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As filed with the Securities and Exchange Commission on December 20, 1996.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CANYON RESOURCES CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 1040 84-0800747
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification number)
</TABLE>
14142 DENVER WEST PARKWAY, SUITE 250
GOLDEN, COLORADO 80401
(303) 278-8464
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive office)
SCOTT M. REED
PARCEL, MAURO, HULTIN & SPAANSTRA, P.C.
1801 CALIFORNIA STREET, SUITE 3600
DENVER, COLORADO 80202
(303) 292-6400
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
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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]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Proposed
maximum maximum
Titles of each class of offering aggregate
securities to be Amount to be price per offering Amount of
registered registered share price registration fee
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<S> <C> <C> <C> <C>
Common Stock 20,000,000 shares $2.47(1) $49,400,000(1) $14,969.70
======================================================================================================================
</TABLE>
(1) Pursuant to Rule 457(c), the proposed maximum offering price per share is
the average of the high and low prices as quoted on The American Stock Exchange
on December 18, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS 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> 2
SUBJECT TO COMPLETION, DATED DECEMBER 20, 1996
PROSPECTUS
CANYON RESOURCES CORPORATION
20,000,000 SHARES
This Prospectus covers 20,000,000 shares (the "Shares") of the common
stock, $.01 par value (the "Common Stock"), of Canyon Resources Corporation, a
Delaware corporation (the "Company"). The Company from time to time may offer
the Shares for general working capital purposes and to fund possible future
acquisitions. See "Use of Proceeds".
When Shares are offered hereunder, a supplement to this Prospectus
will be delivered (the "Prospectus Supplement") together with this Prospectus
setting forth the terms of the offering thereby.
The Company may sell the Shares through underwriters or dealers, or
through agents. See "Plan of Distribution". The accompanying Prospectus
Supplement will set forth the names of any underwriters or agents involved in
the sale of the Shares in respect of which a Prospectus is being delivered, the
principal amounts, if any, to be purchased by underwriters and the
compensation, if any, of such underwriters or agents.
The Company's Common Stock is traded on The American Stock Exchange
("AMEX"). On December 18, 1996 the closing price for the Common Stock as
quoted on AMEX was $2.50.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OF ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------
FOR A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES, SEE "PRINCIPAL RISK FACTORS" AT PAGE 5 HEREOF.
The date of this Prospectus is _____________, 1996.
<PAGE> 3
IN CONNECTION WITH ANY OFFERING OF COMMON STOCK, UNDERWRITERS OR
AGENTS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICES OF THE COMMON STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED
ON THE AMERICAN STOCK EXCHANGE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, and accordingly files reports, proxy
statements, and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements, and other information
filed with the Commission are available for inspection and copying at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at certain of
the Commission's regional offices located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60604; and 7 World Trade
Center, New York, New York 10048, upon payment of the charges prescribed
therefor by the Commission. The Commission also maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants, including the Company, that file electronically with the
Commission at http://www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement. Copies of the Registration Statement are
available from the Commission as set forth above.
The Common Stock of the Company is currently traded on The American
Stock Exchange ("AMEX"). Reports, proxy statements and other information filed
by the Company therewith can be inspected at The American Stock Exchange, 86
Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 0-14329) are
incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
2. Quarterly Report on Form 10-Q for the periods ended March 31,
1996, June 30, 1996 and September 30, 1996.
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3. A description of the Company's Common Stock contained in the
Registration Statement on Form 8-A as declared effective by
the Securities and Exchange Commission on March 18, 1986.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents which are
incorporated by reference herein, other than exhibits to such documents which
are not specifically incorporated by reference herein. Requests should be
directed to Canyon Resources Corporation, 14142 Denver West Parkway, Suite 250,
Golden, CO 80401, Attention: Cheryl Martin (telephone 303-278-8464).
CANYON RESOURCES CORPORATION
Canyon Resources Corporation, a Delaware corporation (the "Company" or
"Canyon") is a Colorado-based company which was organized in 1979 to explore,
acquire, develop, and produce precious metals and industrial minerals. The
Company is involved in all phases of the mining business from early stage
exploration, exploration drilling, development drilling, feasibility studies
and permitting, through construction, operation and final closure of mining
projects.
The Company has gold and industrial mineral production operations in
the western United States. The Company also conducts mineral exploration
activities in the western United States. In the past two years, the Company
has commenced an exploration program in many areas of increasing interest
throughout Latin America and Africa. The Company's exploration and development
efforts emphasize precious metals (gold and silver) and industrial minerals.
Once acquired, mineral properties are evaluated by means of geologic
mapping, rock sampling, and geochemical analyses. Properties having favorable
geologic conditions and anomalous geochemical results usually warrant further
exploration by the Company. In almost all cases, exploration or development
drilling is required to further test the mineral potential of each property.
If a property has been adequately evaluated and does not warrant additional
work, the property is abandoned.
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Properties which have a demonstrated inventory of mineralized rock of
a potentially economic nature are further evaluated by conducting various
studies including calculation of tonnage and grade, metallurgical testing,
development of a mine plan, environmental baseline studies and economic
feasibility studies. If economics of a project are favorable, a plan of
operations is developed and submitted to the required governmental agencies for
review. Depending on the magnitude of the proposed project and its
environmental impact, an environmental analysis report or environmental impact
statement is prepared under direction of one or more governmental agencies,
prior to issuance of permits for the construction of a mining operation.
The Company conducts its mineral exploration and development
independently and through joint ventures with other companies. The Company is
continually evaluating its properties and other properties which are available
for acquisition, and will acquire, joint venture, market to other companies, or
abandon properties in the ordinary course of business.
The Company completed its initial public offering of securities in
1986. From 1986, when the Company became a reporting company, to August 16,
1996, the Company's securities were quoted on the Nasdaq Stock Market. Since
August 19, 1996, the Company's common stock has been traded on AMEX.
The Company's principal executive office is located at 14142 Denver
West Parkway, Suite 250, Golden, Colorado 80401, telephone (303) 278-8464. The
Company, in doing business, acts on its own behalf and through its
subsidiaries. The "Company" or "Canyon" is also used to refer to all of the
wholly owned subsidiaries of Canyon Resources Corporation.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Prospectus and the
documents incorporated herein by reference contain forward-looking statements.
The forward-looking statements contained herein are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in the section
entitled "RISK FACTORS" set forth below. Investors are cautioned not to place
undue reliance on these forward-looking statements, which reflect management's
analysis only as of the date of such statements. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect
events or circumstances that arise after the date of such statements.
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PRINCIPAL RISK FACTORS
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK FOR THE
INVESTOR. EACH POTENTIAL INVESTOR SHOULD CONSIDER CAREFULLY, AMONG OTHER
THINGS, THE FOLLOWING RISK FACTORS THAT MAKE THE SHARES OFFERED HEREBY A
SPECULATIVE INVESTMENT
GENERAL RISKS RELATED TO THE MINING INDUSTRY
Nature of Mineral Exploration and Production. Exploration for
minerals is highly speculative and involves greater risks than many other
businesses. Many exploration programs do not result in the discovery of
mineralization and any mineralization discovered may not be of sufficient
quantity or quality to be profitably mined. Uncertainties as to the
metallurgical amenability of any minerals discovered may not warrant the mining
of these minerals on the basis of available technology. The Company's
operations are subject to all of the operating hazards and risks normally
incident to exploring for and developing mineral properties, such as
encountering unusual or unexpected formations, environmental pollution,
personal injury and flooding. All of these factors may result in losses in
relation to amounts spent which are not recoverable. The Company has
experienced losses of this type from time to time.
Competition and Scarcity of Mineral Lands. Many companies and
individuals are engaged in the mining business, including large, established
mining companies with substantial capabilities and long earnings records.
There is a limited supply of desirable mineral lands available for claim
staking, lease or other acquisition in the United States and other areas where
the Company contemplates conducting exploration activities. The Company may be
at a competitive disadvantage in acquiring mining properties since it must
compete with these individuals and companies, many of which have greater
financial resources and larger technical staffs than the Company. From time to
time, specific properties or areas which would otherwise be attractive to the
Company for exploration or acquisition are unavailable due to their previous
acquisition by other companies.
Fluctuation in the Price of Minerals. The market price of minerals is
extremely volatile and beyond the control of the Company. Gold prices are
generally influenced by basic supply/demand fundamentals. The market dynamics
of supply/demand can be heavily influenced by economic policy, i.e., central
banks sales/purchases, political unrest, conflicts between nations, and general
perceptions about inflation. Fluctuating metal prices may have a significant
impact on the Company's results of operations and operating cash flow.
Furthermore, if the price of a mineral should drop dramatically, the value of
the Company's properties which are being explored or developed for that mineral
could also drop dramatically and the Company might not be able to recover its
investment in those properties. The decision to put a mine into production,
and the commitment of the funds necessary for that purpose, must be made long
before the first revenues from production will be received. During the last
five years, the average annual market price of gold has fluctuated between $326
per ounce and $415 per ounce. Price fluctuations between the time that such a
decision is made and the commencement of production can change completely the
economics of the mine. Although it is
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possible to protect against price fluctuations by hedging in certain
circumstances, the volatility of mineral prices represents a substantial risk
in the mining industry generally which no amount of planning or technical
expertise can eliminate. The Company's practice has generally been to sell its
minerals at spot prices, unless price hedging was required in connection with
securing loan facilities.
Gold Prices Over the Last Five Years. Gold prices tend to fluctuate
significantly. The following table shows the COMEX Gold month-end closing
price for the last five years and eleven months:
COMEX GOLD MONTH-END CLOSING PRICE
<TABLE>
<CAPTION>
YEAR JAN. FEB. MAR. APR. MAY JUN. JUL. AUG. SEPT. OCT. NOV. DEC.
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 $382 $383 $369 $367 $371 $377 $371 $353 $357 $359 $368 $354
1992 $368 $363 $352 $344 $342 $348 $361 $345 $349 $340 $334 $332
1993 $336 $334 $344 $361 $384 $383 $411 $376 $357 $370 $370 $387
1994 $392 $392 $402 $386 $396 $394 $389 $391 $398 $385 $381 $384
1995 $393 $392 $405 $399 $394 $392 $388 $387 $386 $384 $387 $387
1996 $406 $400 $396 $392 $391 $380 $388 $387 $378 $378 $373 ----
</TABLE>
Environmental Controls. Compliance with environmental quality
requirements and reclamation laws imposed by federal, state, and local
governmental authorities may necessitate significant capital outlays, may
materially affect the economics of a given property, or may cause material
changes or delays in the Company's intended activities. New or different
environmental standards imposed by any governmental authority in the future may
adversely affect the Company's activities. The Company experienced significant
delays and incurred costs over those originally anticipated in connection with
the environmental review and permitting process for the Briggs Mine in
California. At the Briggs Project, the Company originally estimated a
permitting time of 24 months and a cost for permitting of $2 million. However,
the actual permitting time stretched to 33 months, and costs increased to $4
million. In California, both the federal government and the state government
require environmental review documents -- an environmental impact statement
("EIS") under federal law and an environmental impact report ("EIR") under
state law. The United States Department of Interior Bureau of Land Management
("BLM") and Inyo County became the lead agencies for the federal and the state
permitting processes, respectively. Notwithstanding the fact that a Memorandum
of Understanding was signed during the first few months of the process between
the BLM and Inyo County, under which the BLM and Inyo County cooperated as
co-lead agencies in the preparation of one environmental review document to
satisfy both federal and state requirements (an EIS/EIR), significant
additional time and numerous administrative drafts of the EIS/EIR were required
during the process to harmonize and satisfy the needs and requirements of both
the BLM and Inyo County. Costs increased due to the significant additional
expense of the numerous administrative drafts which were required to be
completed, due to other additional costs which were incurred in satisfying both
agencies, and due to additional fixed and other costs as a result of the
extended period of time required to complete the permitting process.
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The Kendall Mine operates under permits issued by the Montana
Department of Environmental Quality (DEQ) and other regulatory agencies. The
DEQ also requires that the Company maintain a $1.9 million reclamation bond.
Reclamation has been ongoing throughout the life of the operation and costs to
date total $2.0 million. The Company has accrued an additional $2.2 million
related to mine closure as of September 30, 1996. Although the DEQ has
approved the Company's soils and revegetation plan and its drainage and
sediment control plan, a water quality and long-term monitoring plan has not
been formulated and it is anticipated that it will be submitted for review in
1997. The outcome of that plan may impact the Company's estimate of costs
remaining to achieve mine closure.
Uncertainty of Title. Most of the Company's mining properties are
unpatented mining claims to which the Company has only possessory title.
Because title to unpatented mining claims is subject to inherent uncertainties,
it is difficult to determine conclusively ownership of such claims. In
addition, in order to retain title to an unpatented mining claim, a claim
holder must have met annual assessment work requirements ($100 per claim)
through September 1, 1992 and must have complied with stringent state and
federal regulations pertaining to the filing of assessment work affidavits.
Moreover, after September 1, 1992, the right to locate or maintain a claim
generally is conditional upon payment to the United States of a rental fee of
$100 per claim per year for each assessment year instead of performing
assessment work. State law may, in some instances, still require performance
of assessment work.
The present status of the Company's properties as unpatented mining
claims located on public lands of the U.S. allows the claimant the exclusive
right to mine and remove valuable minerals, such as precious and base metals
and industrial minerals, found therein, and also to use the surface of the land
solely for purposes related to mining and processing the mineral-bearing ores.
However, legal ownership of the land remains with the U.S. Accordingly, with an
unpatented claim, the U.S. retains many of the incidents of ownership of land,
the U.S. regulates use of the surface, and the Company remains at risk that the
claims may be forfeited either to the U.S. or to rival private claimants due to
failure to comply with statutory requirements as to location and maintenance of
the claims. If there exists a valuable deposit of locatable minerals (which is
the requirement for the unpatented claim to be valid in the first place), and
provided certain levels of work and improvements have been performed on an
unpatented mining claim, the Mining Law of 1872 authorizes claimants to then
seek to purchase the full title to the claim, thereby causing the claim to
become the private property of the claimant. Such full ownership expands the
claimant's permissible uses of the property (to any use authorized for private
property) and eliminates the need to comply with maintenance and reporting
requirements necessary to protect rights in an unpatented claim.
Because the Company believes that it has established the existence of
valuable mineral deposits in certain of its properties, and has maintained and
improved the claims in the manner required by law, it has sought to enhance its
rights in those properties by seeking issuance of mineral patents. In July of
1992, the Company caused four applications for mineral patent for the 20 lode
mining claims comprising the then- known ore reserves at the Briggs property to
be filed with the Bureau of Land Management ("BLM"). However, due to
administrative backlogs in the California State Office of the BLM, processing
of those applications has not proceeded. On December 30,
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1993, the Company caused five applications for mineral patent for the 15 placer
mining claims which encompass known ore reserves on public lands for the
diatomite operations conducted by the Company's subsidiary, CR Minerals, to be
filed with the Nevada State Office of the BLM. Those applications have been
processed to the point where the purchase price for the claims has been
accepted.
On October 1, 1994, while the patent applications were pending,
Congress imposed a moratorium on accepting and processing mineral patent
applications within the Department of the Interior. Under the terms of the
continuing statutory moratorium (as interpreted by the Secretary of the
Interior), and solely as a result of the actions or inactions of the respective
state offices prior to the time the moratorium became effective, the Secretary
considers the California applications not to be exempt from the moratorium, and
therefore will not allow them to be processed while the moratorium remains in
effect, but the Nevada applications are considered exempt and are being
adjudicated. The Company instituted litigation in the U.S. District Court for
the District of Nevada to attempt to force the Secretary to construe all of the
applications as exempt from the moratorium and to diligently process all of
them, either by granting patents or by contesting the claims. However, the
Court has declined to compel the Secretary to expedite processing of the
applications. The Court's decision does not determine the validity of the
claims, nor does it directly affect the Company's basic ability to conduct
mining operations on the claims.
The Company has no reason to believe that grounds exist for denial of
any of the patents when and if they are ultimately adjudicated. However, there
can be no assurance that such patents will be granted.
Proposed Legislation Affecting the Mining Industry. For the last
several Congressional sessions, bills have been repeatedly introduced in the
U.S. Congress which would supplant or radically alter the provisions of the
Mining Law of 1872. As of November 1, 1996, no such bills have passed. If
enacted, such legislation could substantially increase the cost of holding
unpatented mining claims and could impair the ability of companies to develop
mineral resources on unpatented mining claims. Under the terms of certain
proposed legislation, the ability of companies to obtain a patent on unpatented
mining claims would be nullified or substantially impaired. Moreover, certain
forms of such proposed legislation contain provisions for the payment of
royalties to the federal government in respect of production from unpatented
mining claims, which could adversely affect the potential for development of
such claims and the economics of operating existing mines on federal unpatented
mining claims. The Company's financial performance could therefore be affected
adversely by passage of such legislation. It is impossible to predict at this
point what any legislated royalties might be, but, as an example, a potential
three percent gross royalty, assuming a gold price of $400 per ounce, would
have an approximated $12 per ounce impact on the Company's costs of production
from unpatented mining claims.
SPECIFIC RISKS RELATED TO THE COMPANY
Permitting Risks at the McDonald Facilities. Mining activity in the
United States is subject to the granting of numerous permits under applicable
Federal and State statutes, including, but not
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limited to, the National Environmental Policy Act, the Clean Water Act, the
Clean Air Act, and the Montana Environmental Policy Act. It is not legal to
engage in mining activity without securing the permits required by these and
other statutes. Initiation of gold production at the McDonald project will
thus require the granting of numerous permits, some of which are discretionary.
Major permits include the Operating Permit from the Montana Department
of Environmental Quality (DEQ), the Operating Plan from the Montana Department
of Natural Resources and Conservation (DNRC), the Air Quality Permit (DEQ), the
Montana Pollutant Discharge Elimination System Permit (DEQ), a Non-Degradation
Authorization (DEQ), a Stormwater Discharge Permit (DEQ), a Water Rights Permit
(DNRC), a Section 404 Dredge and Fill Permit from the U.S. Army Corps of
Engineers (COE), and a Fiscal Impact Plan which must be approved by the Montana
Hard Rock Impact Board and numerous local government units.
An Environmental Impact Statement (EIS) is currently being prepared by
three co-lead agencies, DEQ, DNRC, and COE. This EIS will be used to support
all of the major permit decisions. Agency decisions on the permits are
anticipated to be forthcoming by the end of 1997. In April 1996, certain
environmental groups brought an action against the DEQ challenging its
determination in March of 1996 that the permit application for the McDonald
Project is complete. No assurance can be given that such permits will be
issued, or if issued, in what time frame such issuance would occur.
Permitting, Construction and Start-up Risk at the Briggs Project. The
Company has received all of its permits and approvals for the development and
operation of the Briggs Project, and has obtained financing estimated to cover
100% of project development costs of $34 million for construction of project
facilities and $10 million for mining equipment. The granting of certain of
the permits has been appealed and to date each of the appeals has been
dismissed. No assurance can be given that other potential appeals might not be
successful in overturning the granting of a permit. Construction commenced in
December 1995 and the initial gold pour at the Briggs Mine occurred in October
1996. The first phase of the leach pad was constructed and fully covered with
overliner material and began receiving crushed ore which underwent leaching in
November 1996.
Limited Remaining Life of the Kendall Mine. The Company's principal
revenue and income producing asset from 1988 to 1995 was the Kendall Mine,
located near Lewistown, Montana. The Kendall Mine has produced over 300,000
ounces of gold. Mining activity at the Kendall Mine ceased in January, 1995,
and the Company estimates that gold produced by the Kendall Mine will no longer
be sold profitably after 1996. Thus, the ability of the Company to generate
increased revenues or earnings is dependent on its ability to bring into
production additional facilities, such as the Briggs Mine.
Uncertainty of Funding for Exploration. Prior to 1986, the Company
funded its exploration and acquisition activities through joint venture
arrangements, which minimized the cost of such activities to the Company and
allowed it to explore and acquire a greater number of properties than it would
otherwise have been able to explore or acquire on its own. Since 1986, the
Company has funded a portion of its exploration activities without joint
venture participation, resulting in increased costs to the Company. The
Company has been successful in raising such funds for its exploration
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activities. Additional funding from existing partners or third parties,
however, may be necessary to conduct detailed and thorough evaluations of, and
to develop certain properties. The Company's ability to obtain this financing
will depend upon, among other things, the price of gold and the industry's
perception of its future price. Therefore, availability of funding is
dependent largely upon factors outside of the Company's control, and cannot be
accurately predicted. The Company does not know from what sources it will
derive any required funding. If the Company is not able to raise additional
funds (as to which there can be no assurance), it will not be able to fund
certain exploration activities on its own.
Uncertainty of Funding for Production. The Company believes that its
producing properties have been adequately financed for current and ongoing
production. If the Company's continuing exploration and/or development
activities indicate economically minable ore on other properties now owned or
hereafter acquired by the Company, however, the Company will be required to
expend potentially large sums to put such properties into production. The
amount of such financing could be reduced if the Company sells assets or enters
into joint ventures on one or more of its properties. The Company may need to
seek additional funding for the Seven-Up Pete/McDonald project. The
development capital budget for the Seven-Up Pete/McDonald Project will be
determined on an annual or longer basis pursuant to the budgetary approval
process between Phelps Dodge Mining Company, a division of Phelps Dodge
Corporation, the operator and majority participant in the joint venture, and
the Company, in accordance with the Seven-Up Pete Venture Agreement previously
filed as an exhibit to the Company's Reports on Form 10-K filed with the
Commission.
The Seven-Up Pete Venture Agreement provides for Phelps Dodge, as the
manager of the venture, to submit a proposed budget for review by the venture
participants at least two months prior to the period to be covered by the
budget. Within thirty days of submission of the proposed budget, the
non-managing participant has the option to approve the proposed budget as
submitted or propose modifications to it, in which case the participants must
seek to develop a budget which is mutually acceptable in accordance with the
procedures of the Seven-Up Pete Venture Agreement.
Within twenty days of a final vote adopting a budget, which vote is
determined by an affirmative vote of the majority of the participating
interests, each party can elect to participate to the full extent of its
participating interest in such budget, or in some lessor amount. If a
participant elects to contribute to a budget in an amount less than its full
participating interest, its participating interest will thereafter be reduced
in proportion to the total contributions made by both parties up to the time of
the election, together with the amounts elected to be contributed to such
budget, all in accordance with the formula established in the Seven-Up Pete
Venture Agreement. If a participant defaults in making a required contribution
to an adopted budget, the non-defaulting participant has the option to advance
the amount of default on behalf of the defaulting participant as a demand loan,
or to have the defaulting participant's participating interest reduced in
relation to the amounts contributed by the parties; provided that the defaulted
amount shall be subtracted from the defaulting participant's previous
contributions in calculating the participant's new interest.
In the event a development capital budget is approved which calls for
amounts to be contributed by the Company in excess of that which the Company is
able to expend, the Company
10
<PAGE> 12
may be subject to a dilution of its interest as described above. There can be
no assurance that additional funding would be available to meet the Company's
needs in avoiding dilution. It is estimated that the initial capital costs for
the Seven-Up/McDonald Project would be approximately $188 million. The
Company's 27.75% share of that amount would be approximately $52 million.
However, the Company believes that project financing on reasonable terms could
be obtained for the Seven-Up/McDonald Project for at least 70% or more of the
initial capital cost requirements. In that event, the Company's share of the
remaining 30% of the initial capital cost requirements would be approximately
$16 million in order to retain its current participating interest of 27.75%.
The total amounts spent to date on the Seven-Up/McDonald Project are in excess
of $30 million, of which the Company has expended 27.75%, or approximately $8.4
million.
Uncertainty of Development and Operating Property Economics and Ore
Grades at Development Properties. Decisions as to whether any of the mineral
development properties which the Company now holds or which it may acquire in
the future contain commercially minable deposits, and whether such properties
should therefore be brought into production, depend upon the results of
exploration programs and/or feasibility analyses and the recommendations of
duly qualified engineers or geologists. Such decisions involve consideration
and evaluation of several significant factors, including, but not limited to,
the (a) costs of bringing a property into production, including exploration and
development work, preparation of production feasibility studies and
construction of production facilities, (b) availability and costs of financing,
(c) ongoing costs of production, (d) market prices for the mineral to be
produced, and (e) the amount and grades of reserves or mineralized material.
There can be no assurance that any of the development properties now held by
the Company, or which may be acquired by the Company, contains a commercially
minable mineral deposit, and therefore no assurance that the Company will ever
generate a positive cash flow from production operations on such properties.
The potential development properties and the properties under construction on
which minable reserves have been defined include the Seven-Up Pete/McDonald
deposits in Montana and the Briggs Project in California. There can be no
assurance that these development properties can attain profitable operations.
Both the Briggs and McDonald projects have predicted average gold grades (.030
and .034 ounces per ton, respectively) less than the average grade produced
during mining operations at the Kendall Mine since 1990 of .051 ounces per ton.
In addition, once a property is placed into production, risks still exist that
the amount and grade of its reserves will not actually be as predicted. To the
extent that lower amounts and/or grades of reserves are experienced, costs per
unit produced and profitability can be adversely affected. Depending upon the
extent of such an effect in any of the Company's properties, the Company could
incur a writedown on its investment in any such property.
No Dividends. For the foreseeable future, it is anticipated that the
Company will use any earnings to finance its growth and that dividends will not
be paid to shareholders. Further, pursuant to the Guarantee, Equity
Contribution and Pledge Agreement dated as of December 6, 1995 ("Guarantee
Agreement") executed by the Company in favor of its wholly owned subsidiary, CR
Briggs Corporation, in connection with the Loan Agreement of the same date
("Loan Agreement") for the Briggs Project with Banque Paribas and others, the
Company has agreed to maintain certain levels of working capital, tangible net
worth, and leverage ratios and make equity contributions to complete the Briggs
Project in the event of cost overruns in excess of the $6 million currently
11
<PAGE> 13
available for such purpose, which could restrict the payment of dividends where
such payment would result in a failure to maintain such levels or make such
contributions. See Items 5 and 7 and Notes 6 and 7 to the Financial Statements
in the Company's Report on Form 10-K for the period ending December 31, 1995
filed with the Commission. In particular, the Company, at any time during the
term of the Guarantee Agreement, must maintain a tangible net worth of not less
than $38 million; a working capital ratio of the aggregate current assets to
aggregate current liabilities of the Company and its subsidiaries of at least
1.75 to 1.0; and must maintain a leverage ratio, defined as the ratio of total
liabilities to tangible net worth, of at least 1.22 to 1. Similarly, CR Briggs
Corporation is prohibited from repaying the Company for advances or from paying
dividends to the Company from the Briggs Project revenues unless certain
conditions relating to the financial performance of the Briggs Project are met.
These conditions and the financial performance are referred to in Notes 6 and 7
to the Financial Statements included in the Company's Report on Form 10-K for
the period ending December 31, 1995 filed with the Commission. In addition to
those conditions specifically discussed in Notes 6 and 7, CR Briggs Corporation
must maintain a future debt coverage ratio, defined as the net present value of
the future cash flow for the Briggs Project to the aggregate outstanding
principal amount of loans remaining to be paid on any given date, of at least
1.5 to 1 in order to be able to make any dividend or other payment to the
Company from the proceeds of the Briggs Project. The Company is currently in
compliance with all of the above-described conditions of the Loan Agreement and
the Guarantee Agreement and believes it will be able to stay in compliance
throughout the term of such agreements; however, no assurance can be provided
that the Company will always be in complete compliance with all such
conditions.
Lack of Profitability. The Company's operating history has resulted
in losses from operations in the fiscal years ending December 31, 1993, 1994
and 1995 and through the nine months ended September 10, 1996. While certain
of the Company's operations may be profitable during a given fiscal year, the
Company's operations as a whole may be unprofitable due to exploration and
development costs on properties from which no revenue is derived, to continuing
corporate general and administrative costs and interest expense associated with
long term debt.
Change in Control Provisions. The Company's Certificate of
Incorporation and Bylaws contain certain measures designed to make it more
difficult and time-consuming to change majority control of the Company's Board
of Directors and to reduce the vulnerability of the Company to an unsolicited
offer to take over the Company, particularly an offer which does not
contemplate the acquisition of all the Company's outstanding shares or which
does contemplate the restructuring or sale of all or part of the Company.
These provisions include (i) classification of the Board of Directors into
three classes, each class to serve for three years, (ii) a provision that the
Company's directors may be removed only for cause and only with the approval of
the holders of at least 66-2/3% of the voting power of the Company entitled to
vote for the election of directors, (iii) a provision that any vacancy on the
Board may be filled by the remaining directors then in office, though less than
a quorum, and (iv) a provision requiring a 66-2/3% shareholder vote to amend or
repeal, or to adopt any provision inconsistent with the foregoing measures.
The foregoing measures may have certain negative consequences, including an
effect on the ability of shareholders of the Company or other individuals to
(i) change the composition of the incumbent board of directors; (ii) benefit
from certain transactions which are opposed by the incumbent board of
directors; (iii) make
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<PAGE> 14
a tender offer or otherwise attempt to gain control of the Company, even if
such attempt was beneficial to the Company and its shareholders. Since such
measures may also discourage accumulations of large blocks of the Company's
stock by purchasers whose objective is to have such stock repurchased by the
Company at a premium, they could tend to reduce the temporary fluctuations in
the market price of the Company's stock which are caused by such accumulations.
Accordingly, shareholders may be deprived of certain opportunities to sell
their stock at a temporarily higher market price. The provisions relating to
the removal of directors and the filling of vacancies will reduce the power of
shareholders, even those with a majority interest in the Company, to remove
incumbent directors and to fill vacancies on the board of directors.
Volatility of Price for Common Stock. The market price for shares of
the Company's Common Stock may be highly volatile depending on news
announcements or changes in general market conditions. In recent years the
stock market has experienced extreme price and volume fluctuations.
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Shares
offered hereby will be utilized for general working capital purposes, for mine
exploration and expansion, and to finance possible acquisitions. Except as may
be set forth in a Prospectus Supplement, the Company does not have any
agreements or other commitments for any acquisitions at this time.
PLAN OF DISTRIBUTION
The Company may sell the Shares (i) to or through underwriters or
dealers, (ii) directly to other purchasers or (iii) through agents. The
Prospectus Supplement will set forth the terms of the offerings of any Shares,
including the method of distribution, the name or names of any underwriters,
dealers or agents, any managing underwriter or underwriters, the purchase price
of the Shares and the proceeds to the Company from the sale, any underwriting
discounts and other items constituting underwriters and agents' compensation
and any discounts and concessions allowed, reallowed or paid to dealers or
agents. Any initial public offering price and any discount or concessions
allowed, reallowed or paid to dealers may be changed from time to time. The
expected time of delivery of the Shares in respect of which this Prospectus is
delivered will be set forth in the Prospectus Supplement.
The distribution of the Shares may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Sales of the Shares that may be offered hereby may be effected from
time to time in one or more transactions on AMEX, or in negotiated transactions
or a combination of such methods of sale, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at other
negotiated prices.
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<PAGE> 15
In connection with the sale of the Shares, underwriters may receive
compensation from the Company or from purchasers of the Shares for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell the Shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of the Shares may be deemed to be underwriters, and any discounts
or commissions received by them from the Company and any profit on the resale
of the Shares by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriters or agents will be
identified, and any such compensation will be described, in the Prospectus
Supplement.
Under agreements which may be entered into by the Company,
underwriters and agents who participate in the distribution of the Shares may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Shares from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Shares shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Shares
offered hereby and the organization and existence of the Company will be passed
upon for the Company by Parcel, Mauro, Hultin & Spaanstra, P.C., 1801
California Street, Suite 3600, Denver, Colorado 80202.
14
<PAGE> 16
EXPERTS
The consolidated financial statements of the Company as of December
31, 1995 and 1994 and for the three years in the period ended December 31,
1995, which are incorporated by reference in this Prospectus, have been audited
by Coopers & Lybrand L.L.P., independent public accountants, as indicated in
their report which includes an explanatory paragraph regarding the Company's
change in accounting for impairments of long- lived assets, dated March 27,
1996, with respect thereto, and are incorporated herein by, reference in
reliance upon the authority of said firm as experts in accounting and auditing.
The Engineering Report by Davy International referred to in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, which is incorporated by reference in this Prospectus, has been included
herein in reliance on their report, given on the authority of that firm as
experts in mining engineering.
The "Fatal Flaw Review" and Executive Summary prepared by Roberts &
Schaefer Company for the Company's Feasibility Study at Briggs, referred to in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, which is incorporated by reference in this Prospectus, has been included
herein in reliance on their report, given on the authority of that firm as
experts in mining and processing engineering.
The "Fatal Flaw Review" of the ore reserves, mine plan, and mining
capital and operating costs prepared by Mine Reserves Associates, Inc. for the
Company's Feasibility Study at Briggs, referred to in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, which is
incorporated by reference in this Prospectus, has been included herein in
reliance on their review, given on the authority of that firm as experts in
geology and reserves.
The review of the environmental and permitting aspects of the
Company's Feasibility Study at Briggs performed by Remy and Thomas, Attorneys
at Law, referred to in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, which is incorporated by reference in this
Prospectus, has been included herein in reliance on their review, given on the
authority of that firm as experts in California environmental law.
The additional opinion on the gold recovery at Briggs provided by
Chamberlin & Associates, as referred to in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, which is incorporated by
reference in this Prospectus, has been included herein in reliance on their
opinion, given on the authority of that firm as experts in metallurgical
engineering.
15
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered. All of the amounts shown are estimated except for the Securities
and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee $14,969.70
Blue Sky fees and expenses $ 1,000.00
Printing and engraving expenses $ 500.00
Legal fees and expenses $ 6,000.00
Accounting fees and expenses $ 3,600.00
Total $26,069.70
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides as
follows:
145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. (a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
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<PAGE> 18
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the act that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) and
(b) of this section. Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
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<PAGE> 19
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested director or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this section.
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article VI of the Registrant's Bylaws provides as follows:
The corporation, to the fullest extent permitted by the General
Corporation Law of the State of Delaware and by the common law of the State of
Delaware, shall indemnify each person who is or was an officer, director or
employee of the corporation acting in his capacity as such and may indemnify
each person who is or was an agent of the corporation acting in his capacity as
such. The
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<PAGE> 20
indemnification rights provided by this Article VI are deemed a contract
between the corporation and its officers, directors, and employees, and any
repeal or modification of those rights will not affect any right of such
persons to be indemnified against claims relating to events occurring prior to
such repeal or modification. To assure indemnification under this Article VI
of all such persons who are or were "fiduciaries" of an employee benefit plan
governed by the Act of Congress entitled "Employee Retirement Income Security
Act of 1974," as amended from time to time, Section 145 of said statute shall,
for the purposes hereof, be interpreted as follows: "other enterprise" shall be
deemed to include an employee benefit plan; the corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to said Act of Congress shall be deemed "fines";
and action taken or omitted by a person with respect to an employee benefit
plan in the performance of such person's duties for a purpose reasonably
believed by such person to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
Article TWELFTH of the Registrant's Certificate of Incorporation
provides as follows:
No director of the corporation shall be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) for paying dividends or approving a stock purchase or redemption
which is illegal or otherwise impermissible or prohibited under the Delaware
General Corporate Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
The effect of the foregoing provisions is to permit, under certain
circumstances, indemnification of the Company's officers and directors for
civil and criminal liability, such as negligence, gross negligence, and breach
of duty, so long as such person acted in good faith in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, and
which he reasonably believed to be lawful.
Item 16. Exhibits.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1* Form of Underwriting Agreement
3.1 Amended Certificate of Incorporation of the Company (1)
3.2 Bylaws of the Company, as amended (1)
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<PAGE> 21
4.1 Specimen Common Stock Certificate (2)
5.1** Opinion of Parcel, Mauro, Hultin & Spaanstra, P.C. as to the
legality of the Shares
23.1** Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Davy International
23.3** Consent of Roberts and Schaefer Company
23.4** Consent of Mine Reserves Associates, Inc.
23.5** Consent of Remy, Thomas and Moose
23.6** Consent of Chamberlin & Associates
23.7** Consent of Parcel, Mauro, Hultin & Spaanstra, P.C. (contained in
Exhibit 5.1)
* To be filed by supplement hereto.
** Filed herewith
- -------------------------------------
(1) Incorporated by reference from the Company's Registration Statement on
Form S-3 as declared effective by the Securities and Exchange
Commission on May 14, 1996.
(2) Incorporated by reference from the Company's Registration Statement on
Form 8-A as declared effective by the Securities and Exchange
Commission on March 18, 1986.
Item 17. Undertakings.
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, each such post- effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
20
<PAGE> 22
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to 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 therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant 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 Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant 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
Registrant 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 Act and will be
governed by the final adjudication of such issue.
(6) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(7) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
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<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant hereby 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 and any amendment thereto to be signed
on its behalf of the undersigned, thereunto duly authorized, in the City of
Golden, State of Colorado on December 19, 1996.
CANYON RESOURCES CORPORATION
Date: December 19, 1996 /s/ Richard H. De Voto
-----------------------------------
Richard H. De Voto
Principal Executive Officer
Date: December 19, 1996 /s/ Gary C. Huber
-----------------------------------
Gary C. Huber
Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1933,
as amended, this Registration Statement and any amendment thereto has been
signed below by the following persons on behalf of the Company in the
capacities and on the dates indicated.
Date: December 19, 1996 /s/ Richard H. De Voto
-----------------------------------
Richard H. De Voto, Director
Date: December 19, 1996 /s/ Gary C. Huber
-----------------------------------
Gary C. Huber, Director
Date: December 19, 1996 /s/ William W. Walker
-----------------------------------
William W. Walker, Director
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<PAGE> 24
Date: December 19, 1996 /s/ Paul A. Bailly
-----------------------------------
Paul A. Bailly, Director
Date: December 19, 1996 /s/ Leland O. Erdahl
-----------------------------------
Leland O. Erdahl, Director
Date: December 19, 1996 /s/ George W. Holbrook, Jr.
-----------------------------------
George W. Holbrook, Jr., Director
Date: December 19, 1996 /s/ Frank M. Monninger
-----------------------------------
Frank M. Monninger, Director
Date: December 19, 1996 /s/ William C. Parks
-----------------------------------
William C. Parks, Director
Date: December 19, 1996 /s/ Christopher M. T. Thompson
-----------------------------------
Christopher M. T. Thompson, Director
23
<PAGE> 25
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
1.1* Form of Underwriting Agreement
3.1 Amended Certificate of Incorporation of the Company (1)
3.2 Bylaws of the Company, as amended (1)
4.1 Specimen Common Stock Certificate (2)
5.1** Opinion of Parcel, Mauro, Hultin & Spaanstra, P.C. as to the
legality of the Shares
23.1** Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Davy International
23.3** Consent of Roberts and Schaefer Company
23.4** Consent of Mine Reserves Associates, Inc.
23.5** Consent of Remy, Thomas and Moose
23.6** Consent of Chamberlin & Associates
23.7** Consent of Parcel, Mauro, Hultin & Spaanstra, P.C. (contained in
Exhibit 5.1)
* To be filed by supplement hereto.
** Filed herewith
- ---------------------------------------
(1) Incorporated by reference from the Company's Registration Statement on
Form S-3 as declared effective by the Securities and Exchange
Commission on May 14, 1996.
(2) Incorporated by reference from the Company's Registration Statement on
Form 8-A as declared effective by the Securities and Exchange
Commission on March 18, 1986.
<PAGE> 1
EXHIBIT 5.1
PARCEL, MAURO, HULTIN & SPAANSTRA, P.C.
1801 CALIFORNIA ST., STE. 3600
DENVER, CO 80202
(303) 292-6400
December 20, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Canyon Resources Corporation
Form S-3 Registration Statement
covering 20,000,000 Shares of Common Stock
Ladies and Gentlemen:
As counsel for Canyon Resources Corporation, a Delaware corporation
(the "Company"), we have examined the above-referenced Registration Statement
on Form S-3 under the Securities Act of 1933, as amended (the "Registration
Statement"), which the Company has filed covering the sale of 20,000,000 shares
of the Company's common stock (the "Securities"). Capitalized terms used and
not defined herein shall have the meanings given to them in the Registration
Statement.
We have examined the Registration Statement, the Company's certificate
of incorporation and by-laws and the record of its corporate proceedings and
have made such other investigation and reviewed such other documents as we have
deemed necessary in order to express the opinions set forth below.
We have assumed that (i) the Securities will be duly authorized and
issued, and the certificates evidencing the same will be duly executed and
delivered, against receipt of the consideration approved by the Company which
will be no less than the par value thereof; (ii) the Registration Statement,
and any amendments thereto, will have become effective; (iii) a Prospectus
Supplement will have been filed with the Securities and Exchange Commission
(the "Commission") describing the Securities offered thereby, and (iv) the
Securities will be issued in compliance with applicable federal and state
securities laws.
Based upon the foregoing, we are of the opinion that the Securities
when issued and delivered as described herein and in the Registration
Statement, will be duly and validly issued, fully paid and non-assessable.
<PAGE> 2
Securities and Exchange Commission
December 20, 1996
Page 2
We render the foregoing opinion as members of the Bar of the State of
Colorado and express no opinion as to laws other than the laws of the State of
Colorado and the federal laws of the United States of America.
We hereby consent to the use of our name beneath the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement and to
the filing of a copy of this opinion as Exhibit 5.1 thereto.
/s/ PARCEL, MAURO, HULTIN & SPAANSTRA, P.C.
PARCEL, MAURO, HULTIN & SPAANSTRA, P.C.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Canyon Resources Corporation on Form S-3 of our report, which
includes an explanatory paragraph regarding the Company's change in accounting
for impairments of long-lived assets, dated March 27, 1996, on our audits of
the consolidated financial statements of Canyon Resources Corporation, as of
December 31, 1995 and 1994, and for the years ended December 31, 1995, 1994 and
1993. We also consent to the reference to our firm under the caption "Experts".
/s/ COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Denver, Colorado
December 20, 1996
<PAGE> 1
Exhibit 23.2
Kvaerner Davy
Murray N. Hutchison
Senior Vice President
25 November 1996
Canyon Resources Corporation
14142 Denver West Parkway, Suite 250
Golden, CO 80401 Via Fax No. 1-303-279-3772
Gentlemen:
We hereby consent to the incorporation by reference into the Registration
Statement of Canyon Resources Corporation (the "Company") on Form S-3 covering
the registration of 20,000,000 shares of the Company's common stock, of our
Mine Plan and Preliminary Feasibility Study dated September 1993 pertaining to
the Company's McDonald Property as referred to in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995.
Very truly yours,
/s/Murray N. Hutchison
Murray N. Hutchison
MNH:smr
- --------------------------------------------------------------------------------
2440 Camino Ramon Tel (510) 866-1166 KVAERNER
San Ramon, California 94583 Fax (510) 866-6520
USA
<PAGE> 1
Exhibit 23.3
ROBERTS & SCHAEFER COMPANY
Engineers & Contractors
Western Operation
5225 Wiley Post Way #300
Salt Lake City, Utah 84116
Phone: (801) 364-0900
Fax: (801) 364-0909
- --------------------------------------------------------------------------------
November 25, 1996
Canyon Resources Corporation
14142 Denver West Parkway, Suite 250
Golden, CO 80401
Gentlemen:
We hereby consent to the incorporation by reference, into the Registration
Statement of Canyon Resources Corporation (the "Company") on Form S-3 governing
the registration of 20,000,000 shares of the Company's common stock, of our
reports entitled "Fatal Flaw Review of the Briggs Gold Project Feasibility
Study" and "Briggs Gold Project Feasibility Study - Volume 1 - Executive
Summary" both dated February 1994, as referred to in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
Sincerely,
ROBERTS & SCHAEFER COMPANY
/s/ BRIAN C. Petersen
Brian C. Petersen
Vice President of Operations
<PAGE> 1
Exhibit 23.4
MINE RESERVES ASSOCIATES, INC.
4860 Ward Road, Suite 202
Wheat Ridge, Colorado 80033-2122
Phone: (303) 421-9656 Fax: (303) 421-9470
- --------------------------------------------------------------------------------
November 26, 1996
Canyon Resources Corporation
14142 Denver West Parkway
Suite 250
Golden, CO 80401
Gentlemen:
We hereby consent to the incorporation by reference into the Registration
Statement of Canyon Resources Corporation (the "Company") on Form S-3 covering
the registration of 20,000,000 shares of the Company's common stock, of our
report dated February 1994, pertaining to Ore Reserves and Mine Plan Review of
the Briggs Gold Project Feasibility Study as referred to in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995.
Very truly yours,
MINE RESERVES ASSOCIATES, Inc.
/s/ Lawrence E. Allen
Lawrence E. Allen
Vice President and
Principal Mining Engineer
<PAGE> 1
Exhibit 23.5
REMY, THOMAS and MOOSE
Attorneys at Law
Michael H. Remy 455 Capitol Mall, Suite 210
Tina A. Thomas Sacramento, California 95814
James G. Moose Georganna Foondos
Whitman F. Manley (916) 443-2745 Land Use Analyst
John H. Mattox FAX (916) 443-9017
Courtney A Kaylor
Danae J. Aitchison
Andrea M. Klein
November 25, 1996
Canyon Resources Corporation
14142 Denver West Parkway, Suite 250
Golden, Colorado 80401
To Whom It May Concern:
Remy, Thomas and Moose hereby consents to the incorporation by
reference into the Registration Statements of Canyon Resources Corporation (the
"Company") on Form S-3 covering the registration of 20,000,000 shares of the
Company's common stock, of its letter dated January 31, 1994, pertaining to the
discussion of environmental and permitting issues in the Briggs Gold Project
Feasibility Study as referred to in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
Very truly yours,
/s/ TINA A. THOMAS
Tina A. Thomas
Counsel to Canyon Resources Corporation
TAT:aj
<PAGE> 1
Exhibit 23.6
Chamberlin & Associates
- --------------------------------------------------------------------------------
7463 W. Otero Place
Littleton, CO 80123
Tele/FAX - 303-979-6753
November 25, 1996
Canyon Resources Corporation
14142 Denver West Parkway, Suite 250
Golden, CO 80401
Gentlemen:
We hereby consent to the incorporation by reference into the Registration
Statement of Canyon Resources Corporation (the "Company") on Form S-3 covering
the registration of 20,000,000 shares of the Company's common stock, of our
report dated February 1994, pertaining to metallurgy review of the Briggs Gold
Project Feasibility Study as referred to in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.
Very truly yours,
/s/ PAUL D. CHAMBERLIN
CHAMBERLIN & ASSOCIATES
Paul D. Chamberlin
Owner
