As filed November 1, 2000 File No. ____________
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COLUMBIA RIVER RESOURCES INC.
(Exact name of small business issuer in its charter
Nevada 1040 91-1835664
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
SUITE 304 - 856 HOMER STREET, VANCOUVER, BRITISH COLUMBIA V6B 2W5
(604) 688-1163
(Address and telephone number of principal executive offices)
SUITE 304 - 856 HOMER STREET, VANCOUVER, BRITISH COLUMBIA V6B 2W5
(Address of principal place of business or intended principal place of business)
ROBERT R. FERGUSON, PRESIDENT
COLUMBIA RIVER RESOURCES INC.
SUITE 304 - 856 HOMER STREET
VANCOUVER, BRITISH COLUMBIA V6B 2W5, CANADA
(604) 688-1163
(Name, address and telephone number of agent for service)
Copies of all communications to:
Adam P. Stapen, Esq.
Dill Dill Carr Stonbraker & Hutchings, P.C.
455 Sherman Street, Suite 300
Denver, Colorado 80203
(303) 777-3737; (303) 777-3823 fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]_____
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_____
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_____
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]_____
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS DOLLAR PROPOSED PROPOSED
OF SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING MAXIMUM
REGISTERED REGISTERED PRICE PER UNIT AGGREGATE OFFERING AMOUNT OF
PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 10,000,000 shares $0.45 $4,500,000 $1,188.00
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Common Stock 499,000 shares $0.25 (1) $124,750 $32.93
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(1) Calculated in accordance with Rule 457(c) as of October 26, 2000.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Disclosure Alternative used (check one) Alternative 1 [ ]; Alternative 2 [X]
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SUBJECT TO COMPLETION, DATED NOVEMBER 1, 2000
COLUMBIA RIVER RESOURCES INC.
10,000,000 Shares of Common Stock
We are offering 10,000,000 shares of common stock for sale to the
public. We are not required to sell any specific number or dollar amount of
shares but will use our best efforts to sell the maximum number of shares
offered. There is no minimum offering and no escrow. Therefore any funds
received from a purchaser will be available to us as received and need not be
refunded to the purchaser. This offering of shares will terminate on the earlier
of the date all of the shares offered are subscribed for or ___________________
[90 days from the date of this prospectus]. Please note that we may extend this
date for up to an additional 90 days.
This prospectus also covers 499,000 shares of common stock owned by
four (4) other stockholders. The selling stockholders are allowed to sell their
shares at any time after the effective date of this prospectus. We will not
receive any proceeds from the resale of these shares. We have agreed to pay for
all expenses of this offering.
Our common stock is traded on the local over-the-counter markets and
the Pink Sheets published by Pink Sheets LLC under the symbol "CRVV."
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not an offer to buy these securities in any
state where the offer or sale is not permitted.
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SHARES OFFERED BY THE UNDERWRITING DISCOUNTS PROCEEDS TO THE
COMPANY PRICE TO PUBLIC AND COMMISSIONS COMPANY
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<S> <C> <C> <C>
Per Share $0.45 $0.045 $0.405
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Total Offering $4,500,000 $450,000 $4,050,000
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Underwriting commissions and discounts: We are acting as the general
selling agent. If broker-dealers are used to sell the shares, we will pay them a
10% commission.
Proceeds to the Company: These amounts do not reflect the deduction of
expenses of this offering, estimated at $60,000.
SUITE 304 - 856 HOMER STREET
VANCOUVER, BRITISH COLUMBIA V6B 2W5, CANADA
(604) 688-1163; FAX (604) 688-6375
WWW.COLUMBIARIVER1.COM
The date of this prospectus is ______________, 2000
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TABLE OF CONTENTS
Page
METRIC EQUIVALENTS.......................................................... 1
PROSPECTUS SUMMARY.......................................................... 2
RISK FACTORS................................................................ 3
FORWARD LOOKING STATEMENTS.................................................. 9
DILUTION.................................................................... 10
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.................... 11
DIVIDEND POLICY............................................................. 12
USE OF PROCEEDS............................................................. 12
SELECTED FINANCIAL DATA..................................................... 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS....................................................... 13
BUSINESS.................................................................... 15
DESCRIPTION OF PROPERTY..................................................... 17
GHANA, WEST AFRICA.......................................................... 26
MANAGEMENT.................................................................. 28
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............. 31
SELLING SHAREHOLDERS........................................................ 32
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS................... 33
DESCRIPTION OF SECURITIES................................................... 35
PLAN OF DISTRIBUTION........................................................ 36
SEC POSITION ON INDEMNIFICATION............................................. 38
LEGAL MATTERS............................................................... 38
EXPERTS..................................................................... 39
AVAILABLE INFORMATION....................................................... 39
REPORTS TO STOCKHOLDERS..................................................... 39
FINANCIAL STATEMENTS....................................................... F-1
METRIC EQUIVALENTS
The following table sets forth the conversion from metric into imperial
equivalents:
TO CONVERT FROM TO IMPERIAL MEASUREMENT UNITS MULTIPLY BY
Grams Ounces (troy) 0.0322
Tonnes Tons (short) 1.1023
Grams/tonne Ounces (troy/ton, short) 0.0292
Hectares Acres 2.4711
Kilometres Miles 0.6214
Metres Feet 3.2808
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PROSPECTUS SUMMARY
COLUMBIA RIVER RESOURCES INC.
Columbia River Resources Inc. ("Columbia River"/"We"/"Our") was
organized under the laws of the State of Nevada on June 13, 1997, to engage in
the acquisition, exploration, and if warranted, development of mining properties
located worldwide. We have acquired and subsequently abandoned several mining
properties in pursuit of our business. At this time, we are focusing our
operations on the exploration of the Tanoso Reconnaissance License located in
Ghana, West Africa, as well as the continued reconnaissance evaluation for other
possible acquisitions in the Federal Republic of Nigeria. Our mining property is
not in production and, consequently, we have no current operating income or cash
flow. We are in the exploration stage and have not generated any revenues from
operations.
Our executive offices are located at 304 - 856 Homer Street, Vancouver,
British Columbia V6B 2W5, and our telephone number is (604) 668-1163.
THE OFFERING
Securities offered........10,000,000 shares of common stock
........Resale of 499,000 shares of common stock owned
by four (4) stockholders
Securities outstanding....13,167,259 shares of common stock (as of October
26, 2000)
Use of Proceeds...........Estimated at a maximum of $3,990,000 net of
offering expenses, to be used for property
acquisitions, further exploration and
administration expenses. We will not receive
any of the proceeds from the resale of common
stock owned by the four stockholders.
RISK FACTORS
Investing in our securities involves a high degree of risk. You should
consider carefully the information under the caption "Risk Factors" in deciding
whether to purchase the securities offered under this prospectus.
SUMMARY FINANCIAL INFORMATION
The following summary financial data is derived from our unaudited
financial statements for the period ending June 30, 2000, and from our audited
financial statements for the years ended December 31, 1999 and 1998,
respectively, included elsewhere in this prospectus. We have prepared our
financial statements in accordance with generally accepted accounting principles
in the United States. Our results of operations for any interim period do not
necessarily indicate our results of operations for the full year. You should
read this summary financial data in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business," and
our financial statements. Our results from operations for any interim period do
not necessarily indicate our results of operations for the full year.
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Balance Sheet Data: June 30, 2000 December 31, 1999 December 31, 1998
<S> <C> <C> <C>
Current Assets $ 70,773 $ 43,229 $ 211
Total Assets 165,069 62,525 78,211
Current Liabilities 222,198 393,389 85,299
Long-Term Liabilities 0 0 0
Stockholders' Deficiency 57,129 330,864 7,088
Working Capital Deficiency 151,425 350,160 85,088
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<CAPTION>
Statement of Loss Data: Six Months Ended Year Ended Year Ended
June 30, 2000 December 31, 1999 December 31, 1998
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 0
Net Loss 380,281 565,329 68,231
Net Loss per Share 0.04 0.10 0.02
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You
should be able to bear a complete loss of your investment. You should carefully
consider the following risk factors and other information in this prospectus
before deciding to invest in shares of our common stock.
WE HAVE NOT MINED ANY GOLD OR OTHER METALS AND WE HAVE NO PRODUCTION HISTORY
Our company has no history of producing gold or other metals. We are in
the exploration stage. If warranted, the development of our mining property will
require the construction or rehabilitation and operation of mines, processing
plants and related infrastructure. As a result, we are subject to all of the
risks associated with establishing new mining operations and business
enterprises. We cannot assure you that we will successfully establish mining
operations or produce gold or other metals at our property.
WE HAVE A HISTORY OF LOSSES AND WE EXPECT LOSSES TO CONTINUE FOR AT LEAST THE
NEXT TWO YEARS
As an exploration company that has no production history, we have
incurred losses since our inception, and we expect to continue to incur
additional losses for at least the next two years. As of December 31, 1999, we
had an accumulated deficit of $646,149. We cannot assure you that we will ever
achieve or sustain profitability.
WE EXPECT LOSSES FROM OPERATIONS AND WE EXPECT TO ENCOUNTER RISKS FREQUENTLY
FACED BY EARLY STAGE COMPANIES
To date, we have not generated any revenues from operations to fund
ongoing operational requirements and cash commitments. We have financed our
operations principally through the sale of our equity securities. We incurred a
net loss of $380,281 for the six months ended June 30, 2000, a net loss of
$565,329 for the year ended December 31, 1999, a net loss of $68,231 for the
year ended December 31, 1998, and a net loss of $12,589 for the year ended
December 31, 1997. We have a limited operating history and our operations are
subject to all of the risks inherent in a new business enterprise engaged in the
mining industry. The likelihood of our success must be considered in light of
the expenses, difficulties and delays frequently encountered in connection with
the start-up of new businesses, those historically encountered by us, and the
competitive environment in which we operate.
WE DO NOT GENERATE ANY REVENUES AND WE RELY ENTIRELY UPON OUTSIDE FINANCING
Assuming that we are able to raise all of the capital necessary to
undertake our planned exploration program, we believe that we will not be able
to generate revenues for at least two years. Because of our inability to
generate revenues, we rely entirely upon external sources of financing. We will
need external financing to continue the exploration of our only property, Tanoso
Reconnaissance License, and to fund the acquisition and exploration of any other
mineral property we might acquire. Sources of external financing may include
bank borrowings, joint ventures, and future debt and equity offerings. We cannot
assure you that financing will be available on acceptable terms, or at all. The
failure to obtain external financing could have a material adverse effect on our
results of operations and financial condition. We do not have sufficient
financial resources to undertake our planned exploration program on the Tanoso
Reconnaissance License. If we cannot obtain external funding when needed, we may
be forced to cease operations and abandon our property and business, and you may
lose your entire investment.
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WE RELY ENTIRELY UPON THE SERVICES OF CME & COMPANY, OUR CONTROLLING SHAREHOLDER
CME & Company is a mining exploration and development company located
in Guernsey, Channel Islands, and is our controlling shareholder. CME & Company
is an affiliate of our company and became our controlling shareholder by
accepting shares of our common stock in exchange for performing exploration
activities at the Tansoso Reconnaissance License, and by performing evaluation
activities in Nigeria. CME & Company performs all of our exploration and
evaluation activities. CME & Company also assisted us in entering into our
agreement to the rights to the Tanoso Reconnaissance License, and CME & Company
is an affiliate of the company that entered into that agreement. We rely
entirely upon the services of CME & Company. Our dependence on CME & Company has
made us vulnerable to changes in the operations of CME & Company. If we are
unable to develop any other key relationships or fail to maintain and enhance
our existing relationship with CME & Company, we will suffer material and
adverse consequences. We can give you no assurance that we will be able to
maintain our relationship with CME & Company, or that we will be able to develop
and maintain other strategic alliances.
WE RELY ENTIRELY ON A SINGLE EXPLORATION PROPERTY
We anticipate that a majority, if not all, of our exploration costs for
the next few years and beyond will be incurred in connection with the Tanoso
Reconnaissance License. We do not have another exploration property at this
time. Therefore, we will suffer material adverse consequences if we are unable
to complete our exploration activities in a timely manner, or if the results do
not warrant development operations.
THE EXPLORATION OF THE TANOSO RECONNAISSANCE LICENSE IS SUBJECT TO DELAYS
We plan to complete the exploration of the Tanoso Reconnaissance
License and, if warranted, commence development operations in five years.
However, there can be no assurance that:
* the exploration of the Tanoso Reconnaissance License will be
completed on a timely basis, if at all;
* the results will warrant development operations; or
* the exploration costs and ongoing operating costs associated
with the exploration of the Tanoso Reconnaissance License will
not be higher than anticipated.
If the actual cost to complete the exploration of the Tanoso
Reconnaissance License is significantly higher than what we expect, we cannot
assure you that we will have enough funds to cover these costs or that we will
be able to obtain alternative sources of financing to cover these costs.
Unexpected cost increases or the failure to obtain necessary project financing
on acceptable terms, or to commence or complete the exploration of the Tanoso
Reconnaissance License on a timely basis, will have a material adverse effect on
our future results of operations and financial condition. The exploration of the
Tanoso Reconnaissance License is subject to the other risk factors described in
this prospectus.
WE CONDUCT ALL OF OUR EXPLORATION ACTIVITIES IN COUNTRIES WITH DEVELOPING
ECONOMIES, AND WE ARE SUBJECT TO THE RISKS OF POLITICAL AND ECONOMIC INSTABILITY
ASSOCIATED WITH THESE COUNTRIES
We currently conduct exploration activities in Ghana, West Africa, and
reconnaissance evaluations in the Federal Republic of Nigeria. Ghana and Nigeria
have experienced from time to time economic and/or political instability. We may
be materially and adversely affected by risks associated with conducting
operations in countries, including:
* political instability and violence;
* war and civil disturbance;
* expropriation or nationalization;
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* changing fiscal regimes;
* fluctuations in currency exchange rates;
* high rates of inflation;
* underdeveloped industrial and economic infrastructure; and
* unenforceability of contractual rights.
Changes in mining or investment policies or shifts in the prevailing
political climate in any of the countries in which we conduct exploration and
evaluation activities could adversely affect our business. Our operations may be
affected in varying degrees by government regulation in Ghana and Nigeria with
respect to, among other things:
* exploration restrictions;
* price controls;
* export controls;
* income and other taxes;
* maintenance of claims;
* environmental legislation;
* foreign ownership restrictions;
* foreign exchange and currency controls;
* labor;
* welfare benefit policies;
* land use;
* waste disposal;
* land claims of local residents or entities;
* water use;
* mine safety and occupational health; and
* toxic substances and other matters.
Although we cannot accurately predict the effects of these factors,
compliance with such laws and regulations may increase the costs associated with
the exploration of our property. This could have a material and adverse effect
on our financial condition and results of operations. The various effects of
these laws and regulations may also impact our decisions to acquire another
exploratory property. Furthermore, the exploration of mineral properties is also
contingent upon governmental approvals that are complex and time consuming to
obtain. We cannot assure you that we will be able to obtain or maintain
governmental approval on any of our properties, or in a timely manner.
In addition, legislation in the United States and Canada regulating
foreign trade, investment and taxation could have a material adverse effect on
our financial condition and results of operations.
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WE ARE SUBJECT TO EXTENSIVE FOREIGN ENVIRONMENTAL LAW AND REGULATION
Ghana and Nigeria have laws and regulations which control the
exploration of mineral properties and their effects on the environment,
including air and water quality, mine reclamation, waste handling and disposal,
the protection of different species of animals, and the preservation of lands.
These laws and regulations will require us to acquire permits and other
authorizations for certain activities. In Ghana and Nigeria, there is relatively
new comprehensive environmental legislation, and the permitting and
authorization processes may be less established and less predictable than they
are in the United States. We cannot assure you that we will be able to acquire
necessary permits or authorizations on a timely basis, if at all. Delays in
acquiring any permit or authorization could increase the exploration cost of the
Tanoso Reconnaissance License and could have a material adverse effect on our
operations and financial position.
Environmental legislation in Ghana and Nigeria is evolving in a manner
that will likely require stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of
proposed projects, and a heightened degree of responsibility for us. We cannot
predict what environmental legislation or regulations will be enacted or adopted
in the future or how future laws and regulations will be administered or
interpreted. Compliance with more stringent laws and regulations, as well as
potentially more vigorous enforcement policies or regulatory agencies or
stricter interpretation of existing laws, may (1) necessitate significant
capital outlays, (2) cause us to delay, terminate or otherwise change our
intended activities with respect to our property and (3) materially and
adversely effect our future operations.
The Tanoso Reconnaissance License is located in a historic mining
district where prior owners may have caused environmental damage that may not be
known to us or to the regulators. We have not sought a complete environmental
analysis of the Tanoso Reconnaissance License and have not conducted a
comprehensive review of the environmental laws and regulations in Ghana. To the
extent that we are subject to environmental requirements or liabilities, the
cost of compliance with these requirements and the satisfaction of these
liabilities would increase our costs and could have a material adverse effect on
our financial condition and results of operations. If we are unable to fully
fund the cost of remediation of any environmental condition, we may be required
to suspend or terminate our operations.
THE EXPLORATION OF OUR PROPERTY IS HIGHLY SPECULATIVE, INVOLVES SUBSTANTIAL
EXPENDITURES, AND MAY BE NON-PRODUCTIVE
Our exploration of the Tanoso Reconnaissance License is highly
speculative in nature and may be non-productive. Substantial expenditures are
required to:
* establish ore reserves through drilling and metallurgical and
other testing techniques;
* determine metal content and metallurgical recovery processes to
extract metal from the ore; and
* construct, renovate or expand mining and processing facilities.
If we discover ore, it usually takes several years from the initial
phase of exploration until development or production is possible. During this
time, the economic feasibility of development or production may change. As a
result of these uncertainties, we cannot assure you that we will be able to
acquire additional mineral rights or that our exploration program will result in
proven or probable mineral reserves of sufficient quantities to justify
development or production.
Our exploration activities are also subject to the risk of
unanticipated delays. Such delays may be caused by the following factors, among
others: fluctuations in commodity prices, exploration risks, difficulty in
arranging and obtaining needed financing, unanticipated permitting requirements
or legal obstruction in the permitting process, and other unforeseen matters
beyond our control. In addition to increasing capital and operating costs, such
delays, if protracted, could result in a write off of all or a portion of the
carrying value of the property.
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TITLE TO OUR MINERAL PROPERTY MAY BE CHALLENGED
Our policy is to seek to confirm the validity of our rights to title
to, and contract rights with respect to, each mineral property in which we may
have a material interest. However, we cannot guarantee that title to our
property will not be challenged or impugned. Title insurance generally is not
available and our ability to ensure that we have a secure claim to our
exploration property may be severely constrained. We have not conducted a survey
of the property and, therefore, the precise area and location of Tanoso
Reconnaissance License may be in doubt. Accordingly, our property may be subject
to prior unregistered agreements, transfers to claims, and title may be affected
by, among other things, undetected defects. In addition, we may be unable to
operate our property as permitted or to enforce our rights with respect to our
property.
WE MAY LOSE OUR PROPERTY IF WE FAIL TO MEET PAYMENT REQUIREMENTS
We entered into an agreement Ayaco (Ghana) Limited, an affiliate of our
company, to acquire the rights to the Tanoso Reconnaissance License. Under the
agreement, we are still required to issue 500,000 shares of our common stock to
Ayaco (Ghana) Limited on December 15, 2000, and spend an additional $145,000 in
exploration work. If we fail to issue our shares when due, or fund the required
exploration program, our rights to the property may lapse. We cannot assure you
that we will be able to issue our shares when due, or fund the required
exploration program.
WE CANNOT INSURE AGAINST ALL OF THE RISKS ASSOCIATED WITH EXPLORATION
The business of exploration is subject to a number of risks and
hazards, including:
* adverse environmental effects;
* industrial accidents;
* labor disputes;
* technical difficulties due to unusual or unexpected geologic
formations;
* failures of pit walls; and
* flooding and periodic interruptions due to inclement or
hazardous weather conditions.
These risks can result in, among other things:
* damage to, and destruction of, mineral properties or production
facilities;
* personal injury;
* delays or cessation in our exploration activities;
* monetary losses; and
* legal liability.
Although we maintain, and intend to continue to maintain, insurance
with respect to our operations and property within ranges of coverage consistent
with industry practice, we cannot assure you that insurance will be available at
economically feasible premiums. Insurance against environmental risks is not
generally available, and we may elect to not seek coverage for all risks. These
environmental risks include potential liability for pollution or other
disturbances resulting from mining exploration. In addition, not all risks
associated with exploration activities are included in coverage, and the risks
that are included may result in liabilities which exceed policy limits. The
occurrence of an event that is not fully covered, or covered at all, by
insurance, could have a material adverse effect on our financial condition and
results of operations.
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WE ARE SUBJECT TO CURRENCY FLUCTUATIONS
For accounting purposes, we use the U.S. dollar as our functional
currency. To date, all of our equity financing and certain debt financing have
been conducted in U.S. dollars. However, with our principal offices in
Vancouver, Canada, we maintain a certain amount of our cash holdings in Canadian
dollars. Recently the Canadian dollar has experienced a devaluation against the
U.S. dollar. Gains and losses resulting from the fluctuation of foreign exchange
rates have been included in the determination of income. Continued devaluation
of the Canadian dollar may have a material and adverse effect on our ability to
conduct financings in the future.
OUR SELLING SHAREHOLDERS COULD NEGATIVELY IMPACT OUR OFFERING
Our selling shareholders are allowed to sell their shares at any time
after the effective date of this prospectus. If the price per share in the
secondary market is less than our offering price at $0.45 per share, prospective
purchasers would most likely purchase our stock in the secondary market and from
our selling shareholders, which would decrease our proceeds from this offering
and adversely impact our financial position and plan of operations.
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION
The initial public offering price of the shares does not necessarily
bear any relationship to assets, book value or net worth of the Company. We
established the price for the common stock with a view to the current market
price for the stock. If you purchase in this offering, you will suffer immediate
and substantial dilution in your investment, which can range from $0.28 per
share to $0.40 per share, based on our net tangible book value at June 30, 2000.
YOU MAY SUFFER ADDITIONAL DILUTION FROM THE EXERCISE OR CONVERSION OF OPTIONS,
WARRANTS, AND CONVERTIBLE SECURITIES ISSUED TO OTHER PERSONS
There are outstanding options, warrants, and convertible securities to
acquire shares of our common stock. If any of the outstanding options, warrants,
and convertible securities are exercised or converted, your percentage ownership
in will be reduced. So long as these options, warrants, and convertible
securities are exercisable, the holders will have the opportunity to profit from
a rise in the price of our common stock. The existence of such options,
warrants, and convertible securities may adversely affect the terms on which we
can obtain additional financing. The holders of such options, warrants, and
convertible securities can be expected to exercise them at a time when we would
probably be able to obtain additional capital by an offering of our common stock
at a price higher than the exercise price of these outstanding options,
warrants, and convertible securities.
OUR OFFICERS, DIRECTORS AND MANAGEMENT MAY BE SUBJECT TO CONFLICTS OF INTERESTS
DURING OUR OPERATIONS
Our officers, directors and management may be affiliated with other
companies that are engaged in the business of exploration of mining properties,
including properties located in Ghana and Nigeria. Such associations may give
rise to conflicts of interest from time to time. A conflict of interest poses
the risk that we may enter into a transaction on terms that would place us in a
worse position than if no conflict existed. Our directors are required by law to
act honestly and in good faith with a view to our best interest and to disclose
any interest which they many have in any project or opportunity of which we are
involved. However, each director has a similar obligation to other companies for
which such director serves as an officer or director. We have no specific
internal policy governing conflicts of interest.
"PENNY STOCK" RULES COULD AFFECT THE SECONDARY MARKET FOR OUT COMMON STOCK AND
MAY AFFECT YOUR ABILITY TO SELL SHARES OF OUR COMMON STOCK
Our common stock is subject to rules promulgated by the SEC that
regulate broker-dealer practices in connection with transactions in "penny
stocks". Generally, penny stocks are equity securities with a price of less than
US$5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system). If the Company's shares are traded
for less than US$5 per share, as they currently are, the shares will be
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subject to the SEC's penny stock rules unless (1) the Company's net tangible
assets exceed US$5,000,000 during the Company's first three years of continuous
operations or US$2,000,000 after the Company's first three years of continuous
operations; or (2) the Company has had average revenue of at least US$6,000,000
for the last three years. The penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document prescribed by the SEC that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. As long as our common shares are subject to the penny stock
rules, the holders may find it difficult to sell their shares.
WE MAY HAVE DIFFICULTIES ENFORCING THE LEGAL PROCESS
Service of process upon individuals or firms that are not resident in
the United States may be difficult to obtain within the United States. Some of
the directors and officers of our company reside outside the United States.
Furthermore, since most of our assets are located outside the United States, any
judgment obtained in the United States against us or such persons may not be
collectible within the United States.
FORWARD LOOKING STATEMENTS
Some information contained in this prospectus may contain
forward-looking statements. These statements include comments regarding
exploration plans, costs, grade, permitting, financing needs, the availability
of financing on acceptable terms, the timing of environmental permitting, and
the markets for gold and other metals. The use of any of the words "anticipate",
"continue", "estimate", "expect", "may", "will", "project", "should", "believe",
and similar expressions are intended to identify uncertainties. We believe the
expectations reflected in those forward-looking statements are reasonable.
However, we cannot assure you that these expectations will prove to be correct.
You should not unduly rely on forward-looking statements included in this
prospectus. These statements speak only as of the date of this prospectus. In
particular, this prospectus contains forward-looking statements pertaining to
the following:
* projections of future capital costs for exploration activities
in connection with the Tanoso Reconnaissance License;
* expectations regarding the levels or timing of exploration;
* potential growth in our operations;
* geographic location or focus of our operations;
* potential investments of the proceeds of this offering pending
the application of the net proceeds;
* expected sources or uses of funds;
* anticipated methods exploration and evaluation; and
* foreign governmental laws and regulations.
Our actual results could differ materially from those anticipated in
the forward-looking statements as a result of the risk factors set forth below
and other factors set forth in, or incorporated by reference into, this
prospectus:
* worldwide economic and political events affecting the supply of
and demand for metals;
9
<PAGE>
* volatility in market prices for metals;
* financial market conditions, and the availability of financing
on terms acceptable to us;
* uncertainties associated with exploration activities, including
potential cost overruns, and the unreliability of estimates in
early stages of exploration;
* geological, technical, permitting, exploration and processing
problems;
* the availability and timing of acceptable arrangements for
power, transportation, and water;
* uncertainties regarding future changes in foreign laws and
regulations;
* the availability and performance of CME & Company; and
* the factors discussed under "Risk Factors".
Many of those factors are beyond our ability to control or predict.
Except as required by law, we are not obligated to publicly release any
revisions to these forward-looking statements to reflect future events or
developments. Subsequent written and oral statements attributable to us and
persons acting on our behalf are qualified in their entirety by the cautionary
statements contained in this section and elsewhere in this prospectus.
DILUTION
"Dilution" represents the difference between the public offering price
per share of common stock and the adjusted pro forma net tangible book value per
share of common stock immediately after the completion of this offering.
Dilution arises mainly from our arbitrary decision about the offering price per
share of common stock. In this offering, the level of dilution will be increased
as a result of our low net tangible book value before this offering.
The following table illustrates the anticipated dilution of a new
investor's equity in a share of common stock at different amounts of success
with this offering, based on our net tangible book value at June 30, 2000:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
25% sold 50% sold 100% sold
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Offering price per share of common stock $0.45 $0.45 $0.45
-------------------------------------------------------------------------------------------------------------------
Net tangible book value per common share before offering $(0.01) $(0.01) $(0.01)
-------------------------------------------------------------------------------------------------------------------
Increase per share attributable to new investors $0.06 $0.11 $0.18
-------------------------------------------------------------------------------------------------------------------
Pro forma net tangible book value per common share after offering $0.05 $0.10 $0.17
-------------------------------------------------------------------------------------------------------------------
Dilution per common share to new investors $0.40 $0.35 $0.28
-------------------------------------------------------------------------------------------------------------------
Percentage dilution 88.9 % 77.8% 62.2%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth, as of June 30, 2000, after giving
effect to the sale of 25%, 50%, and 100% of the offering, a comparison of the
respective investment and equity of the current shareholders and investors
purchasing shares in this offering.
<TABLE>
<CAPTION>
25% of Offering Sold
-----------------------------------------------------------------------------------------------------------------
Shares Purchased Total Consideration Average
Number Percent Amount Percent Price per
Share
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 12,438,366 83.26% $ 963,551 46.13% $0.08
-----------------------------------------------------------------------------------------------------------------
New investors 2,500,000 16.74% $1,125,000 53.87% $0.45
-----------------------------------------------------------------------------------------------------------------
Total 14,938,366 100.0% $2,088,551 100.0%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
50% of Offering Sold
-----------------------------------------------------------------------------------------------------------------
Shares Purchased Total Consideration Average
Number Percent Amount Percent Price per
Share
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 12,438,366 71.33% $ 963,551 29.98% $0.08
-----------------------------------------------------------------------------------------------------------------
New investors 5,000,000 28.67% $2,250,000 70.02% $0.45
-----------------------------------------------------------------------------------------------------------------
Total 17,438,366 100.0% $3,213,551 100.0%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
100% of Offering Sold
-----------------------------------------------------------------------------------------------------------------
Shares Purchased Total Consideration Average
Number Percent Amount Percent Price per
Share
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 12,438,366 55.43% $963,551 17.64% $0.08
-----------------------------------------------------------------------------------------------------------------
New investors 10,000,000 44.57% $4,500,000 82.36% $0.45
-----------------------------------------------------------------------------------------------------------------
Total 22,438,366 100.0% $5,463,551 100.0%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock trades under the symbol "CRVV", with quotations on
the pink sheets published by Pink Sheets LLC. The following table
sets forth the range of high and low bid quotations for each fiscal quarter
since the stock began trading. These quotations reflect inter-dealer prices
without retail mark-up, markdown, or commissions and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
BID PRICES
HIGH LOW
<S> <C> <C>
1998 FISCAL YEAR
Quarter ending 03/31/98 $0.80 $0.125
Quarter ending 06/30/98 $0.45 $0.125
Quarter ending 09/30/98 $0.29 $0.06
Quarter ending 12/31/98 $0.20 $0.04
1999 FISCAL YEAR
Quarter ending 03/31/99 $0.26 $0.03
quarter ending 06/30/99 $0.285 $0.10
Quarter ending 09/30/99 $0.23 $0.06
Quarter ending 12/31/99 $0.14 $0.05
2000 FISCAL YEAR
Quarter ending 03/31/00 $0.49 $0.06
Quarter ending 06/30/00 $0.56 $0.13
Quarter ending 09/30/00 $0.35 $0.13
</TABLE>
On October 26, 2000, the closing price for the common stock was
$0.20. We had 17 record holders of our common stock as of October 26, 2000,
including those shares held in street name. Holders of shares of common stock
are entitled to dividends when, and if, declared by the board of directors out
of funds legally available therefor.
11
<PAGE>
DIVIDEND POLICY
We have never paid any cash dividends on our common stock and intend to
retain future earnings, if any, to finance the development and expansion of our
business. Our future dividend policy is subject to the discretion of the board
of directors and will depend upon a number of factors, including our future
earnings, capital requirements, and financial condition.
USE OF PROCEEDS
If we sell all of the shares being offered, our net proceeds are
estimated to be $3,990,000 after deducting legal, accounting, and other offering
expenses estimated at $60,000 and a 10% selling commission on all of the shares.
To the extent that we sell more shares without using the services of a placement
agent, the net proceeds will be increased. We intend to use the net proceeds,
along with any other financing sources that may become available to us, to fund
our exploration and property reconnaissance activities over the next twelve
months. We expect to experience negative cash flow from operations for at least
the next two years.
We expect that our cash requirements will exist principally in the
following areas and, based upon the level of success we achieve in this
offering, we anticipate using the proceeds from this offering as follows:
<TABLE>
<CAPTION>
Level of Success in this Offering:
25% 50% 100%
<S> <C> <C> <C>
Tanoso Reconnaissance License (Phase II) Work Program (1)<F1> $396,500 $ 396,500 $ 396,500
Reconnaissance Exploration in the Federal Republic of Nigeria (2)<F2> 250,000 250,000 250,000
Tanoso Reconnaissance License (Phase III) Work Program (3)<F3> 266,000 956,000 1,983,500
Working Capital
Administration expenses 40,000 80,000 90,000
Other mineral property evaluations (4)<F4> 0 282,500 500,000
Other mineral property reconnaissance, acquisition
And exploration (4)<F4> 0 0 770,000
-------- ---------- ----------
Total - $952,500 $1,965,000 $3,990,000
======== ========== ==========
</TABLE>
-------------------
[FN]
(1)<F1> The amount of proceeds to fund the Tanoso Reconnaissance License (Phase
II) Exploration work program is based upon our agreement with CME &
Company dated April 7, 2000, and reflects the work as set forth in that
agreement.
(2)<F2> The amount of proceeds to fund the reconnaissance exploration in the
Federal Republic of Nigeria is based upon our agreement with CME &
Company dated May 3, 2000, and reflects the work as set forth in that
agreement.
(3)<F3> This phase of exploration is contingent upon the results of the work
which is yet to be completed by CME & Company. Accordingly, this is
only an estimate and some modifications will likely be made to the
proposed funding as results are received and priorities reevaluated.
(4)<F4> These amounts of unallocated working capital will be used for
additional property acquisitions, exploration work and administration
expenses. This allocation of funds is our best estimate. There may be
circumstances where, for sound business reasons, a reallocation of
funds may be necessary. We will only redirect our funds to other
properties on the basis of a written recommendation from an
independent, professional geologist or engineer.
</FN>
Pending the application of net proceeds, we expect to invest the
proceeds from this offering in short term, investment-grade, and interest
bearing securities.
12
<PAGE>
SELECTED FINANCIAL DATA
Pannell Kerr Forster has audited our financial statements for the
fiscal year ended December 31, 1999. Jones Jenson & Company, independent
auditors, now known as HJ & Associates, LLC, has audited our financial
statements for the fiscal years ended December 31, 1998 and December 31, 1997.
The financial data derived those statements and shown below should be read in
conjunction with the notes to the financial statements included elsewhere in
this prospectus and to "Management's Discussion and Analysis of Results of
Operations and Financial Condition" which follows.
<TABLE>
<CAPTION>
BALANCE SHEET DATA: JUNE 30, 2000 DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C> <C>
Current Assets $ 70,773 $ 43,229 $ 211
Total Assets 165,069 62,525 78,211
Current Liabilities 222,198 393,389 85,299
Long-Term Liabilities 0 0 0
Stockholders' Deficiency 57,129 330,864 7,088
Working Capital Deficiency 151,425 350,160 85,088
Statement of Loss Data: Six Months Ended Year Ended Year Ended
June 30, 2000 December 31, 1999 December 31, 1998
Revenues $ 0 $ 0 $ 0
Net Loss 380,281 565,329 68,231
Net Loss per Share 0.04 0.10 0.02
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our
financial statements and the selected financial data and related notes included
elsewhere in this prospectus.
GENERAL
We are a mining company engaged in the acquisition, exploration, and if
warranted, development of mining properties located worldwide. We are currently
focusing our resources on the exploration of our only project, the Tanoso
Reconnaissance License located in Ghana, West Africa, as well as the continued
evaluation of other possible mining property acquisitions in the Federal
Republic of Nigeria. Our only exploration property is not in production and,
consequently, we have no current operating income or cash flow. We are in the
exploration stage and have not generated any revenues from operations. We
incurred a net loss of $380,281 for the six months ending June 30, 2000, and had
an accumulated deficit of $646,149 as of December 31, 1999.
The report of the independent auditors on our financial statements for
the year ended December 31, 1999, includes an explanatory paragraph relating to
the uncertainty of our ability to continue as a going concern. We have suffered
losses from operations, require additional financing, and need to continue
the exploration of the Tanoso Reconnaissance License. Ultimately we need to
generate revenues. Exploration may take years to complete and the amount of
revenues, should we ever develop our property, is difficult to determine. Our
previous capital needs have been met by the issuance of our common stock, and by
offering our common stock in exchange for services rendered. These factors raise
substantial doubt about our ability to continue as a going concern. We cannot
assure you that we have any reserves on the Tanoso Reconnaissance License, or
that we will be able to develop a commercially feasible mining property. Even if
we are able to develop a commercially feasible mining property, there is no
assurance that we will be able to generate revenues and attain profitability.
13
<PAGE>
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We have not generated any revenue. For the six months ended June 30,
2000, we recorded a net loss of $380,281, as compared to $565,329 for the year
ended December 31, 1999. The proportionately higher loss for the current fiscal
period is due in part to paying CME & Company for its exploration work on the
Tanoso Reconnaissance License, and its reconnaissance evaluation in Nigeria. The
increased loss is also attributable to higher legal and accounting expenses
incurred in anticipation of filing this registration statement.
For the six months ended June 30, 2000, the statement of cash flows
reflects net cash used in operating activities of $539,477, which was offset by
net cash provided by financing activities of $547,765. Since we have no source
of revenue, our working capital will be depleted by operating expenses and
payments to CME & Company, and we will rely entirely upon external sources of
cash.
At June 30, 2000, we had a working capital deficit of $151,425. Funds
required to maintain the our existence have been provided by related parties and
through offerings of our common stock. We require another offering of common
stock to provide sufficient working capital. In addition to another offering of
common stock, we anticipate that additional financing may be obtained through
long- or short-term loans against our equity, or through a joint venture or
strategic alliance. We cannot provide you any assurance that we will be able to
obtain additional funding, or obtain additional funding with terms favorable to
us. Our failure to obtain additional financing could result in delay or
indefinite postponement of the exploration programs on the Tanoso Reconnaissance
License, and a complete loss of your investment.
PLAN OF OPERATIONS
We have two primary objectives during the next twelve months. Our first
objective is to continue our exploration of the Tanoso Reconnaissance License.
On December 15, 1999, we entered into an agreement with Ayaco (Ghana) Limited to
acquire the rights to the Tanoso Reconnaissance License. According to the
agreement, we assumed an obligation to fund an initial $160,000 work program as
set forth within a report by CME (Ghana) Limited dated April 1998, which is a
subsidiary of CME & Company, and a separate $295,000 funding and exploration
program as set forth in the report by CME & Company dated September 30, 1999. As
of June 2000, we performed the initial $160,000 work program, and have completed
$150,000 of the $295,000 funding and exploration program. We still need to fund
the remaining $145,000 work program.
We believe that our exploration activities will enhance the perceived
value of the Tanoso Reconnaissance License which, in turn, may allow us to enter
into a joint venture or some other strategic alliance for its continued
exploration and possible development, if any, or may allow us to obtain
additional financing on favorable terms. As a result, we entered into another
agreement with CME & Company dated April 7, 2000, and agreed to fund an
additional $441,500 exploration program, which includes the remaining $145,000
work program as required by the CME & Company report dated September 30, 1999.
On April 17, 2000, we advanced $20,000 to CME & Company and another $25,000 on
May 19, 2000 for a total retainer of $45,000 for services to be performed under
the agreement.
Our second objective is to continue our reconnaissance activities and
possibly acquire an option on a mining property in the Federal Republic of
Nigeria. On May 3, 2000, we entered into an agreement with CME & Company whereby
we agreed to fund a $300,000 regional and detailed evaluation of the
southwestern, central and northeastern parts of Nigeria. On May 19, 2000, we
advanced $50,000 to CME & Company as a retainer for the services to be performed
under that agreement. We are focusing our reconnaissance evaluation to identify
potential properties which may contain tantalum and other rare metals. If we are
able to find a suitable property, we anticipate that an acquisition will require
some form of an option agreement in exchange for the issuance of our shares of
common stock, a cash payment, and/or a funding and development commitment.
Our reconnaissance and exploration activities are capital intensive. In
October 2000, CME & Company exercised 340,000 warrants for proceeds of $51,000.
As a result, we believe that we will be able to meet our anticipated operating
expenses for the next six months. However, we do not have sufficient financial
resources to undertake our planned exploration program on the Tanoso
Reconnaissance License, or to undertake our reconnaissance activities in the
Federal Republic of Nigeria. As a result, we will need external financing to
develop
14
<PAGE>
and construct the Tanoso Reconnaissance License and to fund the exploration and
development of any other mining property. Sources of external financing may
include bank borrowings, joint ventures, and future debt and equity offerings.
We cannot assure you that financing will be available on acceptable terms, or at
all. The failure to obtain additional financing could result in delay or the
indefinite postponement of further exploration and development of our projects,
and the possible loss of such properties.
We do not anticipate that we will purchase any significant equipment
during the next twelve months. We anticipate retaining the services of
contractors and other third parties to assist us in our reconnaissance,
exploration and development activities. These contractors and other third
parties generally use their own equipment and labor and, therefore, we do not
anticipate hiring any employees during the next twelve months.
ENVIRONMENTAL COMPLIANCE
Our current and future exploration and development activities, as well
as our future mining and processing operations, if warranted, are subject to
various federal, state and local laws and regulations in the countries in which
we conduct our activities. These laws and regulations govern the protection of
the environment, prospecting, development, production, taxes, labor standards,
occupational health, mine safety, toxic substances and other matters. Our
management expects to be able to comply with those laws and does not believe
that compliance will have a material adverse effect on our competitive position.
We intend to obtain all licenses and permits required by all applicable
regulatory agencies in connection with our mining operations and exploration
activities. We intend to maintain standards of compliance consistent with
contemporary industry practice.
BUSINESS
Our company was organized under the laws of the State of Nevada on June
13, 1997, to engage in the acquisition, exploration, and if warranted,
development of mining properties located worldwide. We have acquired and
subsequently abandoned several mining properties in pursuit of our business. At
this time, we are focusing our operations on the exploration of the Tanoso
Reconnaissance License located in Ghana, West Africa, as well as the continued
evaluation for other possible mining properties in the Federal Republic of
Nigeria.
ABANDONED MINING PROPERTIES
During 1997, we entered into a letter of intent to purchase an option
for mineral properties located in Chihuahua, Mexico. Pursuant to the letter of
intent, we paid $15,000 and issued 100,000 shares of our common stock. During
1998, we entered into a separate agreement to purchase an option on 150 mining
claims northwest of Elko, Nevada, and we paid $25,000 and issued 100,000 shares
of our common stock. We subsequently decided to abandon these properties in
1999, and we have no further obligations with respect to the abandoned
properties.
THE TANOSO RECONNAISSANCE LICENSE
BACKGROUND
The Tanoso Reconnaissance License is located at Tanoso in the Techiman
District of Ghana, West Africa. On July 5, 1999, Ayaco (Ghana) Limited, an
affiliate of our company, entered into an agreement with the government of the
Republic of Ghana and paid 250,000 cedis to acquire a twelve (12) month
renewable right to conduct geological and geophysical investigations in the
licensed area in order to identify the potential of gold and diamond deposits.
Under the agreement, Ayaco (Ghana) Limited agreed to fund a $160,000 work
program as recommended in a report by CME (Ghana) Limited dated April 1998. If
the work program was not entirely funded, then the agreement provided that the
difference between the amounts actually expended and the total amount
outstanding would become a debt owed to the Ghana government. The yearly rental
fee for the Tanoso Reconnaissance License is 614,000 cedis (US$111.67), and
pursuant to the Ghana mining laws, the Ghana government is entitled to a 10% net
profit interest in the licensed area.
15
<PAGE>
ACQUISITION
On September 28, 1999, we entered into a Binding Heads of Agreement
with Ayaco (Ghana) Limited to acquire an option to purchase the rights to the
Tanoso Reconnaissance License from Ayaco (Ghana) Limited. In accordance with the
Binding Heads of Agreement, we issued 100,000 shares of our common stock to
Ayaco (Ghana) Limited and received an exclusive three month due diligence
period. After conducting our due diligence review, we exercised our option to
acquire the rights to the Tanoso Reconnaissance License and entered into a
separate agreement with Ayaco (Ghana) Limited.
Under the separate agreement dated December 15, 1999, we agreed to
assume the required $160,000 work program as recommended by CME (Ghana) Limited,
a subsidiary of CME & Company, and a separate $295,000 funding and exploration
program as set forth in the report by CME & Company dated September 30, 1999. In
addition to assuming these obligations, we agreed to issue Ayaco (Ghana) Limited
an additional 1,000,000 shares of our common stock. We issued Ayaco (Ghana)
Limited 500,000 shares of common stock on January 4, 2000, and we are required
to issue the remaining 500,000 shares on December 15, 2000. If we complete the
funding and exploration programs, and issue the remaining 500,000 shares of our
common stock, then we will receive title to the Tanoso Reconnaissance License,
subject to a 10% net profit interest payable to Ayaco (Ghana) Limited and the
10% net profit interest payable to the Ghana government. Although the Ghana
government has approved the transfer of the license from Ayaco (Ghana) Limited
to our company, subject to a consideration fee, title to the Tanoso
Reconnaissance License is currently held by Ayaco (Ghana) Limited. We expect
that the consideration fee to be paid to the Ghana government will be a nominal
amount.
FUNDING AND EXPLORATION REQUIREMENTS
We have completed the initial $160,000 work program as recommended in
the report by CME (Ghana) Limited dated April 1998, and we filed the appropriate
documents with the Ghana government to evidence our expenditures.
We have no further obligations with respect to this work program.
We are in the process of completing the separate $295,000 funding and
exploration obligation as required by the agreement with Ayaco (Ghana) Limited
dated December 15, 1999. On October 1, 1999, we entered into an agreement with
CME & Company, an affiliate of our company, and CME & Company agreed to perform
a $150,000 reconnaissance and exploratory work program on the Tanoso
Reconnaissance License. CME & Company completed its services and has received
payment from us. We have no further obligations under that agreement. Our
funding of this agreement was applied to the $295,000 obligation.
On April 7, 2000, we entered into a separate agreement with CME &
Company to fulfill the remaining $145,000 of our $295,000 obligation. Under this
agreement, CME & Company agreed to perform an additional $441,500 exploration
program on the Tanoso Reconnaissance License, which will include trenching,
drilling, excavation, and soil and drainage geochemistry. On April 17, 2000, we
advanced $20,000 to CME & Company and another $25,000 on May 19, 2000, as a
retainer for the services to be performed under the agreement.
We will need additional external financing in order to satisfy the
remaining $396,500 payments due to CME & Company, which includes our remaining
$145,000 obligation as required by our agreement with Ayaco (Ghana) Limited
dated December 15, 1999. We will be using a portion of the proceeds from this
offering to pay that amount. However, we cannot assure you that we will receive
sufficient funds from this offering to meet our obligations. If we fail to
obtain additional financing, this could result in the delay or indefinite
postponement of further exploration and development activities at the Tanoso
Reconnaissance License. As a result, we may also have to exercise our right to
terminate the agreement at any time by providing CME & Company two weeks prior
written notice and, upon termination, we are required to pay CME & Company for
all work and expenses incurred prior to termination.
RECONNAISSANCE EXPLORATION IN THE FEDERAL REPUBLIC OF NIGERIA
We are currently considering the possible acquisition of mining
properties in the Federal Republic of Nigeria. To assist in this endeavor, we
entered into an agreement with CME & Company dated May 3, 2000, whereby CME &
Company has agreed to perform a $300,000 regional and detailed evaluation of the
southwestern, central and northeastern parts of Nigeria. Under the agreement,
CME & Company will provide all necessary
16
<PAGE>
personnel, equipment, materials and services, and CME & Company will focus its
evaluation on properties that may contain tantalum or other rare metal deposits.
CME & Company will conduct geological mapping and rock sampling of potential
areas, which may be followed by trenching and trench sampling if necessary. On
May 19, 2000, we advanced $50,000 to CME & Company as a retainer for the
services to be performed under this agreement.
Although we have not identified any potential acquisition, and no
assurance can be given that we will acquire a mining property in Nigeria, we
will need external financing to fund CME & Company's reconnaissance evaluation
activities in Nigeria. If additional funding is not obtained, we may have to
terminate our agreement by providing two weeks prior written notice and, upon
termination, we will be required to pay CME & Company for all work and expenses
incurred prior to termination.
EMPLOYEES / CONSULTANTS
As of the date of this prospectus, we have no employees in our company.
We conduct our operations by retaining consultants and independent contractors.
FACILITIES
Our principal offices are located in Vancouver, British Columbia,
Canada. On February 19, 1999, we entered into a sublease agreement with CME
Consulting Ltd. for 913.25 square feet. The term of the sublease agreement is
from April 1, 1999 to November 30, 2000. In accordance with the sublease
agreement, our lease payments are CDN$1,170.41 per month, and every third month
we are required to pay an additional CDN$86.67 as a security deposit. The
monthly payments include the use of two desks, two chairs, and common office
furniture.
LEGAL PROCEEDINGS
There are no legal proceedings pending and, to the best of our
knowledge, there are no legal proceedings contemplated or threatened.
DESCRIPTION OF PROPERTY
The following is a summary taken from a geological report and property
evaluation by Robert J. Griffis, Ph.D., P.Eng., titled "Geological Report on the
Ayaco Reconnaissance Concession in the Brong Ahafo/Ashanti Regions of Ghana for
Columbia River Resource Inc.", dated March 2000, and submitted as an exhibit to
this prospectus. We believe that the summary of the report is fair and accurate.
Location and Access
The Ayaco reconnaissance exploration licence is located mainly in the
Brong Ahafo Region of southwestern Ghana (see fig.1) although a portion
of the area includes a very small area in the NW tip of the Ashanti
Region. The centre of the area is about 290km NW of Ghana's capital,
Accra and it is about 280km north of the port city of Takoradi in the
Western Region. It is also about 20km east of Sunyani, the regional
capital of Brong Ahafo.
The reconnaissance licence covers an area of about 307 sq.km in two
separate blocks; the larger northern block makes up about two-thirds of
the area and the southern block makes up the balance (see Fig. 3). The
reconnaissance licence is dated July 5, 1999 and is valid for a 12
month period after which it may be renewed for a further period up to
12 months or, alternatively, areas within the reconnaissance licence
may be applied for as a prospecting concession. According to PNDC Law
153 (Minerals and Mining Law, 1986), a renewal of the licence must be
applied for three months prior to the expiry date. By law, exploration
work on a reconnaissance licence is intended to have minimal
disturbance on the land and would normally exclude drilling and any
substantial surface excavations. The latter, more advance type of work
would be appropriate on prospecting licences which are generally
smaller (up to 150 sq.km); such licences cover up to 3 year periods and
are also renewable. Independent enquiries at the Minerals Commission
which recommends
17
<PAGE>
and oversees exploration and mining licences indicates
that the Ayaco concession is currently in good standing. A further
requirement is that a qualified professional who will oversee the
exploration work on a reconnaissance or prospecting licence must apply
for a prospecting permit which is issued by the Mines Department and is
renewable on an annual basis.
The reconnaissance licence is held in the name of Ayaco (Ghana) Ltd., a
local company which has entered a joint venture agreement with
Vancouver-based Columbia River Resources Inc. (CRRI). This agreement,
dated December 10, 1999, calls for CRRI to earn an 80% interest in the
Ayaco concession, leaving Ayaco with a 10% net profit interest and the
Government receives its mandatory non-contributing 10% interest.
Access to the general area is quite good. The southern (or western)
block is located immediately north of the paved highway between Kumasi
and Sunyani; a well-maintained gravel road from Kyeraa crosses part of
the concession. The northern (or eastern) block is traversed by the
Kumasi-Techiman highway and a good gravel road which links up the main
highways to Techiman and Sunyani. A number of 4WD dirt roads are also
present in both blocks and, as elsewhere in southern Ghana, footpaths
and dirt tracks to small villages and farms criss-cross much of the
area.
The area occurs in the headwaters of the Tano River which cuts across
both blocks of the concession and includes many secondary and tertiary
tributaries that form a dendritic pattern throughout the region. The
topography is gently undulating with the highest hill just over 400m
(approximately 1300-1350 ft) and most of the main valleys being at
about 300m (approximately 1000 ft). The lowest elevation is about 240m
(approximately 800 ft) along the main Tano River valley where it exits
the southern block of the concession; the same river has an elevation
of close to 320m (approximately 1050 ft.) at Tanoso on the
Kumasi-Techiman highway. On a regional basis, it appears that the tops
of the hills and ridges in the area probably correlate with an old, now
largely dissected, peneplain which is gently tilted to the SW. The Tano
River will be the only perennial river in the area whereas virtually
all of the tributaries will flow mainly in the rainy seasons.
The area falls within the wet semi-equatorial belt which features
relatively abundant rainfall (on average about 1400mm/yr) occurring in
two main seasons. The initial season generally starts in about March
and peaks in June. There is a drop-off in July-August and then a second
season which falls mainly in September-October. The months of November
through February are usually quite dry and generally mark the
`Harmattan' season when the dry, dusty winds from the Sahara cover the
region. For most of the year daily temperatures fall in the range
25(Degree)-35(Degree)C; during the Harmattan, night-time temperatures
may dip below 20(Degree)C and in March before the main rains arrive,
the day-time temperatures will often be in the high 30's.
The relatively high rainfall and warm temperatures produce quite
luxurious forest growth featuring a great variety of high canopy
tropical hardwoods typical of the moist semi-deciduous forest zone
which covers most of southwestern Ghana. Although much of the primary
forest has been removed by timbering and farming, most of the forest
reserves in the area host advanced secondary growth. In recent years
the Government of Ghana has been making a concerted effort to preserve
the dwindling forest reserves throughout the country. Towards the north
part of the concession, the area starts to feature more open areas with
fewer trees and grasslands which become more extensive in the savannah
lands just to the north of the area.
The area features a few larger towns within are immediately adjacent to
the concession blocks; these include Kyraa just west of the southern
block and Tanoso, Afrantwo and Akumadan along the Kumasi-Techiman
highway by the northern block. Quite a few smaller villages and hamlets
are scattered around the area, especially in the southern block of the
concession. The area falls within the cocoa belt of southern Ghana and
this is the main cash crop for the area. In addition, farming of maize,
cassava, various types of yams and plantain is very widespread but
intended mainly for local use.
18
<PAGE>
HISTORY
The dominant gold producing area in Ghana has been in the Ashanti belt
where probably 90% of the production has come from in the past 100
years and where much of the previous artisanal mining was concentrated
for centuries (Junner, 1935; Kesse, 1985). However, the Sefwi belt has
had some important production, mainly from the Bibiani area, but there
are very widespread indications of extensive historical small-scale
surface mining in many parts of the belt as well as small underground
operations within the past 50-60 years. Of course, the more remote
location of the Sefwi belt has contributed to the lack of more
extensive exploration and the overall potential was always considered
quite positive. In recent years, this view has been very much
substantiated and new, important discoveries, particularly in the Yamfo
district, promise to see very significant production in the near
future.
At the south end of this belt, Cote d'Ivoire, the Eden Roc group of
Canada developed a number of small open-pit operations in the mid 1990s
in the general vicinity of Anuiri. Although this operation closed a
couple of years ago, the area certainly has considerable potential for
shallow open-pit or deeper underground operations. Unfortunately, much
of the primary gold in this area is refractory and will require
roasting or bioxidation treatment methods to recover gold closely
associated with arsenopyrite and pyrite and usually hosted in quartz
veins and stockwork systems.
On the Ghana site of the border, small production from shallow
underground mines occurred in the 1930s and into the early 1950s from
prospects SE of Enchi. Starting in the late 1980s this area has
attracted considerable exploration attention and although significant
mineralized gold systems over a strike length of at least 15km has been
confirmed, the gold is largely confined to relatively narrow vein
systems. As yet, not viable prospects have been confirmed although the
overall potential must still be considered as quite good. The Enchi
prospects occur on the eastern margin of the belt and appear to be
closely associated with regional structures that may extend into the
Anuiri area.
The largest producer in the belt has been from the underground
operations at Bibiani that produced over 2 million ounces; modern
production in this area started at the turn of the century but most of
the production came in the period 1935-1965. The mine closed in 1969
but renewed interest in the 1990s has resulted in a major new open-pit
operation, producing at rate of about 250,000 ozs/yr at overall costs
of less than 175USD/oz. This project was largely the result of
exploration work by the Canadian junior, International Gold Resources
which was later taken over by Ashanti Goldfields. At Bibiani much of
the gold is associated with an extensive quartz stockwork system
related to a major NE trending fault complex; most of the gold is
free-milling.
Immediately south of Bibiani are series of prospects on a concession
held by Chirano Goldfields and currently being explored by the
Australian junior, Red Back Mining. Earlier, this property had been
explored by Placer Dome and later by Reunion Mining but the potential
has been considerably enhanced by extensive drilling carried out by Red
Back. Many of the prospects in this area are related to quartz
stockworks hosted by intermediate intrusives and again associated with
NE trending faults. Current indications are for a resource potential of
about 1 million ounces of gold and substantial production is likely to
result in due course as grades appear favourable and both the oxides
and primary mineralization is free-milling.
The most exciting new development in Ghana's gold sector has come
recently from the long neglected western margin of the Sefwi belt in
what is now generally referred to as the Yamfo district. At the
beginning of the 1990s, Dr Alex Barko, a Ghanaian consultant
successfully applied for a prospecting concession (in the name of
Minconuslt Ltd.) immediately east of the town of Yamfo and not far from
the regional capital, Sunyani. Barko's research into historical data
indicated very elevated gold values in panned concentrates, from the
Susan river which were reported in an annual report of the Gold Coast
Geological Survey in the mid 1930s. At about the same time as Dr Barko
acquired the Yamfo concession, the BGR/Ghana geological Survey regional
mapping program confirmed extensive soil geochemical anomalies in the
same general
19
<PAGE>
area. After some preliminary exploration work, Minconsult
entered into a JV with the Gencor group of South Africa. Further
successful results brought the BRGM/La Source group of France into the
area as they had a regional (West Africa) JV arrangement with Gencor
and acquired several adjacent properties along strike from the Yamfo
concession, then held in a new company, Centenary Mining, which was
controlled by Gencor. Eventually the Normandy Poseidon group of
Australia entered the picture when it essentially acquired control of
the La Source group and they eventually took control of the area when
they bought Gencor's interest when most of Gencor's gold assets were
sold of to Gold Fields.
Southwest of Yamfo (approximately 30km), a longstanding concession was
held by S. Amegashie and Partners over the known Kenyase prospects.
Early work on the concession (late 1980s) was encouraging but not
definitive and eventually the property was JV'd to Noel Kiernan's Irish
company, Moydow. Moydow followed up some of the earlier work and
extended the soil geochem coverage in the area. Eventually drilling on
the relatively low rank geochemical anomaly at Ntotoroso produced very
favourable results. By this point, Moydow negotiated an agreement with
Normandy Poseidon whereby Normandy would acquire a major interest in
the project with an option to earn a majority interest but Moydow would
manage the exploration work through to a feasibility stage.
Although little technical and geological data have been released by
Normandy, Moydow has announced most of their drill results and some
geological information on the Ntotoroso prospect area. The whole belt
is now developing into a major exploration play; the main zone of
interest has a strike length exceeding 40km with Kenyase in the south
followed by Ntotoroso, Bosumkese, Yamfo and Subenso at the north end
(see Fig. 4). All the prospects have a strong structural control along
a major NE trending fault corridor and mineralization is hosted in a
number of units although the dominant host is a belt-type intermediate
granitoid, especially at the southern end of the district whereas
further to the north Birimian metasediments appear to be the preferred
host. At Ntotoroso, the mineralization in the belt granitoid is
apparently controlled by shallow-dipping structures with extensive
silicification, sulphides and carbonate alteration which result in
quite wide (20-50+m) zones of mineralization an most of the gold
appears to be free-milling. At present, the Normandy group is in the
feasibility stage and are expected to make a positive production
decision on the Yamfo concession later this year. The Moydow group is
currently at a pre-feasibility stage but proceeding very aggressively
to complete drilling and resource estimates. The general indications
are that the combined resources evaluated by Normandy (mainly the
Subenso, Yamfo and Kenyase prospects) will likely be in the order of 5
million ozs whereas the Ntotoroso zone may contribute at least another
2 million ozs. This is certainly the most exciting mining project in
Ghana for many years and, along with the Morilla project in Mali, the
most exciting exploration/mining gold project in West Africa.
Ayaco's location along strike from the nearby Yamfo-Subenso prospects
must be considered quite favourable. Part of this area was apparently
under licence to the Gencor group several years ago but details on the
nature and extent of any work is not currently available. It would
appear that Gencor dropped part of the area based on a geological
interpretation that the main Yamfo structure swings to the ENE just
north of the Centenary concession where they retained some area.
However, the interpretation of the complicated structure in this area
is difficult and it appears quite possible that some of the major
structures in the Ayaco concession area extend to the Yamfo area.
RECENT WORK RESULTS
Two technical reports by CME & Company ("CME") on recent work (dated
September 30, 1999 and February 15, 2000) on the Ayaco concession were
supplied to the author. These reports are quite thorough and, as a
result, a site visit was considered unnecessary. In addition, the
author has been involved in other exploration work in nearby areas and
is quite familiar with the geographic and geological conditions in the
concessions area.
20
<PAGE>
CME conducted the exploration on the Tanoso Reconnaissance Licence. The
fieldwork carried out by CME has been of a high professional standard
utilizing exploration methods that have proven very successful
elsewhere in this region. Care has been taken to ensure the integrity
of the sampling and analytical methods using laboratories with
well-established reputations in the industry.
RECONNAISSANCE EXPLORATION
The initial reconnaissance exploration work carried out on the Ayaco
concession involved broad-scale geological mapping and stream sediment
sampling which has proven to be an effective means to detect the
presence of possible gold-bearing structures and to prioritize areas
for more detailed prospecting and exploration. The stream sediment
program included 138 samples covering most of the concession. Two types
of samples were taken; one type (active) included samples taken from
straight portions of stream channels where the sediment would include
typical sediment load including a small proportion of heavy minerals
such as gold; the second type (trap) was taken from areas in the
channel where concentrations of heavy minerals would be expected, for
example, on the leeward side of boulders, at the base of waterfalls
etc. Approximately 2kg of samples were taken from each site after
having been we sieved and the -2mm fraction retained for analysis.
Locations of samples were aided by using hand-held GPS units and
following drainages defined on the topographic map (1:50,000 scale).
The two methods are generally complimentary with the trap samples
giving a slightly better indication of coarse gold entrained in the
base of the stream sediment load and the active sampling giving a
better indication of very fine-grained gold that my adhere to clastic
particles throughout the stream bedload. Although the number of samples
(64 active samples and 74 trap samples) is perhaps not enough for a
rigorous statistical analysis, they certainly are sufficient to
indicate background and anomalous levels with considerable confidence.
The 2kg samples were sent to Transworld Laboratories, a reputable
analytical facility in Tarkwa which has been operating in Ghana for
several years. Each of the samples was dried, pulverized and bottle
rolled for 24 hours with a strong cyanide solution which would dissolve
virtually all of the contained gold. The gold in solution was
precipitated and the concentration determined with an AA finish. This
method is especially useful in detecting very low levels (300 parts per
trillion or 0.3 ppb) of gold in samples and is now routinely used in
many exploration projects.
For the active stream samples (64), a statistical analysis indicated
three main populations; the lowest population has threshold value of
4ppb, whereas a second population has a threshold level of 10ppb and
anomalous values are taken to be those samples over 32ppb. The lower
population probably reflects low background levels in metasediments
whereas the second population probably with slightly higher background
levels appears to correlate with areas underlain by metavolcanics
(mainly basalts). A total of seven anomalous values (13.8% of
population) over 32ppb were determined; these were in the range of 32
to 856ppb and 4 of the 7 samples were above 100ppb which would be
considered very anomalous.
The trap samples (74) appear to indicate four populations with an
anomalous threshold of 45ppb. The other populations also appear to
reflect background levels in metasediments and metavolcanics. Eight
samples (8.3% of population) were above 45lppb and ranged as high as
1408ppb; five of these samples were above 150ppb which would be
considered very anomalous. As noted by CME, quite a few of the active
samples have higher background levels of gold which suggests a possible
bedrock source with very finely disseminated gold.
The regional stream sediments indicated significant anomalies in the
southern half of the western block. These areas were selected for more
detailed evaluation that included airphoto interpretation, soil
geochemistry, ground magnetometer survey and a limited pitting and
trenching program.
21
<PAGE>
PRELIMINARY FOLLOW-UP EXPLORATION PROGRAM
The follow-up exploration program to isolate and evaluate bedrock
sources of stream geochem anomalies was carried out over about a three
month period at the end of 1999. The initial work involved an airphoto
interpretation to identify regional structures, especially those that
may extend northwards from the Yamfo area. A number of early NE
features as well as later cross-cutting fracture systems were
identified.
This was followed up by an extensive soil geochemical survey,
concentrated in the southern portion of the western block where stream
geochemical sampling had been encouraging and where favourable
structures have been interpreted. Soil geochemistry has certainly been
demonstrated to be the single most effective tool for gold exploration
in Ghana over the past 15 years and it should prove very useful in the
Ayaco concession area. Control for the soil geochemical program was
provided with an extensive cut and surveyed grid (total 159 line km)
with a baseline oriented approximately NE and the cross-lines, spaced
at 400m, oriented NW-SE. Samples were taken at 25m intervals on the
cross-lines but initially, every second sample was analysed; if results
from the first set of analyses produced anomalies, then the adjacent
samples were analysed. In addition, areas with good anomalies on the
400m lines were resurveyed with additional cross-lines at 100m
intervals and samples taken at 25m intervals. Soil samples were taken
at 40-50cm depth, fully logged and dispatched to Transworld
Laboratories in Tarkwa where samples were processed and 30gm fractions
treated with aqua regia and the dissolved gold determined by AAS. A
total of 344 soil samples were analysed for gold and all of the
procedures followed by CME were quite standard and appropriate.
In addition to the gold analyses, pulps from the soil samples were sent
to the well-established ACME Analytical Laboratories in Vancouver for
multi-element ICP analysis. In many instances, certain trace elements
are effective pathfinders for gold, and multi-element analysis will
sometimes help to discriminate and prioritize various anomalies and
target areas. However, in Ghana, experience to date has certainly
demonstrated that gold anomalies in soils are certainly the best
indicator for gold in underlying bedrock and other multi-element
analyses are much less indicative. Due to the widespread association of
arsenic with gold in many Birimian occurrences, it is common and often
quite useful to include arsenic analysis as was done in the Ayaco soil
geochem program. Discussion of soil geochem results are in the
following section of this chapter.
After completion of the surveyed grid for soil geochem, a ground
magnetometer survey was also carried out. Again the intent was to get a
better indication of bedrock geology because of the very limited
exposures, and especially to assist in identifying possible bedrock
structures which may have anomalous magnetic signatures or may be
interpreted by possible offsets in bedrock lithologies with distinctive
magnetic signatures. This survey was carried out by Spectral Geophysics
who have conducted many similar surveys in Ghana over the past several
years. The results have confirmed the probable presence of various
types of bedrock structures (mainly folding and faulting) and, in
particular, have identified one fairly strong NE trending magnetic
anomaly in close association with major gold anomalies in the soils.
The preliminary exploration program also included a limited number of
pits (21 in total) located mainly in Area 1 of the grid (see Fig. 6)
where the major soil anomalies occur. In addition, four trenches, each
100m long and about 3m deep, were completed in the same general area to
test bedrock areas underlying some of the geochemical anomalies.
Results of this work are also discussed in the following section.
SIGNIFICANT RESULTS
The soil geochemical survey was carried out over the priority areas in
the southern portion of the western block as indicated by the stream
sediment anomaly patterns. A geostatistical evaluation of soil
geochemical data revealed a threshold value of 25ppb Au and results
above this value are considered to be anomalous. Three broad areas of
25+ppb Au were indicated within the grid; two
22
<PAGE>
of the areas (#2 and 3 on Fig. 6) are broadly but quite weakly
anomalous whereas #1 is distinctly more interesting. The broad
anomalous zone of Area #1 covers a strike-length of approximately 2.8km
and is up to about 400m wide; it is oriented with a long axis at
approximately NE-SW. Details of Area #1 are shown in Fig 7. Within the
broadly anomalous areas are two zones with significantly higher values.
The western zone extends from line 11400E to about line 12100E (minimum
700m length) and is variable in width from about 50 to 200m; most of
the soil values are 100+ppb au with five samples being above 250ppb and
a high of 546 ppb. The eastern zone in Area #1 is noticeably stronger
with a length of about 1000m (from line 128000E to 13800E) and a fairly
consistent width of 150-200m; values within this zone are also mainly
above 100ppb with 11 samples above 250ppb Au and two samples above
1000ppb Au. This is obviously a significant anomaly worthy of detailed
follow-up work.
The pits were scattered throughout much of Area #1 (see Fig. 7) to
better evaluate individual soil sample results and the four trenches
were extended along line with multiple sample anomalies (see Fig. 7).
The significant results from the pits and trenches are summarized in
the attached tables. All pit and trench samples were fire assayed (50gm
aliquots) at Transworld in Tarkwa.
Most of the pits and trenches reached the weathered saprolite which
should give a generally good indication of bedrock mineralization. Many
of the pits yielded anomalous bedrock gold values above 200ppb Au (0.2
g/t) and quite a few indicated values in excess of 500ppb Au (0.5g/t).
The best results were in pit #6 (on line 12900E and 4700N) located at
the western end of east zone of Area #1; this pit gave results of 3.3
and 3.9 g/t in two of the channel samples and a grab sample of a
narrow, horizontal quartz vein (more or less in place) in the pit
yielded a value of about 7.2 g/t. This pit certainly confirms the
presence of mineralized vein structures and disseminated gold values in
adjacent metasediment hostrock.
In the trenches, narrow zones of anomalous bedrock values were
indicated in trenches 1,3 and 4. Trench #1, at the north end of Area
#1, is in an area with isolated geochemical highs whereas 3 and 4 are
located in and adjacent to the strong anomaly at the eastern end of
Area #1. The best results are a 6m zone in trench #3 averaging about
0.7g/t and there are several other zones (2-6m wide) with values in the
range 0.5-1.2g/t. Trench #4 yielded several narrow zones (1-4m wide)
with values in the range of 0.2-0.6g/t. Grab samples of quartz veins
and veinlets from both trench #3 and #4 yielded several values greater
than 1g/t with the two highest being 6.1g/t (trench #3) and 4.7 g/t
(trench #3). Although the mineralized zones are not very wide, the
results are nevertheless encouraging and further confirm mineralized
bedrock structures (vein systems) and disseminated gold in the
metasedimentary hostrocks. These results indicate that more systematic
follow-up work is warranted.
<TABLE>
<CAPTION>
Table 2: Selected Gold Results: Pitting (after CME - February 15, 2000 Report)
------------------------------------------------------------------------------------
Pit Sample Sample Pit Sample
Number Direction Length (m) Result
(ppb Au)
<S> <C> <C> <C>
------------------------------------------------------------------------------------
2 vertical 0.90 442
------------------------------------------------------------------------------------
2 horizontal 1.10 429
------------------------------------------------------------------------------------
2 horizontal 1.00 1,418
------------------------------------------------------------------------------------
3 vertical 3.00 318
------------------------------------------------------------------------------------
3(including) vertical 2.00 399
------------------------------------------------------------------------------------
3(including) vertical 0.40 662
------------------------------------------------------------------------------------
3 horizontal 0.80 448
------------------------------------------------------------------------------------
4 vertical 0.60 344
------------------------------------------------------------------------------------
5 vertical 1.60 111
------------------------------------------------------------------------------------
6 vertical 2.56 3,320
------------------------------------------------------------------------------------
6(including) vertical 1.50 3,861
------------------------------------------------------------------------------------
23
<PAGE>
------------------------------------------------------------------------------------
6 - Grab: 7,159
quartz
vein
------------------------------------------------------------------------------------
7 vertical 2.21 177
------------------------------------------------------------------------------------
9 vertical 1.50 102
------------------------------------------------------------------------------------
9(including) vertical 0.75 137
------------------------------------------------------------------------------------
11 vertical 1.40 661
------------------------------------------------------------------------------------
12 vertical 0.55 763
------------------------------------------------------------------------------------
12 - Grab: 1,966
quartz
vein
------------------------------------------------------------------------------------
13 vertical 2.30 127
------------------------------------------------------------------------------------
14 vertical 1.10 713
------------------------------------------------------------------------------------
17 vertical 1.09 370
------------------------------------------------------------------------------------
17 horizontal 1.10 871
------------------------------------------------------------------------------------
17 horizontal 1.00 281
------------------------------------------------------------------------------------
20 horizontal 0.82 248
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Table 3: Selected Gold Results: Trenching (after CME - February 15, 2000 Report)
--------------------------------------------------------------------------------------------
Trench Sample Sample Length Trench Sample
Number Direction (m) Result (ppb Au)
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
1 horizontal 2 667
--------------------------------------------------------------------------------------------
1 horizontal 2 839
--------------------------------------------------------------------------------------------
3 horizontal 6 390
--------------------------------------------------------------------------------------------
3(including) horizontal 2 952
--------------------------------------------------------------------------------------------
3 vertical 2 528
--------------------------------------------------------------------------------------------
3 horizontal 6 714
--------------------------------------------------------------------------------------------
3(including) horizontal 2 1,225
--------------------------------------------------------------------------------------------
3 vertical 2 739
--------------------------------------------------------------------------------------------
3(including) vertical 1 1,354
--------------------------------------------------------------------------------------------
3 - Grab: quartz 739
stringers
--------------------------------------------------------------------------------------------
3 - Grab: quartz 4,664
stringers
--------------------------------------------------------------------------------------------
4 Horizontal 4 304
--------------------------------------------------------------------------------------------
4 Vertical 1 309
--------------------------------------------------------------------------------------------
4 Vertical 1 573
--------------------------------------------------------------------------------------------
4 Vertical 2 222
--------------------------------------------------------------------------------------------
4(including) Vertical 1 274
--------------------------------------------------------------------------------------------
4 Vertical 1 241
--------------------------------------------------------------------------------------------
24
<PAGE>
-------------------------------------------------------------------------------------------
4 - Grab: quartz 6,093
stringers
--------------------------------------------------------------------------------------------
4 - Grab: quartz 1,967
stringers
--------------------------------------------------------------------------------------------
4 - Grab: quartz 172
stringers
--------------------------------------------------------------------------------------------
4 - Grab: quartz 1,141
--------------------------------------------------------------------------------------------
</TABLE>
EXPLORATION EXPENDITURES
Details on expenditures to date were not available for this report but
it is estimated that the initial reconnaissance work probably cost in
the order of $50,000 whereas the preliminary follow-up program probably
cost about $250,000. The original cost estimates by CME for the
follow-up work was about $295,000 but this included a considerably
larger grid and more geochemical sampling than was eventually
completed. In both cases, the estimated costs would represent good
value for the work carried out.
PROPOSED WORK PROGRAM
The following recommendations are presented.
o The reconnaissance licence should be immediately converted to a
prospecting licence (150 km2 maximum) in order to carry out additional
exploration work on the property not legally permissible on
reconnaissance licenses. A qualified technical expert should also
obtain the mandatory prospecting permit from the Mines Department in
order to oversee future work on the project. If necessary, a second
prospecting licence may be applied for if the 150 km2 maximum does not
cover all areas of interest.
o The two priority target areas for immediate attention should be the
strong soil anomalies outlined in Area #1 at the southern end of the
western block. Other areas with more isolated stream and soil anomalies
should not be neglected.
o The follow-up work in Area #1 should entail more extensive trenching
followed by a preliminary drilling program. The trenching would likely
involve up to about 2000m of trenching with most trenches 100-200m long
and a maximum of 3m deep; this work should be carried out only in the
dry season as the soil becomes quite waterlogged in the wet season and
collapsing of trench walls can be a significant safety hazard. After
the trenches have been thoroughly sampled, mapped and surveyed, and
after drilling has been completed, most of the trenches should be
re-filled to avoid future accidents to local inhabitants and any open
trenches required for future work should be safely cordoned off.
o The initial drilling should probably consist of RAB drilling
(approximately 8000m) which is relatively inexpensive but can give
reliable data on gold values to shallow depths (perhaps to 50m
depending on ground conditions). This is, in effect, a scouting drill
program to better outline areas of interest confirmed by the soil
geochemistry and additional trenching. Encouraging results from
trenching and RAB drilling would be followed by more detailed RC
drilling which is considerably more expensive but also provides much
more reliable samples that can be used more effectively in resource
estimates.
o Additional ground geophysics may also prove very useful in helping to
prioritize drill targets and to assist in better defining bedrock
structures of possible interest. An IP survey (10-20 line km) in the
priority areas of Area #1 may be quite effective in outlining zones in
the bedrock with disseminated sulphides which are probably associated
with gold-bearing structures and vein
25
<PAGE>
systems. Additional ground magnetic surveying will assist in
identifying structures and the lithologies of the underlying bedrock.
o These recommendations are in general accord with those of CME (February
15, 2000 Report) and, as noted by CME, additional work is also required
to further evaluate other areas of the concession.
o The CME recommendations call for overall expenditures of about
$300,000. The above program should cost about the same amount; the
lower RAB drilling cost will permit more drilling than the 5000m of RC
drilling recommended by CME. In addition, the above program includes
modestly more trenching (or pitting where appropriate) than recommended
by CME. It may be possible to carry out the above program in the period
mid March-June but because of uncertainty on the timing of the rainy
seasons, it may be more prudent to delay the work until later in the
year after the main rainy season is over and ground conditions improve
for trenching and drilling which are the critical activities of the
proposed program.
GHANA, WEST AFRICA
We have compiled the following information from governmental and
private publications, and believe the same to be fair and accurate.
GENERAL INFORMATION
Ghana is a country in West Africa near the equator and on the Greenwich
Meridian, bounded on the northwest by Burkina Faso, on the east by Togo, on the
south by the Gulf of Guinea, and on the west by Cote d'Ivoire, which is also
known as the Ivory Coast. Ghana's total geographical area is 238,537 square
kilometers (92,100 square miles), and its capital is the city of Accra. Other
significant cities include Kumasi, Tema, Tamale and Sekendi-Takaradi.
Although there are numerous African languages spoken in Ghana, English
is the official language. Ghana is an agricultural country with mineral
deposits, including gold, diamonds, bauxite and manganese. Ghana's leading
exports are gold, cocoa (beans, butter, chocolate), tropical hardwoods, bauxite,
diamonds, and manganese.
Ghana is a member of the Economic Community of West African States (ECOWAS).
POLITICAL BACKGROUND
In 1874, the area of Ghana was a colony of Great Britain. By 1901,
Great Britain had annexed Ashanti and declared a protectorate over the country's
north. In 1957, the area gained independence and took the name Ghana, and
British Togoland became part of the new country.
During the 1970's and early 1980's, Ghana suffered severe economic
problems. In 1981, one of the former military leaders, Flight Lieutenant Jerry
Rawlings, led a revolt and gained control of the government, and political
parties were banned. At or around 1990, Ghana experienced pressure from the
Western nations concerning its militia government, and the Western nations used
economic aid as an incentive for the return to a democratic government. This led
to the formation of new political organizations and a gradual return to a
democratic society. In December 1990, Flt. Lt. Rawlings announced proposals for
the introduction of a new Constitution by the end of 1991. In May 1991, Flt. Lt.
Rawlings established a consultative assembly, which was to a draft a new
Constitution. On April 28, 1992, the new Constitution was subsequently approved
by 92% of votes cast during a national referendum, with 43.7% of the electorate
voting. A program for the transition to a multi-party system was drafted, and in
the following years a number of political associations were established.
In the presidential election on November 3, 1992, Flt. Lt. Rawlings
secured 58.3% of the votes. Although international observers maintained that the
election had been conducted fairly, the main four opposition parties, which had
contested the election, claimed that electoral impropriety had taken place. In
protest, these parties withdrew from the forthcoming legislative elections. As a
result, the pro-government National Democratic
26
<PAGE>
Congress secured 94.5% of the electoral seats. On January 7, 1993, Flt. Lt.
Rawlings was sworn in as President and the new Parliament was inaugurated.
Under the terms of the Constitution, Ghana has a multi-party political
system. Executive power is vested in the President, who is the Head of State as
well as the Commander-in-Chief of the Armed Forces. The President is elected for
a maximum of two four-year terms. Legislative power is vested in a two hundred
member unicameral Parliament, with each member elected for four years. The
running mate of the successful Presidential candidate becomes the
Vice-President. The President appoints the Cabinet, subject to approval by
Parliament.
RECENT ECONOMY
Ghana's economy has suffered a sustained decline since the mid-1970s.
In 1983, the government introduced an extensive economic reform program that
received financial support from the International Monetary Fund and the World
Bank. The economic recovery program and subsequent government actions have
improved Ghana's economic position. Ghana's gross domestic product averaged 4.5%
in 1999. The annual rate of inflation declined from approximately 123% at the
end of 1983, to single digits in late 1999. Ghana's economy still depends upon
receiving foreign aid. Ghana's currency is a cedi, and at the end of 1999, one
U.S. dollar equaled 4,400 cedis. The major minerals exported from Ghana are
gold, bauxite, diamonds and manganese. Ghana is Africa's second largest gold
producer behind South Africa.
MINING LAW
Under the Constitution and the mining laws of Ghana, all minerals in
Ghana in their natural state are the property of the government of Ghana, and
title is vested in the President on behalf of, and in trust for, the people of
Ghana. The government of Ghana grants certain rights to these minerals through
licenses and leases.
A license is required for the export and disposal of minerals and the
government has a pre-emptive right over all such minerals. The Minister of
Energy and Mines generally has the power to negotiate, grant, revoke, suspend or
renew any mineral right. The government holds, as of right and without payment
of any compensation, a 10% interest in the rights and obligations of all
reconnaissance, prospecting or mining operations in relation to a mineral right,
and the government has the option to acquire an additional 20% interest where
any mineral is discovered in commercial quantities, on terms agreed between the
government and the holder of the mining lease. In addition, the Ghana government
is entitled to a net royalty of 3% to 12% of all mineral sales. In addition, the
government may acquire an interest in any Ghana company engaged in mining
operations in Ghana, which will result in the company having to obtain the
government's approval for (1) any action which will have the effect of making a
person a controller of the company; (2) the voluntary bankruptcy or liquidation
of the company; or (3) the disposal of any mining lease or a substantial asset
of the company. Under the mining laws, a "controller" is defined as a person who
either directly or indirectly directs the affairs of the company or controls at
least 20% of the voting power.
There are two kinds of licenses: a reconnaissance license and a
prospecting license. A reconnaissance and prospecting license grant the right to
erect camps or temporary buildings and installations in the licensed area. A
prospecting license also grants the right to make boreholes and such other
excavations. A prospecting license is granted for an initial period of not more
than three (3) years and may be renewed at the government's discretion. If the
holder desires to mine any minerals on the property, the holder is required to
apply for a mining lease.
A mining lease grants the right to take all reasonable measures on and
under the surface of the property in order to mine, erect equipment, plant and
buildings, to prospect within the mining area, and to stack mineral waste in an
approved manner. Activities such as the diversion of water require separate
licenses or governmental consents. A mining lease is granted for a period of not
more than thirty (30) years and may be renewed at the government's discretion. A
holder of a mining lease is obligated to file a mining, recruiting and training
program with the government and comply with its terms. A holder of a mining
lease is required to seek government consent on various issues, which may
withheld in the government's sole discretion.
27
<PAGE>
MANAGEMENT
OFFICERS AND DIRECTORS
Our officers and directors are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Robert R. Ferguson 45 President, Treasurer and Director since inception.
Robert F. Weicker 43 Director since August 1998
Tim Earle 43 Secretary since August 1998
</TABLE>
The term of office of each director ends at the next annual meeting of
our stockholders or when such director's successor is elected and qualifies. The
term of office of each officer ends at the next annual meeting of the our board
of directors, which is expected to take place immediately after the next annual
meeting of our stockholders, or when such officer's successor is elected and
qualified. Since our inception, we have not had an annual meeting of our
stockholders.
ROBERT R. FERGUSON, PRESIDENT, TREASURER AND DIRECTOR SINCE INCEPTION
IN JUNE 1997. As President, Treasurer and Director, Mr. Ferguson is responsible
for our day-to-day operations, including corporate development, investor and
media relations, and corporate finance. From 1993 to 1997, Mr. Ferguson was the
manager of corporate development for Eldorado Gold Corporation, Vancouver,
British Columbia, and a separate company, HRC Development Corporation,
Vancouver, British Columbia. In that capacity, he was responsible for
supervising the investor relations department, prepare and deliver corporate
presentations, and assist in the preparation of the annual and quarterly reports
to the shareholders. From 1986 to 1992, Mr. Ferguson was the manager of investor
relations for American Reserve Mining Corporation, Vancouver, British Columbia,
and was responsible for similar activities.
Mr. Ferguson received his high school diploma in 1975, and has since
completed seminars on managing and directing a public company, and the Canadian
securities laws. Mr. Ferguson owns a minority interest in a small chain of
restaurants and bars located in Vancouver, British Columbia. He has been a
member of the Prospectors and Developers Association in Vancouver, British
Columbia since 1994.
ROBERT F. WEICKER, DIRECTOR SINCE AUGUST 1998. From September 1995 to
September 1999, Mr. Weicker was the Manager of Exploration for Newhawk Gold
Mines Ltd., in Vancouver, British Columbia. Mr. Weicker was responsible for
directing the exploration functions of the company, and assisted the company
with acquisitions in Canada and the United States. From May 1994 to August 1995,
Mr. Weicker was the President and Chief Executive Officer of Oracle Minerals
Inc., a Canadian publicly traded mineral exploration company located in
Vancouver, British Columbia. In that capacity, Mr. Weicker supervised and
coordinated the company's exploration activities in El Salvador and in Ontario,
Canada. From January 1989 to February 1994, Mr. Weicker was the Chief Mining
Geologist for Equinox Resources Ltd., a Canadian publicly traded mineral
exploration and production company in Vancouver, British Columbia. Mr. Weicker
was involved in the direction, growth and administration of the company,
including project generation, property evaluations, budgeting and assessment
reporting, ore reserve calculations, and geotechnical and environmental
concerns.
Mr. Weicker is a registered Professional Geoscientist in the Province
of British Columbia, Canada, and a member of The Association of Professional
Engineers and Geoscientists of British Columbia. Mr. Weicker graduated from the
University of Waterloo in 1977 and received a degree with honors Earth Sciences.
TIM EARLE, SECRETARY SINCE AUGUST 1998. Since 1993, Mr. Earle has been
the President of Leare Developments Ltd., a real estate development and
consulting company in Vancouver, British Columbia. Mr. Earle is responsible for
identifying, acquiring, and rezoning real property for residential and
commercial uses. Mr. Earle also manages the construction and leasing of
improvements on real property. Since 1999, Mr. Earle has been a Director and
Treasurer of Longwood Brew Pub Ltd., a restaurant and bar located in Nanaimo,
British Columbia.
From 1985 to 1992, Mr. Earle was an associate with Realtech Realty
Corporation, in Vancouver, Canada. Mr. Earle was responsible for establishing a
sales division in conjunction with the financing of commercial properties for
institutional funds. From 1980 to 1984, Mr. Earle was an associate with Knowlton
Realty Ltd., a
28
<PAGE>
commercial real estate firm in Calgary and Vancouver, Canada. Mr. Earle's duties
included lease negotiation, management of properties, and development and
valuation analyses. Mr. Earle has been a licensed real estate agent in Canada
since 1991. Mr. Earle received a Diploma of Technology in Administrative
Management - Real Estate Option from the British Columbia Institute of
Technology in 1980.
No other directorships are held by each director in any company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or any company registered as an investment company, under the
Investment Company Act of 1940.
Messrs. Ferguson, Weicker and Earle may be deemed to be "promoters" and
"control persons" of our company, as that term in defined in the Securities Act
of 1933.
KEY CONSULTANTS AND CONTRACTORS
As of the date of this prospectus, we have no employees in our company.
We conduct our operations by retaining the following key consultants and
contractors:
1. FREEFORM COMMUNICATIONS INC. On January 1, 2000, we entered into a
one year agreement with Freeform Communications Inc., an affiliate of our
company which is owned by operated by Robert R. Ferguson. Under the agreement,
Freeform Communications Inc. provides day-to-day management consulting services
to our company for $1,650 per month.
2. CME & COMPANY. We have retained CME & Company to provide exploration
services on our Tanoso Reconnaissance License, and to evaluate potential
acquisitions in Nigeria. CME & Company is an affiliate of us and became our
controlling shareholder by accepting shares of our common stock in exchange for
services rendered. Since our inception in June 1997, we engaged CME & Company to
perform services as follows:
a. Under the agreement with CME & Company dated, October 1, 1999, CME &
Company agreed to perform a $150,000 reconnaissance and exploratory work program
on the Tanoso Reconnaissance License.
b. Under the agreement with CME & Company dated October 10, 1999, CME &
Company agreed to perform reconnaissance evaluation services to identify
potential acquisitions in the Northern Maru Belt and Anka Belt of Nigeria for
$300,000.
c. Under the agreement with CME & Company dated April 7, 2000, CME &
Company agreed to perform an additional $441,500 exploration program on the
Tanoso Reconnaissance License. We have the right to terminate this agreement at
any time by providing two weeks written prior notice and, upon termination, we
would be obligated to pay CME & Company for all work and expenses incurred prior
to termination.
d. Under the agreement with CME & Company dated May 3, 2000, CME &
Company agreed to perform a $300,000 regional and detailed evaluation of the
southwestern, central and northeastern parts of Nigeria. We have the right to
terminate this agreement at any time by providing two weeks written prior notice
and, upon termination, we would be obligated to pay CME & Company for all work
and expenses incurred prior to termination.
29
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the remuneration for Messrs. Ferguson,
Weicker and Earle from inception (July 26, 1996) through December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
NAME OF INDIVIDUAL CAPACITIES IN WHICH AGGREGATE WARRANTS & OPTIONS
OR IDENTITY OF GROUP REMUNERATION WAS RECEIVED REMUNERATION GRANTED
<S> <C> <C> <C>
Robert R. Ferguson Director, President & $61,397 (1)<F1> 306,984
Robert. F. Weicker Director $10,000 (2)<F2> 50,000
Tim Earle Secretary $10,000 (3)<F3> 50,000
<FN>
(1)<F1> This amount consists of $25,000 of options and $36,397 of warrants. On
January 8, 1998, Mr. Ferguson was granted 125,000 options at a price of
$0.25 per share, which will expire on January 8, 2003. On December
1998, Freeform Communications Inc., an affiliated company owned and
operated by Mr. Ferguson, advanced our company CDN$20,000, and on
December 30, 1998, we repaid the advanced funds by issuing 181,984
Units to Freeform Communications Inc., with each Unit consisting of one
share of our common stock and one warrant to purchase one share of our
common stock at a price of $0.15 per share until December 30, 1999, and
at price of $0.25 per share from December 31, 1999 to December 30,
2001.
(2)<F2> On August 26, 1998, Mr. Weicker was granted 50,000 options at a price
of $0.25 per share, which will expire on August 26, 2003.
(3)<F3> On August 26, 1998, Mr. Earle was granted 50,000 options at a price of
$0.25 per share, which will expire on August 26, 2003.
</FN>
</TABLE>
On January 1, 2000, we entered into a one year consulting agreement
with Freeform Communications Inc., an affiliated company owned and operated by
Robert R. Ferguson. Under the agreement, Freeform Communications Inc. provides
day-to-day management consulting services to our company for $1,650 per month.
Other than the agreement with Freeform Communications Inc., we do not pay
monetary compensation to our officers and directors, nor do we compensate our
directors for attendance at meetings. We reimburse our officers and directors
for reasonable expenses incurred during the course of their performance. There
are no employment agreements with any of our executive officers, and we have no
long-term incentive or medical reimbursement plans. We anticipate offering some
form of incentive-based monetary compensation in the future.
STOCK OPTION PLAN
We do not have a formal stock option plan. Our board of directors, in
its discretion, issues options to officers, directors, and consultants on a
case-by-case basis. In general, options may be exercised by payment of the
option price by either (i) cash, (ii) tender of shares of our common stock which
have a fair market value equal to the option price, or (iii) by such other
consideration as the board of directors may approve at the time the option is
granted.
30
<PAGE>
The following table provides certain option, warrant and rights
information (whether vested or not) as to the officers and directors
individually, and as a group, as of October 26, 2000:
<TABLE>
<CAPTION>
TITLE OF NUMBER OF
NAME OF HOLDER SECURITIES SECURITIES EXERCISE PRICE EXPIRATION DATE
<S> <C> <C> <C> <C>
Robert R. Ferguson (1)<F1> Options 125,000 $0.25 01/08/2003
Director, President, and Treasurer Warrants 181,984 $0.15 / $0.25 12/30/999; 12/30/2001
Robert F. Weicker Options 50,000 $0.25 08/26/2003
Director
Tim Earle Options 50,000 $0.25 08/26/2003
Secretary
Officers and directors as a group (3 Options 225,000
persons) Warrants 181,984
-------------
<FN>
(1)<F1> Includes the warrants owned by Freeform Communications Ltd., an affiliated company owned and operated by
Robert R. Ferguson.
</FN>
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information as to the officers and
directors individually and as a group, and the holders of more than 5% of the
Company's common stock, as of October 26, 2000. Except as otherwise indicated,
the persons named in the table have sole voting and investing power with respect
to all shares of common stock owned by them.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS/ PERCENT OF
NAME AND ADDRESS OF OWNER SHARES HELD PRIOR WARRANTS TOTAL CLASS
TO OFFERING(1)<F1> EXERCISABLE(2)<F2> BEFORE/AFTER
OFFERING(3)<F3>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert R. Ferguson (4)<F4>
904 - 850 Burrard Street 511,984 306,984 818,968 6.1% / 3.5%
Vancouver, British Columbia V6Z 2J1
CANADA
Robert F. Weicker
3000 Walton Avenue 0 50,000 50,000 0.4% / 0.2%
Coquitlam, British Columbia V3B 6V6
CANADA
Tim Earle
1348 Marine Drive, 2nd Floor 0 50,000 50,000 0.4% / 0.2%
North Vancouver, British Columbia
CANADA
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF OPTIONS/ PERCENT OF
NAME AND ADDRESS OF OWNER SHARES HELD PRIOR WARRANTS TOTAL CLASS
TO OFFERING(1)<F1> EXERCISABLE(2)<F2> BEFORE/AFTER
OFFERING(3)<F3>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CME & Company (5)<F5>
P.O. Box 199 Victory House, Le Truchot 5,274,171 4,262,013 9,536,184 54.7% /34.8%
St. Peter Port,Guernsey GY1 4HX
Channel Islands
Officers and directors, as a group
(3 persons) 511,984 406,984 918,968 6.8% / 3.9%
------------------
<FN>
(1)<F1> Management does not anticipate that any of the persons or entities listed
will subscribe for shares in the offering.
(2)<F2> Includes options of shares of common stock exercisable within 60 days
from October 26, 2000. These additional shares are deemed to be
outstanding for the purpose of computing the percentage of class owned
by such persons, but are not deemed to be outstanding for the purpose
of computing the percentage of any other person.
(3)<F3> Based on 13,167,259 shares of common stock outstanding on October 26,
2000. Where the persons listed on this table have the right to obtain
additional shares of common stock within 60 days from October 26, 2000,
these additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such persons, but are not
deemed to be outstanding for the purpose of computing the percentage of
any other person.
(4)<F4> Includes shares held by Freeform Communications Ltd., an affiliated
company owned and operated by Mr. Ferguson.
(5)<F5> Includes the shares of common stock owned by C.M. Explorations Services
Ltd., an affiliate of CME & Company, and shares of common stock and
warrants owned by Sarah Hawkins, who is related to T. Gregory Hawkins,
Managing Director of C.M. Exploration International, the General
Partner of CME & Company.
</FN>
</TABLE>
CHANGES IN CONTROL
We are not aware of any arrangements that may result in a change in
control of our company.
SELLING SHAREHOLDERS
We are registering shares of common stock held by existing shareholders
of our company. The shares are being registered to permit public secondary
trading of such shares, and each of the selling shareholders may offer the
common stock for resale as they wish. The following table sets forth the name
and amount of shares for each selling shareholder. None of the selling
shareholders ever had any position, office, or material relationship with us
within the past three years.
32
<PAGE>
<TABLE>
<CAPTION>
COMMON PERCENTAGE AMOUNT TO
SHARES BEING TOTAL COMMON OWNERSHIP BE OWNED
SELLING STOCKHOLDER(1)<F1> REGISTERED SHARES OWNED BEFORE SALE AFTER
(2)<F2> OFFERING
<S> <C> <C> <C> <C>
Christopher Dundas 394,000 394,000 3.0% -0-
George Arvanitis 20,000 20,000 0.2% -0-
Onyx Trading Corporation 20,000 20,000 0.2% -0-
c/o George Arvanitis
Sandra Mosca Redon 65,000 65,000 0.5% -0-
TOTAL 499,000 499,000 3.8% -0-
----------------
<FN>
(1)<F1>To our knowledge, except as set forth in the footnotes to this table and
subject to applicable community property laws, each person named in the
table has sole voting and investment power with respect to the shares set
forth opposite such person's name. The address of each of the persons in
this table is as follows: c/o Columbia River Resources, Inc., Suite 304 -
856 Homer Street, Vancouver, British Columbia V6B 2W5.
(2)<F2>Based on 13,167,259 shares of common stock outstanding as of October 26, 2000.
</FN>
</TABLE>
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
JIM ROMANO. On October 24, 1997, we issued Jim Romano 50,000 shares of
our common stock as a finder's fee for our acquisition of a mining property
located in Chihuahua, Mexico. On January 8, 1998, we granted Jim Romano an
option to purchase 125,000 shares of our common stock at a price of $0.25 per
share, with an expiration date of January 8, 2003. Jim Romano exercised his
option on March 22, 2000.
CALDERAN VENTURES LTD. Calderan Ventures Ltd. is a company owned and
operated by Jim Romano. Pursuant to an oral agreement, Calderan Ventures Ltd.
provided our company with investor relations services from January 2000 through
March 2000, and we were invoiced $18,000. On April 11, 2000, we satisfied the
debt owed to Calderan Ventures Ltd. by issuing it 72,000 shares of our common
stock. We no longer use the services of Calderan Ventures Ltd.
562275 B.C. LTD. 562275 B.C. Ltd. is a company owned and operated by
Jim Romano. In 1998, 562275 B.C. Ltd. advanced $35,000 to our company, and on
December 30, 1998, we repaid 562275 B.C. Ltd. by issuing it 500,000 Units at
$0.07 per Unit, with each Unit consisting of one share of our common stock and
one warrant.
FREEFORM COMMUNICATIONS LTD. Freeform Communications Ltd. is an
affiliated company owned and operated by Robert R. Ferguson, the President and a
director of the Company. Under the agreement dated January 1, 2000, Freeform
Communications Ltd. provides day-to-day management services in exchange for
$1,650 per month. In 1998, Freeform Communications Ltd. also advanced
CDN$20,000, and on December 30, 1998, we repaid Freeform Communications Ltd. by
issuing it 181,984 units at $0.07 per unit, with each unit consisting of one
share of our common stock and one warrant. In 1997, Freeform Communications Ltd.
purchased 330,000 shares of our common stock for $3,300.
33
<PAGE>
CME & Company. CME & Company is a mining exploration and development
company located in Guernsey, Channel Islands. CME & Company is an affiliate of
us and became our controlling shareholder by accepting shares of common stock in
exchange for services rendered. The following table provides certain option,
warrant and rights information (whether vested or not), as to CME & Company, as
of October 26, 2000:
<TABLE>
<CAPTION>
Title of Number of
SECURITIES SECURITIES EXERCISE PRICE EXPIRATION DATE
<S> <C> <C> <C>
Warrants 214,286(1)<F1> $0.15 / $0.25 11/25/2000; 11/25/2002
387,790 $0.15 / $0.25 10/15/2000; 10/15/2002
2,500,188 $0.15 / $0.25 01/24/2001; 01/24/2003
66,682 $0.15 / $0.25 02/03/2001; 02/03/2003
321,055 $0.25 03/16/2002
450,000(2)<F2> $0.15 / $0.25 12/25/1999; 12/25/2000
322,012 $0.15 / $0.25 02/03/2001; 02/03/2002
Total: 4,262,013
-------------
<FN>
(1)<F1> Warrants held in trust by CM Exploration Services Ltd. and on behalf of CME & Company.
(2)<F2> Warrants owned Sarah Hawkins, who is related to T. Gregory Hawkins, Managing
Director of C.M. Exploration International, the General Partner of CME &
Company.
</FN>
</TABLE>
Since our inception in June 1997, we have entered into or assumed the
following agreements with CME & Company:
a. Under our related party agreement with Ayaco (Ghana) Limited dated
December 15, 1999, we agreed to assume a $160,000 funding and exploration
program as set forth in the report by CME (Ghana) Limited dated April 1998,
which is a subsidiary of CME & Company, and a separate $295,000 funding and
exploration program as provided in the report by CME & Company dated September
30, 1999.
b. Under the agreement with CME & Company dated, October 1, 1999, CME &
Company agreed to perform a $150,000 reconnaissance and exploratory work program
on the Tanoso Reconnaissance License. Our funding of this agreement was applied
to our $295,000 funding obligation under the agreement with Ayaco (Ghana)
Limited.
c. Under the agreement with CME & Company dated October 10, 1999, CME &
Company agreed to perform reconnaissance evaluation services to identify
potential acquisitions in the Northern Maru Belt and Anka Belt of Nigeria for
$300,000.
d. Under the agreement with CME & Company dated April 7, 2000, CME &
Company agreed to perform an additional $441,500 exploration program on the
Tanoso Reconnaissance License. An amount of $145,000 will be applied to satisfy
our remaining funding obligation under the December 15, 1999 agreement with
Ayaco (Ghana) Limited. We have the right to terminate this agreement at any time
by providing two weeks written prior notice and, upon termination, we would be
obligated to pay CME & Company for all work and expenses incurred prior to
termination.
e. Under the agreement with CME & Company dated May 3, 2000, CME &
Company agreed to perform a $300,000 regional and detailed evaluation of the
southwestern, central and northeastern parts of Nigeria. We have the right to
terminate this agreement at any time by providing two weeks written prior notice
and, upon termination, we would be obligated to pay CME & Company for all work
and expenses incurred prior to termination.
34
<PAGE>
CME & Company is partnership of C.M. Exploration International Ltd. and
C.M. (Exploration ) Ltd. CME & Company is affiliated with C.M. Exploration
Services Ltd. by common directors. CME & Company's wholly-owned subsidiary is
CME (Ghana) Limited. CME (Ghana) Limited is affiliated with Ayaco (Ghana)
Limited by a common director. As a result, CME & Company is also affiliated with
Ayaco (Ghana) Limited.
CME (GHANA) LIMITED. CME (Ghana) Limited is a mining exploration and
development company located in Accra, Ghana. CME (Ghana) Limited is a subsidiary
of CME & Company, and is affiliated with Ayaco (Ghana) Limited by a common
director. Under our agreement with Ayaco (Ghana) Limited dated December 15,
1999, we agreed to assume a $160,000 funding and development program as set
forth in the report by CME (Ghana) Limited dated April 1998.
AYACO (GHANA) LIMITED. Ayaco (Ghana) Limited is a mining exploration
and development company located in Accura, Ghana. Ayaco (Ghana) Limited is
affiliate of CME & Company. Under our agreement with Ayaco (Ghana) Limited dated
December 15, 1999, we were granted the right to acquire the Tanoso
Reconnaissance License if we assumed and completed a $160,000 work program as
recommended by CME (Ghana) Limited, a subsidiary of CME & Company, and a
separate $295,000 funding and exploration program as set forth in the report by
CME & Company dated September 30, 1999. In addition to assuming these
obligations, we agreed to issue Ayaco (Ghana) Limited 1,000,000 shares of our
common stock.
CME CONSULTING LTD. CME Consulting Ltd. is a mineral exploration
consulting company located in Vancouver, British Columbia, Canada. CME
Consulting Ltd. is affiliated with CME Managing Consultants, Inc., as both
entities have common officers, directors and shareholders. On February 19, 1999,
we entered into a sublease agreement with CME Consulting Ltd. for 913.25 square
feet of office space. The term of the sublease agreement is from April 1, 1999
to November 30, 2000. Under the agreement, our lease payments are CDN$1,170.41
per month, and every third month we are required to pay an additional CDN$86.67
as a security deposit. The monthly payments include the use of two desks, two
chairs, and common office furniture.
CME MANAGING CONSULTANTS, INC. CME Managing Consultants, Inc. is a
mining exploration and development company located in Vancouver, British
Columbia, Canada. CME Managing Consultants, Inc. is affiliated with CME
Consulting Ltd., as both entities have common officers, directors and
shareholders. On October 20, 1998, we entered into an agreement with CME
Managing Consultants, Inc. whereby we agreed to fund and paid a CDN$7,500 work
program on one of our abandoned properties.
C.M. EXPLORATION SERVICES LTD. On November 24, 1999, C.M. Exploration
Services Ltd., an investment company located in Guernsey, Channel Islands,
submitted an unsolicited offer to purchase 214,286 units at a price of $0.07 per
unit, with each unit consisting of a share of our common stock and a warrant. We
accepted the offer and issued the units. C.M. Exploration Services Ltd. is
affiliated with the general partner of CME & Company by common directors.
We believe that the terms of the above-described transactions were no
less favorable to us than would have been obtained from a nonaffiliated third
party for similar consideration.
DESCRIPTION OF SECURITIES
GENERAL
We are authorized to issue of up to 50,000,000 common shares, $0.001
par value per share, and 1,000,000 preferred shares, $0.01 par value per share.
The following summary does not purport to be complete. You may wish to refer to
our articles of incorporation and bylaws, copies of which are available for
inspection. None of the holders of any class or series of our capital stock has
preemptive rights or a right to cumulative voting. As of October 26, 2000,
13,167,259 shares of common stock were issued and outstanding and no shares
preferred stock had been issued.
35
<PAGE>
PREFERRED STOCK
The Articles of Incorporation authorize the Board of Directors to
issue, by resolution, 1,000,000 shares of preferred stock, in classes or series,
having such designations, powers, preferences, rights, and limitations as the
Board of Directors may from time to time determine. As of the date of this
prospectus, no classes of preferred stock have been designated and no shares
have been issued.
COMMON STOCK
As of October 26, 2000, there were 13,167,259 shares of common stock
issued and outstanding. The board of directors may issue additional shares of
common stock without the consent of the common stockholders.
VOTING RIGHTS. Each outstanding share of common stock is entitled to
one vote. The common stockholders do not have cumulative voting rights, which
means that the holders of more than 50% of such outstanding shares voting for
the election of directors can elect all of the directors to be elected, if they
so choose.
NO PREEMPTIVE RIGHTS. Holders of common stock are not entitled to any
preemptive rights.
DIVIDENDS AND DISTRIBUTIONS. Holders of common stock are entitled to
receive such dividends as may be declared by the directors out of funds legally
available for dividends and to share pro rata in any distributions to holders of
common stock upon liquidation or otherwise. However, we have never paid cash
dividends on our common stock, and do not expect to pay such dividends in the
foreseeable future.
TRANSFER AGENT
The registrar and transfer agent for the common stock is Computershare
Investor Services, 12039 West Alameda Parkway, Suite Z-2, Lakewood, Colorado
80228.
PLAN OF DISTRIBUTION
GENERAL
We are acting as the general selling agent with respect to the common
stock being offered at a price of $0.45 per share. We intend to enter into
agreements with securities broker-dealers, who are members of the NASD, so that
broker-dealers who will be involved in the sale of the shares will be paid a
commission of ten percent by us. No broker-dealer has agreed to participate in
this offering as of the date of this prospectus. The NASD must first approve the
arrangements with any broker-dealers that will participate in the distribution
of this offering. In addition, our officers and directors may also be involved
in the sale of the shares but will not receive any sales commission or other
remuneration. This distribution will not involve any reallocations between NASD
members and non-members.
We may provide any sales agent or broker-dealer with a list of persons
whom we believe may be interested in purchasing shares in this offering. The
sales agent or broker-dealer may sell a portion of the shares to any such
person if he resides in a state where the shares can be sold and where the sales
agent or broker-dealer can sell the shares. No sales agent or broker-dealer is
obligated to sell any shares to any such person and will do so only to the
extent that such sales would not be inconsistent with the public distribution of
the shares. We are unaware of any person, including any affiliate, who intends
to finance any portion of the purchase price of the shares to be acquired in
this offering. It is not intended that the proceeds from this offering will be
used, directly or indirectly, to enable anyone to purchase shares.
METHOD OF SUBSCRIBING
You may subscribe by completing and delivering our form of subscription
agreement to us. The subscription price of $0.45 per share must be paid by
check, bank draft, or postal or express money order payable in United States
dollars to the order of Columbia River Resources Inc. Certificates for shares of
common stock subscribed for will be issued as soon as practicable after
termination of the offering.
36
<PAGE>
EXPIRATION DATE
The subscription offer will expire ___________________________ [90 days
from the date of this prospectus] which period may be extended for an additional
90 days, or on such earlier date as we shall determine in our discretion.
RIGHT TO REJECT
We reserve the right to reject any subscription in our sole discretion
and to withdraw this offer at any time prior to our acceptance of the
subscriptions received, if acceptance of a subscription would result in the
violation of any laws to which we are subject.
NO ESCROW
We have not established an escrow account and we are employing the
funds as they are being raised. THIS OFFERING IS NOT SUBJECT TO ANY MINIMUM
SUBSCRIPTION LEVEL, AND THEREFORE ANY FUNDS RECEIVED FROM A PURCHASER ARE
AVAILABLE TO US AND NEED NOT BE REFUNDED TO THE PURCHASER.
The Nevada General Corporation Law and Article VI of our Articles of
Incorporation permit the us to indemnify our officers and directors and certain
other persons against expenses in defense of a suit to which they are parties by
reason of such office, so long as the persons conducted themselves in good faith
and the persons reasonably believed that their conduct was in our best
interests, not opposed to our best interests, or unlawful. Indemnification is
not permitted in connection with a proceeding by or in the right of us in which
the officer or director was adjudged liable to us or in connection with any
other proceeding charging that the officer or director derived an improper
personal benefit, whether or not involving action in an official capacity, in
which proceeding the officer or director was adjudged liable on the basis that
he or she derived an improper personal benefit.
SELLING SHAREHOLDERS
When the selling shareholders sell their shares, the shares may be
delivered and/or sold in transactions from time to time on the over-the-counter
market, in negotiated transactions, or a combination of such methods of sale.
These transactions will be at market prices prevailing at the time, at prices
related to such prevailing prices, or at negotiated prices. The selling
stockholders may effect such transactions by selling to or through one or more
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling
stockholders. The selling stockholders and any broker-dealers that participate
in the distribution may under certain circumstances be deemed to be
"underwriters" within the meaning of federal securities laws. Any commissions
received by such broker-dealers and any profits realized on the resale of
securities by them may be deemed to be underwriting discounts and commissions
under federal securities laws.
Any broker-dealer participating in such transactions as agent may
receive commissions from the selling stockholders and, if they act as agent for
the purchaser of the securities, from such purchaser. Broker-dealers may agree
with the selling stockholders to sell a specified number of securities at a
stipulated price per share. To the extent such a broker-dealer is unable to do
so acting as agent for the selling stockholders, it may purchase as principal
any unsold securities at the price required to fulfill the broker-dealer
commitment to the selling stockholders. Broker-dealers who acquire securities as
principal may then resell these securities in transactions which may involve
crosses and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above in the
over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale or at negotiated prices. In connection
with such resales broker-dealers may pay to or receive from the purchasers of
these securities commissions computed as described above. To the extent required
under the federal securities laws, a supplemental prospectus will be filed,
disclosing
<TABLE>
<S> <C>
I. the name of any such broker-dealers;
II. the number of securities involved;
III. the price at which such securities are to be sold;
IV. the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable;
</TABLE>
37
<PAGE>
<TABLE>
<S> <C>
V. that such broker-dealers did not conduct any investigation to verify the information set out or
incorporated by reference in this prospectus, as supplemented; and,
VI. other facts material to the transaction.
</TABLE>
Under applicable rules and regulations under federal securities laws,
any person engaged in the distribution of the resale of securities may not
simultaneously engage in market making activities with respect to the securities
of our company for a period of two business days prior to the commencement of
such distribution. In addition, the selling stockholders will be subject to
applicable provisions of the federal securities laws, and the rules and
regulations under these laws, including Regulation M, which provisions may limit
the timing of purchases and sales of the securities by the selling stockholders.
The selling stockholders will pay all commissions and other expenses
associated with the sale of the common stock by them. The shares of common stock
offered through this prospectus are being registered because of our contractual
obligations with the selling stockholders, and we have paid the expenses of the
preparation of this prospectus.
SEC POSITION ON INDEMNIFICATION
As permitted by Nevada law, our Articles of Incorporation provides that
a director of our company shall not be personally liable to us or our
stockholders for monetary damages for a breach of fiduciary duty as a director,
except (i) for any breach of the director's duty of loyalty to us or our
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of the law, or (iii) under Section
78.300 of the Nevada General Corporation Law, which prohibits the unlawful
payment of dividends or the unlawful repurchase or redemption of stock. This
provision is intended to afford our directors protection against, and to limit
their potential liability for monetary damages resulting from, suits alleging a
breach of the duty of care by a director.
The provisions diminish the potential rights of action which might
otherwise be available to our shareholders by limiting the liability of officers
and directors to the maximum extent allowable under Nevada law, and by affording
indemnification against most damages and settlement amounts paid by a director
of our company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause our company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because we do not presently
have directors' liability insurance and because there is no assurance that we
will procure such insurance or that if such insurance is procured it will
provide coverage to the extent directors would be indemnified under the
provisions, we may be forced to bear a portion or all of the cost of a
director's claims for indemnification under such provisions. If we are forced to
bear the costs for indemnification, the value of our stock may be adversely
affected. In the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising under the Securities Act of 1933 is
contrary to public policy and, therefore, is unenforceable.
LEGAL MATTERS
Dill Dill Carr Stonbraker & Hutchings, P.C., Denver, Colorado will pass
upon the validity of our shares offered hereby.
38
<PAGE>
EXPERTS
Our financial statements as of December 31, 1998 and December 31, 1997,
have been audited by Jones Jenson & Company n/k/a HJ & Associates, LLD,
independent chartered accountants, as set forth in their report on such
financial statements, and are included in this prospectus in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing. The financial statements for the fiscal year ended December 31, 1999
have been audited by Pannell Kerr Forster, as set forth in their report on such
financial statements, and are included in this prospectus in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
We have not previously been subject to the reporting requirements of
the SEC. We have filed with the SEC a registration statement on Form SB-1 under
the Securities Act with respect to the Securities offered hereby. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits and schedules thereto. For further information on us
and our securities, you should review the registration statement and the
exhibits and schedules thereto. Statements made in this prospectus regarding the
contents of any contract or document filed as an exhibit to the registration
statement are not necessarily complete. You should review the copy of such
contract or document so filed.
You can inspect the registration statement and the exhibits and the
schedules thereto filed with the commission, without charge, at the office of
the SEC at Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549. You
can also obtain copies of these materials from the public reference section of
the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed rates.
You can obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The Commission maintains a web site on the
Internet that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Commission at
HTTP://WWW.SEC.GOV.
We have a web site on the Internet at HTTP://WWW.columbiariver1.com.
REPORTS TO STOCKHOLDERS
As a result of filing this registration statement, we will become
subject to the reporting requirements of the Securities Exchange Act, and will
be required to file periodic reports, proxy statements, and other information
with the SEC. We will furnish our shareholders with annual reports containing
audited financial statements certified by independent public accountants
following the end of each fiscal year, proxy statements, and quarterly reports
containing unaudited financial information for the first three quarters of each
fiscal year following the end of such fiscal quarter.
39
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Interim Balance Sheet (Unaudited)
(U.S. Dollars)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
June 30, December 31,
2000 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 19,251 $ 10,963
Share Receivable 31,250 -
Prepaid expenses 4,984 1,636
Due from stockholder 15,287 30,630
----------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 70,773 43,229
PROPERTY AND EQUIPMENT 4,296 4,296
OPTIONS ON MINERAL PROPERTIES 90,000 15,000
----------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 165,069 $ 62,525
====================================================================================================
LIABILITIES
CURRENT
Accounts payable $ 4,982 $ 10,242
Advances from stockholder 207,628 373,559
Notes payable 9,588 9,588
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 222,198 393,389
---------------------------------------------------------------------------------------------------
CONTINGENCY
STOCKHOLDERS' DEFICIT
PREFERRED STOCK, $0.01 par value, 1,000,000 shares
authorized, no shares issued and outstanding
COMMON STOCK PAR VALUE OF $0.001
50,000,000 Shares authorized
12,438,366 and 7,377,222 Shares issued and outstanding 963,551 402,254
SUBSCRIPTIONS RECEIVED 10,418 27,132
OTHER RECEIVABLE (4,668) (114,101)
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE (1,026,430) (646,149)
---------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' DEFICIT (57,129) (330,864)
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 165,069 $ 62,525
===================================================================================================
</TABLE>
F-1
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Interim Statement of Cash Flows (Unaudited)
Six Month Period Ended June 30, 2000
(With comparative figures for the year ended December 31, 1999)
(U.S. Dollars)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (380,281) (565,329)
Adjustments to reconcile net loss to
net cash used by operating activities
Contributed interest - -
Depreciation - 1,655
Write-off of options on mineral properties - 116,025
Changes in non-cash working capital
Due from shareholder 15,343 (30,630)
Prepaid expenses (3,348) (1,636)
Organization costs - -
Accounts payable (5,260) (5,548)
Advances from shareholder (165,931) 373,559
--------------------------------------------------------------------------------------------------
NET CASH USED BY OPERATING ACTIVITIES (539,477) (111,904)
--------------------------------------------------------------------------------------------------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of property and equipment - (5,951)
Purchase of option on mineral properties - (38,025)
--------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES - (43,976)
--------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Subscriptions received 125,136 27,132
Other receivable 114,100 -
Proceeds from (repayment of) notes payable - (7,500)
Issuance of common stock 308,529 147,000
--------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 547,765 166,632
--------------------------------------------------------------------------------------------------
INFLOW (OUTFLOW) OF CASH 8,288 10,752
CASH, BEGINNING OF PERIOD 10,963 211
--------------------------------------------------------------------------------------------------
Cash, End of Period 19,251 10,963
==================================================================================================
NON-CASH FINANCING ACTIVITIES
Common stock issued for settlement of debt 52,421
Shares receivable 31,250 -
Common stock issued 21,768 114,101
Common stock issued for mineral options 75,000 15,000
==================================================================================================
</TABLE>
F-2
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Interim Statement of Operations (Unaudited)
Six Month Period Ended June 30, 2000
(With comparative figures for the year ended December 31, 1999)
(U.S. Dollars)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
EXPENSES
Property exploration expenses $ 338,483 $ 384,778
Write-off of options on mineral properties - 116,025
General and administrative 41,798 62,871
Depreciation - 1,655
--------------------------------------------------------------------------------------------------
TOTAL EXPENSES 380,281 565,329
--------------------------------------------------------------------------------------------------
Net Loss for Period $ (380,281) $ (565,329)
==================================================================================================
Net Loss Per Share $ (0.04) $ (0.10)
==================================================================================================
Weighted Average Number of Common
Shares Outstanding 10,334,524 6,251,566
==================================================================================================
</TABLE>
F-3
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Financial Statements
December 31, 1999 and 1998
INDEX Page
Report of Independent Chartered Accountants 1
Financial Statements
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 6-12
F-4
<PAGE>
JONES, JENSEN
& COMPANY, LLC
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Columbia River Resources, Inc.
(A Development Stage Company)
Vancouver, B.C. Canada
We have audited the accompanying balance sheet of Columbia River Resources, Inc.
(a development stage company) as of December 31, 1998, and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
year ended December 31, 1998 and for the period from inception on June 13, 1997
through December 31, 1997 and 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Columbia River Resources, Inc.
(a development stage company) as of December 31, 1998 and the results of its
operations and its cash flows for the year ended December 31, 1998 and for the
period from inception on June 13, 1997 through December 31, 1997 and 1998 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has no operations and limited capital which
together raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are also described in Note
7. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
February 27, 1999
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (802) 328-4461
F-5
<PAGE>
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE DIRECTORS OF COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
We have audited the accompanying balance sheet of Columbia River Resources, Inc.
(An Exploration Stage Company) as at December 31, 1999 and the related
statements of operations, stockholders' deficit and cash flows for the year then
ended and the cumulative totals for the development stage operations from June
13, 1997 (inception) through December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. Our opinion,
insofar as it relates to the cumulative totals for the development stage
operations from June 13, 1997 (inception) through December 31, 1998, is based
solely on the report of the other auditors.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of Columbia River Resources, Inc. (An
Exploration Stage Company) as at December 31, 1999 and the results of its
operations and cash flows for the year then ended and the cumulative totals for
the development stage operations from June 13, 1997 (inception) through December
31, 1999 in conformity with generally accepted accounting principles. Our
opinion, insofar as it relates to the cumulative totals for development stage
operations from June 13, 1997 (inception) through December 31, 1998 is based
solely on the report of the other auditors.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company has no revenues and limited capital which
together raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are also described in note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Pannell Kerr Forster
"Pannell Kerr Forster"
Chartered Accountants
Vancouver, Canada
March 27, 2000
F-6
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Balance Sheets
December 31, 1999 and 1998
(U.S. Dollars)
<TABLE>
<CAPTION>
========================================================================================================================
1999 1998
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 10,963 $ 211
Prepaid expenses 1,636 0
Due from stockholder (note 10) 30,630 0
------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 43,229 211
PROPERTY AND EQUIPMENT (note 5) 4,296 0
OPTIONS ON MINERAL PROPERTIES (note 6) 15,000 78,000
-------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 62,525 $ 78,211
=========================================================================================================================
LIABILITIES
CURRENT
Accounts payable $ 10,242 $ 15,790
Advances from stockholder (note 10) 373,559 4,682
Notes payable (note 7) 9,588 64,827
-------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 393,389 85,299
-------------------------------------------------------------------------------------------------------------------------
CONTINGENCY (note 11)
STOCKHOLDERS' DEFICIT (note 8)
PREFERRED STOCK, $0.01 par value, 1,000,000 shares authorized, no shares
issued and outstanding
COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF $0.001 PAR VALUE
50,000,000 Shares authorized
7,377,222 and 3,660,000 Shares issued and outstanding 402,254 73,732
SUBSCRIPTIONS RECEIVED 27,132 0
OTHER RECEIVABLE (note 9) (114,101) 0
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE (646,149) (80,820)
-------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' DEFICIT (330,864) (7,088)
-------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 62,525 $ 78,211
=========================================================================================================================
</TABLE>
See notes to financial statements.
F-7
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Statement of Operations
(U.S. Dollars)
<TABLE>
<CAPTION>
====================================================================================================================================
From
Inception on
June 13,
June 13 to 1997 Through
Year Ended December 31 December 31, December 31,
1999 1998 1997 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EXPENSES
Property exploration expenses $ 384,778 $ 0 $ 0 $ 384,778
Write-off of options on mineral properties 116,025 0 0 116,025
General and administrative 62,871 67,547 12,506 142,924
Depreciation 1,655 684 83 2,422
------------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 565,329 68,231 12,589 646,149
------------------------------------------------------------------------------------------------------------------------------------
NET LOSS FOR PERIOD $ (565,329) $ (68,231) $ (12,589) $ (646,149)
====================================================================================================================================
NET LOSS PER SHARE $ (0.10) $ (0.02) $ (0.00)
====================================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,251,566 3,597,500 3,510,000
====================================================================================================================================
</TABLE>
See notes to financial statements.
F-8
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Statement of Stockholders' Deficit
(U.S. Dollars)
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
and Paid-In During the
Common Capital In Other Subscription Exploration
Shares Excess of Par Receivable Received Stage Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT INCEPTION ON JUNE 30, 1997 0 $ 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock for cash at $0.01
per share (net of issuance costs) 3,460,000 33,399 0 0 0 33,399
Issuance of common stock for mineral property
at $0.01 per share (note 6(b)) 50,000 500 0 0 0 500
Net loss from inception on June 13, 1997 to
December 31, 1997 0 0 0 0 (12,589) (12,589)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1997 3,510,000 33,899 0 0 (12,589) 21,310
Contributed interest 0 2,333 0 0 0 2,333
Issuance of common stock for mineral property
at $0.25 per share (note 6(b)(c)) 150,000 37,500 0 0 0 37,500
Net loss for year ended December 31, 1998 0 0 0 0 (68,231) (68,231)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 3,660,000 73,732 0 0 (80,820) (7,088)
Issuance of common stock for mineral property
at $0.15 per share (note 6(a)) 100,000 15,000 0 0 0 15,000
Issuance of common stock for cash at $0.07
per share (note 8(b)) 2,100,000 147,000 0 0 0 147,000
Issuance of common stock for settlement of debt
at $0.07 per share (note 8(b)) 748,865 52,421 0 0 0 52,421
Issuance of common stock for settlement of debt
at $0.1485 per share (notes 9 and 12(c)) 768,357 114,101 0 0 0 114,101
Other receivable (note 9) 0 0 (114,101) 0 0 (114,101)
Subscriptions received (note 8(c)) 0 0 0 27,132 0 27,132
Net loss for year ended December 31, 1999 0 0 0 0 (565,329) (565,329)
====================================================================================================================================
BALANCE, DECEMBER 31, 1999 7,377,222 $ 402,254 $ (114,101) $ 27,132 $(646,149) $(330,864)
====================================================================================================================================
</TABLE>
See notes to financial statements.
F-9
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Statement of Cash Flows
(U.S. Dollars)
<TABLE>
<CAPTION>
================================================================================================================================
From
June 13,
June 13 to 1997 Through
Year Ended December 31 December 31, December 31,
1999 1998 1997 1999
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (565,329) $ (68,231) $ (12,589) $ (646,149)
Adjustments to reconcile net loss to
net cash used by operating activities
Contributed interest 0 2,333 0 2,333
Depreciation 1,655 684 83 2,422
Write-off of options on mineral properties 116,025 0 0 116,025
Changes in non-cash working capital
Due from shareholder (30,630) 0 0 (30,630)
Prepaid expenses (1,636) 1,406 (1,406) (1,636)
Organization cost 0 0 (767) (767)
Accounts payable (5,548) 19,982 490 14,924
Advances from shareholder 373,559 0 0 373,559
--------------------------------------------------------------------------------------------------------------------------------
NET CASH USED BY OPERATING ACTIVITIES (111,904) (43,826) (14,189) (169,919)
--------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchase of property and equipment (5,951) 0 0 (5,951)
Purchase of option on mineral properties (38,025) (25,000) (15,000) (78,025)
--------------------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (43,976) (25,000) (15,000) (83,976)
--------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Subscriptions received 27,132 0 0 27,132
Proceeds from (repayment of) notes
payable (7,500) 64,827 0 57,327
Issuance of common stock 147,000 0 33,399 180,399
--------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 166,632 64,827 33,399 264,858
--------------------------------------------------------------------------------------------------------------------------------
INFLOW (OUTFLOW) OF CASH 10,752 (3,999) 4,210 10,963
CASH, BEGINNING OF PERIOD 211 4,210 0 0
--------------------------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD $ 10,963 $ 211 $ 4,210 $ 10,963
================================================================================================================================
NON-CASH FINANCING ACTIVITIES
Common stock issued for settlement of
debt $ 52,421 $ 0 $ 0 $ 52,421
Common stock issued 114,101 0 0 114,101
Common stock issued for mineral options 15,000 37,500 500 53,000
================================================================================================================================
</TABLE>
See notes to financial statements.
F-10
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
1. INCORPORATION AND NATURE OF OPERATIONS
The Company was incorporated on June 13, 1997, in the State of Nevada. The
Company is in the exploration stage as defined in Statement No. 7 of the
Financial Accounting Standards Board. Its principal business is the
acquisition and exploration of mining properties.
2. GOING CONCERN
These financial statements have been prepared in accordance with generally
accepted accounting principles on a going concern basis. This presumes
funds will be available to finance on-going development, operations and
capital expenditures and the realization of assets and the payment of
liabilities in the normal course of operations for the foreseeable future.
Management intends to raise additional capital through share issuances to
finance operations.
The Company has minimal capital resources presently available to meet
obligations which normally can be expected to be incurred by similar
companies and has an accumulated deficit of $646,149. These factors raise
substantial doubt about the Company's ability to continue as a going
concern and is dependent on its ability to obtain and maintain an
appropriate level of financing on a timely basis and to achieve sufficient
cash flows to cover obligations and expenses. The outcome of these matters
cannot be predicted. These financial statements do not give effect to any
adjustments to the amounts and classification of assets and liabilities
which might be necessary should the Company be unable to continue as a
going concern.
3. REALIZATION OF ASSETS
The investment in options on resource properties comprises a significant
portion of the Company's assets. Recovery of the carrying value of the
investment in resource properties is dependent upon the existence of
economically recoverable reserves, the ability of the Company to obtain
necessary financing to complete the exploration and development, the
attainment of future profitable production or the disposition of the
properties for proceeds in excess of their carrying value.
4. SIGNIFICANT ACCOUNTING POLICIES
(a) Property and equipment
Property and equipment are carried at cost less accumulated
depreciation. Depreciation is calculated at the following rates
(commencing when the assets are put into use):
Computer hardware - 30% Declining balance
Office furniture and equipment - 20% Declining balance
The Company reviews property and equipment to determine if the
carrying amount is recoverable based on the estimate of future cash
flows expected to result from the use of the asset and its eventual
disposition. If in this determination there is an apparent shortfall,
the loss will be recognized as a current charge to operations.
F-11
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
4. SIGNIFICANT ACCOUNTING POLICIES
(b) Exploration stage expenditures
The Company expenses all expenditures for exploration of resource
properties as they are incurred where the properties do not have
proven mineral reserves.
(c) Foreign currency translation
Amounts recorded in foreign currency are translated into United States
dollars as follows:
(i) Monetary assets and liabilities are translated at the rate of
exchange in effect at the balance sheet date;
(ii) Non-monetary assets and liabilities at the exchange rates
prevailing at the time of the acquisition of the assets or
assumption of the liabilities; and,
(iii) Revenues and expenses, at the average rate of exchange for the
year.
Gains and losses arising from this translation of foreign currency are
excluded from net loss for the period and accumulated as a separate
component of stockholder's deficit.
(d) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosures 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 and would impact future results of
operations and cash flows.
(e) Loss per share
Loss per share computations are based on the weighted average of
common shares outstanding during the period. Diluted loss per share
has not been presented separately as the outstanding stock options and
warrants are anti-dilutive for each of the periods presented.
(f) Financial instruments
The Company's financial instruments include cash, due from
stockholder, accounts payable, advances from stockholder, and notes
payable. It is management's opinion that the Company is not exposed to
significant interest or credit risks arising from these financial
instruments and that currency risks are nominal.
F-12
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
1999 1998
---------------------------------------------------------------------------------------------------------
Accumulated
Cost Depreciation Net Net
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer hardware $ 4,643 $ 1,393 $ 3,250 $ 0
Office furniture and equipment 1,308 262 1,046 0
---------------------------------------------------------------------------------------------------------
$ 5,951 $ 1,655 $ 4,296 $ 0
=========================================================================================================
</TABLE>
6. OPTIONS ON MINERAL PROPERTIES
(a) Tanoso Reconnaissance License, Ghana
On September 28, 1999, the Company entered into a Binding Heads of
Agreement ("BHA") with Ayaco (Ghana) Limited ("Ayaco") to purchase an
option to acquire a 100% working interest ("interest") in the Tanoso
Reconnaissance License ("License"). In exchange for a non-refundable
100,000 shares of common stock issued at a deemed value of $0.15 per
share (the "Option Payment"), Ayaco granted the Company the following:
(i) An exclusive 3 month due diligence period during which the
Company may investigate all aspects of the licenses and the
corporate matters of Ayaco so far as those matters affect the
BHA.
(ii) The right to make an election ("Election") to acquire the
interest from Ayaco through written notice.
Pursuant to the terms of the BHA, the Company is required to issue
500,000 shares of its common stock to Ayaco upon each of the first
anniversary of the BHA and on the date of Election for a total of
1,000,000 shares of common stock.
The Company is also required to assume funding and development costs
of $150,000 relating to the License. The Option Payment and any other
sums incurred by the Company relating to the option or the BHA, shall
be applied toward the earn-in expenditures.
F-13
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
6. OPTIONS ON MINERAL PROPERTIES (Continued)
Once the shares have been issued pursuant to the BHA, Ayaco will
transfer title of the License to the Company. The Company will own a
100% interest in the License, subject to a 10% net profit interest
payable to Ayaco and a 10% net profit interest payable to the
Government of Ghana.
100,000 shares of common stock were issued to Ayaco in 1999 in
compliance with the BHA.
On December 15, 1999, the Company entered into an Agreement
("Agreement") with Ayaco to exercise the option. This agreement
contains the same terms as BHA, with the exception that 500,000 shares
of common stock could be issued 20 days after the execution date.
These shares were subsequently issued in 2000.
The Agreement may be terminated at any time by the Company through
written notice. Upon termination, the parties to the Agreement shall
not be responsible for any unfulfilled obligations under the
Agreement.
(b) Roble Property, Mexico
On July 21, 1997, the Company entered into a Letter of Intent with
Hunter Exploration Group and Seguro Projects, Inc. to purchase an
option for mineral properties located in Chihuahua, Mexico. Pursuant
to the terms of the Letter of Intent, the Company made payments of
$15,000 and issued 50,000 shares of common stock. The Company was
committed to pay an additional $25,000 and to issue an additional
50,000 shares of common stock. During 1999, the Company abandoned the
option.
(c) Blue Basin Property, Nevada
On July 13, 1998, the Company purchased an option on 150 mining claims
northwest of Elko, Nevada for cash of $25,000 and 100,000 shares of
its common stock valued at $0.25 per share. The Company was committed
to fund exploration expenditures of $75,000 and cash payments of
$50,000 by June 29, 1999. During 1999, the Company abandoned the
option.
7. NOTES PAYABLE
Notes payable are non-interest bearing and have no fixed terms of
repayment.
F-14
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
8. STOCKHOLDERS' EQUITY
(a) Stock options
The Company has granted founders, directors and certain employees
stock options. Stock option activity is summarized as follows:
======================================================================
Exercise Number
Price of Shares
----------------------------------------------------------------------
Balance outstanding, December 31, 1997 $ 0.00 0
1998 - Granted $ 0.32 * 1,250,000
1998 - Cancelled $ 0.42 (500,000)
----------------------------------------------------------------------
Balance outstanding, December 31, 1998 and 1999 $ 0.25 750,000
======================================================================
* Weighted average exercise price
In 1995 the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation", which contains a fair value-based method for valuing
stock-based compensation that entities may use. This measures
compensation cost at the grant date based on the fair value of the
award. Compensation is then recognized over the service period, which
is usually the vesting period. For U.S. GAAP purposes management
accounts for options under APB Opinion No. 25. As option exercise
prices approximated market price on the dates of grants no
compensation expense has been recognized.
(b) On December 30, 1998, the Board of Directors of the Company authorized
a private placement of its common stock. Under the terms of the
private placement, the Company can issue up to 3,571,479 units
("Unit") at a value of $0.07 each. Each Unit consists of one share of
common stock and a warrant to purchase one share at $0.15 per share
within a year of issue and at $0.25 per share in the second year
following issue. 2,848,865 Units were issued in 1999.
(c) On September 30, 1999, 66,881 warrants were exercised for proceeds of
$10,032. The shares subscribed have not been issued. Accordingly, they
are reflected as subscriptions received.
(d) On December 21, 1999, the Company accepted an unsolicited offer to
purchase 244,286 Units for cash. The Company also resolved to issue
727,790 Units, for settlement of accounts payable owed to a
shareholder. These units were subsequently issued in January 2000
(note 12(e)).
(e) Warrants issued and outstanding were as follows:
======================================================================
Issued in 1999 (note 8(b)) 2,848,865
Exercised (66,881)
----------------------------------------------------------------------
Outstanding at December 31, 1999 2,781,984
======================================================================
Warrants are exercisable at $0.15 per share in the first year and at
$0.25 per share in the second year.
F-15
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
9. OTHER RECEIVABLE
In 1999, the Company's transfer agent erroneously issued 768,357 shares.
Subsequent to the year-end, these shares were cancelled.
10. RELATED PARTY TRANSACTIONS
(a) Amounts due from a stockholder are non-interest earning and have no
fixed terms of repayment.
(b) Advances from a stockholder are non-interest bearing and have no fixed
terms of repayment.
(c) The Company made payments for various purposes to related parties as
listed below:
<TABLE>
<CAPTION>
====================================================================================================
Relationship 1999 1998 1997
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Included in General and
Administrative Expenses
Rent to affiliate $ 13,976 $ 0 $ 0
Office services to affiliate $ 8,905 $ 0 $ 0
Management services to
company with common
officer $ 19,800 $ 0 $ 0
Consulting services to related party $ 0 $ 0 $ 4,000
Included in Property Exploration
Expenses
Consulting services by stockholder $378,487 $ 0 $ 4,000
====================================================================================================
</TABLE>
(d) The Company issued 768,865 Units to companies controlled by
shareholders as settlement for debt incurred for consulting services
which were provided in the normal course of its commercial operations.
(e) The Company erroneously issued 768,357 shares to a company controlled
by stockholders.
(f) The Company has agreed to pay a company employing an officer of the
Company a fee of $1,650 per month for management fees and has also
agreed to pay an affiliate of the Company approximately $8,800 for
rent.
11. CONTINGENCY
During the year ended December 31, 1999, the Company had not purchased any
insurance. Management is in the process of obtaining insurance.
F-16
<PAGE>
COLUMBIA RIVER RESOURCES, INC.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended December 31, 1999 and 1998 and Period From June 13, 1997
(Inception) Through December 31, 1999
(U.S. Dollars)
--------------------------------------------------------------------------------
12. SUBSEQUENT EVENTS
(a) On January 4, 2000, the Company resolved to issued 500,000 shares,
valued at $0.15 each, to purchase options on mineral properties.
(b) On January 24, 2000, the Company resolved to issue 2,500,188 Units,
valued at $0.07 each, for settlement of accounts payable of $175,013
to a stockholder.
(c) On January 31, 2000, the Company resolved to issue 2,571 Units, valued
at $0.07 each, for settlement of accounts payable $180 owed to an
affiliate. It also resolved to cancel 768,357 shares incorrectly
issued in 1999 so that they could be issued correctly (note 9).
(d) On February 3, 2000, the Company resolved to issue 66,682 Units,
valued at $0.07 each, for settlement of accounts payable owed to an
affiliate.
(e) In January 2000, 972,076 units were issued (note 8 (d)).
13. INCOME TAXES
A deferred tax asset stemming from the Company's net operating loss carry
forward, has been reduced by a valuation account to zero due to
uncertainties regarding the utilization of the deferred assets. At December
31, 1999, the Company has available a net operating loss carry forward of
approximately $300,000 which it may use to offset future United States
federal taxable income. The net operating loss carry forward if not
utilized, will begin to expire in 2016.
F-17
<PAGE>
[Back cover of prospectus]
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _________, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law and Article VI of the registrant's
Articles of Incorporation permit us to indemnify its officers and directors and
certain other persons against expenses in defense of a suit to which they are
parties by reason of such office, so long as the persons conducted themselves in
good faith and the persons reasonably believed that their conduct was in the
registrant's best interests, not opposed to the registrant's best interests, or
unlawful. Indemnification is not permitted in connection with a proceeding by or
in the right of the registrant in which the officer or director was adjudged
liable to the registrant or in connection with any other proceeding charging
that the officer or director derived an improper personal benefit, whether or
not involving action in an official capacity, in which proceeding the officer or
director was adjudged liable on the basis that he or she derived an improper
personal benefit.
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the registrant in connection with the securities
being registered are as follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission filing fee.........................$ 1,221
NASD filing fee.......................................................$ 962
Accounting fees and expenses..........................................$ 10,000
Blue sky fees and expenses............................................$ 5,000
Legal fees and expenses...............................................$ 30,000
Transfer agent fees and expenses......................................$ 5,000
Printing expenses.....................................................$ 5,000
Miscellaneous expenses................................................$ 2,817
Total.................................................................$ 60,000
======
</TABLE>
All amounts are estimates except the SEC filing fee and NASD filing fee
ITEM 3. UNDERTAKINGS
(A) The small business issuer will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered
would not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) Include any additional or changed material
information on the plan of distribution.
II-1
<PAGE>
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(B) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the small business
issuer will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
For the period from June 1999 to present, the registrant sold and issued the
following units and shares of its common stock, which sales and issuances were
not registered under the Securities Act of 1933, as amended (the "Act"):
On June 15, 1999, the registrant issued 768,357 shares of common stock in
exchange for services rendered, valued at $114,100.99, in reliance upon the
exemption from registration contained in Section 4(2) of the Act.
On December 1, 1999, the registrant issued 100,000 shares of common stock to
Ayaco (Ghana) Limited as consideration for an option to acquire the rights to
the Tanoso Reconnaissance License. The shares were issued in reliance upon the
exemption from registration contained in Section 4(2) of the Act.
On December 21, 1999, the registrant issued 214,286 units to C.M Exploration
Services Ltd., and 30,000 units to David Wingfield, in exchange for cash, with
each unit consisting of one share of our common stock and one warrant to
purchase one share of our common stock. The units were issued in reliance upon
the exemption from registration contained in Section 4(2) of the Act.
On December 21, 1999, the registrant issued 727,790 units to CME & Company in
exchange for services rendered, valued at $50,945.32, with each unit consisting
of one share of our common stock and one warrant to purchase one share of our
common stock. The units were issued in reliance upon the exemption from
registration contained in Section 4(2) of the Act.
On January 4, 2000, the registrant issued 500,000 shares of common stock to
Ayaco (Ghana) Limited as consideration for an option to acquire the rights to
the Tanoso Reconnaissance License. The shares were issued in reliance upon the
exemption from registration contained in Section 4(2) of the Act.
On January 31, 2000, the registrant issued 2,571 units to CME Managing
Consultants Inc. in exchange for services rendered, valued at $180.00, with each
unit consisting of one share of our common stock and one warrant to purchase one
share of our common stock. The units were issued in reliance upon the exemption
from registration contained in Section 4(2) of the Act.
II-2
<PAGE>
On January 31, 2000, the registrant issued 2,500,188 units to CME & Company in
exchange for services rendered, valued at $175,013.19, with each unit consisting
of one share of our common stock and one warrant to purchase one share of our
common stock. The units were issued in reliance upon the exemption from
registration contained in Section 4(2) of the Act.
On February 3, 2000, the registrant issued 66,682 units to CME & Company in
exchange for services rendered, valued at $4,667.71, with each unit consisting
of one share of our common stock and one warrant to purchase one share of our
common stock. The units were issued in reliance upon the exemption from
registration contained in Section 4(2) of the Act.
On April 1, 2000, the registrant issued 499,000 shares of common stock to four
purchasers in exchange for cash of $124,750. The shares were issued in reliance
upon the exemption from registration contained in Rule 506 of Regulation D.
On April 11, 2000, the registrant issued 321,055 units to CME & Company in
exchange for services rendered, valued at $64,211.07, with each unit consisting
of one share of our common stock and one warrant to purchase one share of our
common stock. The units were issued in reliance upon the exemption from
registration contained in Section 4(2) of the Act.
On April 11, 2000, the registrant issued 72,000 shares of common stock to
Calderan Ventures, Ltd., in exchange for services rendered, valued at $18,000.
The shares were issued in reliance upon the exemption from registration
contained in Section 4(2) of the Act.
On April 11, 2000, the registrant issued 125,000 shares of common stock to James
Romano in exchange for cash of $31,250. The shares were issued in reliance upon
the exemption from registration contained in Section 4(2) of the Act.
On June 26, 2000, the registrant issued 322,012 units to CME & Company in
exchange for services rendered, valued at $22,540.81, with each unit consisting
of one share of our common stock and one warrant to purchase one share of our
common stock. The units were issued in reliance upon the exemption from
registration contained in Section 4(2) of the Act.
On August 15, 2000, the registrant issued 66,881 shares of common stock to CME
Managing Consultants Inc. in exchange of $10,032.50. The shares were issued in
reliance upon the exemption from registration contained in Section 4(2) of the
Act.
On October 23, 2000, the registrant issued 340,000 shares of common stock to
CME & Company in exchange for $51,000. the shares were issued in reliance upon
the exemption from registration contained in Section 4(2) of the Act.
With respect to the sales of securities above, no underwriting commissions or
discounts were paid on these sales.
II-3
<PAGE>
ITEM 5. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sequential Page
Exhibit No. Exhibit Number
----------------------------------------------------------------------------------------------------------------------
1.1 Form of Selling Agent Agreement 63
----------------------------------------------------------------------------------------------------------------------
2.1 Articles of Incorporation 68
----------------------------------------------------------------------------------------------------------------------
2.2 Bylaws 74
----------------------------------------------------------------------------------------------------------------------
4.1 Form of Subscription Agreement 96
----------------------------------------------------------------------------------------------------------------------
6.1 Lease Agreement between Columbia River Resources Inc. and CME Consulting Ltd. 98
----------------------------------------------------------------------------------------------------------------------
6.2 Binding Heads Property Agreement between Columbia River Resources Inc. Ayaco 102
----------------------------------------------------------------------------------------------------------------------
6.3 Agreement between Columbia River Resources Inc. and Ayaco (Ghana) Limited dated 107
----------------------------------------------------------------------------------------------------------------------
6.4 Agreement between Columbia River Resources Inc. and Freeform Communications Ltd. 112
----------------------------------------------------------------------------------------------------------------------
6.5 Agreement between Columbia River Resources Inc. and CME & Company - Tanoso 115
----------------------------------------------------------------------------------------------------------------------
6.6 Agreement between Columbia River Resources Inc. and CME & Company - Nigeria 122
----------------------------------------------------------------------------------------------------------------------
6.7 Report on Reconnaissance Rock, Stream Sampling and Geological Mapping on the Ayaco 129
----------------------------------------------------------------------------------------------------------------------
6.8 Agreement between Columbia River Resources Inc. and CME & Company, dated October 154
----------------------------------------------------------------------------------------------------------------------
6.9 Agreement between Columbia River Resources Inc. and CME & Company - Tantalum 161
----------------------------------------------------------------------------------------------------------------------
10.1 Consent of Jones, Jensen & Company, LLC n/k/a HJ & Associates, LLC 167
----------------------------------------------------------------------------------------------------------------------
10.2 Consent of Pannell Kerr Foster 169
----------------------------------------------------------------------------------------------------------------------
10.3 Consent of Dill Dill Carr Stonbraker & Hutchings, P.C. (incorporated by reference
to Exhibit 11.1) 171
----------------------------------------------------------------------------------------------------------------------
10.4 Consent of Robert J. Griffis, Ph.D., P.Eng. 173
----------------------------------------------------------------------------------------------------------------------
11.1 Opinion re legality 175
----------------------------------------------------------------------------------------------------------------------
</TABLE>
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, Province of British Columbia, on November 1, 2000.
COLUMBIA RIVER RESOURCES INC.
(Registrant)
By:/S/ROBERT R. FERGUSON
-------------------------------------------
Robert R. Ferguson, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President , Treasurer & Director
/s/ Robert R. Ferguson (Principal Executive, Financial and
-------------------------------- Accounting Officer) November 1, 2000
Robert R. Ferguson
/s/ Robert F. Weicker
-------------------------------- Director November 1, 2000
Robert F. Weicker
</TABLE>
II-5
<PAGE>
