremely large concession.
The application was presented to the Ministry of Mines on April 24,
1997. The area is plotted on the CHIQUIMULA 1:250,000 scale map included.
89
<PAGE> 11
"ATITLAN"
Also a mineral reconnaissance concession located in the Sacatepequez,
Chimaltenango, and Solola provinces in western Guatemala. It covers an area of
600 sq. Kms., bounded by the following UTM coordinates:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,625,000 700,000
2 1,625,000 730,000
3 1,605,000 730,000
4 1,605,000 700,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Atitlan concession was requested based on the geological setting of
the region and on several references from the Archives of Central America
pointing to mineral occurrences in the area. Geologically Atitlan is located
within the central tertiary volcanic belt of southern Guatemala, which presents
the best characteristics for epithermal mineralization in the country.
References point out the existence of several gold, silver, and copper
occurrences in the area which are yet to be located precisely.
The mineral reconnaisance concession application was presented to the
Ministry of Energy and Mines on July 23, 1997. The concession can be plotted in
the GUATEMALA 1:250,000 base map.
90
<PAGE> 12
"SAN DIEGO"
Is a mineral reconnaissance concession located in the Zacapa and
Chiquimula provinces in eastern Guatemala, some 150 Kms. east of Guatemala City.
Due to its reconnaissance status it covers a larger area than exploration
concessions, namely 800 sq. kms. the following UTM coordinates bound it:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Apex North East
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 1,650,000 190,000
2 1,650,000 230,000
3 1,630,000 230,000
4 1,630,000 190,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The San Diego reconnaissance concession was requested with the purpose
of covering a large area of good, prospective land in eastern Guatemala. The
main feature at San Diego is the fact that it completely surrounds the El Pato
gold and silver mineral reserve, which is the best-understood exploration
project in Guatemala to this date. The area has been studied by the General
Mining Directorate and by the United Nations Revolving Fund for Natural
Resources Exploration during the years 1990 and 1991. From these studies, a
total of 850,000 MT averaging 7.0 g/t gold are proven. Possible reserves are
200,000 tone averaging 5.8 g/t gold.
Geologically, due to its extension the area contains several geological
settings. Most important is the presence of the Motagua Fault to the north and
the Chiquimula Pluton (intrusive) on the eastern half of the concession.
The mineral reconnaissance concession application was presented to the
Ministry of Energy and Mines on July 24, 1997. The concession can be plotted on
the CHIQUIMULA 1:250,000 base map.
91
<PAGE> 1
AURORA GOLD CORPORATION
1400-400 Burrand Street
Vancouver, B.C., Canada
V6C 2W2
November 3, 1997
Minera Motagua, S.A.
30 calle 13-48
Zone 5
Guatemala City
Guatemala
Attention: Mr. Roberto Destarac & Mr. Roberto Velasquez
Gentlemen,
This letter is to acknowledge a mutually agreed upon revision of our two
previous agreements covering the application and the granting of mineral
concession and mineral reconnaissance concessions in Guatemala.
- - July 18, 1997 covering four (4) mineral concessions: El Triunfo, El
Rejon, Bola de Oro and Carmona.
- - August 16, 1997 agreement covering eight (8) mineral concessions: Los
Cipreses, Chiyax, Los Angeles, La Union, Barranquillo, El Rancho, El
Jicaro, Monjitas and two (2) mineral reconnaissance concessions Atitlan
and San Diego.
The mutually agreed upon revisions to the above two agreements are as follows:
- - July 18, 1997 agreement - The elimination of the second cash payment of
$10,000 USD. A reduction of the Aurora Gold Corporation common shares
to be granted upon completion of due diligence and governmental
approval of the four (4) mineral concessions from 10,000 common shares
per concession to 1,500 common shares per concession for a new total of
6,000 Aurora Gold Corporation. Also, the elimination of any Aurora Gold
Corporation common shares being granted upon completion of a positive
feasibility report for each distinct mineral deposit per mineral
concession that is deemed to be economically viable.
92
<PAGE> 2
- - August 16, 1997 agreement - The elimination of the second cash payment
of $10,000 USD. A reduction of Aurora Gold Corporation common shares to
be granted upon completion of due diligence and governmental approval
of eight (8) mineral concessions and two (2) mineral reconnaissance
concessions from 11,500 common shares per concessions to 1,500 common
shares per concession for a new total of 15,000 common shares. Also,
the elimination of any Aurora Gold Corporation common shares being
granted upon completion of a positive feasibility report for each
distinct mineral deposit per mineral concession that is deemed to be
economically viable.
- - The elimination of the 2% Net Smelter Royalty Interest (NSR) to Minera
Motagua, S.A. for each distinct mineral deposit per mineral concession
under either the July 18, 1997 or August 16, 1997 agreements.
It is acknowledged by all parties that Aurora Gold Corporation's nominee Aurora
Gold, S.A. will be the local Guatemalan operating company and all the above
concessions will be transferred and/or granted in the name of Aurora Gold, S.A.
Yours truly,
Aurora Gold Corporation
David E. Jenkins
President
The terms outlined above are accepted by Minera Motagua, S.A., this 3rd day of
November 1997.
Minera Motagua, S.A.
Per:
------------------------------------
Roberto Destarac
Per:
------------------------------------
Roberto Velasquez
93
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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<CASH> 122,921
<SECURITIES> 0
<RECEIVABLES> 12,326
<ALLOWANCES> 0
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<TOTAL-ASSETS> 135,247
<CURRENT-LIABILITIES> 68,866
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0
0
<COMMON> 168,351
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<TOTAL-LIABILITY-AND-EQUITY> 237,217
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
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<OTHER-EXPENSES> 569,980
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (569,980)
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<INCOME-CONTINUING> (569,980)
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