<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-18449
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 7, 1997)
3,400,000 SHARES
CANYON RESOURCES CORPORATION
COMMON STOCK
---------------
All of the 3,400,000 shares (the "Shares") of common stock, $.01 par
value (the "Common Stock"), offered hereby are being sold by Canyon Resources
Corporation, a Delaware corporation (the "Company").
The Company's Common Stock is traded on the American Stock Exchange
("AMEX") under the symbol "CAU." On June 5, 1997, the closing price for the
Common Stock as quoted on AMEX was $3.125. See "Market for the Company's
Common Stock."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE 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" IN THE PROSPECTUS ON PAGES 4 THROUGH 10.
<TABLE>
<CAPTION>
======================================================================================================
Price Proceeds
to Purchaser to
Public Commissions (1) Company (2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................... $2.9375 0.1925 $2.7450
- ------------------------------------------------------------------------------------------------------
Total........................ $9,987,500 $654,500 $9,333,000
======================================================================================================
</TABLE>
(1) The Company has agreed to indemnify the Purchaser and certain other
persons against certain liabilities, including liabilities under the
Securities Act of 1933. See "Plan of Distribution."
(2) Before deducting expenses of the offering estimated at $200,000.
--------------
The Shares are offered by the Purchaser, subject to prior sale, when,
as and if delivered to and accepted by the Purchaser, and subject to the right
of the Purchaser to reject any order in whole or in part, and to certain other
conditions. It is expected that delivery of the Shares will be in New York, New
York on or about June 11, 1997. See "Plan of Distribution."
NATWEST SECURITIES LIMITED
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JUNE 5, 1997
<PAGE> 2
FOR THE UNITED KINGDOM PURCHASERS: THE SHARES MAY NOT BE OFFERED OR SOLD TO
PERSONS IN THE UNITED KINGDOM EXCEPT TO PERSONS WHOSE ORDINARY ACTIVITIES
INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS
PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS, OR OTHERWISE IN
CIRCUMSTANCES WHICH WILL NOT RESULT IN AN OFFER TO THE PUBLIC IN THE UNITED
KINGDOM WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995,
AND THIS PROSPECTUS SUPPLEMENT MAY NOT BE PASSED ON TO ANY PERSON IN THE UNITED
KINGDOM WHO DOES NOT FALL WITHIN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT
1986 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1996 OR WHO IS NOT A PERSON
TO WHOM THE PROSPECTUS SUPPLEMENT MAY OTHERWISE LAWFULLY BE ISSUED OR PASSED
ON.
---------------
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.
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.
S-2
<PAGE> 3
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
Certain information contained in this Prospectus Supplement, the
related Prospectus and the documents incorporated by reference herein and
therein constitute "Forward-looking Statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which can be identified by the use of forward-looking terminology such
as "may," "will," "expect," "anticipate," "estimate" or "continue" or the
negatives thereof or other variations thereon or comparable terminology. The
statements in "Recent Developments" on pages S-3 through S-5 of this Prospectus
Supplement constitute cautionary statements identifying important factors,
including certain risks and uncertainties, with respect to such statements that
could cause the actual results, performance or achievements of the Company to
differ materially from those reflected in such forward-looking statements.
RECENT DEVELOPMENTS
Cahuilla Property
In March 1997, Canyon entered into an agreement to purchase the
Cahuilla gold project, a gold-mineralized exploration property located in
Imperial County, California, from Kennecott Exploration Company. Canyon has
agreed to issue 100,000 shares of Common Stock to Kennecott upon execution of
the purchase agreement (scheduled on or before August 29, 1997) and another
100,000 shares within 18 months. In addition, upon mine development, $10 per
recoverable ounce of gold, not to exceed $20 million, as determined by a
Feasibility Study, will be payable in Common Stock at the then share price.
The Cahuilla property is comprised of 3,380 acres of mineral leases of
private lands, with the majority of the property being held under an
exploration agreement with an option to lease lands of the Torres-Martinez
Desert Cahuilla Tribe. Kennecott and other companies have drilled 211 holes on
the property in earlier exploration activities.
High-grade mineralization occurs on the Cahuilla property along
high-angle structures, including an intercept of 240 feet of 0.112 ounce of
told per ton, and is surrounded by an extensive area of low-grade
mineralization (0.010 to 0.020 ounce of gold per ton). Preliminary calculations
indicate that more than 800,000 ounces of gold are contained within 34 million
tons of mineralized rock with an average grade of 0.022 ounce of gold per ton
on the property.
Briggs Mine
The Briggs Mine in southeastern California achieved commercial
production in March and April of 1997. Gold production in March and April was
6,190 ounces and 7,079 ounces, respectively, thus achieving the planned average
production rate of 75,000 ounces per year. Cash production costs for the two
months averaged $237 per ounce. Gold was sold at an average price of $404 per
ounce, utilizing Canyon's hedge position of 249,000 ounces of gold sold forward
and gold loans which will be delivered at prices averaging $402 per ounce.
In December 1995, CR Briggs Corporation, a wholly-owned subsidiary of
Canyon, entered into a loan agreement for financing the Briggs Mine. The
project construction was completed in early 1997, and formal completion testing
was initiated February 1, 1997. The testing covered a period of 120 days during
which certain production and economic parameters were measured against values
contained in the project's original feasibility study. Final completion
analysis will not be available until mid to late-June, but initial indications
are that many conditions of the completion tests required under the loan
agreement will have been satisfied, with the exception of certain items,
principally relating to the crushing plant, which will require additional time
to complete. The Company anticipates that the lenders will
S-3
<PAGE> 4
grant an extension of time for the satisfaction of the completion tests. The
Company believes that the need for an extension of time for completion testing
is temporary in nature and poses no long-term material adverse effect to the
project. Nevertheless, if the Company does not timely satisfy the completion
test requirements and the lenders do not grant an extension of time therefor,
CR Briggs Corporation will not be in compliance with its loan agreement and the
lenders will be entitled to exercise any and all of their remedies thereunder,
including, without limitation, accelerating the loan and foreclosing on the
collateral securing the loan.
In May 1997, Canyon completed a drilling program which has increased
the mineable reserves at the Briggs Mine by 318,700 ounces, representing a 49%
increase of the initial 653,000-ounce Briggs reserve, yielding a total mineable
reserve at Briggs of 971,700 ounces of gold. The reserves were increased by
systematic drilling of the Goldtooth and North Briggs targets, immediately to
the south and north, respectively, of the Briggs Mine. At North Briggs, 151
drillholes (48,640 feet) defined 3.6 million tons of reserves, averaging 0.054
ounce of gold per ton and containing 193,000 ounces of gold, which can be mined
with a 7.8:1 strip ratio. The North Briggs reserves occur subparallel to the
topography, along a low-angle detachment fault, with increased thickness of
mineralization eastward approaching the high-angle regionally persistent
Goldtooth fault. The gold mineralized structure at North Briggs is still open
to the northeast and east.
At Goldtooth, 132 drillholes (38,668 feet) have defined 2.9 million
tons of reserves, which average 0.043 ounce of gold per ton and contain 125,700
ounces of gold, which can be mined with a 5.4:1 strip ratio. The Goldtooth
reserves occur primarily in steeply dipping orientation within favorable rock
units adjacent to the Goldtooth fault.
Panamint Range Drilling
In May 1997, Canyon completed reconnaissance drilling of a few other
gold targets in its 17,000-acre claim block in the Panamint Range, which
includes the Briggs Mine. The drilling program discovered, in four holes, two
mineralized horizons at the Pleasant Canyon target which appear to extend from
the surface to depths of at least 500 feet. The intercepts include 65 feet of
0.068 ounce of gold per ton in one hole and 50 feet of 0.048 ounce of gold per
ton in another hole. These early drill results at the Pleasant Canyon target
represent a new gold discovery that the Company will assess further with much
additional drilling.
Environmental Controls -- Kendall Mine
During the fourth quarter of 1996, the Company recorded a charge of
$1.4 million based on an update to the anticipated scope of reclamation work
for water quality compliance and long term monitoring requirements at its
Kendall Mine. The Company's estimate of total costs to achieve mine closure is
$5.6 million. Reclamation costs through March 31, 1997, total $2.9 million. See
Prospectus, "Principal Risk Factors -- General Risks Related to the Mining
Industry -- Environmental Controls."
Proposed Changes in Mining Laws
During the last several Congressional sessions, bills have been
repeatedly introduced in the U.S. Congress that would supplant or radically
alter the provisions of the General Mining Law of 1872. As of May 29, 1997, no
such bills had been passed. If enacted, such legislation could substantially
increase the cost of holding unpatented mining claims and could impair the
ability of the Company to develop mineral resources on unpatented mining
claims.
Recently, the Secretary of the Interior directed the Bureau of Land
Management to form a task force to prepare and publish for public comment
revisions to the hardrock mining surface management regulations implemented in
1981. The Secretary suggested the revised regulations address, for example,
implementation of a technology based standard in hardrock mining, development
of performance standards for hardrock mining and reclamation, increased
regulation of operations of less than five acres, and increased coordination
with state regulators. As of May 29, 1997, no such regulations had been
proposed or promulgated. If promulgated, such regulations could impair the
ability of the Company to economically develop mineral resources on federal
lands.
S-4
<PAGE> 5
The extent of the changes, if any, which may be made by Congress to
the General Mining Law or by the Bureau of Land Management to the surface
mining regulations is not currently known and the potential impact on the
Company as a result of future Congressional action is not currently
determinable.
Permitting Risks at the McDonald Facilities
The Company now anticipates that agency decisions on the granting of
numerous permits necessary under applicable federal and state statutes for the
initiation of gold production at the McDonald Project will be forthcoming by
the third quarter of 1998. No assurance, however, can be given that necessary
permits will be issued, or if issued, when such issuance will occur.
In April of 1996, certain environmental groups brought an action
against the Montana Department of Environmental Quality (the "DEQ") challenging
its determination in March of 1996 that the Company's permit application for
the McDonald Project was complete. This action has been dismissed and is not
reviewable by the courts. See the Prospectus, "Principal Risk Factors --
Specific Risks Related to the Company -- Permitting Risks at the McDonald
Facilities."
Seven-Up/McDonald Project
The Company's share of amounts spent through March 31, 1997 on the
Seven-Up/McDonald Project total approximately $9.1 million. See Prospectus,
"Principal Risk Factors -- Specific Risks Related to the Company -- Uncertainty
of Funding for Production."
Legal Proceedings
On December 23, 1996, an appellant group including the Timbisha
Shoshone Indian Tribe and Desert Citizens Against Pollution (collectively, the
"Appellants") filed an administrative appeal challenging the approval of a Plan
of Operations for exploration within the Briggs claim block. This appeal has
been resolved in the Company's favor. This decision concludes the proceeding
before the Interior Department.
On February 13, 1997, Appellants filed a petition for Writ of Mandate
and complaint for injunctive relief in California Superior Court challenging
the approval of the Mine Reclamation Plan for exploration within the Briggs
claim block. The Court has denied Appellants' request for a temporary
restraining order and has issued a Tentative Statement of Decision in favor of
the Company on the motion for preliminary injunction and the Writ of Mandate.
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 five months:
Comex Gold Month-End Closing Price
<TABLE>
<CAPTION>
Year Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.
- --------- --------- --------- --------- --------- -------- --------- --------- --------- -------- --------- --------- ---------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 $368
1997 $345 $365 $351 $340 $345
</TABLE>
S-5
<PAGE> 6
USE OF PROCEEDS
Canyon intends to use the net proceeds of this offering ($9,133,000
after deducting Purchaser commissions and estimated offering expenses)
to move forward several mine development and advanced exploration projects in
the United States. Canyon anticipates such proceeds will be used as follows:
<TABLE>
<CAPTION>
Project Program Anticipated Expenditures
- ------- ------- ------------------------
<S> <C> <C>
Briggs Mine Reserve and mine expansion $3.0 million
Cahuilla Project Resource and reserve definition 2.5
Panamint Range Exploration and definition of new 1.5
gold discoveries
General Corporate McDonald and other projects 2.133
------
Total $9.133 million
</TABLE> ======
The mineable reserves of the Briggs Mine have recently been increased
by 318,700 ounces by drilling to the north (North Briggs area) and south
(Goldtooth area) of the initial Briggs 653,000 ounce reserve. The North Briggs
reserves are still open and warrant continued drilling. The Company plans to
submit a new permit application in June or July 1997, for mine expansion at
Briggs and to allow comprehensive exploration and development drilling
throughout the Panamint Range claim block. No assurance can be given that such
permit will be issued or, if issued, in what time frame such issuance would
occur. The Company estimates that approximately $3.0 million of the net
proceeds of this offering will provide sufficient capital to increase the
annual production at Briggs from an average rate of 75,000 ounces of gold per
year to the 85,000 to 90,000 ounces per year level and to complete the
permitting to enable the mining of new reserve ounces. In addition
approximately $1.5 million of the net proceeds are expected to enable further
drill evaluation and definition of some of the Company's other known gold
deposits in the Panamint Range, such as the newly discovered Pleasant Canyon
occurrence, and the Cecil R and Jackson occurrences.
The Company intends to conduct definition drilling, metallurgical
testing, and engineering evaluation of the Cahuilla project with up to
approximately $2.5 million of the proceeds from this offering. The remaining
net proceeds from this offering, approximately $2.133 million, will be used for
a general corporate category, which includes expenditures on the McDonald
project as well as other projects yet to be identified.
No assurance can be given as to the outcome of drilling or other
evaluations for any individual project. If results at any point in time for
that project do not merit further expenditure of additional funds, then
management will have discretion as to the use of such proceeds.
S-6
<PAGE> 7
CAPITALIZATION
The following table sets forth as at March 31, 1997, (i) the actual
capitalization of the Company and (ii) the capitalization of the Company as
adjusted to give effect to the sale of the Shares offered hereby.
<TABLE>
<CAPTION>
At March 31, 1997
---------------------
Actual As adjusted
-------- -----------
(In thousands)
<S> <C> <C>
Debt:
Notes Payable $ 34,140 $ 34,140
-------- --------
Stockholders' Equity
Preferred stock, $0.01 par value,
10,000,000 shares authorized; none
outstanding
Common stock, $0.01 par value,
100,000,000 shares authorized;
37,580,500 shares outstanding and
40,980,500 as adjusted(1) 376 410
Additional paid in capital 81,579 90,678
Deficit (33,686) (33,686)
-------- --------
Total stockholders' equity 48,269 57,402
-------- --------
Total capitalization $ 82,409 $ 91,542
======== ========
</TABLE>
- ----------------
(1) Excludes: (i) 1,960,000 shares of Common Stock reserved for
issuance under the Company's Incentive Stock Option Plan; (ii) 250,000 shares
of Common Stock reserved for issuance pursuant to the Company's Non-Qualified
Stock Option Plan; (iii) 2,317,167 shares of Common Stock reserved for issuance
upon the exercise of warrants issued in connection with a private placement of
shares of Common Stock made by the Company in March 1996; and (iv) 278,182
shares of Common Stock reserved for issuance upon exercise of the Warrants
being issued to the Purchaser as described under "Plan of Distribution."
DILUTION
Purchasers of the shares of Common Stock offered hereby will
experience an immediate and substantial dilution in the net tangible book value
per share of their Common Stock from the initial offering price. As of March
31, 1997, the net tangible book value of the Common Stock was $46,959,000 or
$1.25 per share. Net tangible book value per share represents the amount of
total tangible assets less total liabilities, divided by the number of shares
of Common Stock outstanding. Assuming no changes in the net tangible book value
after March 31, 1997, other than to give effect to the sale by the Company of
3,400,000 shares of Common Stock offered hereby and after deducting purchaser
commissions and estimated offering expenses payable by the Company, the pro
forma net tangible book value of the Company as of March 31, 1997 would have
been $56,092,000 or $1.37 per share, representing an immediate increase in net
tangible book value per share of $0.12 to existing shareholders and an
immediate dilution of $1.5675 per share to new investors purchasing shares of
Common Stock in the Offering. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Initial offering price per share.......................................... $2.9375
Net tangible book value per share before the Offering..................... $ 1.25
Increase per share attributable to sale of shares to new investors........ 0.12
------
Net tangible book value per share after the Offering...................... 1.37
-------
Dilution per share to new investors....................................... $1.5675
=======
</TABLE>
S-7
<PAGE> 8
The following table sets forth as of March 31, 1997, the number of
shares of Common Stock purchased or to be purchased from the Company, the total
effective cash consideration paid or to be paid to the Company, and the average
price per share paid by existing shareholders and by new investors purchasing
shares sold by the Company in the Offering.
<TABLE>
<CAPTION>
Shares Purchased(1) Total Consideration
-------------------------- -------------------------- Average
Number Percent Amount Percent Per Share
----------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders(1)........... 37,580,500 91.7 % $81,954,400 89.1 % $ 2.18
New investors...................... 3,400,000 8.3 9,987,500 10.9 $ 2.9375
----------- ---------- ----------- ----------
Total..................... 40,980,500 100 % $91,941,900 100 %
=========== ========== =========== ==========
</TABLE>
- ---------------
(1) Assumes no exercise of any outstanding stock options or warrants.
To the extent that outstanding options or warrants, or any options or warrants
granted in the future, are exercised, there may be further dilution to new
investors.
MARKET FOR THE COMPANY'S COMMON STOCK
The Company's Common Stock is traded on AMEX under the symbol "CAU."
The Common Stock was first included on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") on February 9, 1986, following
the completion of the Company's initial public offering and on the NASDAQ
National Market System on May 15, 1990. The Company subsequently moved trading
of the Common Stock to AMEX on August 19, 1996. For the periods indicated, the
following table reflects the high and low bid prices for the Common Stock while
it was included on NASDAQ and the high and low sales prices for the Common
Stock while it has been traded on AMEX.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal Year Ending December 31, 1997
Second Quarter (through June 5, 1997) ..................................... $3.38 $2.25
First Quarter.............................................................. $3.50 $2.25
Fiscal Year Ended December 31, 1996
Fourth Quarter............................................................. $3.13 $2.31
Third Quarter.............................................................. $3.00 $2.38
Second Quarter............................................................. $3.88 $2.69
First Quarter.............................................................. $3.63 $2.38
Fiscal Year Ended December 31, 1995
Fourth Quarter............................................................. $2.56 $1.81
Third Quarter.............................................................. $2.75 $2.13
Second Quarter............................................................. $2.44 $1.88
First Quarter.............................................................. $2.13 $1.50
</TABLE>
On June 5, 1997, the high and low sales prices for the Common Stock
were $3.13 and $3.06, respectively. These prices do not include retail markups,
markdowns, or commissions and do not necessarily represent actual transactions.
Price quotations were provided by NASDAQ through August 16, 1996. From August
19, 1996 to the present, AMEX provided quotes.
As of June 5, 1997, there were approximately 1,349 holders of record
of the Company's Common Stock. The number of stockholders of the Company who
beneficially own shares in nominee or "street" name or through similar
arrangements is estimated by the Company to be approximately 3,000.
S-8
<PAGE> 9
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in a purchase agreement
(the "Purchase Agreement") between the Company and NatWest Securities Limited
(the "Purchaser"), the Company has agreed to sell to the Purchaser, and the
Purchaser has agreed to purchase from the Company, all of the Shares offered
hereby. Under the terms and conditions of the Purchase Agreement, the Company
is obligated to sell, and the Purchaser is obligated to purchase, all of the
Shares if any of the Shares are purchased.
The Purchaser proposes to offer the Shares to a limited number of
institutional investors all of whom are "accredited investors" as defined in the
Securities Act (the "Institutional Placement"). After the initial offering to
the public, the offering price, the concessions to selected dealers and the
reallowance to other dealers may be changed by the Purchaser.
The Company and its executive officers and directors (who, as of June
3, 1997, beneficially held in the aggregate 3,705,044 shares of Common Stock,
including shares of Common Stock issuable upon exercise of outstanding options
beneficially owned by them) have agreed not to sell, offer to sell, issue,
distribute or otherwise dispose of any shares of Common Stock of the Company
for a period of 90 days from the date of this Prospectus Supplement (subject to
certain limited exceptions), without the prior written consent of the
Purchaser; provided, however, that the Company may issue up to 3,400,000 shares
of Common Stock as consideration in connection with investments in,
acquisitions of, or mergers or combinations with other companies, and its
executive officers and directors may sell up to an aggregate of 1,000,000
shares of Common Stock.
In connection with the offering made hereby, the Company has agreed to
sell to the Purchaser, for nominal consideration, warrants to purchase 278,182
shares of Common Stock from the Company (the "Warrants"). The Warrants are
exercisable, in whole or in part, at an exercise price of $4.05 per share at any
time during the two year period commencing one year after the date of the
warrant agreement pursuant to which the Warrants will be issued. Said Warrant
agreement will contain provisions providing for adjustment of the exercise
price and the number and type of securities issuable upon exercise of the
Warrants should any one or more of certain specified events occur. The Warrants
grant to the holders thereof certain rights of registration for the securities
issuable upon exercise of the Warrants.
The Company has agreed to reimburse the Purchaser for out-of-pocket
expenses (including fees of its counsel up to a maximum of $100,000) in
connection with the sale of the Shares offered hereby. The Company has also
agreed to indemnify the Purchaser or contribute to losses arising out of
certain liabilities that may be incurred in connection with this offering,
including liabilities under the Securities Act.
The Purchaser, a United Kingdom broker-dealer and a member of the
Securities and Futures Authority Limited, has agreed that, as part of the
distribution of the Shares offered hereby, it will not offer or sell through a
general solicitation any Shares within the United States, its territories or
possessions or to persons who are citizens thereof or residents therein,
provided that sales may be made by means of an Institutional Placement through
the intermediation of one or more affiliates of the Purchaser acting on behalf
of such investors. The Purchase Agreement does not limit the sale of the Shares
outside the United States.
The Purchaser has further represented and agreed that (a) it has not
offered or sold and will not offer or sell in the United Kingdom by means of
any document, any Shares except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their business or otherwise in circumstances
which will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995; (b) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Shares
in, from or otherwise involving the United Kingdom; and (c) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Shares to a person who is of
the kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
S-9
<PAGE> 10
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 100,000,000 shares of Common
Stock, and 10,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"), which Preferred Stock is issuable in series with rights and
preferences as designated by the Board of Directors. As of March 31, 1997,
there were 37,580,500 shares of Common Stock issued and outstanding and no
shares of Preferred Stock issued and outstanding.
American Securities Transfer & Trust, Inc., Denver, Colorado acts as
Transfer Agent for the Company.
Common Stock
Holders of Common Stock are entitled to one vote for each share held
of record on all matters presented to stockholders. Stockholders are not
entitled to cumulative voting rights. Therefore, holders of a majority of the
outstanding shares have the power to elect all directors.
Holders of Common Stock are entitled to receive such dividends as may
be declared by the Board of Directors out of legally available funds and, in
the event of liquidation, to share pro rata in any distribution of the
Company's assets after payment of liabilities. Holders of Common Stock do not
have preemptive rights to subscribe to additional shares if issued by the
Company. All of the outstanding shares of Common Stock are, and the shares
being offered through this Prospectus Supplement will be, fully paid and
nonassessable.
Preferred Stock
The Company's Board of Directors is vested with authority to divide
the authorized shares of Preferred Stock into one or more series of such shares
and to fix and determine the relative rights and preferences of any such
series. A series of such shares may, among other matters, establish (a) the
number of preferred shares to constitute such series and the distinctive
designations thereof; (b) the rate and preference of dividends, if any, the
time of payment of dividends, whether dividends are cumulative and the date
from which any dividend shall accrue; (c) whether shares of Preferred Stock may
be redeemed and, if so, the redemption price and the terms and conditions of
redemption; (d) the liquidation preferences payable on preferred shares in the
event of involuntary or voluntary liquidation; (e) sinking fund or other
provisions, if any, for redemption or purchase of such preferred shares; (f)
the terms and conditions by which preferred shares may be converted, if the
preferred shares of any series are issued with the privilege of conversion, and
(g) voting rights, if any. The Board of Directors, without the approval of the
Company's stockholders, has the power to authorize the issuance of Preferred
Stock with voting and conversion rights which could adversely affect the voting
power of the Common Stock.
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. Stroock & Stroock &
Lavan LLP, Los Angeles, California, will pass upon certain legal matters for
the Purchaser.
S-10
<PAGE> 11
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.
-------------------------------------
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 January 7, 1997.
<PAGE> 12
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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<PAGE> 13
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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<PAGE> 14
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.
4
<PAGE> 15
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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<PAGE> 16
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.
- -------------------------------------------------------------------------------------------------------------
<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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<PAGE> 17
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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<PAGE> 18
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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<PAGE> 19
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
9
<PAGE> 20
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
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<PAGE> 21
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
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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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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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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.
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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.
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No person has been authorized in connection with the offering made hereby to
give any information or to make any representations, other than those contained
herein and, if given or made, such information or representations must not be
relied upon as having been authorized by the Company or the Purchaser. This
Prospectus Supplement and the Prospectus do not constitute an offer to sell or
the solicitation of an offer to buy any of these securities in any jurisdiction
to any person to whom it is unlawful to make such offer or solicitation in
such jurisdiction. The delivery of this Prospectus Supplement and the
Prospectus at any time does not imply that the information in the Prospectus
Supplement and the Prospectus is correct as of any time subsequent to this
date.
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TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT
Canyon Resources Corporation......................S-2
Forward-Looking Statements........................S-3
Recent Developments...............................S-3
Use of Proceeds...................................S-6
Capitalization....................................S-7
Dilution..........................................S-7
Market for the Company's Common Stock.............S-8
Plan of Distribution..............................S-9
Description of Capital Stock.....................S-10
Legal Matters....................................S-10
PROSPECTUS DATED JANUARY 7, 1997
Available Information...............................2
Incorporation of Certain Documents by
Reference.........................................2
Canyon Resources Corporation........................3
Forward Looking Statements..........................3
Principal Risk Factors..............................4
Use of Proceeds....................................10
Plan of Distribution...............................10
Legal Matters......................................11
Experts............................................11
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3,400,000 SHARES
CANYON RESOURCES CORPORATION
COMMON STOCK
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PROSPECTUS SUPPLEMENT
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NATWEST SECURITIES LIMITED
June 5, 1997
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