<PAGE> 1
As filed with the Securities and Exchange Commission on June 28, 1996.
Registration No. _________
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------
CANYON RESOURCES CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 14142 DENVER WEST PARKWAY, SUITE 250 84-0800747
(State or other jurisdiction of GOLDEN, COLORADO 80401 (I.R.S. Employer
incorporation or organization) (303) 278-8464 Identification Number)
(Address, including zip code, and
telephone number, including area code,
of Registrant's principal executive office)
GEORGE S. YOUNG
14142 DENVER WEST PARKWAY, SUITE 250
GOLDEN, COLORADO 80401
(303) 278-8464
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time 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]
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>
===================================================================================================================================
Proposed Proposed
maximum maximum
offering aggregate
Titles of securities Amount to be price per offering Amount of
to be registered registered share price registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value issuable
upon redemption of
6% Convertible
Subordinated Notes 6,367,070 Shares $ 3.31 (1) $ 21,075,001 $ 7,267.24(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Fee Paid Herewith $ 212.55(3)
===================================================================================================================================
</TABLE>
(1) Based upon the redemption price of the 6% Convertible Subordinated
Notes of $3.31 per share.
(2) Of this amount, $7,054.69 was previously paid in connection with the
filing of a Registration Statement on Form S-3 of the Issuer declared
effective by the Commission on September 22, 1993 (File No. 33-65028).
(3) Pursuant to Rule 429 the Registrant hereby requests that the fee from
such prior filing be applied to this Registration Statement. Accord-
ingly, only the balance of $212.55 is being paid herewith.
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.
<PAGE> 2
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.
SUBJECT TO COMPLETION, DATED JUNE 28, 1996
PROSPECTUS
CANYON RESOURCES CORPORATION
6,367,070 SHARES OF COMMON STOCK
This Prospectus covers the sale by certain selling shareholders (the
"Selling Shareholder") of 6,367,070 shares of the Common stock, $.01 par value
("Common Stock") issuable by Canyon Resources Corporation ("Canyon" or the
"Company") in redemption of the Company's outstanding 6% Convertible
Subordinated Notes due 1998 (the "Notes"). All 6,367,070 shares of the common
stock covered by this Prospectus may be referred to as the "Shares". The
Shares are being offered by the Selling Shareholders through brokers' and
dealers' transactions not involving any underwriter. No discounts or
commissions will be paid to any other party in connection with the redemption
of the Notes. The Company will not receive any of the proceeds from the sale
of the Shares by the Selling Shareholders (see "Selling Shareholders").
Brokers or dealers through whom the Shares are sold may receive compensation in
the form of commissions from the Selling Shareholders and/or the purchasers of
the Shares for whom they act as agent. (See "Plan of Distribution".)
The Company's Common Stock is traded in the over-the-counter market
and is quoted on NASDAQ's National Market under the symbol "CYNR." On July __,
1996, the closing price of the Common Stock on NASDAQ's National Market was
$____.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR 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
__ HEREOF.
The date of this Prospectus is July __, 1996.
<PAGE> 3
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with the offer
contained in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any sale hereunder shall,
under any circumstances, create any implication that there has been no change
in the affairs of the Company since the date hereof. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy any security
other than the securities covered by this Prospectus, nor does it constitute an
offer or solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation.
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 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 in the
over-the-counter market and is quoted on NASDAQ, National Market. Reports,
proxy statements and other information filed by the Company therewith can be
inspected at the National Association of Securities Dealers, Inc., 1735 K
Street N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 0-14329) with
the Commission 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 period ended March 31, 1996.
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
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<PAGE> 4
should be directed to Canyon Resources Corporation, 14142 Denver West Parkway,
Suite 250, Golden, CO 80401, Attention: George S. Young (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 mineral properties. 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 and majority owned
subsidiaries of Canyon Resources Corporation. The Company filed a Registration
Statement and completed its initial public offering of securities in 1986.
Since that time the Company has been a reporting company and its securities
have been traded on NASDAQ.
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 exploration activities in
the search for valuable mineral properties 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 marketed to another company or abandoned.
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 may be required prior to issuance of permits for the construction of
a mining operation.
The Company conducts a portion of its mineral exploration and
development through joint ventures with other companies. The Company has also
independently financed the acquisition of mineral properties and conducted
exploration and drilling programs and implemented mine development and
production from mineral properties in the western United States and exploration
programs in Latin American and Africa.
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's principal executive office is located at 14142 Denver
West Parkway, Suite 250, Golden, Colorado 80401, telephone (303) 278-8464.
RECENT DEVELOPMENTS
On June 5, 1996, the Company's Board of Directors unanimously passed a
resolution to redeem all of the remaining $21,075,001 principal balance of the
6% Convertible Subordinated Notes (the "Notes") issued by the Company in May,
1993. The redemption will be accomplished through the issuance of shares of
the Company's Common Stock, with the amount of shares to be issued based on a
share price of $3.31 per share, which is 94% of the immediately-preceding 30-
day average price of the Company's Common Stock of $3.52 per share, in
accordance with the provisions of the indenture under which the Notes were
issued. Redemption notices have been sent to the noteholders of record. The
Redemption Date has been set for July 12, 1996, at which time the Company will
issue 6,367,070 shares of Common Stock, plus accrued interest
3
<PAGE> 5
in cash, to redeem the Notes. During 1994 and 1995, Notes in the total
principal amount of $925,000 were converted by noteholders, resulting in the
issuance of 268,114 shares of Common Stock of the Company at a conversion price
based on a per share price of $3.45.
PRINCIPAL RISK FACTORS
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, including many of those which have been
conducted by the Company, do not result and have not resulted 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 $344
per ounce and $384 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 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.
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. 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
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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.
Uncertainty of Title. Most of the Company's mining properties which
are in the United States 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. Since a substantial portion of all mineral exploration,
development and mining in the United States now occurs on unpatented mining
claims, this uncertainty is inherent in the mining industry. 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, 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 above 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 should be
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.
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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 June 30, 1996, no such bills have passed, although a
number of differing and sometimes conflicting bills are now pending. 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 a potential three to four percent gross
royalty, assuming a gold price of $400 per ounce, would have an approximated $12
to $16 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 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. In addition, certain environmental groups are in the
process of attempting to qualify an initiative petition related to water
quality regulation for placement on the ballot during the general election in
Montana in November of 1996. If placed on the ballot and if passed in the
election in November, such an initiative could have a materially adverse effect
on the permitting process at McDonald. 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. However, the granting of
certain of the permits has been appealed. Although the Company believes that
each of the appeals will be dismissed, no assurance can be given that one or
more of the appeals might not be successful in overturning the granting of a
permit. Construction commenced in December 1995, with project start-up and
commercial gold production scheduled to commence in the second half of 1996 at a
production rate of approximately 75,000 ounces of gold per year. However, no
assurance can be given that the project will be constructed and placed into
production successfully or within either the time frame or capital costs
described above.
Limited Remaining Life of the Kendall Mine. The Company's principal
revenue and income producing asset is 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
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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.
Market Effects of Stock. At the date of this Prospectus, and assuming
redemption of the Notes, a total of 6,367,070 additional shares of the Company's
Common Stock will be available for trading in the public market. This increase
in the number of shares of the Company's Common Stock in the market, and the
possibility of sales of such stock, may have a depressive effect on the price
of the Company's Common Stock in the market. Assuming redemption of the Notes,
the 6,367,070 additional shares available for trading in the public market
constitute 17.1 percent of the outstanding shares of common stock of the
Company. As of the date of this Prospectus, there are 30,909,056 shares of
Common Stock outstanding. On ______, 1996, the closing price of the on
NASDAQ's National Market was $____ for the Common Stock. The table set forth
below contains information concerning the trading volume and high and low
sales prices of the Common Stock during the last six fiscal quarters.
<TABLE>
<CAPTION>
QUARTER ENDED SHARES TRADED CLOSING SALE PRICES
-------------- ------------- -------------------
HIGH LOW
---- ---
<S> <C> <C> <C>
12/31/94 5,440,192 $2.56 $1.50
3/31/95 3,452,372 $2.13 $1.50
6/30/95 5,203,343 $2.44 $1.88
9/30/95 5,697,332 $2.75 $2.13
12/31/95 7,853,105 $2.56 $1.81
3/31/96 13,331,496 $3.62 $2.37
</TABLE>
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 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 development capital 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 Exploration, Inc., 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 Securities and Exchange 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,
7
<PAGE> 9
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 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 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 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 McDonald Project are in
excess of $24 million, of which the Company has expended 27.75%, or
approximately $6.7 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
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 ended December 31, 1995
filed with the Securities and Exchange 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
8
<PAGE> 10
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 Securities and Exchange Commission. In
addition to those conditions specifically discussed in Notes 6 and 7, CR Briggs
Corporation must maintain a future debt cover 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. 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 to
interest expense associated with long term debt.
Change in Control Provisions and Anti-Takeover Provisions. Effective
June 15, 1989, the Company's shareholders adopted 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 measures included (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 affect
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 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.
Gold Prices over the Last Five Years. The following table shows the
COMEX Gold month-end closing price for the last five years:
<TABLE>
<CAPTION>
COMEX GOLD MONTH-END CLOSING PRICE
----------------------------------
YEAR JAN. FEB. MAR. APR. MAY JUN. JUL. AUG. SEPT. OCT. NOV. DEC.
- ---- ---- ---- ---- ---- --- ---- ---- ---- ----- ---- ---- ----
<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
</TABLE>
9
<PAGE> 11
USE OF PROCEEDS
The Company will not receive any proceeds from the redemption of the
Notes. The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
The 6,367,070 Shares registered for sale hereunder are comprised of
shares to be issued to _____ Selling Shareholders pursuant to the redemption of
$21,075,001 of 6% Convertible Subordinated Notes issued by the Company in May,
1993. The 6,367,070 shares of Common Stock to be held by the Selling
Shareholders and being registered hereunder represent approximately 17.1% of
the Company's issued and outstanding Common Stock.
The following list sets forth (i) the names of the Selling
Shareholders; (ii) their affiliation or material relationship with the Company,
if any during the last three years; (iii) the amount of Securities owned by
each prior to this offering; (iv) the amount of Securities being offered
hereunder for each Selling Shareholder's account; and (v) the amount of Shares
held by each and (if 1% or more) the percentage of the class owned by each
Selling Shareholder after completion of this offering.
10
<PAGE> 12
<TABLE>
<CAPTION>
SHARES OWNED SECURITIES
BEFORE SHARES OFFERED OWNED
NAME(1) THIS OFFERING(2) HEREUNDER (2)OFFERING (3) AFTER THIS
- ------- ---------------- ------------------------- ----------
<S> <C> <C> <C>
Atwell & Co. 45,317 45,317 0
Brian Mountford & Associates, Ltd. 2,114 2,114 0
CEDE & Co. 5,279,456 5,279,456 0
First Marathon Securities Limited(4) 445,951 435,951 10,000
Galley Bell & Co. 113,293 113,293 0
Harbor Mooring & Co. 113,293 113,293 0
Nesbitt Burns Inc.(4) 151,057 151,057 0
Wagner Scott Clearing Corp. 226,586 226,586 0
</TABLE>
(1) The names of the Selling Shareholders listed above are the beneficial
owners of the securities and are not necessarily the holders of
record.
(2) These share amounts include shares issuable upon redemption of the
Notes.
(3) For purpose of this table, the Company has assumed that all of the
Shares being offered hereunder will be sold.
(4) These companies have acted as underwriters in a March, 1996 private
placement of the Company's Common Stock.
PLAN OF DISTRIBUTION
The Selling Shareholders may, from time to time, offer the Shares
through dealers or brokers, who may receive compensation in the form of
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom they may act as agents. As of the date hereof, no Selling Shareholder
has advised the Company that it has entered into any agreement or understanding
with any dealer or broker for the offer or sale of the Shares. The Selling
Shareholders may enter into such agreements or understandings in the future.
The Selling Shareholders may also offer some or all of the Shares through
market transactions on the National Association of Securities Dealers Automated
Quotation System's (NASDAQ) National Market, on which the Company's Common
Stock is traded. Sales of the Shares through brokers may be made by any method
of trading authorized by NASDAQ's National Market, including block trading in
negotiated transactions. Without limiting the foregoing, such brokers may act
as dealers by purchasing any or all of the Shares covered by the Prospectus.
Sales of Shares are, in general, expected to be made at the market price
prevailing at the time of each such sale; however, prices in negotiated
transactions may differ considerably. No Selling Shareholder has advised the
Company that it anticipates paying any consideration, other than usual and
customary broker's commissions, in connection with sales of the Shares. The
Selling Shareholders are acting independently of the Company in making
decisions with respect to the timing, manner and size of each sale.
Upon redemption of the Notes, shares of the Common Stock will be
issued directly by the Company to the Note holders. No brokerage commission or
similar fee will be paid in connection with the issuance of such shares of
Common Stock. The Company will bear all expenses in connection with the
registration of the shares of Common Stock covered by this Prospectus.
11
<PAGE> 13
LEGAL MATTERS
Certain legal matters with respect to the legality of the securities
offered hereby and the organization and existence of the Company have been
passed upon for the Company by Parcel, Mauro, Hultin & Spaanstra, P.C., 1801
California Street, Suite 3600, Denver, Colorado 80202.
EXPERTS
The consolidated financial statements 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 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, 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, 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, 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, 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, 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.
12
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. 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 $ 212.55
-----------------------------------------
Printing and mailing expenses $1,000.00
-----------------------------------------
Legal fees and $2,000.00
expenses
-----------------------------------------
Accounting fees and $5,000.00
expenses
-----------------------------------------
Total* $8,212.55
=========================================
</TABLE>
*All amounts are estimated other than the SEC registration fee.
Item 14. 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.
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.
13
<PAGE> 15
(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 a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorney's fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
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 (including
attorney's fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(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 an 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.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorney's
fees).
14
<PAGE> 16
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 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.
15
<PAGE> 17
Item 15. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
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 and Thomas
23.6* Consent of Chamberlin & Associates
23.7* Consent of Parcel, Mauro, Hultin & Spaanstra, P.C. (contained in Exhibit 5.1)
</TABLE>
* Filed herewith
- --------------------------------------------
(1) Incorporated by reference from the Company's Registration Statement on
Form S-3 as filed 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 16. 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.
(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
16
<PAGE> 18
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.
17
<PAGE> 19
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 June 28, 1996.
CANYON RESOURCES CORPORATION
Date: June 28, 1996 /s/ Richard H. De Voto
----------------------------------
Richard H. De Voto
Principal Executive Officer
Date: June 28, 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: June 28, 1996 /s/ Richard H De Voto
----------------------------------
Richard H. De Voto, Director
Date: June 28, 1996 /s/ Gary C. Huber
----------------------------------
Gary C. Huber, Director
Date: June 28, 1996 /s/ William W. Walker
----------------------------------
William W. Walker, Director
Date: June 28, 1996 /s/ Paul A. Bailly
----------------------------------
Paul A. Bailly, Director
Date: June 28, 1996 /s/ Leland O. Erdahl
----------------------------------
Leland O. Erdahl, Director
18
<PAGE> 20
Date: June 28, 1996 /s/ George W. Holbrook, Jr.
----------------------------------
George W. Holbrook, Jr.,
Director
Date: June 28, 1996 /s/ Frank M. Monninger
----------------------------------
Frank M. Monninger, Director
Date: June 28, 1996 /s/ William C. Parks
----------------------------------
William C. Parks, Director
Date: June 28, 1996 /s/ Christopher M. T. Thompson
----------------------------------
Christopher M. T. Thompson,
Director
19
<PAGE> 21
Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
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 and Thomas
23.6* Consent of Chamberlin & Associates
23.7* Consent of Parcel, Mauro, Hultin & Spaanstra, P.C. (contained in Exhibit 5.1)
</TABLE>
* Filed herewith
- --------------------------------------------
(1) Incorporated by reference from the Company's Registration Statement on
Form S-3 as filed 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.
Attorneys at Law
Suite 3600
1801 California Street
Denver, Colorado 80202-2636
Telephone (303) 292-6400
Telecopier (303) 295-3040
June 28, 1996
Canyon Resources Corporation
14142 Denver West Parkway, Suite 250
Golden, Colorado 80401
Re: Registration Statement on Form S-3
Covering the Registration of 6,367,070
Common Shares of Canyon Resources Corporation
Gentlemen and Ladies:
We have acted as counsel for Canyon Resources Corporation, a Delaware
corporation (the "Company"), in connection with the registration for sale of
6,367,070 shares of the Company's Common Stock (the "Securities") in accordance
with the registration provisions of the Securities Act of 1933, as amended.
In such capacity we have examined, among other documents, the
Registration Statement on Form S-3 filed by the Company with the Securities and
Exchange Commission on or about June 28, 1996, (as may be further amended from
time to time, the "Registration Statement"), covering the registration of the
Securities.
Based upon the foregoing and upon such further examinations as we have
deemed relevant and necessary, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware.
2. The Shares have been legally and validly authorized under the
Company's Certificate of Incorporation, as amended, and constitute (or will
constitute upon due redemption of the Notes as described in the Registration
Statement) duly and validly issued and outstanding and fully paid and
nonassessable shares of the Company.
<PAGE> 2
Canyon Resources Corporation
June 28, 1996
Page 2
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.
Very truly yours,
/s/ Parcel, Mauro, Hultin & Spaanstra, P.C.
Parcel, Mauro, Hultin & Spaanstra, P.C.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC 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
June 28, 1996
<PAGE> 1
Exhibit 23.2
DAVY INTERNATIONAL
2440 Camino Ramon
Murray N. Hutchison San Ramon, CA 94583
Senior Vice President Tel: (510) 866-1166
Telex: 470670
Fax: (510) 866-6520
June 24, 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 6,367,070 shares of the Company's common stock in
connection with the redemption of the Company's 6% Convertible Subordinated
Notes, 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
<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
- --------------------------------------------------------------------------------
June 24, 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 6,367,070 shares of the Company's common stock in
connection with the redemption of the Company's 6% Convertible Subordinated
Notes, 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 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
- --------------------------------------------------------------------------------
June 24, 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 6,367,070 shares of the Company's common stock in
connection with the redemption of the Company's 6% Convertible Subordinated
Notes, 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 & 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
June 24, 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 6,367,070 shares of the
Company's common stock in connection with the redemption of the Company's 6%
Convertible Subordinated Notes, 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
June 27, 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 6,367,070 shares of the Company's common stock in
connection with the redemption of the Company's 6% Convertible Subordinated
Notes, 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/P.D. Chamberlin
CHAMBERLIN & ASSOCIATES
Paul D. Chamberlin
Owner
