UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED 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
CAN-EX MINERALS CORPORATION
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(Name of Small Business Issuer in its Charter)
Nevada 84-1485618
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(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
6395 Blazing Star Drive - Colorado Springs, Colorado 80922
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (719) 380-9862
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Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
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(Title of Class)
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PART I
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) Business Development
Can-Ex Minerals Corporation (the "Company" or the "Registrant" ) is a
Nevada corporation which was originally incorporated on December 15, 1997. The
Company was authorized to issue an aggregate of 50,000,000 shares of capital
stock with a par value of $0.001 per share.
As of June 30, 1999, 11,422,000 shares of the Company's authorized
shares of common stock were issued and outstanding.
To management's knowledge, the Company has not been subject to
bankruptcy, receivership or any similar proceedings.
The Company maintains offices at 6395 Blazing Star Drive, Colorado
Springs, Colorado 80922.
(b) Business of the Issuer
As defined in Statements of Financial Accounting Standards, the Company
is still in the development stage. The Company was established to engage in the
acquisition, exploration and development of natural resource properties. The
company is still in the " exploration" stage with respect to its mineral
properties. The company has no revenue to date from the exploration of its
mineral properties. The company sampling and exploration efforts to date have
not disclosed a commercially viable ore body. The Company's main area of
interest is in the Republic of Chile where it has staked certain mineral claims
more fully described below.
Acquisition of Minerals Claims. In a Purchase Agreement dated May 26,
1998 between Garth Johnson and the Company, it was agreed that the Company would
acquire from Mr. Johnson 600 hectares of mineral claims on the salt flats known
as Piedra Parada Salar and more specifically described as the Constelacion Duo
and Constelacion Cuatro for the following consideration:
a. The Company will pay Johnson the cost of staking and
recording of the claims the sum of $85,000 by no later than June 30, 1998;
b. The Company has granted Johnson a 3% net smelter royalty
which the Company can buy from Johnson for the sum of $2,000,000 at any time
prior to or during production of the claims and all royalty payments shall apply
to reduce the $2,000,000 purchase price of the net smelter royalty; and
c. The Company agreed to issue to Johnson 800,000 shares of
the Company's capital stock. Of these shares 650,000 will be subject to a
pooling agreement.
In consideration for the above, Johnson agreed to:
i. Commence and complete staking, site engineering, the
Mensura, being the equivalent to a legal survey, and filing the inscription of
Mensura in the Conservator of Mines for Chile and will negotiate on behalf of
the Company, the acquisition or lease of the 2 other claim blocks in the
Constelacion claim group ( Constelacion 1 and 3) These claims are currently held
by a third party known personally to Johnson. This would give the Company a
total target area of approximately 1200 hectares. No actions have been requested
or taken towards the acquisition of the additional claim groups to date. The
company wishes to further explore its current property before acquiring any more
properties.
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ii. Transfer title to the claims within 60 days of receiving
the final cash payment towards the staking and recording of the claims;
iii. Assist the Company and its engineers by providing
assistance and any and all geological and engineering documents, including, but
not limited to maps, reports, assays, studies available on the claims or their
surrounding area; and
iv. Immediately enter into a Pooling Agreement with the
Company regarding 650,000 shares issued to him out of the 800,000 shares noted
above.
The company has completed all payments to Mr. Johnson as per the
agreement. Mr. Johnson has filed the application for Pedimento on the claim
groups and subsequently filed the registration statements in the Comuna Office.
The claims have been published in the Mining paper as well. The final stage in
the recording process, taking the property to Mensura, involves a legal survey,
placing stone monuments, and filing for exploitation permits. The exploitation
permits are documents which define minerals to be mined, the process that is to
be used, and also contain the "Environmental Impact Statements". As the Company
is still in the "exploration" stage, we have not defined a viable ore body,
therefore more sampling programs will be carried out. Future sampling programs
will depend on the availability of financing. We can and will maintain our
claims in good standing as long as it takes to gather further data needed for
the Mensura process.
Description of the Mineral Claims, the Republic of Chile and Geological
Structures.
The mineral claims cover a portion of an enclosed evaporated body or
salt flat known as the Piedra Parada Salar, and total approximately 3,500 acres
in the Republic of Chile.
Chile is located on the west coast of southern South America, bordered
by the Pacific Ocean on the west, Argentina and Bolivia on the east and Peru on
the north. Chile covers a geographical area slightly larger than the State of
Texas. The average width from east to west is only 110 miles, but the
north-south dimension of 2,650 miles is equivalent to the distance between
Washington, DC and the US West Coast.
The Company's mineral claims are located in Region 3 of Chile which is
largely a mining region. The actual claims held in trust for the Company by its
President, Grant Dion, are part of the Constelacion Group, being the
Constelacion Dos and Constelacion Cuatro and form the majority of the assets of
the Company. The claims consist of two contiguous mineral properties covering an
area of 600 hectares. The Piedra Parada Salar, where the Company's property is
located, is centered in a drainage basin covering about 200 miles of land area,
and receives water inflows in the form of local runoff and from thermal springs
which enter the Salar at the margins. This area was anciently the lowest area of
<PAGE>
the drainage basin and thus received the influx of mineral and erosional
products. Due to local and regional faulting, a process whereby the Pacific
tectonic plate is submerged under the South American plate causing the Andes
mountains to rise and continually grow, some of the area has been uplifted some
30 to 35 feet above other portions of the Salar. The uplifting has exposed a
series of horizontal beds which contain a number of minerals. Portions of
Constelacion Dos contain these uplifted areas. These portions are more exposed
to the prevailing northwesterly winds, which have subsequently carved the
uplifted horizontal beds into low scarps and terraces reminiscent of dunelike
formations.
The mineralized areas consist of layered beds composed largely of
gypsum interbedded with silt-stone, sandstone and iron minerals.
The Piedra Parada Salar is located in an enclosed basin area covering
an area of about 500 square kilometers (about 200 square miles). In the Piedra
Parada Salar, the rate of water evaporation is greater than the rate of
replenishment, due in part to the high degree of solar radiation at these high
altitudes and the general lack of cloud cover for most of the year. This causes
the water-borne minerals and salts to deposit out of solution as the water
evaporates. The Piedra Parada Salar has a large surface area compared to the
amount of water inflow, therefore the Salar is covered with no more than maybe a
foot or so of water, even during spring runoff. Another factor is the constant
afternoon windy condition, where winds often average 20 to 30 miles per hour.
Location and Access.
The Constelacion Dos & Cuatro mineral claims are located in
NorthCentral Chile along the border with Argentina in a remote area of Region 3.
The claims lie at a mean elevation of 13,000 feet, surrounded by hills and peaks
ranging from 1,000 to 5,000 feet above the level of the mineral properties. The
properties are located approximately 120 kilometers east of the city of El
Salvador and are accessible by following the road from El Salvador to La Ola for
a distance of about 70 kilometers, then turning east for the remainder of the
distance, most of which is traversed along a combination of unimproved dirt road
and trail.
Mineralization on or near the Constelacion Dos and Constelacion Cuatro.
The company engaged the services of Krueckl & Associates ("K&A") to
carry out a preliminary property evaluation on the mineral properties called the
Con 2 & 4 located in Chile's Region III . Evidence from sampling carried out by
K&A, Ulriksen, Gardner, Wilkins, Shattwell suggests that the mineral resource is
real and therefore requires further investigations. Auger drill samples were
taken at the western and southern margin of the Salar. The assay results for
these samples show that the mineralization occurs in areas other than the pillar
region of the basin. In addition, considering the extent of alteration resulting
from the geothermal system in the area, it is very likely the Salar basin has
precious and other metals throughout. At this time however, we do not have
information on the intensity and extent of this mineralization. Channel samples
were cut from sections of the exposed pillars. Economic minerals are primarily
gold and silver. Possible by-products include titanium, strontium, and a wide
suite of salt bearing minerals. Precious metals are associated with all of the
different mineral and detrital formations in the Salar, which currently have
<PAGE>
been sampled to a maximum depth of some 25 meters. Certain formations, such as
those associated with iron mineralization carry more precious metals than the
other formations. Recoveries of the precious metals in the samples suggest an
average value of 3 grams gold per metric ton, for portions of the Salar having
the potential for ore reserves.
Should Con 2 & 4 be considered for production potential, a detailed
drilling program will expose some 30 to 50 million metric tons of mineral
resource, assuming an average depth to the bottom of the Salar at 25 meters. At
this point however, the ore to waste stripping ratio for this mineral resource
is not known. Current information suggests a stripping ratio of about 1:1.
The next phase of work (called Phase 1) will involve a two part
drilling program. The first part being exploration drilling. In this part drill
holes should be spaced at 500 meters. The second part will involve more detailed
drilling at a space of 200 meters. This effort would provide sufficient
mineralogical information on the mining potential of this resource so that a
preliminary feasibility study can be undertaken.
(1) Principal Products
As stated above, the Company will be involved in the exploration and
development of its claims for the precious metals contained therein. None of the
Company's properties contain a known body of commercial ore and, therefore, any
program conducted on such properties would be an exploratory search of ore.
There is no certainty that the exploration of the properties will result in
discoveries of commercially mineable quantities of ore. Most exploration
projects do not result in the discovery of commercially mineable deposits of
ore.
(2) Status of Publicly Announced New Products or Services
The Company has not made any public announcements regarding its
products or services.
(3) Competition
The Company faces well-established and well-funded competition. The
exploration and development of mining properties is highly competitive. There
are many well-established, well-funded successful corporations with financial
resources greatly in excess of that available to the Company. The Company's
corporate infrastructure is as lean as possible. The Company does not support an
office full of engineers and secretaries. As a result, overhead is very low.
Because of this lower overhead more of the money raised can be spent on the
mineral properties for exploration. Moreover, the potential mineralized areas in
our claim blocks seem to support a low cost production plan of operation.
Further details on production methods will be established after Phase 1 drill
samples have been taken and analyzed. Expensive diamond drilling and blasting
techniques associated with hard rock mining will not be employed. It is
believed, based on the K&A report, that basic low cost mining equipment, such as
a D6 CAT, excavator, a crushing circuit, will be the primary means of material
extraction. The Company will contract independent laborers and engineers to
perform duties as needed.
<PAGE>
The exploration and development field is highly competitive. The
success or failure of the Company will be largely dependent on the Company's
ability to attract key people from the mining industry.
(4) Risks Associated With Mining Exploration and Development
Mining operations generally involve a high degree of risk. Hazards such
as unusual or unexpected formations and other conditions are involved. The
Company may become subject to liability for pollution, cave-ins or hazards
against which it cannot ensure or which it may not elect to ensure. The payment
of such liabilities may have a material adverse effect on the Company's
financial position.
Resource exploration and development is a speculative business, marked
by a number of significant risks including, among other things, unprofitable
effort resulting not only from the failure to discover mineral deposits but from
finding mineral deposits which, though present, are insufficient in size or
grade to return a profit from production. The marketability of any minerals
acquired or discovered may be affected by numerous factors which are beyond its
control and which cannot be accurately predicted, such as market fluctuations,
the proximity and capacity of milling facilities, mineral markets and processing
equipment, and such other factors as government regulations, including
regulations relating to royalties, allowable production, importing and exporting
of minerals and environmental protection. Compliance with these regulations may
have a material adverse effect on the Company's financial resources. While the
Company has obtained the usual industry standard title reports, and performed
subsequent filing and registration of its claims, the claims could become part
of a dispute. At which time, the Company may have to defend its claims group
adding expenses, and as a result possibly facing a reduction of their interest
or losing its claim altogether.
(5) Title to Properties
While the Company has obtained the usual industry standard title
reports with respect to its properties, this should not be construed as a
guarantee of title. The properties may be subject to prior unregistered
agreements and title may be affected by undetected defects. Certain of the
claims may be under dispute and resolutions of a dispute may result in the loss
of some or all of such claims or a reduction in the Company's interest therein.
None of the Company's properties have been surveyed and, accordingly,
the precise location of the boundaries of the claims and ownership of mineral
rights on specific tracts of land comprising the claims may be in doubt.
(6) Governmental Approval, Effect of Governmental Regulation and Costs
and Effects of Compliance with Environmental Laws
Prior to commencing mining operations on any of its properties, the
Company must meet certain stringent environmental requirements.
The Republic of Chile maintains a regulatory structure to address
environmental issues, including mining operations, tailings, water and airborne
<PAGE>
emissions. The Chilean government enacted an environmental framework law in
1994. All regulations pertinent to the environmental framework law will be
adopted and strictly adhered to by the Company. Regulations have not been
published regarding environmental impact statements. The costs associated with
compliance of these laws cannot be accurately assessed until the complete
regulation program has been disseminated and implemented. However, based on
current available information, as it relates to the applicable regulations, the
Company anticipates the application regulations will not materially affect
operations in Chile.
During the process of "Mensura" (a legal survey) and formal filing of
application to extract the minerals, the Company must disclose their intended
method of mining and processes involved. The includes an "Environmental Impact
Statement". At this time all environmental issues such as wastes and reclamation
efforts are addressed. If the plan covers all issues sufficiently, the Company
will be granted "Production Permits". The costs associated with these
"Environmental Impact Statements" may have an adverse material effect on the
Company's financial Statements, and it may prove to be difficult to obtain the
"Production permits".
(7) Employees
The officers and directors who are identified below are the significant
employees of the Company. The Company has no other employees.
(c) Reports to Security Holders
Prior to filing of its Form 10-SB in June of 1999, the Company had not
been required to deliver annual reports. To the extent that the Company is
required to deliver annual reports to security holders through its status as a
reporting company, the Company shall deliver annual reports. Also, to the extent
the Company is required to deliver annual reports by the rules or regulations of
any exchange upon which the Company's shares are traded, the Company shall
deliver annual reports. If the Company is not required to deliver annual
reports, the Company will not go the expense of producing and delivering such
reports. If the Company is required to deliver annual reports, they will contain
audited financial statements as required.
Prior to the filing of its Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Management anticipates that
Forms 3, 4, 5, 10K-SB, 10Q-SB, 8-K and Schedules 13D along with appropriate
proxy materials will have to be filed as they come due. If the Company issues
additional shares, the Company may file additional registration statements for
those shares.
The public may read and copy any materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).
<PAGE>
(d) Year 2000 Disclosure
The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at any
of the Company's facilities. All of the Company's computer systems are new and
have been year 2000 compliant from their acquisition. The Company keeps current
with all updates and revisions with all software the Company currently use. It
is anticipated that the software updates reflect required revisions to
accommodate transactions in the year 2000 and thereafter. Though it is not
anticipated that the Company will have a problem at the turn of the century, the
Company intends to coordinate the resolution of any year 2000 problems with the
vendors of the software the Company utilizes.
The Company presently uses Pentium Class computers with the latest
software, i.e., Window 98, Office 97. These products are Y2K compliant. The
Company does not use any industry specific software, but if the Company does
acquire such in the future, management will make certain that all software is
Y2K compliant.
The Company's worst case scenario should all its computer systems fail
as a result of the Y2K issue would be the temporary loss of the Company's basic
office functions such as bookkeeping and word processing. The Company has backed
up, and will continue to back up, its bookkeeping and word processing computer
files so they may be restored in the event of a total loss.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
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The Company has not received revenues from operation during the
two-year period immediately preceding the filing of this Amended Form 10-SB.
Plan of Operation
To date the Company has invested $50,000 in the sampling program. This
includes all costs associated with the report authored by Krueckl & Associates
Mining Consultants (K&A). All samples have been analyzed and corresponding data
is contained in the report. During the next twelve months, the Company intends
to continue its exploration on the Consellation Dos and Cuatro claims located in
the Piedra Parada Salar. Future sampling programs will follow the advice
contained in the K&A report. Starting with Phase 1, a two part drill program
will be instituted. Primary drilling will have a spacing of 500 meters. This
should define the minerals located in the claim block to a depth of 25 meters.
Secondary drilling will be done at a spacing interval of 200 meters. This effort
would provide sufficient mineralogical data on the mining potential of this
resource. Phase 1 should also include collecting all relevant other information
on the environment and mining infrastructure of the Piedra Parada basin required
for the Preliminary Mine Feasibility Study.
<PAGE>
The Company anticipates costs for all operations, if undertaken as in
the report and extracted above, in the next 12 months to be approximately
$720,000.
The Company has limited cash available for its operations during the
next twelve months and no sources of revenue to meet its cash flow needs.
Operations will either be funded through the private placement of the Company's
equity securities or through long-term financing arrangements management is
attempting to obtain. The Company will seek to locate an underwriter, and if
found a public offering of common stock will be considered. The directors of the
Company may elect to advance further funds. Alternatively, the Company will seek
to raise funds through a private offering of securities to an institutional
buyer or through a registered broker dealer. The Company does not currently have
any financing arranged. There can be no assurance that financing will be
arranged. Without such financing the Company may not be able to put Phase 1
planning into effect. The Company may in the absence of adequate funding seek to
find a joint venture partner. To date, no potential partner has been located or
identified, and no assurance can be made that one can be located on terms
acceptable to the Company.
The only present source of funds available to the Company is through
the sale of equity shares, advances from the directors and officers or obtaining
funds through bank financing. Even if the results of exploration are
encouraging, the Company may not have sufficient funds to conduct further
exploration that may be necessary to determine whether or not a commercially
mineable deposit exists on any of its properties. While additional working
capital may be generated through the operation, development, sale or possible
joint venturing of properties, there is no assurance that any such funds will be
available.
The Company's future success is based upon a business plan for the next
twelve months which involves a high degree of risk and as the Company's
financial statements indicate, management recognizes that if it is unable to
raise additional capital that the Company cannot operate and will not be able to
complete its plan of operations for the next twelve months. The Company's
auditor issued a "going concern" opinion as reflected in the enclosed Financial
Statements below. This means the Company must find a way to obtain financing or
the plan of operations can not be carried out. The Company must overcome the
risk of inadequate funding. Without additional financing, further exploration on
the property will cease.
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ITEM 3. DESCRIPTION OF PROPERTY
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(a) Principal Plants and Property and Description of Real Estate and
Operating Data.
As described in Item 1. above, in May of 1998, the Company entered into
a Purchase Agreement with Garth Johnson under the terms of which the Company
acquired from Mr. Johnson 600 hectares of mineral claims on the sale flats known
as Piedra Parada Salar and more specifically described as the Constelacion Duo
and Constelacion Cuatro. These mineral claims cover approximately 1,500 acres in
the Republic of Chile.
<PAGE>
The actual claims are held in trust for the Company by its President,
Grant Dion, and are the majority of the assets of the Company.
(b) Investment Policies
The Company's plan of operations is focused on the continued
development and exploration of its properties described in Item 1.
Accordingly, the Company has no particular policy regarding each of the
following types of investments:
1. Investments in real estate or interest in real estate;
2. Investments in real estate mortgages; or
3. Securities of or interests in persons primarily engaged in
real estate activities.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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(a) Security Ownership of Certain beneficial Owners:
The following information sets forth certain information as of March
31, 1999 about each person who is known to the Company to be the beneficial
owner of more than five percent (5%) of the Company's Common Stock:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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Common RFC International Corp1 4,000,000 35%
Attn: Grant Dion
6395 Blazing Star Drive
Colorado Springs, CO 80922
Common Garth Johnson 800,000 7%
7645 Cambie Street
Vancouver, B.C. CANADA V6P 3H8
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1These shares are held in the name of RFC International Corp., a
company owned and controlled by Grant Dion, President of the Company. The
4,000,000 shares have been deemed to be Rule 144 stock and are, therefore,
restricted from trading and any such trading will be in conformity with the
Exchange Act.
<PAGE>
(b) Security Ownership of Management:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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Common Grant N. Dion 4,000,000(2) 35%
6395 Blazing Star Drive
Colorado Springs, CO 80922
Common Terry W. Mueller 515,000(3) 4.5%
672 English Bluff Road
Delta, B.C. CANADA V4M 3N4
All Directors and 4,515,000 39.5%
Officers as a Group
(c) Changes in Control:
There is no arrangement which may result in a change in control.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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(a) Directors and Executive Officers
As of June 30, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
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2 These shares are held in the name of RFC International Corp., a
company owned and controlled by Grant Dion, President of the Company.
<PAGE>
3 Of this amount, 5,000 shares are owned by Margaret Mueller, Terry
Mueller's wife; 5,000 shares are owned by Karen Mueller, Terry Mueller's
daughter; 2,500 shares are owned by Jason Mueller, Terry Mueller's son; and
2,500 shares are owned by Davie Mueller, Terry Mueller's son.
Name Age Position Officer/Director*
- ---- --- -------- -----------------
Grant N. Dion 35 President 12-15-97 to present
and Director
William Larry Owen 79 Secretary and 12-15-97 to present
Director
Terry W. Mueller 57 Director 12-15-97 to present
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
(b) Business Experience:
Grant N. Dion, age 35, is the President and a Director of Can-Ex
Minerals Corporation. Mr. Dion received a Bachelor of Science and Marketing
degree from the University of Denver. From August of 1998 to January 1999, Mr.
Dion has been the exclusive marketing agent for all custom homes built by Willis
Homes, Inc. From 1992 to the present, he has been the Marketing Director for
NHBR/Information Advantage. From September of 1991 to May of 1992 salesman for
Prudential Insurance. From December of 1990 to September of 1991, he worked for
Security Mutual Life where he obtained extensive knowledge of pension plans,
variable benefits packages, insurance and tax laws as they related to the IRS.
From January of 1990 to November of 1990, he performed health benefits and
retirement pension plan analysis and sales. While attending college, Mr. Dion
spent his summers staking mineral claims, taking soil samples and doing general
prospecting work in a wide range of geological areas from the Northwest
Territories in Canada, placer operations in the B.C. Interior, Lode claims in
Oregon and operations in the Mojave Desert. He played two years for the Edmonton
Oilers, a professional hockey team.
William Larry Owen, age 79, is the Secretary and a Director of Can-Ex
Minerals Corporation. Mr. Owen graduated with a B.A. degree from George
Pepperdine College in 1947 and received a M.A. degree in Education from the
University of Southern California and completed 95% of his Doctorate in
Education. He edited the Shemya Daily News through out his Army career of four
years. From 1948 to 1950 taught in the Norwalk City School system. In 1950 and
1951 was VicePrincipal in the Norwalk City School system. From 1951 to 1959 was
Principal in the Norwalk-La Marida City School system. In 1967 he discovered one
of British Columbia's largest Jade deposits. In 1981 and 1982 he was President
of Great Central ;Mines. In 1982 and 1983 was President of International Phasor
Telecom. From 1986 to 1988 was a principal of Rockford Technologies Corp. From
1989 to the present, he has been President of Rhombic Corporation.
<PAGE>
Terry W. Mueller, age 57, is a Director of Can-Ex Minerals Corporation.
Mr. Mueller's education includes attendance at Vancouver Vocation Institute in
Electronics, Chicago Vocational Institute of Vancouver in Drafting and British
Columbia Institute of Technology in Electro-Mechanics. From 1969 through 1977
he was a Delta Cable Television Co. Ltd. Technician. From 1977 to the present,
hehas been President of Inglewood Construction Limited, general contractor, high
end residential construction.
(c) Directors of Other Reporting Companies:
None of the directors are directors of other reporting companies.
(d) Employees:
The officers and directors who are identified above are the significant
employees of the Company.
(e) Family Relationships:
There are no family relationships between the officers and/or directors
of the Company.
(f) Involvement in Certain Legal Proceedings:
None of the officers and directors of the Company have been involved in
the past five (5) years in any of the following:
(1) Bankruptcy proceedings;
(2) Subject to criminal proceedings or convicted of a criminal
act;
(3) Subject to any order, judgment or decree entered by any Court
for violating any laws relating to business, securities or
banking activities; or
(4) Subject to any order for violation of federal or state
securities laws or commodities laws.
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ITEM 6. EXECUTIVE COMPENSATION
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The following table sets forth information about compensation paid or
accrued by the Company during the years ended December 31, 1998 and 1997 to the
Company's officers and directors. None of the Executive Officers of the Company
earned more than $100,000 during the years ended December 31, 1998 and 1997.
<PAGE>
Summary Compensation Table
Long Term Compensation
------------------------------------
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Annual Compensation Awards
Payouts
--------------------- ------------------ -----
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(e) (g)
Other (f) Securities
(i)
(a) Annual Restricted Under- (h)
Other
Name and (c) (d) Compen- Stock Lying LTIP
Compen-
Principal (b) Salary Bonus sation Awards Options/
Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($)
($)
- -------- ------ ------ ----- ------ ---------- ---------- -----
Grant N. Dion
President 1998 $ None $ None $ None $ None None
None None
and Director 1997 $ None $ None $ None $ None None
None None
William Larry Owen
Secretary and 1998 $ None $ None $ None $ None None
None None
a Director 1997 $ None $ None $ None $ none None
None None
Terry W. Mueller
Director 1998 $ None $ None $ None $ None None
None None
1997 $ None $ None $ None $ none None
None None
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's capital stock, except as
follows:
<PAGE>
On or about June 29, 1998, the Company issued 500,000 shares of its
capital stock to Terry Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended. Such shares also are subject to a Pooling
Agreement with the Company which provides that:
i. One year from the date of the Agreement, ten percent of the
Shares will be issued to the Shareholders and be deemed to be
free trading unless the Shares are restricted by the
Regulatory Bodies having jurisdiction over the affairs of the
Company. In this regard, the Company deems the shares to be
restricted; and
ii. Each and every month, starting from the thirteenth month from
the date of signing of the Agreement, five percent of the
remaining balance of the Shares, after the release of ten
percent of the Shares noted (I.) Above have been made, will be
released to the Shareholder until such time as all the Shares
have been released.
On May 26, 1998, the Company entered into a Purchase Agreement with
Garth Johnson. Pursuant to that agreement, the Company acquired from Mr. Johnson
600 hectares of mineral claims on the salt flats known as Piedra Parada Salar
and more specifically described as the Constelacion Duo and Constelacion Cuatro
for the following consideration:
a. The Company will pay Johnson the cost of staking and
recording of the claims the sum of $85,000 by no later than June 30, 1998;
b. The Company has granted Johnson a 3% net smelter royalty
which the Company can buy from Johnson for the sum of $2,000,000 at any time
prior to or during production of the claims and all royalty payments shall apply
to reduce the $2,000,000 purchase price of the net smelter royalty; and
c. The Company agreed to issue to Johnson 800,000 shares of
the Company's capital stock, and valued the issued shares at$500,000. This
valuation was the result of negotiations between Mr. Johnson and the Company.
All of the 800,000 shares issued to Mr. Johnson will be restricted and subject
to Rule 144. 650,000 of these shares are subject to a Pooling Agreement.
In consideration for the above, Johnson agreed to:
i. Commence and complete staking, site engineering, the
Mensura, being the equivalent to a legal survey, and filing the inscription of
Mensura in the Conservator of Mines for Chile and will negotiate on behalf of
the Company the balance of 50% of the Constelacion Group held by a third party
known personally to Johnson which will give the Company 98% of the Constelacion
claim block (Con 1-4) for an area of approximately 1200 hectares;
ii. Transfer title to the claims within 60 days of receiving
the final cash payment towards the staking and recording of the claims;
<PAGE>
iii. Assist the Company and its engineers by providing
assistance and any and all geological and engineering documents, including, but
not limited to maps, reports, assays, studies available on the claims or their
surrounding area; and
iv. Immediately enter into a Pooling Agreement with the
Company regarding the 650,000 shares issued to him out of the 800,000 shares
noted above.
- --------------------------------------------------------------------------------
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- --------------------------------------------------------------------------------
The Company is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. On June 30,
1999 there were 11,422,000 shares of stock issued and outstanding.
Capital Stock
Each of the holders of record of stock is entitled to one (1) vote per
share thereof at all shareholder meetings for all purposes, including the
election of the Company's directors and all other matters submitted to such
holders for a vote of stockholders; to share ratably in all dividends, when, as,
and if declared by the Company's Board of Directors from funds legally available
therefor; and to share ratably in all assets available for distribution to
holders of record of capital stock upon liquidation or dissolution after the
payment of all debts and other liabilities. Shares of common stock are not
redeemable and the holders have no conversion rights, pre-emptive or other
rights to subscribe to or purchase additional shares in the event of a
subsequent offering. The common stock does not carry cumulative voting rights.
All issued and outstanding shares of common stock are fully-paid and
non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will depend
upon, among other considerations, the Company's need for working capital and its
financial condition at the time.
The Company may, if approved at the general meeting of shareholders,
resolve to authorize the Board of Directors to declare and pay dividends to the
Company's shareholders in the form of bonus shares. The shareholders would
receive bonus shares in lieu of cash dividends, if any, declared and paid by the
Company.
"Anti-Takeover" Provisions. Although the Board of Directors is not
presently aware of any takeover attempts, the Company's Certificate of
<PAGE>
Incorporation and By-laws contain certain provisions which may be deemed to be
"anti-takeover" in nature in that such provisions may deter, discourage, or make
more difficult the assumption of control of the Company by another corporation
or person through a tender offer, merger, proxy contest or similar transaction
or series of transactions. These provisions were adopted unanimously by the
Board of Directors and approved by the stockholders of the Company.
Authorized but Unissued Shares. The Company has authorized 50,000,000
shares of common stock. These shares were authorized for the purpose of
providing the Board of Directors of the Company with as much flexibility as
possible to issue additional shares for proper corporate purposes including
equity financing, acquisitions, mergers, stock dividends, stock splits, stock
options and other purposes. The Company has no agreements, commitments or plans
at this time for the sale or use of its shares of common stock except as
described herein. Through June 30, 1999, the Company had issued 11,422,000
shares of stock.
No Cumulative Voting. The Company's Certificate of Incorporation and
By-laws do not contain any provisions for cumulative voting. Cumulative voting
entitles stockholders to as many votes as equal the number of shares owned by
such holder multiplied by the number of directors to be elected. A stockholder
may cast all these votes for one candidate or distribute them among any two or
more candidates. Thus, cumulative voting for the election of directors allows a
stockholder or group of stockholders who hold less than fifty percent (50%) of
the outstanding shares voting to elect one or more members of a Board of
Directors. Without cumulative voting for the election of directors, the vote of
holders of a plurality of the shares voting is required to elect any member of a
Board of Directors and would be sufficient to elect all the members of the Board
of Directors being elected.
General Effect of Anti-Takeover Provisions. The overall effect of these
provisions may be to deter a future tender offer or other takeover attempt that
some stockholders might view to be in their best interest as the offer might
include a premium over the market price of the Company's capital stock at that
time. In addition, these provisions may have the effect of assisting the
Company's current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of the Company's business.
Voting Rights. Except as set forth below, every holder of shares
present in person or by proxy or by representative, attorney or proxy appointed
under the Company's By-laws at a meeting of shareholders has one vote on a vote
taken by a show of hands, and on a poll every holder of shares who is present in
person or by proxy or representative has one vote for every fully paid share
held by him, registered in each shareholder's name on the Company's stockholder
list. Unless a poll is demanded, every question submitted to a meeting of
holders of shares shall be decided by a show of hands of the shareholders
present and entitled to vote. In the case of an equality of votes, in either a
poll or a show of hands, the chairman shall have a second or casting vote.
Notwithstanding the above, restrictions are imposed on voting rights in the
following circumstances: (a) if two or more persons are registered as the holder
<PAGE>
of the share, the only one of the holders entitled to vote is the senior who
tenders a vote, seniority being determined by the order of names in the
Company's list of stockholders; (b)if the terms upon which the shares were
issued restrict the voting rights attaching to that share, the holder is
entitled to vote only in accordance with the terms upon which that shares were
issued (neither any shares currently outstanding nor the common shares have
restricted voting rights).
Article II Section 5 of the Company's By-laws allows that the holders
of a majority of the issued and outstanding shares of the common stock of the
Company entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. All resolutions (e.g. resolutions for the election of directors,
the approval of increase in authorized capital, approval of financial
statements, amending the Articles of Incorporation and By-laws; authorizing
liquidation or a going private transaction) require the affirmative vote of the
holders of a majority of the issued and outstanding shares of the common stock
of the Company entitled to vote.
Not less than ten days notice of any general shareholders meeting,
specifying the place, day and hour of the meeting, specifying the general nature
of the business, shall be given to the shareholders.
Article III Section 4 of the Company's By-laws allows that any director
or the entire Board of Directors may be removed, at any time, with or without
cause, by the holders of a majority of the shares then entitled to vote with or
without a stockholders meeting.
Certain Voting Requirements. The affirmative vote of the holders of a
majority of the shares present at a shareholders meeting and entitled to vote
generally constitutes shareholder approval or authorization of matters for which
such approval or authorization is required. A sale or transfer of substantially
all of the Company's assets, liquidation, merger, consolidation, reorganization
or similar extraordinary corporate action generally requires the affirmative
vote of a majority of the shares outstanding and entitled to vote thereon.
Restricted Shares. Restricted shares may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including the requirements of Rule 144.
Reports to Shareholders. The Company intends to furnish its
shareholders with annual reports containing financial statements for each fiscal
year containing unaudited summary financial information and such other periodic
reports as it may deem appropriate or as required by law.
<PAGE>
PART II
- --------------------------------------------------------------------------------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
Market Information:
The Company's common stock currently is not trading on any exchange.
Management anticipates that the Company's shares will be qualified on the system
of the National Association of Securities Dealers, Inc. ("NASD")known as the
Bulletin Board.
There has been no market for the Company's stock in the last two years.
Accordingly, the Company has no range of high and low bid prices for the
Company's common stock to report.
There is no public market for the shares of the Company and there can
be no assurance that an active public market for the shares will develop or be
sustained. In addition, the shares of the Company are subject to various
governmental and regulatory body rules which affect the liquidity of the shares.
Holders:
There were approximately 45 holders of record of the Company's common
stock as of June 30, 1999
Dividends:
The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
- --------------------------------------------------------------------------------
ITEM 2. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings that will have a materially adverse effect upon the
Company's financial condition or operation.
- --------------------------------------------------------------------------------
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountants are Andersen, Andersen & Strong, L.C.,
Certified Public Accountants, 941 East 3300 South, Suite 202, Salt Lake City,
Utah 84106.
<PAGE>
- --------------------------------------------------------------------------------
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- --------------------------------------------------------------------------------
On or about June 23, 1998, the Company issued 6,000,000 shares of its
capital stock in exchange for a total of $6,000 in cash. Such shares were issued
pursuant to the exemption from registration under Section 4(2)of the Securities
Act of 1933, as amended. Such shares were issued to the following entities in
the following amounts:
Registered Owner No. Shares
---------------- ----------
Douglas Inc. 1,000,000
Corporate House 1,000,000
Peregrine Corp. 1,000,000
Scovest Financial 1,000,000
Bond Mercantile Limited 1,000,000
Commodore Management 1,000,000
On or about June 29, 1998, the Company issued 4,000,000 shares of its
capital stock to RFC International Corp. in exchange for $4,000 in cash. Such
shares were issued pursuant to the exemption from registration under Section
4(2)of the Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 500,000 shares of its
capital stock to Terry Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2)of the
Securities Act of 1933, as amended. Such shares also are subject to a Pooling
Agreement with the Company which provides that:
i. One year from the date of the Agreement, ten percent of the
Shares will be issued to the Shareholders and be deemed to be
free trading unless the Shares are restricted by the
Regulatory Bodies having jurisdiction over the affairs of the
Company; and
ii. Each and every month, starting from the thirteenth month from
the date of signing of the Agreement, five percent of the
remaining balance of the Shares, after the release of ten
percent of the Shares noted (I.) Above have been made, will be
released to the Shareholder until such time as all the Shares
have been released.
<PAGE>
On or about June 29, 1998, the Company issued 800,000 shares of its
capital stock to Garth Johnson in connection with the agreement between Johnson
and the Company dated May 26, 1998 and described in Item 7 above. Such shares
were issued pursuant to the exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 5,000 shares of its
capital stock to Karen Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 5,000 shares of its
capital stock to Margaret Mueller in exchange for $500 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to Jason Mueller in exchange for $250 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2)of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to David Mueller in exchange for $250 in cash. Such shares were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to Lucy Owen in exchange for $250 in cash. Such shares were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.
On or about June 29, 1998, the Company issued 2,500 shares of its
capital stock to Mark Owen in exchange for $250 in cash. Such shares were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.
On or about June 29, 1998, the Company issued the following listed
shares to the individuals listed for the consideration of $0.10 per share. These
shares were issued in accordance with the exemption from registration provided
by Rule 504 of Regulation D of the Securities Act of 1933, as amended and an
appropriate Form D was filed in connection with the issuance of these shares:
Registered Owner No. Shares
---------------- ----------
Jack Forbes 5,000
Howard Guerin 5,000
Victor Hobart 5,000
Jamish McPhee 5,000
Harry Van Tol 5,000
Greg Van Tol 5,000
Richard Perkins 10,000
Jan Behm 5,000
Gordon Ross Krushinsky 2,500
<PAGE>
Carol D. Krushinsky 2,500
Lucy Owen 2,500
Robert C. Krushinsky 5,000
James Ingram 5,000
Herb Sievers 5,000
Gary V. Sweezey 5,000
Douglas Inc. 1,000,000
Corporate House S.A. 1,000,000
Peregrine Corporation 1,000,000
Scovest Financial Ltd. 1,000,000
Bond Mercantile Limited 1,000,000
Commodore Management Corp. 1,000,000
The 1,000,000 shares issued to Commodore Management Corp. are subject
to a Pooling Agreement with the Company which provides:
i. One year from the date of the Agreement, ten percent of the
Shares will be issued to the Shareholders and be deemed to be
free trading unless the Shares are restricted by the
Regulatory Bodies having jurisdiction over the affairs of the
Company; and
ii. Each and every month, starting from the thirteenth month from
the date of signing of the Agreement, five percent of the
remaining balance of the Shares, after the release of ten
percent of the Shares noted (I.) Above have been made, will be
released to the Shareholder until such time as all the Shares
have been released.
On or about November 23, 1998, the Company issued the following listed
shares to the individuals listed for the consideration of $0.10 per share. These
shares were issued in accordance with the exemption from registration provided
by Rule 504 of Regulation D of the Securities Act of 1933, as amended, and an
appropriate Form D was filed in connection with the issuance of these shares.
Registered Owner No. Shares
---------------- ----------
Richard T. Hethey 25,000
Christopher Begin 1,300
Sandra Begin 1,200
Deborah Dion 1,000
Trevor Dion 1,500
Tracy Toms 1,000
Stephen Toms 1,000
<PAGE>
- --------------------------------------------------------------------------------
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Section 78.751 of the Nevada General Corporation Law allows the Company
to indemnify any person who was or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise. The Company may advance expenses in connection with
defending any such proceeding, provided the indemnitee undertakes to pay any
such amounts if it is later determined that such person was not entitled to be
indemnified by the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART F/S
- --------------------------------------------------------------------------------
Financial Statements
- --------------------------------------------------------------------------------
CAN-EX MINERALS CORPORATION
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
June 30, 1999 and December 31, 1998
<PAGE>
Board of Directors
Can-Ex Minerals Corporation
Vancouver B. C. Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Can-Ex Minerals Corporation (
exploration stage company) at June 30, 1999 and December 31. 1998, and the
statement of operations, stockholders' equity, and cash flows for the six months
ended June 30, 1999 and the year ended December 31, 1998 and the period from
December 15, 1997 to December 31, 1997 and the period from December 15, 1997
(date of inception) to June 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Can-Ex Minerals Corporation at
June 30, 1999 and December 31, 1998, and the results of operations, and cash
flows for the six months ended June 30, 1999 and the year ended December 31,
1998 and the period from December 15, 1997 to December 31, 1997 and the period
from December 15, 1997 (date of inception) to June 30, 1999, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the exploration
stage and does not have the necessary working capital for its planned activity,
which raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Anderson Anderson & Strong
Salt Lake City, Utah
July 29, 1999
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
BALANCE SHEETS
June 30, 1999 and December 31, 1998
===================================================================================================
<CAPTION>
(Restated)
Jun 30, Dec 31,
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 11,164 $ 19,077
--------- ---------
Total Current Assets 11,164 19,077
--------- ---------
OTHER ASSETS
Mineral claims - Note 3 -- --
--------- ---------
$ 11,164 $ 19,077
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,667 $ 104
Accounts payable - related parties 155,196 100,326
--------- ---------
Total Current Liabilities 161,863 100,430
--------- ---------
STOCKHOLDERS' EQUITY
Common stock
50,000,000 shares authorized at $0.001 par
value; 11,422,000 shares issued and outstanding 11,422 11,422
Capital in excess of par value 13,878 12,078
Deficit accumulated during the exploration stage (175,999) (104,853)
--------- ---------
Total Stockholders' Equity (150,699) (81,353
--------- ---------
$ 11,164 $ 19,077
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999 and the Year Ended December 31, 1998
and the Period December 15, 1997 to December 31, 1997, and the
Period December 15, 1997 (date of inception) to June 30, 1999
==============================================================================================
<CAPTION>
(Restated)
Jun 30, Dec 31, Dec 15 1997 Dec. 15, 1997
1999 1998 to Dec 31 1997 to Jun 30, 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ --
EXPENSES 71,146 104,853 -- 175,999
----------- ----------- ----------- -----------
NET LOSS $ (71,146) $ (104,853) $ -- $ (175,999)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE
Basic $ -- $ (.02)
----------- -----------
AVERAGE OUTSTANDING SHARES
Basic 11,422,000 5,700,000
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from December 15, 1997 (Date of Inception)
to June 30, 1999
===========================================================================================================
<CAPTION>
Common Stock Capital in
------------------------- Excess of Accumulated
Shares Amount Par Value Deficit
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance December 15, 1997 (date of inception) -- $ -- $ -- $ --
Net operating loss December 15 to
December 31, 1997 -- -- -- --
Issuance of common stock for cash 4,000,000 4,000 -- --
at $.001 - June 16, 1998
Issuance of common stock for cash
at $.001 - June 20, 1998 500,000 500 -- --
Issuance of common stock for expenses
at $.001 - June 20, 1998 800,000 800 -- --
Issuance of common stock for cash
at $.001 - June 23, 1998 6,000,000 6,000 -- --
Issuance of common stock for cash
at $.10 - June 27, 1998 90,000 90 8,910 --
Issuance of common stock for cash
at $.10 - October 16, 1998 32,000 32 3,168 --
Net operating loss for the year
ended December 31, 1998 -- -- -- (104,853)
---------- ---------- ---------- ----------
Balance December 31, 1998 11,422,000 11,422 12,078 (104,853)
Contributions to capital - expenses -- -- 1,800 --
Net operating loss for three months
ended June 30, 1999 -- -- -- (71,146)
---------- ---------- ---------- ----------
Balance June 30, 1999 11,422,000 $ 11,422 $ 13,878 $ (175,999)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1999 and the Year Ended December 31, 1998
and the Period December 15, 1997 to December 31, 1997 and the
Period December 15, 1997 (date of inception) to June 30, 1999
=========================================================================================================================
<CAPTION>
(Restated)
Jun 30, Dec 31, Dec 15, 1997 Dec. 15, 1997
1999 1998 to Dec 31, 1997 to Jun 30, 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (71,146) $(104,853) $ -- $(175,999)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Changes in accounts payables 11,433 2,947 -- 14,380
Contributions to capital - expenses 1,800 -- -- 1,800
Issuance of common stock for expenses 800 -- 800
Net Cash used by Operations (57,913) (101,106) -- (159,019)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES -- -- -- --
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from loan - related party 50,000 97,483 -- 147,483
Proceeds from issuance of common stock -- 22,700 -- 22,700
--------- --------- --------- ---------
Net Change in Cash (7,913) 19,077 -- 11,164
Cash at Beginning of Period 19,077 -- -- --
--------- --------- --------- ---------
Cash at End of Period $ 11,164 $ 19,077 $ -- $ 11,164
========= ========= ========= =========
SCHEDULE OF NONCASH OPERATING ACTIVITIES
Issuance of 800,000 common shares for expenses - 1998 $ 800
---------
Contribution to capital - expenses - 1999 $ 1,800
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on December
15, 1997 with authorized common stock of 50,000,000 shares at $0.001 par value.
The Company was organized for the purpose of acquiring and developing mineral
properties. At the report date mineral claims, with unknown reserves, had been
acquired. The Company has not established the existence of a commercially
minable ore deposit and therefore has not reached the development stage and is
considered to be in the exploration stage. (see note 3).
Since its inception the company has completed Regulation D offerings of 182,000
shares of its common capital stock for cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- ------------
On December 31, 1998, the Company had a net operating loss carry forward of
$104,853. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful since
the Company has no operations.
The loss carryforward expires in the year 2019.
Earnings (Loss) Per Share
- -------------------------
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
<PAGE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Capitalization of Mining Claim Costs
- ------------------------------------
Costs of acquisition, exploration, carrying, and retaining unproven properties
are expensed as incurred. Costs incurred in proving and developing a property
ready for production are capitalized and amortized over the life of the mineral
deposit or over a shorter period if the property is shown to have an impairment
in value. Expenditures for mine equipment are capitalized and depreciated over
their useful lives.
Environmental Requirements
- --------------------------
At the report date environmental requirements related to the mineral claims
acquired (note 3) are unknown and therefore an estimate of any future cost
cannot be made.
Financial Instruments
- ---------------------
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values. These
values are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Restatement of Financial Statements for the Year Ended December 31, 1998
- ------------------------------------------------------------------------
The company purchased the mineral claims outlined in note 3. The purchase price
of $85,000 was capitalized in 1998, however it has since been determined by
management that the claims were unproven and needed further exploration to
establish the existence of a commercially minable ore reserve, and therefore the
purchase price should have been expensed . The financial statements have been
restated for 1998 to expense the $85,000 resulting in a net operating loss of
$104,853 for the year ended December 31, 1998.
<PAGE>
CAN-EX MINERALS CORPORATION
( Exploration Stage Company )
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
3. MINERAL CLAIMS
On May 26, 1998 the company acquired a 98% interest in mineral claims, with
unknown reserves, from a related party, consisting of 600 hectares and known as
the Piedra Parada Salar Mineral Claims located in Region 111 in the nothern part
of the Republic of Chile for a payment of $85,000, which was expensed. The
purchase agreement provides for a 3% net smelter royalty due to the transferor
with a right to purchase the royalty by the Company for $2,000,000 with any
royalty payments made to apply against the purchase price.
The claims may be retained by the Company only upon payment of a yearly property
tax of approximately $3000. The next property tax payment is due in May 2000.
4. RELATED PARTY TRANSACTIONS
Related parties have acquired 42% of the common stock.
Related parties loaned money to the Company which was used to purchase mining
claims from the same parties. Note 3
The officers and directors of the Company are involved in other business
activities and they may, in the future, become involved in additional business
ventures which also may require their attention. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The risk factors for
this possibility are unknown and the Company has formulated no policy for the
resolution of such conflicts.
5. GOING CONCERN
The Company does not have the working capital necessary to complete the planned
exploration of the mineral claims outlined in note 3.
Continuation of the Company as a going concern is dependent upon obtaining the
additional working capital necessary for its planned activity and the management
of the Company has developed a strategy, which it believes will accomplish this
objective through additional equity funding, and long term financing, which will
enable the Company to operate in the future.
<PAGE>
PART III
- --------------------------------------------------------------------------------
ITEM 1. Index to Exhibits
- --------------------------------------------------------------------------------
The following exhibits are filed with this Amended Form 10-SB:
Assigned Number Description
- ---------------------------
(2) Plan of acquisition, reorganization, arrangement, liquid, or
succession: None
(3)(ii) By-laws of the Company: Filed with the Form 10-SB filed June
1, 1999 and incorporated herein by this reference.
(4) Instruments defining the rights of holders including
indentures: None
(9) Voting Trust Agreement: None
(10) Material Contracts:
Purchase Agreement Dated May 26, 1998
Pooling Agreement Dated May 26, 1998
(11) Statement regarding computation of per share earnings:
Computations can be determined from financial statements.
(16) Letter on change in certifying accountant: None
(21) Subsidiaries of the registrant: None
(24) Power of Attorney: None
(27) Financial Data Schedule: Included
(99) Additional Exhibits: Property Valuation Report Conclusion
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: September 1,1999.
-----------------
CAN-EX MINERALS CORPORATION
By: /s/ Grant N. Dion
---------------------------------
Grant N. Dion
President
By: /s/ William L. Owen
---------------------------------
William L. Owen
Secretary
EX-10
PURCHASE AGREEMENT
THIS AGREEMENT made this 26 day of May, 1998
BETWEEN
GARTH JOHNSON. having a residence at 7645 Cambie Street,
Vancouver, British Columbia, Canada, V6P 3H8
(known herein as "Johnson")
ON THE FIRST PART
AND
CAN-EX MINERALS CORPORATION, a Nevada corporation with offices
at 6395 Blazing Star Drive, Colorado Springs, Colorado, USA,
80922
(known herein as "Can-Ex")
ON THE SECOND PART
WHEREAS:
A. Johnson has under his control or will be staking and recording six
hundred (600) hectares of mineral Claims located on salt flats known as Piedra
Parada Salar in the Republic of Chile (herein called the "Project"), more
particularly described on Schedule "A" attached hereto and made a part hereof.
B. Can- Ex wishes to acquire the six hundred (600) hectares of the
Project from Johnson as more fully described in Schedule "A" subject to the
terms and conditions set forth below
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements herein contained and the sum of One
Dollar ($1.00) paid to Johnson by Can-Ex (the receipt of which is
hereby acknowledged), the parties thereto agree as follows:
1. DEFINITIONS
1.01 In this Agreement, including the recitals and schedules hereto,
unless there is something in the subject matter or context inconsistent
therewith, the following words and expressions shall have the following
meanings.
(a) "Agreement" means this Purchase Agreement as amended from time to
time;
(b) "Claims" means those certain mineral claims more particularly
described in
Schedule "A" hereto;
(c) "Conservator of Mines" is the equivalent of the Mining Recording
Office;
1
<PAGE>
(d) "Gardner" is Harold Gardner, as associate of Johnson, who owns
jointly with
Johnson 1,200 hectares in the Project;
(e) "Interest" means a ninety percent (98%) in the Project more tully
described on Schedule "A"
(f) "Mensura" is the equivalent of legal survey of property;
(g) "Other Tenements" means all surface rights or and to any lands
within or outside the Property including surface rights held in fee or under
lease, license, easement, right of way or other rights of any kind (and all
renewals, extensions and amendments or substitutions thereof) acquired by or on
behalf ofthe parties with respect to the Property;
(h) "Project" means the twelve hundred (1,200) hectares under the
control of Johnson and his associate, Gardner, known as the Constelacion Group 1
to 4 inclusive and more fully described on Schedule A; and
(i) "Property" means the Project, and other interests as set out and
more particularly described in Schedule "A" hereto and shall include any renewal
thereof and any form of substitute or successor title thereto, and Other
Tenements, and any other additional Claims acquired.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.01 Johnson represents and warrants to Can-Ex that:
(a) he is the full age of eighteen (18) years;
(b) he is capable of managing his own affairs;
(c) neither the execution and delivery of this Agreement nor any of
the agreements referred to herein or contemplated hereby, nor the consummation
of the transactions hereby contemplated conflict with, result in the breach of
or accelerate the performance required by, any agreement to which he is a party;
2
<PAGE>
(d) 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
jurisdiction applicable or pertaining thereto or of its constating documents,
(e) he and or his Chilean company, have a fifty percent (50%) interest
in the Project with the other fifty percent (50%) being held by Gardner being
the Constelacion Group 1 to 4 inclusive comprising some twelve hundred (1,200)
hectares; and
(f) the Project is free and clear of all liens and encumbrances and
they will be transferred to Can Ex in good standing under the mining laws of
Chile in that the inscription of Mensura will be filed with the Conservator of
Mines
2 02 Can-Ex represents and warrants to Johnson that:
(a) it is a company duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction,
(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;
(c) neither the execution and delivery of this Agreement nor any of
the agreements referred to herein or contemplated hereby, nor the consummation
of the transactions hereby contemplated conflict with, result in the breach of
or accelerate the performance required by, any agreement to which it is a party;
and (d) 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
jurisdiction applicable or pertaining thereto or of its constating documents.
2.03 The representations, warranties and covenants 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 Project by Johnson and
Can-Ex and any loss, damage, cause of action 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.
3. POSSESSION AND CONTROL
3.01 Coincident with the execution of this Agreement, Can-Ex shall have
exclusive possession and control of the Project during the term of this
Agreement.
3
<PAGE>
4. CONSIDERATION ASSUMED BY CAN-EX
4.01 In consideration for the purchase herein, Can-Ex shall undertake
the following on behalf of Johnson:
a. Can-Ex shall pay to Johnson the cost of staking and recording of
the Project, not to be less than six hundred (600) hectares, being mainly the
Constelacion 2 and 4; the sum of eighty-five thousand dollars ($85,000) which
will be paid in full by no later than June 30, 1998;
b. Can-Ex will grant Johnson a three percent (3%) Net Smelter Royalty
from the six hundred (600) hectares covering the Constelacion 2 and 4. Can-Ex
shall have the right to purchase from Johnson the three percent (3%) Net Smelter
Royalty for the sum of two million dollars ($2,000,000) at any time either prior
to or during production of the Project and all royalty payments shall apply to
reduce the $2,000,000 purchase price of the Net Smelter Royalty; and
c. Can-Ex agrees to issue to Johnson eight hundred thousand (800,000)
shares in its capital stock, of which six hundred and fifty thousand (650,000)
shares will be subject to a Pooling Agreement which will be entered into
separately into between Johnson and Can-Ex.
5. OBLIGATIONS OF JOHNSON
5.01 In consideration for the payments noted under Section 4 above,
Johnson hereby agrees to complete the following:
a. Johnson shall forthwith commence and complete; staking, site
engineering, the Mensura and filing the inscription of Mensura in the
Conservator of Mines in the Republic of Chile, as more fully described under
Schedule "B" of the key mineral claims, being the Constelacion 2 and 4,
contiguous to the Piedra Parada mineral reserves at the recommendation of the
geologist/owner of the Piedra Parada which are will cover not less than six
hundred (600) hectares and will negotiate, on behalf of Can-Ex, the balance of
the fifty percent (50%) of the Constelacion Group held by Gardner to obtain a
total ownership percentage for Can-Ex of a ninety-eight percent (98%) interest
in the Constelacion Group I to 4 inclusive;
b. Johnson locates and records the title to the Project, indicated
under 5.01(a) above, in his corporate name in Chile and will at all times work
in the best interest of Can-Ex;
4
<PAGE>
c. Johnson agrees to transfer title to the Project to Can Ex within
sixty (60) days of receiving the final cash payment indicated under 4.01(a)
above;
e. Upon completion of the recording into his corporate file, Johnson
will transfer nintey-eight percent (98%) of the title to the Project to Can-Ex
or a nominee of Can-Ex;
f Johnson shall assist Can-Ex and its engineers by providing
assistance and any and all geological and engineering documentation, including
but not limited to maps, reports, assays, studies, available on the Project or
its surrounding areas to dated that may be deemed necessary or beneficial for an
underwriting and acceptable to the various regulatory bodies having f~ture
jurisdiction over the affairs of Can-Ex; and.
g. Johnson hereby agrees as a condition on signing this Agreement to
immediately enter into a Pooling Agreement with Can-Ex regarding the issuance of
six hundred and fifty thousand (650,000) shares under 4.01(c) above.
6. AREA OF INTEREST
6.01 In respect to this Agreement the area of interest is defined in
Schedule "A" all property within a twenty mile radius of the Project.. There is
an obligation on the part of Johnson to forthwith give notice to Can-Ex of
staking, leasing, purchasing or obtaining by other methods any interest in other
mineral claims within the immediately or surrounding area of interest and grant
immediately Can-Ex first right of refusal on the property and/or claims having
been staked. The price to be paid by Can-Ex cannot exceed fifty percent (50%) of
the cost incurred by Johnson to stake and record said property.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall terminate:
(a) if Johnson fails to transfer a 98% interest in the Project to Can-
Ex, or its nominee, s described under Schedule "A";
(b) if Can Ex fails to meet the terms and conditions in accordance
with paragraphs 4.01; or
(c) if either Johnson and/or Can-Ex gives notice in accordance with
paragraph 9.
5
<PAGE>
8. TERMINATION PRIOR FINALIZATION OF AGREEMENT
8.Ol At any time prior to the finalization of the terms and conditions
of this Agreement, either Johnson and/or Can-Ex can terminate this Agreement, by
giving ninety (90) days notice in writing to that effect to each other and on
receipt of such notice by them, the Agreement shall be of no further force or
effect unless Can-Ex has adhered to the majority of the terms and conditions
indicated in 4 0 1 (a) whereby Johnson cannot unilaterally terminate this
Agreement with the written consent of Can-Ex.
9. FORCE MAJEURE
9.01 No party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its reasonable control
(except those caused by its own lack of funds) including, but not limited to
acts of God, fire, storm, flood, explosions, strikes, lockouts or other
industrial disturbances, act of the public enemy, riots, laws, rules and
regulations or orders of any duly constituted governmental authority, including
environmental protection agencies, or nonavailability of materials or
transportation
9.02 All time limits imposed by this Agreement will be extended by a
period of equivalent to the period of delay resulting from events described in
paragraph 10.01 hereof but may not exceed ninety (90) days in total
9.03 A party relying on the provisions of paragraph 10.01 hereof will
take all reasonable steps to eliminate any of the events mentioned in 10.01 and,
if possible, will perform its obligations under this Agreement as far as
practical, but nothing herein will require such party to settle or adjust any
labour dispute or to question or to test the validity of any law, rule,
regulation or order of any duly constituted governmental authority or to
complete its obligations under this Agreement if an event under 10 0 1 renders
completion impossible.
10. NOTICE
10.01 Any notice, direction, cheque or other instructions required or
permitted to be given under this Agreement shall be in writing and may be given
by the delivery of the same or by mailing the same by prepaid registered or
certified mail or by sending the same by telegram, telex, telecommunication or
other similar forms of communication including, facsimile, in each case
addressed to the intended recipient at the address of the respective party set
out on the front page hereof
10.02 Any notice, direction, cheque or other instrument aforesaid will,
if delivered, be deemed to have been given and received on the day it was
delivered, arid if mailed, be deemed to have been given and received on the
fifth business day following the day of mailing, except in the event of a
6
<PAGE>
disruption of the postal service in which event notice will be deemed to be
received only when actually received and, if sent by telegram, telex, fax
machine, telecommunication or other similar form of communication, be deemed to
have been given or received on the day it was so sent.
10.03 Any party may at any time give to the other notice in writing of
any changes or address of the party giving such notice and from and after the
giving of such notice the address or addresses therein specified will be deemed
to be the address of such party for the purposes of giving notice hereunder
11. FURTHER ASSURANCES
11.0.1 Each of the parties hereto shall from time to time and at all
times do all such further acts and execute and deliver all further deeds and
documents as shall be reasonably required in order to fully perform and carry
out the terms of this Agreement. For greater certainty this section shall not be
construed as imposing any obligation on any party to provide guarantees.
12. ENTIRE AGREEMENT
12.0.1 This Agreement embodies the entire agreement and understanding
between Johnson and Can-Ex and supersedes all prior agreements and undertakings,
whether oral or written, relative to the subject matter hereof
13. AMENDMENT
13.0.1 This Agreement may be changed orally but only by an agreement in
writing, executed under seal, by the party or parties against which enforcement,
waiver, change, modification or discharge is sought.
14. ARBITRATION
14.01 If any question, differences or disputes shall arise between the
parties in respect of any matters arising under this Agreement or in relation to
the construction hereof the same shall be determined by the award of three
arbitrators to be named as follows:
(a) the party sharing one side of the dispute shall name an
arbitrator and give notice thereof to the pay sharing the other side of the
dispute;
(b) the party sharing the other side of the dispute shall, within 14
days of receipt of the notice, name an arbitrator; and
7
<PAGE>
(c) the two arbitrators so named shall, within 15 days of the naming
of the latter of them, select a third arbitrator.
The decision of the majority of these arbitrators shall be made within
30 days after the selection of the latter of them. The expense of the
arbitration shall be borne equally by Johnson and Can Ex. If the parties on
either side of the dispute fail to name an arbitrator within the time limit or
proceed with the arbitration, the arbitrator named may decide the question The
place of arbitration shall be Colorado Spring, Colorado, United States
15. RULES AGAINST PERPETUITIES
15.01 If any right, power or interest of either Johnson or Can-Ex under
this Agreement would violate the Rule against perpetuities, then such right,
power and interest shall terminate at the expiration of 20 years after the death
of the last survivor of all the lineal descendants of his late Majesty, King
George V of England, living on the date of execution of this Agreement.
16. ENUREMENT
16.01 This Agreement shall enure to the benefit and be binding upon the
parties hereto and their respective successors and permitted assigns.
17. GOVERNING LAW
17.01 This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Nevada.
18. SEVERABILITY
18.01 If any one or more of the provisions contained herein shall be
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision shall not in any way be
affected or impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
19. NUMBER AND GENDER
19.01 Words used herein importing the singular number only shall
include the plural, and vice versa, and words importing the masculine gender
shall include the feminine and neuter genders, and vice versa, and words
importing persons shall include firms and corporations
8
<PAGE>
20. HEADINGS
20.01 The division of this Agreement into articles and sections
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
21. CURRENCY
21.01 Ml references to currency are stated in United States
dollars
22. TIME OF THE ESSENCE
22.01 Time shall be of the essence in the performance of this
Agreement
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the date, month and year first above written.
THE COMMON SEAL OF CAN-EX )
MINERALS CORPORATION was )
hereunto affixed in the presence of: )
) C/S
)
/s/ William Larry Owen )
- ------------------------
(Authorized Signatory) )
)
)
/s/ )
- ------------------------
(Authorized Signatory) )
WITNESSED:
)
/s/ Stacey Bligh )
- ------------------------
(Signature) )
)
Stacey Bligh ) /s/ Garth Johnson
- ------------------------ ------------------------
(Print Name) ) Garth Johnson
)
250-1075 W. Georgia )
- ------------------------
(Address) )
)
Vancouver, BC V6E3C9 )
- ------------------------
9
<PAGE>
SCHEDULE "A"
PIEDRA PARADA PROJECT
MINERAL CLAIMS
The following mineral claims, comprising not less than six hundred
(600) hectares located in Region 111 which is located in the northern part of
the Republic of Chile and known as the Piedra Parada mineral claims:
10
<PAGE>
SCHEDULE "B"
RESPONSIBILITIES OF GARTH JOHNSON
Upon completion of all boundary definitions combined with coordinates
of a survey, Garth Johnson will undertake the following with the assistance of a
Parito (land title expert)
Stage 1
- - preparation of a manifestation of the claims to be acquired;
- - file the manifestation in the local courthouse and pay the requisite fees,
- - attend to the regional office (Region 111) and file the inscription in the
Conservator of Mines,
- - publish notice of the claims in the Mining Newspaper and pay initial claim
taxes.
Stage 2:
- - Preparation of a Solicitud de Mensura and employing a mining engineer,
- - file the Solicitud de Mensura in the local courthouse and pay the requisite
fees;
- - publish the Solicitud de Mensura in the Mining Bulletin;
- - pay the fees of the sponsoring lawyer and mining engineer; and
- - pay the proportional annual property taxes.
Stage 3
- - commence and complete on site engineering; the Mensura;
- - complete liluigs and paying fees in local courthouse;
- - publish Mensura details in the Mining Bulletin;
- - attend to the regional office and file the Inscription ofMensura in the
Conservator of Mines; and
- - pay the fees of the sponsoring lawyer and the engineering/survey fees.
11
POOLING AGREEMENT
THIS AGREEMENT is made and executed this 26 day of May, 1998
BETWEEN:
CAN-EX MINERALS CORPORATION., a body corporate duly incorporated
under the laws of the State of Nevada and having an office at 6395
Blazing Star Drive, Colorado Springs, USA, 80922,
(the "Can-Ex")
AND:
GARTH JOHNSON, having a residence at 7645 Cambie Street,
Vancouver, British Columbia, Canada, V6P 3H8
(the "Shareholder")
WHEREAS:
A. Can-Ex is desirous for the Shareholder to enter into this Pooling
Agreement ("Agreement") in contemplation of it obtaining a quote on the OTC
Bulletin Board under Rule 504 Regulation D;
and
B. The Shareholder is desirous to enter into this Agreement as a
condition for Can-Ex having issued him Shares under a Purchase Agreement dated
May 26, 1998.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and agreements herein contained and the sum of One Dollar
($1.00) paid by the Can-Ex to the Shareholder (the receipt of which is hereby
acknowledged), the parties thereto agree as follows:
1. DEFINITIONS
1.01 In this Agreement, including the recitals herein, unless there is
something in the subject matter or context inconsistent therewith, the following
words and expressions shall have the following meanings:
(a) "Agreement" shall mean this Pooling Agreement;
(b) "Regulatory Body" representatives of NASD, OTC Bulletin Board,
Securities and Exchange Commission, British Columbia Securities Commission or
any other governing having jurisdiction over the affairs of Can-
Ex;
<PAGE>
(c) "Shares" shall mean the six hundred and fifty thousand
(650,000) shares held in the capital stock of the Can-Ex by the Shareholder out
of a total number of shares of eight hundred thousand (800,000); and
(d) "Trustee" shall be the transfer agent appointed by Can-Ex;
being Nevada Agency and Trust Company located at Suite 880 - 50 West Liberty
Street, Reno, Nevada, USA.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.Ol The Can-Ex represents and warrants to the Shareholder that:
(a) it is a company duly incorporated, organized and validly
subsisting under the laws of Nevada;
(b) it has the 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;
(c) neither the execution and delivery of this Agreement referred to
herein or contemplated hereby, nor the consummation of the transactions hereby
contemplated conflict with, result in the breach of or accelerate the
performance required by, any agreement to which it is a party; and
(d) 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
jurisdiction applicable or pertaining thereto or of its constating documents.
2.02 The Shareholder represents and warrants to the Can-Ex that:
(a) he is above the age of eighteen (18) year old;
(b) he is capable of managing his own affairs;
(c) he is the owner of eight hundred thousand (800,000) Shares in the
capital stock of Can-Ex of which one hundred and fifty thousand (150,000) shares
are not subject to any pooling agreements, and the balance are subject to the
terms and conditions of this Agreement;
(d) neither the execution and delivery of this Agreement referred to
herein or contemplated hereby, nor the consummation of the transactions hereby
contemplated conflict with, result in the breach of or accelerate the
performance required by, any agreement tQ which it is a party; and
2
<PAGE>
(e) 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
jurisdiction applicable or pertaining thereto or of its constating documents.
1.03 The representations, warranties and covenants hereinbefore set out
are conditions on which the parties have relied in entering into this Agreement
and shall survive any interest in this Agreement and any loss, damage, cause of
action 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.
2. POOLING OF SHARES
2.01 Can-Ex requires the Shareholder to enter into this Agreement under
the following terms and conditions:
(a) Can-Ex and the Shareholder hereby severally agree each with the
other that they will respectively deliver or cause to be delivered to the
Trustee six hundred and fifty thousand (650,000) certificates of the Shares in
Can-Ex to be held by the Trustee and released, subject as hereinafter provided,
on the following basis:
i. One (1) year from the date of this Agreement, ten percent
(10%) of the Shares will be issued to the Shareholder and be deemed to be free
trading unless the Shares are restricted by the Regulatory Bodies having
jurisdiction over the affairs of Can~Ex;
ii. Each and every month, starting from the thirteenth (13) month
from the date of signing of this Agreement, five percent (5%) of the remaining
balance of the Shares, after the release often percent (10%) of the Shares noted
in 2.01(a) have been made, will be released to the Shareholder until such time
as all the Shares have been released by the Trustee; and
iii. The Shareholder will, if required, sign another pooling
agreement with the Trustee under the same terms and conditions as have been
indicated in 2.01(a) i to ii inclusive.
2.02 The Shareholder shall be entitled to a letter or receipt from the
Trustee stating the number of Shares represented by certificates held for him by
the Trustee subject to the terms of this Agreement.
2.03 Except without written consent of the Can-Ex, and if required by
any Regulatory Bodies, the Shareholder shall not sell, deal in, assign, transfer
in any manner whatsoever or agree to sell, deal in, assign or transfer in any
manner whatsoever any of the said Shares or beneficial ownership of or any
interest in them and, except with written consent of the Can-Ex, and if required
by any Regulatory Bodies, the Trustee shall not accept or acknowledge any
transfer, assignment, declaration of trust or any other document evidencing a
change in legal and beneficial ownership or of interest in the said Shares,
except as may be required by reason of the death or bankruptcy of the
Shareholder, subject to this Agreement for whatever person or persons, firm or
corporation may thus become legally entitled thereto.
3
<PAGE>
2.04 The Can-Ex and the Shareholder hereto acknowledge and agree that
any Regulatory Bodies shall have the right, at its sole discretion, to
accelerate the releases referred to herein and may from time to time notify the
Trustee of such acceleration. Such acceleration may be based on whatever
consideration Regulatory Bodies, in its sole discretion, consider advisable.
3. TERMINATION
3.01 It is hereby acknowledged by the Shareholder that Can-Ex is
preparing to seek a quotation on the OTC Bulletin Board under NASD whereby the
Shares of Can-Ex will be quoted. If such quotation of Shares does not occur
within fifteen (15) months from the date of this Agreement, then this Agreement
shall terminate and the Trustee shall release all Shares deposited with it to
the Shareholder.
4. FORCE MAJEURE
4.01 No party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its reasonable control
including, but not limited to acts of God, fire, storm, flood, explosions,
strikes, lockouts or other industrial disturbances, act of the public enemy,
riots, laws, rules and regulations or orders of any duly constituted
governmental authority.
5. SAVE HARMLESS THE TRUSTEE
5.01 Can-Ex and the Shareholder agree that in consideration of the
Trustee agreeing to act as Trustee, Can-Ex and the Shareholder do hereby
covenant and agree from time to time and at all times hereinafter will and truly
to save, defend, and keep harmless and fully indemnify the Trustee, its
successors and assigns, from and against all lost, costs, charges, damages and
expenses which the Trustee, its successors and assigns, may at any time or times
hereafter bear, sustain, suffer or be put to for or by reason or on account of
its acting as Trustee pursuant to this Agreement.
5.02 It is further agreed by and between Can-Ex and the Shareholder
hereto and, without restricting the foregoing indemnify, that in case
proceedings should hereafter be taken in any Court respecting the Shares hereby
pooled, the Trustee shall not be obliged to defend any such action or submit its
rights to the Court until it shall have been indemnified by other good and
sufficient security in addition to the indemnify hereinbefore given against
costs of such proceedings.
6. AMENDMENT
6.01 This Agreement may only be changed with the express permission of
the Can-Ex and the Regulatory Bodies.
4
<PAGE>
7. NOTICE
7.01 Any notice, direction, cheque or other instructions required or
permitted to be given under this Agreement shall be in writing and may be given
by the delivery of the same or by mailing the same by prepaid registered or
certified mail or by sending the same by telegram, telex, telecommunication or
other similar forms of communication including- facsimile, in each case
addressed to the intended recipient at the address of the respective party set
out on the front page hereof
7.02 Any notice, direction, cheque or other instrument aforesaid will,
if delivered, be deemed to have been given and received on the day it was
delivered, and if mailed, be deemed to have been given and received on the fifth
business day following the day of mailing, except in the event of a disruption
of the postal service in which event notice will be deemed to be received only
when actually received and, if sent by telegram, telex, fax machine,
telecommunication or other similar form of communication, be deemed to have been
given or received on the day it was so sent.
7.03 Any party may at any time give to the other notice in writing of
any changes or address of the party giving such notice and from and after the
giving of such notice the address or addresses therein specified will be deemed
to be the address of such party for the purposes of giving notice hereunder.
8. FURTHER ASSURANCES
8.01 Each of the parties hereto shall from time ~o time and at all
times do all such further acts and execute and deliver all further deeds and
documents as shall be reasonably required in order to fully perform and carry
out the terms of this Agreement. For greater certainty this section shall not be
construed as imposing any obligation on any party to provide guarantees.
9. ENTIRE AGREEMENT
9.01 This Agreement embodies the entire agreement and understanding
between Johnson and Can-Ex and supersedes all prior agreements and undertakings,
whether oral or written, relative to the subject matter hereof
10. ARBITRATION
10.01 If any question, differences or disputes shall arise between the
parties in respect of any matters arising under this Agreement or in relation to
the construction hereof the same shall be determined by the award of three
arbitrators to be named as follows:
(a) the party sharing one side of the dispute shall name an arbitrator
and give notice thereof to the pay sharing the other side of the dispute;
(b) the party sharing the other side of the dispute shall, within 14
days of receipt of the notice, name an arbitrator; and
5
<PAGE>
(c) the two arbitrators so named shall, within 15 days of the naming of
the latter of them, select a third arbitrator.
The decision of the majority of these arbitrators shall be made within
30 days after the selection of the latter of them. The expense of the
arbitration shall be borne equally by Johnson and Can Ex. If the parties on
either side of the dispute fail to name an arbitrator within the time limit or
proceed with the arbitration, the arbitrator named may decide the question. The
place of arbitration shall be Colorado Springs, Colorado, United States.
11. RULES AGAINST PERPETUITIES
11.01 If any right, power or interest of either Johnson or Can-Ex under
this Agreement would violate the Rule against perpetuities, then such right,
power and interest shall terminate at the expiration of 20 years after the death
of the last survivor of all the lineal descendants of his late Majesty, King
George V of England, living on the date of execution of this Agreement.
12. ENUREMENT
12.01 This Agreement shall enure to the benefit and be binding upon the
parties hereto and their respective successors and permitted assigns.
13. GOVERNING LAW
13.01 This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Nevada.
14. SEVERABILITY
14.01 If any one or more of the provisions contained herein shall be
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision shall not in any way be
affected or impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
15. NUMBER AND GENDER
15.01 Words used herein importing the singular number only shall include
the plural, and vice versa, and words importing the masculine gender shall
include the feminine and neuter genders, and vice versa, and words importing
persons shall include firms and corporations.
6
<PAGE>
16. HEADINGS
16.0.1 The division of this Agreement into articles and sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
17. TIME OF THE ESSENCE
17.01 Time shall be of the essence in the performance of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day, month and year first above written~
THE COMMON SEAL OF CAN-EX )
MINERALS CORPORATION was )
hereunto affixed in the presence of: )
) C/S
)
/s/ William Larry Owen )
- ------------------------
(Authorized Signatory) )
)
)
/s/ )
- ------------------------
(Authorized Signatory) )
WITNESSED:
)
/s/ Stacey Bligh )
(Signature) )
)
Stacey Bligh ) /s/ Garth Johnson
- ------------------------ ------------------------
(Print Name) ) Garth Johnson
)
250-1075 W. Georgia )
- ------------------------
(Address) )
)
Vancouver, BC V6E3C9 )
- ------------------------
7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 11164
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11164
<CURRENT-LIABILITIES> 161863
<BONDS> 0
0
0
<COMMON> 11422
<OTHER-SE> (162121)
<TOTAL-LIABILITY-AND-EQUITY> 11164
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 71146
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (71146)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
EX 99
PROPERTY EVALUATION REPORT
on the
CONSTELACION 2 & 4 MINERAL CLAIMS
PIEDRA PARADA BASIN AREA
REGION III, CHILE
for
CAN-EX MINERALS CORPORATION
by
GEORGE P KRUECKL, P Eng. KRUECKL & ASSOCIATES MINING
CONSULTANTS LTD.
E222 - 807 East 6th Avenue
Vancouver, B.C.
V5T 1L9
May 31, 1999
<PAGE>
35
CONCLUSIONS
Evidence from sampling carried out by Ulriksen, Gardner, Wilkins, Shattwell and
K&A suggests that the mineral resource is real and therefore requires further
investigations. The auger samples taken by Shattwell at the western and southern
margin of the Salar show that the mineralization occurs in areas other than the
Pillar region on the east side of the basin. In addition, considering the extent
of alteration resulting from the geothermal system in the area, it is very
likely the Salar basin has precious and other metals throughout. At this time
however, we do not have information on the intensity and extent of this
mineralization. The following paragraph details the reason for this conclusion.
Water flows into the basin as local runoff plus thermal springs that enter the
Salar at the margins and from the area underneath the Salar basin. Local surface
water runoff represents only five to 10 percent of the total inflow. Water
entering the Salar, especially the thermal waters, have leached minerals, at
surface and at depth, from the local volcanic formations. These waters carry
large amounts of sulfates, chlorides and other salts into the Salar. The thermal
waters charged with chlorides and sulfides have leached precious metals and base
metals as the waters flow through the volcanic formations. The precious metals
are mainly gold and silver and the base metals are mainly lead, zinc and
titanium. Further, it is projected that anciently, the geothermal system
provided a much more abundant supply of minerals from the boiling level of the
upper magma chamber. This geothermal system, and the associated leaching by
thermal springs, is also considered responsible for the deep alteration zones on
the surrounding hills (mountains). In the Pillar region evidence for
mineralization is more available because of easy access to the various layers
the make up the Salar in the Piedra Parada Basin. Channel samples taken by
Ulriksen, Gardner, Wilkins, Shattwell and K&A (plus auger samples taken by K&A)
show the following:
1. The top eight meters of the Salar have low mineral content, likely
because the chloride complexes that contained minerals were leached downward to
the eight-meter level. This would explain why the K&A auger samples, which
attained a maximum depth of three meters, carried either very low or no values.
2. In the southeast Pillar region channel samples by Gardner, Wilkins,
Shattwell and K&A show that considerable gold values occur from the 8 to 18
(plus) meters level. The lower level is not well defined because channel samples
taken for PPC#2 and PPC#3 were still in fairly high gold values. The depths of
PPC#2 and PPC#3 were 22.6 and 21.1 meters respectively.
3. The K&A channel samples taken for PPC#4 and PPC#5 did not reflect
the upper level of mineralization to be at eight meters. However, the lowest
sample taken (10.4 to 12.8 meters), on channel samples for PPC#4, was next to
the Salar water level. This sample may have been leached on the pillar surface
where the sample was taken, due to proximity to the level of Salar water. Or
conversely, the level of mineralization may be deeper than 12.8 meters in this
northern portion of the Pillar region. Channel samples for PPC#5 were only taken
to a depth of 6.7 meters, because the36 Pillar slope, in this part of the Pillar
region, was not exposed to a deeper level. The CON 2 & 4 mineral claims are, for
<PAGE>
the most part, not within the Pillar region, but next to the Pillar region of
the Piedra Parada Salar Basin. Based on the evidence currently available the
initial part of the Phase I exploration program should show where mineralization
is located, both horizontally and vertically throughout the mineral claims. Such
initial investigations should include both auger and core drilling, details of
which will be defined in the Recommendations section of this report. The reason
both auger and core drilling are required is because of the type of
mineralization occurring in the Salar formations "Layers". The precious (and/or
other) metals content of the various materials contained in the Salar are
chemically combined with chlorine forming precious (and/or other) metals
chloride complexes. These complexes are very stable and mobile in a water
environment. Therefore, a core drilling device that requires water circulation
for cooling the bit and clearing cuttings away from the bit, would also mobilize
the metals contained in the core. As a result, the core recovered from these
rock layers would not represent the metals values available in the surrounding
in situ rock. Thus, assaying for metals cannot be carried out on core samples.
Therefore, to obtain the type of sample that can be assayed, it would involve a
drilling device in which the cuttings are mechanically removed from the bottom
of the drill hole without the use of fluids. Auger drilling is the obvious
answer.
The geologist can visually recognize changes in the core that may reflect
changes in mineral values whereas cuttings from auger drilling do not give
visual evidence of changes in mineral values. Therefore, core is required to
identify; a) layers (horizontal formations) where drill casing may be required
and to identily marker horizons; b) indications for sampling intervals to be
used for auger drilling; c) to record the geological characteristics of the
various formations; d) to identify' materials below the Salar basin,
particularly if there is some potential for additional mineralization; e) the
core is also required for specific technical tests involving the relationship of
rock hardness, fragmentation and permeability characteristics for finding the
rate and percentage of precious metal recovery.....etc. On completion of the
initial part of the Phase I program an area on CON 2 & 4 should be selected to
carry out a detailed auger drilling program to define some ten years of ore
reserves. Assuming an average depth to the bottom of the Salar for each drill
hole is 25 meters, the detailed drilling program will expose some 30 to 50
million metric tons of mineral resource. This tonnage would, of course, include
both ore grade and stripping materials.
Submitted by Knueckl & Associates Mining Consultants Ltd.
- -----------------------
George P Krueckl, P Eng.
