UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
GOLDEN RIVER RESOURCES INC.
(Name of Small Business Issuer in its Charter)
NEVADA 98-0187538
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2420 PANDOSY STREET, KELOWNA, BRITISH COLUMBIA, CANADA, V1Y 1T8
(Address of principal executive offices)
Issuer's Telephone Number: (250) 717-1049
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of class)
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PART 1
ITEM 1. DESCRIPTION OF BUSINESS
CORPORATE HISTORY
As used herein, the term "Company" refers to Golden River Resources Inc., a
corporation incorporated under the laws of Nevada. The Company is engaged in the
exploration and development of precious mineral resource properties. The Company
indirectly, through subsidiaries, owns interests in mineral properties located
in Durango State, Mexico. These interests are comprised of options to acquire
interests in the mineral properties in consideration of cash payments, share
issuances and exploration expenditures.
The Company was incorporated under the laws of the State of Nevada on June 17,
1997. The Company has one subsidiary: Rob Roy Resources Inc. ("Rob Roy"), all of
the shares of which are owned directly by the Company. Rob Roy owns all of the
shares of La Mexicana Resources S.A. de C.V. ("La Mexicana"). The Company,
through its subsidiaries, is engaged in the acquisition and exploration of
precious mineral properties.
In May 1998, the Company completed a private placement of 3,568,000 shares of
its Common Stock, resulting in gross proceeds of $35,680. In June 1998, the
Company sold 200,000 shares of Common Stock for gross proceeds of $10,000. In
December 1998, the Company sold 1,800,000 shares of Common Stock for gross
proceeds of $90,000.
On March 10, 1999, the Company completed the purchase of all of the issued and
outstanding shares of Rob Roy, a non-reporting company incorporated in British
Columbia, Canada, on June 13, 1997. The Company issued, on a one-for-one basis,
6,454,872 shares of its Common Stock (the "Takeover Shares") in exchange for
6,454,872 common shares without par value of Rob Roy. Certificates for 15% of
the Takeover Shares issued to Rob Roy's shareholders were subject to a
restrictive legend which expired on May 11, 1999; certificates for an additional
15% of the Takeover Shares were subject to a restrictive legend which expired on
September 11, 1999; and the certificates for the balance of 70% of the Takeover
Shares are subject to a restrictive legend expiring on January 11, 2000.
After the completion of the purchase, Rob Roy became a subsidiary of the
Company. Rob Roy owns 100% of the shares of La Mexicana, a company incorporated
pursuant to the laws of Mexico on February 12, 1998. La Mexicana is a company
engaged in the acquisition and exploration of natural resource properties
located in the area of Durango, Mexico. Rob Roy does not have an interest in any
other companies.
The Company engaged in two other private placements of Common Stock: 2,000,000
shares for gross proceeds of $700,000 in April 1999 and 750,000 shares for gross
proceeds of $75,000 in September 1999.
On October 13, 1999, the Company entered into an agreement with Peter Holstein,
on behalf of himself and all other shareholders of Transmeridian Exploration
Inc., a British Virgin Islands company engaged in oil and gas exploration
("Transmeridian"), to purchase all of the issued and outstanding shares of
Transmeridian by issuing shares of Common Stock of the Company. The number of
shares issued are to be determined by the net asset value of the oil and gas
properties owned by Transmeridian at the closing date divided by $5.00 for
proven reserves and $10.00 for probable reserves. An independent and certified
oil and gas valuator is to be engaged to value the Transmeridian assets.
Consummation of the acquisition of Transmeridian is subject to several
conditions, including satisfactory due diligence of Transmeridian, its net asset
value, and its principals; execution of a formal purchase agreement; approval of
the transaction by the
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shareholders of the Company; the furnishing of financial statements by
Transmeridian which will meet the requirements of the Securities and Exchange
Commission; and the execution of a satisfactory employment agreement with Peter
Holstein. If the acquisition is completed, the Company will use its reasonable
best efforts to change its name to "Transmeridian Exploration Inc.", and to
arrange for a private placement in the minimum amount of $2,000,000 to cover
immediate working capital and project costs. Also upon closing, Peter Holstein
will have the right to designate four persons for appointment to the board of
directors of the Company. Since the Company has just started its due diligence
work on Transmeridian, management does not know whether the acquisition will be
consummated or when closing would occur.
On October 25, 1999, the Company entered into a nonbinding letter of intent with
OREX Gold Mines Corporation to use its method for processing gold ores.
Management anticipates that the process may be useful in connection with the
Mexicana I property if the Company's exploration work on the property yields
promising results. The parties have not yet negotiated any terms of a working
relationship.
MINING OPERATIONS AND RISKS
The mining properties are exploration properties and do not have any proven
mineral reserves. Should mineral reserves be discovered on the property, it is
anticipated that the minerals would be predominately gold and silver. See Part I
- - Item 3. Description of Property below. Development of the mining properties
will only follow upon obtaining satisfactory results from an exploration
program.
Exploration for and the development of natural resources involve a high degree
of risk and few properties which are explored are ultimately developed into
producing properties. There is no assurance that the Company's exploration
activities will result in any discoveries of commercial bodies of ore. The long
term profitability of the Company's operations will be in part directly related
to the cost and success, if any, of its exploration programs, which may be
affected by a number of factors. Substantial expenditures are required to
establish reserves through drilling, to develop processes to extract the
resources, and, in the case of new properties, to develop the extraction and
processing facilities and infrastructure at any site chosen for extraction.
Although substantial benefits may be derived from the discovery of a major
deposit, no assurance can be given that resources will be discovered in
sufficient quantifies to justify commercial operations or that the funds
required for development can be obtained on a timely basis.
Exploration for natural resources involves many risks, which even a combination
of experience, knowledge, and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest will be
subject to all the hazards and risks normally incident to exploration,
development, and production of resources, any of which could result in work
stoppages, damage to persons or property, and possible environmental damage.
Although the Company has or will obtain liability insurance in an amount which
it considers adequate, the nature of these risks is such that liabilities might
exceed policy limits, the liabilities and hazards might not be insurable risks,
or the Company might not elect to insure itself against such liabilities due to
the high premium costs or other reasons, in which event the Company could incur
significant costs that could have a material adverse effect upon its financial
condition.
All phases of the Company's operations are subject to environmental regulation.
Generally, environmental legislation is evolving in a manner which will 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 companies and their officers,
directors, and employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect the Company's
operations.
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Although the Company has or intends to obtain title opinions for any concessions
in which it has or will acquire a material interest, there is no guarantee that
title to such concessions will not be challenged or impugned. In some countries,
the system for recording title to the rights to explore, develop, and mine
natural resources is such that a title opinion provides only minimal comfort
that the holder has title. Also, in many countries claims have been made and new
claims are being made by aboriginal peoples that call into question the rights
granted by the governments of these countries.
The Company's revenues, if any, are expected to be in large part derived from
the extraction and sale of base and precious metals such as gold and silver. The
price of those commodities has fluctuated widely, particularly in recent years,
and is affected by numerous factors beyond the Company's control including
international, economic, and political trends, expectations of inflation,
currency exchange fluctuations, interest rates, global or regional consumptive
patterns, speculative activities, and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of base and precious metals, and therefore the economic
viability of any of the Company's exploration projects, cannot accurately be
predicted.
There are many individuals and companies that are engaged in the mining
business. Some of which are very large, established mining companies with
substantial capabilities and long earning records. The Company may be at a
competitive disadvantage in acquiring mining properties or in purchasing,
leasing, or obtaining mining equipment since it must compete with these
individuals and companies, most of which have greater financial resources and
larger technical staffs than the Company. There can be no assurance that the
Company will be successful in prospecting for or acquiring additional mining
claims or leases, or in arranging for their exploration or development.
Water is essential in all phases of the exploration and development of mineral
properties and the milling of any ore obtained as a result. It is used in such
processes as exploration drilling, leaching, placer mining, dredging, testing,
and hydraulic mining. The Company has not determined the availability of water
for any of the properties it has acquired, and it has not determined the cost of
compliance with any water quality restrictions. Furthermore, any water that may
be found will be subject to acquisition pursuant to state, federal and foreign
water law, and its use will be subject to regulation pursuant to local, state,
federal and foreign water quality standards. Both the lack of available water
and the cost of complying with water quality restrictions may make an otherwise
viable project economically impossible to complete. If any properties that the
Company acquires warrant development, such determinations will be made while
planning a development program. Management does not expect any significant
difficulties with respect to this matter. Water sufficient for mining purposes
is available on the La Mexicana concession.
MINERAL INDUSTRY OF MEXICO
The Mexican government commenced privatization efforts in the late part of the
1980's. The Mining Law of 1992 generally encourages domestic investment and
foreign participation in the mining industry. The Mining Law permits direct
investment, with up to 100% of equity, in exploration works and activities and
allows, through a 30-year trust mechanism, up to 100% foreign participation in
mineral production.
In addition, in 1989 Mexico reduced the corporate income tax to 35% and in 1991
eliminated the mineral production tax.
Government approval is not required for the proposed Phase 1 work program on the
La Mexicana project. An environmental assessment report must be filed for the
specific areas disturbed in Phase
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2. This will be done when these areas are outlined. The filing of the
environmental assessment report is a minor expense in the overall budget.
Besides an operating license, it will be necessary to obtain permits for water
well usage, water discharge, land use, explosives, and hazardous materials
handling. The Company is not aware of any major environmental or regulatory
issues that might impede the development of a mine on the La Mexicana property.
See Part I - Item 3. Description of Property below.
EMPLOYEES
As of the date of this registration statement, the Company employs two people
full-time at its Kelowna office and technical staff to carry out its projects in
Mexico on an as-needed basis. Eleven people were employed during the La Lajita
drill program in May, June, and July of 1999, including the President of the
Company, David St. Clair Dunn, P. Geo.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Effective March 10, 1999, the Company completed the acquisition of 100% of the
outstanding common shares of Rob Roy. As the Rob Roy shareholders obtained
effective control of the Company through the exchange of their shares of Rob Roy
for shares of the Company, the acquisition has been accounted for in these
consolidated financial statements as a reverse acquisition. Consequently, the
consolidated statements of loss and deficit and changes in cash flows reflect
the results from operations and changes in financial position of Rob Roy, the
legal subsidiary, for the year ended June 30, 1999 combined with those of the
Company, the legal parent, from the date of acquisition on March 10, 1999, in
accordance with generally accepted accounting principles for reverse
acquisitions. In addition, the comparative figures are those of Rob Roy, the
legal subsidiary.
The Company's fiscal year end is June 30. The following is a summary of certain
selected financial information for the period from its date of incorporation to
June 30, 1998 and for the fiscal year ended June 30, 1999. Reference should be
made to the financial statements attached to this registration statement to put
the following summary in context. All dollar figures referred to in this section
relating to the Company are listed in US dollars unless otherwise noted.
<TABLE>
<CAPTION>
Inception (June 13, 1997) to
Year ended June 30, 1999 June 30, 1998 (unaudited)
<S> <C> <C>
Revenues -- --
(Loss) from continuing
operations $ (1,160,315) $ (254,769)
(Loss) per common share $ (0.15) $ (0.13)
JUNE 30, 1999 June 30, 1998
Working capital (deficiency) $ (95,390) $ (28,983)
Total assets $ 391,193 $ 258,820
Long-term obligations -- --
</TABLE>
RESULTS OF OPERATIONS
The Company's level of activity was substantially higher in during the fiscal
year ended June 30, 1999, as compared to the previous period. Expenses were
$1,160,315 for 1999 as compared to $254,769 for 1998. The most significant
increases were in the areas of exploration of mineral properties, professional
fees, and travel and promotion. Additionally, the Company wrote-off
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$534,214 in 1999 upon its decision to abandon the La Lajita property. After
completing the exploration program on the La Lajita property, the Company
decided to terminate its option. The Company paid acquisition costs $492,500,
issued 350,000 shares, and incurred exploration expenditures in excess of
$300,000 prior to terminating its option in September 1999.
A 943.9-meter diamond drilling program was carried out on the La Lajita property
in the area recommended by the Company's consulting geologists as having the
highest possibility of containing an open pittable precious metals resource. The
drilling did not outline sufficient mineralization at high enough grades to
continue the development of the property. While underground mining targets with
good potential remain on the property, they do not fit the Company's corporate
objectives.
Due to the lack of any revenues, and the cumulative losses of $1,415,084
incurred through June 30, 1999, there is a substantial doubt about the Company's
ability to continue as a going concern.
FINANCIAL CONDITION
Since inception, the Company's capital resources have been limited. The Company
has had to rely upon the sale of equity securities for cash required to fund the
administration of the Company. From its inception through June 30, 1999, the
Company has raised $560,642, net of share issuance costs from the sale of its
Common Stock. In addition, 600,000 shares have been issued for mineral property
options. Since the Company does not expect to generate any revenues in the near
future, it will have to continue to rely upon sales of equity and debt
securities to raise capital. It follows that there can be no assurance that
financing, whether debt or equity, will always be available to the Company in
the amount required at any particular time or for any particular period or, if
available, that it can be obtained on terms satisfactory to the Company.
At June 30, 1999, the Company had a working capital deficiency of $95,390, as
compared to $28,983 at June 30, 1998. The decrease in the working capital
deficiency can be attributed to the cash outlays for payments on mineral
properties and mineral property exploration made during the fiscal year ended
June 30, 1999.
Other than as described under "Properties of La Mexicana", the Company does not
have any interest in any properties. In Note 1 to the audited financial
statements, it is noted that "the recoverability of the amount shown for mineral
properties of $318,396 as at June 30, 1999 is dependent upon the discovery of
economically recoverable mineral reserves, the ability of the Company to obtain
the necessary financing to complete the exploration and development of the
mineral properties, future profitable production or proceeds from the
disposition of the mineral properties and the Company's ability to complete its
obligations.
PLAN OF OPERATION
The Company plans to conduct a Phase 1 regional geochemical survey over the La
Mexicana property at a cost of $19,333. The Phase 1 program will be followed by
a Phase 2 program at a cost of $76,000. The Company does not presently have the
funds available for either the Phase 1 or Phase 2 program and will have to raise
additional funds by way of debt or equity in order to finance same. It does not
have any arrangements for such funding at present. See Part I - Item 3.
Description of Property, below, for more detail on the proposed work programs of
the Company.
As of September 30, 1999, the Company had approximately $20,000 cash on hand,
which will be sufficient to satisfy its cash requirements for the next three
months of minimal operations. The Company does not intend to hire any more
full-time employees over the next 12 months.
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Subject to the availability of funds the Company will hire additional employees
and consultants on a part-time basis in order to carry out its proposed work
programs. The Company does not intend to make any purchases of plant or
equipment over the next 12 months.
If the Transmeridian transaction should be completed, the Company would be
required to arrange for a private placement in the minimum amount of $2,000,000
to cover immediate working capital and project costs. Since the Company has just
started its due diligence work on Transmeridian, management does not know
whether the acquisition will be consummated or when closing would occur.
Accordingly, the Company has not made any plans with respect to a proposed
private placement.
ITEM 3. DESCRIPTION OF PROPERTY
SUMMARY OF THE PROPERTIES
La Mexicana, a wholly owned subsidiary of Rob Roy, acquired options to purchase
rights to certain mineral properties in Mexico pursuant to certain agreements
described below. La Mexicana's main focus has been on the La Lajita and Mexicana
1 properties located near Durango, Mexico. After performing a drill program on
the La Lajita property, the Company decided that the La Lajita property did not
warrant any further work and terminated its option on that property in September
1999.
TERMS OF OPTION ON MEXICANA 1
La Mexicana has entered into an agreement in writing (the "Alcaraz Agreement")
dated February 12, 1998 with ING. Cuitlahuac Rangel Alcaraz ("Alcaraz"), an
arm's length party, to acquire the right and option to purchase an undivided 70%
interest in the Mexicana I property located near Durango, Mexico. The option
must be exercised by February 12, 2001. The Alcaraz Agreement requires the
following payments, share issuances and exploration expenditures:
a) US$50,000 on or before the execution of the Alcaraz Agreement;
b) US$50,000 on August 12, 1998 and every six months thereafter until
February 12, 2001, or until a positive bankable feasibility study is
completed, whichever is the earliest to occur;
c) 250,000 shares upon the approval of the Alcaraz Agreement by any
regulatory authority having jurisdiction;
d) a further 750,000 shares of the Company within three years of the
issuance under paragraph (c) above. La Mexicana agrees to make
application for a minimum of 250,000 shares of the Company to be
issued to Alcaraz every six months from the date of the issuance of
the shares pursuant to paragraph (c). The issuance of any shares
pursuant to this section shall be subject to regulatory approval, if
required; and
e) a minimum amount of US$1,500,000 shall be invested on work
commitments, according to the following budget schedule: US$300,000 by
the first year, US$500,000 by the end of the second year and the
remaining US$700,000 by the end of the third year from the issuance
under paragraph (c) above.
Through June 30, 1999, the Company had issued 250,000 shares and made option
payments in the aggregate amount of $307,500, including the prepayment of the
$50,000 payment due July 1, 1999 and $45,000 towards the payment due January 1,
2000. However, the Company has made
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only nominal exploration expenditures. The optionor has orally notified the
Company that it is extending the due dates for the exploration expenditures and
share issuances and that the Company is not in default of the agreement.
La Mexicana shall also be responsible for the payment of value added tax of 15%
on property payments and for mining taxes required to keep the property in good
standing.
Alcaraz is the beneficial and registered concessionaire of 100% of the
Exploration Mining Concession of the Mexicana 1 lot. During the term of this
Agreement the Company has the exclusive right to explore the Property, subject
to the Company obtaining appropriate surface rights and governmental
authorizations.
The Alcaraz Agreement provides that after the exercise of the option, Alcaraz
and the Company shall either become co-concessionaires of the Property or
incorporate a new company that shall acquire the title to the Property.
MEXICANA 1 GROUP OF CLAIMS
LOCATION, ACCESS, PHYSIOGRAPHY AND POPULATION
Mexicana 1 property is located in the Municipality of Pueblo Nuevo, State of
Durango, Mexico, 25 kilometers northwest of La Lajita property. Mexicana 1 is
located on 1:50,000 Map Sheet Pueblo Nuevo, F-13-A-38. The property consists of
20,477 HS in three adjoining rectangular blocks.
The P.P. MEXICANA, E-21633, S = 490 HS and the MEXICANA 1, E-21798, S = 20477 HS
DURANGO monument is located at approximately 105(degree)30'08" west longitude,
23(degree)21'48" north latitude.
Road access to the property is from El Salto on Highway 40 south, 50 kilometers
to La Puerta, then southwest 10 kilometers to Cofradia, then 28 kilometers (2.5
hours) on a dirt track east to Los Naranjos. This road crosses rugged to extreme
physiography. Los Naranjos is at an elevation of 800 meters, in a tropical
climate. It is a village of about 100 people. Mexicana 1 property eastern
boundary is 1.0 kilometer east of Los Naranjos. The property covers part of the
valley of the San Antonio de Animas River and extends northwest from the valley
roughly 10 kilometers. Part of the property can be accessed by road, from Los
Naranjos west, down San Antonio de Animas River through the hamlets of Los
Higueras and El Guanacaste for five kilometers west to the town of Mesa San
Pedro. The western part of the Property can be accessed from the state of Sinola
to the town of La Escondida, just inside the western edge of the property. The
rest of the property is covered by networks of well-used trails.
Elevations on the property range from 290 meters on the San Antonio de Animas
River in the southwestern corner of the property, to 2,520 meters in the
northeast corner.
HISTORY AND PREVIOUS WORK
The only previous work seen was the La Mexicana workings. These consist of two
adits driven approximately five meters on narrow quartz veins on the west side
of the arroyo of the Los Naranjos River. The Mexicana I monument is located in
front of these workings, about 1.0 kilometers down the Los Naranjos River
northwest of Los Naranjos. Spanish workings are reported by A. Camacho on the
south side of the San Antonio de Animas River below El Guanacaste at an
approximate elevation of 700 meters. These workings were not examined.
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There are artisinal workers working the river gravels on a small scale,
especially on the junction of the Arroyo of the Los Naranjos River and the
Arroyo of the San Antonio de Animas River.
PROPERTY GEOLOGY
The Mexicana 1 property lies within the Sierra Madre Occidental Geological
province, which is a 1200 kilometer long north-west trending belt of volcanic
rocks 200 to 300 kilometers wide. This belt of rocks is a broad anticline with
three main stratigraphic units. A basement of Jurassic marine sediments is
unconformably overlain by an Upper Cretaceous to Lower Tertiary andesite to
rhyolite sub-aerial and submarine package which includes sub-volcanic
intrusives. This unit is called the "Lower Volcanic Unit," is approximately 1000
meters thick and contains most of the known mineralization of interest. The
Lower Volcanic Unit is, in turn, unconformably overlain by an approximately 400
meter thick unit of rhyolite to dacite sub-aerial pyroclastics, the Upper
Volcanic Unit. Very little mineralization of interest has been found in the
Upper Volcanic Unit, but mot of the mineralization in the Lower Volcanic Unit is
within caldera complexes associated with the eruption of the Upper Volcanic
Unit. The potential should exist for "Round Mountain" style low-sulphidation,
epithermal gold mineralization in the Upper Volcanics.
The Upper Volcanic Unit is capped by minor mafic lava flows.
Regional, northwest trending dextral faults which, in part, focus the calderas
in the Upper Volcanic Sequence, are common throughout the province.
Gold mineralization in the Lower Volcanic Series is found mainly in epithermal
to mesothermal quartz veins and stockworks associated with caldera complexes.
Radiating faults, concentric ring faults, and particularly, their junctions in
the caldera, are favorable areas for mineralization.
Mexicana 1 property is a very large area (16 kilometers E-W by 15 kilometers
N-S). Where examined, the property covers Upper Volcanic sequence above 1,400
meters and Lower Volcanic Unit below this. The property covers an approximately
15.0 meter diameter caldera, centered three kilometers west-northwest of Los
Naranjos, on the San Antonio de Animas River. A granitic intrusion was observed
in this area. Twelve meters of a 20-meter quartz stockwork zone with pyrite
cubes to 2.0 centimeters were sampled. This sample did not carry anomalous gold,
but copper was anomalous at 620 parts per million (0.062%).
Two major structures were observed on the property and can be traced on
satellite photographs. One structure trends 50 kilometers northwest through Los
Naranjos. The Los Naranjos River follows part of this structure. The second
structure trends east-northeast and can be traced for 55 kilometers. The San
Antonio de Animas River follows this structure for 15 kilometers from two
kilometers above its junction with Los Naranjos River to the west-southwest.
The junction of these structures is a very prospective area. It lies on the
eastern boundary of Mexicana 1 property.
Other smaller structures were observed, some with associated color anomalies,
particularly another northwest trending structure which crosses the San Antonio
de Animas River near where the Spanish workings were reported, and follows the
road to Mesa de San Pedro northwest out of the valley.
WORK PROGRAMS
The Company has not conducted any exploration on the Mexicana 1 property.
Subject to the availability of funds, the Company plans to conduct a systematic
regional mineral exploration program, consisting of regional scale stream
geochemical sampling and rock sampling to test the
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area in 1999. The following table outlines the proposed budget for the La
Mexicana property for the balance of 1999:
<TABLE>
PROPOSED BUDGET FOR LA MEXICANA (IN CANADIAN $):
<CAPTION>
PHASE 1
<S> <C> <C>
Research: Government mining and geological information and claim status $ 2,880
Regional geochemical and examination of showings
Geologist: 20 days @ $500/day................................... 10,000
Assistant: 15 days @ $175/day................................... 2,625
Vehicle: 15 days @ $100/day................................... 1,500
Travel: 2 @ $1,000........................................... 2,000
Room and board: 30 days @ $50/day.................................... 1,500
Assays: 300 samples @ $15/sample............................. 4,500
Communication: ..................................................... 500
Expendables: ..................................................... 500
Report preparation ..................................................... 1,000
Contingency: ..................................................... 995
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Total Phase 1....................................................................................$ 28,000
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<CAPTION>
PHASE 2 (Geological mapping, geochemical surveys, trenching and detailed sampling)
<S> <C> <C>
Geologist: 40 days @ $500/day...................................$ 20,000
Assistants: 2 for 30 days @ $200/day............................. 12,000
Vehicle: 2 for 30 days @ $100/day............................. 6,000
Travel: 3 @ $1,000........................................... 3,000
Room and board: 90 days @ $70/day.................................... 6,300
Assays: 2,100 @ $15/sample................................... 31,500
Communications: ..................................................... 2,500
Expendables: ..................................................... 3,900
Local labor: 4 for 15 days @ $40/day.............................. 2,400
Mules: 4 for 15 days @ $40/day.............................. 2,400
Backhoe or small cat: 20 days @ $500/day................................... 10,000
Mob or demob for equipment..................................................... 2,000
Report preparation:............................................................ 2,000
Contingency: ..................................................... 10,000
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Total Phase 2....................................................................................$ 114,000
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TOTAL PHASES 1 AND 2.............................................................................$ 142,000
=============
</TABLE>
LA LAJITA
La Mexicana entered into an agreement (the "Fuerte Mayo Agreement") dated
February 12, 1998 with Fuerte Mayo S.A. de C.V. ("Fuerte Mayo"), an arm's length
party, to acquire the right and option to purchase an undivided 60% interest in
the La Esperanza, Guadalupe and Ampl. de Guadalupe mining Lots and the Santa
Nino and Dos Hermanos mining lots located near Durango, Mexico.
An initial program of 943.9 meters of HQ diamond drilling in 13 holes was
carried out by Britton Hermanos, S.A. de C.V. under the supervision of Company
personnel from April to June 1999. The first area to be tested was the Dos
Hermanos zone, where past sampling had returned up to
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50 grams per ton gold over two meters within a larger mineralized zone, up to 20
meters in thickness. Initial drilling in the Dos Hermanos area intersected the
mineralized breccia zone in all 13 holes with widths of breccia zone and
stringer zone up to 33.8 meters (LL-99-4). The highest gold-silver values were
encountered in LL-99-6 where 5.64 g/t gold and 64 g/t silver were returned over
4.2 meters within a 19.8 meter zone of anomalous gold and silver. Samples were
analyzed by Chemex Laboratory.
After completing the exploration program on the La Lajita property, the Company
decided to terminate its option since the drilling did not outline an open
pittable resource of sufficient size to meet the Company's objectives. The
Company paid acquisition costs $492,500, issued 350,000 shares and incurred
exploration expenditures in excess of $300,000 on the La Lajita property prior
to terminating its option.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 1999, the outstanding Common
Stock of the Company owned or of record or beneficially by each person who owned
of record, or was known by the Company to own beneficially, more than 5% of the
Company's Common Stock, and the name and shareholdings of each Officer and
Director and all Officers and Directors as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME SHARES OWNED COMMON STOCK OWNED(1)<F1>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
David St. Clair Dunn(2)<F2> (3)<F3> 100,000 0.67%
1154 Marine Drive
Gibsons, British Columbia
Canada V0N 1V1
- ------------------------------------------------------------------------------------------------------------------------------
ROBERT BRUCE MANERY(2)<F2> (4)<F4> 195,200 1.30%
2420 Pandosy Street
Kelowna, British Columbia
Canada V1Y 1T8
- ------------------------------------------------------------------------------------------------------------------------------
ROGER WATTS(2)<F2>(4)<F4> 195,200 1.30%
200-537 Leon Avenue
Kelowna, British Columbia
Canada V1Y 2A9
- ------------------------------------------------------------------------------------------------------------------------------
ALL OFFICERS & DIRECTORS 490,400 3.22%
AS A GROUP(5)<F5>
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>
(1) This table is based on 14,822,872 shares of Common Stock outstanding on
September 30, 1999. If a person listed on this table has the right to
obtain additional shares of Common Stock within sixty (60) days from
September 30, 1999, the additional shares are deemed to be outstanding
for the purpose of computing the percentage of class owned by such
person, but are not deemed to be outstanding for the purpose of
computing the percentage of any other person.
<F2>
(2) These individuals are the officers and directors of the Company and may
be deemed to be "parents" of the Company as that term is defined in the
rules and regulations promulgated under the federal securities laws.
<F3>
(3) Includes options to purchase 100,000 shares of Common Stock. See Part I
- Item 6. Executive Compensation.
11
<PAGE>
<F4>
(4) Includes options to purchase 150,000 shares of Common Stock. See Part I
- Item 6. Executive Compensation.
<F5>
(5) Includes options to purchase 400,000 shares of Common Stock. See Part I
- Item 6. Executive Compensation.
</FN>
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age, and position of each officer and
director of the Company. No director of the Company has been a director or
officer of a company registered under the 1934 Act. Further, no directors or
officers, promoters or control persons of the Company have in the past five
years been involved in any bankruptcy, criminal proceedings or securities
infractions.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NAME AGE POSITION
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
David St. Clair Dunn 47 President, Director
- --------------------------------------------------------------------------------------------------------------------------
Robert Bruce Manery 52 Vice-President Corporate Development, Secretary, Director
- --------------------------------------------------------------------------------------------------------------------------
Roger Watts 54 Chairman of the Board, Director
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
All directors of the Company have served since April 7, 1999. The officers were
elected on April 7, 1999, and will serve for one year or until their respective
successors are elected and qualified.
DAVID ST. CLAIR DUNN - PRESIDENT, DIRECTOR
Self-Employed consulting geologist. Vice President of Exploration and director
from April 1998 to present of ESM Resources Ltd., Vancouver, British Columbia, a
company engaged in mineral exploration. Director of Hyperion Resources Corp.
from September 1997 to December, 1998, Vancouver, British Columbia, a mineral
exploration company. Vice President Exploration of Consolidated Silver Tusk
Mines Ltd., Vancouver, British Columbia, from May 1997 to December 1997. From
November 1993 to November 1996 was the vice president and a director of Pioneer
Metals Corp., Vancouver, British Columbia. From May 1990 to May 1993 was a
consulting geologist to various public companies. Mr. Dunn is a registered
professional geoscientist with the British Columbia Association of Professional
Engineers and Geoscientists. He graduated from the University of British
Columbia in Vancouver, with a Bachelor of Science degree in geology.
ROBERT BRUCE MANERY - VICE-PRESIDENT CORPORATE DEVELOPMENT, SECRETARY,
DIRECTOR
Since April 1975 has been the President of RB Graphics Canada Inc., Kelowna,
British Columbia, an advertising and marketing company involved in the marketing
of international trade shows. Also President of One of a Kind Incorporated, a
company involved in the marketing of syndicated radio shows in North America
(the Champ) and the marketing of international art and wine exposes from May
1991 to present.
12
<PAGE>
ROGER WATTS - CHAIRMAN OF THE BOARD OF DIRECTORS
Barrister and Solicitor. Senior partner with the law firm of Salloum, Doak,
Kelowna, British Columbia.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth information for all persons who have served as
the chief executive officer of the Company since its inception in June 1997:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------------------------------------------------
OTHER
ANNUAL RESTRICT- SECURITIES
NAME AND COMPEN- ED STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS/ PAYOUTS COMPEN-
POSITION YEAR ($) ($) ($) ($) SARS (#) ($) SATION($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David St. 1999 -0- -0- -0- -0- -0- -0- $18,333
Clair Dunn, (1)<F1>
President
- ------------------------------------------------------------------------------------------------------------------------------------
David 1999 -0- -0- -0- -0- -0- -0- -0-
Parsons, (2)<F2>
President
- ------------------------------------------------------------------------------------------------------------------------------------
Ryan 1999 -0- -0- -0- -0- -0- -0- -0-
Barnard, 1998 -0- -0- -0- -0- -0- -0- -0-
President (3)<F3>
- ------------------------------------------------------------------------------------------------------------------------------------
Nolan Moss, 1998 -0- -0 -0- -0- -0- -0- -0-
President (4)<F4>
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>
(1) Mr. Dunn has been the President since April 7, 1999. The amount paid was
for geological work.
<F2>
(2) Mr. Parsons was the President from December 18, 1998 to April 7, 1999.
<F3>
(3) Mr. Barnard was the President from April 3, 1998 to December 18, 1998.
<F4>
(4) Mr. Moss was the President from June 17, 1997 to April 3, 1998.
</FN>
</TABLE>
OPTIONS GRANTED DURING THE MOST RECENTLY COMPLETED FISCAL YEAR
During the fiscal year ended June 30, 1999, the Board of Directors of the
Company adopted a stock option plan, whereby directors, officers and employees
of the Company were granted the right to subscribe for up to 10% of the issued
and outstanding shares of the Company at prices to be fixed at the time of
grant. No options were granted under this plan during the fiscal year ended June
30, 1999. Subsequent to June 30, 1999, the Company granted stock options to
purchase 1,450,000 shares of Common Stock exercisable at a price of $0.10 per
share for 5 years. The following officers and directors were granted stock
options:
OPTIONEE Number of Options Granted
Roger Watts 150,000
Bruce Manery 150,000
David St. Clair Dunn 100,000
The options vest December 23, 1999 and expire September 23, 2004.
13
<PAGE>
PLANS AND OTHER COMPENSATION
The Company paid management fees of $55,618 to Bruce Manery and Roger Watts
during the year ended June 30, 1999.
No "Long Term Incentive Plan" has been instituted by the Company and none are
proposed at this time. Accordingly, there is no LTIP Awards Table set out in
this registration statement. The Company does not have a "Compensation
Committee".
No pension plans or retirement benefit plans have been instituted by the Company
and none are proposed at this time.
PROPOSED COMPENSATION
The Company anticipates it will pay to David St. Clair Dunn, its president,
compensation of $30,000 during the current fiscal year for geological work to be
billed at his customary rates. Bruce Manery and Roger Watts are each paid
Cdn.$3,500 per month as management fees.
In addition to the foregoing, officers and directors are also entitled to the
reimbursement of all reasonable business expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following shareholders of the Company were paid a total of $93,691 in
consulting fees: Cannonbridge Capital Corp., Brian Trowbridge, and Mischcorp
Ltd.
In July 1999, Messina Holdings Ltd. and 67849 Capital Ltd. loaned $41,975 and
$18,375 to the Company, respectively. The loans were unsecured, did not bear
interest, and had no fixed terms of repayment. The loans are outstanding as of
October 26, 1999.
At June 30, 1999, $12,190 was owed to officers and directors of the Company for
management fees.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized share capital of the Company consists of 50,000,000 shares of
Common Stock at $0.001 par value and 1,000,000 shares of preferred stock
("Preferred Stock") at $0.01 par value. As at September 30, 1999, the Company
has a total of 14,822,872 shares of Common Stock issued and outstanding and no
shares of Preferred Stock issued and outstanding.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share for each share held
of record on all matters submitted to a vote of stockholders. Holders of Common
Stock do not have cumulative voting rights, and therefore the holders of a
majority of the shares of Common Stock voting for the election of directors may
elect all of the Company's Directors standing for election. Subject to
preferences that may be applicable to the holders of outstanding shares of
Preferred Stock, if any, the holders of Common Stock are entitled to receive
such lawful dividends as may be declared by the Board of Directors. In the event
of a liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, and subject to the rights of the holders of
outstanding
14
<PAGE>
shares of Preferred Stock, if any, the holders of shares of Common Stock shall
be entitled to receive pro rata all of the remaining assets of the Company
available for distribution to its stockholders. The Common Stock has no
preemptive, redemption, conversion or subscription rights. All outstanding
shares of Common Stock are fully paid and non-assessable. The issuance of Common
Stock or of rights to purchase Common Stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, a majority of the outstanding voting stock of the
Company
PREFERRED STOCK
The Articles of Incorporation of the Company authorize the board of Directors to
issue, by resolution, 1,000,000 shares of Preferred Stock, in classes, having
such designations, preferences, rights and limitations and on such terms and
conditions as the board of Directors may from time to time determine, including
the rights, if any, of the holders of such Preferred Stock with respect to
voting, dividends, redemptions, liquidation and conversion. As at September 30,
1999, no classes of Preferred Stock have been designated and no shares have been
issued.
15
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The Company's Common Stock is quoted on the OTC Bulletin Board system of the
National Association of Securities Dealers with the symbol GDRV. The Company's
Common Stock was first quoted on the OTC-BB on January 15, 1999.
The following table lists the high and low bid prices quoted on the OTC-BB of
the National Association of Securities Dealers for shares of the Company's
Common Stock for each of the fiscal quarters since the Company's stock was first
quoted on such bulletin board system.
Fiscal Quarter Ended High Bid Low Bid
March 31, 1999 $0.5100 $0.3400
June 30, 1999 $0.5100 $0.3125
September 30, 1999 $0.4375 $0.0900
On October 5, 1999, the high and low bid prices were $0.14 and $0.125,
respectively.
The high and low bid quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
The Company's Common Stock is issued in registered form and the following
information is taken from the records of American Securities Transfer and Trust
Inc., of 12039 W. Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228, the
registrar and transfer agent for the Common Stock.
On June 30, 1999, the shareholders' list for the Company's Common Stock showed
155 registered shareholders and 14,822,872 shares outstanding.
The Company has not paid dividends in the past and it does not expect to have
the ability to pay dividends in the near future. If the Company generates
earnings in the future, it expects that they will be retained to finance further
growth and, when appropriate, retire debt. The Directors of the Company will
determine if and when dividends should be declared and paid in the future based
on the Company's financial position at the relevant time. All of the Company's
shares are entitled to an equal share in any dividends declared and paid.
ITEM 2. LEGAL PROCEEDINGS
The officers and directors of the Company certify that to the best of their
knowledge, neither the Company nor any of its officers and directors are parties
to any legal proceeding or litigation. Further, the officers and directors know
of no threatened or contemplated legal proceedings or litigation. None of the
officers and directors has been convicted of a felony and none have been
convicted of any criminal offense, felony or misdemeanor relating to securities
or performance in corporate office. To the best knowledge of the officers and
directors, no investigations of felonies, misfeasance in office or securities
investigations are either pending or threatened at this time.
16
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting
and financial disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities of
the Company, without registration, since its inception in June 1997. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
(a) During the period from the date of formation of the Company on June 17,
1997 to June 30, 1998, the Company issued 3,768,000 shares of Common
Stock. 3,568,000 shares were issued at a price of $0.01 per share and
200,000 shares were issued at a price of $0.05 per share. The Company
relied upon the exemption from registration contained in Section 504 of
Regulation D of the Securities Act of 1933, as amended.
(b) In January and March 1999, a total of 600,000 shares of Common Stock
were issued as part of the Company's option payments for the La
Mexicana and La Lajita properties. The shares were valued at $0.05 per
share. The Company relied upon the exemption contained in Rule 504 with
respect to 250,000 of these and 350,000 shares were issued in reliance
on Section 4(2).
(c) In December 1998 and January 1999, 200,000 shares were issued for
services valued at $0.05 per share and 1,800,000 shares were sold for
$0.05 per share in reliance on the exemption from registration
contained in Rule 504.
(d) In connection with the takeover of Rob Roy in March 1999, 6,454,872
shares were issued in exchange of the Rob Roy shares. The Company
relied upon Regulation S with respect to 4,518,410 of these shares and
1,936,462 shares were issued in reliance on the exemption contained in
Rule 504 of Regulation D.
(e) In April 1999, the Company sold 2,000,000 shares at $0.35 per share
pursuant to the exemption from registration contained in Rule 504.
(f) In September 1999, the Company sold 750,000 shares at $0.10 per share
pursuant to the exemption from registration contained in Section 4(2).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the General Corporation Law of Nevada and Article VI of the
Company's Articles of Incorporation permit the Company 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 Company's best interests or not opposed to the
Company's best interests, and with respect to any criminal action or proceeding,
had no reasonable cause to believe their conduct was unlawful. Indemnification
is not permitted in connection with a proceeding by or in the right of the
corporation in which the officer or director was adjudged liable to the
corporation or in connection with any other proceeding charging that the officer
or
17
<PAGE>
director derived an improper personal benefit, whether or not involving action
in an official capacity.
18
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The audited financial statements of the Company for the fiscal year ended June
30, 1999, with comparative figures to June 30, 1998 are attached hereto as pages
F-1 to F-14. Effective March 10, 1999, the Company completed the acquisition of
100% of the outstanding common shares of Rob Roy. As the Rob Roy shareholders
obtained effective control of the Company through the exchange of their shares
of Rob Roy for shares of the Company, the acquisition has been accounted for in
these consolidated financial statements as a reverse acquisition. Consequently,
the consolidated statements of loss and deficit and changes in cash flows
reflect the results from operations and changes in financial position of Rob
Roy, the legal subsidiary, for the year ended June 30, 1999 combined with those
of the Company, the legal parent, from the date of acquisition on March 10,
1999, in accordance with generally accepted accounting principles for reverse
acquisitions. In addition, the comparative figures are those of Rob Roy, the
legal subsidiary.
<PAGE>
PART III
The following exhibits are included with this registration statement:
REGULATION
S-B NUMBER DOCUMENT
2.1 Offer to Purchase
3.1 Articles of Incorporation
3.2 Bylaws
10.1 Mexicana I Agreement dated as of February 12, 1998
10.2 La Lajita Agreement dated as of February 12, 1998
10.3 1999 Stock Option Plan
10.4 Agreement with Transmeridian Exploration Inc., as
amended
10.5 Letter of Intent with OREX Gold Mines Corporation
21 Subsidiaries of the Registrant
27 Financial Data Schedule
20
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
GOLDEN RIVER RESOURCES INC.
Date: November 3, 1999 By:/S/DAVID ST. CLAIR DUNN
David St. Clair Dunn, President
21
<PAGE>
Consolidated Financial Statements of
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Year ended June 30, 1999
F-1
<PAGE>
AUDITORS' REPORT TO THE STOCKHOLDERS
We have audited the accompanying consolidated balance sheet of Golden River
Resources Inc. and subsidiaries, a development stage enterprise, as at June 30,
1999 and the consolidated statements of loss, stockholders' equity and
comprehensive income and cash flows for the year then ended. 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.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. 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, the 1999 consolidated financial statements, referred to above,
present fairly, in all material respects, the financial position of the Company
and subsidiaries as at June 30, 1999 and the results of their operations and
their cash flows for the year then ended in accordance with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the consolidated financial
statements, the Company, to date, has generated no revenues and has cumulative
losses since inception of $1,415,084. These factors, among others, as discussed
in Note 2 a), raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/S/KPMG LLP
Kelowna, Canada
September 7, 1999, except as to note 11, which is as of September 23, 1999.
F-2
<PAGE>
<TABLE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Consolidated Balance Sheet
June 30, 1999, and 1998
$ United States
<CAPTION>
===========================================================================================================================
1999 1998
(Unaudited)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash $ 57,149 $ 12,798
Prepaid expense 6,220 -
-----------------------------------------------------------------------------------------------------------------------
63,369 12,798
Capital assets (note 4) 9,428 -
Mineral properties (note 5) 318,396 246,022
---------------------------------------------------------------------------------------------------------------------------
$ 391,193 $ 258,820
===========================================================================================================================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 146,569 $ 36,780
Due to shareholders (note 6) 12,190 5,001
-----------------------------------------------------------------------------------------------------------------------
158,759 41,781
Stockholders' Equity
Capital stock 1,643,489 463,380
Deficit accumulated during the development stage (1,415,084) (254,769)
Accumulated other comprehensive income 4,029 8,428
-----------------------------------------------------------------------------------------------------------------------
232,434 217,039
Subsequent events (note 11)
---------------------------------------------------------------------------------------------------------------------------
$ 391,193 $ 258,820
===========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
/s/ROGER S. WATTS Director
/s/R. BRUCE MANERY Director
F-3
<PAGE>
<TABLE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Consolidated Statement of Loss
Year ended June 30, 1999, and from inception on June 13, 1997 to June 30, 1998
$ United States
<CAPTION>
===========================================================================================================================
From Inception From Inception
(June 13, 1997) (June 13, 1997)
to June 30, 1999 1999 to June 30, 1998
(Unaudited) (Unaudited)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses
Amortization $ 1,232 $ 1,232 $ -
Consulting fees 2,821 - 2,821
Exploration of mineral properties 315,973 245,210 70,763
General and administrative 62,393 35,592 26,801
Option payments to acquire mineral properties
written off 534,214 534,214 -
Professional fees 184,371 152,065 32,306
Management fees 125,308 55,618 69,690
Travel and promotion 188,772 136,384 52,388
---------------------------------------------------------------------------------------------------------------------------
Loss $ 1,415,084 $ 1,160,315 $ 254,769
===========================================================================================================================
Weighted average number of shares 7,599,495 1,894,809
Loss per share $ (0.15) $ (0.13)
===========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Consolidated Statement of Stockholders' Equity and Comprehensive Income
Year ended June 30, 1999, and from inception on June 13, 1997 to June 30, 1998
$ United States
<CAPTION>
===========================================================================================================================
Deficit
Accumulated Accumulated
During the Other Total
CAPITAL STOCK Development Comprehensive Stockholders
Shares Amount Stage Income Equity
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rob Roy
Issued for cash at Cdn $0.01
(US $0.007) per share 750,000 $ 5,115 - - $ 5,115
Issued for cash at Cdn $0.25
(US $0.17) per share 2,687,634 458,265 - - 458,265
Loss - - $ (254,769) - (254,769)
Foreign currency translation adjustment - - - $ 8,428 8,428
--------------------------------------------------------------------------------------------------------------------------
Rob Roy balance, June 30, 1998
(Unaudited) 3,437,634 463,380 (254,769) 8,428 217,039
Issued for cash at Cdn $0.25
(US $0.17) per share 3,017,238 515,591 - - 515,591
Foreign currency translation adjustment - 1,014 - - 1,014
--------------------------------------------------------------------------------------------------------------------------
Rob Roy balance, March 10, 1999
exchanged into Golden River
common shares at 1 share for each
Rob Roy share 6,454,872 979,985 (254,769) 8,428 733,644
===========================================================================================================================
Golden River
Issued for cash at $0.01 per share 3,568,000 35,680 - - 35,680
Issued for cash at $0.05 per share 200,000 10,000 - - 10,000
Share issue costs - (9,446) - - (9,446)
--------------------------------------------------------------------------------------------------------------------------
Golden River balance, June 30, 1998
(Unaudited) 3,768,000 36,234 - - 36,234
Issued for cash at $0.05 per share 1,800,000 90,000 - - 90,000
Issued pursuant to mineral property
option agreements at $0.05 per share 600,000 30,000 - - 30,000
Issued for services at $0.05 per share 200,000 10,000 - - 10,000
Issued for cash at $0.35 per share 2,000,000 700,000 - - 700,000
Share issue costs - (265,592) - - (265,592)
--------------------------------------------------------------------------------------------------------------------------
Golden River balance, March 10, 1999
prior to the business combination
with Rob Roy 8,368,000 600,642 - - 600,642
Adjustment to record business
combination
Shares of Golden River issued to
acquire shares of Rob Roy (above),
recorded at the fair value of
Golden River net assets (note 3) 6,454,872 750,244 - - 750,244
Increase in the book value of Golden
River's capital stock to that of Rob Roy - 217,603 (254,769) 8,428 (28,738)
Loss (1,160,315) (1,160,315)
Foreign currency translation adjustment - - - (4,399) (4,399)
--------------------------------------------------------------------------------------------------------------------------
Golden River balance, after business
combination with Rob Roy 14,822,872 1,568,489 (1,415,084) 4,029 157,434
Shares to be issued for services at
$0.10 per share (note 7) - 75,000 - - 75,000
---------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1999 14,822,872 $ 1,643,489 $(1,415,084) $ 4,029 $ 232,434
===========================================================================================================================
</TABLE>
Refer to note 2 b) for basis of presentation and consolidation.
F-5
<PAGE>
<TABLE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
Year ended June 30, 1999, and from inception on June 13, 1997 to June 30, 1998
$ United States
<CAPTION>
================================================================================================================================
From Inception From Inception
(June 13, 1997) (June 13, 1997)
to June 30, 1999 1999 to June 30, 1998
(Unaudited) (Unaudited)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash spent on mineral property exploration $ (315,973) $ (245,210) $ (70,763)
Cash paid to suppliers and management (464,026) (321,801) (142,225)
----------------------------------------------------------------------------------------------------------------------------
(779,999) (567,011) (212,988)
Cash flows from investing activities:
Purchase of capital assets (10,699) (10,699) -
Option payments on mineral properties (822,610) (576,588) (246,022)
----------------------------------------------------------------------------------------------------------------------------
(833,309) (587,287) (246,022)
Cash flows from financing activities:
Issuance of capital stock 1,666,133 1,202,753 463,380
Foreign currency translation adjustment 4,324 (4,104) 8,428
--------------------------------------------------------------------------------------------------------------------------------
Increase in cash 57,149 44,351 12,798
Cash, beginning of period - 12,798 -
--------------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 57,149 $ 57,149 $ 12,798
================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
1. NATURE OF OPERATIONS
Golden River Resources Inc. ("Golden River" or the "Company") is
incorporated under the laws of Nevada and its principal business activity
is mineral property exploration and development.
The Company, through mineral property option agreements (note 5), is in the
process of exploring and developing mineral properties and has not yet
determined whether these properties contain mineral reserves that are
economically recoverable. The recoverability of the amount shown for
mineral properties of $318,396 as at June 30, 1999 is dependent upon the
discovery of economically recoverable mineral reserves, the ability of the
Company to obtain the necessary financing to complete the exploration and
development of the mineral properties, future profitable production or
proceeds from the disposition of the mineral properties and the Company's
ability to complete its obligations.
Title to mineral properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims as well as the
potential for problems arising from the frequently ambiguous conveyancing
history characteristic of many mining properties. The Company has
investigated title to all of the mineral properties to which it has an
option to acquire an interest and, to the best of its knowledge, title to
all of these properties is in good standing. The properties in which the
Company has committed to earn an interest are located in Durango, Mexico
and the Company is therefore relying on title opinion by legal counsel who
are basing such opinions on the laws of Durango.
2. SIGNIFICANT ACCOUNTING POLICIES:
a) Going concern
These financial statements have been prepared on the going concern
basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of business. As shown in the
consolidated financial statements, to date, the Company has generated no
revenues and has cumulative losses since inception of $1,415,084. In
addition, as noted in note 5 b), the Company is committed to significant
payments pursuant to a mineral property option agreement. These factors,
among others, raise substantial doubt about the Company's ability to
continue as a going concern. The Company's ability to continue as a
going concern is dependent on its ability to generate future profitable
operations and receive continued financial support from its shareholders
and other investors.
b) Basis of presentation and consolidation:
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
F-7
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b) Basis of presentation and consolidation (continued):
Effective March 10, 1999, the Company completed the acquisition of 100%
of the outstanding common shares of Rob Roy Resources Ltd. ("Rob Roy").
As the Rob Roy shareholders obtained effective control of the Company
through the exchange of their shares of Rob Roy for shares of the
Company, the acquisition of Rob Roy has been accounted for in these
consolidated financial statements as a reverse acquisition.
Consequently, the consolidated statements of loss, stockholders' equity
and comprehensive income and cash flows reflect the results from
operations and cash flows of Rob Roy, the legal subsidiary, for the year
ended June 30, 1999, combined with those of Golden River, the legal
parent, from acquisition on March 10, 1999, in accordance with generally
accepted accounting principles for reverse acquisitions. Amounts prior
to March 10, 1999 are those of Rob Roy.
c) Translation of Financial Statements
The Company's subsidiary, Rob Roy Resources Ltd., operates in Canada and
its operations are conducted in Canadian currency.
These statements have been translated into United States dollars. The
method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.4630.
ii) Expenses are translated at the exchange rate in effect at the
transaction date.
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "accumulated
other comprehensive income".
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 amounts 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.
e) Financial instruments
The fair values of cash and accounts payable and accrued liabilities
approximate their carrying values due to the relatively short periods to
maturity of these instruments. It is not possible to determine the fair
value of amounts due to shareholders as a maturity date is not
determinable. The maximum credit risk exposure for all financial assets
is the carrying amount of that asset.
F-8
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
f) Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates which are intended to amortize the
cost of assets over their estimated useful life:
====================================================================
Asset Method Rate
--------------------------------------------------------------------
Furniture and equipment Declining balance 20%
Computer equipment Declining balance 30%
--------------------------------------------------------------------
Amortization is provided at one-half the annual rates in the year of
acquisition.
g) Mineral properties:
The amount shown for mineral properties is comprised of the direct costs
of acquiring the properties including any value added taxes. All other
costs, including administrative overhead, are expensed as incurred.
Mineral properties acquired for share consideration are recorded at the
fair value of the shares at the date of acquisition.
Management periodically reviews the carrying values of its investments
in mineral properties with internal and external mining professionals. A
decision to abandon, reduce or expand activity on a specific project is
based upon many factors including general and specific assessments of
mineral reserves, anticipated future mineral prices, anticipated costs
of developing and operating a producing mine, the expiration date of
mineral property leases and the general likelihood that the Company will
continue exploration on the project. The Company does not set a
pre-determined holding period for properties with unproven reserves.
However, properties which have not demonstrated suitable prospects at
the conclusion of each phase of an exploration program are re-evaluated
to determine if future exploration is warranted and that carrying values
are appropriate.
If a mineral property is abandoned or it is determined that its carrying
value cannot be supported by future production or sale on an
un-discounted cash flow basis, the related costs are charged against
operations in the year of abandonment or determination of impairment of
value. The amounts recorded as mineral properties represent unamortized
acquisition costs to date and do not necessarily reflect present or
future values.
The accumulated costs of mineral properties that are developed to the
stage of commercial production will be amortized to operations through
unit of production depletion based on proven and probable reserves.
F-10
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
h) Exploration costs In order to comply with directives from the Securities
and Exchange Commission ("SEC") with respect to accounting for
exploration expenditures, the Company has expensed all costs associated
with the exploration of properties in which the Company holds options to
acquire an interest. Under Canadian generally accepted accounting
principles ("GAAP"), these expenditures would have been capitalized with
the acquisition costs of the mineral properties. Had the Company
accounted for these transactions using Canadian GAAP, the effect on the
consolidated financial statements would have been as follows:
<TABLE>
<CAPTION>
========================================================================================================
Mineral Properties Deficit Loss for the Period
1999 1998 1999 1998 1999 1998
(Unaudited) (Unaudited) (Unaudited)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As stated $ 318,396 $ 246,022 $ 1,415,084 $ 254,769 $1,160,315 $ 254,769
As restated under
Canadian GAAP $ 326,055 $ 316,785 $ 1,407,425 $ 184,006 $1,152,656 $ 184,006
========================================================================================================
</TABLE>
i) Loss per share
Loss per share has been calculated using the weighted average number of
common shares outstanding during the period.
j) Accounting standards change
In June, 1998, the Financial Accounting Standards Board issued SFAS no.
133, "Accounting for Derivative Instruments and Hedging Activities."
Management is in the process of reviewing this new standard. Adoption of
this statement is not expected to have a significant impact on the
results of operations or financial position.
3. BUSINESS COMBINATION:
Effective March 10, 1999, Golden River and Rob Roy executed their business
combination agreement. Golden River issued 6,454,872 common shares to the
shareholders of Rob Roy in consideration for all of the issued and
outstanding common shares of Rob Roy on the basis of one common share of
Golden River for each common share of Rob Roy. As the former shareholders
of Rob Roy obtained effective control of the Company through the share
exchange, this transaction has been accounted for in these financial
statements as a reverse acquisition and the purchase method of accounting
has been applied. Under reverse acquisition accounting, Rob Roy is
considered to have acquired Golden River with the results of Golden River's
operations included in the consolidated financial statements from the date
of acquisition. Rob Roy is considered the continuing entity and
consequently, the amounts prior to March 10, 1999 are those of Rob Roy.
F-10
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
3. BUSINESS COMBINATION (CONTINUED):
Prior to the business combination with Rob Roy, Golden River was deemed a
shell corporation with no operations since inception on June 17, 1997.
Equity financing was raised prior to March 10, 1999 in anticipation of the
business combination. Accordingly, the acquisition has been recorded at the
fair value of the tangible net assets of Golden River at the date of
acquisition. The acquisition details are as follows:
Net assets acquired
Cash $ 34,761
Share subscriptions receivable 514,500
Due from related party 267,174
Option payments on mineral properties 30,000
Current liabilities (96,191)
-------------------------------------------------------------------------
Consideration given for net assets acquired 750,244
Common shares issued $ 750,244
=========================================================================
As the continuing entity is deemed to be Rob Roy, capital stock of Golden
River has been increased by $217,603 as a result of accounting for this
combination as a reverse acquisition. Proforma results for periods prior to
the acquisition have not been provided as such results would not be
significantly different from those reported. The amount due from related
party was receivable from Rob Roy Resources Ltd. and has been eliminated
upon consolidation of the Company and Rob Roy.
The share subscriptions receivable were collected subsequent to the
business combination on March 10, 1999.
4. CAPITAL ASSETS:
<TABLE>
<CAPTION>
================================================================================================================
1999 Accumulated Net book
Cost amortization value
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Furniture and equipment $ 6,668 $ 667 $ 6,001
Computer equipment 4,031 604 3,427
----------------------------------------------------------------------------------------------------------------
$ 10,699 $ 1,271 $ 9,428
================================================================================================================
</TABLE>
5. MINERAL PROPERTIES:
<TABLE>
<CAPTION>
================================================================================================================
1999 June 30, 1998 Option Payments On Mineral Write Down of June 30, 1999
(Unaudited) Properties Including Value Mineral Properties
Added Taxes
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
La Lajita $ 144,420 $ 389,794 $ (534,214) -
La Mexicana 101,602 216,794 - $ 318,396
----------------------------------------------------------------------------------------------------------------
$ 246,022 $ 606,588 $ (534,214) $ 318,396
================================================================================================================
<CAPTION>
1998 June 13, 1997 Option Payments On Mineral Write Down of June 30, 1998
Properties Including Value Mineral Properties (Unaudited)
Added Taxes (Unaudited)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
La Lajita - $ 144,420 - $ 144,420
La Mexicana - 101,602 - 101,602
----------------------------------------------------------------------------------------------------------------
- $ 246,022 - $ 246,022
================================================================================================================
</TABLE>
F-11
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
5. MINERAL PROPERTIES (CONTINUED):
a) La Lajita
Pursuant to an option agreement with an effective date of July 1, 1997,
as evidenced in writing on February 12, 1998, the Company acquired an
option to earn a 60% interest in five mineral claims located in the
Municipality of Pueblo Nuevo, State of Durango, Mexico.
The agreement required periodic option payments, the issuance of capital
stock and a commitment to undertake minimum exploration expenditures on
the properties over a term of three years.
To June 30, 1999, the Company made option payments in the aggregate
amount of $492,500, including the prepayment of $75,000 due July 1,
1999, issued 350,000 shares at an agreed price of $0.05 per share, and
incurred exploration expenditures in excess of $300,000 with respect to
the properties.
Subsequent to June 30, 1999, the Company elected to abandon the La
Lajita properties. As a result, all costs incurred in connection with
the acquisition of these mineral properties have been written off as at
June 30, 1999.
b) La Mexicana
Pursuant to an option agreement with an effective date of July 1, 1997,
as evidenced in writing on February 12, 1998, the Company acquired an
option to earn a 70% interest in mineral claims located in the
Municipality of Pueblo Nuevo, State of Durango, Mexico. The agreement
requires the following:
* an initial payment of $50,000;
* an additional $250,000, payable $50,000 semi-annually commencing
January 1, 1998;
* the issuance of 250,000 common shares at an agreed price of $0.05
per share on the effective date that the Company became listed on a
recognized quotation system (being March 10, 1999); and
* the issuance of a further 250,000 shares at an agreed price of
$0.05 per share on each of September 10, 1999, March 10, 2000 and
September 20, 2000.
F-12
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
5. MINERAL PROPERTIES (CONTINUED):
In addition, under the terms of the agreement, the Company must make
exploration expenditures on the claims in the amount of $300,000 by June
30, 1998, $500,000 by June 30, 1999 and $700,000 by June 30, 2000. The
Company is also responsible for the payment of any value added taxes on the
property.
As at June 30, 1999, the Company has made option payments in the aggregate
amount of $307,500, including prepayment of the $50,000 payment due July 1,
1999 and $45,000 on account of the payment due January 1, 2000, but has
only made nominal exploration expenditures of the nature outlined in the
agreement. However, the Company has been orally notified by the optionor
that the due dates for the exploration expenditure requirements and
issuance of shares have been extended, and that the Company is not in
default of the agreement.
6. DUE TO SHAREHOLDERS:
The amount due to shareholders is unsecured and without interest or stated
terms of repayment.
7. CAPITAL STOCK:
a) Authorized:
50,000,000 common shares with a par value of $0.001 per share
1,000,000 preferred shares with a par value of $0.01 per share
b) As at June 30, 1999, 7,115,678 common shares were subject to hold
periods under which the holder's right to sell such shares is
restricted.
c) During 1999, the Company received services for which it agreed to issue
750,000 Common shares at $0.10 per share subsequent to June 30, 1999.
8. RELATED PARTY TRANSACTIONS
During the year, the Company paid or accrued management fees of $55,618
(1998 - $69,690) to Directors of the Company.
During the year, the Company paid consulting fees in the amount of $93,691
(1998 - nil) to a Company owned by a shareholder. These costs have been
included in share issue costs.
9. COMPARATIVE FIGURES
Certain of the comparative figures have been restated to conform with the
presentation adopted in the current year.
F-13
<PAGE>
GOLDEN RIVER RESOURCES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
Year ended June 30, 1999
$ United States
================================================================================
10. STATEMENT OF CASH FLOWS
Cash flows from operating activities prepared under the indirect method are
as follows:
<TABLE>
<CAPTION>
=====================================================================================================
From inception From inception
(June 13, 1997) to (June 13, 1997)
June 30, 1999 1999 to June 30,1998
(Unaudited)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loss $ (1,415,084) $ (1,160,315) $ (254,769)
Non cash items
Amortization 1,232 1,232 -
Option payments to acquire mineral properties
written off 534,214 534,214 -
Accounts payable and accrued liabilities 59,829 23,049 36,780
Other changes in non-cash working capital 5,970 969 5,001
-----------------------------------------------------------------------------------------------------
$ (813,839) $ (600,851) $ (212,988)
=====================================================================================================
</TABLE>
11. SUBSEQUENT EVENTS
Subsequent to June 30, 1999, the Company received a loan in the amount of
$60,350 from a company owned by a shareholder. The loan is unsecured, does
not bear interest and has no fixed terms of repayment.
On September 23, 1999, the Company issued 1,450,000 common share stock
options. These stock options have an exercise price of $0.10 per share and
expire on September 23, 2004.
12. THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
<PAGE>
Exhibit 2.1
Offer to Purchase
<PAGE>
GOLDEN RIVER RESOURCES INC.
OFFER TO PURCHASE
THE ISSUED AND OUTSTANDING
COMMON SHARES OF
ROB ROY RESOURCES INC.
OFFER TO PURCHASE
JANUARY 29, 1999
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN
ANY DOUBT HOW TO DEAL WITH THIS MATTER, YOU SHOULD CONSULT YOUR LAWYER,
INVESTMENT DEALER, STOCKBROKER, BANK MANAGER OR OTHER PROFESSIONAL ADVISOR. NO
SECURITIES COMMISSION OR SIMILAR AUTHORITY IN CANADA HAS IN ANY WAY PASSED UPON
THE MERITS OF THE SECURITIES OFFERED HEREUNDER AND ANY REPRESENTATION TO THE
CONTRARY IS AN OFFENSE.
Date: January 29, 1999
GOLDEN RIVER RESOURCES INC.
1300 E. College Way
Mount Vernon, Washington
USA, 98273
OFFER TO PURCHASE
ALL OF THE OUTSTANDING COMMON SHARES OF
ROB ROY RESOURCES INC.
BASIS OF OFFER
GOLDEN RIVER RESOURCES INC. (the "Offeror") will, subject to the terms of the
Offer (which provides for the adjustment of the exchange basis in certain
specified events), issue to holders of all of the issued and outstanding Class
"A" common shares without par value in the capital stock of Rob Roy Resources
Inc. (the "Offeree"), for each one Class "A" common share without par value in
the capital stock of the Offeree ("Offeree Shares") in respect of which the
Offer is accepted, one common share without par value in the capital of the
Offeror ("Offeror Shares").
The Offer is conditional, among other things, on there being validly deposited
under the Offer and not withdrawn, at least 90% of the Offeree Shares
outstanding at the time the Offeror first takes up and pays for the Offeree
Shares (see "Conditions of the Offer").
THE OFFER WILL EXPIRE AT 12:00 NOON, VANCOUVER TIME, ON MARCH 15, 1999 (THE
"TERMINATION DATE"). WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 NOON., VANCOUVER
TIME, ON MARCH 15, 1999.
A holder of Offeree Shares wishing to accept the Offer should tender the Offeree
Shares in respect of which he wishes to accept the Offer by depositing a
properly completed and duly executed Letter of Transmittal in the form
accompanying this Offer with the depository for the Offer, being Pacific
Corporate Trust Company, Attention: Marc Castonguay, prior to 12:00 noon on the
Termination Date. By signing the Letter of Transmittal, a holder of Offeree
Shares is authorizing the Offeree to deposit with the depository, any
certificates for Offeree Shares held for such holder by the Offeree.
OWNERSHIP OF OFFEROR SHARES MUST BE REGARDED AS SPECULATIVE, DUE TO THE NATURE
OF ITS BUSINESS AND ITS PRESENT STAGE OF DEVELOPMENT. AN INVESTMENT IN NATURAL
RESOURCE ISSUERS INVOLVES A SIGNIFICANT DEGREE OF RISK. THE DEGREE OF RISK
INCREASES SUBSTANTIALLY WHERE THE ISSUER'S PROPERTIES ARE IN THE EXPLORATION AS
OPPOSED TO THE DEVELOPMENT STAGE (SEE "RISK FACTORS" IN THE ATTACHED OFFERING
CIRCULAR).
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION TO ANY PERSON IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE OFFER IS
NOT BEING MADE TO, NOR WILL DEPOSITS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS
OF OFFEREE SHARES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION AND IS NOT UNDER
ANY CIRCUMSTANCES TO BE CONSTRUED AS AN OFFER TO ANY SUCH PERSON NOTWITHSTANDING
THAT A COPY OF THIS OFFER MAY HAVE BEEN DELIVERED TO SUCH PERSON. HOWEVER, THE
OFFEROR OR ITS AGENTS
<PAGE>
- 2 -
MAY, IN THEIR SOLE DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM NECESSARY TO
EXTEND THE OFFER TO HOLDERS OF OFFEREE SHARES IN SUCH JURISDICTION.
Additional copies of this document, the Offering Circular and the accompanying
Letter of Transmittal may be obtained upon request without charge from Pacific
Corporate Trust Company at its office shown below.
The depository for the Offer:
Pacific Corporate Trust Company
Suite 830, 625 Howe Street
Vancouver, British Columbia
V6C 3B8
(604) 689-9853
(604) 689-8144
For deliveries by hand or mail:
Pacific Corporate Trust Company
Suite 830, 625 Howe Street
Vancouver, British Columbia
V6C 3B8
Attention: Marc Castonguay
SECURITIES LEGISLATION IN CERTAIN OF THE PROVINCES AND TERRITORIES OF CANADA
PROVIDES SECURITY HOLDERS OF THE OFFEREE WITH, IN ADDITION TO ANY OTHER RIGHTS
THEY MAY HAVE AT LAW, RIGHTS OF RESCISSION OR TO DAMAGES, OR BOTH, IF THERE IS A
MISREPRESENTATION IN A CIRCULAR OR NOTICE THAT IS REQUIRED TO BE DELIVERED TO
SUCH SECURITIES HOLDERS. HOWEVER, SUCH RIGHTS MUST BE EXERCISED WITHIN THE
PRESCRIBED TIME LIMITS. HOLDERS OF OFFEREE SHARES SHOULD REFER TO THE APPLICABLE
PROVISIONS OF THE SECURITIES LEGISLATION OF THEIR PROVINCE OR TERRITORY FOR
PARTICULARS OF THOSE RIGHTS OR CONSULT WITH A LAWYER.
AS OF DECEMBER 31, 1998, 19.66% OF THE ISSUED AND OUTSTANDING OFFEREE SHARES ARE
HELD BY INSIDERS AND PROMOTERS OF THE OFFEREE. UPON COMPLETION OF THE OFFER,
ASSUMING THAT ALL OF THE OFFEREE SHARES ARE TENDERED PURSUANT TO THE TERMS OF
THE OFFER AND TAKEN UP AND PAID FOR BY THE OFFEROR, INSIDERS AND PROMOTERS OF
THE OFFEROR WILL HOLD 6.02% OF THE ISSUED AND OUTSTANDING OFFEROR SHARES.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SUMMARY OF OFFER...............................................................................................1
OFFER..........................................................................................................5
1. The Offer..............................................................................................5
2. Approval of Offer and Offering Circular................................................................5
3. Definitions............................................................................................5
4. Manner and Time of Acceptance..........................................................................7
5. Extension and Variation of Offer.......................................................................8
6. Conditions of the Offer................................................................................9
7. Rights of Withdrawal..................................................................................10
8. Payment for Deposited Offeree Shares..................................................................11
9. Distributions and Liens...............................................................................12
10. Mail Service Interruption.............................................................................13
11. Notice................................................................................................13
12. Compulsory Acquisition................................................................................13
13. Lawful Delivery.......................................................................................14
14. Arrangements Between the Offeror and the Directors and Officers of the Offeree........................14
15. Commitments to Acquire Offeree Shares.................................................................15
16. Market Purchases of Offeree Shares....................................................................15
17. Depository............................................................................................15
18. General...............................................................................................15
OFFERING CIRCULAR.............................................................................................17
SUMMARY OF OFFERING CIRCULAR................................................................................17
GOLDEN RIVER RESOURCES INC....................................................................................20
CORPORATE STRUCTURE OF THE OFFEROR..........................................................................20
Name and Incorporation....................................................................................20
Subsidiaries..............................................................................................20
Intercorporate Relationships..............................................................................20
BUSINESS OF THE OFFEROR.....................................................................................20
Description and General Development.......................................................................20
Valuation.................................................................................................20
Summary and Analysis of Financial Operations..............................................................21
Effect of Recent Developments on Operations................................................................22
PROPERTIES OF THE OFFEROR...................................................................................22
ADMINISTRATION OF THE OFFEROR...............................................................................23
USE OF PROCEEDS.............................................................................................23
RISK FACTORS................................................................................................25
DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT OF THE OFFEROR..........................................27
1. Name, Address, Occupation and Security Holding......................................................27
2. Aggregate Ownership of Securities...................................................................27
3. Other Reporting Issuers.............................................................................27
4. Corporate Cease Trade Orders or Bankruptcies........................................................28
5. Penalties or Sanctions..............................................................................28
6. Individual Bankruptcies.............................................................................28
7. Conflict of Interest................................................................................28
INDEBTEDNESS OF DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT OF THE
OFFEROR.....................................................................................................28
PAYMENTS TO INSIDERS AND PROMOTERS..........................................................................29
1. Executive Compensation..............................................................................29
<PAGE>
- ii -
(a) Introduction......................................................................................29
(b) Options Granted During the Most Recently Completed Fiscal Year....................................29
(c) Plans and Other Compensation......................................................................29
(d) Proposed Compensation.............................................................................29
2. Related Party Transactions..........................................................................29
3. Appointment of Directors............................................................................29
4. Promoters...........................................................................................30
SHARE AND LOAN CAPITAL......................................................................................30
1. Share Capital.......................................................................................30
2. Loan Capital........................................................................................31
3. Escrowed Shares.....................................................................................31
PRIOR ISSUANCES OF SHARES...................................................................................31
TRADING HISTORY.............................................................................................32
OPTIONS TO PURCHASE AND AGREEMENTS TO ISSUE SECURITIES......................................................32
1. Stock Options.......................................................................................33
2. Share Purchase Warrants.............................................................................33
3. Fully Diluted Share Capital.........................................................................33
4. Dilution............................................................................................34
PRINCIPAL HOLDERS OF SECURITIES.............................................................................34
OTHER MATERIAL FACTS........................................................................................35
RELATIONSHIP BETWEEN OFFEROR AND PROFESSIONAL PERSONS.......................................................35
DIVIDEND RECORD AND POLICY..................................................................................35
MATERIAL CONTRACTS OF THE OFFEROR...........................................................................35
AUDITORS....................................................................................................36
REGISTRAR AND TRANSFER AGENT................................................................................36
LEGAL MATTERS...............................................................................................36
FINANCIAL INFORMATION.......................................................................................36
ROB ROY RESOURCES INC.........................................................................................37
CORPORATE STRUCTURE OF THE OFFEREE..........................................................................37
Name and Incorporation....................................................................................37
Subsidiaries..............................................................................................37
Intercorporate Relationships..............................................................................37
BUSINESS OF THE OFFEREE.....................................................................................37
Description and General Development.......................................................................37
Summary and Analysis of Financial Operations..............................................................37
PROPERTIES OF THE OFFEREE...................................................................................38
</TABLE>
<PAGE>
OFFER
TO: THE OFFEREE SHAREHOLDERS
1. THE OFFER
THE OFFEROR HEREBY OFFERS TO PURCHASE, SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH IN THIS OFFER, THE OFFERING CIRCULAR AND THE LETTER OF TRANSMITTAL, ALL OF
THE ISSUED AND OUTSTANDING OFFEREE SHARES. THE OFFEROR WILL, SUBJECT TO THE
TERMS OF THE OFFER, ISSUE TO THE OFFEREE SHAREHOLDERS ONE OFFEROR SHARE FOR EACH
ONE OFFEREE SHARE IN RESPECT OF WHICH THE OFFER IS ACCEPTED. CERTIFICATES FOR
15% OF THE OFFEROR SHARES TO BE ISSUED TO THE OFFEREE SHAREHOLDERS WILL BE
SUBJECT TO A RESTRICTIVE LEGEND EXPIRING ON MAY 11, 1999, CERTIFICATES FOR AN
ADDITIONAL 15% OF THE OFFEROR SHARES TO BE ISSUED TO THE OFFEREE SHAREHOLDERS
WILL BE SUBJECT TO A RESTRICTIVE LEGEND EXPIRING ON SEPTEMBER 11, 1999, AND THE
CERTIFICATES FOR THE BALANCE OF 70% OF THE OFFEROR SHARES TO BE ISSUED TO THE
OFFEREE SHAREHOLDERS WILL BE SUBJECT TO A RESTRICTIVE LEGEND EXPIRING ON JANUARY
11, 2000.
THE OFFER, TOGETHER WITH THE ACCOMPANYING OFFERING CIRCULAR, WHICH IS
INCORPORATED IN AND FORMS AN INTEGRAL PART OF THE OFFER, AND THE LETTER OF
TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE
MAKING A DECISION WITH RESPECT TO THE OFFER.
The Offer is subject to certain conditions as detailed under item 6 of the
Offer. If such conditions are met, the Offeror will take up and pay for the
Offeree Shares duly deposited and not withdrawn under the Offer in accordance
with the terms hereof. All the terms and conditions of the Offer may be waived
or modified (subject to applicable law) by the Offeror without prejudice to any
right which the Offeror may have by notice in writing delivered to the
Depository at its office in Vancouver, British Columbia.
The Offer is not being made in any jurisdiction other than British Columbia and
for greater certainty is not being made in the United States, any State of the
United States or to U.S. persons. This Offer is not being mailed or otherwise
transmitted into the United States. There is to be no solicitation directly or
indirectly for tenders of Offeree Shares in the United States. All persons
receiving this Offer, including custodians, nominees and trustees for U.S.
Offeree Shareholders, are prohibited from sending it and related offering
documents into the United States or to U.S. persons, even if required to do so
pursuant to contractual or fiduciary obligations.
2. APPROVAL OF OFFER AND OFFERING CIRCULAR
The Offer and the attached Offering Circular were approved by the sole director
and officer of the Offeror and delivery of same to the Offeree Shareholders was
authorized by the sole director and officer of the Offeror on January 29, 1999.
3. DEFINITIONS
In addition to the terms defined in this Offer and Offering Circular, and unless
the context otherwise requires or a term is expressly given a different meaning
in the Offering Circular:
(a) "Commission" means the British Columbia Securities Commission;
(b) "Depository" means Pacific Corporate Trust Company;
(c) "Effective Date" means the date on which the Offeror takes-up
and issues the Offeror Shares for the Offeree Shares;
<PAGE>
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(d) "Eligible Institution" means a Canadian chartered bank, a
trust company in Canada or a firm which is a member of a
recognized stock exchange in Canada;
(e) "Letter of Transmittal" means the Letter of Transmittal in the
form which accompanies this Offer;
(f) "Notice" means the notice of extension or variation given by
the Offeror pursuant to item 5 of the Offer;
(g) "Offer" means the offer made hereby to acquire all of the
Offeree Shares;
(h) "Offer Period" means the period during which Offeree Shares
may be deposited pursuant to the Offer, which ends on the
Termination Date;
(i) "Offeree" means Rob Roy Resources Inc.;
(j) "Offeree Shareholders" means the members of the Offeree;
(k) "Offeree Shares" means the Class "A" common shares without par
value in the capital stock of the Offeree;
(l) "Offeror" means Golden River Resources Inc.;
(m) "Offeror Shares" means the common shares without par value in
the capital of the Offeror;
(n) "Other Securities" means any distributions, payments,
securities, rights or other interests declared, paid, issued,
transferred, made or distributed on or in respect of the
Purchased Shares on or after February 1, 1999;
(o) "Outstanding Securities" means the Offeree Shares not validly
deposited pursuant to the terms of the Offer at the
Termination Date;
(p) "Purchased Shares" means the Offeree Shares validly deposited
pursuant to the terms of the Offer and purchased by the
Offeror;
(q) "Termination Date" means 12:00 noon, Vancouver time, on March
15, 1999 or such later date or dates as may be fixed by a
notice of extension given under item 5 of this Offer;
(r) "U.S. Person" means any natural persons resident in the United
States; any partnership or corporation organized or
incorporated under the laws of the United States; any estate
of which any executor or administrator is a U.S. person; any
trust of which any trustee is a U.S. person; any agency or
branch of a foreign entity located in the United States; any
non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person; any discretionary account
or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and any partnership
or corporation if:
(i) organized or incorporated under the laws of any
foreign jurisdiction; and
(ii) formed by a U.S. person principally for the purpose
of investing in securities not registered under the
SECURITIES ACT OF 1933, unless it is organized or
incorporated, and owned, by accredited investors (as
defined in Rule 501(a)under the SECURITIES ACT OF
1933) who are not natural persons, estates or trusts;
and
(s) "United States" means the United States of America, its
territories and possessions, any State of the United States,
and the District of Columbia.
4. MANNER AND TIME OF ACCEPTANCE
The Offer may be accepted only by the Offeree Shareholders by depositing during
the Offer Period with the Depository at its office set out in the Letter of
Transmittal:
(a) the certificate or certificates representing the Offeree
Shares in respect of which the offer is being accepted. The
Letter of Transmittal contains instructions for a
representative of the Offeree to deposit with the Depository,
such certificates for Offeree Shares that are in the
possession of the Offeree;
(b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed in accordance with the
instructions set out therein; and
(c) any other documentation which may be required pursuant to the
Letter of Transmittal.
The Offeree Shares will only be deemed to have been validly deposited under the
Offer when the Depository has actually received the certificate or certificates
representing the Offeree Shares in respect of which the Offer is being accepted,
the Letter of Transmittal (or facsimile thereof), properly and duly executed,
and any other required documents in accordance with the foregoing prior to the
Termination Date.
If a Letter of Transmittal in respect of Deposited Offeree Shares is executed by
a person other than the registered Offeree Shareholder, then the certificates
representing the Offeree Shares to be deposited must be duly endorsed for
assignment, and accompanied by the appropriate form of transfer of the Offeree
Shares from the registered Offeree Shareholder to the person who executed the
Letter of Transmittal.
The deposit of the Offeree Shares pursuant to the delivery of an executed Letter
of Transmittal and pursuant to the procedures described above will constitute a
binding agreement between the depositing Offeree Shareholder and the Offeror
upon the terms and subject to the conditions of the Offer.
Subject to the terms and conditions in the Offer, payment for the Offeree Shares
deposited and taken up pursuant to the Offer will be made only after timely
receipt by the Depository of the certificate or certificates representing the
Offeree Shares in respect of which the Offer is being accepted, a properly and
duly executed Letter of Transmittal (or facsimile thereof) and any other
required documents.
THE METHOD OF DELIVERY OF THE CERTIFICATES REPRESENTING THE OFFEREE SHARES IN
RESPECT OF WHICH THE OFFER IS BEING ACCEPTED, THE LETTER OF TRANSMITTAL, AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE PERSON DEPOSITING THE
SAME.
The execution of the Letter of Transmittal by any particular Offeree Shareholder
irrevocably appoints any director for the time being of the Offeror and each of
them, and any other person
<PAGE>
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designated by the Offeror in writing, as the true and lawful agent, attorney,
attorney-in-fact and proxy of that particular Offeree Shareholder in respect of
the Offeree Shares covered by the Letter of Transmittal and deposited pursuant
to the Offer and purchased by the Offeror (the "Purchased Shares") and with
respect to any distributions, payments, securities, rights, or other interests
declared, paid, issued, transferred, made or distributed on or in respect of the
Purchased Shares on or after the date of the Offer (collectively, the "Other
Securities"), effective from the date that the Offeror takes up and issues the
Offeror Shares for the Offeree Shares (the "Effective Date"), with full power of
substitution, in the name of and on behalf of that particular Offeree
Shareholder in respect of such Offeree Shares (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to: (a) register and
record, transfer and enter the transfer of Purchased Shares and any Other
Securities on the appropriate register of Offeree Shareholders; (b) vote,
execute and deliver any and all instruments of proxy, authorizations or consents
in respect of all or any of the Purchased Shares and all or any Other
Securities, revoke any such instrument, authorization or consent given prior to,
on or after the Effective Date and designate in any such instruments of proxy
any person or persons as the proxy or the proxy nominees of that particular
Offeree Shareholder in respect of such Purchased Shares and such Other
Securities including, without limiting the generality of the foregoing, in
connection with any meeting (whether annual, special or otherwise) of the
Offeree Shareholders (or any adjournment thereof) whenever called; and (c)
exercise any and all rights of that particular Offeree Shareholder in respect of
the Purchased Shares or Other Securities. Further, an Offeree Shareholder who
executes a Letter of Transmittal agrees, effective from the Effective Date, not
to vote any of the Purchased Shares or Other Securities at any meeting (whether
annual, special or otherwise) whenever called of Offeree Shareholders and not to
exercise from and after the Effective Date any or all other rights or privileges
attached to any or all of the Purchased Shares or Other Securities, and agrees
to execute and deliver to the Offeror any and all instruments of proxy,
authorizations or consents in respect of any or all of the Purchased Shares or
Other Securities, and to designate in any such instruments of proxy the person
or persons specified by the Offeror as the proxy or the proxy nominee or
nominees of the Offeree Shareholder in respect of the Purchased Shares or Other
Securities. Upon such appointment, all prior proxies given by an Offeree
Shareholder in respect of such Purchased Shares or Other Securities shall be
revoked and no subsequent proxies may be given by such person with respect
thereto.
All questions as to the validity, form, eligibility (including timely receipt)
and acceptance of any Offeree Shares deposited pursuant to the Offer will be
determined by the Offeror in its sole discretion, and the depositing Offeree
Shareholders agree that such determination shall be final and binding. The
Offeror reserves the absolute right to reject any and all deposits which it
determines not to be in proper form or which, in the opinion of its counsel, may
be unlawful to accept under the laws of any jurisdiction. The Offeror reserves
the absolute right to waive any defect or irregularity in the deposit of any
Offeree Shares. There shall be no obligation on the Offeror or the Depository to
give notice of any defects or irregularities in any deposit and no liability
shall be incurred by either of them for failure to give any such notice. The
Offeror's interpretation of the terms and conditions of the Offer (including the
Letter of Transmittal) will be final and binding.
5. EXTENSION AND VARIATION OF OFFER
The Offeror may in its sole discretion at any time and from time to time during
the Offer Period, or otherwise as permitted by law, extend the period of time
during which the Offer may be accepted, or otherwise vary the Offer, by giving
oral or written notice of such extension or variation (the "Notice") to the
Depository at its office set out in the Letter of Transmittal. The Offeror
shall, as soon as practicable after giving notice to the Depository, publicly
announce the variation or extension and, where required by law, mail proper
notice to the Offeree Shareholders whose Offeree Shares have not been taken up
and paid for by the Offeror (through the issuance of the Offeror Shares). Any
notice will also be delivered to the Commission and will be deemed to have
<PAGE>
- 9 -
been given and be effective on the day on which it is delivered or otherwise
communicated to the Depository.
Under the applicable securities legislation of the Province of British Columbia,
if there is a variation in the terms of the Offer, the period during which the
Offeree Shares may be deposited pursuant to the Offer will not expire before 10
days after the Notice has been delivered.
During any such extension or in the event of any variation, all Offeree Shares
previously deposited and not withdrawn, if previously deposited and not
withdrawn, will remain subject to the Offer and may be taken up and paid for by
the Offeror (through the issuance of the Offeror Shares) on or after the
Termination Date, subject to items 6 and 7 hereof.
6. CONDITIONS OF THE OFFER
Notwithstanding any other provision of this Offer, the Offeror shall have the
right to withdraw or terminate this Offer, and shall not be required to take up
or accept for payment or issue the Offeror Shares for any Offeree Shares
deposited under this Offer, or may delay the acceptance for payment of the
Offeree Shares deposited if any of the following conditions have not been
satisfied as at the Termination Date:
(a) at least 90% of the issued and outstanding Offeree Shares
shall have been validly deposited under the Offer and not
withdrawn at the time the Offeror first takes up and pays for
the Offeree Shares under the Offer;
(b) none of the following events shall have occurred after the
date of the Offer, or have occurred prior to the date of the
Offer and not have been generally disclosed, which, in the
sole judgement of the Offeror, makes it inadvisable for the
Offeror to proceed with the Offer or to proceed with the
taking up and payment for the Offeree Shares under the Offer:
(i) any action, suit, judgement, investigation,
proceeding or claim (whether or not purportedly on
behalf the Offeree) shall be outstanding or pending
or threatened against or affecting the Offeree or any
material assets thereof in law or in equity or before
or by any federal, provincial, state or other
governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign,
including without limitation in respect of taxes,
government charges or assessments which, in the sole
judgement of the Offeror, could have a material
adverse affect on the Offeree;
(ii) any law or regulation shall have been proposed,
enacted, promulgated or applied, whether or not
having the force of law, which, in the sole judgement
of the Offeror, could have a material adverse affect
on the Offeree; and
(iii) any change (or any condition, event, or development
involving a prospective change) in the business,
assets, capitalization, financial condition,
licenses, permits, rights or privileges, whether
contractual or otherwise, or prospects or affairs of
the Offeree or any other entity in which Offeree has
a material interest shall have occurred which, in the
sole judgement of the Offeror, could have a material
adverse affect on the Offeree or on the Offeror as
the prospective owner of the Offeree Shares pursuant
to this Offer;
(c) the respective boards of directors of the Offeree and the
Offeror shall have approved the making of the Offer;
<PAGE>
- 10 -
(d) the acquisition of the Offeree Shares shall not be prevented
by any applicable law, regulation or policy or by any order or
other decision of any court or regulatory authority and the
Offeror shall have received all government and regulatory
consents or approvals required to consummate the Offer and the
transactions contemplated hereby;
(e) there shall have been no material change in the business,
operations, capital, assets, financial condition, prospects or
affairs, and no material change in the liabilities of the
Offeree as reflected in the financial statements of the
Offeree attached hereto as Schedule "C" which in the sole
judgment of the Offeror is materially adverse to the Offeree;
and;
(f) the Offeree shall have a minimum of US$600,000 cash on hand
and no liabilities.
The foregoing conditions are for the exclusive benefit of the Offeror and may be
asserted by the Offeror regardless of the circumstances (including any action or
inaction of the Offeror). The Offeror may, in its sole discretion, waive such
conditions in whole or in part at any time and from time to time, both before
and after the Termination Date, without prejudice to any other rights which the
Offeror may have under the Offer. The failure by the Offeror at any time to
exercise any of the foregoing rights will not be deemed a waiver of any other
right and each right will be deemed an ongoing right which may be asserted at
any time and from time to time.
Any waiver of a condition or the withdrawal of the Offer will be effective upon
oral or written notice by the Offeror to that effect given to the Depository at
its office set out in the Letter of Transmittal. The Offeror will, promptly
after giving any such notice, make a public announcement of such waiver or
withdrawal, notify the Offeree Shareholders and provide a copy of the notice to
the Exchange and the Commission. A waiver of a condition will require an
extension of the Offer, as described in item 5 hereof.
If the Offer in respect of the Offeree Shares is withdrawn, the Depository will
forthwith return all certificates representing the Offeree Shares deposited
thereunder and any other relevant documents by first class mail to the address
of the depositing Offeree Shareholder specified in the Letter of Transmittal or,
if no such address is specified, to the last address of such Offeree Shareholder
as it appears in the securities register of the Offeree.
7. RIGHTS OF WITHDRAWAL
Any Offeree Shares deposited with the Depository pursuant the Offer may be
withdrawn by or on behalf of the depositing Offeree Shareholder at any time up
to 12:00 noon (Vancouver time) on March 15, 1999 at the Depository. DEPOSITS OF
OFFEREE SHARES UNDER THE OFFER ARE OTHERWISE IRREVOCABLE EXCEPT AS STATED IN
THIS ITEM 7.
In the event of a change in the information contained in the Offering Circular
or in any Notice of change or variation thereunder which requires, under
applicable law, a Notice of change to be sent to the Offeree Shareholders, any
Offeree Shares deposited, if deposited, and not taken up by the Offeror at the
date of the Notice of change may be withdrawn by or on behalf of the depositing
Offeree Shareholder at any time before the expiration of 10 days from the date
of the notice of change.
In the event of a variation in the terms of the Offer, except for a variation
consisting solely of an increase in the consideration offered for the Offeree
Shares but including any extension of the period during which the Offeree Shares
may be deposited under the Offer, which variation requires, under applicable
law, a Notice of variation to be sent to the Offeree Shareholders, any Offeree
<PAGE>
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Shares deposited, if deposited, and not taken up by the Offeror at the date of
the Notice of variation may be withdrawn by or on behalf of the depositing
Offeree Shareholder at any time before the expiration of 10 days from the date
of the notice of variation.
In addition, Offeree Shares deposited pursuant to the Offer and not taken up and
paid for (through the issuance of the Offeror Shares) by the Offeror prior to
the receipt by the Depository of the notice of withdrawal in respect of such
Offeree Shares may be withdrawn by or on behalf of the depositing Offeree
Shareholder at any time after 45 days from the date the Offer was mailed to the
Offeree Shareholders.
Any Offeree Shares withdrawn will not be deemed to have been validly deposited
for purposes of the Offer. However, withdrawn Offeree Shares may be redeposited
by following the applicable procedure described in item 4 at any time prior to
the Termination Date.
Withdrawal of the Offeree Shares deposited must be effected by notice of
withdrawal which must be made by or on behalf of the Offeree Shareholder by whom
or on whose behalf such Offeree Shares were deposited and which must be received
by the Depository. Any such notice of withdrawal must: (a) bemade by a method,
including telegraphic communication, that provides the Depository with a written
or printed copy; (b) be signed by or on behalf of the person who signed the
Letter of Transmittal accompanying the Offeree Shares which are being withdrawn;
(c) specify such person's name and in the case of the Offeree Shares, the number
of Offeree Shares, the name of the registered Offeree Shareholder of, and the
certificate number shown on, each certificate evidencing the Offeree Shares to
be withdrawn; and (d) be actually received by the Depository within the time
specified above. ANY SIGNATURE IN THE NOTICE OF WITHDRAWAL MUST BE GUARANTEED BY
AN ELIGIBLE INSTITUTION. NEITHER THE OFFEROR, THE DEPOSITORY OR ANY OTHER PERSON
WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECT OR IRREGULARITY IN ANY
NOTICE OF WITHDRAWAL OR WILL INCUR ANY LIABILITY FOR FAILURE TO GIVE SUCH
INFORMATION.
In addition to the foregoing rights of withdrawal, Offeree Shareholders are
entitled to statutory rights of rescission in certain circumstances. See
"Offeree's Statutory Rights" in the Offering Circular.
All questions as to the validity (including timely receipt) and form of notices
of withdrawal will be determined by the Offeror in its sole discretion, and such
determination will be final and binding.
8. PAYMENT FOR DEPOSITED OFFEREE SHARES
Subject to the rights of withdrawal referred to in item 5 and the conditions
referred to in item 6, the Offeree Shares which the Offeror becomes bound or is
willing to purchase under the Offer will be taken up and paid for promptly after
the Termination Date and within the time periods required by applicable
securities laws.
The Offeror reserves the right, in its sole discretion, to delay taking up and
paying for any Offeree Shares or to terminate the Offer and not take up and pay
for any Offeree Shares in the event that any of the conditions specified in item
6 hereof are not satisfied or are not waived by the Offeror, by giving oral or
written notice thereof to the Depository. The Offeror confirms that its
reservation of the right to delay payment for the Offeree Shares which it has
taken up is limited by the securities laws of British Columbia.
Settlement will be made by the Depository or the Offeror's registrar and
transfer agent, American Securities Transfer & Trust, Inc., by forwarding
certificates representing the applicable number of Offeror Shares. Unless
otherwise directed in the Letter of Transmittal, the certificates for the
Offeror Shares will be issued in the name of the Offeree Shareholder so
deposited. Unless the person who deposits Offeree Shares instructs the
Depository or the Offeror's registrar and transfer
<PAGE>
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agent to a different address or to hold the share certificate for pick-up by
checking the appropriate box in the Letter of Transmittal, certificates will be
forwarded by first class mail to such persons at the address specified in the
Letter of Transmittal. If no address is specified therein the share certificates
will be forwarded to the address of the Offeree Shareholders shown in the
securities register of the Offeree.
If any deposited Offeree Shares are not taken up and paid for pursuant to the
terms and conditions of the Offer for any reason, or if certificates are
submitted for more Offeree Shares than are deposited, certificates for
unpurchased Offeree Shares will be returned, without expense, to the depositing
holder promptly following the Termination Date or withdrawal and early
termination of the Offer.
The Offeror will pay for the Offeree Shares validly deposited pursuant to the
Offer by providing the Depository or the Offeror's registrar or transfer agent
with sufficient certificates representing the Offeror Shares for transmittal to
the Offeree Shareholders. Under no circumstances will interest be paid by the
Offeror on the purchase price of Offeree Shares purchased by the Offeror,
regardless of any delay in making such payment. The Depository will act as agent
of persons who have deposited Offeree Shares in acceptance of the Offer for the
purposes of receiving payment from the Offeror and transmitting payment to such
persons.
No fractional Offeror Shares will be issued and the number of Offeror Shares to
which a depositing holder is entitled will be rounded down to the nearest whole
Offeror Share.
No fee or commission will be payable by any holder of Offeree Shares who
transmits such Offeree Shares directly to the Depository. Except as set forth in
the instructions to the Letter of Transmittal, transfer taxes, if any, on the
purchase of Offeree Shares will be paid by the Offeror.
In the event of a variation in the Offer resulting from an increase in
consideration offered for the Offeree Shares, such increased consideration will
be paid to each holder of such Offeree Shares previously taken up and paid for
and to each Offeree Shareholder of such Offeree Shares deposited, if deposited,
in acceptance of the varied Offer.
The Offeror Shares issuable pursuant to the Offer are not registered and
accordingly, no Offeror Shares will be delivered to any person who is, or who
appears to the Offeror or the Depository to be a person who is, or who appears
to the Offeror or to the Depository to be, a resident of any particular
jurisdiction unless the Offeror is satisfied in its sole discretion that the
Offeror Shares may be lawfully delivered in such other jurisdiction without
further action by the Offeror. See "Lawful Delivery".
9. DISTRIBUTIONS AND LIENS
If on or after the date of this Offer, the Offeree should charge any of the
Offeree Shares, or should disclose that it has taken any such action to charge
any of the Offeree Shares, then the Offeror may, in its sole discretion, make
such adjustments as it deems appropriate to reflect such charge in the purchase
price and the other terms of the Offer (including, without limitation, the type
of securities offered to be purchased and the amounts payable therefor).
The Offeree Shares acquired pursuant to the Offer will be transferred by the
Offeree Shareholder and acquired by the Offeror free and clear of all liens,
restrictions, charges, encumbrances, claims and equities and together with all
rights, benefits and claims arising therefrom including the right to all
distributions, payments, securities, rights, assets or other interests which may
be declared, paid, issued, distributed, made or transferred on or in respect of
the Offeree Shares purchased pursuant to the Offer.
<PAGE>
- 13 -
If the Offeree should declare or make any distribution or payment on or issue
any rights with respect to the Offeree Shares which is payable or distributable
to Offeree Shareholders of record on a date prior to the transfer to the Offeror
of the tendered Offeree Shares pursuant to the Offer as indicated by the records
of the Offeree taken up pursuant to the Offer: (a) in the case of cash
distributions, the amount of the distributions will be received and held by the
depositing Offeree Shareholder for the account of the Offeror until the Offeror
pays for such Offeree shares; and (b) in the case of non-cash distributions or
rights, the whole of any such non-cash distribution or right will be received
and held by the depositing Offeree Shareholder for the account of the Offeror
and will be remitted promptly and transferred by the depositing Offeree
Shareholder to the Depository, to the account of the Offeror, accompanied by
appropriate documentation of transfer. Pending such remittance, the Offeror will
be entitled to all rights and privileges as owner of any such cash or non-cash
distribution or right and may withhold the entire purchase price payable
pursuant to this Offer or deduct from the purchase price payable pursuant to
this Offer the amount or value thereof as determined by the Offeror in it sole
discretion.
10. MAIL SERVICE INTERRUPTION
Notwithstanding the provisions of the Offer or the Letter of Transmittal,
certificates and other documents will not be mailed if the Offeror determines
that delivery thereof by mail may be delayed. Depositing Offeree Shareholders
entitled to certificates and other documents which are not mailed for the
foregoing reason may take delivery thereof at the office of the Depository at
which they deposited their Offeree Shares under the Offer or at the specified
office of the Offeror's registrar and transfer agent if so specified by the
Offeror or the Depository on application to the Depository until such time as
the Offeror has determined that delivery by mail will no longer be delayed.
Certificates and other documents not mailed for the foregoing reason will be
conclusively deemed to have been delivered on the first day upon which they are
available for delivery to the depositing Offeree Shareholder at the office of
the Depository or at the appropriate office of the Offeror's registrar and
transfer agent.
11. NOTICE
Any notice which the Offeror, the Depository or the Offeror's register and
transfer agent may give or cause to be given to the Offeree Shareholders will be
deemed to have been properly given if it is in writing and is mailed by first
class mail, postage prepaid, to the Offeree Shareholders at their respective
addresses appearing in the securities register of The Offeree, and will be
deemed to have been received on the next business day following mailing. These
provisions will apply notwithstanding any accidental omission to give notice to
any one or more of the Offeree Shareholders and notwithstanding any interruption
of mail service in Canada or elsewhere following mailing.
In the event of any interruption of mail service following mailing, the Offeror
intends to make reasonable efforts to disseminate notices by other means such as
publication. In the event of any disruption in mail service prior to mailing any
notice which the Offeror, the Depository or the Offeror's registrar and transfer
agent may give or cause to be given under the Offer, such notice will be deemed
to have been properly given and to have been received by Offeree Shareholders if
it is published in a newspaper of general circulation in Vancouver, British
Columbia.
12. COMPULSORY ACQUISITION
The purpose of the Offer is for the Offeror to acquire all the issued and
outstanding Offeree Shares.
Section 255 of the COMPANY ACT (British Columbia) provides that, where at least
90% of the Offeree Shares have been validly tendered pursuant to the Offer and
accepted and taken up by the Offeror within 4 months of the date hereof, the
Offeror may, within 5 months from the date hereof,
<PAGE>
- 14 -
give notice in writing to the holders of the Offeree Shares not validly tendered
pursuant to the Offer (the "Outstanding Securities") that the Offeror desires to
acquire the Outstanding Securities upon the terms of the Offer. Section 255 of
the COMPANY ACT (British Columbia) allows an Offeree Shareholder to apply to the
Court to have the price and terms of payment fixed and to make such
consequential orders that the Court considers appropriate. After the date which
is 2 months from the date of such notice, provided that the Court has not
ordered otherwise and provided that no court order is pending, the Offeror will
send a copy of such notice to the Offeree and deliver to the Offeree that number
of Offeror Shares to which the holder or holders of the Outstanding Securities
would be entitled to pursuant to the terms of the Offer and the Offeree is
required to register the Offeror as the holder of the Outstanding Securities.
It is the Offeror's current intention to exercise the foregoing compulsory
purchase right in the event it acquires 90% or more of the Offeree Shares under
the Offer. If the Offeror does not exercise such right, Offeree Shareholders who
do not tender under the Offer may remain minority Offeree Shareholders.
The foregoing is a summary only of the right of acquisition available to the
Offeror and the right of appraisal available to the Offeree Shareholders. This
summary is not intended to be complete and is qualified in its entirety by the
provisions of the COMPANY ACT (British Columbia). Offeree Shareholders should
refer to the COMPANY ACT (British Columbia) and in particular Part 8 thereof for
the full text of the relevant statutory provisions and those who wish to be
better informed about these provisions should consult their legal advisors. The
provisions of the COMPANY ACT (British Columbia), and in particular Part 8
thereof, are complex and may require strict adherence to the notice and timing
provisions, failing which such rights may be lost or altered.
13. LAWFUL DELIVERY
The Offeror Shares issuable pursuant to the Offer are not registered and
accordingly, no Offeror Shares will be delivered to any person who is, or who
appears to the Offeror or the Depository to be a person who is, a resident of
any particular jurisdiction unless the Offeror is satisfied in its sole
discretion that the Offeror Shares may be lawfully delivered in such other
jurisdiction without further action by the Offeror.
All the Offeror Shares which would otherwise be issued to residents of
jurisdictions in which the Offeror Shares may not be lawfully delivered without
further action by the Offeror, will be issued and delivered to the Depository
for sale by the Depository on behalf of such persons. Such persons shall receive
their pro rata share of the cash proceeds from the sale of such Offeror Shares
if and when such sale is permitted by law.
14. ARRANGEMENTS BETWEEN THE OFFEROR AND THE DIRECTORS AND OFFICERS OF THE
OFFEREE
Other than as stated in this Offer and the accompanying Offering Circular, no
Offeree Shares are beneficially owned, directly or indirectly, nor is control or
discretion exercised over any such Offeree Shares by the Offeror or any director
or senior officer of the Offeror nor, to the knowledge of the Offeror after
reasonable inquiry, any associate of any director or senior officer of the
Offeror, nor any person or company holding more than 10% of any class of
securities of the Offeror.
15. COMMITMENTS TO ACQUIRE OFFEREE SHARES
Other than a letter of intent dated March 3, 1998, as revised and restated on
December 18, 1998 between the Offeror and the Offeree (the "Letter of Intent")
there are no contracts, arrangements or agreements, formal or informal, made or
proposed to be made by the Offeror nor, to the knowledge of the Offeror after
reasonable inquiry, by any associate of a director or senior officer of the
<PAGE>
- 15 -
Offeror, by any person or company holding 10% of any class of Offeror Shares nor
any person acting jointly or in concert with the Offeror, with respect to the
acquisition of the Offeree Shares.
Pursuant to the terms of the Letter of Intent, the directors of the Offeree
agreed, subject to the completion of appropriate due diligence, to tender all of
their Offeree Shares pursuant to the terms of the Offer.
Copies of the Letter of Intent are available for inspection at the Offeree's
registered office, being Suite 1020, 510 Burrard Street, Vancouver, British
Columbia, V6C 3A8
16. MARKET PURCHASES OF OFFEREE SHARES
As at the date hereof, the Offeror does not intend to purchase Offeree Shares
other than those tendered pursuant to the terms of the Offer.
17. DEPOSITORY
The Offeror has retained Pacific Corporate Trust Company to act as Depository
for the receipt of certificates in respect of the Offeree Shares and related
Letters of Transmittal deposited under the Offer and for the payment for the
Offeree Shares purchased by the Offeror pursuant to the Offer. The Depository
will receive compensation from the Offeror for services in connection with the
Offer, will be reimbursed for certain out-of-pocket expenses and will be
indemnified against certain liabilities, including liabilities under securities
laws and expenses in connection therewith.
18. GENERAL
THE PROVISIONS OF THE OFFER, OFFERING CIRCULAR AND LETTER OF TRANSMITTAL FORM
PART OF THE OFFER AND SHOULD BE READ CAREFULLY BEFORE MAKING A DECISION WITH
RESPECT TO THE OFFER.
The Offer and the accompanying Offering Circular and the documents referred to
above constitute the takeover bid circular required under the securities
legislation of the Province of British Columbia with respect to the Offer.
It is presently intended that any Offeree Shares acquired pursuant to this Offer
will be held by the Offeror. However, the Offeror reserves the right to transfer
to one or more affiliates of the Offeror the right to purchase all or any
portion of the Offeree Shares deposited, if deposited, pursuant to the Offer.
Any such transfer will not relieve the Offeror of its obligations under the
Offer and will in no way prejudice the rights of person depositing Offeree
Shares to receive payment for the Offeree Shares validly deposited and taken up
pursuant to the Offer.
No broker, dealer or other person has been authorized to give any information or
to make by representation on behalf of the Offeror other than as contained in
the Offer and the Offering Circular and, if any such information or
representation is given or made, it must not be relied upon as having been
authorized.
THIS OFFER IS NOT BEING MADE TO, NOR WILL DEPOSITS BE ACCEPTED FROM OR ON BEHALF
OF OFFEREE SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE
OFFEROR MAY IN ITS SOLE DISCRETION TAKE SUCH ACTION AS IT DEEMS NECESSARY TO
MAKE THE OFFER IN ANY SUCH JURISDICTION AND TO EXTEND THE OFFER TO THE OFFEREE
SHAREHOLDERS IN SUCH JURISDICTION. IN ANY JURISDICTION IN WHICH THE OFFER IS
REQUIRED TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER WILL BE MADE ON
BEHALF OF THE OFFEROR BY BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.
<PAGE>
- 16 -
The Offer and any arrangement resulting from the acceptance of the Offer will be
governed by and construed in accordance with the laws of the United States of
America. Each party to any agreement resulting from the acceptance of this Offer
unconditionally and irrevocably attorns to the jurisdiction of the Courts of the
United States of America and the Courts of Appeal therefrom.
Dated: January 29, 1999
GOLDEN RIVER RESOURCES INC.
By:/S/David Parsons
- ----------------------------------------
DAVID PARSONS
President, Chief Financial Officer,
and sole Director
OFFEREE SHAREHOLDERS ARE URGED TO READ THE ACCOMPANYING CIRCULAR
AND LETTER OF ACCEPTANCE FOR ADDITIONAL INFORMATION RELATING TO THE
OFFER.
<PAGE>
Exhibit 3.1
Articles of Incorporation
<PAGE>
[FILED STAMP OF THE SECRETARY OF STATE OF THE STATE OF NEVADA]
ARTICLES OF INCORPORATION
OF
GOLDEN RIVER RESOURCES INC.
ARTICLE I
The name of the corporation is Golden River Resources Inc. (the
"Corpora tion").
ARTICLE II
The amount of total authorized capital stock which the Corporation
shall have authority to issue is 50,000,000 shares of common stock, each with
$0.001 par value, and 1,000,000 shares of preferred stock, each with $0.01 par
value. To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.195), as the same now exists or may hereafter be
amended or supplemented, the Board of Directors may fix and determine the
designations, rights, preferences or other variations of each class or series
within each class of capital stock of the Corporation.
ARTICLE III
The business and affairs of the Corporation shall be managed by a Board
of Directors which shall exercise all the powers of the Corporation except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Nevada. The number of members of the Board of Directors shall be
set in accordance with the Company's Bylaws; however, the initial Board of
Directors shall consist of one member. The name and address of the person who
shall serve as the director until the first annual meeting of stockholders and
until his successors are duly elected and qualified is as follows:
NAME ADDRESS
Nolan Moss 1101 - 1875 Bellevue Avenue
West Vancouver, British Columbia
V7V 1B3
CANADA
<PAGE>
ARTICLE IV
The name and address of the incorporator of the Corporation is Lori Ann
Y. Fujioka, 455 Sherman Street, Suite 300, Denver, Colorado 80203.
ARTICLE V
To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.037), as the same now exists or may hereafter be
amended or supplemented, no director or officer of the Corporation shall be
liable to the Corporation or to its stockholders for damages for breach of
fiduciary duty as a director or officer.
ARTICLE VI
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person against all liability and
expense (including attorneys' fees) incurred by reason of the fact that he is or
was a director or officer of the Corporation, he is or was serving at the
request of the Corporation as a director, officer, employee, or agent of, or in
any similar managerial or fiduciary position of, another corporation,
partnership, joint venture, trust or other enterprise. The Corporation shall
also indemnify any person who is serving or has served the Corporation as a
director, officer, employee, or agent of the Corporation to the extent and in
the manner provided in any bylaw, resolution of the shareholders or directors,
contract, or otherwise, so long as such provision is legally permissible.
ARTICLE VII
The owners of shares of stock of the Corporation shall not have a
preemptive right to acquire unissued shares, treasury shares or securities
convertible into such shares.
ARTICLE VIII
Only the shares of capital stock of the Corporation designated at
issuance as having voting rights shall be entitled to vote at meetings of
stockholders of the Corporation, and only stockholders of record of shares
having voting rights shall be entitled to notice of and to vote at meetings of
stockholders of the Corporation.
2
<PAGE>
ARTICLE IX
The initial resident agent of the Corporation shall be the Corporation
Trust Company of Nevada, whose street address is 1 East 1st Street, Reno, Nevada
89501.
ARTICLE X
The provisions of NRS 78.378 to 78.3793 inclusive, shall not apply to
the Corporation.
ARTICLE XI
The purposes for which the Corporation is organized and its powers are
as follows:
To engage in all lawful business; and
To have, enjoy, and exercise all of the rights, powers, and
privileges conferred upon corporations incorporated pursuant to Nevada law,
whether now or hereafter in effect, and whether or not herein specifically
mentioned.
ARTICLE XII
One-third of the votes entitled to be cast on any matter by each
shareholder voting group entitled to vote on a matter shall constitute a quorum
of that voting group for action on that matter by shareholders.
ARTICLE XIII
The holder of a bond, debenture or other obligation of the Corporation
may have any of the rights of a stockholder in the Corporation to the extent
determined appropriate by the Board of Directors at the time of issuance of such
bond, debenture or other obligation.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 13th day of June, 1997.
By/S/LORI ANN Y. FUJIOKA
Lori Ann Y. Fujioka
Incorporator
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
Personally appeared before me this 13th day of June, 1997, Lori Ann Y.
Fujioka, who, being first duly sworn, declared that he executed the foregoing
Articles of Incorporation and that the statements therein are true and correct
to the best of his knowledge and belief.
Witness my hand and official seal.
/S/BRENDA M. JOHNSON
Brenda M. Johnson, Notary Public
My commission expires: Address:
455 SHERMAN STREET, SUITE 300
9-9-2000 DENVER, COLORADO 80203
[NOTARY SEAL]
B:\ARTICLES.INC
.01
4
<PAGE>
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
I, Corporation Trust Company of Nevada, with address at One East First Street,
Town of Reno, County of Washoe, State of Nevada, hereby accept the appointment
as Resident Agent of Golden River Resources Inc. in accordance with NRS 78.090.
In Witness Whereof, I have hereunto set my hand this _______16_______ day of
June, 1997.
/S/MARCIA J. SUNAHARA
-------------------------------------
Resident Agent
5
[FILED STAMP OF THE SECRETARY OF STATE OF THE STATE OF NEVADA]
<PAGE>
Exhibit 3.2
Bylaws
<PAGE>
GOLDEN RIVER RESOURCES INC.
BYLAWS
- -----------------------------
Adopted as of June 17, 1997
<PAGE>
GOLDEN RIVER RESOURCES INC.
BYLAWS
<TABLE>
TABLE OF CONTENTS
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE I
OFFICES
1.1 Registered Office................................................................................ 1
1.2 Principal Office................................................................................. 1
ARTICLE II
STOCKHOLDERS
2.1 Annual Meeting .................................................................................. 1
2.2 Special Meetings................................................................................. 1
2.3 Place of Meeting................................................................................. 2
2.4 Notice of Meeting................................................................................ 2
2.5 Adjournment...................................................................................... 2
2.6 Organization..................................................................................... 2
2.7 Closing of Transfer Books or Fixing of Record Date............................................... 2
2.8 Quorum........................................................................................... 2
2.9 Proxies.......................................................................................... 3
2.10 Voting of Shares................................................................................. 3
2.11 Action Taken Without a Meeting................................................................... 3
2.12 Meetings by Telephone............................................................................ 4
-i-
<PAGE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE III
DIRECTORS
3.1 Board of Directors; Number; Qualifications; Election............................................. 4
3.2 Powers of the Board of Directors: Generally...................................................... 4
3.3 Committees of the Board of Directors............................................................. 4
3.4 Resignation...................................................................................... 4
3.5 Removal.......................................................................................... 5
3.6 Vacancies........................................................................................ 5
3.7 Regular Meetings................................................................................. 5
3.8 Special Meetings................................................................................. 5
3.9 Notice ........................................................................................ 5
3.10 Quorum........................................................................................... 5
3.11 Manner of Acting................................................................................. 5
3.12 Compensation..................................................................................... 5
3.13 Action Taken Without a Meeting................................................................... 6
3.14 Meetings by Telephone............................................................................ 6
ARTICLE IV
OFFICERS AND AGENTS
4.1 Officers of the Corporation...................................................................... 6
4.2 Election and Term of Office...................................................................... 6
4.3 Removal.......................................................................................... 6
4.4 Vacancies........................................................................................ 7
4.5 President........................................................................................ 7
4.6 Vice Presidents.................................................................................. 7
4.7 Secretary........................................................................................ 7
4.8 Treasurer........................................................................................ 8
4.9 Salaries......................................................................................... 8
4.10 Bonds ........................................................................................ 8
-ii-
<PAGE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE V
STOCK
5.1 Certificates..................................................................................... 8
5.2 Record........................................................................................... 9
5.3 Consideration for Shares......................................................................... 9
5.4 Cancellation of Certificates..................................................................... 10
5.5 Lost Certificates................................................................................ 10
5.6 Transfer of Shares............................................................................... 10
5.7 Transfer Agents, Registrars, and Paying Agents................................................... 10
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 Indemnification; Advancement of Expenses......................................................... 10
6.2 Insurance and Other Financial Arrangements Against
Liability of Directors, Officers, Employees, and
Agents......................................................................................... 11
ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 Acquisition of Controlling Interest.............................................................. 11
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 Execution of Instruments......................................................................... 11
8.2 Loans ........................................................................................ 11
8.3 Checks and Endorsements.......................................................................... 12
8.4 Deposits......................................................................................... 12
8.5 Proxies.......................................................................................... 12
8.6 Contracts........................................................................................ 12
-iii-
<PAGE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
ARTICLE IX
MISCELLANEOUS
9.1 Waivers of Notice................................................................................ 12
9.2 Corporate Seal................................................................................... 13
9.3 Fiscal Year...................................................................................... 13
9.4 Amendment of Bylaws.............................................................................. 13
9.5 Uniformity of Interpretation and Severability.................................................... 13
9.6 Emergency Bylaws................................................................................. 13
Secretary's Certification................................................................................. 13
</TABLE>
-iv-
<PAGE>
BYLAWS
OF
GOLDEN RIVER RESOURCES INC.
ARTICLE I
OFFICES
1.1 REGISTERED OFFICE. The registered office of the Corporation
required by the General Corporation Law of Nevada, Nevada Revised Statutes, 1957
("NRS"), Chapter 78, to be maintained in Nevada may be, but need not be,
identical with the principal office if in Nevada, and the address of the
registered office may be changed from time to time by the Board of Directors.
1.2 PRINCIPAL OFFICE. The Corporation may have such other office or
offices either within or outside of the State of Nevada as the business of the
Corporation may require from time to time if so designated by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
2.1 ANNUAL MEETING. Unless otherwise designated by the Board of
Directors, the annual meeting shall be held on the date and at the time and
place fixed by the Board of Directors; provided, however, that the first annual
meeting shall be held on a date that is within 18 months after the date on which
the Corporation first has stockholders, and each successive annual meeting shall
be held on a date that is within 18 months after the preceding annual meeting.
2.2 SPECIAL MEETINGS. Special meetings of stockholders of the
Corporation, for any purpose, may be called by the Chairman of the Board, the
president, any vice president, any two members of the Board of Directors, or the
holders of at least 10% of all of the shares entitled to vote at such meeting.
Any holder or holders of not less than 10% of all the outstanding shares of the
Corporation who desire to call a special meeting pursuant to this Section 2 of
Article II shall notify the president that a special meeting of the stockholders
shall be called. Within 30 days after notice to the president, the president
shall set the date, time, and location of a stockholders' meeting. The date set
by the president shall be not less than 30 nor more than 120 days after the date
of notice to the president. If the president fails to set the date, time, and
location of special meeting within the 30-day time period described above, the
stockholder or stockholders calling the meeting shall set the date, time, and
location of the special meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting.
1
<PAGE>
2.3 PLACE OF MEETING. The Board of Directors may designate any place,
either within or outside the State of Nevada, as the place for any annual
meeting or special meeting called by the Board of Directors. If no designation
is made, or if a meeting shall be called otherwise than by the Board, the place
of meeting shall be the Company's principal offices, whether within or outside
the State of Nevada.
2.4 NOTICE OF MEETING. Written notice signed by an officer designated
by the Board of Directors, stating the place, day, and hour of the meeting and
the purpose for which the meeting is called, shall be delivered personally or
mailed postage prepaid to each stockholder of record entitled to vote at the
meeting not less than 10 nor more than 60 days before the meeting. If mailed,
such notice shall be directed to the stockholder at his address as it appears
upon the records of the Corporation, and notice shall be deemed to have been
given upon the mailing of any such notice, and the time of the notice shall
begin to run from the date upon which the notice is deposited in the mail for
transmission to the stockholder. Personal delivery of any such notice to any
officer of a corporation or association, or to any member of a partnership,
constitutes delivery of the notice to the corporation, association or
partnership. Any stockholder may waive notice of any meeting by a writing signed
by him, or his duly authorized attorney, either before or after the meeting.
2.5 ADJOURNMENT. When a meeting is for any reason adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
2.6 ORGANIZATION. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In the
absence of said officers, any stockholder entitled to vote at that meeting, or
any proxy of any such stockholder, may call the meeting to order and a chairman
shall be elected by a majority of the stockholders entitled to vote at that
meeting. In the absence of the secretary or any assistant secretary of the
Corporation, any person appointed by the chairman shall act as secretary of such
meeting. An appropriate number of inspectors for any meeting of stockholders may
be appointed by the chairman of such meeting. Inspectors so appointed will open
and close the polls, will receive and take charge of proxies and ballots, and
will decide all questions as to the qualifications of voters, validity of
proxies and ballots, and the number of votes properly cast.
2.7 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The directors
may prescribe a period not exceeding 60 days before any meeting of the
stockholders during which no transfer of stock on the books of the Corporation
may be made, or may fix a day not more than 60 days before the holding of any
such meeting as the day as of which stockholders entitled to notice of and to
vote at such meetings must be determined. Only stockholders of record on that
day are entitled to notice or to vote at such meeting.
2.8 QUORUM. Unless otherwise provided by the Articles of Incorporation,
one-third of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall
2
<PAGE>
constitute a quorum at a meeting of stockholders. If fewer than one-third of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting without further notice for a period not to
exceed 60 days at any one adjournment. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of stockholders so
that less than a quorum remains.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by law or the Articles of Incorporation.
2.9 PROXIES. At all meetings of stockholders, a stockholder may vote by
proxy, as prescribed by law. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
6 months from the date of its creation, unless it is coupled with an interest,
or unless the stockholder specifies in it the length of time for which it is to
continue in force, which may not exceed 7 years from the date of its creation.
2.10 VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
stockholders, except as may be otherwise provided in the Articles of
Incorporation or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of the Articles of Incorporation. If the Articles of
Incorporation or any such resolution provide for more or less than one vote per
share for any class or series of shares on any matter, every reference in the
Articles of Incorporation, these Bylaws and the General Corporation Law of
Nevada to a majority or other proportion or number of shares shall be deemed to
refer to a majority or other proportion of the voting power of all of the shares
or those classes or series of shares, as may be required by the Articles of
Incorporation, or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the Articles of Incorporation, or the General Corporation Law of Nevada.
Cumulative voting shall not be allowed. Unless the General Corporation Law of
Nevada, the Articles of Incorporation, or these Bylaws provide for different
proportions, an act of stockholders who hold at least a majority of the voting
power and are present at a meeting at which a quorum is present is the act of
the stockholders.
2.11 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting if a
written consent thereto is signed by stockholders holding at least a majority of
the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required. In no instance where action is authorized by written
consent need a meeting of stockholders be called or notice given. The written
consent must be filed with the minutes of the proceedings of the stockholders.
3
<PAGE>
2.12 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorporation or these Bylaws, stockholders may participate in a meeting of
stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes presence
in person at the meeting.
ARTICLE III
DIRECTORS
3.1 BOARD OF DIRECTORS; NUMBER; QUALIFICATIONS; ELECTION. The
Corporation shall be managed by a Board of Directors, all of whom must be
natural persons at least 18 years of age. Directors need not be residents of the
State of Nevada or stockholders of the Corporation. The number of directors of
the Corporation shall be not less than one nor more than twelve. Subject to such
limitations, the number of directors may be increased or decreased by resolution
of the Board of Directors, but no decrease shall have the effect of shortening
the term of any incumbent director. Subject to the provisions of Article III of
the Corporation's Articles of Incorporation, each director shall hold office
until the next annual meeting of shareholders or until his successor has been
elected and qualified.
3.2 POWERS OF THE BOARD OF DIRECTORS: GENERALLY. Subject only to such
limitations as may be provided by the General Corporation Law of Nevada or the
Articles of Incorporation, the Board of Directors shall have full control over
the affairs of the Corporation.
3.3 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more directors,
which, to the extent provided in the resolution or resolutions or in these
Bylaws, shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers on which the
Corporation desires to place on a seal. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Articles of Incorporation or these Bylaws
provide otherwise, the Board of Directors may appoint natural persons who are
not directors to serve on committees.
3.4 RESIGNATION. Any director of the Corporation may resign at any time
by giving written notice of his resignation to the Board of Directors, the
president, any vice president, or the secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. When
one or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office.
4
<PAGE>
3.5 REMOVAL. Except as otherwise provided in the Articles of
Incorporation, any director may be removed, either with or without cause, at any
time by the vote of the stockholders representing not less than two-thirds of
the voting power of the issued and outstanding stock entitled to voting power.
3.6 VACANCIES. All vacancies, including those caused by an increase in
the number of directors, may be filled by a majority of the remaining directors,
though less than a quorum, unless it is otherwise provided in the Articles of
Incorporation. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. A director elected to fill a
vacancy caused by an increase in the number of directors shall hold office until
the next annual meeting of stockholders and until his successor has been elected
and has qualified.
3.7 REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held without other notice than this Bylaw immediately after and at the same
place as the annual meeting of stockholders. The Board of Directors may provide
by resolution the time and place, either within or outside the State of Nevada,
for the holding of additional regular meetings without other notice than such
resolution.
3.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the president or a one-third of the directors
then in office. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or outside Nevada, as the
place for holding any special meeting of the Board of Directors called by them.
3.9 NOTICE. Notice of any special meeting shall be given at least two
days previously thereto by written notice delivered personally or mailed to each
director at his business address. Any director may waive notice of any meeting.
A director's presence at a meeting shall constitute a waiver of notice of such
meeting if the director's oral consent is entered on the minutes or by taking
part in the deliberations at such meeting without objecting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.10 QUORUM. A majority of the number of directors elected and
qualified at the time of the meeting shall constitute a quorum for the
transaction of business at any such meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.11 MANNER OF ACTING. If a quorum is present, the affirmative vote of
a majority of the directors present at the meeting and entitled to vote on that
particular matter shall be the act of the Board, unless the vote of a greater
number is required by law or the Articles of Incorporation.
3.12 COMPENSATION. By resolution of the Board of Directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for
5
<PAGE>
attendance at such meeting; or a stated salary as director. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor.
3.13 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if, before or after the action, a written consent
thereto is signed by all the members of the Board or of the committee. The
written consent must be filed with the minutes of the proceedings of the Board
or committee.
3.14 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorporation or these Bylaws, members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board or
committee by means of a telephone conference or similar method of communication
by which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section constitutes presence in
person at the meeting.
ARTICLE IV
OFFICERS AND AGENTS
4.1 OFFICERS OF THE CORPORATION. The Corporation shall have a
president, a secretary, and a treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may appoint one or more vice
presidents and such other officers, assistant officers, committees, and agents,
including a chairman of the board, assistant secretaries, and assistant
treasurers, as they may consider necessary, who shall be chosen in such manner
and hold their offices for such terms and have such authority and duties as from
time to time may be determined by the Board of Directors. One person may hold
any two or more offices. The officers of the Corporation shall be natural
persons 18 years of age or older. In all cases where the duties of any officer,
agent, or employee are not prescribed by the Bylaws or by the Board of
Directors, such officer, agent, or employee shall follow the orders and
instructions of (a) the president, and if a chairman of the board has been
elected, then (b) the chairman of the board.
4.2 ELECTION AND TERM OF OFFICE. The officers of the Corporation shall
be elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the stockholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until the first
of the following occurs: until his successor shall have been duly elected and
shall have qualified; or until his death; or until he shall resign; or until he
shall have been removed in the manner hereinafter provided.
4.3 REMOVAL. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgment the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the
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person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
4.4 VACANCIES. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
4.5 PRESIDENT. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents, and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person or
by substitute appointed by him, or shall execute, on behalf of the Corporation,
written instruments appointing a proxy or proxies to represent the Corporation,
at all meetings of the stockholders of any other corporation in which the
Corporation shall hold any stock. He may, on behalf of the Corporation, in
person or by substitute or by proxy, execute written waivers of notice and
consents with respect to any such meetings. At all such meetings and otherwise,
the president, in person or by substitute or proxy as aforesaid, may vote the
stock so held by the Corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and all rights and
powers incident to the ownership of said stock, subject however to the
instructions, if any, of the Board of Directors. The president shall have
custody of the treasurer's bond, if any. If a chairman of the board has been
elected, the chairman of the board shall have, subject to the direction and
modification of the Board of Directors, all the same responsibilities, rights,
and obligations as described in these Bylaws for the president.
4.6 VICE PRESIDENTS. The vice presidents, if any, shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) the vice president designated in writing by the president shall
have the powers and perform the duties of the president. If no such designation
shall be made, all vice presidents may exercise such powers and perform such
duties.
4.7 SECRETARY. The secretary shall perform the following: (a) keep the
minutes of the proceedings of the stockholders, executive committee, and the
Board of Directors; (b) see that all notices are duly given in accordance with
the provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and affix the seal to all
documents when authorized by the Board of Directors; (d) keep, at the
Corporation's registered office or principal place of business within or outside
Nevada, a record containing the names and addresses of all stockholders and the
number and class of shares held by each, unless such a record shall be kept at
the office of the Corporation's transfer agent or registrar; (e) sign with the
president or a vice president, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation, unless the Corporation has a transfer agent; and (g) in general,
perform all duties incident to the office of secretary and such other duties as
from time to time may be
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assigned to him by the president or by the Board of Directors. Assistant
secretaries, if any, shall have the same duties and powers, subject to
supervision by the secretary.
4.8 TREASURER. The treasurer shall be the principal financial officer
of the Corporation and shall have the care and custody of all funds, securities,
evidences of indebtedness, and other personal property of the Corporation, and
shall deposit the same in accordance with the instructions of the Board of
Directors. He shall receive and give receipts and acquittances for monies paid
in or on account of the Corporation, and shall pay out of the funds on hand all
bills, payrolls, and other just debts of the Corporation of whatever nature upon
maturity. He shall perform all other duties incident to the office of the
treasurer and, upon request of the Board, shall make such reports to it as may
be required at any time. He shall, if required by the Board, give the
Corporation a bond in such sums and with such sureties as shall be satisfactory
to the Board, conditioned upon the faithful performance of his duties and for
the restoration to the Corporation of all books, papers, vouchers, money, and
other property of whatever kind in his possession or under his control belonging
to the Corporation. He shall have such other powers and perform such other
duties as may be from time to time prescribed by the Board of Directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state, and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the president and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
4.9 SALARIES. Officers of the Corporation shall be entitled to such
salaries, emoluments, compensation, or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
4.10 BONDS. If the Board of Directors by resolution shall so require,
any officer or agent of the Corporation shall give bond to the Corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of that officer's or agent's duties
and offices.
ARTICLE V
STOCK
5.1 CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation by its
president or a vice president and by the treasurer or an assistant treasurer or
by the secretary or an assistant secretary, and shall be sealed with the seal of
the Corporation, or with a facsimile thereof.
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Whenever any certificate is countersigned or otherwise authenticated by a
transfer agent or transfer clerk, and by a registrar, then a facsimile of the
signatures of the officers or agents, the transfer agent or transfer clerk or
the registrar of the Corporation may be printed or lithographed upon the the
certificate in lieu of the actual signatures. If the Corporation uses facsimile
signatures of its officers and agents on its stock certificates, it cannot act
as the registrar of its own stock, but its transfer agent and registrar may be
identical if the institution acting in those dual capacities countersigns or
otherwise authenticates any stock certificates in both capacities. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
delivered by the Corporation, the certificate or certificates may nevertheless
be adopted by the Corporation and be issued and delivered as though the person
or persons who signed the certificates, or whose facsimile signature has been
used thereon, had not ceased to be an officer of the Corporation. If the
Corporation is authorized to issue shares of more than one class or more than
one series of any class, each certificate shall set forth upon the face or back
of the certificate or shall state that the Corporation will furnish to any
stockholder upon request and without charge a full statement of the
designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the Corporation is authorized to
issue any preferred or special class in series, the variations in the relative
rights and preferences between the shares of each such series, so far as the
same have been fixed and determined, and the authority of the Board of Directors
to fix and determine the relative rights and preferences of subsequent series.
Each certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation's organization; the name
of the person to whom issued; the number and class of shares and the designation
of the series, if any, which such certificate represents; the par value of each
share represented by such certificate or a statement that the shares are without
par value. Certificates of stock shall be in such form consistent with law as
shall be prescribed by the Board of Directors. No certificate shall be issued
until the shares represented thereby are fully paid.
5.2 RECORD. A record shall be kept of the name of each person or other
entity holding the stock represented by each certificate for shares of the
Corporation issued, the number of shares represented by each such certificate,
the date thereof and, in the case of cancellation, the date of cancellation. The
person or other entity in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof, and thus a holder of record of
such shares of stock, for all purposes as regards the Corporation.
5.3 CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the Board of Directors. That part of the
surplus of a corporation which is transferred to stated capital upon the
issuance of shares as a share dividend shall be deemed the consideration for the
issuance of such dividend shares. Such consideration may consist, in whole or in
part, of money, promissory notes, other property, tangible or intangible, or in
labor or services actually performed for the Corporation, contracts for services
to be performed or other securities of the Corporation.
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5.4 CANCELLATION OF CERTIFICATES. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen, or destroyed certificates.
5.5 LOST CERTIFICATES. In case of the alleged loss, destruction, or
mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond, in such form and amount and with such surety as it
may determine, before issuing a new certificate.
5.6 TRANSFER OF SHARES. Upon surrender to the Corporation or to a
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Nevada.
5.7 TRANSFER AGENTS, REGISTRARS, AND PAYING AGENTS. The Board may at
its discretion appoint one or more transfer agents, registrars, and agents for
making payment upon any class of stock, bond, debenture, or other security of
the Corporation. Such agents and registrars may be located either within or
outside Nevada. They shall have such rights and duties and shall be entitled to
such compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 INDEMNIFICATION; ADVANCEMENT OF EXPENSES. To the fullest extent
permitted by the laws of the State of Nevada (currently set forth in NRS
78.751), as the same now exists or may hereafter be amended or supplemented, the
Corporation shall indemnify its directors and officers, including payment of
expenses as they are incurred and in advance of the final disposition of any
action, suit, or proceeding. Employees, agents, and other persons may be
similarly indemnified by the Corporation, including advancement of expenses, in
such case or cases and to the extent set forth in a resolution or resolutions
adopted by the Board of Directors. No amendment of this Section shall have any
effect on indemnification or advancement of expenses relating to any event
arising prior to the date of such amendment.
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6.2 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS. To the fullest extent permitted by
the laws of the State of Nevada (currently set forth in NRS 78.752), as the same
now exists or may hereafter be amended or supplemented, the Corporation may
purchase and maintain insurance and make other financial arrangements on behalf
of any person who is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, for any liability asserted against such
person and liability and expense incurred by such person in its capacity as a
director, officer, employee, or agent, or arising out of such person's status as
such, whether or not the Corporation has the authority to indemnify such person
against such liability and expenses.
ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 ACQUISITION OF CONTROLLING INTEREST. The provisions of the General
Corporation Law of Nevada pertaining to the acquisition of a controlling
interest (currently set forth NRS 78.378 to 78.3793, inclusive), as the same now
exists or may hereafter be amended or supplemented, shall not apply to the
Corporation.
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 EXECUTION OF INSTRUMENTS. The president or any vice president shall
have the power to execute and deliver on behalf of and in the name of the
Corporation any instrument requiring the signature of an officer of the
Corporation, except as otherwise provided in these Bylaws or where the execution
and delivery thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation. Unless authorized to do so by
these Bylaws or by the Board of Directors, no officer, agent, or employee shall
have any power or authority to bind the Corporation in any way, to pledge its
credit, or to render it liable pecuniarily for any purpose or in any amount.
8.2 LOANS. The Corporation may lend money to, guarantee the obligations
of, and otherwise assist directors, officers, and employees of the Corporation,
or directors of another corporation of which the Corporation owns a majority of
the voting stock, only upon compliance with the requirements of the General
Corporation Law of Nevada.
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
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8.3 CHECKS AND ENDORSEMENTS. All checks, drafts, or other orders for
the payment of money, obligations, notes, or other evidences of indebtedness,
bills of lading, warehouse receipts, trade acceptances, and other such
instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the Board
of Directors, which resolution may provide for the use of facsimile signatures.
8.4 DEPOSITS. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the Corporation's credit in such banks or
other depositories as shall from time to time be determined by resolution of the
Board of Directors, which resolution may specify the officers or agents of the
Corporation who shall have the power, and the manner in which such power shall
be exercised, to make such deposits and to endorse, assign, and deliver for
collection and deposit checks, drafts, and other orders for the payment of money
payable to the Corporation or its order.
8.5 PROXIES. Unless otherwise provided by resolution adopted by the
Board of Directors, the president or any vice president may from time to time
appoint one or more agents or attorneys-in-fact of the Corporation, in the name
and on behalf of the Corporation, to cast the votes which the Corporation may be
entitled to cast as the holder of stock or other securities in any other
corporation, association, or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation, association, or other entity or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other corporation, association, or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
8.6 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
ARTICLE IX
MISCELLANEOUS
9.1 WAIVERS OF NOTICE. Whenever notice is required by the General
Corporation Law of Nevada, by the Articles of Incorporation, or by these Bylaws,
a waiver thereof in writing signed by the director, stockholder, or other person
entitled to said notice, whether before, at, or after the time stated therein,
or his appearance at such meeting in person or (in the case of a stockholders'
meeting) by proxy, shall be equivalent to such notice.
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9.2 CORPORATE SEAL. The Board of Directors may adopt a seal circular in
form and bearing the name of the Corporation, the state of its incorporation,
and the word "Seal" which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
9.3 FISCAL YEAR. The Board of Directors may, by resolution, adopt a
fiscal year for the Corporation.
9.4 AMENDMENT OF BYLAWS. The provisions of these Bylaws may at any
time, and from time to time, be amended, supplemented or repealed by the Board
of Directors.
9.5 UNIFORMITY OF INTERPRETATION AND SEVERABILITY. These Bylaws shall
be so interpreted and construed as to conform to the Articles of Incorporation
and the laws of the State of Nevada or of any other state in which conformity
may become necessary by reason of the qualification of the Corporation to do
business in such state, and where conflict between these Bylaws, the Articles of
Incorporation or the laws of such a state has arisen or shall arise, these
Bylaws shall be considered to be modified to the extent, but only to the extent,
conformity shall require. If any provision hereof or the application thereof
shall be deemed to be invalid by reason of the foregoing sentence, such
invalidity shall not affect the validity of the remainder of these Bylaws
without the invalid provision or the application thereof, and the provisions of
these Bylaws are declared to be severable.
9.6 EMERGENCY BYLAWS. Subject to repeal or change by action of the
stockholders, the Board of Directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the laws of the State of Nevada.
SECRETARY'S CERTIFICATION
The undersigned Secretary of Golden River Resources Inc. (the
"Corporation") hereby certifies that the foregoing Bylaws are the Bylaws of the
Corporation adopted by the Board of Directors as of the 17th day of June, 1997.
By/S/NOLAN D. MOSS
Nolan D. Moss, Secretary
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Exhibit 10.1
Mexicana I Agreement dated as of February 13, 1998
<PAGE>
MEXICANA I
THIS AGREEMENT dated as of the 12th day of February, 1998.
BETWEEN:
ING. CUITLAHUAC RANGEL ALCARAZ, a businessman, having an
address at Dakota No. 204 - 203, Col. Napoles, 03810 Mexico,
D.F. married under the separate property regime as is
evidenced with a copy of the marriage certificate attached
hereto as Schedule "A"
(hereinafter called the "Concessionaire")
AND:
LA MEXICANA RESOURCES S.A. DE C.V., a body corporate and
having an address to receive notices at Paseo De La Reforma
450, Lomas de Chapultepec, 11000 Mexico, D.F., a subsidiary of
Rob Roy Resources Inc.
(hereinafter called the "Company")
A. The Concessionaire is the beneficial and registered concessionaire of
100% of the Exploration Mining Concession of the "Mexicana 1" Lot, title number
204,721, located in the State of Durango, Municipality of Pueblo Nuevo, and
registered in the Public Registry of Mining under number 302, pages 151, volume
294 of the Mining Concessions Book on April 25, 1997, as more particularly
described in Schedule "B" attached hereto (hereinafter called the "Property",
jointly with the exploitation mining concession which may be derived therefrom).
B. The Concessionaire has agreed to grant to the Company the exclusive
right to explore the Property and, if applicable, the right to develop the Lot,
and the exclusive right and option to acquire up to an undivided 70% right,
title and interest in and to the Property on the terms and conditions
hereinafter set forth.
C. The Company has agreed that the Concessionaire shall not have to incur
any further expenditures with respect to the Lot until such time as the option
mentioned in clause 1.0 following is either exercised or terminated as
hereinafter provided.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants hereinafter set forth the parties hereto covenant and agree as
follows:
1.0 GRANT AND DURATION
1.1 The Concessionaire hereby grants to the Company the sole and exclusive
right and option to purchase an undivided 70% interest in the Property, together
with all rights, privileges and appurtenances pertaining thereto recorded and
unrecorded to which it is entitled in respect thereof (hereinafter called the
"Option").
1.2 The Option herein granted shall be exercised by the Company on or
before February 12, 2001 (the "Expiry Date").
A:\Mexicana Agr-Final.doc
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1.3 The duration of this Agreement shall be from February 12, 1998 to
February 12, 2001.
2.0 EXERCISE OF OPTION
2.1 In consideration for the exploration rights and, if applicable,
exploitation rights and the Option, the Company shall cause the following
payments and share issuances to be made to the Concessionaire:
a) US$25,000.00 (twenty five thousand dollars of the
United States of America) previously paid upon the execution
of this Agreement.
b) US$25,000.00 (twenty five thousand dollars of the
United States of America) upon the execution of this
Agreement;
c) US$50,000.00 (fifty thousand dollars of the United
States of America) every six months from the date of this
Agreement until the Expiry Date or until a bankable
feasibility study is completed which ever is the sooner; d)
250,000 shares of Pubco upon the approval of this Agreement by
any regulatory authority having jurisdiction over this
Agreement;
e) a further 750,000 shares of Pubco within three years
of the Listing Date. The Company agrees to make application
for a minimum of 250,000 shares of Pubco to be issued to the
Concessionaire every six months from the date of the issuance
of the shares pursuant to paragraph (d) herein. The issuance
of any shares pursuant to this section shall be subject to the
regulatory approval, if required; and
f) a minimum amount of US$1,500,000 (one million fifty
hundred thousand dollars of the United States of America)
shall be invested on work commitments, according to the
following budget schedule: US$300,000 during the first year,
US$500,000 in the second year and the remaining US$700,000 in
the third.
The Company shall also be responsible for the payment of value added
tax. In order to calculate the taxes that may arise from the payment of the
share consideration mentioned in this section, according to the applicable law,
the closing price per share of Pubco, as quoted on the most senior stock
exchange or quotation system on which the shares of Pubco are then listed on the
last trading day immediately prior to the date on which the Company delivers the
shares of Pubco mentioned above to the Concessionaire, shall be used.
It shall be considered that the Company has exercised the Option, upon
the Company paying to the Concessionaire all consideration mentioned in this
section 2.1.
3.0 NON OBLIGATION OF THE OPTIONEE TO MAKE ANY FURTHER ACTS OR PAYMENTS
3.1 The doing of any act or the making of any payment by the Company shall
not obligate the Company to do any further acts or make any further payment.
4.0 ACQUISITION OF INTEREST
4.1 Upon the exercise of the Option by the Company as described in Section
2.0, the Company shall have acquired an undivided 70% interest in and to the
Property and the
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Concessionaire shall have an undivided 30% interest in and to the Property.
4.2 The Company shall pay to the Concessionaire as consideration for the
assignment of the 70% interest in and to the Property the amount of US $10.00,
plus the corresponding value added tax, at the execution of the assignment
agreement mentioned in the following section 5.0.
5.0 ASSIGNMENT AGREEMENT
5.1 Upon the exercise of the Option, the Concessionaire shall within 15
calendar days of the date the Company has exercised its Option, execute an
assignment agreement before a Notary Public selected by the Company, assigning
and undivided 70% interest in the Property in favor of the Company. At the
request of the Company, the Concessionaire shall execute the assignment in favor
of Newco (as defined below).
6.0 RIGHT OF ENTRY
6.1 During the term of this agreement, the Company shall have the exclusive
right to explore, and, if applicable, to exploit the Lot and without restricting
the generality of the foregoing and subject to the Company obtaining appropriate
surface rights and governmental authorizations, the Company shall have the right
to:
a) enter upon and inspect the Lot, provided that the
Concessionaire and his representatives shall have at all
reasonable times, at their risk and expense, to enter upon the
Lot and inspect the Company's work;
b) carry out exploration and, if applicable, development work on
the Lot;
c) place and use thereon excavations, openings, shafts, ditches
and drains, and construct, erect, maintain, use, and at its
election, remove any and all buildings, structures, plants,
machinery, equipment, railroads, roadways, pipelines,
electrical power lines and facilities, stockpiles, waste
piles, tailings ponds and facilities, settlings ponds, and all
other improvements, property and fixtures as may be necessary,
convenient, or suitable for mining, removing, beneficiating,
concentrating, smelting, extracting, leaching, refining and
shipping of ores and minerals thereof, or for any activities
incidental thereto or to any of the rights or privileges of
the Company hereunder; and
d) divert streams, remove lateral and subjacent supports, cave,
subside or destroy the surface or any part thereof, deposit
earth, rocks, waste, lean ore and materials on any parts of
the Lot where it will not interfere with mining, leach the
same, and commit waste to the extent necessary, usual or
customary in carrying out any or all of the above rights,
privileges and purposes.
7.0 WARRANTIES AND REPRESENTATIONS OF THE CONCESSIONAIRE
7.1 The Concessionaire hereby represents and warrants to the Company that:
a) the Property consists of an exploration mining concession over
the "Mexicana 1" Lot, title 204,721, duly and validly staked
and recorded pursuant to the laws of Mexico, which is
accurately described in Schedule "B" hereto, is in good
standing on the date hereof and is free and clear of all
liens, charges and encumbrances;
b) the Concessionaire holds an undivided 100% interest in the
Property;
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c) the Concessionaire has the exclusive right to enter into this
Agreement and all necessary authority to dispose of an
interest in and to the Property in accordance with the terms
of this agreement;
d) there is no agreement respecting the Property to which the
Concessionaire is a party other than this Agreement and no
person, firm or corporation has any interest in the Property
hereunder and no person or entity is entitled to any royalty
or other payment in the nature of rent or royalty on any
minerals, ores, metals or concentrates or any other such
products removed from the Lot;
e) all required consents, approvals or conditions precedent to
the acquisition by the Company of an interest in the Property
as contemplated by the terms of this Agreement have been
obtained or satisfied; and
f) there is no adverse claim or challenge to the ownership of or
title to the Property, nor is there any basis thereof, and
there are no outstanding agreements or options to acquire or
purchase the Property or any portion thereof, and no person,
has any royalty or other interest whatsoever in production
from the Lot.
7.2 The representations and warranties herein before set out are conditions
on which the parties have relied in entering into this agreement and shall
survive the acquisition of any interest in the Property by the Company and each
of the parties will indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by them and
contained in this agreement.
8.0 COVENANTS OF THE CONCESSIONAIRE
8.1 During the currency of this agreement, the Concessionaire covenants and
agrees with the Company to:
a) not do or permit or suffer to be done any act or thing which
would or might in any way adversely affect the rights of the
Company hereunder;
b) make available to the Company and its representatives all
records and files relating to the Property and the Lot and
permit the Concessionaire and its representatives at their own
expense to take abstracts therefrom and make copies thereof;
c) cooperate fully with the Company in obtaining any surface and
other rights on or related to the Lot as the Company deems
desirable;
d) promptly provide the Company with any and all notice and
correspondence from government agencies in respect of the
Property; and
e) not lien or encumber in any manner the Property.
9.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
9.1 The Company represents and warrants to the Concessionaire that:
a) it is a company duly incorporated which is evidenced in
notarial deed 19,689, dated February 12, 1998, granted before
Lic. Jose Maria Morera Gonzalez. Notary Public 102 of the
Federal District and registered in the Public Registry of
Property and Commerce of the Federal District under mercantile
folio 231,942 and in the Public registry of Mining under
number 72, volume 36 of the Society Mining
<PAGE>
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Book on October 23, 1998, organised and validly subsisting
under Mexican Law and is qualified to carry on business in
Mexico;
b) it has full power and authority to carry on its business and
to enter into this agreement and any agreement or instrument
referred to or contemplated by this agreement; and
c) the execution and delivery of this agreement and the
agreements contemplated hereby will not violate or result in
the breach of the laws of any applicable jurisdiction or
constating documents.
10.0 COVENANTS OF THE COMPANY
10.1 The Company hereby covenants and agrees with the Concessionaire as
follows:
a) that during the currency of this agreement it will maintain
the Property in good standing and shall pay all mining duties
on the Property under the Federal Duties Law of Mexico and,
where relevant, it shall conduct exploration work on the Lot
and record all assessment work reports, in the terms of the
Mining Law of Mexico and its Regulations. In the event that
the Company fails to pay the mining duties in respect of the
Property when the same become due and owing, or fails to
record the assessment work report on or before May 20 of each
year, the Concessionaire may, at his option, pay such duties
and record such assessment work reports and the Company agrees
that any amounts so paid by the Concessionaire shall be added
to the purchase price and shall be paid by the Company with
the next payment, if any, or if no payment remains, within one
month of payment by the Concessionaire and to compensate the
Concessionaire for any cost incurred for such recording;
b) conduct all work on or with respect to the Lot in a careful
and miner-like manner and in accordance with all applicable
Federal, State and Municipal laws, rules orders and
regulations, and indemnify and save the Concessionaire
harmless from any and all claims, suits or actions made or
brought against it as a result of work done by or with respect
to the Lot except to the extent that such claims, suits or
actions relate to issues or disputes regarding title to the
Property;
c) that it will properly pay all accounts of every nature and
kind for wages, supplies, Workers' Compensation assessments,
income tax deductions and all other accounts and indebtedness
incurred by it on the Property so that no claim or lien can
arise thereon or upon the ore and mineral contained therein
and it will indemnify the Concessionaire and save him harmless
from any and all loss, cost, actions, suits, damages or claims
which may be made against the Concessionaire in respect of the
operations carried out upon the Lot and that it will discharge
any liens or encumbrances which may arise in respect of or be
recorded against the Property as a result of the operations of
the Company thereon, provided however that the Company shall
have the right to contest the validity of any such lien or
claim of lien;
d) that it will permit the Concessionaire, or the representatives
of the Concessionaire duly authorized in writing, to visit and
inspect at reasonable times and intervals the Lot and any data
obtained by the Company as a result of its operation thereon,
and to take samples for testing purposes from any part of the
Lot, provided always that the Concessionaire or its
representatives shall abide by the rules and regulations laid
down by the Company relating to matters of safety and
efficiency in its operations and that the Company shall be
under no liability to the Concessionaire
<PAGE>
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or his representatives for any personal injury, including
death, or any damage to property other than such as might be
occasioned by or through any neglect on the part of the
Company, its servants or agents;
e) that it will keep full, true and accurate reference reports,
maps and other surveys of all exploration, development and
mining work done on the Lot;
f) that it will keep full, true and accurate records of all ore
and waste from the Lot and will take sufficient samples of ore
removed and will make accurate surveys of ore removed all in
accordance with good mining practice;
g) that it will save and keep the Concessionaire harmless from
all claims, costs, loss or damage which may arise by reason of
injury (including injury resulting in death) to any person
employed by the Company in or upon the Lot or any part thereof
or which may arise by reason of injury (including injury
resulting in death) to any person or damage done to any
property as a result of any work or operations of the Company
or of its possession or occupancy of the Lot;
h) that the Company shall deliver to the Concessionaire all
reports of the studies made by the Company on the Lot within
the following 180 days from the date of termination of this
Agreement for whatever reason other than the exercise of the
Option.
11.0 SALE OF INTEREST
11.1 The Concessionaire agrees that if the Company decides to sell,
transfer, assign or otherwise dispose of its interest to an arm's length third
party then the Concessionaire shall also sell, transfer, assign or otherwise
dispose of its interest to the arm's length third party at the same price per
percentage interest or share as the Company shall dispose of its interest or
shares to the arm's length third party, provided the sale by the Company is made
at fair market value. If the parties cannot agree on a fair market value, the
matter shall be referred to arbitration which shall be governed by section 15.1.
12.0 DEFAULT AND TERMINATION
12.1 Notwithstanding anything in this Agreement to the contrary, if any
party (a "Defaulting Party") is in default of any requirement herein set forth,
the party affected by such default shall give written notice to the Defaulting
Party specifying the default and the Defaulting Party shall not lose any rights
under this agreement, unless within 30 days after the giving of notice of
default by the affected party the Defaulting Party has failed to take reasonable
steps to cure the default by the appropriate performance and if the Defaulting
Party fails within such period to take reasonable steps to cure any such
default, the affected party shall be entitled to seek any remedy it may have on
account of such default.
12.2 The Company may terminate this agreement at any time upon 30 days'
written notice to the Concessionaire (the "Termination").
12.3 Upon such Termination, all rights title and interest of the Company
under this agreement shall terminate, and the Company shall not be required to
make any further payments, or to perform any further obligations of this
agreement, including those payments in Section 2.1 above, which become due after
the termination.
13.0 RIGHTS UPON TERMINATION
13.1 The Company shall leave the Lot within a period of 30 days from the
Termination Date.
<PAGE>
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The Company shall have the right, within a period of 30 days following the
Termination Date, to remove from the Lot all buildings, plants, equipment,
machinery, tools, appliances and supplies which have been brought upon the Lot
by the Company or on behalf of the Concessionaire, and any such property not
removed within such 30 days Period shall become the property of the
Concessionaire.
14.0 CO-CONCESSIONAIRES' OR SHAREHOLDERS AGREEMENT
14.1 After the exercise of the Option, the Concessionaire and the Company
shall either become co-concessionaires of the Property or incorporate a new
company ("Newco") that shall acquire the title to the Property:
a) to further explore and, if deemed warranted as herein
provided, to develop the Lot and equip it for commercial
production;
b) to operate the Lot as a mine; and
c) to engage in such other activity as may be considered by the
parties to be necessary or desirable in connection with the
foregoing.
14.2 The parties shall have three months after the exercise of the Option to
negotiate the terms of a co-concessionaires' agreement or to incorporate Newco
and negotiate a shareholders' agreement for the further exploration and
development of the Lot with the intent of putting the Lot into production. The
parties shall use their best efforts to negotiate a structure and an agreement
and do all necessary acts to enter into an agreement. If the co-concessionaires'
agreement or shareholders' agreement, as the case may be, is not finalized
within three months of the exercise of the Option, then the parties will submit
themselves to binding arbitration to determine the structure and to settle the
agreement having regard to the terms of this agreement.
14.3 The parties agree that the co-concessionaires' agreement or
shareholders' agreement shall contain terms customary in a relationship of that
nature and shall contain the following terms which are non-negotiable shall form
part of the co-concessionaires' agreement or shareholders' agreement, as the
case may be:
a) the Concessionaire and the Company shall each subscribe for
and pay for their respective portion of the costs of the
shares of Newco, if Newco's incorporation is elected by the
Company;
b) the initial interests of the parties in the Property or Newco,
as the case may be, shall be 70% as to the Company's interest
and 30% of the Concessionaire's interest. For further
certainty, shares of Newco shall be deemed to be an "Interest"
or "Interests" for the purposes of this section 14.3;
c) a party shall be entitled to recover any monies lent by it for
the development of the Property before there is any
distribution of profits to the Concessionaire and the Company;
d) the co-concessionaires agreement or Newco, as the case may be,
shall be managed by a Management Committee or Board of
Directors, which shall be comprised of one member or director
appointed by each party. The Management Committee or Board of
Directors shall have the power to appoint the operator/manager
of the Property;
e) the members of the Management Committee or Board of Directors
shall have voting power, proportional to the interest in the
co-concessionaire agreement or in
<PAGE>
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Newco held by the party appointing such member or director;
f) no party shall do, transact, perform or undertake anything in
the name of the other parties or in the name of Newco;
g) nothing contained in the agreement shall, except to the extent
specifically authorized thereunder, be deemed to constitute a
party, an agent or legal representative of any other party.
15.0 ARBITRATION
15.1 All matters of dispute between the parties hereto concerning this
agreement which cannot be resolved or settled by the parties, shall be finally
settled by arbitration in Vancouver, British Columbia. The party desiring
arbitration shall appoint one arbitrator, and shall notify the other party of
such appointment, and the other party shall within 15 days after receiving such
notice, appoint an arbitrator, and two arbitrators so named, before proceeding
to act, shall within 30 days of the appointment of the last appointed
arbitrator, unanimously agree on the appointment of the third arbitrator to act
with them and be chairman of the arbitration herein provided for. If the other
party shall fail to appoint an arbitrator within 15 days after receiving notice
of the appointment of the first arbitrator, the first arbitrator shall be the
only arbitrator, and if the two arbitrators appointed by the parties shall be
unable to agree on the appointment of the chairman, the chairman shall be
appointed under the provisions of the ARBITRATION ACT (British Columbia). Except
as specifically or otherwise provided in this paragraph, the arbitration herein
provided for shall be conducted in accordance with such Act. The chairman or, in
the case where only one arbitrator is appointed, the single arbitrator, shall
fix the time and place in Vancouver, British Columbia, and he shall preside over
the arbitration and determine all questions of procedure not provided for under
such Act or this paragraph. After hearing any evidence or representations that
the parties may submit, the single arbitrator, or the arbitrators, as the case
may be, shall make an award and reduce the same to writing and deliver one copy
thereof to each of the parties. The expense of the arbitration shall be paid in
the manner specified in the award. The parties agree that the award of the
majority of the arbitrators, or in the case a single arbitrator, shall be final
and binding upon each of them.
16.0 ASSIGNMENT
16.1 The Concessionaire may not during the term of this agreement assign any
or a part of its interest in this agreement or the Property and the Company may
at any time assign its rights contained in this agreement provided that the
assignor agrees to be bound by the terms and conditions of this agreement.
17.0 GENERAL TERMS AND CONDITIONS
17.1 If this agreement is terminated for any cause whatsoever except the
exercise of the Option granted hereby by the Company, the Company shall deliver
to the Concessionaire copies of all reports, data, assay results and other
material relating to its exploration and development work on the Lot.
18.0 COVENANT FOR FURTHER ASSURANCES
18.1 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out the
intent of this agreement.
19.0 ENTIRE AGREEMENT
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19.1 This agreement shall represent the entire understanding between the
parties with respect to the Property. No representations or inducements have
been made save as herein set forth. No changes, alterations, or modifications of
this agreement shall be binding upon either party until and unless a memorandum
in writing to such effect shall have been signed by all parties hereto.
20.0 TIME OF ESSENCE
20.1 Time shall be of the essence in the performance of this agreement.
21.0 TITLES
21.1 The titles to the paragraphs to this agreement shall not be deemed to
form part of this agreement but shall be regarded as having been used for
convenience or reference only.
22.0 LAWS OF AGREEMENT
22.1 This agreement shall be governed by and interpreted in accordance with
the applicable laws in Mexico, Federal District, Mexico, for local matters and
with the applicable laws of the Mexican Republic for federal matters.
23.0 ENUREMENT
23.1 This agreement shall enure to the benefit of and be binding upon the
parties hereto, and their respective heirs, successors, personal representatives
and assigns.
24.0 NOTICES
24.1 Any notice under this agreement shall be given personally to the
parties at the address set forth on the first page hereof or to such other
address as the parties may hereinafter designate in writing to the other
parties.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
ING. CUITLAHUAC RANGEL ALCARAZ
LA MEXICANA RESOURCES S.A. DE C.V.
PER:
AUTHORIZED SIGNATORY
<PAGE>
Exhibit 10.2
La Lajita Agreement dated as of February 12, 1998
<PAGE>
LA LAJITA
THIS AGREEMENT dated as of the 12th day of February, 1998
BETWEEN:
MINERA FUERTE MAYO S.A. DE C.V.
(hereinafter called the "Concessionaire")
AND:
LA MEXICANA RESOURCES S.A. DE C.V., a body corporate and
having an office to received notices at Paseo de la Reforma
450, Lomas de Chapultepec, 11000 Mexico, D.F. (hereinafter
called the "Company")
A. By virtue of an assignment of rights agreement executed on September
20, 1996, between Mr. Fortunato Vizcarra Quinones and the Concessionaire, the
Concessionaire acquired 100% of the rights derived from the exploration mining
concession of "La Esperanza" lot, title 193,536 located in the Municipality of
Pueblo Nuevo, State of Durango (the "La Esperanza Agreement"), which
exploitation mining concession's application was filed under file 2/1.3- 1478.
The lot above mentioned shall be called hereinafter the "La Esperanza" lot.
B. By virtue of an exploration with purchase option agreement executed on
August 3, 1997, (the "Guadalupe Agreement") between Adrian Betancourt Ruiz,
acting on his own and representing Messrs. Heriberto Betancourt Cabrera and Juan
Manuel Parra and the Concessionaire, the Concessionaire acquired an option to
acquire up to a 100% interest in the exploitation mining concession's rights of
the following lots located in the Municipality of Pueblo Nuevo, State of
Durango:
NAME OF LOT TITLE NUMBER
1. Guadalupe 186,533
2. Ampl. de Guadalupe 205,214
The lot above mentioned in section B.1. shall be called hereinafter the
"Guadalupe" lot, and the lot mentioned in section B.2. above shall be called
hereinafter the "Ampl. Guadalupe" lot.
C. By virtue of an assignment of rights agreement executed on November 5,
1997, between Mr. Basilio Silva Noriega, and in representation of Mr. Modesto
Silva Noriega and Mrs. Martha Emilia Silva Noriega and the Concessionaire, the
Concessionaire acquire 100% of the rights derived from the exploitation mining
concession of the "Santo Nino" lot, title 194,007, located in the Municipality
of Pueblo Nuevo, State of Durango (hereinafter the "Santo Nino Agreement") in
which the Concessionaire bind himself to pay Messrs. Basilio, Modesto and Martha
Emilia Silva Noriega to a 1% net smelter return royalty which is defined below,
in case the Concessionaire desires to exploit the corresponding lot. The lot
above mentioned shall be called the hereinafter the "Santo Nino" lot.
D. By virtue of an assignment of rights agreement executed on November 5,
1997, between Mr. Manuel Silva Gonzalez and the Concessionaire, the
Concessionaire acquired 100% of the rights derived from the exploration mining
concession of the "2 Hermanos" lot, title 194,319,
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located in the Municipality of Pueblo Nuevo, State of Durango, which
exploitation mining concession's application was filed under file 2/1.3-1654
(hereinafter the "2 Hermanos Agreement"), in which the Concessionaire bind him
self to pay to Mr. Manuel Silva Gonzalez to a 1% net smelter return royalty, in
case the Concessionaire exploit the corresponding lot. The lot above mentioned
shall be called hereinafter the "2 Hermanos" lot.
The La Esperanza Agreement, the Guadalupe Agreement, the 2 Hermanos
Agreement, and the Santa Nino Agreement to be known together as the "Underlying
Agreements"
When mention is made indistinctly in this agreement (hereinafter the
"Agreement") of "Lots" or "Mining Lots" or "Property", it shall be understood
this reference is being made to the mining concessions mentioned in sections A,
B, C and D above and when mention is made of "Concession" or "Concession
Rights", it shall be understood that this reference is being made to the rights
of the mining exploitation of the Lots and to the mining exploitation concession
that arise therefrom.
E. The Concessionaire has agreed to grant to the Company the exclusive
right to explore and if applicable develop the Lots, and the exclusive right and
option to acquire up to an undivided 60% right, title and interest in and to the
Property on the terms and conditions hereinafter set forth.
F. The Company has agreed that the Concessionaire shall not have to incur
any further expenditures with respect to the Property until such time as the
Option granted hereby is either exercised or terminated as hereinafter provided.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants hereinafter set forth the parties hereto covenant and agree as
follows:
CLAUSES
1.0 GRANT AND DURATION
1.1 The Concessionaire hereby grants to the Company the sole and exclusive
right and option to purchase an undivided 60% interest in Lots, together with
all rights, privileges and appurtenances pertaining thereto recorded and
unrecorded to which it is entitled in respect thereof (hereinafter called the
"Option").
1.2 The Option herein granted shall be exercised by the Company on or
before February 2, 2000 (the "Expiry Date").
1.3 The duration of this Agreement shall be from February 12, 1998 to
February 2, 2000.
2.0 OPTION PAYMENTS
2.1 In consideration for the exploration rights and, if applicable,
exploitation rights in and to the La Esperanza, Guadalupe and Ampl. de Guadalupe
lots, and the Option on those lots, the Company shall cause the following
payments and share issuances to be made to the Concessionaire:
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a) US$50,000 (fifty thousand dollars of the United States of
America) prior to the execution of this Agreement (the receipt
and sufficiency of which is hereby acknowledged by the
Concessionaire);
b) US$25,000 (twenty five thousand dollars of the United States
of America) when any company that has a Mexican subsidiary
into which the interest of the Company in the Property is sold
("Pubco") is listed on a recognized stock exchange or
quotation system (the "Listing Date");
c) US$75,000 (seventy five thousand dollars of the United States
of America) every six months after the Listing Date until the
Expiry Date or until a positive bankable feasibility study is
completed, whichever is the sooner;
d) 250,000 shares of Pubco upon the approval of this Agreement by
any regulatory authority having jurisdiction over this
Agreement;
e) a further 750,000 shares of Pubco within three years of the
Listing Date. The Company agrees to make application for a
minimum of 250,00 shares of Pubco to be issued to the
Concessionaire every six months from the date of the issuance
of the shares pursuant to paragraph (d) herein. The issuance
of any shares pursuant to this section shall be subject to
regulatory approval, if required; and
f) a minimum amount of US$1,500,000 (one million five hundred
thousand dollars of the United States of America) shall be
invested on work commitments, according to the following
budget schedule: US$300,000 by the first year, US$500,000 by
the end of the second year and the remaining US$700,000 by the
end of the third year, provided that any work performed on the
Santa Nino and 2 Hermanos lots shall be applied and counted
toward this work commitment.
2.2 In consideration for the exploration rights and, if
applicable, exploitation rights in and to the Santa Nino and 2 Hermanos lots and
the Option on those lots, the Company shall cause the following payments and
share issuances to be made to the Concessionaire:
a) US$100,000 (one hundred thousand dollars of the United States of
America) on or before September 30, 1998;
b) 100,000 shares of Pubco upon the Listing Date;
c) a further 50,000 shares of Pubco upon the filing of a qualified
engineering report, which engineering report is accepted for filing
by the regulatory authorities, if required, and which engineering
report, on review of the completion of the recommended work program
on the 2 Hermanos and Santa Nino lots, recommends a further work
program on the 2 Hermanos and Santa Nino lots;
d) a further 50,000 shares of the Pubco upon the filing of an
additional qualifiedengineering report, which engineering report is
accepted for filing by the regulatory authorities, if required, and
which engineering report, on review of the completion of the
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recommended work program on the 2 Hermanos and Santa Nino lots,
recommends a further work program on the 2 Hermanos and Santa Nino
lots;
e) a further 200,000 shares of Pubco within three years of the Listing
Date.
The Company shall also be responsible for the payment of value added tax. In
order to calculate the taxes that may arise from the payment of the share
consideration mentioned in this clause, according to the applicable law, the
closing price per share of Pubco, as quoted on the most senior stock exchange or
quotation system on which the shares of Pubco are then listed on the last
trading day immediately prior to the date on which the Company delivers the
shares of Pubco mentioned above to the Concessionaire, shall be used.
It shall be considered that the Company has exercised the Option on the La
Esperanza, Guadalupe and Ampl. de Guadalupe lots, upon the Company paying to the
Concessionaire all consideration mentioned in clause 2.1 It shall be considered
that the Company has exercised the Option on the 2 Hermanos and Santa Nino lots,
upon the Company paying to the Concessionaire all consideration mentioned in
clause 2.2.
3.0 OPTION ONLY
3.1 This Agreement is an option only and the doing of any act or the making
of any payment by the Company shall not obligate the Company to do any
further acts or make any further payment.
4.0 ACQUISITION OF INTEREST
4.1 Upon the exercise of the Option by the Company as described in clause
2, the Company shall have acquired an undivided 60% interest in and to
the Lots.
5.0 ASSIGNMENT AGREEMENT
5.1 Upon the exercise of the Option, the Concessionaire shall within 15
calendar days of the date the Company has exercised its Option execute
an assignment agreement before a Notary Public selected by the Company,
assigning an undivided 60% interest in the Property in favor of the
Company. At the request of the Company, the Concessionaire shall
execute the assignment in favor of Newco (as defined below).
6.0 RIGHT OF ENTRY
6.1 During the term of this Agreement, the Company shall have the exclusive
right to explore, and, if applicable, to exploit the Lots and without
restricting the generality of the foregoing and subject to the Company
obtaining appropriate surface rights and governmental authorizations,
the Company shall have the right to:
a) enter upon and inspect the Lots, provided that the
Concessionaire and its representatives shall have the right at
all reasonable times, at its risk and expense, to enter upon
the Lots and inspect the Company's work;
b) carry out exploration and, if applicable, development work on
the Lots;
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c) place and use thereon excavations, openings, shafts, ditches
and drains, and of construct, erect, maintain, use, and at its
election, removing any and all buildings, structures, plants,
machinery, equipment, railroads, roadways, pipelines,
electrical power lines and facilities, stockpiles, waste
piles, tailings ponds and facilities, settlings ponds, and all
other improvements, property and fixtures as may be necessary,
convenient, or suitable for mining, removing, beneficiating,
concentrating, smelting, extracting, leaching, refining and
shipping of ores and minerals thereof, or for any activities
incidental thereto or to any of the rights or privileges of
the Company hereunder; and
d) divert streams, remove lateral and subjacent supports, cave,
subside or destroy the surface or any part thereof; deposit
earth, rocks, waste, lean ore and materials on any parts of
the Lots where it will not interfere with mining, leach the
same, and commit waste to the extent necessary, usual or
customary in carrying out any or all of the above rights,
privileges and purposes.
7.0 WARRANTIES AND REPRESENTATIONS OF THE CONCESSIONAIRE
7.1 The Concessionaire hereby represents and warrants to the Company that:
a) the Property consist of and exploration mining concessions
over the "La Esperanza" lot, title 193,536, the "2 Hermanos"
lot, title 194,319, and the exploitation mining concessions
over the "Guadalupe" Lot, title 186,533, the "Ampl. De
Guadalupe" lot, title 205,214, and the "Santa Nino" lot, title
194,007, and each of the said Lots are duly and validly staked
and recorded pursuant to the laws of Mexico, and are in good
standing on the date hereof and are free and clear of all
liens, charges and encumbrances;
b) the Concessionaire has the right to acquire an undivided 100%
interest in the Property;
c) the Underlying Agreements are in good standing as at the date
hereof;
d) the Concessionaire has the exclusive right to enter into this
Agreement and all necessary authority to dispose of an
interest in and to the Property in accordance with the terms
of this Agreement;
e) there is no agreement respecting the Property to which the
Concessionaire is a party other than this Agreement and no
person, firm or corporation has any interest in the Property
hereunder and no person or entity is entitled to any royalty
or other payment in the nature of rent or royalty on any
minerals, ores, metals or concentrates or any other such
products removed from the Lots, with the exception of the net
smelter return royalties mentioned in the Santa Nino and 2
Hermanos Agreements, as mentioned in clause 11.0 below;
f) all required consents, approvals or conditions precedent to
the acquisition by the Company of an interest in the Property
as contemplated by the terms of this Agreement have been
obtained or satisfied; and
g) there is no adverse claim or challenge to the ownership of or
title to the Property, nor is there any basis thereof, and
there are no outstanding agreements or options to acquire or
purchase the Property or any portion thereof, and no person,
has any royalty or other interest whatsoever in production
from the Lots, with the
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exceptionof the net smelter return royalties mentioned in the
Santo Nino and 2 Hermanos Agreements, as mentioned in the
clause 11.0 below;
7.2 The representations and warranties hereinbefore set out are conditions
on which the parties have relied in entering into this Agreement and shall
survive the acquisition of any interest in the Property by the Company and each
of the parties will indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by them and
contained in this Agreement.
8.0 COVENANTS OF THE CONCESSIONAIRE
8.1 During the currency of this Agreement, the Concessionaire covenants and
agrees with the Company to:
a) keep the Underlying Agreements in good standing by making such
payments or share issuances as are required to keep same in
good standing;
b) not do or permit or suffer to be done any act or thing which
would or might in any way adversely affect the rights of the
Company hereunder;
c) make available to the Company and its representatives all
records and files relating to the Lots and permit the
Concessionaire and its representatives at its own expense to
take abstracts therefrom and make copies thereof;
d) cooperate fully with the Company in obtaining any surface and
other rights on or related to the Lots as the Company deems
desirable;
e) promptly provide the Company with any and all notice and
correspondence from government agencies in respect of the
Property and any notices of default from the registered owners
of the Property; and
f) not lien or encumber in any manner the Property.
9.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
9.1 The Company represents and warrants to the Concessionaire that:
a) it is a company duly incorporated which is evidenced in
notarial deed 19,689, dated February 12, 1998, granted before
Lic. Jose Maria Morera Gonzalez. Notary Public 102 of the
Federal District and registered in the Public Registry of
Property and Commerce of Federal District, under mercantile
folio 231,942 and in the Public Registry of Mining under
number 72, volume 36, of the Society Mining Book on October
23, 1998, organized and validly subsisting under Mexican law
and is qualified to carry on business in Mexico;
b) it has full power and authority to carry on its business and
to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement; and
c) the execution and delivery of this Agreement and the
agreements contemplated hereby will not violate or result in
the breach of the laws of any applicable jurisdiction or
constating documents.
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10.0 COVENANTS OF THE COMPANY
10.1 The Company hereby covenants and agrees with the Concessionaire as
follows:
a) that during the currency of this Agreement it will maintain
the Property in good standing and shall pay all mining duties
on the Property under the Federal Duties Law of Mexico and,
where relevant, it shall conduct exploration work on the Lots
and record all assessment work reports, in the terms of the
Mining Law of Mexico and its Regulations. In the event that
the Company fails to pay the mining duties in respect of the
Property when the same become due and owing, or fails to
record the assessment work report on or before May 20 of each
year, the Concessionaire may, at its option, pay such duties
and record such assessment work reports and the Company agrees
that any amounts so paid by the Concessionaire shall be added
to the purchase price and shall be paid by the Company with
the next option payment, if any, or if no option payment
remains, within one month of payment by the Concessionaire and
to compensate the Concessionaire for any cost incurred for
such recording;
b) conduct all work on or with respect to the Lots in a careful
and miner-like manner and in accordance with all applicable
Federal, State and Municipal laws, rules orders and
regulations, and indemnify and save the Concessionaire
harmless from any and all claims, suits or actions made or
brought against it as a result of work done by or with respect
to the Lots except to the extent that such claims, suits or
actions relate to issues or disputes regarding title to the
Property;
c) that it will properly pay all accounts of every nature and
kind for wages, supplies, Workers' Compensation assessments,
income tax deductions and all other accounts and indebtedness
incurred by it on the Property so that no claim or lien can
arise thereon or upon the ore and minerals contained therein
and it will indemnify the Concessionaire and save it harmless
from any and all loss, cost, actions, suits, damages or claims
which may be made against the Concessionaire in respect of the
operations carried out upon the Lots and that it will
discharge any liens or encumbrances which may arise in respect
of or be recorded against the Property as a result of the
operations of the Company thereon, provided however that the
Company shall have the right to contest the validity of any
such lien or claim of lien;
d) that it will permit the Concessionaire, or the representatives
of the Concessionaire duly authorized in writing, to visit and
inspect at reasonable times and intervals the Lots, and any
data obtained by the Company as a result of its operation
thereon, and to take samples for testing purposes from any
part of the Lots, provided always that the Concessionaire or
its representatives shall abide by the rules and regulations
laid down by the Company relating to matters of safety and
efficiency in its operations and that the Company shall be
under no liability to the Concessionaire or its
representatives for any personal injury, including death, or
any damage to property other than such as might be occasioned
by or through any neglect on the part of the Company, its
servants or agents;
e) that it will keep full, true and accurate reference reports,
maps and other surveys of all exploration, development and
mining work done on or under the Lots;
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f) that it will keep full, true and accurate records of all ore
and waste from the Lots and will take sufficient samples of
ore removed and will make accurate surveys of ore removed, all
in accordance with good mining practice;
g) that it will save and keep the Concessionaire harmless from
all claims, costs, loss or damage which may arise by reason of
injury (including injury resulting in death) to any person
employed by the Company in or upon the Lots or any part
thereof or which may arise by reason of injury (including
injury resulting in death) to any person or damage done to any
property as a result of any work or operations of the Company
or of its possession or occupancy of the Lots; and
h) that Company shall deliver to the Concessionaire all reports
of the studies made by the Company on the Lots within 180 days
from the date of termination of this Agreement for whatever
reason other than the exercise of the Option.
11.0 SURRENDER AND ACQUISITION OF PROPERTY INTERESTS PRIOR TO
TERMINATION OF AGREEMENT
11.1 The Company may at any time, elect to abandon any one or more of the
Lots by giving notice to the Concessionaire of such intention. For a period of
30 days after the date of delivery of such notice the Concessionaire may elect
to have any or all of the Lots in respect of which such notice has been given
transferred to it by delivery of a request therefore to the Company, provided
that such transfer has already taken place in favour of the Company. Any Lots so
transferred, if in good standing at the date hereof or if the Company causes the
same to be placed in good standing after the date hereof, shall be in good
standing under the laws of Mexico for at least 90 days from the date of
transfer. If the Concessionaire fails to make request for the transfer of any
mineral claims as aforesaid within such 30-day period, the Company may then
abandon such Lots without further notice to the Concessionaire. Upon any such
transfer or abandonment the Lots so transferred or abandoned shall for all
purposes of this Agreement cease to form part of the Property and the Company
shall have no further obligations pursuant thereto.
12.0 FORCE MAJEURE
12.1 If the Company is at any time either during the exercise of the Option
or thereafter prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, walkouts, labour shortages, power shortages,
fires, wars, acts of God, governmental regulations restricting normal
operations, shipping delays or any other reason or reasons beyond the control of
the Company, then the time limited for the performance by the Company of its
obligations hereunder shall be extended by a period of time equal in length to
the period of each such prevention or delay.
12.1 The Company shall within seven days given notice to the Concessionaire
of each event of force majeure described above, and upon cessation of such event
shall furnish the Concessionaire with notice of that event together with
particulars of the number of days by which the obligations of the Company
hereunder have been extended by virtue of such event of force majeure and all
preceding events of force majeure.
13.0 DEFAULT AND TERMINATION
13.1 Notwithstanding anything in this Agreement to the contrary, if any
party (a "Defaulting Party") is in default of any requirement herein set forth
the party affected by such default shall give written notice to the Defaulting
Party specifying the default and the Defaulting Party shall
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not lose any rights under this Agreement, unless within 30 days after the giving
of notice of default by the affected party the Defaulting Party has failed to
take reasonable steps to cure the default by the appropriate performance and if
the Defaulting Party fails within such period to take reasonable steps to cure
any such default, the affected party shall be entitled to seek any remedy it may
have on account of such default.
13.2 The Company may terminate this Agreement at any time upon 30 days
written notice to the Concessionaire (the "Termination").
13.3 Upon such Termination, all rights, title and interest of the Company
under this Agreement shall terminate, and the Company shall not be required to
make any further payments, or to perform any further obligations of the
Agreement, including those payments in Section 2.1 above, which become due after
the Termination.
13.4 In the event the Concessionaire provides the Company with any notice
received from the registered holders of the Property that any of the Underlying
Agreements is in default (including default for its registration before the
Public Registry of Mining), the Company shall have the right but not the
obligation to rectify such default such as by making payments or share
issuances, and do all acts as required to rectify such default, and the cost of
same may be set off against any payments due to the Concessionaire here in or
the Company may, at its option, demand payment directly from the Concessionaire
for same.
14.0 RIGHTS UPON TERMINATION
14.1 Upon Termination, the Company shall leave the Lots within a period of
30 days from the Termination date. The Company shall have the right, within a
period of 30 days following the Termination date, to remove from the Lots all
buildings, plant, equipment, machinery, tools, appliances and supplies which
have been brought upon the Lots by the Company or on behalf of the
Concessionaire, and any such Property not removed within such 30 day period
shall become the property of the Concessionaire.
15.0 CO-CONCESSIONAIRES' OR SHAREHOLDERS' AGREEMENT
15.1 After the exercise of the Option, the Concessionaire and the Company
shall either become fco-concessionaires of the Property or incorporate a new
company ("Newco") that shall acquire the title to the Property:
a) to further explore and, if deemed warranted as herein
provided, to develop the Lots and equip it for commercial
production;
b) to operate the Lots as a mine; and
c) to engage in such other activity as may be considered by the
parties to be necessary or desirable in connection with the
foregoing.
15.2 The parties shall have three months after the exercise of the Option to
negotiate the terms of a co-concessionaires' agreement or to incorporate Newco
and negotiate a shareholders' agreement for the further exploration and
development of the Lots with the intent of putting the Lots into production. The
parties shall use their best efforts to negotiate a structure and an agreement
and do all necessary acts to enter into an agreement. If the co-concessionaires'
agreement or shareholders' agreements, as the case may be, is not finalized
within three months of the exercise of the Option, then the parties will submit
themselves to binding arbitration to determine the structure and to settle the
agreement having regard to the terms of this Agreement.
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15.3 The parties agree that the co-concessionaires' agreement or
shareholders' agreement shall contain terms customary in a relationship of that
nature and shall contain the following terms which are non-negotiable shall form
part of the co-concessionaires' agreement or shareholders' agreement, as the
case may be:
a) the Concessionaire and the Company shall each subscribe for
and pay for their respective portion of the costs of the
shares of Newco, if Newco's incorporation is elected by the
Company;
b) the initial interests of the parties in the Property or Newco,
as the case may be, shall be 60% as to the Company's interest
and 40% as to the Concessionaire's interest provided the
Concessionaire has earned a 100% interest in the Property
pursuant to the Underlying Agreements. For further certainty,
shares of Newco shall be deemed to be an "Interest" or
"Interests" for the purposes of this section 13.3;
c) a party shall be entitled to recover any monies lent by it for
the development of the Property before there is any
distribution of profits to the Concessionaire and the Company;
d) the co-concessionaires' agreement or Newco, as the case may
be, shall be managed by a Management Committee or Board of
Directors, which shall be comprised of one member or director
appointed by each party. The Management Committee or Board of
Directors shall have the power to appoint the operator/manager
of the Property;
e) the members of the Management Committee or Board of Directors
shall have voting power proportional to the interest in the
Property or in Newco held by the party appointing such member
or director;
f) no party shall do, transact, perform or undertake anything in
the name of the other parties or in the name of Newco;
g) nothing contained in the agreement shall, except to the extent
specifically authorized thereunder, be deemed to constitute a
party, an agent or legal representative of any other party.
16.0 SALE OF INTEREST
16.1 The Concessionaire agrees that if the Company decides to sell,
transfer, assign or otherwise dispose of its interest to an arm's length third
party then the Concessionaire shall also sell, transfer, assign or otherwise
dispose of its interest to the arm's length third party at the same price per
percentage interest or share as the Company shall dispose of its interest or
shares to the arm's length third party, provided the sale by the Company is made
at fair market value. If the parties cannot agree on a fair market value, the
matter shall be referred to arbitration which shall be governed by section 17.0.
17.0 ARBITRATION
17.1 All matters of dispute between the Concessionaire acting collectively
and the Company concerning this Agreement which cannot be resolved or settled by
the parties, shall be finally settled by arbitration in Vancouver, British
Columbia. The party desiring arbitration shall appoint
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one arbitrator, and shall notify the other party of such appointment, and the
other party shall within 15 days after receiving such notice, appoint an
arbitrator, and two arbitrators so named, before proceeding to act, shall within
30 days of the appointment of the last appointed arbitrator, unanimously agree
on the appointment of the third arbitrator to act with them and be chairman of
the arbitration herein provided for. If the other party shall fail to appoint an
arbitrator within 15 days after receiving notice of the appointment of the first
arbitrator, the first arbitrator shall be the only arbitrator, and if the two
arbitrators appointed by the parties shall be unable to agree on the appointment
of the chairman, the chairman shall be appointed under the provisions of the
ARBITRATION ACT (British Columbia). Except as specifically or otherwise provided
in this paragraph, the arbitration herein provided for shall be conducted in
accordance with such Act. The chairman or, in the case where only one arbitrator
is appointed, the single arbitrator, shall fix the time and place in Vancouver,
British Columbia, and he shall preside over the arbitration and determine all
questions of procedure not provided for under such Act or this paragraph. After
hearing any evidence or representations that the parties may submit, the single
arbitrator, or the arbitrators, as the case may be, shall make an award and
reduce the same to writing and deliver one copy thereof to each of the parties.
The expense of the arbitration shall be paid in the manner specified in the
award. The parties agree that the award of the majority of the arbitrators, or
in the case a single arbitrator, shall be final and binding upon each of them.
18.0 ASSIGNMENT
18.1 The Concessionaire may not during the term of this Agreement assign any
or a part of its interest in this Agreement or the Property and the Company may
at any time assign its rights contained in this Agreement provided that the
assignor agrees to be bound by the terms and conditions of this Agreement.
19.0 GENERAL TERMS AND CONDITIONS
19.1 If this Agreement is terminated for any cause whatsoever except the
exercise of the Option granted hereby by the Company, the Company shall deliver
to the Concessionaire copies of all reports, data, assay results and other
material relating to its exploration and development work on the Lots.
19.2 For further clarity, where reference is made in this Agreement to the
Concessionaire, the Company's obligations to the Concessionaire shall be
satisfied if the Company makes payments to, delivers or gives notice to, the
person designated in writing to receive such by the Concessionaire from time to
time.
20.0 COVENANT FOR FURTHER ASSURANCES
20.1 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out the
intent of this Agreement.
21.0 ENTIRE AGREEMENT
21.1 This Agreement shall represent the entire understanding between the
parties with respect to the Property. No representations or inducements have
been made save as herein set forth. No changes, alterations, or modifications of
this Agreement shall be binding upon either party until and unless a memorandum
in writing to such effect shall have been signed by all parties hereto.
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22.0 TITLES
22.1 The titles to the paragraphs to this Agreement shall not be deemed to
form part of this Agreement but shall be regarded as having been used for
convenience or reference only.
23.0 LAWS OF AGREEMENT
23.1 This Agreement shall be governed by and interpreted in accordance with
the applicable laws in the Federal District in Mexico for local matters and with
the applicable laws of the Mexican Republic for federal matters.
24.0 ENUREMENT
24.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto, and their respective heirs, successors, personal representatives
and assigns.
25.0 NOTICES
25.1 Any notice under this Agreement shall be given personally to the
parties at the address set forth on the first page hereof or to such other
address as the parties may hereinafter designate in writing to the other
parties.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
MINERA FUERTE MAYO S.A. DE C.V.
PER:
CUITLAHUAC RANGEL ALCARAZ
LA MEXICANA RESOURCES S.A. DE C.V.
PER:
AUTHORIZED SIGNATORY
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<PAGE>
Exhibit 10.3
1999 Stock Option Plan
<PAGE>
GOLDEN RIVER RESOURCES INC.
1999 STOCK OPTION PLAN
1. PURPOSE; EFFECTIVENESS OF THE PLAN.
(a) The purpose of this Plan is to advance the interests of the
Company and its stockholders by helping the Company obtain and
retain the services of employees, officers, consultants, and
directors, upon whose judgment, initiative and efforts the
Company is substantially dependent, and to provide those
persons with further incentives to advance the interests of
the Company.
(b) This Plan will become effective on the date of its
adoption by the Board, provided the Plan is approved by the
stockholders of the Company (excluding holders of shares of
Stock issued by the Company pursuant to the exercise of
options granted under this Plan) within twelve months before
or after that date. If the Plan is not so approved by the
stockholders of the Company, any options granted under this
Plan will be rescinded and will be void. This Plan will remain
in effect until it is terminated by the Board or the Committee
(as defined hereafter) under section 9 hereof, except that no
ISO (as defined herein) will be granted after the tenth
anniversary of the date of this Plan's adoption by the Board.
This Plan will be governed by, and construed in accordance
with, the laws of the State of Nevada.
2. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the following defined terms
(together with other capitalized terms defined elsewhere in this Plan)
will govern the construction of this Plan, and of any stock option
agreements entered into pursuant to this Plan:
(a) "10% Stockholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions
set forth in Section 424(d) of the Code at the time he or she
is granted an Option, stock possessing more than ten percent
(10%) of the total combined voting power or value of all
classes of stock of the Company and/or of its subsidiaries;
(b) "1933 Act" means the federal Securities Act of 1933, as
amended;
(c) "Board" means the Board of Directors of the Company;
(d) "Called for under an Option," or words to similar effect,
means issuable pursuant to the exercise of an Option;
(e) "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to
refer to Sections of the Code as enacted at the time of this
Plan's adoption by the Board and as subsequently amended, or
to any substantially similar successor provisions of the Code
resulting from recodification, renumbering or otherwise);
<PAGE>
(f) "Committee" means a committee, known as the Compensation
Committee, of two or more Disinterested Directors, appointed
by the Board, to administer and interpret this Plan; provided
that the term "Committee" will refer to the Board during such
times as no Committee is appointed by the Board;
(g) "Company" means Golden River Resources Inc.;
(h) "Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code;
(i) "Disinterested Director" means a member of the Board who is
not during the period of one year prior to his or her service
as an administrator of the Plan, or during the period of such
service, granted or awarded Stock, options to acquire Stock,
or similar equity securities of the Company under this Plan or
any similar plan of the Company, other than the grant of a
Formula Option pursuant to section 6(m) of this Plan;
(j) "Eligible Participants" means persons who, at a particular
time, are employees, officers, consultants, or directors of
the Company or its subsidiaries;
(k) "Fair Market Value" means, with respect to the Stock and as of
the date an ISO or a Formula Option is granted hereunder, the
market price per share of such Stock determined by the
Committee, consistent with the requirements of Section 422 of
the Code and to the extent consistent therewith, as follows:
(i) If the Stock was traded on a stock exchange on the
date in question, then the Fair Market Value will be
equal to the closing price reported by the applicable
composite-transactions report for such date;
(ii) If the Stock was traded over-the-counter on the date
in question and was classified as a national market
issue, then the Fair Market Value will be equal to
the last-transaction price quoted by the NASDAQ
system for such date;
(iii) If the Stock was traded over-the-counter on the date
in question but was not classified as a national
market issue, then the Fair Market Value will be
equal to the average of the last reported
representative bid and asked prices quoted by the
NASDAQ system for such date; and
(iv) If none of the foregoing provisions is applicable,
then the Fair Market Value will be determined by the
Committee in good faith on such basis as it deems
appropriate.
Golden River Resources Inc. 1999 Stock Option Plan - Page 2
<PAGE>
(l) "Formula Option" means an NSO granted to members of the
Committee pursuant to section 6(m) hereof;
(m) "ISO" has the same meaning as "incentive stock option," as
defined in Section 422 of the Code;
(n) "Just Cause Termination" means a termination by the Company of
an Optionee's employment by and/or service to the Company (or
if the Optionee is a director, removal of the Optionee from
the Board by action of the stockholders or, if permitted by
applicable law and the bylaws of the Company, the other
directors), in connection with the good faith determination of
the Company's board of directors (or of the Company's
stockholders if the Optionee is a director and the removal of
the Optionee from the Board is by action of the stockholders,
but in either case excluding the vote of the Optionee if he or
she is a director or a stockholder) that the Optionee has
engaged in any acts involving dishonesty or moral turpitude or
in any acts that materially and adversely affect the business,
affairs or reputation of the Company or its subsidiaries;
(o) "NSO" means any option granted under this Plan whether
designated by the Committee as a "non-qualified stock option,"
a "non-statutory stock option" or otherwise, other than an
option designated by the Committee as an ISO, or any option so
designated but which, for any reason, fails to qualify as an
ISO pursuant to Section 422 of the Code and the rules and
regulations thereunder;
(p) "Option" means an option granted pursuant to this Plan
entitling the option holder to acquire shares of Stock issued
by the Company pursuant to the valid exercise of the option;
(q) "Option Agreement" means an agreement between the Company and
an Optionee, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Plan;
(r) "Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of
the Option Stock called for under such Option;
(s) "Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option;
(t) "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a
Transfer authorized under this Plan;
Golden River Resources Inc. 1999 Stock Option Plan - Page 3
<PAGE>
(u) "Plan" means this 1999 Stock Option Plan of the Company;
(v) "QDRO" has the same meaning as "qualified domestic relations
order" as defined in Section 414(p) of the Code;
(w) "Stock" means shares of the Company's Common Stock, $.001 par
value;
(x) "Subsidiary" has the same meaning as "Subsidiary Corporation"
as defined in Section 424(f) of the Code;
(y) "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment,
transfer, conveyance, pledge, hypothecation, encumbrance,
disposal, loan, gift, attachment or levy of such Option Stock,
including without limitation an assignment for the benefit of
creditors of the Optionee, a transfer by operation of law,
such as a transfer by will or under the laws of descent and
distribution, an execution of judgment against the Option
Stock or the acquisition of record or beneficial ownership
thereof by a lender or creditor, a transfer pursuant to a
QDRO, or to any decree of divorce, dissolution or separate
maintenance, any property settlement, any separation agreement
or any other agreement with a spouse (except for estate
planning purposes) under which a part or all of the shares of
Option Stock are transferred or awarded to the spouse of the
Optionee or are required to be sold; or a transfer resulting
from the filing by the Optionee of a petition for relief, or
the filing of an involuntary petition against such Optionee,
under the bankruptcy laws of the United States or of any other
nation.
3. ELIGIBILITY.
The Company may grant Options under this Plan only to persons who are
Eligible Participants as of the time of such grant. Subject to the
provisions of sections 4(d), 5 and 6 hereof, there is no limitation on
the number of Options that may be granted to an Eligible Participant.
4. ADMINISTRATION.
(a) COMMITTEE. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does
not appoint such a Committee, the Board itself will administer
this Plan and take such other actions as the Committee is
authorized to take hereunder; provided that the Board may take
such actions hereunder in the same manner as the Board may
take other actions under the Company's Articles of
incorporation and bylaws generally.
Golden River Resources Inc. 1999 Stock Option Plan - Page 4
<PAGE>
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have
full and final authority in its discretion, at any time and
from time to time, subject only to the express terms,
conditions and other provisions of the Company's Articles of
incorporation, bylaws and this Plan, and the specific
limitations on such discretion set forth herein:
(i) to select and approve the persons who will be granted
Options under this Plan from among the Eligible
Participants, and to grant to any person so selected
one or more Options to purchase such number of shares
of Option Stock as the Committee may determine;
(ii) to determine the period or periods of time during
which Options may be exercised, the Option Price and
the duration of such Options, and other matters to be
determined by the Committee in connection with
specific Option grants and Options Agreements as
specified under this Plan;
(iii) to interpret this Plan, to prescribe, amend and
rescind rules and regulations relating to this Plan,
and to make all other determinations necessary or
advisable for the operation and administration of
this Plan; and
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this section 4(b) to one
or more directors of the Company who are executive
officers of the Company, but only in connection with
Options granted to Eligible Participants who are not
subject to the reporting and liability provisions of
Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder,
and subject to such restrictions and limitations
(such as the aggregate number of shares of Option
Stock called for by such Options that may be granted)
as the Committee may decide to impose on such
delegate directors.
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no
authority:
(i) to grant Options to any of its members, whether or
not approved by the Board; and
(ii) to determine any matters, or exercise any discretion,
in connection with the Formula Options under section
6(m) hereof, to the extent that the power to make
such determinations or to exercise such discretion
would cause one or more members of the Committee no
longer to be "Disinterested Directors" within the
meaning of section 2(i) above.
Golden River Resources Inc. 1999 Stock Option Plan - Page 5
<PAGE>
(d) DESIGNATION OF OPTIONS. Except as otherwise provided herein,
the Committee will designate any Option granted hereunder
either as an ISO or as an NSO. To the extent that the Fair
Market Value (determined at the time the Option is granted) of
Stock with respect to which all ISOs are exercisable for the
first time by any individual during any calendar year
(pursuant to this Plan and all other plans of the Company
and/or its subsidiaries) exceeds $100,000, such option will be
treated as an NSO. Notwithstanding the general eligibility
provisions of section 3 hereof, the Committee may grant ISOs
only to persons who are employees of the Company and/or its
subsidiaries.
(e) OPTION AGREEMENTS. Options will be deemed granted hereunder
only upon the execution and delivery of an Option Agreement by
the Optionee and a duly authorized officer of the Company.
Options will not be deemed granted hereunder merely upon the
authorization of such grant by the Committee.
5. SHARES RESERVED FOR OPTIONS.
(a) OPTION POOL. The aggregate number of shares of Option Stock
that may be issued pursuant to the exercise of Options granted
under this Plan initially will not exceed Five Hundred
Eight-Six Thousand Eight Hundred (586,800) (the "Option
Pool"), provided that such number automatically shall be
adjusted quarterly on the first day of the Company's fiscal
quarter to a number equal to 10% of the number of shares of
Stock of the Company outstanding on the last day of the
immediately preceding fiscal quarter, or 586,800 shares,
whichever is greater, and provided further that such number
will be increased by the number of shares of Option Stock that
the Company subsequently may reacquire through repurchase or
otherwise. Shares of Option Stock that would have been
issuable pursuant to Options, but that are no longer issuable
because all or part of those Options have terminated or
expired, will be deemed not to have been issued for purposes
of computing the number of shares of Option Stock remaining in
the Option Pool and available for issuance.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any change
in the outstanding Stock of the Company as a result of a stock
split, reverse stock split, stock dividend, recapitalization,
combination or reclassification, appropriate proportionate
adjustments will be made in:
(i) the aggregate number of shares of Option Stock in the
Option Pool that may be issued pursuant to the
exercise of Options granted hereunder;
Golden River Resources Inc. 1999 Stock Option Plan - Page 6
<PAGE>
(ii) the Option Price and the number of shares of Option
Stock called for in each outstanding Option granted
hereunder; and
(iii) other rights and matters determined on a per share
basis under this Plan or any Option Agreement
hereunder. Any such adjustments will be made only by
the Board, and when so made will be effective,
conclusive and binding for all purposes with respect
to this Plan and all Options then outstanding. No
such adjustments will be required by reason of the
issuance or sale by the Company for cash or other
consideration of additional shares of its Stock or
securities convertible into or exchangeable for
shares of its Stock.
6. TERMS OF STOCK OPTION AGREEMENTS.
Each Option granted pursuant to this Plan will be evidenced by an
agreement (an "Option Agreement") between the Company and the person to
whom such Option is granted, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Plan. Without
limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
(a) COVENANTS OF OPTIONEE. At the discretion of the Committee, the
person to whom an Option is granted hereunder, as a condition
to the granting of the Option, must execute and deliver to the
Company a confidential information agreement approved by the
Committee. Nothing contained in this Plan, any Option
Agreement or in any other agreement executed in connection
with the granting of an Option under this Plan will confer
upon any Optionee any right with respect to the continuation
of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its
subsidiaries.
(b) VESTING PERIODS. Unless the Option Agreement executed by an
Optionee expressly otherwise provides and except as set forth
herein, the right to exercise an Option granted hereunder will
be subject to the following Vesting Periods, subject to the
Optionee continuing to be an Eligible Participant and the
occurrence of any other event (including the passage of time)
that would result in the cancellation or termination of the
Option:
(i) a minimum three-month vesting period for all options;
and
(ii) such additional vesting periods as may be determined
by the Committee in its sole discretion.
(c) EXERCISE OF THE OPTION.
Golden River Resources Inc. 1999 Stock Option Plan - Page 7
<PAGE>
(i) MECHANICS AND NOTICE. An Option may be exercised to
the extent exercisable (1) by giving written notice
of exercise to the Company, specifying the number of
full shares of Option Stock to be purchased and
accompanied by full payment of the Option Price
thereof and the amount of withholding taxes pursuant
to subsection 6(c)(ii) below; and (2) by giving
assurances satisfactory to the Company that the
shares of Option Stock to be purchased upon such
exercise are being purchased for investment and not
with a view to resale in connection with any
distribution of such shares in violation of the 1933
Act; provided, however, that in the event the Option
Stock called for under the Option is registered under
the 1933 Act, or in the event resale of such Option
Stock without such registration would otherwise be
permissible, this second condition will be
inoperative if, in the opinion of counsel for the
Company, such condition is not required under the
1933 Act, or any other applicable law, regulation or
rule of any governmental agency.
(ii) WITHHOLDING TAXES. As a condition to the issuance of
the shares of Option Stock upon full or partial
exercise of an NSO granted under this Plan, the
Optionee will pay to the Company in cash, or in such
other form as the Committee may determine in its
discretion, the amount of the Company's tax
withholding liability required in connection with
such exercise. For purposes of this subsection
6(c)(ii), "tax withholding liability" will mean all
federal and state income taxes, social security tax,
and any other taxes applicable to the compensation
income arising from the transaction required by
applicable law to be withheld by the Company.
(d) PAYMENT OF OPTION PRICE. Each Option Agreement will specify
the Option Price with respect to the exercise of Option Stock
thereunder, to be fixed by the Committee in its discretion,
but in no event will the Option Price for an ISO granted
hereunder be less than the Fair Market Value (or, in case the
Optionee is a 10% Stockholder, one hundred ten percent (110%)
of such Fair Market Value) of the Option Stock at the time
such ISO is granted, and in no event will the Option Price for
an NSO granted hereunder be less than the 85% of Fair Market
Value. The Option Price will be payable to the Company in
United States dollars in cash or by check or, such other legal
consideration as may be approved by the Committee, in its
discretion.
(i) For example, the Committee, in its discretion, may
permit a particular Optionee to pay all or a portion
of the Option Price, and/or the tax withholding
liability set forth in subsection 6(c)(ii) above,
with respect to the exercise of an Option either by
surrendering shares of Stock already owned by such
Optionee or by withholding shares of Option Stock,
provided that the
Golden River Resources Inc. 1999 Stock Option Plan - Page 8
<PAGE>
Committee determines that the fair market value of
such surrendered Stock or withheld Option Stock is
equal to the corresponding portion of such Option
Price and/or tax withholding liability, as the case
may be, to be paid for therewith.
(ii) If the Committee permits an Optionee to pay any
portion of the Option Price and/or tax withholding
liability with shares of Stock with respect to the
exercise of an Option (the "Underlying Option") as
provided in subsection 6(d)(i) above, then the
Committee, in its discretion, may grant to such
Optionee (but only if Optionee remains an Eligible
Participant at that time) additional NSOs, the number
of shares of Option Stock called for thereunder to be
equal to all or a portion of the Stock so surrendered
or withheld (a "Replacement Option"). Each
Replacement Option will be evidenced by an Option
Agreement. Unless otherwise set forth therein, each
Replacement Option will be immediately exercisable
upon such grant (without any Vesting Period) and will
be coterminous with the Underlying Option. The
Committee, in its sole discretion, may establish such
other terms and conditions for Replacement Options as
it deems appropriate.
(e) TERMINATION OF THE OPTION. Except as otherwise provided
herein, each Option Agreement will specify the period of time,
to be fixed by the Committee in its discretion, during which
the Option granted therein will be exercisable, not to exceed
ten years from the date of grant (the "Option Period");
provided that the Option Period will not exceed five years
from the date of grant in the case of an ISO granted to a 10%
Stockholder. To the extent not previously exercised, each
Option will terminate upon the expiration of the Option Period
specified in the Option Agreement; provided, however, that
each such Option will terminate, if earlier:
(i) thirty days after the date that the Optionee ceases
to be an Eligible Participant for any reason, other
than by reason of death or disability or a Just Cause
Termination;
(ii) twelve months after the date that the Optionee ceases
to be an Eligible Participant by reason of such
person's death or disability; or
(iii) immediately as of the date that the Optionee ceases
to be an Eligible Participant by reason of a Just
Cause Termination.
In the event of a sale or all or substantially all of the
assets of the Company, or a merger or consolidation or other
reorganization in which the Company is not the surviving
corporation, or in which the Company becomes a subsidiary of
another
Golden River Resources Inc. 1999 Stock Option Plan - Page 9
<PAGE>
corporation (any of the foregoing events, a "Corporate
Transaction"), then notwithstanding anything else herein, the
right to exercise all then outstanding Options will vest
immediately prior to such Corporate Transaction and will
terminate immediately after such Corporate Transaction;
provided, however, that if the Board, in its sole discretion,
determines that such immediate vesting of the right to
exercise outstanding Options is not in the best interests of
the Company, then the successor corporation must agree to
assume the outstanding Options or substitute therefor
comparable options of such successor corporation or a parent
or subsidiary of such successor corporation.
(f) OPTIONS NONTRANSFERABLE. No Option will be transferable by the
Optionee otherwise than by will or the laws of descent and
distribution, or in the case of an NSO, pursuant to a QDRO.
During the lifetime of the Optionee, the Option will be
exercisable only by him or her, or the transferee of an NSO if
it was transferred pursuant to a QDRO.
(g) QUALIFICATION OF STOCK. The right to exercise an Option will
be further subject to the requirement that if at any time the
Board determines, in its discretion, that the listing,
registration or qualification of the shares of Option Stock
called for thereunder upon any securities exchange or under
any state or federal law, or the consent or approval of any
governmental regulatory authority, is necessary or desirable
as a condition of or in connection with the granting of such
Option or the purchase of shares of Option Stock thereunder,
the Option may not be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent
or approval is effected or obtained free of any conditions not
acceptable to the Board, in its discretion.
(h) ADDITIONAL RESTRICTIONS ON TRANSFER. By accepting Options
and/or Option Stock under this Plan, the Optionee will be
deemed to represent, warrant and agree as follows:
(i) SECURITIES ACT OF 1933. The Optionee
understands that the shares of Option Stock have not
been registered under the 1933 Act, and that such
shares are not freely tradable and must be held
indefinitely unless such shares are either registered
under the 1933 Act or an exemption from such
registration is available. The Optionee understands
that the Company is under no obligation to register
the shares of Option Stock.
(ii) OTHER APPLICABLE LAWS. The Optionee further
understands that Transfer of the Option Stock
requires full compliance with the provisions of all
applicable laws.
Golden River Resources Inc. 1999 Stock Option Plan - Page 10
<PAGE>
(iii) INVESTMENT INTENT. Unless a registration statement is
in effect with respect to the sale of Option Stock
obtained through exercise of Options granted
hereunder: (1) Upon exercise of any Option, the
Optionee will purchase the Option Stock for his or
her own account and not with a view to distribution
within the meaning of the 1933 Act, other than as may
be effected in compliance with the 1933 Act and the
rules and regulations promulgated thereunder; (2) no
one else will have any beneficial interest in the
Option Stock; and (3) he or she has no present
intention of disposing of the Option Stock at any
particular time.
(i) COMPLIANCE WITH LAW. Notwithstanding any other provision of
this Plan, Options may be granted pursuant to this Plan, and
Option Stock may be issued pursuant to the exercise thereof by
an Optionee, only after there has been compliance with all
applicable federal and state securities laws, and all of the
same will be subject to this overriding condition. The Company
will not be required to register or qualify Option Stock with
the Securities and Exchange Commission or any State agency,
except that the Company will register with, or as required by
local law, file for and secure an exemption from such
registration requirements from, the applicable securities
administrator and other officials of each jurisdiction in
which an Eligible Participant would be granted an Option
hereunder prior to such grant.
(j) STOCK CERTIFICATES. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all
legends required by law and necessary to effectuate this
Plan's provisions. The Company may place a "stop transfer"
order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the
legends referred to in this section 6(k) have been complied
with.
(k) NOTICES. Any notice to be given to the Company under the terms
of an Option Agreement will be addressed to the Company at its
principal executive office, Attention: Corporate Secretary, or
at such other address as the Company may designate in writing.
Any notice to be given to an Optionee will be addressed to the
Optionee at the address provided to the Company by the
Optionee. Any such notice will be deemed to have been duly
given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered and deposited, postage and
registry fee prepaid, in a post office or branch post office
regularly maintained.
(l) OTHER PROVISIONS. The Option Agreement may contain such other
terms, provisions and conditions, including such special
forfeiture conditions, rights of repurchase, rights of first
refusal and other restrictions on Transfer of Option Stock
issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the
Committee in its sole discretion.
Golden River Resources Inc. 1999 Stock Option Plan - Page 11
<PAGE>
(m) FORMULA OPTIONS. [reserved for future consideration]
7. PROCEEDS FROM SALE OF STOCK.
Cash proceeds from the sale of shares of Option Stock issued from time
to time upon the exercise of Options granted pursuant to this Plan will
be added to the general funds of the Company and as such will be used
from time to time for general corporate purposes.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS.
Subject to the terms and conditions and within the limitations of this
Plan, and except with respect to Formula Options, the Committee may
modify, extend or renew outstanding Options granted under this Plan, or
accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of new Options in
substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, however, no modification of any Option
will, without the consent of the holder of the Option, alter or impair
any rights or obligations under any Option theretofore granted under
this Plan.
9. AMENDMENT AND DISCONTINUANCE.
The Board or the Committee may amend, suspend or discontinue this Plan
at any time or from time to time; provided that no action of the Board
or the Committee will cause ISOs granted under this Plan not to comply
with Section 422 of the Code unless the Board or the Committee
specifically declares such action to be made for that purpose and
provided further, that the provisions of section 6(m) hereof may not be
amended more often than once during any six (6) month period, other
than to comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules and regulations thereunder. Moreover,
no such action may alter or impair any Option previously granted under
this Plan without the consent of the holder of such Option. The Board
or the Committee may amend the Plan without shareholder approval where
such approval is not required to satisfy any statutory or regulatory
requirements.
10. PLAN COMPLIANCE WITH RULE 16B-3.
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, transactions under this plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
under the 1934 Act. To the extent any provision of the plan or action
by the plan administrators fails so to comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
plan administrators.
Golden River Resources Inc. 1999 Stock Option Plan - Page 12
<PAGE>
11. COPIES OF PLAN.
A copy of this Plan will be delivered to each Optionee at or before the
time he or she executes an Option Agreement.
***
Date Plan Adopted by Board of Directors: January 21, 1999
Date Plan Approved by Stockholders: __________________, 1999
Golden River Resources Inc. 1999 Stock Option Plan - Page 13
<PAGE>
Exhibit 10.4
Agreement with Transmeridian Exploration Inc., as amended
<PAGE>
GOLDEN RIVER INC.
U.S. CORPORATE OFFICE
1300 EAST COLLEGE WAY
MOUNT VERNON, WA
98273
October 8, 1999
Peter Holstein
85 Chester Square
London, England
SWIW9H5
(the "Vendor")
RE: PURCHASE BY GOLDEN RIVER INC. ("GOLDEN RIVER") OF ALL THE ISSUED
AND OUTSTANDING SHARES (THE "SHARES") OF TRANSMERIDIAN EXPLORATION
INC., A BRITISH VIRGIN ISLANDS COMPANY ("TRANSMERIDIAN") CARRYING ON
THE BUSINESS OF OIL AND GAS EXPLORATION, DEVELOPMENT AND OPERATION
(THE "BUSINESS")
We are writing to confirm the terms and conditions upon which the
Vendor will sell, transfer and assign to Golden River and Golden River will
purchase the Shares from the Vendor.
The basic terms and conditions of such purchase and sale are as
follows:
1. The Vendor warrants that he is a shareholder of Transmeridian and has
authority to execute this Agreement on behalf of all other shareholders of
Transmeridian. The Vendor will and will cause all other shareholders of
Transmeridian to sell, transfer and assign to Golden River and Golden River
will purchase from the Vendor and the other shareholders of Transmeridian
free and clear of all liens, charges and encumbrances the Shares for the
consideration set out herein; all references herein to the Vendor shall
include all shareholders of Transmeridian;
2. The closing of the purchase and sale of the Shares (the "Closing") will
take place on November 15, 1999 or such other date as may be agreed to by
the parties hereto (the "Closing Date");
<PAGE>
-2-
3. The purchase price for the Shares will be the payment on the Closing Date
of such number of common shares in the capital of Golden River (the
"Purchase Shares") that equals the net asset value of oil and gas
properties owned by Transmeridian at the Closing Date (the "Transmeridian
Net Asset Value) divided by $5.00 US for Proven Reserve Value and $10.00 US
for Probable Reserve Value, both as defined below;
4. The Purchase Shares will have such hold periods as are required under
applicable securities laws, which to the knowledge of Golden River is one
year plus applicable affiliate volume restrictions. The Purchase Shares
will be issued from treasury as fully paid and non-assessable shares in the
capital of Golden River and shall be free and clear of all liens, charges
and encumbrances;
5. The Purchase Shares will be paid on Closing either into escrow or directly
to the Vendor. The portion of Transmeridian's Net Asset Value which is
conditional on Transmeridian or the Vendor fulfilling certain obligations
under the applicable purchase or joint venture agreements for oil or gas
properties (the "Earning Conditions") will be paid in Purchase Shares on
the Closing Date into escrow (the "Escrow Shares") with the transfer agent
of Golden River, who will be instructed to release the Escrow Shares from
escrow upon such of the Earning Conditions as is agreed by the parties
prior to Closing being fulfilled; and such amount of the Transmeridian Net
Asset Value of Transmeridian which is not subject to Earning Conditions
shall be issued and delivered to the Vendor on Closing;
6. Upon execution hereof, the parties will at the expense of Transmeridian
retain a firm of Independent and certified oil and gas property valuators
(the "Valuators") approved by all parties who shall value the Transmeridian
assets. The Valuators will be instructed to assess the Transmeridian Net
Asset Value allocating 100% value for Proven Reserves, 50% value for
Probable Reserves, and no value for speculative reserves, all taken at a
15% discount rate (Proven and Probable Reserves as defined by oil industry
standards). The Valuators also will take into account all other risks and
contingencies standard in the oil and gas industries in determining the
Transmeridian Net Asset Value, and will apply such additional discounts as
are reasonable or necessary in their opinion to arrive at a fair value for
the Transmeridian Net Asset Value. Such value as determined by the
Valuators will be the Transmeridian Net Asset Value;
7. Between the execution hereof and the Closing Date, the parties will
co-operate to provide any and all documentation and other material
necessary in order for the other parties to conduct due diligence, seek
approval of any regulatory or other bodies from whom consent is required
and prepare necessary closing documents;
8. As a condition of Closing, all parties must be satisfied with their due
diligence of Transmeridian and Golden River and their principals; the
Transmeridian Net Asset Value; and formal purchase agreements;
9. As a condition of Closing, Golden River and Peter Holstein will have agreed
to an employment contract on terms satisfactory to both;
<PAGE>
-3-
10. As a condition of Closing, Golden River will require approval of its
shareholders to the transactions contemplated herein; Golden River agrees
to use its reasonable best efforts to obtain such approval upon formal
agreements being approved and executed;
11. Prior to the Closing, the Vendor will not, and will prevent any other party
with authority for Transmeridian, from holding discussions, entertaining
offers, or conducting any negotiations with any other party respecting the
sale of the Shares or the Business;
12. Until the Closing, the Vendor will cause Transmeridian to enter into
business arrangements stipulating that the Shares will be transferred to
Golden River. Prior to Closing, Transmeridian will not enter into any
agreements without prior consultation with Golden River;
13. Upon Closing, Golden River will use its reasonable best efforts to change
its name to "Transmeridian Exploration, Inc.";
14. Upon Closing, the Vendor will have the right to the appointment of four
directors to the board of Golden River, which directors will hold office
until the next annual general meeting of Golden River at which time
directors will be elected;
15. Upon Closing, the Vendor will use their reasonable best efforts to arrange
a private placement in Golden River for a minimum of USD$2 million dollars
to cover immediate working capital and project costs. In addition, the
Vendor will use their reasonable best efferts to arrange for 100% project
financing for each of the Transmeridian projects;
16. The Vendor will cause Transmeridian to disclose all contracts, engagements
and commitments, whether oral or written to Golden River immediately as
they occur;
17. The parties will diligently work toward the preparation and execution of a
formal purchase agreement which includes the terms set out herein. The
formal purchase agreement will also contain representations and warranties
which are customary in agreements respecting purchases of companies with
very substantial oil and gas assets;
18. Each party will execute all of the documents and do all such other acts and
deeds as an when the same may be necessary in order to carry out the terms
and intent of this Letter Agreement;
19. Each party will pay its costs of the transactions contemplated herein.
20. This agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors
and permitted assigns. This agreement may not be assigned by any paty
without the prior written consent of the others;
21. This agreement may be executed in several counterparts each of which will
be deemed to be an original and all of which together will constitute one
and the same instrument. A facsimile copy of a signed agreement will be
deemed an original.
<PAGE>
-4-
If you agree to the above terms kindly sign this letter signifying your
approval and acceptance and return one fully executed copy to us at your
earliest convenience. This offer is open for acceptance until October
_______________, 1999.
Yours truly,
GOLDEN RIVER INC.
Per: /s/ Bruce Manery
The undersigned hereby agree to the foregoing terms of purchase and sale this
13th day of October, 1999.
/S/ PETER HOLSTEIN
PETER HOLSTEIN
<PAGE>
GOLDEN RIVER RESOURCES INC.
2420 PANDOSY STREET
KELOWNA, BRITISH COLUMBIA
V1Y 1T8 CANADA
November 4, 1999
Peter Holstein
85 Chester Square
London, England
SWIW9H5
(the "Vendor")
RE: PURCHASE BY GOLDEN RIVER RESOURCES INC. ("GOLDEN RIVER") OF ALL
THE ISSUED AND OUTSTANDING SHARES (THE "SHARES") OF TRANSMERIDIAN
EXPLORATION INC., A BRITISH VIRGIN ISLANDS COMPANY ("TRANSMERIDIAN")
CARRYING ON THE BUSINESS OF OIL AND GAS EXPLORATION, DEVELOPMENT AND
OPERATION (THE "BUSINESS")
We are writing to amend our earlier letter agreement with you dated
October 8, 1999 and accepted by you October 13, 1999 (the "Agreement").
The terms and conditions set forth in the Agreement are to remain the
same, except to the extent that they conflict with the following:
1. The closing of the purchase and sale of the Shares (the "Closing") will
take place as soon as practicable after all of the conditions to Closing
have been met.
2. As a condition of Closing, all parties must be satisfied with their due
diligence of Transmeridian and Golden River and their principals; the
Transmeridian Net Asset Value; and formal purchase agreement. For the
purpose of the Agreement, due diligence is intended to encompass an
examination of the feasibility of the acquisition of the Transmeridian
Business by Golden River.
3. As an additional condition of Closing, Transmeridian must provide
historical audited financial statements through the end of the latest
complete fiscal year and unaudited financial statement through the end of
the latest completed fiscal quarter which will meet the requirements of the
United States Securities and Exchange Commission.
<PAGE>
-2-
In the event that the terms and conditions set forth in the Agreement
conflict with the terms set forth above, the terms set forth above shall be
deemed to be the agreement between the parties.
If you agree to the above terms, kindly sign this letter signifying
your approval and acceptance and return one fully executed copy to us at your
earliest convenience.
Yours truly,
GOLDEN RIVER RESOURCES INC.
Per: /s/ Bruce Manery
The undersigned hereby agrees to the foregoing terms this 4th day of November,
1999.
/S/ PETER HOLSTEIN
Peter Holstein
<PAGE>
Exhibit 10.5
Letter of Intent with OREX Gold Mines Corporation
<PAGE>
OREX GOLD MINES CORPORATION
2121 Ponce de Leon Blvd.
Suite 510
Coral Gables, FL 33134
October 22, 1999
The Board of Directors
Golden River Resources, Inc.
1300 East College Way
Mount Vernon, WA 98273
Attn: Bruce Manery
To the Board of Directors:
OREX Gold Mines Corporation's ("OREX") has licensed a novel technology
for the commercial extraction of gold from mines and ore concentrates. Golden
River Resources, Inc. ("GOLDEN") has several gold claims/properties situated in
the State of Durango, Mexico. GOLDEN wishes to utilize OREX's method for
processing gold ores. OREX wishes to collaborate fully with Golden in the
extraction of gold from its claims/properties.
This letter will confirm the mutual present intentions of GOLDEN and
OREX whereby they will:
1. DEFINITIVE AGREEMENT. Promptly following the execution of this
letter, the parties shall use their best efforts to negotiate and
enter into a definitive agreement (the "Definitive Agreement")
with respect to the contemplated Joint Venture Agreement. The
terms of this letter and consummation of the transactions
contemplated hereby shall further be subject to the negotiation,
execution, and delivery of the Definitive Agreement and the
approval thereof by the Boards of Directors of OREX and GOLDEN on
or before January 1, 2000.
2. DUE DILIGENCE. The terms of this letter and the consummation of
transactions contemplated herein shall be subject to the
completion by OREX and GOLDEN, their affiliates and
legal/accounting advisors, of a due diligence review on or before
January 1, 2000 of that information about OREX, its licensed
technology, and GOLDEN, its claims/properties, that each party
deems appropriate. Such due diligence investigation shall be
completed no later than 5 days before execution of the Definitive
Agreement.
<PAGE>
3. BEST EFFORTS CLOSING. The parties hereto shall use their best
efforts to complete the Definitive Agreement no later than
January 1, 2000.
4. NON-BINDING LETTER. Except for the provisions of the "Best
Efforts Closing" paragraph of this letter, which constitutes a
binding obligation, this letter is intended solely as a statement
of the present intentions of the parties and is not to be
considered a complete integration of any agreements or to create
any binding obligations.
If the foregoing correctly sets forth the understanding of GOLDEN,
please sign, date and return to the undersigned the enclosed duplicate of this
letter.
Very truly yours,
OREX Gold Mines Corporation
By: /S/ WARREN HEMEDINGER
Warren Hemedinger, President
Agreed and accepted this 25th day of October, 1999.
Golden River Resources, Inc.
By: /S/ BRUCE MANERY
Title: VP INVESTOR RELATIONS
<PAGE>
Exhibit 21
Subsidiaries of the Registrant
<PAGE>
SUBSIDIARIES OF GOLDEN RIVER RESOURCES INC.
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
Rob Roy Resources Inc. British Columbia
La Mexicana Resources S.A. de C.V. Mexico
<PAGE>
Exhibit 27
Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF LOSS, CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME, CONSOLIDATED
STATEMENT OF CASH FLOWS, AND THE NOTES THERETO, WHICH MAY BE FOUND ON PAGES F-1
THROUGH F-14 OF THE COMPANY'S FORM 10-SB, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR OTHER
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1998
<PERIOD-START> JUL-01-1998 JUN-13-1997
<PERIOD-END> JUN-30-1999 JUN-30-1998
<EXCHANGE-RATE> 1 1
<CASH> 57,149 12,798
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 63,369 12,798
<PP&E> 10,699 0
<DEPRECIATION> 1,271 0
<TOTAL-ASSETS> 391,193 258,820
<CURRENT-LIABILITIES> 158,759 41,781
<BONDS> 0 0
0 0
0 0
<COMMON> 1,643,489 463,380
<OTHER-SE> (1,411,055) (246,341)
<TOTAL-LIABILITY-AND-EQUITY> 391,193 258,820
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,160,315 254,769
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (1,160,315) (254,769)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,160,315) (254,769)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,160,315) (254,769)
<EPS-BASIC> (0.15) (0.13)
<EPS-DILUTED> (0.15) (0.13)
</TABLE>
