<PAGE>
As filed with the Securities and Exchange Commission on February 26, 1996
Registration No. 33-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SOLV-EX CORPORATION
(Exact name of registrant as specified in its charter)
NEW MEXICO 85-0283729
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(State of Incorporation) (IRS Employer Identification No.)
500 MARQUETTE N.W., SUITE 300
ALBUQUERQUE, NEW MEXICO 87102
(505) 243-7701
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(Address, including zip code, and telephone number, including
area code of registrant's principal executive offices)
HERBERT M. CAMPBELL II
500 MARQUETTE N.W., SUITE 300
ALBUQUERQUE, NEW MEXICO 87102
(505) 243-7701
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(Name, address, including zip code, and telephone number,
including area code of agent for service)
It is requested that copies of all correspondence be sent to:
HERRICK K. LIDSTONE, ESQ.
FRIEDLOB SANDERSON RASKIN PAULSON & TOURTILLOTT, LLC
1400 GLENARM PLACE, SUITE 300
DENVER, COLORADO 80202
(303) 571-1400
Approximate date of commencement of sale to public: As soon as practicable
after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF OFFERING AGGREGATE AMOUNT OF
SECURITIES TO AMOUNT TO BE PRICE PER OFFERING REGISTRATION
BE REGISTERED REGISTERED UNIT PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock 519,870 shares $35.47 $18,439,789 $6,359
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</TABLE>
(1) Pursuant to Rule 457, the offering price of the securities registered
hereby is computed on the basis of the average of the bid/asked price
of the common stock in the National Association of Securities Dealers
Automated Quotation System Small-Cap Market ("NASDAQ") on February 22,
1996.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the date the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Commission
acting pursuant to said Section 8(a) may determine.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
Subject to Completion
Preliminary Prospectus Dated February 28, 1996
519,870 Shares
SOLV-EX CORPORATION
Common Stock
($.01 Par Value)
This Prospectus relates to 500,000 shares of Common Stock, $.01 par
value (the "Common Stock") of Solv-Ex Corporation ("Solv-Ex" or the
"Company") sold by the Company in a private transaction during August 1995,
as well as 19,870 shares issued upon exercise of outstanding common stock
purchase warrants, all which are being offered by Selling Shareholders. Any
proceeds received by the Selling Shareholders from the sale of shares of
Common Stock will inure to the respective Selling Shareholders and not to the
Company (See "Selling Shareholders"). The Company will pay all of the
expenses incident to the filing of this Registration Statement. Such
expenses include legal and accounting fees in connection with the preparation
of the Registration Statement of which this Prospectus is a part, legal fees
in connection with the qualification of the sale of the Shares under the laws
of certain states, registration and filing fees, printing expenses, and other
expenses. The Selling Shareholders will pay all other expenses incident to
the offering and sale of the Shares to the public, including commissions and
discounts of underwriters, dealers or agents, if any. The Company will not
receive any proceeds of the sale of the Shares by the Selling Shareholders.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND THEIR
PURCHASE SHOULD BE CONSIDERED ONLY BY PERSONS ABLE TO SUSTAIN A TOTAL LOSS OF
THEIR INVESTMENT (SEE "RISK FACTORS").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Common Stock is traded in the over-the-counter market and is quoted
on the NASDAQ Small-Cap Market under the symbol "SOLV." On February 26, 1996
the closing bid price for the Common Stock on the NASDAQ Small Cap Market was
$31.00 per share.
The shares to which this Prospectus relates are being offered by the
Selling Shareholders through underwriters, dealers or brokers in the
over-the-counter market. The shares may also be sold in privately negotiated
transactions. Sales through dealers or brokers will be made with customary
commissions being paid by the Selling Shareholders. Payments to persons
assisting the Selling Shareholders with respect to privately negotiated
transactions will be negotiated on a transaction by transaction basis. The
Selling Shareholders have advised the Company that prior to the date of this
Prospectus they have made no agreements or arrangements with any underwriter,
broker or dealer regarding resale of the shares (See "Plan of Distribution").
The date of this Prospectus is ______________, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street NW, Washington D.C. 20549, and at the Regional Officers of the
Commission: The World Trade Center, Suite 1300, New York, NY 10048; 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can also be obtained from the Public Reference Section of the Commission at
its principal office at 450 Fifth Street NW, Washington, D.C. 20549.
As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information and exhibits set forth in
the Registration Statement (the "Registration Statement"), of which this
Prospectus is a part. Statements contained herein concerning the provisions
of documents are necessarily summaries of such documents, and each statement
is qualified in its entirety by reference to the copy of the applicable
document filed with the Commission. Copies of the Registration Statement and
its exhibits are on file at the offices of the Commission and may be
obtained, upon payment of the fee prescribed by the Commission, or may be
examined without charge at the public reference facilities maintained by the
Commission described above. For further information, reference is made to
the Registration Statement and its exhibits.
The Company will provide to each person to whom this Prospectus is delivered,
upon written or oral request of such person, a copy of any and all
information that has been incorporated by reference in the Registration
Statement of which this Prospectus is a part (not including exhibits to the
information that is incorporated by reference). Requests for such
information should be submitted to Solv-Ex Corporation, 500 Marquette N.W.,
Suite 300, Albuquerque, New Mexico 87102, Attention: Herbert M. Campbell II,
Vice President and General Counsel, telephone number (505) 243-7701.
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<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained in the body
of this Prospectus and is qualified in its entirety by the detailed
information and financial statements appearing elsewhere herein and
incorporated by reference herein.
THE COMPANY - Solv-Ex Corporation - is a New Mexico corporation
incorporated in 1980, which has concentrated its efforts in recent years
towards processing and recovery of mineral products from oil sands, as well
as improving its technology for recovery of bitumen (heavy crude oil) from
oil sands. The Company's technologies, several of which are patented, have
been thoroughly tested at its Albuquerque Pilot Plant and Research Center
with results which the Company believes are favorable, but have not been
demonstrated on a commercial basis. The Company has received no significant
revenues from operations.
The Company's principal assets are its technology (including the Pilot
Plant and Research Center) and two oil sands leases in Canada. (See "The
Company" and "Risk Factors.") The Company's executive offices are located at
500 Marquette N.W., Suite 300, Albuquerque, New Mexico, and its telephone
number at that address is (505) 243-7701.
RISK FACTORS - The securities offered involve a high degree of risk.
Risk factors applicable to the Company include a weak financial condition due
to the Company's history of operating losses, the need for additional
capital, its inability to commercialize its technology, its lack of patent
protection, the level of competition, the level of environmental regulation
and controls and its dependence on key personnel. (See "Risk Factors.")
THE OFFERING - The Selling Shareholders are offering a total of 519,870
shares of Common Stock to the public at market prices during the period that
this Prospectus is in effect. The Company will not receive any proceeds from
this offering. (See "Selling Shareholder" and "Plan of Distribution.")
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<PAGE>
SELECTED FINANCIAL DATA - The following is a summary of selected
financial information about the Company:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
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1995 1994 1993 1992 1991
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<S> <C> <C> <C> <C> <C>
Revenue $89,950 $16,749 $312,862 $10,990 $35,219
Net (loss) (1,079,600) (2,439,471) (2,249,607) (758,434) (700,382)
(Loss) per common share (.05) (.13) (.13) (.05) (.05)
Total assets 5,376,843 4,319,619 4,101,648 2,382,021 2,538,512
Long-term obligations 66,500 77,634 89,940 1,434,545 132,659
Total liabilities 702,136 271,410 396,415 1,640,458 1,711,208
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED DECEMBER 31,
--------------------------
1995 1994
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<S> <C> <C>
Revenues $ 42,896 $ 38,788
Net (loss) (1,993,527) (302,566)
(Loss) per common share (0.10) (0.015)
Total assets 7,885,907 6,390,351
Long-term obligations 61,750 72,014
Total liabilities 1,651,933 985,387
</TABLE>
THE COMPANY
GENERAL DEVELOPMENT OF BUSINESS.
- -SUMMARY
Solv-Ex is a New Mexico corporation incorporated in 1980, which in recent
years has concentrated its efforts towards processing and recovery of
minerals from oil sands, as well as improving its technology for recovery of
bitumen from oil sands. Although Solv-Ex is currently classified as a
development stage company as defined by generally accepted accounting
principles, the Company is engaged in efforts to complete financing for two
separate projects with the objective of becoming an operating entity. The
Company's headquarters are located at 500 Marquette N.W., Albuquerque, New
Mexico 87102.
The Company was originally organized for the purpose of developing a process
to extract bitumen from oil sands. Bitumen is a semi-solid hydrocarbon
compound which can be converted through an upgrading process into crude oil
which meets specifications for being transported by pipeline into fungible
markets for the oil. Through years of research and testing at its Research
Center and Pilot Plant in Albuquerque, New Mexico, the Company has developed
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<PAGE>
and continuously improved a patented process for bitumen extraction which it
believes is commercially attractive at today's oil prices, particularly in
view of stronger markets which have developed for heavier crude oils. It has
also developed a patented process to extract marketable mineral products from
the fine clays contained in oil sands or in waste tailings which exist as a
result of oil sands processing by others.
Historically, a significant part of expenses incurred by the Company to
develop its technology have been classified as research and development for
accounting purposes. Funds to perform such work have been raised through
sales of Common Stock (in public and private offerings), as well as exercise
of options, government grants and a joint venture. The Company has not yet
completed financing for a commercial project using its technology, and the
expenditures have resulted in recurring operating losses.
During the last three fiscal years, Solv-Ex has made significant improvements
in its extraction technologies for both bitumen and mineral products
contained in the fine clays. These improvements have resulted from extensive
pilot plant operations and have been verified by independent third parties,
both as to technology and projected capital and operating costs for
commercial plants using the technology. As hereinafter described, continued
progress has enabled to Company to raise funds for such work on an on-going
basis.
As in the case of any new natural resource project, there can be no assurance
that the Company can complete financing for either its oil or minerals
extraction projects or that any such financing can be completed upon terms
and conditions deemed reasonable. The Company recognizes that its lack of
operating history and the large amount of capital required to complete its
projects could make it difficult to complete project financing. However, on
the basis of its work to date, projections of revenues, capital and operating
costs, independent third party evaluation of its technologies and the markets
for anticipated products, management believes it will be able to complete
project financing for both projects and remove further doubt as to its
ability to continue as a going concern.
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<PAGE>
The amount of funding required is estimated to be approximately $125
million for the oil extraction project and $20-30 million for minerals
extraction project, depending on the final mix of products selected.
Although it is difficult to attribute a relative amount of importance
to either project, the Company expects that the first project in
production will be minerals extraction from existing tailings as a
result of its smaller size and lower requirement for construction and
operating capital. The Company also considers completion of financing
for the Bitumount Project as a matter of priority because the Company's
oil sands lease for this project requires installation of productive
capacity by December 14, 1997 in order to extend the lease into its
third term without additional action by the Company or governmental
approval.
- -DESCRIPTION OF BUSINESS DEVELOPMENT
Much of the Company's work during the mid-1980's was performed pursuant
to a joint venture with Shell Canada Limited during 1987 and 1988,
which successfully processed approximately 1,000 tons of oil sands for
bitumen recovery using a solvent extraction process. The oil sands
processed by the venture were mined from the Athabasca region of
Northern Alberta in Canada, which is known to contain the world's
largest deposits of oil sands. The venture was terminated in 1988 due
to declining oil prices at the time, but it served to establish the
technical feasibility of the Company's bitumen recovery process. As
hereinafter described, the Company has greatly simplified and achieved
significant improvements in its process since termination of the Shell
venture, the most notable of which has been elimination of solvent use
in bitumen extraction.
In 1988, the Company acquired its own oil sands lease (the "Bitumount
Lease") from Can-Amera Oil Sands, Inc. ("Can-Amera"), a Canadian
company organized in 1953 to develop oil sands deposits and which had
held the lease since December, 1955. The Bitumount Lease Property is
known to contain substantial quantities of surface mineable bitumen-
bearing material and is currently the subject of the Company's efforts
to develop its own commercial
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<PAGE>
project. In December 1989, the Company also acquired an
approximately 48.5 percent of the outstanding stock of Can-Amera
and received an assignment of voting rights to an additional 22.5
percent. During the 1993 fiscal year, certain Corporate Notes
issued by Can-Amera in 1955 were redeemed with Can-Amera Common
Stock, which diluted the Company's control to approximately 60.5%.
The remaining 39.5 percent of the outstanding stock of Can-Amera
not controlled by the Company is held by approximately 600 other
shareholders.
As of July 1, 1994, the Company entered into an agreement with United
Tri-Star Resources Limited ("UTS"), a Canadian oil and gas company
headquartered in Calgary, Alberta the stock of which is listed on the
Toronto Stock Exchange. Under this agreement, UTS provided the Company
with C$3 million towards completion of a feasibility report for
development of the Bitumount Lease and certain pre-construction
activities in connection therewith. Pursuant to the agreement, UTS also
acquired an undivided 10% working interest in the Bitumount Lease and
has the option to acquire 10% of any working interest acquired by Solv-
Ex (on the same terms and conditions as Solv-Ex) in other projects for
oil sands development in the Athabasca Region using the Solv-Ex
technology.
In July, 1995, Solv-Ex acquired a second oil sands lease (adjacent to
and much larger than the Bitumount Lease) from Petro-Canada. Pursuant
to the above described UTS Agreement, UTS acquired an undivided 10%
working interest in the Petro-Canada Lease by paying 10% of the
acquisition cost.
There are currently two major operations in Northern Alberta which
produce synthetic crude oil from the oil sands. These operations have
generated vast amounts of residues (or "tailings"), which are known to
contain significant quantities of various metals, primarily aluminum,
titanium, and iron. However, the tailings from these operations are
currently being contained in large, deep ponds which many observers
believe represent an environmental problem. Following the joint venture
with Shell, the Company undertook a substantial research and test
program for commercial recovery of such metals from the fine clays
contained in both oil sands and tailings in an effort to improve the
overall economics
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<PAGE>
of production operations. As a result of such efforts, the Company
has also developed patented process technology which it believes
can be used in commercial operations for recovery of metals, either
from tailings generated by others or from primary production of
bitumen from oil sands. Such metals will be initially extracted as
metallic sulfates, which can easily be upgraded to either an
intermediate metallic compound or elemental metal, depending upon
the market into which such products will be sold.
During the last three fiscal years, the Company modified its
Albuquerque Pilot Plant to incorporate the latest improvements in its
bitumen extraction process and to add a circuit for production of
minerals from oil sands tailings. During this period, extensive pilot
work was conducted on a continuing basis to demonstrate both bitumen
extraction and production of minerals from oil sands and tailings. More
than 100 tons of tailings and 300 tons of oil sands crude ore were
processed under the program, all of which were obtained from the
Athabasca region of Northern Alberta. The initial phase of the program
regarding metals extraction was conducted with the assistance of the
Alberta Oil Sands Technology and Research Authority ("AOSTRA"), which
committed to provide $300,000 for the program pursuant to an agreement
entered into in November, 1992. AOSTRA is a Crown corporation (owned by
the Province of Alberta) and can recover a maximum of 3 times the
amount of its contribution from certain defined future commercial
operations which use the technology.
As of September 21, 1994, the Company also entered into an agreement
with Suncor Inc. ("Suncor"), which operates one of the two large
surface mines and process facilities in Northern Alberta for production
of synthetic crude oil. Under this agreement, Suncor has granted the
Company access to its tailings for the purpose of constructing and
operating a plant to demonstrate use of the Company's patented
technology to process tailings for recovery of metal products,
primarily alumina.
Work is continuing at the Company's pilot plant for the purposes of (i)
testing further improvements or changes made from time to time in the
process; (ii) developing additional data required for engineering and
design of the facility for co-production of
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<PAGE>
marketable oil and mineral products from the Bitumount Lease; and
(iii) production of minerals in bulk quantities in connection with
marketing activities.
Duo-Ex Corporation ("Duo-Ex"), a wholly owned subsidiary of the Company
and its wholly owned subsidiary, Shale Research, Inc. ("Shale"), were
incorporated in 1981 and 1988, respectively. These subsidiaries have
been involved in the development of processes to extract hydrocarbons
from oil shale. During the fiscal year ended June 30, 1995, and since
1987 Duo-Ex and Shale have been inactive.
In 1993, the Company formed Applied Remedial Technologies, Inc. (doing
business as Applied Remediation Technologies or "ART") as another
wholly owned subsidiary which employs most of the personnel at the
pilot plant.
During the fiscal year ended June 30, 1995, neither the Company nor any
of its subsidiaries has been involved in any bankruptcy, receivership,
merger or consolidation; has acquired or disposed of any material
amount of assets otherwise than in the ordinary course of business; nor
experienced any material change in its mode of conducting business.
RISK FACTORS
The securities offered by this Prospectus involve a high degree of risk. In
analyzing the offering, prospective investors should carefully consider the
following matters.
NO REVENUES FROM OPERATIONS - With the exception of the contract revenues
received in Fiscal 1993 from the government of the province of Alberta,
Canada, and relatively minor amounts of interest income, the Company has not
generated revenues for many years. The Company has primarily been operating
from funds generated by the sale of the Company's Common Stock. Although
there can be no assurance that the Company will be able to generate operating
revenues in the future, the Company believes that improvements in its overall
technology increase the
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<PAGE>
likelihood that it will be able to secure funding on some basis for
construction and operation of a commercial-scale plant to demonstrate such
technology.
NEED FOR ADDITIONAL FINANCING - At December 31, 1995, the Company had a net
working capital deficit of $501,831. The Company has been using significant
amounts of cash in anticipation of receipt of project financing (which cannot
be assured), and during the six months ended December 31, 1995, used more
than $2,040,000 of cash in its operations and approximately the same amount
was used in investing activities. A $9 million private placement of common
stock was completed in January through FIBA Nordic Securities (UK) Ltd. at a
price in excess of 80% of the per share market price. In order for the
Company to finance its operations or to proceed with development of its oil
sands leases, construction and operation of a tailings plant or any other
commercial project, it will be necessary for the Company to raise a
significant amount of funds. Although based on preliminary discussions with
prospective project financing parties the Company believes that it will be
able to raise the necessary capital, the Company's prior efforts to raise
funds for commercial projects have not been successful, and there can be no
assurance that current efforts to raise such funds will be successful.
Furthermore, until such time as the Company is able to generate operating
cash flow, of which there can be no assurance, it will be required to
continue to raise funds for working capital and other expenditures through
private placement sales of its Common Stock, issuance of convertible
debentures or some form of joint venture transaction. Although there can be
no assurance that the Company will be able to do so, the Company has
historically been able to satisfy its requirements for operating capital
through private placement sales of its Common Stock and believes that it will
be able to do so in the immediate future.
DEVELOPMENT STAGE COMPANY; GOING CONCERN REFERENCE Because of the Company's
development efforts, the Company has incurred an operating loss each fiscal
year since inception. Such losses cumulate as a deficit and will continue to
have a negative impact on Stockholders' Equity until such time, if ever, as
the Company has commenced a commercial-scale project which proves profitable.
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<PAGE>
Although the Company believes it will have positive operating income after
its technology is placed into commercial operation, there can be no assurance
that the Company will ever operate profitably. It should be noted that the
Company's independent auditors stated in their report on the Company's
financial statements for the year ended June 30, 1995, that: ". . . the
Company's recurring net losses from operations and the lack of assurance that
the Company will be able to obtain project financing raise substantial doubt
about the entity's ability to continue as a going concern."
RISKS INVOLVED IN COMMERCIALIZING THE TECHNOLOGY - Although the Company
believes its processes have been successfully proven on a pilot plant scale
and that the scale-up factors contemplated by the Company for a
commercial-scale plant are reasonable, it is not uncommon for minerals or
metals extraction technologies to perform with disappointing results when
they are implemented on a large scale. Accordingly, there can be no
assurance that the Company's processes will perform efficiently or profitably
in a commercial-scale operation. Although the Company has entered into
preliminary agreements for marketing certain products, there can also be no
assurance that the Company will be able to finalize satisfactory marketing
arrangements or that market prices will be sufficient to permit profitable
operations, even if the processes perform as expected.
COMPETITION - The Company may be at a competitive disadvantage in utilizing
its processes on a commercial-scale in that it must compete with other
companies, many of which have greater financial resources and larger
technical staffs than the Company. Such other companies may also have the
ability to influence market prices of or available markets for the Company's
anticipated products in a manner which could impair the Company's ability to
obtain satisfactory prices for such products or sales in sufficient
quantities to permit profitable operations.
PATENT PROTECTION - The Company owns certain proprietary information
which it has acquired while developing its technology. It also owns
significant patents with respect to both its bitumen and minerals
extraction technology and has applied for additional patents as a
result of discoveries made during its recent pilot
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program. As developments warrant, the Company may file
applications for further additional patents from time to time in an
effort to protect itself against unauthorized use of its
technology, including patents from changes or improvements which
may result from operations or continuing research.
Process patents, such as those owned by the Company, may be considered
somewhat complicated and no assurance can be given that the Company's
existing patents or patent applications, if granted, will be
sufficiently broad to protect the Company from research and development
efforts of competitors or that such competitors will not infringe upon
them. In any event, the cost of enforcing any alleged or actual
infringement in litigation would probably be costly and could easily
interfere with the Company's proposed business.
POTENTIAL INABILITY TO COMPLY WITH GOVERNMENT ENVIRONMENTAL REGULATIONS
- - The Company's processes for extraction of bitumen and mineral
products, whether from oil sands or tailings, appear to meet or exceed
the requirements of all current environmental laws or regulations
applicable to discharges by operations in the Province of Alberta,
Canada, based upon independent third party analysis of the results of
the pilot plant operations. Construction and operating permits for
mining and processing operations (including reclamation) are issued
based upon review of individual permit applications by appropriate
authorities of the Province and a determination that the planned
operation will be in compliance with published environmental laws and
regulations. The size of the planned operation can be expected to have
an effect on the extent to which underlying data will be required in
support of a permit application and the degree to which governmental
authorities may have discretionary authority in permitting.
Compliance with these statutory and contractual requirements may
necessitate capital outlays not previously anticipated by the Company.
The Company believes it can readily comply with existing environmental
requirements to obtain permits for construction and operations using
equipment and procedures already incorporated into process design.
Similarly, the Company cannot predict the effect which any further
changes in environmental laws, rules or
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<PAGE>
regulations would have on the economic viability of its technology.
As in the case of any new processing plant, there is always risk that
results from the Company's commercial-scale operations, if achieved,
will not compare favorably with pilot plant results. Should this be the
case with respect to discharges into the environment from a plant
operated by the Company, there is no assurance that satisfactory
results could be achieved or that funds would be available to take such
action as might be required to achieve satisfactory results.
DEPENDENCE ON KEY PERSONNEL - Development of the Company's technology
and its ability to remain in business to date has been largely
dependent upon the efforts of Mr. John S. Rendall, Chairman, Chief
Executive Officer and a Director of the Company. Mr. Rendall is the
founder of and devotes 100% of his time to the time and affairs of the
Company. The Company does not have an employment agreement with Mr.
Rendall, but is the beneficiary of a key-man life insurance policy on
Mr. Rendall. The loss of Mr. Rendall would be detrimental to the
development of the Company because the specialized nature of its
business requires personnel experienced in both bitumen and minerals
extraction, which is an unusual combination of knowledge and experience
and would be difficult to replace.
DIVIDENDS - The Company has no history of earnings and there can be no
assurance that there will be earnings in the future. Moreover, the
nature of the Company's future operations, if successful, will be
capital intensive and it is likely any cash flow from operations will
be reinvested in expanded or new operations in the foreseeable future.
Accordingly, there can be no assurance that dividends will ever be paid
even if commercial operations are undertaken successfully.
SALE OF SHARES BY SELLING SHAREHOLDERS - As a result of this offering,
a substantial number of shares which could not otherwise be sold in the
market (other than in accordance with Rule 144) will become subject to
sale by the Selling Shareholders without restriction, which could have
a material adverse effect on the market price for the Company's Common
Stock. Subject to Rule 144
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<PAGE>
restrictions, the shares offered by this Prospectus would first
become available for sale during August, 1997.
HIGH VOLATILITY OF SHARE PRICE - The Company's common stock has been
highly volatile in the public market since July, 1994. During that
period of time the price has increased from $1.93 per share (bid) to in
excess of $35.00 per share (February, 1996). Currently the stock is
quoted in the low $30's. Recently trading volumes have fluctuated
widely as well. The Company has no basis for determining whether or
not this price volatility and trading volume fluctuation will continue.
USE OF PROCEEDS
Since this offering is an offer by the Selling Shareholders, the
Company will receive no net proceeds from this offering. Proceeds from
the sale of such shares offered hereby will accrue to the benefit of
the Selling Shareholders and not to the Company.
MARKET INFORMATION
The principal market in which the Company's common stock is traded
is the NASDAQ Small-Cap Market.
The table below states the quarterly high and low bid prices for the
Company's common stock as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"). The
quotations reflect inter-dealer prices, without retail mark-up, mark-
down, or commission and may not necessarily represent actual
transactions.
-15-
<PAGE>
<TABLE>
<CAPTION>
BID PRICES
---------------
LOW HIGH
--- ----
<S> <C> <C>
QUARTER ENDED
- -------------
September 30, 1993 $4-7/8 $ 6-3/8
December 31, 1993 3-7/8 6-1/4
March 31, 1994 5 6-3/16
June 30, 1994 1-15/16 5-11/16
September 30, 1994 1-15/16 4-7/8
December 31, 1994 3 4-15/16
March 31, 1995 3 4-13/16
June 30, 1995 3-5/8 9
September 30, 1995 6-1/2 8-3/16
December 31, 1995 9-3/4 16-5/8
</TABLE>
The number of holders of record of the Company's common stock as of
February 26, 1996 was approximately 912 according to American
Securities Transfer, Inc., the Company's transfer agent. This number
does not include an unknown number of persons who hold their shares in
street name.
DIVIDENDS
The Company has paid no cash dividends on its Common Stock and has no
present intention of paying cash dividends in the foreseeable future.
Payment of cash dividends in the future will be within the discretion
of the Board of Directors and will depend, among other things, upon the
Company's future earnings, capital requirements and other financial
conditions. The Company expects that any future financing may require
restrictions on the payment of dividends.
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<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that prior to the
date of this Prospectus it has not made any agreements or arrangements
with any underwriters, brokers or dealers regarding the resale of the
Shares. The Company has been advised by the Selling Shareholders that
the Shares may at any time or from time to time be offered for sale
either directly by the Selling Shareholders or by any transferee or
other successor in interest. Such sales may be made in the over-the-
counter market or in privately negotiated transactions.
The Company will pay all of the expenses incident to the filing of this
Registration Statement. Such expenses include legal and accounting
fees in connection with the preparation of the Registration Statement
of which this Prospectus is a part, legal fees in connection with the
qualification of the sale of the Shares under the laws of certain
states, registration and filing fees, printing expenses, and other
expenses. The Selling Shareholders will pay all other expenses
incident to the offering and sale of the Shares to the public,
including commissions and discounts of underwriters, dealers or agents,
if any. The Company will not receive any proceeds of the sale of the
Shares by the Selling Shareholders.
In connection with this offering the Company and the Selling
Shareholders have agreed to indemnify each other against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "1933 Act").
SALE OF SHARES BY SELLING SHAREHOLDERS
The Company anticipates that the Selling Shareholders will from time to
time offer the Shares through (i) dealers or agents or in ordinary
brokerage transactions, (ii) direct sales to purchasers or sales
effected through an agent; (iii) privately negotiated transactions; or
(iv) combinations of any such methods. The Shares would be sold at
market prices prevailing at the time of sale or at negotiated prices.
Dealers and brokers involved in the offer and sale of the shares may
receive compensation in the form of discounts and commissions. Such
compensation, which may be in
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<PAGE>
excess of ordinary brokerage commissions, may be paid by the Selling
Shareholders and/or the purchasers of Shares for whom such underwriters,
dealers or agents may act. The Selling Shareholders and any dealers or
agents which participate in the distribution of the Shares may be deemed to
be "underwriters" as defined in the 1933 Act and any profit on the sale of
the Shares and any discounts, commissions or concessions received by any
dealers or agents might be deemed by the NASD to constitute underwriting
compensation.
If the Company is notified by any of the Selling Shareholders that any
material arrangement has been entered into with an underwriter for the
sale of Shares, a supplemental prospectus will be filed to disclose
such of the following information as the Company believes appropriate:
(i) the name of the participating underwriter; (ii) the number of
Shares involved; (iii) the price at which such Shares are sold; (iv)
the commissions paid or discounts or concessions allowed to such
underwriter; and (v) other facts material to the transaction.
Sales of Shares in the over-the-counter market may be by means of one
or more of the following: (i) a block trade in which a broker or
dealer will attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction; (ii) purchases by a dealer as principal and resale by such
dealer for its account pursuant to this Prospectus; and (iii) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to
participate.
The Company is unable to predict the effect which sale of the Shares by
the Selling Shareholders might have upon the market price of the
Company's Common Stock or the Company's ability to raise further
capital.
-18-
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information about the selling
security holders in this offering:
<TABLE>
<CAPTION>
SHARES SHARES %AGE AFTER
NAME OWNED OFFERED OFFERING
---- ------ ------- ----------
<S> <C> <C> <C>
GFL Advantage 500,000 500,000 0%
Fund Limited
c/o CITCO
Kaya Flamboyan 9
Curacao
Netherlands
Antilles
Jeffrey B. Hodde 32,996 9,663 0%
Lee S. Chapman 103,145 10,237 0%
</TABLE>
In early August, 1995, GFL Advantage Fund Ltd. purchased the shares
offered hereby from the Company at a price of $5.688 per share in an
exempt offering.
Messrs. Hodde and Chapman acquired their shares for $3.625 per share in
November 1995 upon exercise of certain common stock purchase warrants
given them in July 1993.
The Selling Shareholders have advised the Company that the do not
necessarily plan to sell or transfer any of its shares, including those
shares offered hereby, but that they reserves the ability to do so upon
such terms and conditions (including price) as it may deem advisable.
(See "Plan of Distribution.")
-19-
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the sale of securities offered
hereby will be passed upon on behalf of the Company by Herbert M.
Campbell II, Esq., a director and general counsel of the Company.
Friedlob Sanderson Raskin Paulson & Tourtillott, LLC, P.C., 1400
Glenarm Place, Denver, Colorado has acted as special counsel to the
Company in connection with this Registration Statement. Members of
that law firm are the beneficial owners of approximately 50,000 shares
of Common Stock of the Company. As of February 15, 1996, Mr. Campbell
owned 58,000 shares of the Company's Common Stock and held exercisable
options to acquire an additional 95,000 shares.
EXPERTS
The consolidated financial statements of the Company included in the
Company's Annual Report on Form 10-K as of June 30, 1995 and 1994, and
for each of the years in the three year period ended June 30, 1995 and
cumulative from inception to June 30, 1995, have been incorporated by
reference in the registration statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the June 30, 1995
consolidated financial statements contains an explanatory paragraph
that states that the Company's recurring net losses from operations and
the lack of assurance that the Company will be able to obtain project
financing raise substantial doubt about the entity's ability to
continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of that
uncertainty.
-20-
<PAGE>
MATERIAL CHANGES
A description of material changes or developments in the Company's
business which have occurred since June 30, 1995 is contained in the
Quarterly Reports on Form 10-Q as filed with the Commission for the
quarters ended December 31, 1995 and September 30, 1995 and under the
caption "THE COMPANY" in this Prospectus. A $9 million private
placement of common stock was completed in January through FIBA Nordic
Securities (UK) Ltd. In order for the Company to finance its
operations or to proceed with development of its oil sands leases,
construction and operation of a tailings plant or any other commercial
project, it will be necessary for the Company to raise a significant
amount of funds.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission are
incorporated herein by reference: (i) Form 10-K for the year ended June
30, 1995, as amended; (ii) Form 10-Q for the quarters ended December
31, 1995 and September 30, 1995; and (iii) Proxy Statement for a Annual
Meeting of Shareholders held December 15, 1995.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering shall be deemed to be incorporated by reference herein
from the date of filing of such documents.
COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
As set forth in the Registration Statement under the caption
"INDEMNIFICATION OF DIRECTORS AND OFFICERS," Article XI of the
Company's Bylaws under certain circumstances provides for the
indemnification of the Company's officers, directors, and controlling
persons against liabilities which they may incur in such capacities.
In general, any officer, director, employee or agent may be indemnified
against expenses, fines, settlements or
-21-
<PAGE>
judgements arising in connection with a legal proceeding to which such person
is a party as a result of such relationship, if that person's actions were in
good faith, were believed to be in the Company's best interests, and were
believed not to be unlawful. Unless such person is successful upon the merits
in such an action, indemnification may be awarded only after a determination
by independent decision of the Board of Directors, by legal counsel, or by a
vote of the shareholders that the applicable standard of conduct was met by
the person to be indemnified. No specific provision is contained in the
Bylaws with respect to liabilities arising under the Securities Act.
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 provisions described herein, 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 Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director,
officer, or controlling person of the Company in the successful defense
of any action, suit, or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issues.
-22-
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
No dealer, salesman or other person has
been authorized to give any information or
to make any representations other than
those contained in this Prospectus. Any
information or representations not here- SOLV-EX CORPORATION
in contained, if given or made, must not
be relied upon as having been authorized
by the Company or any underwriter. This 519,870 Shares of
Prospectus does not constitute an offer or Common Stock
solicitation in respect to these securities
in any jurisdiction in which such offer or
solicitation would be unlawful. The delivery
of this Prospectus shall not, under any __________
circumstances, create any implication that
there has been no change in the affairs of PROSPECTUS
the Company since the date of this Pros- __________
pectus. However, in the event of a material
change, this Prospectus will be amended or
supplemented accordingly.
INDEX
PAGE NO.
--------
Available Information. . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . 10
Use of Proceeds. . . . . . . . . . . . . 15
Market Information . . . . . . . . . . . 15
Dividends. . . . . . . . . . . . . . . . 16
Plan of Distribution . . . . . . . . . . 17
Selling Shareholder. . . . . . . . . . . 19
Legal Matters. . . . . . . . . . . . . . 20
Experts. . . . . . . . . . . . . . . . . 20
Material Changes . . . . . . . . . . . . 21
Documents Incorporated by Reference. . . 21
Commission Position on Indem-
nification for Securities
Act Liabilities. . . . . . . . . . . . 21
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
In connection with the registration and distribution of the
securities to be registered hereby, the expenses to be incurred by the
Registrant are as follows:
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . $ 1,883
Legal Fees . . . . . . . . . . . . 8,000
Accounting Fees. . . . . . . . . . 5,000
Printing costs . . . . . . . . . . 1,000
Miscellaneous costs. . . . . . . . 1,117
-------
Total $17,000
-------
-------
</TABLE>
Except for the Registration Fee, all the above expenses are
estimated.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 53-11-4.1 of the New Mexico Business Corporation Act and
Article XI of the Registrant's Bylaws under certain circumstances
provided for the indemnification of the Registrant's officers,
directors, and controlling persons against liabilities which they may
incur in such capacities. A summarization of the circumstances in
which such indemnification is provided for is contained herein, but
that description is qualified in its entirety by reference to Article
XI of the Registrant's Bylaws.
In general, any officer, director, employee or agent may be
indemnified against expenses, fines, settlements or judgements arising
in connection with a legal proceeding to which such person is a party
as a result of such relationship, if that person's actions were in good
faith, were believed to be in the Registrant's best interest, and were
believed not to be unlawful. Unless such person is successful upon the
merits in such an
II-0
<PAGE>
action, indemnification may be awarded only after a determination
by independent decision of the Board of Directors, by legal
counsel, or by a vote of the shareholders that the applicable
standard of conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Registrant are
generally the same as those set forth above; however, with respect to
such actions, indemnification is granted only with respect to expenses
actually incurred in connection with the defense or settlement of the
action. In such actions, the person to be indemnified must have acted
in good faith, in a manner believed to have been in the Registrant's
best interest and with respect to which such person was not adjudged
liable for negligence or misconduct.
Indemnification may also be granted pursuant to provisions of the
Bylaws which may be adopted in the future, pursuant to a vote of
directors. The statutory provisions cited above and the referenced
portion of the Bylaws also grant the power to the Registrant to
purchase and maintain insurance which protects its officers and
directors against any liabilities incurred in connection with their
service in such position.
With regard to shareholder derivative suits, the indemnification
provisions may be unenforceable as against public policy. (See the
caption "Commission Position of Indemnification for Securities Act
Liabilities" in the Prospectus at Page 10.)
Item 16. EXHIBITS
The following exhibits are filed as part of this Registration
Statement:
3.1 Articles of Incorporation, as Amended October 7, 1993.
3.2 Bylaws, as Amended October 9, 1992 - Incorporated by
reference to Exhibit No 3.2 to the Registrant's
II-1
<PAGE>
Annual Report on Form 10-K for the fiscal year ended
June 30, 1993.
*5.1 Opinion and Consent of Herbert M. Campbell, II.
*23.1 Consent of KPMG Peat Marwick LLP
*23.2 Consent of Herbert M. Campbell, II--Included in Exhibit
5.1.
__________
* Filed herewith.
Item 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933 as amended, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) to remove from registration by means of a post effective
amendment any of the securities being registered hereunder which
remain unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for the
purposes of determining liability under the Securities Act of
1933, as amended, each filing of the Registrant's Annual
II-2
<PAGE>
Report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the
offering of such securities at such time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Albuquerque, New
Mexico on February 26, 1996.
SOLV-EX CORPORATION
By__________________________________
John S. Rendall
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or
directors of the Registrant, by virtue of their signatures to the
Registration Statement appearing below, hereby appoint and constitute
John S. Rendall and Herbert M. Campbell II, or either of them, with
full power of substitution, as attorneys-in-fact in their names, place
and stead, to execute any and all amendment to this Registration
Statement in the capacities set forth opposite their names and hereby
ratify all that said attorneys-in-fact may do by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
___________________ Chairman, Chief Executive February 26, 1996
John S. Rendall Officer and Director
(Principal Executive
Officer)
II-4
<PAGE>
___________________ President and Director February 26, 1996
W. Jack Butler (Principal Financial
Officer)
___________________ Vice President, and February 26, 1996
Herbert M. Campbell II Director (Principal
Accounting Officer)
___________________ Director February 26, 1996
J.E. Czaja
___________________ Director February 26, 1996
M. Norman Anderson
___________________ Director February 26, 1996
Julius D. Heldman
___________________ Director February 26, 1996
Thompson MacDonald
___________________ Director February 26, 1996
Lee F. Robinson
___________________ Director February 26, 1996
M.E. Davey
II-5
<PAGE>
EXHIBIT 5.1
[LETTERHEAD]
February 28, 1996
Board of Directors
Solv-Ex Corporation
500 Marquette NW, Suite 300
Albuquerque, NM 87102
Re: Registration Statement on Form S-3
Opinion of Counsel
Gentlemen:
As General Counsel for Solv-Ex Corporation (the "Corporation"), a New
Mexico corporation, I have examined the Articles of Incorporation, the Bylaws
and Minutes of the Corporation and such other corporate records, documents
and proceedings, and have considered such questions of law as I deemed
relevant for the purpose of this opinion. I have also, as such counsel,
examined the Corporation's Registration Statement on Form S-3 (the
"Registration Statement"), which will be filed with the Securities and
Exchange Commission today or shortly thereafter, covering the sale of 519,870
shares (the "Shares") of the Corporation's Common Stock as described in and
in accordance with the terms of the Registration Statement.
Based upon the foregoing, I am of the opinion that the Shares are duly and
validly issued as fully paid and non-assessable shares of Common Stock.
I know that I am referred to under the caption "Legal Matters" included in
the Prospectus filed as a part of the Registration Statement. I hereby
consent to the use of my name in such Registration Statement and to the
filing of this opinion as Exhibit 5.1 thereto. In giving this consent, I do
not thereby admit that I come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the Rules and
Regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ HERBERT M. CAMPBELL II
- ------------------------------
Herbert M. Campbell II
General Counsel
Duplicate Original: KPMG Peat Marwick
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
Board of Directors
Solv-Ex Corporation:
We consent to incorporation by reference in the Registration Statement on
Form S-3 of Solv-Ex Corporation of our report dated October 2, 1995, relating
to the consolidated balance sheets of Solv-Ex Corporation and subsidiaries as
of June 30, 1995 and 1994, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended June 30, 1995 and cumulative from July 2, 1980
(inception), which report appears in the June 30, 1995 annual report on
Form 10-K of Solv-Ex Corporation. We also consent to the reference to our firm
under the heading "Experts."
Our report dated October 2, 1995 contains an explanatory paragraph that
states that the Company's recurring net losses from operations and the lack
of assurance that the Company will be able to obtain project financing raise
substantial doubt about the entity's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that
might result from the outcome of that uncertainty.
/s/ KPMG PEAT MARWICK LLP
------------------------------
KPMG Peat Marwick LLP
Albuquerque, New Mexico
February 15, 1996
