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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 1
TO
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 0-24393 13-3945947
(State or other jurisdiction of (Commission File no.) (I.R.S. Employer
incorporation or organization) Identification No.)
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 67 INDEX TO EXHIBITS IS ON PAGE 38.
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AURORA GOLD CORPORATION
REGISTRATION STATEMENT ON FORM 10 SB
PART I
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Page
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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 16
Item 4. Security Ownership of Certain Beneficial Owners and Management 27
Item 5. Directors, Executive Officers, Promoter and Control Persons 28
Item 6. Executive Compensation 29
Item 7. Certain Relationship Alterations 31
Item 8. Description of Securities 32
Part II
Item 1. Market Price and Dividends on the Registrants'
Common Equity and other Stockholder Matters 33
Item 2. Legal Proceeding 34
Item 3. Changes in and Disagreements with Accountants 34
Item 4. Recent Sales of Unregistered Securities 34
Item 5. Indemnifications of Directors and Officers Financial Statements 35
Part F/S
Financial Statements 41
Part III
Item 1. Index to Exhibits 64
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ITEM 1. DESCRIPTION OF BUSINESS
Aurora Gold Corporation (the "Company" or "Aurora") 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
following a change of control which occurred on October 30, 1995, to the
acquisition, exploration and, if warranted, the development of mineral resource
properties. The Company changed its name to Aurora Gold Corporation on August
20, 1996 to more fully reflect its business activities.
Since its redirection, the Company's activities have been limited
primarily to the acquisition of rights to certain mineral properties and the
implementation of preliminary exploration programs on these properties in which
it has acquired an interest . 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.
Currently, the Company's activities are centred in Guatemala. 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 title holders 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 accordingly, it is not possible to assess the potential impact of
such possible future regulations.
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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 kilometres and a maximum of 3,000 square kilometres. The following
fees are paid for the reconnaissance concessions (a) US$215 when granted (b)
land fees of US$20 per square kilometre 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 kilometre. Their value will be
between US$35 and US$185. Land fees are charges as follows - 3 Units per square
kilometre per year for the first three years, 6 Units per square kilometre per
year for the first two year extension, 9 Units per square kilometre 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
kilometre 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 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,
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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 common stock is traded on the NASD's OTC Bulletin Board.
See "Part II, Item 3. Market Price and Dividends on the Registrant's Common
Equity and Other Stockholder Matters." Notwithstanding the Company's (1) own
efforts to ensure that is Rule 15c-211, report and information statement (the
"Information Statement") is current and (2) mailing of an annual report to its
stockholders, the Company concluded that in order to more efficiently provide
and make generally available current material information concerning its
operations to its stockholders and prospective stockholders alike, a voluntary
filing of a registration statement on Form 10-SB pursuant to the Security
Exchange Act of 1934, as amended, (the "Exchange Act") was warranted. If the
Company's reporting obligation under the Exchange Act is terminated its
intention would be to periodically update the Information Statement and to
continue to disseminate an annual report, including audited financial
statements, to its stockholders.
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."
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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 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. See "Item 2. Management's Discussion and Analysis or Plan
of Operation."
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. 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
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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. LACK OF CASH FLOW AND ADDITIONAL FUNDING REQUIREMENTS
None of the Company's properties has commenced commercial production and
the Company has no history of earnings or cash flow from its operations. The
company presently does not have sufficient financial resources to undertake all
of its currently planned exploration and development programs. The further
exploration and the potential development of any ore deposits found on the
Company's exploration license depends upon the Company's ability to obtain
financing through any or all of the joint venturing of properties, debt
financing, equity financing or other means. There is no assurance that the
Company will be successful in obtaining the required financing. Failure to
obtain additional financing on a timely basis could cause the Company to forfeit
its interest in such properties and reduce or terminate its operations. The
Company has no understanding or agreements with any person regarding such
additional funding requirements. The Company's auditor has indicated in its
report that "the Company has incurred a loss from operations and lacks current
liquidity which raises substantial doubt about its ability to pay current
liabilities, and therefore continue as a going concern." See "Part F/S.
Financial Statements." 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.
The Company has not declared or paid dividends on its shares since
incorporation and does not anticipate doing so in the foreseeable future.
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D. TITLE RISKS
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.
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
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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 LABOUR 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 labour 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. NO EMPLOYMENT AGREEMENTS WITH MANAGEMENT
The Company currently has no employment agreements with Management and
does not maintain, nor does it intend to obtain, key man life insurance on any
member of its Management.
K. 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
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.
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L. YEAR 2000 RISKS
Currently the Company does not rely on any computer programs that will
materially impact the operations of the Company in the event of a Year 2000
disruption. However, like any other Company, advances and changes in available
technology can significantly impact its business and operation. Consequently,
although the Company has not identified any specific year 2000 issue, the "Year
2000" problem creates risk for the Company from unforeseen problems in its own
computer systems and from third parties, including but not limited to financial
institutions, with whom it transacts business. Such failures of the Company
and/or third parties computer systems could have a material impact on the
Company's ability to conduct its business. See "Item 2. Managements Discussion
and Analysis or Plan of Operation."
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company is a mineral exploration company based in Vancouver, Canada
engaged in the exploration of base and precious metals worldwide. 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.
A. EXPLORATION PROPERTY AGREEMENTS
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.
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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 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 totalling 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.
Agreement dated July 7, 1997 as revised November 3, 1997 (the Guatemala
Agreement July 7, 1997). The parties to the agreement of July 17, 1997 are the
Company and Minera Motagua S.A. Under the terms of the agreement Minera Motagua
S.A. has agreed to act as agent for the Company and apply to the Guatemala
government on Aurora's behalf for four (4) mineral exploration licenses covering
the following four Guatemala mineral concessions: El Triunfo, El Rejon, Bola de
Oro and Carmona. Upon completion of the Company's due diligence and the
Guatemala government approval of the four mineral explorations licenses, Minera
Motagua S.A. will receive (1) cash payment of US$5,000 (paid July 21, 1997), (2)
Aurora will issue 1,500 common shares to Minera Motagua S.A. per mineral
exploration concession granted by the Guatemala government for a total of 6,000
common shares. Aurora will assume the payment of all fees and be responsible for
maintaining the title to all the concessions in accordance with Guatemala mining
law.
Agreement dated August 16, 1997 as revised November 3, 1997 (the
Guatemala Agreement August 16, 1997). The parties to the agreement of August 16,
1997 are the Company and Minera Motagua S.A. Under the terms of the Agreement
Minera Motagua S.A. has agreed to act as agent for the Company and apply to the
Guatemala government on Aurora's behalf for eight (8) mineral exploration
licenses covering the following eight Guatemala mineral concessions: Los
Cipreces, Chiyax, Los Angeles, La Union, Barranquilla, El Rancho, Jicaro and
Monjitas and two (2) mineral reconnaissance licenses covering the following two
(2) Guatemala mineral reconnaissance concessions; Atitlan and San Diego. Upon
the completion of the Company's due diligence and the Guatemala government
approval of the eight mineral exploration licenses and two reconnaissance
licenses Minera Montagua S.A. will receive (1) cash payment of US$5,000 (paid on
August 18, 1997), (2) Aurora will issue 1,500 common shares to Minera Montagua
S.A. per mineral exploration/reconnaissance concession granted by the Guatemala
government for a total of 15,000
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<PAGE> 13
common shares. Aurora will assume the payment of all fees and be responsible for
maintaining the title to all the concessions in accordance with Guatemala mining
law.
Agreement dated July 28, 1998 (the Guatemala Agreement July 28, 1998).
The parties to the agreement of July 28, 1998 are the Company and Minera Motagua
S.A. Under the terms of the agreement Minera Motagua S.A. has agreed to act as
agent for Aurora Gold Corporation, drop the applications to the Guatemala
government for exploration licenses for the following four (4) concessions;
Atitlan, Carmona, El Rejon and El Triunfo and to make applications to the
Guatemala government for approval of exploration licenses for the following six
concessions: Aguas Calientes, Apantes, Valenton I, La Esperanza, Miramundo and
Tesoro at no additional cost to Aurora's existing package of Guatemala mineral
concessions. Aurora will assume the payment of all fees and be responsible for
maintaining the title to all the concessions in accordance with Guatemala mining
law.
B. FINANCING
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.
C. FINANCIAL INFORMATION
Three Months Ended March 31, 1998 versus Three Months Ended March 31,
1997
Net loss for the three months ended March 31, 1998 decreased by $90,217
over the three months ended March 31, 1997, due primarily to:
(1) The Company's write off of certain mineral properties in the
amount of $22,345 in the three months ended March 31, 1997.
(2) Stockholder and public relations expenses by $9,102 ($2,144 -
three months ended March 31, 1998, $11,246 - three months ended
March 31, 1997).
(3) Legal fees decreased by $15,905 ($2,791 - three months ended
March 31, 1998, $18,696 - three months ended March 31, 1997).
(4) Travel decreased by $5,641 ($Nil - three months ended March 31,
1998, $5,641 - three months ended March 31, 1997).
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(5) Property development and examination expenses decreased by
$26,682 ($477 - three months ended March 31, 1998, $27,159 -
three months ended March 31, 1997).
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 borrowing) 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.
YEAR 2000 ISSUES
The "Year 2000 problem", as it has come to be known, refers to the fact
that many computer programs use only the last two digits to refer to a year, and
therefore recognize a year that begins with "20" as instead beginning with "19".
For example, the year 2000 would be read as being the year 1900. If not
corrected, this problem could cause many computer applications to fail or create
erroneous results.
The Company has modified and tested all of the critical applications of
its information technology ("IT"), the result of which is that all such critical
applications are now Year 2000 compliant. The Company believes that virtually
all of the non-critical applications of its IT are or will be made Year 2000
compliant prior to January 1, 1999. The Company's analysis and program is
directed by its or others with whom it transacts business, internal IT
personnel. The total amount of the payments made to date and to be made
hereafter to such independent consultant are not
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<PAGE> 15
expected to be material. Based on the Company's analysis to date, the Company
believes that its material non-IT systems are either Year 2000 compliant, or do
not need to be made Year 2000 compliant in order to continue to function in
substantially the same manner in the Year 2000. The Company intends to continue
its analysis of whether its non-IT systems require any Year 2000 remediation.
The Company's Year 2000 compliance work has not caused, nor does the Company
expect that it will cause, a deferral on the part of the Company of any material
IT or non-IT projects.
However, there can be no assurance that any of the Company's vendors or
others with whom it transacts business, will be Year 2000 compliant prior to
such date. The company is unable to predict the ultimate affect that the Year
2000 problem may have upon the Company, in that there is no way to predict the
impact that the problem will have nation-wide or world-wide and how the Company
will in turn be affected, and, in addition, the company cannot predict the
number and nature of its vendors and customers who will fail to become Year 2000
compliant prior to January 1, 2000. Significant Year 2000 difficulties on the
part of vendors or customers could have a material adverse impact upon the
Company. The Company intends to monitor the progress of its vendors and
customers in becoming Year 2000 compliant. The Company has not to date
formulated a contingency plan to deal with the potential non-compliance of
vendors and customers, but will be considering whether such a plan would be
feasible.
FORWARD LOOKING STATEMENTS
The Registration Statement includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words or phrases
such as "expects" or "does not expect", "is expected", "anticipates" or "does
not anticipate", "plans", "estimates" or "intends", or stating that certain
actions, events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved) are not statements of historical fact and may be "forward
looking statements". Such statements are included, among other places in this
Registration Statement, in the sections entitled "Management's Discussion and
Analysis or Plan of Operation," "Description of Business" and "Description of
Property." Forward-looking statements are based on expectations, estimated and
projections at the time the statements are made that involve a number of risks
and uncertainties which could cause actual results or events to differ
materially from those presently anticipated. These include, but are not limited
to, the risks of mining industry (for example, operational risks of exploring
for, developing and producing crude oil and natural gas, risks and uncertainties
involving geology of mineral deposits, the uncertainty of reserve estimates and
estimates relating to production volumes, cost and expense projections,
potential cost overruns and health, safety and environmental risks), risks
relating to the Company's properties (for example, lack of operating history and
transportation), fluctuations in mineral prices and exchange rates and
uncertainties resulting from potential delays or changes in plans with respect
to exploration or development projects or capital expenditures. See "Risk
Factors of the Company's Business." Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
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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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<PAGE> 17
(A) ACQUISITION OF PROPERTY INTERESTS OR OPTIONS TO ACQUIRE PROPERTY INTERESTS
The Company's current exploration activities are confined solely to
Guatemala and the rights are working interests in Guatemala mineral and
reconnaissance concessions. The Company has retained pursuant to signed
agreements, Minera Montagua S.A. to act as its agent in Guatemala.
(i) Agreement dated July 7, 1997 as revised November 3, 1997 (the
Guatemala Agreement July 7, 1997). The parties to the agreement
of July 17, 1997 are the Company and Minera Motagua S.A. Under
the terms of the agreement Minera Motagua S.A. has agreed to act
as agent for the Company and apply to the Guatemala government
on Aurora's behalf for four (4) mineral exploration licenses
covering the following four Guatemala mineral concessions: El
Triunfo, El Rejon, Bola de Oro and Carmona. Upon completion of
the Company's due diligence and the Guatemala government
approval of the four mineral explorations licenses, Minera
Motagua S.A. will receive (1) cash payment of US$5,000 (paid
July 21, 1997), (2) Aurora will issue 1,500 common shares to
Minera Motagua S.A. per mineral exploration concession granted
by the Guatemala government for a total of 6,000 common shares.
Aurora will assume the payment of all fees and be responsible
for maintaining the title to all the concessions in accordance
with Guatemala mining law.
(ii) Agreement dated August 16, 1997 as revised November 3, 1997 (the
Guatemala Agreement August 16, 1997). The parties to the
agreement of August 16, 1997 are the Company and Minera Motagua
S.A. Under the terms of the Agreement Minera Motagua S.A. has
agreed to act as agent for the Company and apply to the
Guatemala government on Aurora's behalf for eight (8) mineral
exploration licenses covering the following eight Guatemala
mineral concessions: Los Cipreces, Chiyax, Los Angeles, La
Union, Barranquilla, El Rancho, Jicaro and Monjitas and two (2)
mineral reconnaissance licenses covering the following two (2)
Guatemala mineral reconnaissance concessions; Atitlan and San
Diego. Upon the completion of the Company's due diligence and
the Guatemala government approval of the eight mineral
exploration licenses and two reconnaissance licenses Minera
Motagua S.A. will receive (1) cash payment of US$5,000 (paid on
August 18, 1997), (2) Aurora will issue 1,500 common shares to
Minera Motagua S.A. per mineral exploration/reconnaissance
concession granted by the Guatemala government for a total of
15,000 common shares. Aurora will assume the payment of all fees
and be responsible for maintaining the title to all the
concessions in accordance with Guatemala mining law.
(iii) Agreement dated July 28, 1998 (the Guatemala Agreement July 28,
1998). The parties to the agreement of July 28, 1998 are the
Company and Minera Motagua S.A. Under the terms of the agreement
Minera Motagua S.A. has agreed to act as agent for Aurora Gold
Corporation, drop the applications to the Guatemala government
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for exploration licenses for the following four (4) concessions;
Atitlan, Carmona, El Rejon and El Triunfo and to make
applications to the Guatemala government for approval of
exploration licenses for the following six concessions: Aguas
Calientes, Apantes, Valenton I, La Esperanza, Miramundo and
Tesoro at no additional cost to Aurora's existing package of
Guatemala mineral concessions. Aurora will assume the payment of
all fees and be responsible for maintaining the title to all the
concessions in accordance with Guatemala mining law.
The exploration license confers on the titleholder the exclusive right
to locate, study, analyse and evaluate the deposits that have been granted,
within the licenses' territorial limits and to unlimited depth in the subsoil.
The 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 following 10 mineral exploration concession licenses have been
granted by the Guatemala government:
<TABLE>
<CAPTION>
NAME DATE GRANTED FEES EXPIRY/RENEWAL
(QUETZAL) DATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Miramundo 04/20/98 Q. 10,983.33 12/31/98
El Rancho 04/20/98 Q. 14,666.66 12/31/98
Monjitas 04/28/98 Q. 4,960.56 12/31/98
Los Angeles 05/05/98 Q. 19,459.89 12/31/98
Los Cipreces 05/05/98 Q. 17,643.89 12/31/98
Chiyax 05/05/98 Q. 10,985.32 12/31/98
Apantes 07/16/98 Q. 28,553.60 7/15/99
Jicaro 07/16/98 Q. 27,624.50 7/15/99
Valenton 1 08/03/98 Q. 9,024.52 7/27/99
Aguas Calientes 08/03/98 Q. 31,889.09 7/29/99
</TABLE>
The following five mineral exploration concession licenses and 1
reconnaissance concession license are pending and are expected to be approved by
the Guatemala government by December 31, 1998:
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<TABLE>
<CAPTION>
NAME DATE GRANTED FEES EXPIRY/RENEWAL
(QUETZAL) DATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Barranquilla - -
San Diego - (Reconnaissance -
Bola de Oro - concession) -
La Union - -
Tesoro - -
La Esperanza - -
</TABLE>
(B) PROPERTY DESCRIPTIONS
The Company's current exploration activities are confined solely to
Guatemala and the rights are working interests in Guatemala mineral and
reconnaissance concessions . The Company has retained pursuant to written
agreements, Minera Motagua S.A. to act as its agent in Guatemala.
By Agreement dated July 7, 1997 as revised November 3,1997 (the
Guatemala Agreement July 7, 1997) Minera Motagua S.A. has agreed to act as agent
for the Company and apply to the Guatemala government on the Company's behalf
for four mineral exploration licenses covering the following four Guatemala
mineral concessions: El Triunfo, El Rejon, Bola de Oro and Carmona.
By Agreement dated August 16, 1997 as revised November 3, 1997 (the
Guatemala Agreement August 16, 1997) Minera Motagua S.A. has agreed to act as
agent for the Company and apply to the Guatemala government on the Company's
behalf for eight mineral exploration licenses covering the following eight:
Guatemala mineral concessions; Los Cipreces; Chiyax, Los Angeles, La Union,
Barranquilla, El Rancho, Jicaro, Monjitas and two mineral reconnaissance
licenses covering the following two Guatemala mineral reconnaissance
concessions: Atitlan and San Diego.
By Agreement dated July 28, 1998 (the Guatemala Agreement July 28, 1998)
stipulate that Minera Motagua S.A. has, agreed to act as agent for the Company
and drop the applications to the Guatemala government for exploration licenses
for the following three mineral concessions; Carmona, el Rejon and El Triunfo
and one reconnaissance concession; Atitlan. Minera Motagua S.A. has applied to
the Guatemala government on the Company's behalf for approval of exploration
licenses for the following six mineral concessions; Aguas Calientes, Apantes,
Valenton 1, La Esperanza, Miramundo and Tesoro.
The sixteen 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 in 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
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documentation available from the colonial period in Central America and the
Ministry of Energy and Mines of the Government of Guatemala.
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 favourable 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 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 favourable geological
environment for mineralization.
San Diego
The San Diego is a mineral reconnaissance concession located in the
Zacapa and Chiquimula province in eastern Guatemala, some 150 kilometres east of
Guatemala City. Due to its reconnaissance status it covers a larger area than an
exploration concession, namely 800 square kilometres. 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.
Monjitas
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The Monjitas concession is located in central Guatemala some 10
kilometres east of Guatemala City. It covers a total area of 20 square
kilometres. 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 kilometres east of Guatemala City. It
covers a area of 90 square kilometres. 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 Barranquilla and 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.
Barranquilla
The Barranquilla concession is located in the El Progreso province in
eastern Guatemala, some 70 kilometres east of Guatemala City. It covers an area
of 96 square kilometres. The Archives of Central America refer to the existence
of an old copper-gold mine 10 kilometres east of the town of Barranquilla, on
the road to Guastatoya. The geology of the concession is very similarly to that
found in the Jicaro concession, which bounds Barranquilla to the east.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 2, 1997.
Los Cipreces
The Los Cipreces concession is located in the Totonicapan province in
western Guatemala, 200 kilometres west of Guatemala City. It covers and area of
56 square kilometres. The Archives of Central America refer to the existence of
a silver and gold mine on the road 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.
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<PAGE> 22
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 kilometres northwest of Guatemala City. It covers an area of
48 square kilometres. 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 Cipreces area due to their
proximity.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997.
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<PAGE> 23
Jicaro
The Jicaro concession is located in the El Progreso province of eastern
Guatemala, some 80 kilometres east of Guatemala City. It covers an area of 90
square kilometres. 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 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 kilometres. 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 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.
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 kilometres. 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.
Aguas Calientes
The Aguas Calientes concession is located in the province of
Sacatepequez in western Guatemala, some 30 kilometres southwest of Guatemala
City. It covers an area of 99 square kilometres. The Aguas Calientes area was
requested based on references obtained at the Archives of Central America.
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<PAGE> 24
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 22, 1997.
Apantes
The Apantes concession is located in the Jutiapa and Jalapa provinces of
eastern Guatemala 130 kilometres east of Guatemala City. It covers an area of 88
square kilometres. The Apantes area was requested based on references obtained
at the Archives in Central America.
The area is located within tertiary volcanic rocks in contact with
several pockets of redbeds.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 9, 1997.
La Esperanza
The La Esperanza mineral exploration concession is located in the Zacapa
province in eastern Guatemala some 115 kilometres east of Guatemala City. It
covers an area of 40 square kilometres. The La Esperanza concession was
requested based on the knowledge of the existence of a large gold bearing quartz
vein system in the area and on its closeness to the San Agustin government
mineral reserve.
The vein system within metamorphic rocks consists of a set of large bulk
quartz veins outcropping in some cases for up to 500 metres with an average
width of 1.5 metres. The quartz veins contain sulfides in the form of galena,
chalcopyrite, pyrite, native copper and some copper oxides. Veins outcrop along
a four-kilometre long area. Some breccia type veins are also found to the east
of the system.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on June 4, 1998.
Miramundo
Miramundo is located in the Jutiapa province in eastern Guatemala some
130 kilometres east of Guatemala City. It covers an area of 45 square
kilometres. The Miramundo area was requested based on reference obtained at the
Archives of Central America.
The area is located on tertiary volcanic terrain.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997.
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<PAGE> 25
Tesoro
The Tesoro concession is located in the Zacapa province in eastern
Guatemala next to the border with Honduras, some 175 kilometres east of
Guatemala City. It covers an area of approximately 50 square kilometres. The
exact area has not been calculated yet since the eastern limit of the concession
is the borderline between Guatemala and Honduras and has an irregular shape.
Geologically it is similar to the La Union and Los Angeles concessions
due to their proximity. The concession is located on tertiary volcanic and
intrusive rocks.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on May 13, 1997.
Valenton 1
The Valenton 1 concession is located in the Guatemala and Baja Verapaz
provinces in central Guatemala 20 kilometres north of Guatemala City. It covers
an area of 25 square kilometres. The Valenton 1 concession was requested based
on historical references obtained at the Archives of Central America .
The concession is located with metamorphic rocks extremely close to the
Motagua Fault system in a zone of great geological complexity, which may control
mineralization.
The mineral exploration concession application was presented to the
Ministry of Energy and Mines on April 30, 1997.
(C) EXPLORATION ACTIVITIES AND ANTICIPATED CAPITAL EXPENDITURES
The Company since August 1997 has been conducting preliminary
exploration work on all of its application concessions. Once the Guatemala
government grants the exploration and reconnaissance licenses, the Company
intends to increase its exploration work on each of the concessions. As of
August 18, 1998, 10 mineral exploration concessions have been granted. The
remaining 5 mineral exploration concessions and 1 mineral reconnaissance
concession expect to be granted by year-end.
The Company has retained the services of John A.A. James, B.Sc., "Mining
Engineer", JAMine, Inc.; Gregory G. Crowe, M.Sc.,P.G.; Jorge Mario Rios Munoz,
B.Sc. ($220 per day); and Roberto Destarac Porres, B.Sc. to evaluate the mineral
and reconnaissance concessions on the Company's behalf. There are no long term
agreements or understandings regarding the continuation of these consulting
relationships and all such arrangements may be terminated by either party
thereto upon one month's prior notice. Messrs. Munoz and Destarac Porres are
compensated at the rate of $220 per day and $3,000 per month respectively. In
addition. Mr. Destarac Porres has received 75,000 options to acquire up to
75,000 shares of the Company's common stock at prices ranging from
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<PAGE> 26
$.01 to $.75 per share. Messrs. James and Crowe received respectively, 150,000
and 50,000 options to acquire shares of the Company's common stock at prices
ranging from $.01 to $.75 per share. Generally, all options terminate 30 days
after the option holder ceases to be a consultant to or an officer or director
of, the Company.
The Company will retain independent mineral consultants on an as when
needed basis.
Consultants and advisors will be employed by the Company based on their
technical expertise, familiarity with the subject matter, ability to speak the
language of the country in which the Company's property interests are located;
knowledge of local mining laws, ordinances and geology.
The Company estimates that approximately $250,000 will be required from
September through December 31, 1999 in order to complete its preliminary
assessment of its properties. The Company does not have sufficient funds on hand
to complete its proposed reconnaissance and assessment program and satisfy its
administrative expenses through December 31, 1998. The Company anticipates
having to raise additional funds by December 31, 1998.
No assurance can be given that such financing will be available when
required by the Company. The amount of funds that may be available to the
Company may be less than that required by the Company and will be affected by
factors, such as general market and economic conditions, that are beyond the
Company's control. The Company has no (1) understandings or agreements with any
person regarding such financing and (2) present intentions to effectuate a
merger or other business combination
Notwithstanding the foregoing, if an appropriate opportunity presents
itself to joint venture the continual exploration and if warranted, the
development of its properties the Company intends to fully explore the viability
of any such opportunities.
(D) OFFICE FACILITIES
There are no long term agreements or commitments with respect to the
Company's offices located at 1505 - 1060 Alberni Street, Vancouver, British
Columbia Canada V6E 4K2. The office is rented on a month-to-month basis at a
cost of $900 per month. The Company is required to give 30 days notice prior
to vacancy.
26
<PAGE> 27
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 September 11, 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 September 11, 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.(1) 2,000,000 18.4%
P.O. Box 209
Providencials,
Turk & Caicos Islands, BWI
Carrington International Limited(1) 650,000 6.0%
Suite 2402
Bank of America Tower
12 Harcourt Road
Central, Hong Kong
Officers and Directors
David E. Jenkins 425,000 *
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 174,000 *
64 West Street
Torrensville, South Australia
Australia, 5031
A. Cameron Richardson 25,000 *
1505-1060 Alberni Street
Vancouver, B.C. Canada V6E 4K2
Officers and Directors (4 persons) 632,333(2) *
</TABLE>
(1) To the best of the Company's knowledge, each of Global Entertech Ltd.
and Carrington International Limited are offshore investment firms. None
of the officers and directors of the Company are affiliated with either
Globe Entertech Ltd. and/or Carrington International Limited.
(2) Includes options to purchase up to 575,000 shares of common stock. See
"Item 5. Executive Compensation."
* Less than 1%.
27
<PAGE> 28
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, & 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 Datalogic Marketing Corporation, a business
consulting firm, specializing in venture capital. Prior to forming Datalogic
Marketing Corporation, Mr. Jenkins served as an investment advisor for Paine
Webber, Inc. and Blythe Eastman Dillon Inc. from 1983 to 1989.
JOHN A.A. JAMES, Vice-President & Director
Mr. James, is a Fellow of the Australasia Institute of Mining and
Metallurgy, a member of the Society for Mining, Metallurgy and Exploration,
Inc. and of the Colorado Mining Association. He is a certified mining engineer.
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
(JAMine, Inc.; JMA Mining Corporation; Mirage Resources Corporation; James Askew
Associates, Inc.; James Askew Associates Pty. Ltd.; Jara Mine Construction).
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.
A. CAMERON RICHARDSON, Secretary and Controller
Mr. Richardson has been employed as Controller of Aurora Gold
Corporation since October 1997. Between 1992 and 1997 Mr. Richardson has held
the following accounting positions with reporting issuers in British Columbia:
Attwood Gold Corporation, Controller, Royalstar Resources Ltd., Controller,
Goldrush Casino and Mining Corporation, Controller. From 1981 to 1992, he was
employed by International Corona Corporation.
28
<PAGE> 29
He holds a bachelor's degree from York University and is a Certified Management
Accountant. Mr. Richardson receives a monthly compensation from the Company in
the amount of Cdn$1,250 per month.
ITEM 6. EXECUTIVE COMPENSATION
GENERAL
The following table sets forth information concerning the compensation
of the named executive officers for each of the registrant's last three
completed fiscal year:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- ----------------------------------------------
Awards Payments
---------------------- -------------------
Securities
Other Under- All
Annual Restricted Lying other
Name And Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonuses sation Award(s) SARs Payouts sation
($) ($) ($) ($) (=) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Jenkins 1998(1) 40,000 -0- -0- None None None -0-
1997 60,000 -0- -0- None None None -0-
1996 60,000 -0- -0- None None None -0-
James A. James 1998(1) -0- -0- -0- None None None -0-
1997 34,713 -0- -0- None None None -0-
1996 -0- -0- -0- None None None -0-
Richard Bullock(2) 1998 -0- -0- -0- None None None -0-
1997 -0- -0- -0- None None None -0-
1996 24,000(3) -0- -0- None None None -0-
A. Cameron Richardson 1998(1) 6,815 -0- -0- None None None -0-
1997 2,000 -0- -0- None None None -0-
1996 -0- -0- -0- None None None -0-
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Through August 31, 1998.
(2) Mr. Bullock resigned as corporate secretary and director of the Company
on April 6, 1998 in order to pursue personal interests. There were no
disagreements between the Company and Mr. Bullock on any matters
pertaining to the Company.
(3) Of this amount 14,879 was payable as of December 31, 1996, which payment
was waived by Mr. Bullock in 1997.
29
<PAGE> 30
OPTIONS/SAR GRANTS TABLE
The following table sets forth information concerning individual grants
of stock options (whether or not in tandem with stock appreciation rights
("SARs")), and freestanding SARs made during the last completed fiscal year to
each of the named executive officers;
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1997(1) AND 1998 FISCAL YEARS
(INDIVIDUAL GRANTS)
==================================================================================================
Percent Of
Number of Total Options/
Securities SARs Granted
Underlying To Employees Exercise Or
Option/SARs In Fiscal Base Price
Name Granted (#) Year ($/Sh) Expiration Date
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David Jenkins 200,000 20.9% $0.01 06/26/03
200,000 20.9% 0.75 09/09/03
John James 100,000 10.5% $0.01 06/25/03
50,000 5.2% 0.75 09/09/03
Cameron Richardson 25,000 2.6% $0.75 09/09/03
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) No options were awarded in 1997.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth information concerning each exercise of
stock options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options and SARs, on an aggregated basis:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
================================================================================================
Number of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Shares Options/SARs Options/SARs
Acquired Value At FY-End($) 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>
30
<PAGE> 31
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:
<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 RIGHTS PERIOD UNIT
(#) MATURATION THRESHOLD TARGET MAXIMUM
NAME (b) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
(a) (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. He receives a monthly salary of
$5,000. It is anticipated that aggregate compensation to all directors and
officers in the fiscal year ending in 1998 will not exceed $71,000. 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,
31
<PAGE> 32
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 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 60,000 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 June 30, 1998 is $667. (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
32
<PAGE> 33
remaining shares will not be able to elect any of the Company's 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 REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER 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
June 30, 1998 2.00 1.00 479,000
September 3, 1998 1.56 0.69 696,000
</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. There are no plans, proposals, arrangements or understandings
with any person or company with regard to the development of a trading market in
any of the Company's securities.
33
<PAGE> 34
On September 11, 1998, the Company had 786 registered stockholders
owning 10,870,387 shares.
On September 11, 1998, the closing price of the Company's Common Stock
as reported on the OTC Bulletin Board was $0.75 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.
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 offshore 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.
34
<PAGE> 35
Except for 950,000 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.
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 favour
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 defence 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
35
<PAGE> 36
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 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 defence of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defence 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, 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
36
<PAGE> 37
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 defences 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.
37
<PAGE> 38
PART III
ITEM 1. INDEX TO EXHIBITS
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.*
3.4 Agreement dated July 28, 1998 between the Company and Minera Motagua
S.A.
3.5 Agreement dated August 24, 1998 with Jorge Mario Rios Munoz.
27.1 Financial Data Schedule*
- ----------
* Previously filed.
38
<PAGE> 39
PART F/S
FINANCIAL STATEMENTS
Aurora Gold Corporation
(Formerly Chefs' Acquisition Corporation)
Audited Financial Statements:
<TABLE>
<S> <C>
Report of Independent Accountants
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):
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>
39
<PAGE> 40
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Post-Effective Amendment No. 1 to the Registration
Statement on Form 10-SB to be signed on its behalf by the undersigned, hereunto
duly authorized.
Date: September 29, 1998
Aurora Gold Corporation
By: /s/ David Jenkins
--------------------
David Jenkins, President
40
<PAGE> 41
================================================================================
AURORA GOLD CORPORATION
- --------------------------------------------------------------------------------
Table of Contents
Report of Independent Accountants
Balance Sheets
Statements of Operations and Accumulated Deficit
Statements of Cash Flows
Summary of Significant Accounting Policies
Notes to Financial Statements
41
<PAGE> 42
================================================================================
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 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.
"BDO DUNWOODY"
Vancouver, British Columbia CHARTERED ACCOUNTANTS
March 6, 1998 (INTERNATIONALLY BDO BINDER)
42
<PAGE> 43
================================================================================
AURORA GOLD CORPORATION
Balance Sheets
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
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:
<PAGE> 44
"David Jenkins" Director "Richard Bullock" Director
- --------------------- ---------------------
43
<PAGE> 45
================================================================================
AURORA GOLD CORPORATION
Statements of Operations and Accumulated Deficit
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
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.
44
<PAGE> 46
================================================================================
AURORA GOLD CORPORATION
Statements of Cash Flows
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
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.
45
<PAGE> 47
================================================================================
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 Non-producing mineral interests are initially
EXPLORATION EXPENDITURES 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.
46
<PAGE> 48
================================================================================
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
December 31, 1997
- --------------------------------------------------------------------------------
MINERAL PROPERTIES AND Exploration activities conducted jointly with others
EXPLORATION EXPENDITURES - are reflected at the Company's proportionate interest
CONTINUED in such activities.
RECLAMATION AND Costs related to site restoration programs are
DECOMMISSIONING COSTS accrued over the life of the project.
TRANSLATION OF The Corporation has adopted the United States dollar
FOREIGN CURRENCIES 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.
47
<PAGE> 49
================================================================================
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
December 31, 1997
- --------------------------------------------------------------------------------
DISCLOSURE ABOUT FAIR VALUE The respective carrying value of certain
OF FINANCIAL INSTRUMENTS 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 In June 1997, the Financial Accounting Standards
PRONOUNCEMENTS 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.
48
<PAGE> 50
================================================================================
AURORA GOLD CORPORATION
Summary of Significant Accounting Policies
(Expressed in U.S. Dollars)
December 31, 1997
- --------------------------------------------------------------------------------
NEW ACCOUNTING In June 1997, the Financial Accounting Standards
PRONOUNCEMENTS Board issued SFAS No. 131, Disclosures about
- - CONTINUED 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.
49
<PAGE> 51
================================================================================
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.
50
<PAGE> 52
================================================================================
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> <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>
51
<PAGE> 53
================================================================================
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.
52
<PAGE> 54
================================================================================
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>
53
<PAGE> 55
================================================================================
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>
54
<PAGE> 56
================================================================================
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.
55
<PAGE> 57
================================================================================
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.
56
<PAGE> 58
================================================================================
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>
<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>
57
<PAGE> 59
================================================================================
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 totaling $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.
58
<PAGE> 60
================================================================================
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:
<PAGE> 61
"David Jenkins" "Richard Bullock"
- ----------------------------- -----------------------------
Director Director
59
<PAGE> 62
================================================================================
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>
60
<PAGE> 63
================================================================================
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>
61
<PAGE> 64
================================================================================
AURORA GOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1998 (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
Share capital
<TABLE>
<CAPTION>
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>
62
<PAGE> 65
================================================================================
AURORA GOLD CORPORATION
Notes to Unaudited Financial Statements
March 31, 1998 (Expressed in U.S. Dollars)
- --------------------------------------------------------------------------------
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
totaling $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.
63
<PAGE> 66
AURORA GOLD CORPORATION
AMENDMENT NO. 1
FORM 10-SB
File No. 024393
INDEX TO EXHIBITS
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 17, 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.*
3.4 Agreement dated July 28, 1998 between the Company and Minera Motagua
S.A.
3.5 Agreement dated August 24, 1998 with Jorge Mario Rios Munoz.
27.1 Financial Data Schedule*
- ----------
* Previously filed.
64
<PAGE> 1
EXHIBIT 3.4
July 28, 1998
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 our verbal agreements regarding the exchange of
four of the original mineral concessions acquired from you and the acquisition
of two additional mineral concessions.
The following four concessions have been dropped: Atlin, Carmona, El Rejon and
El Trunfol.
The following six concessions have been added at no additional cost to Aurora
Gold's existing package of Guatemalan mineral concessions: Auguas Calientes,
Apantes, El Valentoni, La Esperanza, Miramundo and Tesora.
If any of the six newly assigned concessions are in other names than Aurora Gold
S.A., we agree to keep them in those names and accept undertakings from the
person(s) involved.
Yours sincerely,
"David Jenkins"
David Jenkins
President
Accepted and acknowledged by either Roberto Destarac or Roberto Velasquez
This 28th day of July 1998.
"Roberto Velasquez"
Roberto Velasquez
65
<PAGE> 1
EXHIBIT 3.5
[AURORA GOLD CORPORATION LETTERHEAD]
August 24, 1998
Mr. Jorge Mario Rios Munoz,
7 Calle "A" 8-81, #4 Zona 8,
Mixco, San Cristobal,
Guatemala, Guatemala,
Central America.
Dear Jorge Mario,
AURORA GOLD CORPORATION - CONTRACT GEOLOGICAL APPOINTMENT -
TERMS AND CONDITIONS
We are pleased to confirm the Terms and Conditions relating to provision of
contract geological services ("Services") to be provided by you to Aurora Gold
Corporation ("Aurora") and its affiliates.
1. SERVICES
The Services will include the direction and control of field geological
programs for Aurora and its affiliates. More specifically to:
(i) ensure that there is independent geological advice, and opinion,
provided to Aurora for work programs on exploration properties
involving commercial transactions with Minera Motagua S.A. and thus
avoid any conflicts of interest arising from the continued
involvement of that company's principals, Roberto Destarac Porres et
al, in the evaluation of said exploration properties;
(ii) add necessary expertise and provide technical advice to Aurora's
geological team by virtue of your background in exploration
particularly with Guatemala and other Central American countries; and
(iii) expedite the initial work programs on properties for which
applications for exploration concessions are pending, and for those
exploration concessions already granted which have payments falling
due on December 31, 1998.
2. LOCATION
The services will be provided in Guatemala, specifically in the technical
assessment of Reconnaissance Concessions and Exploration Concessions, either
currently held, or for which applications are pending. By mutual agreement,
provision of Services may be extended to assessment of other areas in
Guatemala, or other Central American countries.
66
<PAGE> 2
MR. JORGE MARIO RIOS MUNOZ -2- AUGUST 24, 1998
3. REPORTING
In the main, you will report to J.A.A. James on the progress of the field
programs and other matters relating to Aurora's interests. It will also be
necessary for you to report to Mr. David E. Jenkins, President of Aurora,
from time to time, and liaise with Mr. Oscar Eugenio Rivera Nuila, Aurora's
attorney in Guatemala.
4. REMUNERATION
(i) Remuneration for the Services will be at the rate of two hundred and
twenty dollars (currency of the United States of America) per day.
Expenses incurred by you while carrying out Aurora's business will be
reimbursed.
(ii) An invoice should be submitted to J.A.A. James at the end of each
month. Each invoice should show details of time engaged on Aurora's
work and expenses, with receipts, relating thereto.
(iii) Payment will be made by wire transfer to the bank account, details of
which are to be nominated by you.
(iv) Additional remuneration for Services shall be in the form of options
in Aurora and Mr. David Jenkins will discuss the arrangement with you
directly.
(v) The Services may be terminated by either party giving to the other
not less than one month's notice in writing.
5. CONFIDENTIALITY
A Confidentiality Agreement is appended to these Terms and Conditions and we
ask that you sign both copies, retaining one for your records and returning
the other to the undersigned.
If you have any questions relating to the foregoing Terms and Conditions, please
do not hesitate to contact the undersigned. We look forward to a working
arrangement which is satisfying to you, and which advances Aurora's corporate
objectives.
Yours sincerely,
"John A.A. James"
J.A.A. James
Vice President and Director, Aurora Gold Corporation
67
