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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-31986 (82-689)
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GLAMIS GOLD LTD.
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(Exact name of Registrant as specified in its charter)
British Columbia, Canada None.
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(Jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
3324 Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, B.C. Canada, V7X 1L3
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(Address of Principal Executive Offices)
604-681-3541
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(Registrant's telephone number, including area code)
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 180 days. Yes X No .
--- ---
The number of shares outstanding of the Registrant's common stock, as of
November 7, 1996, was 26,504,707.
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GLAMIS GOLD LTD.
INDEX
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Page
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Part I - Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets as at September 30, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Earnings for the nine months ended
September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Retained Earnings for the nine months
ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Changes in Financial Position for the
nine months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 3
Notes to Interim Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . 6
Part II - Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . 12
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars)
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<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
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<S> <C> <C>
Cash $ 3,474 $ 4,162
Other current assets (note 3) 16,214 13,500
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Current assets 19,688 17,662
Plant and equipment and mine development costs 49,495 50,459
Other assets 5,599 1,637
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$ 74,782 $ 69,758
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LIABILITIES
Current liabilities $ 4,617 $ 2,525
Long term liabilities 2,785 2,624
SHAREHOLDERS' EQUITY
Share capital (note 4):
Authorized:
50,000,000 common shares without par value
5,000,000 preferred shares, $10 par value,
issuable in Series
Issued and fully paid:
26,504,707 common shares (1995 - 26,386,707) 56,872 56,076
Contributed surplus 63 63
Cumulative translation adjustment - -
Retained earnings 10,445 8,470
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67,380 64,609
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$ 74,782 $ 69,758
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</TABLE>
Prepared by Management without audit
Approved by the Directors:
"JAMES R. BILLINGSLEY" "CHESTER F. MILLAR"
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Director Director
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CONSOLIDATED STATEMENTS OF EARNINGS
(Expressed in thousands of U.S. dollars)
(Except per share amounts)
<TABLE>
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenue from gold production $12,293 $ 8,115 $33,600 $27,311
Cost of production 5,915 5,162 17,926 14,735
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6,378 2,953 15,674 12,576
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Expenses
Depreciation & depletion 2,782 2,247 7,651 6,192
Royalties 824 459 1,960 1,534
Selling, general & administrative 826 672 2,279 2,024
Exploration 114 643 1,041 2,009
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4,546 4,021 12,931 11,759
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Earnings (loss) from operations 1,832 (1,068) 2,743 817
Interest expense 33 39 122 172
Other (income) expense (112) (203) (249) (549)
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Earnings (loss) before income taxes 1,911 (904) 2,870 1,194
Provision for income taxes 581 (244) 895 370
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Net earnings (loss) $ 1,330 $ (660) $ 1,975 $ 824
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Earnings (loss) per share $ 0.05 $ (0.03) $ 0.07 $ 0.03
===============================================================================
</TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Expressed in thousands of U.S. dollars)
<TABLE>
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Retained earnings, beginning of period $ 9,115 $11,500 $ 8,470 $10,016
Net earnings 1,330 (660) 1,975 824
Dividends -- (1,169) -- (1,169)
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Retained earnings, end of period $10,445 $9,671 $10,445 $9,671
===============================================================================
</TABLE>
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CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Expressed in thousands of U.S. dollars)
<TABLE>
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 1,330 $ (660) $ 1,975 $ 824
Adjustments for items not affecting
working capital 2,796 2,183 7,873 6,259
Net changes in non-cash working capital 780 (1,157) (621) 582
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Net cash provided by operations 4,906 366 9,227 7,665
NET INVESTMENT ACTIVITIES (6,330) (3,137) (10,711) (10,102)
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FINANCING ACTIVITIES
Stock issues - - 796 2,367
Dividends paid - (1,169) - (1,169)
Other financing activities - (1) - (115)
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Net financing activities - (1,170) 796 1,083
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Decrease in cash (1,424) (3,941) (688) (1,354)
Effect of currency translation adjustment
on cashflow - - - 23
Cash, beginning of period 4,898 14,133 4,162 11,523
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Cash, end of period $ 3,474 $10,192 $3,474 $10,192
===============================================================================
</TABLE>
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GLAMIS GOLD LTD.
Notes to Interim Consolidated Financial Statements
(tables expressed in thousands of United States Dollars)
September 30, 1996
1. GENERAL
In the opinion of management, the accompanying unaudited consolidated balance
sheets and consolidated statements of earnings, retained earnings and changes
in financial position contain all adjustments, consisting only of normal
recurring accruals, necessary to present fairly the financial position of
Glamis Gold Ltd. (the "Company") as of September 30, 1996 and December 31, 1995
and the results of its operations and changes in its financial position for the
nine months ended September 30, 1996 and 1995. The results of operations for
the nine months ended September 30, 1996, are not necessarily indicative of the
results to be expected for the entire fiscal year.
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles for annual financial statements. These financial statements should
be read in conjunction with the Company's audited consolidated financial
statements and related footnotes included in the Company's Transition Report on
Form 10-K for the transition period ended December 31, 1995.
The financial statements are prepared in accordance with accounting principles
generally accepted in Canada which conform, in all material respects, with
accounting principles generally accepted in the United States, except as
described in note 5 hereof.
2. REPORTING CURRENCY AND FOREIGN CURRENCY TRANSLATION
Effective July 1, 1994, the Company adopted the United States (U.S.) dollar as
its reporting currency and effective December 31, 1995, the Company changed its
year end from June 30 to December 31.
The Canadian operations of the Company are considered "self-sustaining" and its
accounts are translated into U.S. dollars using the current rate method under
which assets and liabilities are translated at the rate of exchange at the end
of the period. Revenues and expenses are translated at the average exchange
rate for the period. Exchange gains and losses are deferred and included as a
separate component of shareholders equity.
The Mexican subsidiary of the Company is treated as an integrated operation and
its accounts are translated into U.S. dollars using the temporal method whereby
monetary items are translated at exchange rates prevailing at the balance sheet
date and non-monetary items at
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historical exchange rates. Revenue and expenses are translated at average
exchange rates for the period. Translation gains or losses are included in the
determination of net income.
3. OTHER CURRENT ASSETS
Included in other current assets are the following inventories:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
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<S> <C> <C>
Finished goods $ 3,972 $ 2,737
Work-in-progress 10,987 8,915
Supplies and spare parts 750 841
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$15,709 $12,493
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</TABLE>
4. SHARE CAPITAL
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
--------------------------------- ------------------------------
# of Shares Amount # of Shares Amount
(000) (000)
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<S> <C> <C> <C> <C>
Issued and fully paid:
Balance beginning of period 26,386,707 $56,076 26,032,707 $53,710
Issued during the period:
For cash consideration under
the terms of directors'
and employees' stock
options
118,000 796 354,000 2,366
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Balance end of period 26,504,707 56,872 26,386,707 $56,076
========== ======= ========== =======
</TABLE>
5. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
Accounting in these interim consolidated financial statements under Canadian
and United States generally accepted accounting principles is substantially the
same except for accounting for income taxes. In accordance with the Statement
of Accounting Standards No. 109 "Accounting for Income Taxes" ("FAS 109"),
United States generally accepted accounting principles require the asset and
liability method of accounting for income taxes as compared to the deferred
method formerly required under APB Opinion 11, which was similar to accounting
for income taxes under Canadian generally accepted accounting principles.
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If the Company had applied the provisions of Statement 109 in the fiscal year
ended June 30, 1994 when it became effective without restating prior years'
financial information, there would be no deferred income taxes payable at
December 31, 1995. The amount reported for loss for the six months ended
December 31, 1995 would be increased by $131,000, the amount reported for
earnings for the fiscal year ended June 30, 1995 would be reduced by $86,000
and the amount reported for earnings for the fiscal year ended June 30, 1994
would be increased by $1,679,000. It is not expected that there would be a
material difference in the consolidated statements of operations and changes in
financial position for the nine months ended September 30, 1996 if they were
prepared under United States generally accepted accounting principles.
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information should be read in conjunction with the unaudited
consolidated financial statements and related notes included herein which are
prepared in accordance with generally accepted accounting principles in Canada
for interim financial information. In all material respects, they conform with
those principles generally accepted in the United States, except as described
in note 5 of Item 1.
SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Except for the statements of historical fact contained herein, the information
presented in this Item 2 constitutes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the factual results of current exploration
activities, conclusions of feasibility studies now underway, changes in project
parameters as plans continue to be refined, future prices of gold as well as
those factors discussed in the section entitled "Other Considerations" in the
Company's Transition Report on Form 10-K.
SUMMARY OF RESULTS OF OPERATIONS
Gold production for the three months ended September 30, 1996 (sometimes
referred to as the "current period"), was 32,133 ounces of gold which produced
revenues of $12,293,000. This compares with production of 21,328 ounces of
gold and revenues of $8,115,000 for the three months ended September 30, 1995.
Production of gold during the current period was approximately 51% greater than
the same period last year and revenues were approximately 51% greater. These
increases are mainly attributed to increases in production of 8,364 ounces of
gold at the Rand Mine and 2,032 ounces of production at the Picacho Mine.
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Gold production for the nine month period ended September 30, 1996 was 86,454
ounces which produced revenues of $33,600,000. This compares with production
of 71,770 ounces of gold and revenues of $27,311,000 for the nine month period
ended September 30, 1995. The gold production for the nine months ended
September 30, 1996 represents an increase of 20% from that experienced in the
nine month period ended September 30, 1995, while revenues increased by 23%.
The increase in production during the nine month period ended September 30,
1996 was primarily due to increased production at both the Rand and Picacho
Mines.
The increase in production at the Rand Mine during the period ended September
30, 1996, was the result of increasing ore mining by 50%, while the increase in
production at the Picacho Mine is the result of lower strip ratios and higher
grade.
Revenue for the nine months ended September 30, 1996, increased by $6,289,000
from that reported for the nine months ended September 30, 1995. The increase
in gold production of 14,684 ounces increased revenues by approximately
$5,596,000 while the increase in revenue per ounce realized, from $381 in the
prior period to $389 in the period ended September 30, 1996, added
approximately $693,000.
Cost of production for the three months ended September 30, 1996 of $5,915,000
was an increase of $753,000, approximately 15%, over the $5,162,000 recorded
during the same period in the previous year.
The total cost of production for the nine months ended September 30, 1996 was
$17,926,000 compared to $14,735,000 for the nine months ended September 30,
1995. The increase in costs of $3,191,000 during the current period compared
with the same period during 1995 is principally the result of an increase in
production, which increased costs by approximately $3,018,000, and an increase
in the average cost per ounce of production to $207 from $205, which added
approximately $173,000.
For the three months ended September 30, 1996, depreciation, depletion and
royalties increased by $900,000 over those reported for the same period during
1995, primarily because of production increases. The increase in
administrative expense is caused by the write-off of approximately $222,000
related to an unsuccessful equity financing. The reduction in exploration
expense was caused by a charge in fiscal 1995 of $619,000 related to the
unsuccessful bid for Eldorado Corporation and no comparable expense in the
current period.
For the nine months ended September 30, 1996, depreciation and depletion and
royalties increased by $1,885,000 over those reported for the same period
during 1995 because of the increase in production during the current period.
The material item affecting the increase in administrative expense is the cost
of the unsuccessful equity financing noted above. Other than the prior year's
exploration expense, including the Eldorado Corporation bid, the decrease in
expense reflects a reduction in exploration.
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DISCUSSION OF INDIVIDUAL OPERATIONS
PICACHO MINE, IMPERIAL COUNTY, CALIFORNIA
During the three months ended September 30, 1996 compared with the same period
in the previous year, production was increased by 2,032 ounces of gold.
Cash costs of production during the current period, as compared with the same
period in the previous year, were reduced from $163 per ounce to $137 per ounce
and total costs were reduced from $244 per ounce to $221 per ounce. The
reduction in cash cost is substantially the result of an increase in grade from
0.030 ounces of gold per ton to 0.039 ounces of gold per ton.
During the three months ended September 30, 1996, 425,000 tons of ore grading
0.039 ounces of gold per ton was placed on the heap leach pad compared with
396,200 tons of ore grading 0.030 ounces of gold per ton during the same period
last year. 552,500 tons of waste was mined which produced a strip ratio of
1.50 tons of waste to one ton of ore.
Production of 24,640 ounces of gold for the nine months ended September 30,
1996 was 2,247 ounces greater than the 22,393 ounces of gold produced in the
nine months ended September 30, 1995. The average per ounce cash cost of gold
production at the Picacho Mine for the nine month period ended September 30,
1996 was $154 per ounce, compared to $191 per ounce for the nine month period
ended September 30, 1995, and total costs of production were $238 per ounce of
gold produced for the current period, compared to $267 per ounce of gold
produced for the same period in 1995. The reduction in cost is a reflection of
reduced staff, and an increase in grade because current mining is taking place
deeper in the ore body. In addition, short waste hauls due to back-filling of
the East Dulcina Pit reduced operating costs. During the nine month period
ended September 30, 1996, 1,237,200 tons of ore grading 0.034 ounces of gold
per ton were placed on the heap leach pad, compared to the 1,415,640 tons of
ore grading 0.024 ounces of gold per ton which were placed on the pad during
the nine month period ended September 30, 1995. 2,235,900 tons of waste was
mined during the current period, which produced a stripping ratio of 1.81 tons
of waste to one ton of ore.
It is expected that the Picacho Mine will produce approximately 30,000 ounces
of gold during the year ended December 31, 1996.
RAND MINE, KERN COUNTY, CALIFORNIA
During the three months ended September 30, 1996, production was 21,767 ounces
of gold compared with 13,403 ounces for the same period in the previous year,
an increase of 62%.
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Cash costs of production during the current period, as compared with the same
period in the previous year, were reduced from $288 per ounce to $205 per ounce
and total costs were reduced from $406 per ounce to $290 per ounce.
During the three month period ended September 30, 1996, 2,117,100 tons of ore
grading 0.018 ounces of gold per ton was placed on the heap leach pad compared
to 1,377,800 tons grading 0.027 ounces of gold per ton during the same period
last year. 1,109,200 tons of waste was mined which produced a strip ratio of
0.52 tons of waste to one ton of ore.
Production from the Rand Mine for the nine months ended September 30, 1996, was
60,991 ounces of gold compared to the 49,377 ounces of gold which was produced
during the same period in 1995. The increase in production during the current
period resulted from a concentration on ore mining. All mining is being
carried out at the Yellow Aster Pit which has resulted in gains in production
because of more ore tons mined. Improved equipment availabilities has also
contributed to the improved operations. Because of the decrease in grade, more
ore tons had to be mined to increase production.
The average per ounce cash cost of gold production at the Rand Mine was $227
per ounce for the nine months ended September 30, 1996, compared to $208 per
ounce for the same period in 1995. Total cost of production was $314 per ounce
of gold produced for the current period, compared to $296 per ounce for the
same period during 1995. The higher cost per ounce during the current period
is the result of mining ore of a lower grade than that mined during the same
period in 1995.
6,487,300 tons of ore grading 0.018 ounces of gold per ton were mined during
the nine months ended September 30, 1996, compared to 3,248,772 tons of ore
grading 0.024 ounces of gold per ton which was mined during the nine months
ended September 30, 1995. The stripping ratio for the current period was 0.62
tons of waste to one ton of ore.
The Company expects that the Rand Mine will produce approximately 84,000 ounces
of gold during the year ended December 31, 1996.
Five new 190-ton trucks and a 26-cubic yard hydraulic shovel have been acquired
as replacement units for the existing fleet. The new equipment started
operating approximately October 15, 1996. The new mining fleet was acquired to
optimize production at the Mine, as reported at June 30, 1996.
IMPERIAL PROJECT, IMPERIAL COUNTY, CALIFORNIA
The Company's draft Environmental Impact Study in respect of the Imperial
Project was published in the Federal Register on November 1, 1996. This will
begin the public review process for production permitting of the Imperial
Project.
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The Company expects to receive the required permits during July 1997. No
development activities will be carried out on the project until the final
production permits are issued.
MINERA GLAMIS S.A. DE C.V.
CIENEGUITA GOLD PROJECT, CHIHUAHUA, MEXICO
During the nine months ended September 30, 1996, the Company was credited with
823 ounces of gold produced from the Cieneguita Project.
A second heap leach pad, designed to accommodate approximately 15,000 tons of
ore, was completed during the quarter ended March 31, 1996 and ore has been
stacked on it and leaching is in progress. It is expected that the Company
will be credited with approximately 1,200 ounces of production from this
project during the year ended December 31, 1996.
GUNUNG PANI JOINT VENTURE PROJECT - SULAWESI ISLAND, INDONESIA
The Company has entered into a Letter Agreement with Paramount Ventures &
Finance Inc. of Vancouver, British Columbia, concerning the Gunung Pani gold
prospect located on Sulawesi Island, Indonesia.
The terms of the Letter of Agreement allow the Company to earn 50% of
Paramount's interest in the property by paying all exploration and development
costs in respect of the property until delivery of a bankable feasibility
study. Glamis will manage the exploration and development activities of the
venture.
The property consists of two parcels of land totalling 2,113 hectares and is
located just off a paved road 70 miles west of the capital of Sulawesi.
Paramount has the right to earn an 80% interest in the property, with the
option to increase this to 95%.
Between 1981 and 1984, 29 diamond drill holes aggregating 4,625 meters and 3
adits totalling 220 meters were completed on the property by a major mining
company. This work indicates the potential of a large disseminated gold
deposit being located on the property.
In addition, the Company agreed to acquire 2 million units of Paramount at a
price of Cdn.$2.25 per unit for a total acquisition cost of Cdn.$4.5 million
(U.S.$3.3 million). Each unit consists of one common share and one-half share
purchase warrant. Each share purchase warrant is exercisable at Cdn.$2.50 per
share for one year. This acquisition has been completed through the
acquisition of 2 million special warrants issued by Paramount which will, upon
exercise, convert into 2 million units of Paramount.
<PAGE> 13
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LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $15 million at September 30, 1996, compared
to $15.1 million at December 31, 1995. At September 30, 1996, there were
long-term liabilities of $2.8 million which compared with $2.6 million at
December 31, 1995. The long-term liabilities consist of deferred taxes and
reserves for reclamation. Included in the working capital at September 30,
1996, is $3.5 million in cash while there was $4.2 million in cash at December
31, 1995.
The Company's major capital expenditures during the nine months ended September
30, 1996, were approximately $2.8 million for completion of the Rand Facilities
and approximately $1.5 million for the feasibility report and permitting for
the Imperial Project. In addition, $2.5 million was spent for down payments on
the new mining fleet for the Rand Mine; $0.4 million was spent for the buyout
of leases on equipment at the Picacho Mine and $3.3 million was spent for the
purchase of 2 million units of Paramount Ventures & Finance Inc.
During the remainder of 1996 the re-engineering of the Rand Mine will require
approximately $10.8 million for the replacement of mining equipment, which
includes a 27 cubic yard hydraulic shovel and five 190 ton trucks. These
capital expenditures should allow for more efficient mining which should result
in lower costs and enable an increase in the level of production at the Rand
Mine to approximately 90,000 ounces of gold per year.
It is estimated that the Imperial Project will require approximately an
additional $0.2 million during the remainder of 1996 to complete the permitting
of the project.
The Company has a banking facility available for cash draws and letters of
credit for security against future reclamation costs. The Company and the
lender have amended the facility in order that the maximum facility, initially
for $20.0 million, will be available with no repayments required in the first
year of the five-year term. Each year, the term of the agreement will
automatically be extended by one year unless either party determines otherwise.
If an extension does not occur, the Company may immediately retire the loan
with no penalty or bonus payment required or repay the loan over the remaining
four years of the term. As at September 30, 1996 there were no cash borrowings
under the existing banking facility but the lender had provided letters of
credit for $4.7 million to provide security for future reclamation costs.
Estimated cash flow from operations of $5.0 million for the remainder of the
year and the funds available from the Bank line of credit should be sufficient
to fund the capital expenditures for the year ended December 31, 1996.
On June 3, 1996, the Company entered into an agreement with Research Capital
Corporation providing for the sale of common shares of the Company to raise
approximately U.S.$35,000,000. Pursuant to this a preliminary prospectus was
filed by the Company in
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Canada. The offering has not been completed and the preliminary prospectus
lapsed on August 19, 1996.
HEDGING
The Company has sold call options in respect of 16,200 ounces of gold at an
average strike price of $415 having various expiry dates from January 9, 1997
to December 29, 1997.
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS:
The Company is defending an action, initiated on September 22, 1995 against
Rand and Glamis Gold, Inc. by Rand Communities Water District in the Kern
County, California Superior Court, for Declaratory and Injunctive Relief.
There have been no material changes in the matter from that disclosed in Item 3
of the Company's Transition Report dated March 25, 1996.
David Robert Johnson served Rand and Glamis Gold, Inc. on February 26, 1996
with notice of an action commenced by him in the Kern County, California
Superior Court against Rand and Glamis Gold, Inc. for injunctive relief and
damages. There have been no material changes in the matter from that disclosed
in Item 3 of the Company's Transition Report dated March 25, 1996.
ITEM 2 CHANGES IN SECURITIES: None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES: None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None.
ITEM 5 OTHER INFORMATION: None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
Exhibit No. Exhibit Description
10.42 Letter Agreement with
Paramount Ventures & Finance Inc.
27 Financial Data
Schedule
(b) Reports on Form 8-K:
- None
<PAGE> 15
- 13 -
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLAMIS GOLD LTD.
---------------------------------------
(Registrant)
November 12, 1996
Signed: "Lorne B. Anderson"
---------------------------------------
LORNE B. ANDERSON
Chief Financial Officer & Treasurer
(Principal Accounting and Financial
Officer)
<PAGE> 16
- 14 -
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
10.42 Letter Agreement with Paramount 15
Ventures & Finance Inc.
27 Financial Data Schedule 17
<PAGE> 1
- 15 -
EXHIBIT 10.42
PARAMOUNT VENTURES & FINANCE INC.
1400 - 789 WEST PENDER STREET
VANCOUVER, B.C. V6C 1H2
TEL: (604) 687-1334 FAX: (604) 687-1338
NORTH AMERICA TOLL FREE: 1(800) 565-5059
August 14, 1996
GLAMIS GOLD LTD.
3324 Four Bentall Four
1055 Dunsmuir Street
Vancouver, BC
V7X 1L3
Attention: Chester Millar
Dear Mr. Millar:
RE: Gunung Pani Gold Project, North Sulawesi, Indonesia
Joint Venture Proposal
The purpose of this letter is to set out our understanding of the principle
terms and conditions upon which Glamis Gold Ltd. ("Glamis") would earn an
interest in the Gunung Pani Gold Project ("Pani") located in North Sulawesi,
Indonesia, now held by Paramount Ventures & Finance Inc. ("Paramount") as to
eighty (80) percent interest.
Paramount will grant to Glamis an option to earn a fifty (50) percent interest
of Paramount's interest in the Pani project under the following terms:
1. Glamis will provide management and personnel and act as the operator
of the Pani project.
2. Glamis will provide all funding of the exploration work on the project
through to a bankable feasibility study.
3. Paramount will be responsible in maintaining the property in good
standing throughout the option period.
4. A more formal joint venture and option agreement will be signed by
both Glamis and Paramount within thirty (30) days of the date of this
letter.
5. Glamis will have the option to acquire one-half of the additional
working interest in the property which may be acquired by Paramount.
<PAGE> 2
- 16 -
Upon execution of the formal joint venture and option agreement,
Glamis will provide to Paramount at Glamis' option; either
(a) 400,000 common shares of Glamis; or
(b) funding of a private placement of Paramount's common shares in
the amount of 2,00,000 units priced at $2.25. The private placement
is to be a unit offering consisting of one common share and one-half
of a warrant, expiring one year for the date of issue. The warrant
exercise price is $2.50.
6. It is understood that Paramount will allow their share in the property
to be used as security for project financing and that repayment of all
financing related to the project will be repaid with appropriate
interest prior to any distribution of profits to either Glamis or
Paramount
7. Either Party has the right to first refusal of any sale or assignment
by either party.
8. All above are subject to satisfactory due diligence of the underlying
property agreements.
The terms of this letter of understanding will expire at 5:00 P.M., August 21,
1996.
If you are in agreement with the terms of this letter, would you please sign
where noted below.
Yours truly,
"Paul T. Conroy"
Paul T. Conroy,
President
THE TERMS AND CONDITIONS OF THIS LETTER OF UNDERSTANDING ARE AGREED TO THIS
___________ DAY OF AUGUST, 1996.
"C.F. Millar"
- --------------------------------
Glamis Gold Ltd.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) GLAMIS
GOLD LTD. CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS PERIOD ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) 10
Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,474
<SECURITIES> 0
<RECEIVABLES> 505
<ALLOWANCES> 0
<INVENTORY> 15,709
<CURRENT-ASSETS> 19,688
<PP&E> 102,188
<DEPRECIATION> 52,693
<TOTAL-ASSETS> 74,782
<CURRENT-LIABILITIES> 4,617
<BONDS> 2,785
0
0
<COMMON> 56,872
<OTHER-SE> 10,508
<TOTAL-LIABILITY-AND-EQUITY> 67,380
<SALES> 33,600
<TOTAL-REVENUES> 33,600
<CGS> 17,926
<TOTAL-COSTS> 17,926
<OTHER-EXPENSES> 12,682
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122
<INCOME-PRETAX> 2,870
<INCOME-TAX> 895
<INCOME-CONTINUING> 1,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,975
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
