<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NO. 1-9666
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
BATTLE MOUNTAIN GOLD COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 76-0151431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 CLAY STREET, 42ND FLOOR, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 650-6400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
Name of each Exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
Common Stock New York Stock Exchange
$3.25 Convertible Preferred Stock New York Stock Exchange
Rights to Purchase Preferred Stock New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X.
---
The aggregate market value of the common stock held by non-affiliates
of the registrant was approximately $835 million as of March 14, 1997, based on
the closing sales price of the registrant's common stock as reported on the New
York Stock Exchange Composite Tape on such date. As of such date, the aggregate
market value of the common stock and Exchangeable Shares of the registrant's
wholly-owned subsidiary, Battle Mountain Canada Ltd., together, held by
non-affiliates was approximately $1,193 million. For purposes of the foregoing
sentence only, all directors and officers of the registrant are assumed to be
affiliates.
The number of shares outstanding of the registrant's common stock as
of March 14, 1997 is 115,109,272, not including 114,566,404 shares of
Exchangeable Shares of the registrant's wholly-owned subsidiary, Battle
Mountain Canada Ltd., that entitle holders to the same rights as the
registrant's common stock and are exchangeable at any time into such common
stock on a one-for-one basis.
DOCUMENTS INCORPORATED BY REFERENCE:
LIST HEREUNDER THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE
AND THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED: PROXY
STATEMENT RELATING TO THE 1997 ANNUAL MEETING OF STOCKHOLDERS OF BATTLE
MOUNTAIN GOLD COMPANY TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO REGULATION 14A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (TO THE
EXTENT SET FORTH IN ITEMS 10, 11, AND 12 OF PART III OF THIS ANNUAL REPORT).
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<PAGE> 2
The information appearing in Part II, Item 8 of Battle Mountain Gold Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 is
hereby amended as indicated in the Index to Consolidated Financial Statements
at "II. Lihir Gold Limited (A Development Stage Company)" to include the
following financial statements of Lihir Gold Limited.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
PAGE
----
II. LIHIR GOLD LIMITED (A DEVELOPMENT STAGE COMPANY)
<S> <C>
Report of Independent Accountants ........................................ 2
Profit and Loss Accounts ................................................. 4
Balance Sheet ............................................................ 5
Statement of Cash Flows .................................................. 7
Notes to Financial Statements ............................................ 8
</TABLE>
1
<PAGE> 3
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Lihir Gold Limited
Port Moresby
Papua New Guinea
We have audited the financial statements of Lihir Gold Limited for the year
ended 31 December 1996 as set out on pages 1 to 27. The Company's Directors are
responsible for the preparation and presentation of the financial statements
and the information they contain. We have conducted an independent audit of
these financial statements in order to express an opinion on them to the
members of the Company.
Our audit has been conducted in accordance with International Standards on
Auditing, which are substantially similar to U.S. standards, to provide
reasonable assurance as to whether the financial statements are free of material
misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial statements, and
the evaluation of accounting policies and significant accounting estimates.
These procedures have been undertaken to form an opinion as to whether, in all
material respects, the financial statements are presented fairly in accordance
with Accounting Standards adopted for use in Papua New Guinea and Papua New
Guinea statutory requirements so as to present a view which is consistent with
our understanding of the Company's financial position and the results of its
operations.
The audit opinion expressed in the Report has been formed on the above basis.
As described in Note 21 to the financial statements, the Company's accounting
policies vary in certain important respects from the accounting principles
generally accepted in the United States. Note 21 reconciles these differences.
2
<PAGE> 4
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
AUDIT OPINION
In our opinion:
(a) the financial statements of Lihir Gold Limited are properly drawn up:
(i) so as to give a true and fair view of the state of affairs of
the Company at 31 December 1996 and of the results and cash
flows of the Company for the year ended on that date; and
(ii) in accordance with the provisions of the Companies Act
(Chapter 146); and
(iii) in accordance with applicable Accounting Standards;
(b) the accounting and other records (including registers) examined by us have
been properly kept in accordance with the Companies Act.
/s/ COOPERS & LYBRAND
COOPERS & LYBRAND
By R. Hubbard
Registered under the Accountants Registration Act (Chapter 89)
PORT MORESBY, PAPUA NEW GUINEA
On 13 day of March 1997
3
<PAGE> 5
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED 31 DECEMBER 1996,1995 AND 1994
<TABLE>
<CAPTION>
US$000
Note 1996 1995 1994
<S> <C> <C> <C>
Operating profit before income tax 5 - - -
Income tax attributable to operating profit - - -
-------- ------- --------
Operating profit after income tax - - -
Retained profits at the beginning of the
financial period - - -
-------- ------- --------
Retained profits at end of the financial
period - - -
======== ======= ========
</TABLE>
The accompanying notes form part of these financial accounts
4
<PAGE> 6
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS AS AT 31 DECEMBER, 1996 AND 1995
<TABLE>
<CAPTION>
US$000
NOTE 1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash 8 44,002 363,099
Receivables 9 42 420
------ -------
TOTAL CURRENT ASSETS 44,044 363,519
NON-CURRENT ASSETS
Development properties 10 670,412 268,235
------- -------
Hedging costs 17 20,496 -
------- -------
TOTAL NON-CURRENT ASSETS 690,908 268,235
------- -------
TOTAL ASSETS 734,952 631,754
------- -------
CURRENT LIABILITIES
Creditors and borrowings 11 51,055 10,054
Employee benefits 516 218
Loan - UBS Consortium 16(a) 540 -
Retention 1,527 168
------- -------
TOTAL CURRENT LIABILITIES 53,638 10,440
------- -------
NON CURRENT LIABILITIES
Loan - UBS Consortium 16(a) 60,000 -
------- -------
TOTAL NON -CURRENT LIABILITIES 60,000 -
------- -------
TOTAL LIABILITIES 113,638 10,440
------- -------
COMMITMENTS AND CONTINGENCIES 14&15
NET ASSETS 621,314 621,314
======= =======
SHAREHOLDERS' EQUITY
Share capital 12 68,085 68,085
(Ordinary shares K0.10 par value
</TABLE>
5
<PAGE> 7
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
Authorized 2,000,000,000; issued
and outstanding 1996 and 1995
900,000,000 shares)
<S> <C> <C>
Reserves 13 553,229 553,229
------- -------
TOTAL SHAREHOLDERS' EQUITY 621,314 621,314
======= =======
</TABLE>
6
<PAGE> 8
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDING 31 DECEMBER 1996,1995 AND 1994
<TABLE>
<CAPTION>
US$000
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period 363,099 - -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 431,754 -
Loan - UBS Consortium 60,540 - -
Joint venture contribution 37,936 12,812
-------- -------- -------
Net cash inflows from financing activities 60,540 469,690 12,812
-------- -------- -------
increase in Development Properties (420,417) (123,877) (12,812)
Interest received 18,240 7,266 -
Decrease in current assets 378 (420) -
Increase in Deferred Hedging Costs (20,496) - -
Increase in current liabilities 42,658 10,440 (12,812)
-------- -------- -------
Net cash outflows from investing activities (379,637) (106,591) -
Net increase/(decrease) in cash and cash equivalents (319,097) 363,099 -
-------- -------- -------
Effect of exchange rate changes on the
translation of cash balances - - -
-------- -------- -------
Balance at end of period 44,002 363,099 -
======== ========= =======
</TABLE>
The accompanying notes form part of these financial statements
7
<PAGE> 9
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
NOTE I: STATEMENT OF ACCOUNTING POLICIES
The financial statements have been prepared in accordance with the Papua New
Guinea Companies Act (Chapter 146) and are presented in accordance with
applicable International Accounting Standards (IAS). The financial statements
have also been prepared on the basis of historical costs and do not take into
account changing money values. Cost is based on the fair values of the
consideration given in exchange for assets. The accounting policies have been
consistently applied, unless otherwise stated.
The following is a summary of the significant accounting policies adopted by
the Company in the preparation of the financial statements.
(a) EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation expenditure is accumulated separately for
each area of interest. Exploration expenditure is fully written off
in the financial year in which it is incurred, unless recoupment from
revenue to be derived from the relevant area of interest/mineral
resource, or from the sale of that area of interest, is reasonably
assured.
Evaluation expenditure is capitalised, to the extent to which its
recoupment out of revenue to be derived from the relevant area of
interest/mineral resource, or from sale of that area of interest, is
reasonably assured.
Exploration or evaluation expenditure written off, or provided
against, is reinstated when recoupment out of revenue to be derived
from the relevant area of interest/mineral resource or from sale of
that area of interest, is reasonably assured.
(b) DEVELOPMENT PROPERTIES
Development expenditure is accumulated separately for each area of
interest in which economically recoverable mineral reserves have
been identified and are reasonably assured.
Once a development decision has been taken, all past and future
exploration and evaluation expenditure in respect of the area of
interest is aggregated with the costs of development and classified
under non-current assets as "Development Properties".
All expenditure incurred prior to the commencement of commercial
levels of production from each development property is carried forward
to the extent to which recoupment out of revenue to be derived from
the sale of production from the relevant development property, or from
sale
8
<PAGE> 10
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
of that property, is reasonably assured.
No amortisation is provided in respect of development properties until
they are reclassified as "Mine Properties", following the commencement
of commercial production.
(c) MINE PROPERTIES
Mine properties represent the accumulation of all exploration,
evaluation, and development expenditure incurred by or on behalf of
the Company in relation to areas of interest in which mining of a
mineral resource has commenced.
When further development expenditure is incurred in respect of a mine
property after the commencement of production, such expenditure is
carried forward as part of the cost of that mine property only when
substantial future economic benefits are thereby established,
otherwise such expenditure is classified as part of the cost of
production.
Amortisation of costs is provided on the unit-of-production method,
separate calculations being made for each mineral resource. The
unit-of-production basis results in an amortisation charge
proportional to the depletion of estimated recoverable gold ounces
contained in Ore Reserves (comprising both Proved and Probable Ore
Reserves).
(d) CAPITALISATION OF FINANCING COSTS
Interest, other financing costs and foreign exchange differences are
classified as part of development and mine properties where they
relate to funds raised for developing those properties. Interest
earned on the temporary investment of borrowed funds and funds
received in connection with the sale of equity securities prior to the
expenditure being made is deducted from interest paid on the borrowed
funds in arriving at the amounts so capitalised.
(e) MINE BUILDINGS, MACHINERY AND EQUIPMENT
The cost of major items of buildings, machinery and equipment is
depreciated over the expected useful life adopting the
unit-of-production method. Each item's economic life has due regard to
both physical life limitations and to present assessments of
economically recoverable reserves of the mine property and to possible
future variations in those assessments. Estimates of remaining useful
lives are made on a regular basis for all assets, with annual
reassessments for major items.
The total net carrying values of mine building, machinery and
equipment at each mine property
9
<PAGE> 11
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER, 1996
are reviewed regularly and, to the extent to which these values exceed
their recoverable amounts, that excess is fully provided against in
the financial year in which this is determined.
Major spares purchased specifically for particular plant are included
in the cost of plant and are depreciated over the expected useful life
of the item of plant.
(f) REMAINING MINE LIVES
In estimating the remaining life of the mine at each mine property for
the purpose of amortisation/depreciation calculations, due regard is
given, not only to the volume of remaining recoverable mineral
reserves, but also to limitations which could arise from the potential
for changes in technology, demand, product substitution and other
issues which are inherently difficult to estimate over a lengthy time
frame.
(g) RESTORATION, REHABILITATION AND ENVIRONMENTAL EXPENDITURE
Restoration, rehabilitation and environmental expenditure to be
incurred during the production phase of operations is accrued when the
need for such expenditure is established, and then written off as part
of the cost of production of the mine property concerned. Significant
restoration, rehabilitation and environmental expenditure to be
incurred subsequent to the cessation of production at each mine
property is accrued, in proportion to production, when the amount of
expenditure can be reasonably estimated.
(h) INVENTORIES
Inventories of broken ore, concentrate and metal are physically
measured or estimated and valued at the lower of cost and net
realisable value.
Cost comprises direct material, labor and transportation expenditure
in getting such inventories to their existing location and condition,
together with an appropriate portion of fixed and variable overhead
expenditure, based on weighted average costs incurred during the
period in which such inventories are produced. Net realisable value is
the amount estimated to be obtained from sale of the item of inventory
in the normal course of business, less any anticipated costs to be
incurred prior to its sale.
Inventories of consumable supplies and spare parts expected to be used
in production are valued at weighted average cost.
10
<PAGE> 12
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE
ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER, 1996
(i) REVENUE RECOGNITION
Sales are recognised as revenue only when there has been a passing of
risk to the customer, and:
- the product is in a form suitable for delivery and no further
processing is required by, or on behalf of, the Company;
- the quantity and quality (grade) of the product can be determined
with reasonable accuracy;
- the product has been despatched to the customer and is no longer
under the physical control of the Company (or property in the
product has earlier passed to the customer); and
- the selling price can be measured reliably.
Sales revenue represents the gross proceeds receivable from the
customer.
Revenue received from sale/disposal of product, materials or services
during the exploration, expenditure or development phases of
operations is offset against expenditure in respect of the area of
interest/mineral resource concerned.
(j) EMPLOYEE ENTITLEMENTS
(i) Wages and Salaries
A liability for wages and salaries is recognized, and measured
as the amount unpaid at balance date at current pay rates in
respect of employees' services up to that date.
(ii) Annual and Long Service Leave
A liability for annual and long service leave is recognized
and measured with reference to existing entitlement and salary
and measured as the amount unpaid at balance date at current
pay rates in respect. of employee's services up to that date.
(k) FOREIGN CURRENCY TRANSLATION
As the Company's turnover is denominated in US dollars and the
majority of its fixed asset purchases and costs are in US dollars or
currencies related to US dollars, the Company's
11
<PAGE> 13
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
Directors have adopted the US dollar as the Company's functional and
management reporting currency.
The Company's Kina figures for 1996 are translated from US Dollars at the
rate prevailing at 31 December 1996 of PGK 1.00 = USD 0.74 (1995: PGK 1.00
= USD 0.75). Translation differences resulting from the effects of changes
in translation from US dollar functional currency to Kina are taken to a
capital reserve entitled "Foreign Currency Translation Reserve".
(l) INCOME TAX
Tax effect accounting procedures are followed whereby the income tax
expense in the profit and loss account is matched with the accounting
profit (after allowing for permanent differences). The future tax benefit
relating to tax losses is not carried forward as an asset unless the
benefit is assured beyond any reasonable doubt. Income tax on net
cumulative timing differences is set aside to the deferred income tax and
future income tax benefit accounts at the rates which are expected to
apply when those timing differences reverse.
(m) LEASES
Leases of fixed assets where substantially all the risks and benefits
incidental to the ownership of the asset, but not the legal ownership
transferred to the Company, are classified as finance leases. Finance
leases are capitalised, recording an asset and liability equal to the
present value of the minimum lease payments, including any guaranteed
residual values. Leased assets are amortised over their estimated useful
lives. Lease payments are allocated between the reduction of the lease
liability and the lease interest expense for the period.
Lease payments for operating leases, where substantially all the risks and
benefits remain with the lessor, are charged as expenses in the periods
in which they are incurred.
(n) CASH
For the purpose of the statement of cash flows, cash includes:
(i) cash on hand and in at call deposits with banks or financial
institutions, net of bank overdrafts; and
(ii) investments in money market instruments with less than 90 days
to maturity.
12
<PAGE> 14
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
Cash is held in USD, AUD and Kina based on the forecast of cash
requirements to meet obligations denominated in those currencies. All
surplus above that required to meet these obligations is held in USD.
Surplus cash is invested in short-term instruments with maturities up to
180 days, and are subject to floating interest rates or fixed interest
rates payable on maturity. The limit of exposure to any one bank is
dependent upon the rating of the bank. The maximum exposure to one bank
is US$50 million.
The USD is held in accounts maintained by the Company in New York. AUD is
held in accounts maintained by the Company in Australia. Kina is held by
the Company in accounts in Papua New Guinea.
(o) COMPARATIVE FIGURES
Comparative figures have been included in accordance with International
Accounting Standards.
(p) ROUNDING OF AMOUNTS
The financial statements and Directors' Report have been rounded to the
nearest thousand dollars.
NOTE 2: SPECIAL MINING LEASE
The Special Mining Lease was issued on 17 March, 1995 and has a term of 40
years. Under the Mining Act it may be renewed for subsequent 20 year periods at
the discretion of the PNG Government.
NOTE 3: REQUIREMENTS REGARDING CASH RESERVES
The PNG Central Banking (Foreign Exchange and Gold) Regulations generally
require PNG companies to hold all cash reserves in Kina. Prior approval of the
PNG Central Bank is required to convert funds from Kina into other currencies.
Under the Mining Development Contract, however, the Company has permission to
retain funds in foreign currencies to meet its obligations.
NOTE 4: DIVIDEND RESTRICTIONS
The Senior Loan Facility prohibits the payment of dividends by the Company
prior to Completion (as defined in the Loan Agreement) and permits the payment
of dividends thereafter only on the quarterly payment dates under the Loan
Agreement and only if certain conditions are met, including a condition
13
<PAGE> 15
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
that after payment of such dividends and all other payments required under the
Loan Agreement the Company has a specified minimum cash balance in an offshore
account and a Debt Cover ratio (as defined in the Loan Agreement) of not less
than 1.25:1.
NOTE 5: OPERATING PROFIT US$000
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Operating Profit before income tax expense has been
determined after:
(i) Charging as expenses: - - -
(ii) Crediting as income: - - -
</TABLE>
It is noted that all items of income and expenditure relate to the development
properties and as such have been capitalised.
NOTE 6: REMUNERATION AND RETIREMENT BENEFITS
(a) Directors' and Executive Officers' Remuneration
<TABLE>
<CAPTION>
US$000
<S> <C> <C> <C>
Income received or due and receivable by all Directors 1996 1995 1994
including insurance premiums to indemnify against
liability whilst acting as a Director & Executive Officer 1,073 921 685
Executive Directors & Executive Officers: 892 847 685
</TABLE>
The names of Company directors who have held office
during the financial year are:
GARNAUT, Ross G TELFER, Ian
LEPANI, Charles W THOMAS, Gavin (Retired)
LESLIE, Jonathan C A VICKERMAN, Andrew
LOUDON, A Geoffrey FORBES, Jeffrey I (Retired)
O'REILLY, John F KULALA, John (Alternate for C W Lepani)
SOIPANG, Mark IVES, Glenn (Alternate for I. Telfer)
TAUVASA, Joseph J
TAYLOR, Meg
14
<PAGE> 16
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
<TABLE>
<CAPTION>
(b) Retirement and superannuation payments US$000
<S> <C> <C> <C>
Amounts paid directly on retirement from
office or to prescribed superannuation 1996 1995 1994
funds for the provision of retirement
benefits for:
Principal executive officer - - -
Directors 30 - -
</TABLE>
15
<PAGE> 17
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
NOTE 7: AUDITORS' REMUNERATION
<TABLE>
<CAPTION>
Amounts received or due and receivable by
Company auditors for: 1996 1995 1994
<S> <C> <C> <C>
- auditing the accounts 36 30 7
- other services 90 747 5
</TABLE>
NOTE 8: CASH
<TABLE>
<CAPTION>
US$000
1996 1995 1994
<S> <C> <C> <C>
Cash at bank 8,600 1,372 -
At call deposits with financial institutions 35,402 149,012 -
Treasury bills and commercial paper - 212,715 -
-------- ------- -------
44,002 363,099 -
</TABLE> ======== ======= =======
NOTE 9: RECEIVABLES
<TABLE>
<CAPTION>
US$000
1996 1995 1994
<S> <C> <C> <C>
CURRENT
Prepayments 33 41 -
Amounts receivable from:
other related bodies corporate 9 379 -
------- ------- -------
42 420 -
======= ======= =======
</TABLE>
NOTE 10: OTHER ASSETS
<TABLE>
<CAPTION>
NON-CURRENT
Development Properties US$000
1996 1995 1994
<S> <C> <C> <C>
Exploration and evaluation phase 146,005 146,005 146,005
Development phase 528,773 115,005 5,619
Interest received (18,240) (7,266) -
Borrowing costs 13,171 10,054 -
Foreign currency translation 703 4,437 -
------- ------- -------
Total development properties 670,412 268,235 151,624
======= ======= =======
</TABLE>
16
<PAGE> 18
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
NOTE 11: CREDITORS AND BORROWINGS
<TABLE>
<CAPTION>
CURRENT US$000
1996 1995 1994
<S> <C> <C> <C>
Creditors and borrowing
Trade creditors and accruals 50,100 9,492 -
Amounts payable to related bodies 955 562 -
------ ------ ------
51,055 10,054 -
====== ====== ======
</TABLE>
17
<PAGE> 19
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
<TABLE>
<CAPTION>
NOTE 12: SHARE CAPITAL US$000
1996 1995 1994
<S> <C> <C> <C>
(a) Authorised Capital
2 billion Ordinary Shares of K0.10 each 148,000 148,000 -
======= ======= =======
(b) Issued and Outstanding Capital
900,000,000 Ordinary Shares of K0.10 68,085 68,085 -
each, fully paid ======= ======= =======
</TABLE>
Of these ordinary shares on issue, 514,461,874 were issued to the
sponsors, and are held in escrow until 9 October 1997.
(c) On 17 March, 1995 the Company issued 100 shares at K1.00 which were
subsequently split into 1000 shares of K0.10 each on 4 August 1995.
(d) On 13 October, 1995 the company issued 866,475,701 Ordinary Shares
and on 19 October 33,523,299 a total of Ordinary shares of K0.10 at a
premium as follows:
<TABLE>
<CAPTION>
No. Of Shares Premium per Share (US$)
<S> <C> <C>
Shares issued to Sponsors 514,461,874* 0.2928
Global Offering 385,537,126 1.09157
</TABLE>
* The shares issued to the sponsors are held in escrow for a
period of two years commencing 13 October, 1995.
(e) Share Options
In 1995 the Company granted to the Sponsors 7,200,000 share options
at a price 15% above the final institutional price in consideration
for their agreement to underwrite the over-allotment options under
the Company's Global Offering. The option is valid for a period of
five years and if exercised during the escrow period the shares would
be subject to the escrow conditions.
18
<PAGE> 20
LIHR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
NOTE 13: RESERVES
<TABLE>
<CAPTION>
US$000
1996 1995 1994
<S> <C> <C> <C>
CAPITAL RESERVE
Share premium reserve 553,229 553,229 -
------- ------- -------
553,229 553,229 -
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
MOVEMENTS DURING THE YEAR US$000
1996 1995 1994
<S> <C> <C> <C>
Share premium reserve
Balance at beginning of year 553,229 - -
Premium on shares issued - 571,475 -
Less underwriters' fees - (18,246) -
------- ------- -------
Balance at end of year 553,229 553,229 -
------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
US$000
1996 1995 1994
<S> <C> <C> <C>
Foreign currency translation reserve
Balance at the beginning of the year - - -
Change in net assets - - -
------- ------- -------
Balance at the end of the year - - -
======= ======= =======
</TABLE>
NOTE 14: CAPITAL AND LEASING COMMITMENTS
(a) OPERATING LEASE COMMITMENTS
Non-cancellable Operating leases contracted
for but not capitalised in the accounts
<TABLE>
<CAPTION>
US$000
1996 1995 1994
<S> <C> <C> <C>
</TABLE>
19
<PAGE> 21
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
<TABLE>
<CAPTION>
Payable
<S> <C> <C> <C>
1995 - 944 775
1996 249 302 159
1997 17 - -
1998 - - -
1999 - - -
2000 - - -
2001 - - -
----- ----- -----
266 1,246 1,768
</TABLE>
<TABLE>
<CAPTION>
(b) Capital Expenditure Commitments US$000
1996 1995 1994
<S> <C> <C> <C>
Capital expenditure commitments
contracted for:
Capital expenditure projects 183,119 228,231 -
======= ======= =======
Payable
- not later than one year 183,119 195,755 -
- later than one year but not later
than 2 years - 32,476 -
------- ------- -------
183,119 228,231 -
======= ======= =======
</TABLE>
NOTE 15: CONTINGENT LIABILITIES
There are no material amounts of contingent liabilities, not provided for in
the accounts.
Environmental Contingent Liability
A contingent liability exists in the Company in relation to the restoration,
monitoring and control of mine sites and in respect of possible but
unidentified remediation requirements on certain such sites. The extent to
which contingent liabilities may involve future costs is not possible to
measure.
NOTE 16: FINANCE FACILITIES
<TABLE>
<CAPTION>
Loan Facilities US$000
1996 1995 1994
<S> <C> <C> <C>
Loan facilities 330,000 310,000 -
Amount utilised (60,000) - -
------- ------- -------
Unused loan facilities 270,000 310,000 -
======= ======= =======
</TABLE>
20
<PAGE> 22
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
The major facilities are summarised as follows:
(a) $300,000,000 senior loan facility with a syndicate of 25 banks, which
expires on 11 August, 2005. Interest payments under the facility are
based on LIBOR plus a margin which varies over time. Mandatory prepayments
are required under the Loan Agreement in certain conditions. There are
certain conditions precedent to each draw down. The Sponsors have
guaranteed the facility until Completion. The Company has provided a range
of covenants and warranties in relation to the facility. As at 31 December
1996 $60,000,000 had been drawn down against this facility, and interest
accrued amounted to $540,000 (1995: $NIL).
The terms of the finance facility can be withdrawn on an event of default
occurring. The Loan Agreement includes the following "Events of Default",
among others: (a) failure to make any payment under any Finance Agreement;
(b) violations of any representations and warranties, the effect of which
is to have a material adverse effect on the Project or the Company; (c)
the Mining Development Contract, Special Mining Lease, any Finance
Agreement or any other material Project Agreement has ceased to be a
valid, binding and enforceable agreement that is in full force and effect,
or a party thereto has defaulted in its obligations thereunder, and such
cessation or default has a material adverse effect on the Company's
ability to meet Loan Payments; (d) certain events of insolvency or
bankruptcy; (e) the acceleration of any other indebtedness of the Company
in excess of $5 million; (f) the Lihir Project is abandoned; (g) a
catastrophic casualty has occurred and the Company is not undertaking
repair and reconstruction in accordance with the terms of the Loan
Agreement; (h) the Banks' security interest in certain material assets is
not a valid, perfected first priority security interest or any person
other than the Banks attaches assets of the Company having a net book
value in the aggregate of more than $1 million; (i) the Company fails to
maintain insurance required by the Loan Agreement; (j) the PNG government
expropriates the assets of the Company or takes any other action which
the Banks reasonably believe will have a material adverse effect on the
Lihir Project; (k) final judgments in excess of $5 million in aggregate
rendered against the Company remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 90 days from the date
of entry; (1) the Manager is no longer wholly owned and controlled by
RTZ-CRA at a time when the Management Agreement remains in effect; (m) the
Manager or RTZ-CRA has committed a material default under the Management
Agreement or Technical Support Agreement, respectively, which has a
material adverse effect on the Lihir Project, or either of these
agreements is terminated, declared to be unenforceable or expressly
repudiated by any contracting party; (n) RTZ-CRA fails to maintain an
indirect
21
<PAGE> 23
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
equity interest in the Company equal to the greater of 15% or the amount
held immediately following the Global Offering (the "RTZ Minimum Equity
Percentage ") or Southern Gold ceases to be the direct beneficial holder
of an equity interest in the Company equal to the greater of 20% or the
amount held immediately following the Global Offering (the "Southern Gold
Minimum Equity Percentage"); (o)following Completion; the Banks determine,
in the exercise of reasonable good faith judgment, that by reason of a
material adverse change in or affecting the operation of the Lihir Project
the Company will be unable to make Loan Payments in full when due;
provided that neither the occurrence of (i) any event that is (or with
the passage of time would be) a political event covered under the
political risk insurance policies nor (ii) any change in the international
market price of gold, will be considered such a material adverse change
for purposes of this Event of Default; (p) Completion has not occurred by
December 31, 1999, subject to certain adjustments due to force majeure
events (provided that in no event shall the Final Completion Date extend
beyond June 30, 2000); (q) certain additional convertibility or transfer
restrictions are placed on the Company's revenues which limit its ability
to make Loan Payments; (r) the occurrence of certain events of political
violence which renders impossible the continued construction or operation
of the Lihir Project; (s) an Unremedied Funding Shortfall has occurred and
has continued unremedied for a further period of 60 days; (t) any required
authorization, consent or approval is not obtained or is revoked; (u) an
event of default under the Completion Agreement has occurred, is
continuing and has not been cured; (v) certain hedging agreements required
under the Loan Agreement to ensure the availability to the Company of
funds to make Loan Payments cease to be in full force and effect; (w) the
political risk insurance policies cease to be in full force and effect
unless such event is caused by the Banks; and (x) violation of any
covenant in any Finance Agreement which violation has a material adverse
effect on the Project or the Company and continues unremedied for 30 days
after notice is given by the agent for the Banks to the Company.
The Loan Agreement provides that immediately upon declaration of any
"Default" by the Banks, the agent for the Banks may take control of the
Kina and non-Kina accounts of the Company (subject to application of the
funds in such accounts in accordance with the terms of the Loan Agreement)
and has the right (a) to direct the activities of the Manager under the
Management Agreement, (b) to terminate the Management Agreement for cause
and (c) to appoint a successor to the Manager (provided that the Banks may
not take actions which would prevent the Company from correcting such
Default). Immediately following a Default relating to the insolvency of
the Company, an abandonment or any expropriatory action or following a
certain grace period with respect to any other Default, the agent for the
Banks (as instructed by the Banks in accordance with the terms of the Loan
Agreement) may decide to take additional Enforcement Actions (which
include
22
<PAGE> 24
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
applying funds in the Kina and non-Kina accounts to the making of Loan
Payments, declaring the Loan principal immediately due and payable,
exercising any security interests in the collateral and taking other
legal, equitable or other remedial action or any other action available
under applicable law). Until December 31, 1999 or a later Final Completion
Date extended due to force majeure events (but in no event for more than
six months), so long as there is no continuing event of default under the
Completion Agreement and abandonment has not occurred, the Banks may not
exercise any remedies against the Company as long as the Sponsors under
the Completion Agreement are paying or causing to be paid under the
Completion Guarantee all obligations under the Loan Agreement in
accordance with their regularly scheduled maturities or are awaiting the
outcome of an arbitration as contemplated by the Completion Agreement.
Covenants - The Company has agreed that during the term of the Loan
Agreement it will, among other things: (a) not engage in any business
other than the Lihir Project or any business related to other exploration
licenses granted by the PNG governmnent (such other businesses to be
funded through shareholder equity, proceeds from subordinated debt or
funds from the Expansion Account); (b) with certain exceptions, not sell,
lease or otherwise dispose of any of the Lihir Project assets except for
the production of the Lihir Project; (c) construct and operate the Lihir
Project substantially in accordance with the Approved Proposal for
Development and good international mining practice; (d) use its best
efforts to procure Completion by December 31, 1999; (e) not incur
indebtedness for borrowed money in addition to the Loan except certain
subordinated loans and certain permitted senior unsecured working capital
facilities; (f) incur no liens or encumbrances upon any Lihir Project
assets, except permitted encumbrances; (g) use the Loan proceeds solely
for purposes of the Lihir Project; (h) enter into hedging agreements as
required by the Loan Agreement to protect itself and the Banks against
fluctuations in the price of gold; (i) not terminate the Management
Agreement or appoint a successor Manager not wholly owned and controlled
by RTZ-CRA, or amend the Management Agreement in any material respect
adverse to the Banks or the Company; and (j) indemnify the Banks against
certain liabilities they may incur arising out of use or disposal by the
Company of hazardous substances or failure by the Company to comply with
PNG environmental laws.
Security - the Company has provided to the syndicate of Banks a first
ranking security over all its assets.
(b) LOAN FACILITY EUROPEAN INVESTMENT BANK ("EIB")/MINERAL RESOURCES
DEVELOPMENT COMPANY PTY LTD ("MRDC")
The Company entered into an Agreement with EIB and MRDC whereby the
European
23
<PAGE> 25
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
Investment Bank will lend funds to MRDC who will on-lend those funds to the
Company pursuant to an On-lending Agreement. The amount of the loan is 25
million European Currency Units (ECU's) currently equivalent to
approximately $30 million. The funds are provided to MRDC at a
concessional rate of interest. The drawdown period is up to 3 years and 11
months from the date of the Agreement being 15 February 1996. The
interest rate payable by the Company will be 2% above the cost of funds of
EIB at the time of the drawdown. EIB's current cost of US dollar funds is
approximately 6.9%. The loan principal is repayable by way of 16
semi-annual installments commencing four years after loan signature. The
payment of interest under the Loan will be deferred during the
construction period and will be repaid when permitted under the Senior
Loan Agreement. The loan is unsecured. There are various conditions
precedent to the loan being drawn by the Company, which are expected to be
finalised early in 1997.
EIB is with notice entitled to cancel the undisbursed portion of the
credit on exceptional circumstances arising which materially adversely
affects the relevant international capital markets or EIB's access thereto
or upon the occurrence of the various events which also entitle EIB to
demand repayment of the loan prior to the scheduled repayment dates.
EIB is entitled to demand repayment of the loan from Mineral Resources
Development Company Pty Ltd ("MRDC") and which will trigger repayment of
the loan from MRDC to the Company immediately on among other things: (a)
where any documents or information provided by the Company is found to be
incorrect; (b) if the Company becomes insolvent or a receiver and manager
is appointed to any part of the assets or affairs of the Company; (c) the
Company's net worth reduces by a substantial amount; and (d) the Company
is following default on its main US$300 million loan required to repay.
that loan. EIB is entitled to demand repayment of the loan from MRDC
within a reasonable period and which will trigger repayment of the loan
from MRDC to the Company on among other things: (a) where the Company
fails to comply with its obligations under the Finance Contract with EIB
and MRDC; and (b) if any event occurs in relation to various project
agreements or any other agreement or permission in relation to the Lihir
Project or the Company which has the effect of stopping, indefinitely
interrupting or materially altering the terms of exploitation of the Lihir
Project by the Company or of materially and adversely affecting the
financial or taxation regime applicable to the revenues derived from the
Lihir Project or applicable to the Company.
MRDC is entitled, upon reasonable notice, to demand immediate repayment of
the loan in the event of the Company breaching the On-lending Agreement
and failing to remedy that breach.
The right of MRDC to receive repayment of the loan in the circumstances
mentioned
24
<PAGE> 26
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
above is subject to subordination terms under the Company's US$300 million
loan facility.
The following table details the profile of debt repayments, assuming
the full amount of both facilities are drawdown.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Repayable in Less Repayable in One to Repayable in Two to Repayable in Excess
Than One Year Two Years Five Years of Five Years
$000 $000 $000 $000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
- 44,440 140,180 145,380
- --------------------------------------------------------------------------------
</TABLE>
NOTE 17: HEDGING INSTRUMENTS
The Company has entered into a series of agreements with financial
institutions in relation to future sales of gold. It is a requirement
under the senior loan facility to ensure a minimum level of income for the
years 1998 to 2002. It is Company policy not to engage in hedging
activities for speculative purposes or to trade hedged positions.
The following table summarises the hedging programme as at 31 December
1996:
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE TYPE OF INSTRUMENT
STRIKE PRICE ASSURED
(US$/OZ) (US$ MILLION)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997 150,000 406.35 60.95 Forward Contracts
- --------------------------------------------------------------------------------
1998 157,700 427.77 67.46 Mainly Put Options
- --------------------------------------------------------------------------------
1999 217,100 439.56 95.43 Mainly Put Options
- --------------------------------------------------------------------------------
2000 214,950 452.71 97.31 Mainly Put Options
- --------------------------------------------------------------------------------
2001 205,500 466.23 95.81 Mainly Put Options
- --------------------------------------------------------------------------------
2002 200,550 480.33 96.33 Mainly Put Options
- --------------------------------------------------------------------------------
</TABLE>
There are six counterparties to these contracts, all of which are
recognised financial institutions with a
25
<PAGE> 27
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
minimum credit rating of Aa3. As at the 31 December 1996 the Company had
spent $20.496 million on the purchase of options. The Company's risk in
the event of any of the counterparties defaulting on their contractual
obligations is limited to the defaulting party's share of this amount,
together with any revenue that may be foregone in the case where the
defaulted strike price exceeds the prevailing spot price at the value
date. The Company does not expect any counterparty to fail to meet its
obligations under the programme.
The accounting treatment of the option premium is to defer the full
amount, and then to subsequently charge to Profit and Loss at each value
date the cost of those options that expire on that date.
The Company does not engage in financial instruments to hedge future
interest rates or foreign exchange transactions.
26
<PAGE> 28
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
NOTE 18: SCHEDULE OF DEBTS RECEIVABLE AND DEBTS PAYABLE
<TABLE>
<CAPTION>
US$000
1996 1995 1994
<S> <C> <C> <C>
Debts receivable:
- not later than one year 42 420 -
====== ====== ======
Debts payable:
- not later than one year 51,055 10,054 -
====== ====== ======
</TABLE>
NOTE 19: EVENTS SUBSEQUENT TO BALANCE DATE
No significant events have occurred subsequent to the balance date.
NOTE 20: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and
conditions which are no more favourable than those available to other
parties.
MANAGEMENT AGREEMENT
Lihir Management Company Pty Ltd, a wholly owned subsidiary of the RTZ-CRA
Group, manages the Company and the Lihir Project pursuant to the
Management Agreement dated 17 March 1995 and LMC receives a management fee
for managing the project.
There are three Directors who are on the Board of the Company and Lihir
Management Company.
<TABLE>
<CAPTION>
Transactions with Related Companies US$000
1996 1995 1994
<S> <C> <C> <C>
The RTZ-CRA Group supplies labour on a secondment
basis and bears expenses on behalf of the project
which are subsequently recharged to the project 1,567 1,127 640
===== ===== ===
LMC management fee 3,644 875 123
===== ===== ===
</TABLE>
27
<PAGE> 29
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
NOTE 21: RECONCILIATION TO US GAAP
The Company's accounting policies vary in certain important respects from
the accounting principles generally accepted in the United States ("US
GAAP"). Such differences principally affect the measurement of mineral
development costs and certain reclassification issues.
Exploration costs
For the purposes of US GAAP, the Company's policy is to expense
exploration and evaluation costs when incurred. When a commercial mineral
deposit has been identified and the decision has been made to formulate a
mining plan, the costs of developing the mine are capitalized. The
Company's management determined that a commercial mineral deposit existed
in 1992 and for the purpose of US GAAP all expenditure incurred since this
date has been capitalized. In accordance with the Company's mineral
development properties accounting policy under IAS, exploration and
development costs of $1 13.7 million incurred prior to the date that
commercial feasibility was determined to exist have been capitalised as
part of the mineral development property asset. Under US GAAP such costs
would have been expensed.
Foreign exchange and general and administrative costs
Under IAS, foreign exchange gains and losses and general and
administrative expenses incurred over the constructions period are
capitalised while they are charged to expense under US GAAP.
28
<PAGE> 30
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
In thousands except per share amounts
Reconciliation to generally accepted accounting principles in the United
States.
<TABLE>
<CAPTION>
1996 1995 1994
US$000 US$000 US$000
<S> <C> <C> <C>
SHAREHOLDERS' EQUITY IN ACCORDANCE WITH IAS GAAP 621,314 621,314 151,624
Less:
- -- General and administrative costs expensed (21,871) (7,298) (1,400)
- -- Project financing (11,470) (8,994) (1,900)
Reversal of exploration and evaluation costs incurred
prior to identification of commercial feasibility (113,700) (113,700) (113,700)
-------- -------- --------
ACCUMULATED DEFICIT DURING THE DEVELOPMENT STAGE
UNDER US GAAP (147,041) (129,992) (117,000)
-------- -------- --------
SHAREHOLDERS' EQUITY UNDER US GAAP 474,273 491,322 34,624
======== ======== ========
NET INCOME/LOSS IN ACCORDANCE WITH IAS GAAP -- -- --
Less:
- -- General and administrative costs expensed (14,573) (5,898) (2,100)
-------- -------- --------
NET LOSS UNDER US GAAP (14,573) (5,898) (2,100)
======== ======== ========
Net Loss per share under US GAAP ($ 0.02) ($ 0.03) ($--)
======== ======== ========
Weighted average number of shares outstanding during the year 907,200 196,001 --
======== ======== ========
</TABLE>
Fully diluted loss per share is not materially different from primary loss
per share.
The 1995 Annual Report disclosed a Net Loss under US GAAP of $5,726,000. A
review of accounting policy has resulted in Interest Received now being
capitalised for US GAAP purposes and the 1995 results for both Net Loss
and Shareholders' Equity have been restated to reflect this. The
adjustment had
29
<PAGE> 31
LIHIR GOLD LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER, 1996
an immaterial impact on both net loss and loss per share for 1995.
For US GAAP purpose, certain expenditure relating to Project Financing
is not included as part of the net loss, but is transferred directly to
shareholder's equity. In 1996 this amounted to $2,476,000 (1995
$7,094,000).
30
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
BATTLE MOUNTAIN GOLD COMPANY
By /s/ Jeffrey L. Powers
-------------------------------
Jeffrey L. Powers
Vice President and Controller
Date: July 23, 1997
31
<PAGE> 33
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C> <C>
*2(a) -- Plan of Arrangement of Hemlo Gold Mines Inc. under Section
182 of the Business Corporations Act (Ontario) (Annex D to
Exhibit 20(a), Joint Management Information Circular and
Proxy Statement, to the Company's Current Report on Form 8-K
dated June 11, 1996, File No. 1-9666).
*2(b) -- Combination Agreement effective as of March 11, 1996 by
and between the Company and Hemlo Gold Mines Inc. (Annex C to
Exhibit 20(a), Joint Management Information Circular and
Proxy Statement, to the Company's Current Report on Form 8-K
dated June 11, 1996, File No. 1-9666).
++3(a) -- Restated Articles of Incorporation of the Company, as amended
and restated through July 19, 1996.
*3(b) -- Certificate of Resolution Establishing Designation,
Preferences and Rights of $3.25 Convertible Preferred Stock
(Exhibit 4(b) to the Company's Current Report on Form 8-K
dated July 19, 1996, File No. 1-9666).
*3(c) -- Certificate of Amendment of Certificate of Resolution
Establishing Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock (Exhibit 4(c) to the
Company's Current Report on Form 8-K dated July 19, 1996,
File No. 1-9666).
3(d) -- Bylaws of the Company, as amended through March 21, 1997.
*4(a) -- Rights Agreement, dated November 10, 1988, as amended and
restated as of July 19, 1996, between the Company and The
Bank of New York, as Rights Agent (Exhibit 4(e) to the
Company's Current Report on Form 8-K dated July 19, 1996,
File No. 1-9666).
*4(b) -- Voting, Support and Exchange Trust Agreement dated as of
July 19, 1996 between the Company, Hemlo Gold Mines Inc. and
The R-M Trust Company (Annex E to Exhibit 20(a), Joint
Management Information Circular and Proxy Statement, to the
Company's Current Report on Form 8-K dated June 11, 1996,
File No. 1-9666).
</TABLE>
E-1
<PAGE> 34
<TABLE>
<S> <C> <C>
*4(c) -- Specimen Stock Certificate for the Common Stock of the Company
(Exhibit 4(b) to the Company's Annual Report on Form 10-K for
the year ended December 1, 1988; File No. 1-9666).
*4(d) -- Fiscal and Paying Agency Agreement, dated as of January 4,
1990, between the Company and Citibank, N.A., Fiscal Agent
(Exhibit 4(c) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1989; File No. 1-9666).
*4(e)(1) -- Investment Agreement, dated May 22, 1992, between Empresa
Minera Inti Raymi S.A. and International Finance Corporation
(Exhibit 4(e) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992; File No. 1-9666).
*4(e)(2) -- Amendment to Investment Agreement and Waiver, effective as of
December 31, 1994, between Empresa Minera Inti Raymi S.A. and
International Finance Corporation (Exhibit 4(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995; File No. 1-9666).
*4(f)(1) -- Finance Agreement, dated as of September 14, 1992, between
Empresa Minera Inti Raymi S.A. and Overseas Private
Investment Corporation (Exhibit 4(f) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992;
File No. 1-9666).
*4(f)(2) -- First Amendment to Finance Agreement and Limited Waiver,
effective as of December 31, 1994, between Empresa Minera
Inti Raymi S.A. and Overseas Private Investment Corporation
(Exhibit 4(f)(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994; File No. 1-9666).
*4(f)(3) -- Letter Agreement dated December 31, 1994, among Overseas
Private Investment Corporation, Battle Mountain Gold Company,
Kori Kollo Corporation and Zeland Mines, S.A. (Exhibit 4(c)
to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, File No. 1-9666).
*4(g)(1) -- Loan Agreement, dated June 29, 1992, between Empresa Minera
Inti Raymi S.A. and Corporacion Andina de Fomento (English
translation) (Exhibit 4(g) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992; File No.
1-9666).
*4(g)(2) -- Amendment to Loan Agreement, effective as of December
31, 1994, between Empresa Minera Inti Raymi S.A. and
Corporacion Andina de Fomento (English translation) (Exhibit
4(b) to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995; File No. 1-9666).
+*10(a)(1) -- Battle Mountain Gold Company 1988 Deferred Income
Stock Option Plan, as amended through May 18, 1995 (Exhibit
10(a) to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995; File No. 1-9666).
</TABLE>
E-2
<PAGE> 35
<TABLE>
<S> <C> <C>
+*10(a)(2) -- Specimen of Deferred Income Stock Option Agreement for
officers of the Company, as amended and restated (Exhibit
10(a)(4) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992; File No. 1-9666).
+*10(b)(1) -- 1985 Stock Option Plan of the Company, as amended and
restated effective April 7, 1993 (Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993; File No. 1-9666).
+*10(b)(2) -- First Amendment to 1985 Stock Option Plan of the Company,
effective May 12, 1995 (Exhibit 10(b)(1) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995; File No. 1-9666).
+*10(b)(3) -- Specimen of the Company's 1985 Stock Option Plan Non-Qualified
Stock Option Agreement for executive officers of the Company
(Exhibit 10(a)(1) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993; File No. 1-9666).
+*10(b)(4) -- Specimen Amendment to the Company's 1985 Stock Option Plan
Non-Qualified Stock Option Agreement for executive officers
of the Company (Exhibit 10(b)(2) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; File
No. 1-9666).
+*10(b)(5) -- Specimen of the Company's 1985 Stock Option Plan Incentive
Stock Option Agreement for executive officers of the Company
(Exhibit 10(a)(2) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993; File No. 1-9666).
+*10(b)(6) -- Specimen Amendment to the Company's 1985 Stock Option Plan
Incentive Stock Option Agreement for executive officers of
the Company (Exhibit 10(b)(3) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; File
No. 1-9666).
+*10(c)(1) -- Battle Mountain Gold Company 1986 Restricted Stock Plan, as
amended and restated (Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1988;
File No. 1-9666).
+*10(c)(2) -- Specimen of Agreement under the Company's 1986 Restricted
Stock Plan (Exhibit 10(c)(2) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992; File No.
1-9666).
+o*10(d)(1) -- Specimen of the Company's Severance Agreements with officers
of the Company regarding certain benefits payable in the
event of change of control of the Company (Exhibit 10(f) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1986; File No. 0-13728).
</TABLE>
E-3
<PAGE> 36
<TABLE>
<S> <C> <C>
+*10(d)(2) -- Severance Agreement, dated June 5, 1992, between the Company
and R. Dennis O'Connell (Exhibit 10(g)(2) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1992; File No. 1-9666).
+*10(e) -- Battle Mountain Gold Company Contribution Equalization Plan,
as amended and restated effective as of November 10, 1988
(Exhibit 10(h) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992; File No. 1-9666).
+*10(f) -- Battle Mountain Gold Company Executive Productivity Bonus
Plan, as amended and restated effective January 1, 1994
(Exhibit 10(i) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993; File No. 1-9666).
*10(g)(1) -- Battle Mountain Gold Company Non-Qualified Stock Option Plan
for Outside Directors. (Exhibit 10(m) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991;
File No. 1-9666).
*10(g)(2) -- Amendment to Battle Mountain Gold Company Non-Qualified Stock
Option Plan for Outside Directors effective January 1, 1995
(Exhibit 10(j)(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994; File No. 1-9666).
*10(g)(3) -- Specimen of Director's Stock Option Agreement under the
Company's Non-Qualified Stock Option Plan for Outside
Directors (Exhibit 10(j)(2) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992; File No.
1-9666).
*10(h) -- Heads of Agreement, dated March 23, 1989, among the Company,
Niugini Mining Limited and the individuals listed on the
signature page thereto (Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1988;
File No. 1-9666).
+*10(i)(1) -- 1994 Long-Term Incentive Plan of Battle Mountain Gold Company,
as effective April 21, 1994 (Exhibit 10(a)(1) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994; File No. 1-9666).
+*10(i)(2) -- Amended and Restated 1994 Long-Term Incentive Plan of Battle
Mountain Gold Company (Annex I to Exhibit 20(a), Joint
Management Information Circular and Proxy Statement, to the
Company's Current Report on Form 8-K dated June 11, 1996,
File No. 1-9666).
+*10(i)(3) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Non-Qualified Stock Option Agreement (Exhibit 10(c)(1) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995; File No. 1-9666).
</TABLE>
E-4
<PAGE> 37
<TABLE>
<S> <C> <C>
+*10(i)(4) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Incentive Stock Option Agreement (Exhibit 10(c)(2) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995; File No. 1-9666).
+*10(i)(5) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Restricted Stock Agreement (Exhibit 10(a)(4) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1994; File No. 1-9666).
+*10(i)(6) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Performance Unit Agreement (Exhibit 10(n)(5) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994; File No. 1-9666).
+*10(j)(1) -- Specimen Split-Dollar Agreement (Individual) (Exhibit 10(o)(1)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994; File No. 1-9666).
+*10(j)(2) -- Specimen Amendment to Split-Dollar Agreement (Individual)
(Exhibit 10(o)(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994; File No. 1-9666).
+*10(j)(3) -- Specimen Split-Dollar Agreement (Trustee) (Exhibit 10(o)(3) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994; File No. 1-9666).
+*10(j)(4) -- Specimen Amendment to Split-Dollar Agreement (Trustee)
(Exhibit 10(o)(4) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994; File No. 1-9666).
+*10(k)(1) -- Battle Mountain Gold Company Supplemental Executive
Retirement Plan (Exhibit 10(d)(1) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995; File
No. 1-9666).
+*10(k)(2) -- Battle Mountain Gold Company Supplemental Executive Retirement
Plan Trust Agreement (Exhibit 10(d)(2) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995; File No. 1-9666).
+o*10(k)(3) -- Specimen of the Company's Supplemental Executive Retirement
Plan Agreement (Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995,
File No. 1-9666).
*10(l) -- Registration Rights Agreement, dated as of July 19, 1996,
between Noranda Inc., Kerr Addison Mines Limited and the
Company (Exhibit 10(a) to the Company's Current Report on
Form 8-K dated July 19, 1996, File No. 1-9666).
+o10(m) -- Specimen of Employment Agreements dated March 11, 1996 between
the Company and certain executive officers
</TABLE>
E-5
<PAGE> 38
<TABLE>
<S> <C> <C>
+10(n) -- Consulting Agreement effective as of March 1, 1997 between
the Company and Karl E. Elers.
++11 -- Computation of Earnings Per Common Share.
++12 -- Computation of Ratio of Earnings to Fixed Charges and Earnings
to Combined Fixed Charges and Preferred Dividends.
*20(a) -- Joint Management Information Circular and Proxy Statement
(Exhibit 20(a) to the Company's Current Report on Form 8-K
dated June 11, 1996, File No. 1-9666).
++21 -- Subsidiaries of the Company.
++23(a) -- Consent of Price Waterhouse LLP.
++23(b) -- Consent of Ernst & Young
23(c) -- Consent of Coopers & Lybrand
++24 -- Powers of Attorney
++27 -- Financial Data Schedule
</TABLE>
- ------------------------
* Incorporated by reference as indicated.
++ Previously filed.
+ Represent management contracts or compensatory plans or arrangements
required to be filed as exhibits to this Annual Report by Item
601(10)(iii) of Regulation S-K.
o Pursuant to Instruction 2 accompanying paragraph (a) and the
Instruction accompanying paragraph (b)(10)(iii)(B)(6) of Item 601 of
Regulation S-K, the registrant has not filed each executive officer's
individual agreement with the Company as an exhibit hereto. The
registrant has agreements substantially identical to Exhibit 10(d)(1)
above with each of Messrs. Elers, Werneburg, Mazur, Quinn and Reisbick.
The registrant has agreements substantially identical to Exhibit
10(k)(3) above with each of Karl E. Elers, Kenneth R. Werneburg, Joseph
L. Mazur, R. Dennis O'Connell, Robert J. Quinn and Fred B. Reisbick.
The registrant has agreements substantially identical to Exhibit 10(m)
above with each of Messrs. Bayer, Atkinson, Baylis and Keyes.
E-6
<PAGE> 1
EXHIBIT 3(b)
BATTLE MOUNTAIN GOLD COMPANY
AMENDED BYLAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this
Corporation shall be held on such date and at such time and place, within or
without the State of Nevada, as the Board of Directors of the Corporation may
designate, and on any subsequent day or days and at the time and place to which
such meeting may be adjourned, for the purposes of electing directors and of
transacting such other business as may properly come before the meeting. The
Board of Directors shall give at least ten (10) days' notice of the date, time
and place of the meeting to the stockholders.
SECTION 2. Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders and may not be effected by any consent in
writing by stockholders. Except as otherwise required by law and subject to
the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Corporation may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the entire Board of
Directors or by the Chairman of the Board or by the President of the
Corporation. Upon written request of the Board of Directors, the Chairman of
the Board or the President, after the Chairman of the Board or the President
after having duly called a special meeting of stockholders, it shall be the
duty of the Secretary or any Assistant Secretary of the Corporation to fix the
date of the meeting to be held not less than ten (10) nor more than sixty (60)
days after receipt of the request and to give due notice thereof.
SECTION 3. Every special meeting of stockholders shall be
held at such place within or without the State of Nevada as the Board of
Directors may designate.
SECTION 4. Written notice of every meeting of stockholders
shall be given by the Secretary of the Corporation to each stockholder of
record entitled to vote at the meeting, by placing such notice in the mail at
least ten (10) days, but not more than sixty (60) days, prior to the day named
for the meeting addressed to each stockholder at his address appearing on the
books of the Corporation.
SECTION 5. The Board of Directors may fix a date, not less
than ten (10) nor more than sixty (60) days preceding the date of any meeting
of stockholders, as a record date for the determination of stockholders
entitled to notice of, and to vote at, any such meeting. The Board of
Directors shall not close the books of the Corporation against transfers of
shares during the whole or any part of such period.
<PAGE> 2
SECTION 6. The notice of every meeting of stockholders may be
accompanied by a form of proxy approved by the Board of Directors in favor of
such person or persons as the Board of Directors may select.
SECTION 7. Except as otherwise provided by law, the Articles
of Incorporation of the Corporation or these Bylaws, the presence in person or
by proxy of the holders of a majority of the votes entitled to be cast thereat
shall constitute a quorum at each meeting of stockholders. The stockholders
present at any duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum. Directors shall be elected by a plurality of the votes
cast in the election. For all matters as to which no other voting requirement
is specified by law, the Articles of Incorporation of the Corporation or these
Bylaws, the affirmative vote required for stockholder action shall be that of a
majority of the votes entitled to be cast thereon present in person or
represented by proxy at the meeting (as counted for purposes of determining the
existence of a quorum at the meeting). In the case of a matter submitted for a
vote of the stockholders as to which a stockholder approval requirement is
applicable under the stockholder approval policy of the New York Stock
Exchange, the requirements of Rule 16b-3 under the Securities Exchange Act of
1934 or any provision of the Internal Revenue Code, in each case for which no
higher voting requirement is specified by law, the Articles of Incorporation of
the Corporation or these Bylaws, the vote required for approval shall be the
requisite vote specified in such stockholder approval policy, Rule 16b-3 or
Internal Revenue Code provision, as the case may be (or the highest such
requirement if more than one is applicable). For the approval of the
appointment of independent public accountants (if submitted for a vote of the
stockholders), the vote required for approval shall be a majority of the votes
cast on the matter.
SECTION 8. Any meeting of stockholders may be adjourned from
time to time, without notice other than by announcement at the meeting at which
such adjournment is taken, and at any such adjourned meeting at which a quorum
shall be present any action may be taken that could have been taken at the
meeting originally called; provided that if the adjournment is for more than
thirty (30) days, or if, after the adjournment, a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.
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<PAGE> 3
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. The business, affairs and property of the
Corporation shall be managed by a board of directors divided into three classes
as provided in the Articles of Incorporation of the Corporation. The number of
directors constituting the entire Board of Directors shall be fixed from time
to time by resolution of the entire Board of Directors but shall be not less
than three nor more than twelve. Each director shall hold office for the full
term to which he shall have been elected and until his successor is duly
elected and shall qualify, or until his earlier death, resignation or removal.
A director need not be a resident of the State of Nevada or a stockholder of
the Corporation.
SECTION 2. Except as provided in the Articles of
Incorporation of the Corporation and subject to the rights of holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under specified circumstances,
newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualifies. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 3. No director of the Corporation shall be removed
from office as a director without cause except by the affirmative vote of the
holders of 80% of the number of shares of Common Stock then outstanding. A
Director may be removed from office for cause only by the affirmative vote of
the holders of not less than a majority of the Common Stock then outstanding.
Except as otherwise provided by law or fixed pursuant to the provisions of
Article FOURTH of the Corporation's Restated Articles of Incorporation relating
to the rights of holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, this Section 3 shall
not apply with respect to any director elected by the holders of any such class
or series having preference.
SECTION 4. Subject to the rights of holders of any class or
series having a preference over the Common Stock as to dividends or upon
liquidation, nominations for the election of directors may be made by the Board
of Directors or a proxy committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of directors. Any stockholder
entitled to vote in the election of directors may nominate one or more persons
for election as directors only at a meeting of stockholders and only if written
notice of such stockholder's intent to make such nomination or nominations has
been given, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation not later than (i) with respect to
an election to be held at an annual meeting of stockholders, ninety (90) days
in advance of such meeting, and (ii) with respect to an election to be held at
a special meeting of stockholders for the election of directors, the close of
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<PAGE> 4
business on the seventh day following the date on which notice of such meeting
is first given to stockholders.
Each such notice shall set forth: (a) the name and address of the stockholder
who intends to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, as then in effect, had the nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a director of the Corporation if so
elected.
SECTION 5. Regular meetings of the Board of Directors shall
be held at such place or places within or without the State of Nevada and at
such time and on such day as may be fixed by resolution of the Board of
Directors, without further notice of such meetings. The time or place of
holding regular meetings of the Board of Directors may be changed by the
Chairman of the Board of Directors or the President of the Corporation by
giving written notice thereof as provided in Section 7 of this Article II.
SECTION 6. Special meetings of the Board of Directors shall
be held, whenever called by the Chairman of the Board of Directors, the
Chairman of the Executive Committee of the Board of Directors, the President of
the Corporation, or by resolution adopted by the entire Board of Directors, at
such place or places within or without the State of Nevada as may be stated in
the notice of the meeting.
SECTION 7. Written notice of the time and place of, and
general nature of the business to be transacted at, all special meetings of the
Board of Directors, and written notice of any change in the time or place of
holding the regular meetings of the Board of Directors, shall be given to each
director personally or by mail or by telegraph, telecopier or similar
communication; provided, however, that notice of any meeting need not be given
to any director if waived by him in writing, or if he shall be present at such
meeting.
SECTION 8. A majority of directors in office shall constitute
a quorum of the Board of Directors for the transaction of business, but a
lesser number may adjourn from day to day until a quorum is present. Except as
otherwise provided by law or in these Bylaws, all questions shall be decided by
a vote of a majority of the directors present.
SECTION 9. Any action that may be taken at a meeting of the
Board of Directors or members of the Executive Committee may be taken without a
meeting if consent in writing setting forth the action so taken shall be signed
by all of the directors or members of the Executive Committee, as the case may
be, and shall be filed with the Secretary of the Corporation.
-4-
<PAGE> 5
SECTION 10. The Board of Directors may designate one or more
of its number to be Vice Chairman of the Board, Chairman of the Executive
Committee and Chairman of any other committees of the Board of Directors and to
hold such other positions on the Board as the Board of Directors may designate.
ARTICLE III
EXECUTIVE COMMITTEE
The Board of Directors may, by resolution adopted by a
majority of the entire Board, designate two or more of its number to constitute
an Executive Committee that shall have and exercise the authority of the Board
of Directors in the management of the business of the Corporation to the extent
permitted by law during intervals between meetings of the Board. The Board of
Directors may, by resolution adopted by a majority of the entire Board,
designate two or more of its number to constitute any other Committee or
Committees with such powers, duties, responsibilities and duration of existence
as the Board of Directors shall deem necessary or desirable.
ARTICLE IV
OFFICERS
SECTION 1. The officers of the Corporation shall consist of a
Chairman of the Board of Directors, President, Secretary, Treasurer and such
Executive, Group, Senior or other Vice Presidents, and other officers as may be
elected or appointed by the Board of Directors. Any number of offices may be
held by the same person. All officers shall hold office until their successors
are elected or appointed, except that the Board of Directors may remove any
officer at any time at its discretion.
SECTION 2. The officers of the Corporation shall have such
powers and duties as generally pertain to their offices, except as modified
herein or by the Board of Directors, as well as such powers and duties as from
time to time may be conferred by the Board of Directors. The Chairman of the
Board and the President shall establish an office of the Chief Executive with
officers from the Corporation and Battle Mountain Canada Ltd. to manage the
Corporation, Battle Mountain Canada Ltd. and their respective subsidiaries.
The Chairman of the Board shall preside at meetings of the Board of Directors
and at meetings of stockholders.
ARTICLE V
SEAL
The seal of the Corporation shall be in such form as the Board
of Directors shall prescribe.
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<PAGE> 6
ARTICLE VI
CERTIFICATES OF STOCK
The shares of stock of the Corporation shall be represented by
certificates of stock, signed by the President or such Vice President or other
officer designated by the Board of Directors, countersigned by the Treasurer or
the Secretary and bearing the seal of the Corporation; and such signature of
the President, Vice President, or other officer, such countersignature of the
Treasurer or Secretary, and such seal, or any of them, may be executed in
facsimile, engraved or printed. In case any officer who has signed or whose
facsimile signature has been placed upon any share certificate shall have
ceased to be such officer because of death, resignation or otherwise before the
certificate is issued, the certificate may be issued by the Corporation with
the same effect as if the officer had not ceased to be such at the date of its
issue. Said certificates of stock shall be in such form as the Board of
Directors may from time to time prescribe.
ARTICLE VII
INDEMNIFICATION
SECTION 1. Right to Indemnification - General. The
Corporation shall indemnify and hold harmless each person who was or is, or is
threatened to be made, a party to or otherwise involved in any threatened,
pending or completed action, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing or other proceeding, whether
civil, criminal, administrative or investigative in nature (any such
threatened, pending or completed proceeding being hereinafter called a
"Proceeding") by reason of the fact that he is or was a director or officer of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
(whether the basis of his involvement in such Proceeding is alleged action in
an official capacity or in any other capacity while serving as such), to the
fullest extent permitted by applicable law in effect on April 28, 1987, and to
such greater extent as applicable law may thereafter from time to time permit,
from and against all expense, liability and loss (including Expenses, as
hereinafter defined, judgments, penalties, ERISA excise taxes, fines and
amounts paid or to be paid in settlement) actually and reasonably incurred by
him or on his behalf or suffered in connection with such Proceeding or any
claim, issue or matter therein; provided, however, that, except as provided in
Section 5 of this Article VII, the Corporation shall indemnify any such person
claiming indemnity in connection with a Proceeding initiated by such person
only if such Proceeding was authorized by the Board of Directors. Such
indemnification rights shall include, but not be limited to, the right to be
indemnified to the fullest extent permitted by N.R.S.Sections 78.751(1) and (3)
in the case of all other Proceedings.
SECTION 2. Certain Provisions Respecting Indemnification for
and Advancement of Expenses. (a) Without limiting any other right of
indemnification provided for in this Article VII, to the extent that a person
referred to in Section 1 of this Article VII claiming indemnity thereunder is
successful on the merits or otherwise in defense of any Proceeding, he must be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection with such Proceeding. If such person is not wholly
successful in defense of such Proceeding but is successful on
-6-
<PAGE> 7
the merits or otherwise therein, the Corporation must indemnify such person
against all Expenses actually and reasonably incurred by him or on his behalf
in connection with each successfully resolved claim, issue or matter. The
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
(b) To the extent that a person referred to in Section 1
of this Article VII is required to serve as a witness in any Proceeding
referred to therein, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection with serving as a
witness.
(c) The Corporation must from time to time pay, in
advance of final disposition, all reasonable Expenses incurred, as such
Expenses are incurred, by or on behalf of any person referred to in Section 1
of this Article VII claiming indemnity thereunder in respect of any Proceeding
referred to therein. Each such advance shall be made within ten (10) days
after the receipt by the Corporation of a statement from the claimant
requesting the advance, which statement shall reasonably evidence the relevant
Expenses and be accompanied or preceded by any such undertaking as may be
required by applicable law respecting the contingent repayment of such
Expenses.
SECTION 3. Procedure for Determination of Entitlement to
Indemnification. (a) To obtain indemnification under this Article VII, a
claimant shall submit to the Secretary of the Corporation a written
application. The Secretary of the Corporation shall, promptly upon receipt of
such an application for indemnification, advise the Board of Directors in
writing of the application. In connection with any such application, the
claimant shall provide such documentation and information as is requested by
the Corporation and reasonably available to him and relevant to a determination
of entitlement to indemnification.
(b) Any indemnification under this Article VII, unless
otherwise ordered by a court or advanced pursuant to Paragraph (c) of Section 2
of this Article VII, must be made by the Corporation upon a determination that
indemnification is proper in the circumstances. The determination must be
made: (i) by the Board of Directors by a majority vote of such quorum
consisting of Disinterested Directors, (ii) by Independent Counsel in a written
opinion, if a quorum of the Board of Directors consisting of Disinterested
Directors is not obtainable or, even if obtainable, a majority vote of such
quorum of Disinterested Directors so directs, or (iii) by the stockholders of
the Corporation; provided, however, that if a Change of Control, as hereinafter
defined, shall have occurred, no determination of entitlement to
indemnification adverse to the claimant shall be made other than one made or
concurred in by Independent Counsel, selected as provided in Paragraph (d) of
this Section 3, in a written opinion.
(c) If the determination of entitlement to
indemnification is to be made by Independent Counsel in the absence of a Change
of Control, the Corporation shall furnish notice to the claimant within ten
(10) days after receipt of the application for indemnification, specifying the
identity and address of Independent Counsel. The claimant may, within fourteen
(14) days after receipt of such written notice of selection, deliver to the
Corporation a written objection to such selection, subject to Paragraph (e) of
this Section 3. If such an objection is made, either the
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<PAGE> 8
Corporation or the claimant may petition any court of competent jurisdiction
for a determination that the objection is without a reasonable basis and/or for
the appointment as Independent Counsel of counsel selected by the Court.
(d) If there has been a Change of Control, Independent
Counsel to act as and to the extent required by Paragraph (b) of this Section 3
shall be selected by the claimant, who shall give the Corporation written
notice advising of the identity and address of the Independent Counsel so
selected. The Corporation may, within seven (7) days after receipt of such
written notice of selection, deliver to the claimant a written objection to
such selection, subject to Paragraph (e) of this Section 3. The claimant may,
within five (5) days after the receipt of such objection, select other counsel
to act as Independent Counsel, and the Corporation may, within seven (7) days
after receipt of such written notice of selection, deliver to the claimant a
written objection, as aforesaid, to such second selection. In the case of any
such objection, the claimant may petition any Court of competent jurisdiction
for a determination that the objection is without a reasonable basis and/or for
the appointment as Independent Counsel of counsel selected by the Court.
(e) Any objection to the selection of Independent Counsel
may be asserted only on the ground that the counsel so selected does not
qualify as Independent Counsel under the definition contained in Section 8 of
this Article VII, and the objection shall set forth with particularity the
basis of such assertion. No counsel selected by the Corporation or by the
claimant may serve as Independent Counsel if a timely objection has been made
to his selection unless a Court has determined that such objection is without a
reasonable basis.
(f) The Corporation shall pay any and all reasonable fees
and expenses of Independent Counsel acting pursuant to this Article VII and in
any proceeding to which such counsel is a party or a witness in respect of its
investigation and report. The Corporation shall pay all reasonable fees and
expenses incident to the procedures of this Section 3 regardless of the manner
in which Independent Counsel is selected or appointed.
SECTION 4. Presumptions and Effect of Certain Proceedings.
(a) A person referred to in Section 1 of this Article VII claiming a right to
indemnification under this Article VII shall be presumed (except as may be
otherwise expressly provided in this Article VII or required by applicable law)
to be entitled to such indemnification upon submission of an application for
indemnification in accordance with Section 3, and the Corporation shall have
the burden of proof to overcome the presumption by clear and convincing
evidence in any determination contrary to the presumption.
(b) Unless the determination is to be made by Independent
Counsel, if the person or persons empowered under Section 3 of this Article VII
to determine entitlement to indemnification shall not have made and furnished
the determination in writing to the claimant within sixty (60) days after
receipt by the Corporation of the application for indemnification, the
determination of entitlement to indemnification, shall be deemed to have been
made in favor of the claimant unless the claimant knowingly misrepresented a
material fact in connection with the application or such indemnification is
prohibited by law. The termination of any Proceeding described in Section 1 of
this Article VII, or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as may be otherwise expressly
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provided in this Article VII or required by applicable law) of itself adversely
affect the right of a claimant to indemnification or create a presumption that
a claimant 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, or
with respect to any criminal Proceeding, that he had reasonable cause to
believe that his conduct was unlawful.
SECTION 5. Right of Claimant to Bring Suit. (a) If (i) a
determination is made pursuant to the procedures contemplated by Section 3 of
this Article VII that a claimant is not entitled to indemnification under this
Article VII, (ii) advancement of Expenses is not timely made pursuant to
Paragraph (c) of Section 2 of this Article VII, (iii) Independent Counsel has
not made and delivered a written opinion as to entitlement to indemnification
within ninety (90) days after the selection or appointment of counsel has
become final by virtue of the lapse of time for objection or the overruling of
objections or appointment of counsel by a Court, or (iv) payment of a claim for
indemnification is not made within ten (10) days after a favorable
determination of entitlement to indemnification has been made or deemed to have
been made pursuant to Section 3 or 4 of this Article VII, the claimant shall be
entitled to bring suit against the Corporation to establish his entitlement to
such indemnification or advancement of Expenses and to recover the unpaid
amount of his claim. Neither the failure of the Corporation (including its
Board of Directors, Independent Counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances, nor an actual determination by
the Corporation (including its Board of Directors, Independent Counsel or its
stockholders) that indemnification is not proper in the circumstances, shall be
a defense to the action or create a presumption that indemnification is not
proper in the circumstances, and the claimant shall be entitled to a de novo
trial on the merits as to any such matter as to which no determination or an
adverse determination has been made.
(b) If a claimant is successful in whole or in part in
prosecuting any claim referred to in Paragraph (a) of this Section 5, the
claimant shall also be entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any and all Expenses actually and
reasonably incurred by him in prosecuting such claim if such Expenses have not
already been paid by the Corporation.
SECTION VI. Non-Exclusivity, Insurance and Survival of
Rights. The rights of indemnification and to receive advancement of Expenses
contemplated by this Article VII shall not be exclusive of any other right to
which any person may at any time be entitled under any applicable law,
provision of the Articles of Incorporation, bylaw, agreements, vote of
stockholders or resolution of directors, or otherwise. Without limiting the
generality of the foregoing, the Corporation may, by action of its Board of
Directors, provide indemnification to other employees and agents of the
Corporation with the same or lesser scope and effect as the indemnification of
directors and officers authorized by this Article VII.
The Corporation may purchase and maintain insurance or make
other financial arrangements 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 for any
liability
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asserted against him and liability and expenses incurred by him in his capacity
as a director, officer, employee or agent, or arising out of his status as
such, whether or not the Corporation has the authority to indemnify him against
such liability and expenses under the Corporation Law of Nevada.
The other financial arrangements made by the Corporation may include the
following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting
a security interest or other lien on any assets of the
Corporation.
(d) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection may
provide protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to the
advancement of expenses or indemnification ordered by a court.
The right to indemnification conferred in this Article VII
shall be a contract right, and no amendment, alteration or repeal of this
Article VII or any provision thereof shall restrict the indemnification rights
granted by this Article VII as to any person claiming indemnification with
respect to acts, events and circumstances that occurred, in whole or in part,
before such amendment, alteration or repeal. The provisions of this Article
VII shall continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of his heirs, executors and administrators.
SECTION 7. Severability. If any provision of this Article
VII shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Article VII shall be construed
so as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
SECTION 8. Definitions. For purposes of this Article VII:
(a) "Change of Control" shall be deemed to have
occurred if: (i) any "person," including a "group" as determined in accordance
with Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is or becomes the beneficial owner, directly or indirectly of
securities of the Corporation representing thirty percent (30%) or more of the
combined voting power of the Corporation's then outstanding securities; (ii) as
a result of, or in connection with, any tender offer or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"), the persons who
were directors of the Corporation before the Transaction shall cease to
constitute a majority of the Board of Directors of the Corporation or any
successor to the Corporation; (iii) the Corporation is merged or consolidated
with another corporation, and as a result of such merger of consolidation less
than seventy percent (70%) of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the aggregate by the
former stockholders of the Corporation, other than (x) any party to such merger
or consolidation, or (y) any affiliates to any such party; (iv) a tender offer
or exchange offer is made and consummated for the ownership of securities
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of the Corporation representing thirty percent (30%) or more of the combined
voting power of the Corporation's then outstanding voting securities; or (v)
the Corporation transfers substantially all of its assets to another
corporation that is not a wholly-owned corporation of the Corporation.
(b) "Disinterested Director" means a director of the
Corporation who is not and was not a party to the Proceeding in respect of
which indemnification is sought as provided in this Article VII.
(c) "Expenses" shall include all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, or being or
preparing to be a witness in a Proceeding.
(d) "Independent Counsel" means a law firm, or a member
of a law firm, with substantial experience in matters of corporation law and
that neither presently is, nor in the five (5) years previous to his selection
or appointment has been, retained to represent: (i) the Corporation or person
claiming indemnification in any matter material to either, or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder,
and is not otherwise precluded under applicable professional standards from
acting in the capacity herein contemplated.
(e) "N.R.S." means the Nevada Revised Statutes.
ARTICLE VIII
ACTION UNDER NEVADA STATUTE
The provisions of Sections 78.378 to 78.3793, inclusive, of
the Nevada General Corporation Law do not apply to the acquisition by Noranda
Inc., an Ontario corporation ("Noranda"), or any person controlled by Noranda
or, to the extent any such person is deemed to be an acquiring person or a
person acting in concert with an acquiring person within the meaning of such
provisions, any person controlling Noranda at the time of such acquisition, of
up to 65,242,526 exchangeable shares ("Exchangeable Shares") of Battle Mountain
Canada Ltd., an Ontario corporation, or shares of common stock, par value $0.10
per share ("Common Stock"), of the Corporation in the arrangement referred to
in the Combination Agreement dated as of March 11, 1996 by and between the
Corporation and Hemlo Gold Mines Inc., an Ontario corporation (to be renamed
Battle Mountain Canada Ltd.), as amended and restated (including shares of
Common Stock issuable upon exchange for such Exchangeable Shares).
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ARTICLE IX
AMENDMENTS
Subject to the provisions of the Articles of Incorporation,
these Bylaws may be altered, amended or repealed at any regular meeting of
stockholders (or at any special meeting thereof duly called for that purpose)
only by the affirmative vote of the holders of at least eighty percent (80%) of
the voting power of all shares of the Corporation represented at such meeting
and entitled to vote generally in the election of directors, voting together as
a class, provided that in the notice of any such special meeting notice of such
purpose shall be given. Subject to the laws of the State of Nevada, the
Articles of Incorporation and these Bylaws, the Board of Directors may alter,
amend or repeal these Bylaws, or enact such other Bylaws as in their judgment
may be advisable for the regulation of the conduct of the affairs of the
Corporation, by majority vote of those present at any meeting of the Board of
Directors at which a quorum is present (except so far as Bylaws adopted by
stockholders shall otherwise provide).
March 21, 1997
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EXHIBIT 23 (c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the previously filed
Registration Statements of Battle Mountain Gold Company on Form S-8 Nos.
33-14605, 33-22146, 33-47570, 33-53195, 333-14521 and 333-14523 of our report
dated March 13, 1997, on our audit of the financial statements of Lihir Gold
Limited as of December 31, 1996, and for the year then ended, which report is
included in this Annual Report on Form 10-K/A.
COOPERS & LYBRAND
Port Moresby, Papua New Guinea
July 21, 1997
