UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _ _ _ _ _ _ _ _ _ _ to _ _ _ _ _ _ _ _ _ _
Commission file number 0-24393
AURORA GOLD CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 13-3945947
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1505 - 1060 ALBERNI STREET, VANCOUVER B.C. CANADA V6E 4K2
(Address of principal executive offices)
(604) 687-4432
(Issuer's Telephone Number)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check, whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 11740,641 shares of Common Stock were
outstanding as of September 30, 1999.
Transitional Small Business Disclosure Format (check one);
YES [ ] NO [X]
<PAGE>
AURORA GOLD CORPORATION
This quarterly report contains statements that plan for or anticipate the
future and are not historical facts. In this Report these forward looking
statements are generally identified by words such as "anticipate", "plan",
"believe", "expect", "estimate", and the like. Because forward looking
statements involve future risks and uncertainties, these are factors that could
cause actual results to differ materially from the estimated results. These
risks and uncertainties are detailed in Part 1 - Financial Information - Item 1.
"Financial Statements", Item 2. "Management's Discussion and Analysis or Plan of
Operation".
The Private Securities Litigation Reform Act of 1995, which provides a "safe
harbor" for such statements, may not apply to this Report.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAGE
----
Consolidated Balance Sheet 3
Consolidated Statements of Stockholder's Equity 4
Consolidated Statements of Operations 5
Consolidated Statement of Cash Flows 6
Consolidated Statements of Mineral Properties 7
Notes to Financial Statements 8-10
2
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Balance Sheet (unaudited)
(Expressed in U.S. Dollars)
September 30, December 31,
1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash and cash equivalents $ 14,972 $ 68,326
Non-trade accounts receivable -- --
--------------------------
14,972 68,326
Fixed assets -- --
Notes receivable 20,000 20,000
Mineral property costs 113,820 69,441
Organizational costs 2,880 4,607
--------------------------
$ 151,672 $ 162,374
- ----------------------------------------------------------------------------------------
Liabilities and Stockholders' Surplus (Deficiency)
Current
Accounts payable $ 15,134 $ 20,580
Notes payable 192,023 --
--------------------------
207,157 20,580
Stockholders' deficiency,
Share Capital
Authorized
50,000,000 common shares, par value $0.001
Issued
11,740,641 (1998 - 11,181,494) common shares 11,740 11,181
Additional paid-in capital 2,629,440 2,259,305
Deficit accumulated during the development stage (2,696,665) (2,128,692)
--------------------------
(55,485) 141,794
--------------------------
$ 151,672 $ 162,374
- ----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Approved on behalf of the Board:
/s/ DAVID JENKINS (Director) /s/ JOHN A.A. JAMES (Director)
- ------------------------------- --------------------------------
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Statements of Stockholder's Equity
(Expressed in U.S. Dollars)
(Unaudited)
For the period ended September 30, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Deficit
Acumulated
Common Stock Additional during the Total
-------------------------------- Paid-In development Stockholder's
Shares Amount Capital stage Equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1997 9,920,389 $ 9,920 $ 344,461 $ (361,208) $ (6,827)
Issuance of common stock
For cash in March 1997 at
$1.00 per share (less issue
costs of $4,842) 750,000 750 744,408 -- 745,158
Net loss for the year (615,880) (615,880)
-------------------------------------------------------------------------------
Balance, December 31, 1997 10,670,389 10,670 1,088,869 (977,088) 122,451
Issuance of common stock
For cash in May 1998 at
$1.25 per share 200,000 200 249,800 -- 250,000
For cash in November 1998 at
$0.698 per share 71,667 72 53,676 -- 53,748
For settlement of
indebtedness - November 1998 54,100 54 37,142 -- 37,196
For cash in December 1998 at
$0.750 per share 143,333 143 107,357 -- 107,500
For settlement of
indebtedness - December 1998 42,005 42 31,461 -- 31,503
Grant of options to employees
and directors -- -- 518,900 -- 518,900
Grant of options to Consultants -- -- 172,100 -- 172,100
Net loss for the year (1,151,604) (1,151,604)
-------------------------------------------------------------------------------
Balance, December 31, 1998 11,181,494 11,181 2,259,305 (2,128,692) 141,794
Issuance of common stock
For settlement of
indebtedness - January 1999 50,000 50 42,140 -- 42,190
For settlement of
indebtedness - February 1999 8,615 9 6,991 -- 7,000
For finders fee - February 1999 25,000 25 20,287 -- 20,312
For cash - March 1999 at
$0.656 per share 22,871 23 14,977 -- 15,000
For settlement of
indebtedness - March 1999 31,510 31 22,620 -- 22,651
For cash in August 1999 at
$0.625 per share 280,000 280 174,720 -- 175,000
For settlement of
indebtedness - August 1999 141,161 141 88,400 -- 88,541
Net loss for the period (567,973) (567,973)
-------------------------------------------------------------------------------
11,740,651 $ 11,740 $ 2,629,440 $ (2,696,665) $ (55,485)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
October 10
1995 Nine-months ended
(inception) to September 30,
September 30, -------------------------
1999 1999 1998
For the periods ended (cumulative) (Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses
Accounting and legal $ 184,567 $ 17,667 $ 28,755
Administrative and general 441,918 16,654 80,911
Amortization and depreciation 18,982 1,727 6,112
Exploration 989,092 472,350 47,887
Interest and bank charges 36,219 16,295 4,200
Salaries and consulting fees 316,924 43,867 68,994
Stock option compensation 691,000 -- --
--------------------------------------------------------------
2,678,702 568,560 236,859
Less interest income 21,447 587 2,634
--------------------------------------------------------------
2,657,255 567,973 234,225
Write off of mineral property costs 39,410 -- --
--------------------------------------------------------------
Net loss for the period $ 2,696,665 $ 567,973 $ 234,225
- ------------------------------------------------------------------------------------
Loss per share
Basis and diluted $ 0.05 $ 0.02
- ------------------------------------------------------------------------------------
Weighted average common shares outstanding
Basic and diluted 11,229,522 10,774,065
- ------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars) October 10
1995 Nine-months ended
(inception) to September 30,
September 30, --------------------------------
1999 1999 1998
For the periods ended (cumulative) (Unaudited) (Unaudited)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided (used) by:
Cash flows from operating activities
Net loss for the period $(2,696,665) $ (567,973) $ (234,225)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation and amortization 18,982 1,727 6,112
Write off of mineral properties 39,410 -- --
Compensation on stock options 691,000 -- --
Expenses satisfied with common stock 240,329 160,382 --
Changes in assets and liabilities
Decrease (increase) in accounts receivable -- -- (7,674)
Increase(decrease) in accounts payable 15,134 (5,446) (35,108)
---------------------------------------------------
(1,691,810) (411,310) (270,895)
---------------------------------------------------
Investing activities
Purchase of fixed assets (24,800) -- --
Mineral property costs (153,230) (44,379) (152,736)
Notes receivable (20,000) -- --
Proceeds on disposal of fixed assets 14,449 -- 14,449
Incorporation costs (11,511) -- --
---------------------------------------------------
(195,092) (44,379) (138,287)
---------------------------------------------------
Financing activities
Proceeds from issuance of common stock 1,539,539 190,000 250,000
Issuance of common stock for debt (50,000) -- 37,196
Issuance of common stock for finders fee 20,312 20,312 --
Proceeds from notes and advances payable 392,023 192,023 --
---------------------------------------------------
1,901,874 402,335 287,196
---------------------------------------------------
Increase (decrease) in cash for the period 14,972 (53,354) (121,986)
Cash, beginning of period -- 68,326 122,921
---------------------------------------------------
Cash, end of period $ 14,972 $ 14,972 $ 935
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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- ----------------------------------
Aurora Gold Corporation
Consolidated Statements of Mineral Properties
- - Acquisition and Exploration Expenses
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
October 10
1995
(inception) to
Additions Additions Write-off Additions Additions September 30,
Jan - Dec Jan - Dec Jan - Dec Jan - Dec Jan - Sep 1999
1996 1997 1997 1998 1999 (cumulative)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property acquisition expenditures
Canada - Cape Breton $ 14,600 $ -- $ (14,600) $ -- $ -- $ --
Canada - Kumealon (Limestone) -- -- -- -- 23,629 23,629
Canada - Northwest Territories 21,810 -- (21,810) -- -- --
Canada - Yukon -- -- -- -- -- --
Guatemala -- 30,499 -- 37,942 15,750 84,191
Tunisia -- -- -- -- -- --
United States - Totem Talc - -- -- 1,000 5,000 6,000
-----------------------------------------------------------------------------
$ 36,410 $ 30,499 $ (36,410) $ 38,942 $ 44,379 $ 113,820
-----------------------------------------------------------------------------
Property exploration expenditures
Canada - Cape Breton $ 3,000 $ 96,186 $ (3,000) $ -- $ -- $ 96,186
Canada - Kumealon (Limestone)- -- -- -- 2,286 2,286
Canada - Northwest Territories -- -- -- -- -- --
Canada - Yukon -- -- -- -- 325,725 325,725
Guatemala -- 45,900 -- 148,744 58,247 252,891
Tunisia -- -- -- -- 34,580 34,580
United States - Totem Talc -- -- -- 11,418 31,883 43,301
General exploration expenditures 93,751 73,429 -- 47,314 19,629 234,123
-----------------------------------------------------------------------------
$ 96,751 $ 215,515 $ (3,000) $ 207,476 $ 472,350 $ 989,092
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Total mineral property costs $ 133,161 $ 246,014 $ (39,410) $ 246,418 $ 516,729 $1,102,912
-----------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Notes to Interim Consolidated Financial Statements (Unaudited)
Basis of Presentation
In the opinion of management, the accompanying interim financial statements
contain all material adjustments consisting only of normal recurring adjustments
necessary to present fairly the financial position, the results of operations
and cash flows of the Company and its consolidated subsidiaries for the interim
period. Users of the financial information produced for the interim periods are
encouraged to refer to the footnotes contained in the Annual Report on Form
10-KSB when reviewing interim financial results.
These consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries Aurora Gold, S.A. and Aurora Gold (BVI) Ltd.
All intercompany transactions and balances have been eliminated.
Exploration costs are charged to operations as incurred as are normal
development costs until such time that proven reserves are discovered. At
September 30, 1999 and 1998, the Company did not have proven mineral reserves.
Costs of initial acquisition of mineral rights and concessions are capitalized
until the properties are abandoned or the right expires.
1. Nature of Business and Going Concern
The Company was formed on October 10, 1995 under the laws of the State of
Delaware and is in the business of exploration and development of mineral
properties. The Company has not yet determined whether its properties
contain mineral resources that may be economically recoverable.
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 general business
strategy of the Company is to acquire mineral properties either directly or
through the acquisition of operating entities. The continued operations of
the Company and the recoverability of mineral property costs is dependent
upon the existence of economically recoverable reserves, confirmation of
the Company's interest in the underlying mineral claims, the ability of the
Company to obtain necessary financing to complete the development and upon
future profitable production. The Company has incurred recurring operating
losses and 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 conditions 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>
September 30, 1999 September 30, 1998
-----------------------------------------------------
Accumulated Accumulated
Cost Depreciation Cost Depreciation
-----------------------------------------------------
<S> <C> <C> <C> <C>
Furniture $ -- $ -- $ 5,229 $ 873
Computer equipment -- -- 11,554 7,584
Office equipment -- -- 8,017 1,894
-----------------------------------------------------
-- -- 24,800 10,351
-----------------------------------------------------
Cost less accumulated
depreciation $ -- $14,449
=====================================================
</TABLE>
8
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3. Organization Costs
September 30, 1999 September 30, 1998
Cost $11,511 $11,511
Less accumulated amortization 8,631 6,501
------------------------------------------
$ 2,880 $ 5,010
==========================================
4. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial
statements include:
a) Included in accounts payable is $0 (September 30, 1998 - $2,279) due
to directors and a company controlled by a director in respect of
salaries, consulting fees and reimbursement for operating expenses.
b) During the nine month period ended September 30, 1999, consulting
fees, salaries and wages of $113,190 (September 30, 1998 - $51,538)
were paid or are payable to directors or companies controlled by
directors.
5. Non Cash Investing and Financing Activities
Amounts owing to a director of $42,190 were settled in January 1999 with
the issuance of 50,000 common shares. In February accounts payable of
$7,000 were settled with the issuance of 8,615. In February, a finder's fee
of $20,312 was settled with the issue of 25,000 shares of common stock. In
March, amounts owing to a director of $22,650 were settled with the
issuance of 31,510 shares. In August accounts payable of $61,691 were
settled with the issuance of 26,201. In August, amounts owing to a director
of $13,350 were settled with the issuance of 21,329 shares. The conversion
of indebtedness was done at the following prices:
Conversion
Indebtedness Price Shares
-------------------- ------------------ ------------------
$ 42,190 $0.84 50,000
7,000 $0.81 8,615
20,312 $0.81 25,000
22,650 $0.72 31,510
15,000 $0.62 24,000
70,042 $0.62 112,066
3,500 $0.69 5,095
-------------------- ------------------
$180,694 256,286
==========================================================
The carrying value of the indebtedness approximated the fair value of the
common shares issued.
9
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6. Outstanding Options
At September 30, 1999, the Company had 1,530,000 options outstanding which
are exercisable between $0.01 and $0.75 per common share at varying dates
through 2004.
ITEM 2. MANAGEMENT'S' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. General
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.
Since commencement of its exploration operations in 1996, the Company has
undertaken a review of potential world mining properties with the objective of
acquisitions, exploration and development.
In addition to British Columbia and the Yukon Territories in Canada,
Guatemala in Central America, Tunisia in North Africa, and Washington State in
the U.S.A., other primary regions under investigation by the Company include
Argentina, Egypt, Mexico, West Africa and South Africa and elsewhere in both
Canada and the U.S.A.
The management of the Company has developed the following exploration
objectives, viz: 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 Mineral Reserves.
B. Exploration
1. British Columbia, Canada
In February 1999, the Company acquired, by staking, a high grade limestone
property six (6) square kilometers (741 acres) located on the north shore
of Kumealon Inlet, 54 kilometers south-southeast of Prince Rupert, B.C.
Canada.
The Company's plans for a complete geological investigation in connection
with an extensive bedrock-sampling program have been deferred until 2000.
2. Yukon Territories, Canada
In May and June, - 1999 the Company acquired by staking, 100% interest in
five gold exploration properties covering approximately 240 square
kilometers, in the Yukon's Tintina Gold Belt. The primary interest lies
between the Tintina Fault to the north and the Denali Fault to the south
and defining a broad arc through central Alaska and the Yukon.
The Company compiled geochemical, geophysical and Yukon Minifile
information in a computer-based Graphical Information System. With these
data the Company identified a large number of gold targets within the
Yukon's Tintina Gold Belt. In the period from July
10
<PAGE>
through September, 1999 the Company conducted field programs involving soil
and stream sediment geochemical sampling and geological mapping.
The results of the field work will be assessed in the last quarter of 1999
allowing decisions to be made with regard to the next phases of field work
to be conducted in 2000, and any associated increases, or decreases, to the
areas of exploration.
3. Guatemala, Central America
During fiscal 1998 and the first quarter of fiscal 1999, the Company
carried out programs of geological reconnaissance, sampling of rock
outcrops and sampling of stream sediments, on ten (10) mineral exploration
concession licenses. In addition, similar programs were completed on five
(5) properties for which applications for mineral exploration concession
licenses were pending. As a consequence of the results of these programs,
it was decided to surrender six (6) mineral exploration concession licenses
and withdraw four (4) applications. The Company was subsequently granted a
mineral exploration licence at La Esperanza, the fifth property for which
an application had been filed.
With La Esperanza, the Company now holds (5) mineral exploration concession
licenses, the others being known as Aguas Calientes, Apantes, Jicaro and
Valenton 1: and one(1) mineral reconnaissance license covering 800 square
kilometers, known as San Diego.
During the balance of 1999 and early 2000, the Company will concentrate on
initial evaluation of the San Diego mineral reconnaissance concession which
will involve archival and other research to identify prospective areas for
subsequent field mapping; and, sampling of outcrops, soils and stream
sediments.
4. Tunisia, North Africa
The Company reviewed an extensive collection of data prepared by the Office
National des Mines ("ONM") of Tunisia which included historical production,
detailed geological mapping, geochemistry, geophysics and in many cases,
drill hole data, to outline areas of interest. Based on its analysis the
Company entered into five (5) option agreements with High Marsh Holdings
Ltd. ("High Marsh") in July, 1999, to acquire 100% interest in five
properties, considered highly prospective for discovery of predominantly
zinc-bearing deposits, similar to those currently being exploited in
Tunisia.
The properties are located within, or near the `Zone des Domes" district, a
southwest to northeast striking belt of Triassic salt-domes and diapirs
intruded into Cretaceous carbonates, located in northern Tunisia. The zone
is approximately 250 kilometers long and 80 kilometers wide. Nearly all of
the historic lead/zinc producers, and three currently producing lead/zinc
mines are located in the Zone des Domes district.
The exploration targets are replacement-type deposits of galena (lead
sulfide, PbS) and sphalerite (zinc sulfide ZnS), accompanied by barite and
fluorite. The geological setting is similar to `Mississippi Valley Type'
lead/zinc deposits occurring in the U.S.A., but the Tunisian deposits tend
to have appreciably higher zinc grades. The five exploration permits
(Permis de Recherche des Mines) under option have been formally awarded to
High Marsh by the Director General of Mines for Tunisia (Le Directeur
General des Mines).
In the quarter ended September 30, 1999, the Company has continued with its
technical investigations in Tunisia and is preparing budgets and schedules
for exploration programs to commence in 2000.
11
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5. Washington State, U.S.A.
The Totem Talc property, located near Metalline Falls, Pend Oreille County,
Washington, consists of ten unpatented lode claims, covering approximately
206 acres, and is held under option by Aurora in an agreement with the
joint venture owners, United Catalysts Inc. and Getchell Gold Corporation.
The Company has considered strategies for advancing the development of the
property based on the conclusions and recommendations in the report
provided by the international firm of consultants responsible for the
re-estimation of the Mineral Resources. A decision on the next phase of
work is expected to be made by the end of 1999.
C. Financial Information
Nine Months Ended September 30, 1999 versus Nine Months Ended September 30, 1998
Net loss for the nine months ended September 30, 1999 was $567,973 compared
to a loss of $234,225 for the nine months ended September 30, 1998. The increase
in the current period net loss is the result of (1) increased exploration
expenditures of $424,463 to $472,350 (September 30, 1998 - $47,887); (2)
decrease in accounting and legal expenses of $26,988 to $17,667 (September 30,
1998 - $28,755); (3) decrease in administrative and general expenses of $64,257
to $16,654 (September 30, 1998, - $80,911); (4) decrease in salaries and
consulting expenses of $$25,127 to $43,867 (September 30, 1998 - $68,994).
D. Financial Condition
At September 30, 1999, the Company had cash and cash equivalents of $14,972
(September 30, 1998 - $20,935) and a working capital deficiency of $192,185
(working capital deficiency September 30, 1998 - $12,823) respectively. Total
liabilities as of September 30, 1999 were $207,157 (September 30, 1998 -
$33,758), an increase of $173,399. During the nine months ended September 30,
1999 investing activities consisted of additions to mineral properties $44,379
(1998 - $152,736). Net loss for the nine months ended September 30, 1999
increased $33,748 to $567,973 (Loss September 30, 1998 - $234,225).
The Company does not have sufficient working capital to (i) pay its
administrative and general operating expenses through December 31, 2000 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. The Company has no
agreements or understandings with any person as to such additional financing.
None of the Company's properties has commenced commercial production and
the Company has no history of earnings or cash flow from its operations. 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.
E. Year 2000 Issues
The company utilizes software and related technologies in its business
that will be affected by the "Year 2000 computer problem", which is common
to many corporations and
12
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governmental entities. This problem concerns the inability of information
systems, primarily computer software programs and certain hardware, to
properly recognize and process date-sensitive information as the Year 2000
approaches. Absent corrective actions, computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900
rather than 2000. This could result in system failure or miscalculation
causing disruptions to various activities and organizations.
The Company has modified and tested all the critical applications
along with all non-critical applications of its information technology
("IT"), the result of which is that all such applications have been either
modified or replaced and are now Year 2000 compliant. The Company used an
independent consultant to oversee the Year 2000 project as well, as to
perform certain remediation efforts. In-addition, progress on the Year 2000
project is also monitored by senior management, and reported to the Board
of Directors. The total amount of the payments made to-date and to be made
hereafter to such independent consultant are not 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. Contingency plans are being
developed for all major components in case of system failures surrounding
the Year 2000. 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.
The Company has identified critical suppliers, as well as other
essential service providers, and has surveyed their Year 2000 compliancy.
Based on expected compliance dates expressed by some of these critical
suppliers and other service providers, additional follow-up will be
required to fully assess their state of readiness for the Year 2000. These
follow-up activities will occur throughout 1999. For other suppliers and
service providers, risk assessments and contingency plans, where necessary
were developed. The Company has taken the above steps to address issues
surrounding suppliers and service providers; however the Company has no
direct ability to influence other parties' compliance actions. The Company
believes it has taken the necessary actions to mitigate the effect of the
Year 2000 risks, 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 effect 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's
operating results and financial condition.
The Company's most likely potential risk is a temporary inability of
third party assay labs to correctly assay the mineral content of the rock
and soil samples sent to them for analysis. The Company has prepared a list
of alternative labs to use should the assay lab currently used not be able
to correctly assay the material.
Contingency plans for the Year 2000 related business interruption are
being developed and are expected to be completed by mid November 1999 and
will include, but not be limited to, the development of emergency backup
recovery procedures, replacing automated processes with manual processes
and identification of alternative suppliers. The Company's Year 2000
efforts are ongoing and its overall plan, as well as the consideration of
contingency plans, will continue to evolve as new information becomes
available. While the Company is taking steps it believes to be necessary to
prevent any major interruption to its business activities that will depend
in part, upon the ability of third parties to be Year 2000 compliant.
13
<PAGE>
PART 11. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not party to any litigation, and has no knowledge of
any pending or threatened litigation against it.
ITEM 2. Changes in Securities
Not Applicable
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual General Meeting on September 30, 1999. At
the meeting two shareholders holding 141,667 shares were present in
person and 98 shareholders holding 6,500,311 were represented by
proxy.
At the meeting unanimous approval by a show of hands was given in
respect to:
1. The election of Messrs. Antonino G. Cacace, John A.A. James,
David Jenkins, Richard O'C Whittall as directors of the Company,
and
2. The appointment of BDO Dunwoody as auditors of the Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
Date: November 15, 1999 BY: /s/ David Jenkins
----------------- -----------------
David Jenkins
Director and President
Date: November 15, 1999 BY: /s/ John A.A. James
----------------- -------------------
John A.A. James
Director and Vice-President
15
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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0
0
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