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 September 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 incorporation (IRS Employer Identification No.)
or organization)
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 September 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.
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -- 3
September 30, 2000 and December 31, 1999
Consolidated Statements of Operations -- 4
Nine-Months Ended September 30, 2000
Consolidated Statements of Cash Flows -- 5
Nine-Months Ended September 30, 2000
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to A Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
2
<PAGE>
Aurora Gold Corporation
Consolidated Balance Sheet
(Expressed in U.S. Dollars)
(Unaudited, Prepared by Management)
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
----------- -----------
<S> <C> <C>
Assets
Current
Cash and cash equivalents $ 4,537 $ 2,109
Accounts receivable 300 --
----------- -----------
4,837 2,109
Plant and equipment, net 27,250 --
Mineral property costs 160,071 148,571
----------- -----------
$ 192,158 $ 150,680
----------- -----------
Liabilities and Stockholders' Surplus (Deficiency)
Current
Accounts payable $ 252,999 $ 160,855
Notes payable 339,103 53,228
----------- -----------
592,102 214,083
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 (3,367,483) (2,984,083)
----------- -----------
(399,944) (63,403)
----------- -----------
$ 192,158 $ 150,680
----------- -----------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
3
<PAGE>
Aurora Gold Corporation
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
(Unaudited, Prepared by Management)
<TABLE>
<CAPTION>
October 10
1995 Nine-months ended
(inception) to September 30
September 30, --------------------------
2000 2000 1999
For the periods ended (cumulative) (Unaudited) (Unaudited)
------------- ---------- -----------
<S> <C> <C> <C>
General and administrative expenses
Depreciation and amortization $ 25,195 $ 3,333 $ 1,727
Interest, bank charges and foreign exchange 37,199 806 16,295
Administrative and general, net of recoveries 597,667 127,558 16,654
Professional fees - accounting and legal 370,241 51,023 17,667
Salaries and consulting fees 875,673 143,489 43,867
---------- -------- ---------
1,905,975 326,209 96,210
Less interest income 21,848 318 587
---------- -------- ---------
1,884,127 325,891 95,623
Exploration expenses 1,443,946 57,509 472,350
Write off of mineral property costs 39,410 -- --
---------- -------- ---------
Net loss for the period $3,367,483 $383,400 $ 567,973
---------- -------- ---------
Loss per share
Basis and diluted $ 0.03 $ 0.05
-------- ---------
Weighted average common shares outstanding
Basic and diluted 11,956,962 11,229,522
---------- ----------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
4
<PAGE>
Aurora Gold Corporation
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited, Prepared by Management)
<TABLE>
<CAPTION>
October 10
1995 Nine-months ended
(inception) to September 30
September 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 $(3,367,483) $(383,400) $(567,973)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 25,195 3,333 1,727
Write off of mineral properties 39,410 -- --
Compensation on stock options 720,500 -- --
Expenses satisfied with common stock 292,200 42,809 180,694
Changes in assets and liabilities
Increase in accounts receivable (300) (300) --
Increase (decrease) in accounts payable 252,999 92,144 (5,446)
----------- --------- ---------
(2,037,479) (245,414) (390,998)
----------- --------- ---------
Investing activities
Purchase of fixed assets (55,383) (30,583) --
Mineral property costs (199,481) (11,500) (44,379)
Proceeds on disposal of fixed assets 14,449 -- --
Incorporation costs (11,511) -- --
----------- --------- ---------
(251,926) (42,083) (44,379)
----------- --------- ---------
Financing activities
Proceeds from issuance of common stock
and stock subscription receipts 1,954,839 4,050 190,000
Repayment of notes and advances (300,000) -- --
Proceeds from notes and advances payable 639,103 285,875 192,023
----------- --------- ---------
2,293,942 289,925 382,023
----------- --------- ---------
Increase (decrease) in cash for the period 4,537 2,428 (53,354)
Cash, beginning of period -- 2,109 68,326
----------- --------- ---------
Cash, end of period $ 4,537 $ 4,537 $ 14,972
----------- --------- ---------
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements
5
<PAGE>
Notes to Interim Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited, condensed, consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions for Form 10-QSB and Item 310 (b) of Regulation S-B and include
the accounts of the Company and its wholly-owned subsidiaries Aurora Gold,
S.A., Aurora Metals (BVI) Ltd. and Deltango Gold Limited. Accordingly, they
do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. All
intercompany transactions and balances have been eliminated. In March 2000
the Company divested its interests in Deltango Gold Limited.
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. In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the nine-month
period ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000.
The balance sheet at December 31, 1999 has been derived from audited
financial statements at that date. The consolidated financial statements
and footnotes thereto included in Aurora Gold Corporation Annual Report on
Form 10-KSB for the year ended December 31, 1999 should be reviewed in
connection with these condensed consolidated financial statements.
The continued operations of the Company is dependent upon the
discovery of economically recoverable reserves or proceeds from the
dispositions thereof, the ability of the Company to obtain financing to
complete development of the properties and on future profitable operations.
All dollar amounts are in United States dollars unless otherwise
indicated. 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 period 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.
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.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities", ("SOP 98-5") which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-activities and organization costs to be expensed as incurred. SOP
98-5 is effective for fiscal years beginning after December 15, 1998 with
initial adoption reported as the cumulative effect of a change in
accounting principle. Adoption of this standard has no material effect on
the financial statements. The Company initially capitalized all costs
directly incurred in its formation. To comply with SOP 98-5, the remaining
balance was written off to depreciation expense during 1999.
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 in 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
6
<PAGE>
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,
2000 to affect its financial statements.
Exploration costs are charged to operations as incurred as are normal
development costs until such time that proven reserves are discovered. From
that time forward, the Company will capitalize all costs to the extent that
future cash flow from reserves equals or exceeds the costs deferred. As at
September 30, 2000 and December 31, 1999, the Company did not have proven
reserves. Cost 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.
Costs related to site restoration programs are accrued over the life
of the project.
The Company places its cash and cash equivalents with high credit
quality financial institutions. As of September 30, 2000 Company had $ nil
in a bank beyond insured limits
The Company expenses advertising costs as incurred. Total advertising
costs charged to expenses for the nine-months ended September 30, 2000 and
1999 were $Nil and $Nil, respectively.
The Company has adopted Statement of Financial Accounting Standards
(SFAS") No. 109, "Accounting for Income Taxes", 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
temporary differences between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse.
Certain long-term assets of the Company are reviewed when changes in
circumstances require as to whether their carrying value has become
impaired, pursuant to guidance established in Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of". Management
considers assets to be impaired if the carrying value exceeds the future
projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be
written down to fair value.
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.
Loss per share is computed using the weighted average number of shares
outstanding during the year. Effective for the year ended December 31,
1997, the Company adopted 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.
7
<PAGE>
In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. The Company
is disclosing this information on its Statement of Stockholders' Equity.
Comprehensive income comprises equity except those resulting from
investments by owners and distributions to owners. SFAS No. 130 did not
change the current accounting treatments for components of comprehensive
income.
2. 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.
3. 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 (147,756) 259,563
Guatemala 194,644 53,597 248,241 6,793 255,034
Tunisia -- 93,362 93,362 122,375 215,737
United States - Totem Talc 11,418 39,783 51,201 -- 51,201
Project assessment and
Exploration expenditures 397,221 90,621 487,842 75,187 563,029
----------- ----------- ----------- ----------- -----------
699,469 686,968 1,386,437 57,509 1,443,946
----------- ----------- ----------- ----------- -----------
$ 788,910 $ 746,098 $ 1,535,008 $ 69,009 $ 1,604,017
----------- ----------- ----------- ----------- -----------
</TABLE>
8
<PAGE>
4. Fixed Assets
<TABLE>
<CAPTION>
September 30, 2000 September 30, 1999
------------------------ -------------------------
Accumulated Accumulated
Cost Depreciation Cost Depreciation
------- ------------ ------- ------------
<S> <C> <C> <C> <C>
Computer equipment $15,125 $ 1,650 $ -- $ --
Office equipment 15,458 1,683 -- --
------- ------- ------- ------------
30,583 3,333 -- --
------- ------- ------- ------------
Cost less accumulated depreciation $27,250 $ --
======= =======
</TABLE>
5. Organization Costs
September 30, 2000 September 30, 1999
------------------ ------------------
Cost $ 11,511 $ 11,511
Less accumulated amortization (11,511) (8,631)
-------- --------
$ -- $ 2,880
======== ========
The cumulative effect of the adoption of SOP 98-5 in 1999 resulted in
a write off of $2,880. This amount is included in depreciation and
amortization on the Statement of Operations due to its insignificance.
6. Loans Payable
Loans payable are unsecured, bear interest at the Citibank (New York
City, USA) prime rate plus two percent and due on demand.
7. Outstanding Options
At September 30, 2000 the Company had 400,000 options outstanding.
Number Exercise Price Expiry
------------ ----------------------- ---------------------------
250,000 $0.75 September 2003
150,000 $0.75 December 2003
-----------
400,000
===========
On June 2, 2000 405,000 stock options were exercised at $0.01 per
share for gross proceeds of $4,050.
8. Related Party Transactions
Related party transactions not disclosed elsewhere in these financial
statements include:
a) Included in accounts payable is $213,647 (1999 - $0) due to
directors and a company controlled by a director in respect of
salaries, consulting fees and reimbursement for expenses.
9
<PAGE>
b) During the nine-month period ended September 30, 2000, salaries
and consulting fees of $207,200 (1999 - $123,190) 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.
9. 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
============ ======
10. Reclassifications
Certain reclassifications of prior-year balances have been made to conform
to current year classifications.
ITEM 2. MANAGEMENT'S' DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(A) General
The Company is a mineral exploration company based in Vancouver,
Canada and is engaged in the exploration for precious metals. The Company
was incorporated under the laws of the State of Delaware on October 10,
1995, under the name "Chefs Acquisition Corp.". On August 20, 1996 the
Company changed its name to Aurora Gold Corporation and is an exploration
stage enterprise.
This document contains numerous forward-looking statements relating to
the Company's business. The United States Private Securities Litigation
Reform Act of 1995 provides a "safe harbor" for certain forward-looking
statements. Operating, exploration and financial data, and other statements
in this document are based on information the company believes reasonable,
but involve significant uncertainties as to future gold and silver prices,
costs, ore grades, estimation of gold and silver reserves, mining and
processing conditions, changes that could result from the Company's future
acquisition of new mining properties or businesses, the risks and hazards
inherent in the mining business (including environmental hazards,
industrial accidents, weather or geologically related conditions),
regulatory and permitting matters, and risks inherent in the ownership and
operation of, or investment in, mining properties or businesses in foreign
countries. Actual results and timetables could vary significantly from the
estimates presented. Readers are cautioned not to put undue reliance on
forward-looking statements. The Company disclaims any intent or obligation
to update publicly these forward-looking statements, whether as a result of
new information, future events or otherwise.
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.
10
<PAGE>
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 be 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. The time for
the completion of the agreement has been furthered extended until November
15, 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.
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 from High Marsh Holdings Ltd., 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").
11
<PAGE>
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.
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 became effective sixty days after
filing (August 19, 2000) and Aurora Metals became a reporting foreign
issuer.
On September 5, 2000 Aurora Metals (BVI) Ltd., in accordance with the
terms of the High Marsh Option Agreements, gave High Marsh 30 days' notice
of termination on four of the Exploration Permits and similar notice on a
further Exploration Permit on September 11, 2000. The Company's decision to
terminate five (5) of the six (6) High Marsh Option Agreements was based on
the results of reconnaissance and technical investigations, which did not
indicate potential for the existence of economically viable deposits of
zinc-lead mineralization.
(C) Financial Information
Nine-Months Ended September 30, 2000 versus Nine-Months Ended
September 30, 1999
Net Loss:
For the nine-months ended September 30, 2000 the Company recorded a
loss of $383,400 or $0.03 per share, compared to a loss of $567,973 or
$0.05 per share in 1999.
Revenues:
The Company had no operating revenues for the nine-month period ended
September 30, 2000 (1999 - $0).
Costs and Expenses:
General and administrative expenses - For the nine-months ended
September 30, 2000 the Company recorded general and administrative expenses
of $127,558 compared to $16,654 in 1999. $113,000 of the September 30, 2000
expenses relate to project research, development and travel.
Professional fees - accounting and legal - For the nine-months ended
September 30, 2000 the Company recorded legal fees of $39,867, compared to
$7,754 in 1999. $23,400 of the $39,867 legal fees relate to Tunisia and the
establishment of Aurora Metals (BVI) Ltd. For the nine-months ended
September 30, 2000 the Company recorded accounting fees of $11,156 compared
to $9,913 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 nine-months ended September 30,
2000 the Company recorded exploration expenses of $57,509, compared to
$472,350 in 1999. The following is a breakdown of the exploration expenses
by property: - Canada, Kumealon property $910 (1999 - $2,286), Canada -
Yukon properties Credit $147,755 (1999 - $325,725) Guatemala $6,793 (1999 -
$51,247), Tunisia $122,375 (1999 - $34,580), United States, Totem Talc
property $0 (1999 - 38,883), and Project assessment and exploration
expenditures of $75,186 (1999 - 19,629). 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 $259,564 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.
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(D) Financial Condition and liquidity
At September 30, 2000, the Company had cash of $4,537 (1999 - $14,972)
and working capital deficiency of $587,265 (1999 working capital deficiency
- $192,185) respectively. Total liabilities as of September 30, 2000 were
$592,102 (1999 - $207,157) an increase of $384,945.
Net cash used in operating activities in the nine-month period ended
September 30, 2000 was $245,414 compared to $390,998 in the nine-month
period ended September 30, 1999. Net cash used in investing activities in
the nine-month period ended September 30, 2000 consisted of additions to
mineral properties $11,500 (1999 - $44,379) and additions to fixed assets
$30,583 (1999 - $0). Net cash received from financing activities in the
nine-month period ended September 30, 2000 consisted of proceeds from notes
and advances payable $285,875 (1999 - $192,023) and proceeds from the
issuance of common stock and stock subscription receipts of $4,050 (1999 -
$190,000).
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
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In January the Company settled $35,000 of debt owing to a director
with the issue of 70,000 common shares at $0.50 per share. On June 2, 2000
405,000 stock options were exercised at $0.01 per share for gross proceeds
of $4,050.
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable
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*
3.3 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.*
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27.1 Financial Data Schedule
----------
* Previously Filed
(b) Reports on Form 8-K
1. Change in registrant's certifying accounts (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: October 30, 2000 BY: /s/ David Jenkins
-----------------
David Jenkins
Director and President
Date: October 30, 2000 BY: /s/ John A.A. James
-------------------
John A.A. James
Director and Vice-President
15
