UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2000
[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
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 of (IRS Employer
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: 12,873,943 shares of Common Stock
were outstanding as of June 30, 2000.
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
Balance Sheet 3
Statements of Changes in Stockholder's Equity (Deficit) 4-5
Statements of Operations 6
Statement of Cash Flows 7
Summary of Significant Accounting Policies 8-9
Notes to the Financial Statements 10-12
2
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Balance Sheet
(Expressed in U.S. Dollars)
(Unaudited, Prepared by Management) June 30 December 31
2000 1999
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<S> <C> <C>
Assets
Current
Cash and cash equivalents $ 2,767 $ 2,109
Accounts receivable $ 14,463 $ --
--------------------------
17,230 2,109
Plant and equipment, net 28,504 --
Mineral property costs 160,071 148,571
--------------------------
$ 205,805 $ 150,680
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Liabilities and Stockholders' Surplus (Deficiency)
Current
Accounts payable $ 100,941 $ 160,855
Notes payable 267,687 53,228
--------------------------
368,628 214,083
Stockholders' deficiency,
Share Capital
Authorized
50,000,000 common shares, par value $0.001
Issued
12,873,943 (1999 - 11,460,651) common shares 12,874 11,461
Additional paid-in capital 2,954,665 2,484,219
Advances for stock subscriptions -- 425,000
Deficit accumulated during the development stage (3,130,362) (2,984,083)
--------------------------
(162,823) (63,403)
--------------------------
$ 205,805 $ 150,680
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</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
3
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<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Statements of Changes in Stockholder's Equity (Deficit)
(Expressed in U.S. Dollars)
(Unaudited. Prepared by Management)
For the six-months ended June 30, 2000 and the years ended December 31, 1999 and 1998
------------------------------------------------------------------------------------------------------------------------------------
Deficit
Acumulated
Common Stock Additional Advances during the Total
------------------------ Paid-In for Stock development Stockholder's
Shares Amount Capital Subscriptions stage Equity
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<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 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 11,181,492 11,182 2,259,304 -- (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 settlement of
indebtedness - August 1999 141,161 141 88,400 -- -- 88,541
Grant option to consultants
December 1999 -- -- 29,500 -- -- 29,500
Cash advanced on stock
subscriptions -- -- -- 425,000 -- 425,000
Net loss for the period (855,391) (855,391)
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Balance, December 31, 1999 11,460,649 $ 11,461 $ 2,484,219 $ 425,000 $(2,984,083) $ (63,403)
-------------------------------------------------------------------------------------
Issuance of common stock
For cash - March 2000 at
$.500 per share 350,000 350 174,650 (175,000) -- --
For cash - March 2000 at
$.455 per share 550,000 550 249,450 (250,000) -- --
For settlement of --
indebtedness - March 2000 70,000 70 34,930 -- -- 35,000
For settlement of --
indebtedness -April 2000 9,000 9 4,491 -- -- 4,500
For settlement of
indebtedness -April 2000 40,000 40 19,960 20,000
For settlement of
indebtedness -April 2000 80,000 80 39,920 40,000
Cancellation of shares-April 2000 (90,706) (91) (56,600) -- -- (56,691)
Exercise of options - June 2000 405,000 405 3,645 -- -- 4,050
Net loss for the period -- (146,279) (146,279)
-------------------------------------------------------------------------------------
Balance, June 30, 2000 12,873,943 $ 12,874 $ 2,954,665 $ -- $(3,130,362) $ (162,823)
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</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
4
<PAGE>
<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
(Unaudited, Prepared by Management) October 10
1995 Six-months ended
(inception) to June 30
June 30, --------------------------
2000 2000 1999
For the periods ended (cumulative) (Unaudited) (Unaudited)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
General and administrative expenses
Depreciation and amortization $ 23,940 $ 2,078 $ 1,151
Interest, bank charges and foreign exchange 37,044 651 1,927
Administrative and general, net of recoveries 501,030 30,921 (12,272)
Professional fees - accounting and legal 354,437 35,219 4,623
Salaries and consulting fees 767,205 35,021 34,032
---------------------------------------
1,683,656 103,890 29,461
Less interest income 21,694 164 439
---------------------------------------
1,661,962 103,726 29,022
Exploration expenses 1,428,990 42,553 228,912
Write off of mineral property costs 39,410 -- --
---------------------------------------
Net loss for the period $ 3,130,362 $ 146,279 $ 257,934
-----------------------------------------------------------------------------------------
Loss per share
Basis and diluted -- $ 0.01 $ 0.02
-----------------------------------------------------------------------------------------
Weighted average common shares outstanding
Basic and diluted 11,841,341 11,227,605
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</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
5
<PAGE>
<TABLE>
<CAPTION>
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Aurora Gold Corporation
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars) October 10
(Unaudited, Prepared by Management) 1995 Six-months ended
(inception) to June 30
June 30, --------------------------
2000 2000 1999
For the periods ended (cumulative) (unaudited) (unaudited)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided (used) by:
Operating activities
Net loss for the period $(3,130,362) $ (146,279) $ (257,934)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation and amortization 23,940 2,078 1,151
Write off of mineral properties 39,410 -- --
Compensation on stock options 720,500 -- --
Expenses satisfied with common stock 292,200 42,809 108,591
Changes in assets and liabilities
Increase in accounts receivable (14,463) (14,463) (5,590)
Increase(decrease) in accounts payable 100,941 (59,914) 18,638
-----------------------------------------
(1,967,834) (175,769) (135,144)
-----------------------------------------
Investing activities
Purchase of fixed assets (55,382) (30,582) --
Mineral property costs (199,481) (11,500) (29,629)
Proceeds on disposal of fixed assets 14,449 -- --
Incorporation costs (11,511) -- --
-----------------------------------------
(251,925) (42,082) (29,629)
-----------------------------------------
Financing activities
Proceeds from issuance of common stock
and stock subscription receipts 1,954,839 4,050 --
Repayment of notes and advances (300,000) -- (15,000)
Proceeds from notes and advances payable 567,687 214,459 118,862
-----------------------------------------
2,222,526 218,509 103,862
-----------------------------------------
Increase (decrease) in cash for the period 2,767 658 (60,911)
Cash, beginning of period -- 2,109 68,326
-----------------------------------------
Cash, end of period $ 2,767 $ 2,767 $ 7,415
---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
6
<PAGE>
Notes to Interim Consolidated Financial Statements (Unaudited)
Summary of Significant Accounting Policies
Basis of Consolidation
These consolidated financial statements are stated in US dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States and include the accounts of the Company and its wholly-owned
subsidiaries Aurora Gold, S.A., Aurora Metals (BVI) Ltd. and Deltango Gold
Limited. In March 2000 the Company divested its interests in Deltango Gold
Limited. All intercompany transactions and balances have been eliminated.
Mineral Properties and Exploration Expenses
Exploration costs are charged to operations as incurred as are normal
development costs until such time that proven reserves are discovered. At such
time that proven reserves are established, the Company will capitalize all costs
to the extent that future cash flow from mineral reserves equals or exceeds the
costs deferred. At June 30, 2000 and December 31, 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.
Exploration activities conducted jointly with others are reflected at the
Company's proportionate interest in such activities.
Foreign Currency Transactions
Foreign currency accounts are translated into U.S. dollars as follows:
At the transaction date, each asset, liability, revenue and expense is
translated into U.S. dollars by the use of the exchange rate in effect at that
date. At the year-end, monetary assets and liabilities are translated into U.S.
dollars by using the exchange rate in effect at that date. The resulting foreign
exchange gains and losses are included in operations.
Organization Costs
The Company initially capitalized all costs directly incurred in its formation.
To comply with the American Institute of Certified Public Accountants Statement
of Position 98-5 "Reporting on Costs of Start-Up Activities", the remaining
balance was written off to depreciation expense during 1999.
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.
Fair value of Financial Instruments
The respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash and
accounts payable and accrued liabilities. 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.
7
<PAGE>
Income Taxes
The Company follows the provisions of 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 using
the liability method. 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 and liabilities using enacted rates in effect in
the years in which the differences are expected to reverse.
Loss Per Share
Loss per share is computed in accordance with SFAS No. 128, "Earnings Per
Share". Basic loss per share is calculated by dividing the net loss available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in earnings of an entity. In loss periods, dilutive
common equivalent shares are excluded, as the effect would be anti-dilutive.
Basic and diluted earnings per share are the same for the periods presented.
Stock Based Compensation
The Company applies Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations in
accounting for stock option plans. Under APB No. 25, compensation cost is
recognized for stock options granted at prices below the market price of the
underlying common stock on the date of grant.
SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Company to
provide pro-forma information regarding net income as if compensation cost for
the Company's stock option plan had been determined in accordance with the fair
value based method prescribed in SFAS No. 123.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
requires companies to recognize all derivatives contracts as either assets or
liabilities on the balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in income in
the period of change. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000.
Historically, the Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes. Accordingly, the Company does
not expect adoption of the new standards on January 1, 2001 to affect its
financial statements.
Reclassifications
Certain comparative amounts have been restated to conform with the current
period's financial statement presentation.
8
<PAGE>
Notes to the Consolidated Financial Statements
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 location, acquisition, exploration and,
if warranted, development of mineral properties. The Company has not yet
determined whether its properties contain mineral reserves 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 mineral 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. Mineral Properties and Exploration Expenses
<TABLE>
<CAPTION>
Accumulated Accumulated Accumulated
Balance Balance Balance
December 31 December 31 June 30
1998 Additions 1999 Additions 2000
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Property acquisition
Expenditures
Canada - Kumealon $ -- $ 23,630 $ 23,630 $ -- $ 23,630
Guatemala 88,441 15,500 103,941 -- 103,941
Tunisia -- 15,000 15,000 11,500 26,500
United States - Totem Talc 1,000 5,000 6,000 -- 6,000
--------------------------------------------------------------------
89,441 59,130 148,571 11,500 160,071
--------------------------------------------------------------------
Property exploration
expenditures
Canada - Cape Breton 96,186 -- 96,186 -- 96,186
Canada - Kumealon -- 2,286 2,286 910 3,196
Canada - Yukon -- 407,319 407,319 (145,716) 261,603
Guatemala 194,644 53,597 248,241 6,793 255,034
Tunisia -- 93,362 93,362 99,880 193,242
United States - Totem Talc 11,418 39,783 51,201 -- 51,201
Project assessment and
exploration expenditures 397,221 90,621 487,842 80,686 568,528
--------------------------------------------------------------------
699,469 686,968 1,386,437 42,553 1,428,990
--------------------------------------------------------------------
$ 788,910 $ 746,098 $ 1,535,008 $ 54,053 $ 1,589,061
====================================================================
</TABLE>
9
<PAGE>
3. Fixed Assets
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------------------------------------------------
Accumulated Accumulated
Cost Depreciation Cost Depreciation
------------------------------------------------------
<S> <C> <C> <C> <C>
Computer equipment $ 15,125 $ 1,030 $ -- $ --
Office equipment 15,458 1,048 -- --
------------------------------------------------------
30,583 2,078 -- --
------------------------------------------------------
Cost less accumulated depreciation $ 28,504 $ --
======================================================
</TABLE>
4. Organization Costs
June 30, 2000 June 30, 1999
-------------------------------------
Cost $ 11,511 $ 11,511
Less accumulated amortization (11,511) (8,055)
-------------------------------------
$ -- $ 3,456
=====================================
The cumulative effect of the adoption of SOP 98-5 in 1999 resulted in a
write off of $4,607. This amount is included in depreciation and
amortization on the Statement of Operations due to its insignificance.
5. Loans Payable
Loans payable are unsecured, non-interest bearing and due on demand.
6. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial
statements include:
a) Included in accounts payable is $70,900 (1999 - $19,513) due to
directors and a company controlled by a director in respect of
salaries, consulting fees and reimbursement for expenses.
b) During the six month period ended June 30, 2000, salaries and
consulting fees of $90,900 (1999 - $94,840) were paid or are payable
to directors or companies controlled by directors.
c) In January 2000, fixed assets of $15,000 were purchased for their book
value from a director.
Except as otherwise noted, these transactions are recorded at the exchange
amount, being the value established and agreed to by the related parties.
10
<PAGE>
7. Non Cash Investing and Financing Activities
In 2000, the Company settled various debts to a director with the issuance
of shares of common stock as follows:
2000
Conversion
Month of Settlement Indebtedness Price Shares
--------------------------------------------------------------------------
January $ 35,000 $0.50 70,000
------------------ ----------------
$ 35,000 70,000
=================================================
8. Outstanding Options
At June 30, 2000 the Company had 1,100,000 options outstanding.
Number Exercise Price Expiry
-----------------------------------------------------------
100,000 $0.01 June 2003
450,000 $0.75 September 2003
200,000 $0.75 December 2003
50,000 $0.72 March 2004
200,000 $0.69 August 2004
------------------
1,000,000
------------------
On June 2, 2000 405,000 stock options were exercised at $0.01 per share for
gross proceeds of $4,050.
ITEM 2. MANAGEMENT'S' DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(A) General
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.
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 Mineral Reserves. The Company's primary objective is to explore
for gold, silver, base metals and industrial minerals 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 centered in Canada, Guatemala,
Tunisia and the United States of America.
11
<PAGE>
None of the Company's properties contain any known Mineral reserves.
The Company's common stock is traded on the NASD's OTC Bulletin Board.
(B) Significant developments during the first and second quarter of 2000
In January the Company settled $35,000 of debt with the issue of 70,000 common
shares at $0.50 per share.
In February 2000 the Company filed applications for ten (10) additional
exploration permits for zinc-lead mineralization in the Kebbouch district of
northern Tunisia. The permits were filed with and accepted by the Directeur
General L'Office National des Mines. The new permit areas are contiguous with
the Hammala property and will increase the area under Aurora's control to 42
square kilometers. The Hammala property, which Aurora holds under option, and
these additional permit areas in the Kebbouch district, will be foremost in the
Company's exploration plans for 2000.
In March 2000 the Company signed a letter of intent with Billiton UK Resources
B.V. ("Billiton") for funding of exploration on the Hammala property. The letter
of intent will lead to an agreement under which Billiton will make an initial
private placement of $600,000 at a unit price of $0.70. Each unit will comprise
a common share with a purchase warrant exercisable for one year, at $0.85, for
further proceeds of $728,571. After the initial private placement is spent,
Billiton can elect to take a First Option wherein it can earn 51% in the Hammala
property by spending a further $1.0 million over two years.
Following the First Option period, a Joint Venture Phase of further exploration
of the Hammala property, with expenditure of $2.0 million, will be funded pro
rata by Billiton and Aurora. Prior to the end of the Joint Venture Phase,
Billiton can elect to exercise a Second Option to earn a further 19%, i.e., to
reach a total of 70%, by financing all further work, including Pre-feasibility
and Feasibility Studies, engineering, mine development and construction through
to commercial production. Aurora's pro rata share of these costs will be repaid
from Aurora's share of cash flow.
Aurora will be the Operator from the outset and, subject to certain limitations,
will also carry out regional exploration for zinc in Tunisia for Billiton, with
Billiton having a right of first refusal to enter into further exploration
agreements
In April, the March letter of intent between Aurora Gold Corporation and
Billiton UK Resources B.V., which specified that an agreement was to be
completed by April 14, 2000, was revised and the deadline for the agreement was
extended until May 31, 2000. The area for exploration for zinc in the Kebbouch
District in Tunisia, North Africa was also extended and will now include Hammala
and the ten (10) other contiguous exploration permits for which Aurora filed
applications in January 2000 and which were later accepted by the Directeur
General L'Office National des Mines. In June 2000 the Company announced that the
time for the completion of the agreement had been furthered extended until June
30, 2000 and was subsequently further extended to July 31, 2000 and August 31,
2000. The final Agreement is subject to approval by the Board of Directors of
both companies and regulatory authorities.
In March 2000 Aurora divested its interest in four (4) exploration properties in
the Yukon Territory, Canada. The properties are owned by Deltango Gold Limited
("Deltango"), a Yukon registered corporation and former Aurora subsidiary.
Aurora will convert its costs incurred to-date on Deltango's four (4)
exploration properties located in the Yukon Territory Canada into a convertible
debenture. The debenture may be converted into seed shares, or common shares of
Deltango depending on the time of conversion. Concurrently, Deltango has
established plans to raise additional seed capital through the issuance of new
shares to private investors. Subject to meeting certain regulatory requirements,
Deltango will also seek a listing on a Canadian exchange in 2000, providing
liquidity for Aurora's shareholding.
Aurora's decision to relinquish the Yukon gold exploration asset was based, in
part, on the recognition of the Company's recent success with its base metal
exploration activities in Tunisia, and its subsequent announcement of a letter
of intent with Billiton U.K. Resources B.V.
12
<PAGE>
On May 18, 2000, the Board of Directors of Aurora Gold decided to transfer to
Aurora Metals, 100% interest in (6) Exploration Permits in Tunisia, which it
held under option, and 100% interest in the ten (10) Exploration Permits in
Tunisia which were formally granted by publication in the Tunisian Government
Gazette on May 26, 2000, (collectively, the "Tunisian Property"). Aurora Gold
also assigned to Aurora Metals, Aurora Gold's interest in the Letter of Intent
with Billiton UK Resources BV ("Billiton"), signed on February 25, 2000, for the
funding of exploration for zinc on portion of the Tunisian Property. One of the
requirements in the Letter of Intent is that a change of domicile be undertaken
and this will be satisfied on acceptance of Aurora Metals' Registration
Statement by the United States Securities and Exchange Commission ("SEC").
On May 19, 2000 the Board of Directors of Aurora Gold, in order to facilitate
the exploration, development and financing of the Tunisian Property, approved
and authorized a stock dividend payable to the stockholders of Aurora Gold, on a
one to one basis, of the common stock of Aurora Metals. The stock dividend will
be payable to Aurora Gold's stockholders of record as of the close of business
on June 15, 2000. The Company proposes to issue the stock dividend on the
effective date of Aurora Metals' Registration Statement.
On June 19, 2000, Aurora Gold's wholly-owned subsidiary Aurora Metals (BVI) Ltd.
("Aurora Metals"- a company registered in the British Virgin Isles) filed a
Registration Statement, Form 20-F, with the SEC. According to SEC rules the
Registration Statement will become effective sixty days after filing (August 19,
2000) and Aurora Metals will become a reporting foreign issuer.
(C) Financial Information
Six Months Ended June 30, 2000 versus Six Months Ended June 30, 1999
For the six months ended June 30, 2000 the Company recorded a loss of $146,279
or $0.01 per share, compared to a loss of $257,934 or $0.02 per share in 1999.
General and administrative expenses - For the six months ended June 30, 2000 the
Company recorded general and administrative expenses of $30,921 compared to a
credit of $12,272 in 1999. The 1999 credit is due to the allocation and recovery
of 1998 administrative costs from four other junior resource companies.
Professional fees - accounting and legal - For the six months ended June 30,
2000 the Company recorded legal fees of $25,192, compared to $4,623 in 1999.
$17,320 of the $25,192 legal fees relate to Tunisia and the establishment of
Aurora Metals (BVI) Ltd. For the six months ended June 30, 2000 the Company
recorded accounting fees of $10,027 compared to $0 in 1999. The accounting fees
related to the additional costs for the December 31, 1999 audit of Aurora Gold
and the March 31, 2000 audit of its wholly owned subsidiary Aurora Metals (BVI)
Ltd.
Exploration expenditures - For the six months ended June 30, 2000 the Company
recorded exploration expenses of $42,553, compared to $228,912 in 1999. The
following is a breakdown of the exploration expenses by property: - Canada,
Kumealon property $910 (1999 - $2,286), Canada - Yukon properties Credit
$145,716 (1999 - $81,802) Guatemala $6,793 (1999 - $54,714), Tunisia $99,880
(1999 - $19,878), United States, Totem Talc property $0 (1999 - 37,383), and
Project assessment and exploration expenditures of $80,686 (1999 - 32,849). In
March 2000 Aurora divested its interest in four (4) exploration properties in
the Yukon Territory, Canada owned by Deltango Gold Limited. $72,702 in payables
relating to the Yukon properties was transferred to Deltango Gold Limited in
March 2000. Aurora will convert its USD $261,603 in costs incurred to-date on
Deltango's four (4) exploration properties located in the Yukon Territory Canada
into a convertible debenture. The debenture may be converted into seed shares,
or common shares of Deltango depending on the time of conversion.
(D) Financial Condition and liquidity
At June 30, 2000, the Company had cash of $2,767 (1999 - $7,415) and
working capital deficiency of $351,398 (1999 working capital deficiency -
$130,0759) respectively. Total liabilities as of June 30, 2000 were $368,628 as
compared to $143,080 on June 30, 1999, an increase of $225,548. During 2000
financing activities consisted of the following, proceeds from notes and
advances payable $214,459 (1999 - $118,862). In Fiscal 2000
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investing activities consisted of additions to mineral properties $11,500 (1999
- $29,629) and additions to fixed assets $30,582 (1999 - $0). For the six months
ended June 2000 the Company recorded a loss of $146,279, or $0.01 per share,
compared to a loss of $257,934 ($0.02 per share) in 1999.
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 "Year 2000 problem", passed without incident at any of the Company's
properties.
The Year 2000 (YK2) issue is the result of computerized systems using two
digits rather than four digits to identify an applicable year. Date-sensitive
systems may recognize a date using "00" as the year 1900 rather that the year
2000. This could result in a system failure or miscalculation causing disruption
to business operations. In 1999, the Company completed a review of its
computer-based information systems and, where needed, Y2K compliant upgrades for
the Company's core financial systems were installed and tested. To date, no Y2K
problems have been encountered by the Company or the Company's vendors or others
with whom it transacts business and none are expected. The Company's management
and operations staff will again monitor critical operations during the December
31, 2000 - January 1, 2001 Y2K rollover dates.
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
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The Company held its Annual General Meeting on May 8, 2000. At the
meeting two shareholders holding 268,975 shares were present in person
and 125 shareholders holding 6,665,743 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 Moore Stephens, P.C. as independent
accountants for the Company.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Certificate of Incorporation*
3.2 Certificate of Amendment to the Certificate of Incorporation*
3.3 Certificate of Restoration and Renewal of Certificate of
Incorporation*
3.4 Amended and Restated By-laws*
10.1 Agreement dated July 18, 1997 between The Company and Minera Motagua,
S.A.*
10.2 Agreement dated August 16, 1997 between the Company and Minera
Motagua, S.A.*
10.3 Agreement dated November 3, 1997 between the Company and Minera
Motagua, S.A.*
10.4 Agreement dated July 28, 1998 between the Company and Minera Motagua,
S.A.*
10.5 Agreement dated August 24, 1998 with Jorge Mario Rios Munoz. *
10.6 Agreement dated November 18, 1998 between the Company and United
Catalyst, Inc. and Getchell Gold Corporation. *
10.7 Agreement dated February 23, 1999 between the Company and Gregory G.
Crowe. *
10.8 Option Agreements dated as shown between the Company and High Marsh
Holdings Ltd. *
10.8.1 Hamman Zriba/Jebel Guebli October 15, 1999 *
10.8.2 Koudiat Sidii October 15, 1999 *
10.8.3 Ouled Moussa (bou Jabeur Est) October 15, 1999 *
10.8.4 Hammala January 20, 2000 *
10.8.5 El Mohguer (Garn Halfaya) January 20, 2000 *
10.8.6 Jebel Oum Edeboua (Garn Halfaya) January 20, 2000 *
10.9 Joint Venture Agreement between the Company and Patagonia Gold
Corporation *
10.10 Letter of Intent between the Company and Billiton UK Resources B.V. *
27.1 Financial Data Schedule
--------
* Previously Filed
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(b) Reports on Form 8-K
1. Change in registrant's certifying accountants (filed May 16, 2000) *
2. Disposition of assets (filed June 2, 2000) *
--------
* Previously Filed
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: August 11, 2000 BY: /s/ David Jenkins
--------------- ---------------------------
David Jenkins
Director and President
Date: August 11, 2000 BY: /s/ John A.A. James
--------------- ---------------------------
John A.A. James
Director and Vice-President
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