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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 June 30, 1996.
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
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)
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<S> <C>
British Columbia, Canada None.
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(Jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
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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 August
12, 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 June 30, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Earnings for the six months ended
June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Retained Earnings for the six months
ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Changes in Financial Position for the
six months ended June 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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<CAPTION>
June 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
Cash $ 4,897 $ 4,162
Other current asset 15,735 13,500
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Current assets 20,632 17,662
Plant and equipment and mine
development costs 49,675 50,459
Other assets 1,880 1,637
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$72,187 $69,758
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LIABILITIES
Current liabilities $ 3,358 $ 2,525
Long term liabilities 2,779 2,624
SHAREHOLDERS' EQUITY
Share capital (note 4):
Authorized:
50,000,000 common shares
without par value
5,000,000 preferred shares,
$10 par valuable, 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 surplus - -
Retained earnings 9,115 8,470
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66,050 64,609
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$72,187 $69,758
======================================================================
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Approved by the Directors:
"J.R. BILLINGSLEY" "C.F. MILLAR"
J.R. Billingsley C.F. Millar
Director Director
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CONSOLIDATED STATEMENTS OF EARNINGS
(Expressed in thousands of U.S. dollars)
(Except per share amounts)
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<CAPTION>
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Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenue from gold production $11,353 $ 9,227 $21,307 $19,196
Cost of production 6,432 3,340 12,011 9,573
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4,921 5,887 9,296 9,623
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Expenses
Depreciation & depletion 2,563 1,389 4,869 3,945
Royalties 696 560 1,136 1,075
Selling, general & administrative 779 693 1,453 1,352
Exploration 43 1,266 927 1,366
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4,081 3,908 8,385 7,738
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Earnings from operations 840 1,979 911 1,885
Interest expense 50 91 89 133
Other (income) expense (54) (263) (137) (346)
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Earnings before income taxes 844 2,151 959 2,098
Provision for income taxes 273 622 314 614
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Net earnings $ 571 $ 1,529 $ 645 $ 1,484
=================================================================================================
Earnings per share $ 0.02 $ 0.06 $ 0.02 $ 0.06
=================================================================================================
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
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Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Retained earnings, beginning
of period $8,544 $ 9,971 $8,470 $10,016
Net earnings 571 1,529 645 1,484
Dividends - - - -
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Retained earnings, end of
period $9,115 $11,500 $9,115 $11,500
===================================================================================================
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CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(Expressed in thousands of U.S. dollars)
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<CAPTION>
=================================================================================================================
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 571 $ 1,529 $ 645 $ 1,484
Adjustment for items not affecting working capital 2,677 1,029 5,077 4,076
Net changes in non-cash working capital 1,234 1,798 (1,401) 1,739
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Net cash provided by operations 4,482 4,356 4,321 7,299
Net investment activities (2,119) (4,296) (4,381) (6,965)
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FINANCING ACTIVITIES
Stock issues 285 930 796 2,367
Dividends paid - - - -
Other financing activities (268) (115) - (114)
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Net financing activities 17 815 796 2,253
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Increase in cash 2,380 875 736 2,587
Effect of currency translation adjustments on cashflow - 25 - 23
Cash, beginning of period 2,518 13,233 4,162 11,523
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Cash, end of period $ 4,898 $14,133 $ 4,898 $14,133
=================================================================================================================
</TABLE>
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GLAMIS GOLD LTD.
Notes to Interim Consolidated Financial Statements
(tables expressed in thousands of United States Dollars)
June 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 June 30, 1996 and December 31, 1995 and
the results of its operations and changes in its financial position for the six
months ended June 30, 1996 and 1995. The results of operations for the six
months ended June 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 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.
<PAGE> 7
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3. OTHER CURRENT ASSETS
Included in other current assets are the following inventories:
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<CAPTION>
June 30, December 31,
1996 1995
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<S> <C> <C>
Finished goods $ 3,503 $2,737
Work-in-progress 10,146 8,915
Supplies and spare parts 759 841
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$14,408 $12,493
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4. SHARE CAPITAL
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<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
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# 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 118,000 796 354,000 2,366
employees' stock
options
----------- ------- ----------- -------
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.
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
<PAGE> 8
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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 six months ended June 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 June 30, 1996 (sometimes referred to
as the "current period"), was 29,692 ounces of gold which produced revenues of
$11,353,000. This compares with production of 24,020 ounces of gold and
revenues of $9,227,000 for the three months ended June 30, 1995.
Production of gold during the current period was approximately 24% greater than
the same period last year and revenues were approximately 23% greater. These
increases are mainly attributed to an increase in production of 5,364 ounces of
gold at the Rand Mine.
Gold production for the six month period ended June 30, 1996 was 54,321 ounces
which produced revenues of $21,307,000. This compares with production of
50,442 ounces of gold and revenues of $19,196,000 for the six month period
ended June 30, 1995. The gold production for the six months ended June 30,
1996 represents an increase of 8% from that experienced in the six
<PAGE> 9
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month period ended June 30, 1995, while revenues increased by 11%. The
increase in production during the six month period ended June 30, 1996 was
primarily due to increased production at the Rand Mine.
The increase in production at the Rand Mine during the period ended June 30,
1996, was the result of concentrating on ore mining.
Revenue for the six months ended June 30, 1996, increased by $2,111,000 from
that reported for the six months ended June 30, 1995. The increase in
production of 3,879 ounces increased revenues by approximately $1,520,000 while
the increase in revenue per ounce realized, from $381 in the prior period to
$392 in the period ended June 30, 1996, added approximately $590,000.
Cost of production for the three months ended June 30, 1996 of $6,432,000 was
an increase of $3,092,000, approximately 93%, over the $3,340,000 recorded
during the same period in the previous year.
The total cost of production for the six months ended June 30, 1996 was
$12,011,000 compared to $9,573,000 for the six months ended June 30, 1995. The
increase in costs of $2,438,000 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 $860,000 and an increase in the average
cost per ounce of production to $221 from $190 which added approximately
$1,580,000.
For the three months ended June 30, 1996, depreciation, depletion and royalties
increased by $1,320,000 over those reported for the same period during 1995
primarily because of production increases. The increase was substantially
offset by a decrease in exploration costs of $1,223,000.
For the six months ended June 30, 1996, depreciation and depletion and
royalties increased by $985,000 over those reported for the same period during
1995 because of the increase in production during the current period. The
increase noted above was partially offset by a decrease of approximately
$439,000 in exploration expense. This reflects the decrease in exploration.
DISCUSSION OF INDIVIDUAL OPERATIONS
PICACHO MINE, IMPERIAL COUNTY, CALIFORNIA
During the three months ended June 30, 1996 compared with the same period in
the previous year, production was almost identical.
Cash cost of production during the current period was reduced from $206 per
ounce to $167 per ounce and total costs were virtually unchanged. The
reduction in cash cost is substantially the result of an increase in grade from
0.022 to 0.032.
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During the three months ended June 30, 1996, 435,900 tons of ore grading 0.032
was placed on the heap leach pad compared with 569,000 tons of ore grading
0.022 during the same period last year. 726,780 tons of waste was mined which
produced a strip ratio of 1.67 tons of waste to one ton of ore.
Production of 14,683 ounces of gold for the six months ended June 30, 1996 was
215 ounces greater than the 14,468 ounces of gold produced in the six months
ended June 30, 1995. The average per ounce cash cost of gold production at the
Picacho Mine for the six month period ended June 30, 1996 was $166 per ounce,
compared to $206 per ounce for the six month period ended June 30, 1995, and
total costs of production were $249 per ounce of gold produced for the current
period, compared to $279 per ounce of gold produced for the same period in
1995. The reduction in cost is a reflection of reduced staff, an increase in
grade and reduced stripping ratios 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 six month period
ended June 30, 1996, 812,200 tons of ore grading 0.032 ounces of gold per ton
were placed on the heap leach pad, compared to the 1,019,440 tons of ore
grading 0.022 ounces of gold per ton which were placed on the pad during the
six month period ended June 30, 1995. 1,599,100 tons of waste was mined during
the current period, which produced a stripping ratio of 1.97 tons of waste to
one ton of ore.
It is expected that the Picacho Mine will produce approximately 27,000 ounces
of gold during the year ended December 31, 1996.
RAND MINE, KERN COUNTY, CALIFORNIA
During the three months ended June 30, 1996, production was 22,423 ounces
compared with 17,059 ounces for the same period in the previous year, an
increase of 31%.
Cash cost of production during the current period was increased from $111 per
ounce to $232 per ounce and total costs were increased from $169 per ounce to
$317 per ounce.
During the three month period ended June 30, 1996, 1,985,600 tons of ore
grading 0.016 was placed on the heap leach pad compared to 442,241 tons grading
0.032 during the same period last year. 1,493,600 tons of waste was mined
which produced a strip ratio of 0.75 tons of waste to one ton of ore. This
resulted in an additional approximately 1,750,000 tons of ore and waste being
mined, which resulted in increased costs.
Production from the Rand Mine for the six months ended June 30, 1996, was
39,224 ounces of gold compared to the 35,974 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.
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The average per ounce cash cost of gold production at the Rand Mine was $238
per ounce for the six months ended June 30, 1996, compared to $177 per ounce
for the same period in 1995. Total costs of production were $327 per ounce of
gold produced for the current period, compared to $255 per ounce for the same
period during 1995. The higher cost per ounce during the current period is the
result of mining lower grade ore, 0.018 during the current six month period
compared to 0.023 during the same period in 1995.
4,370,200 tons of ore grading 0.018 ounces of gold per ton were mined during
the six months ended June 30, 1996, compared to 1,870,972 tons of ore grading
0.023 ounces of gold per ton which was mined during the six months ended June
30, 1995. The stripping ratio for the current period was 0.67 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.
Mine Optimization
Due to a decrease in production in fiscal 1995 realized from the Rand Mine and
the increase in costs of production, an internal mine optimization study was
initiated by the Company which was completed in April of 1996.
Based upon the study, action has been taken to modernize the fleet of mining
equipment at the Rand Mine. Five new 190-ton trucks and a 26-cubic yard
hydraulic shovel will be acquired as replacement units for the existing fleet.
In addition, mining bench heights will be increased from 20 to 30 feet to help
improve the blasting and loading productivity.
The Company anticipates that these changes will result in production increasing
from approximately 84,000 ounces of gold to approximately 90,000 ounces of gold
per year from the Rand Mine, production cash costs decreasing to $195 per
ounce of gold produced and total costs (including depreciation, amortization,
corporate overhead, royalties and taxes) decreasing to $318 per ounce of
gold produced once the optimization plan has been fully implemented, which the
Company anticipates will occur by late 1996.
IMPERIAL PROJECT, IMPERIAL COUNTY, CALIFORNIA
Drilling, geological interpretation and mine evaluation studies by the Company
have resulted in the delineation of a proven and probable mineable ore resource
for the Imperial Project as at December 31, 1995 within preliminary pit
outlines, using a cut-off grade of 0.007 ounces of gold per ton and a gold
price of $400 per ounce, of 73,796,000 tons of proven reserves grading
0.017 ounces per ton and 16,039,000 tons of probable reserves grading 0.018
ounces of gold per ton, having a combined stripping ratio of 3:1 and containing
approximately 1,500,000 ounces of gold.
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On May 2, 1996 the Board of Directors of the Company determined to place the
Imperial Project into production in accordance with a feasibility study and
operating plan (the "Feasibility Study"). Subject to timely receipt of the
required permits, construction and mine development is estimated to start
during the third quarter of 1997, followed by gold production commencing
approximately six months after the start of construction.
Ore tonnages mined will average 9.4 million tons per year. Mine life is
expected to be approximately 12 years, producing an average of 103,850 ounces
of gold per year in the initial 10 years.
Production cash costs for the Imperial Project are estimated in the Feasibility
Study to be $214 per ounce, with total costs of $292 per ounce, which
include depreciation, amortization, royalties and taxes. In the Feasibility
Study, $400 per ounce was used as a selling price for gold. Gold recovery will
be by conventional heap leach run-of-mine ore utilizing processing facilities
similar to those used at the Company's other major gold-producing properties.
In the Feasibility Study it is estimated that recovery will average 73%.
Initial capital expenditure to bring the Imperial Project into production is
estimated at $47.6 million. The Company is examining various alternatives
available to it for funding the capital expenditures.
MINERA GLAMIS S.A. DE C.V.
CIENEGUITA GOLD PROJECT, CHIHUAHUA, MEXICO
During the six months ended June 30, 1996, the Company was credited with 414
ounces of the production.
A second heap leach pad, designed to accommodate approximately 15,000 tons of
ore, was completed during the quarter ended March 31, 1996 and stacking of ore
on it commenced during the current period. It is expected that the Company
will be credited with approximately 1,500 ounces of production from this
project during the year ended December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $17.3 million at June 30, 1996, compared to
$15.1 million at December 31, 1995. At June 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 June 30, 1996, is $4.9 million
in cash while there was $4.2 million in cash at December 31, 1995.
The Company's major capital expenditures during the six months ended June 30,
1996, were approximately $2.8 million for completion of the Rand Facilities and
approximately $0.8 million for the feasibility report and permitting for the
Imperial Project.
<PAGE> 13
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During the remainder of 1996 the re-engineering of the Rand Mine will require
approximately $15.0 million for a change of mining equipment, which will
include a large 26 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 to
approximately 90,000 ounces of gold per year.
It is estimated that the Imperial Project will require an additional $0.9
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 agreed to amend 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 March 31, 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 $6.0 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 that a preliminary prospectus was
filed by the Company in Canada. The offering has not been completed and the
preliminary prospectus will lapse on August 19, 1996. No assurance can be
given that the offering will be completed.
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.
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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:
<TABLE>
<S> <C>
(a) Exhibits
Exhibit No. Exhibit Description
1.1 Underwriting Letter Agreement
27 Financial Data Schedule
(b) Reports on Form 8-K:
- Report dated June 6, 1996 in respect of the proposed
offering of common shares.
</TABLE>
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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)
August 12, 1996
Signed: "Lorne B. Anderson"
-----------------------
LORNE B. ANDERSON
Chief Financial Officer & Treasurer
(Principal Accounting and Financial Officer)
<PAGE> 16
EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description Page No.
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<S> <C> <C>
1.1 Underwriting Letter Agreement
27 Financial Data Schedule
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<PAGE> 1
EXHIBIT 1.1
RESEARCH CAPITAL CORPORATION
Ernst & Young Tower, Suite 1500, 222 Bay Street
Toronto-Dominion Centre, P.O. Box 265, Toronto, Ontario M5K 1S5
Tel: (416) 860-7600
June 3, 1996
GLAMIS GOLD LTD.
3324 Four Bentall Centre
1055 Dunsmuir Street
P.O. Box 49287
Vancouver, B.C.
V7X 1L3
ATTENTION: MR. CHESTER F. MILLAR, CHAIRMAN & DIRECTOR
RE: US$35,000,000 OFFERING OF COMMON SHARES
Dear Sirs:
This letter summarizes the general terms and conditions under which Research
Capital Corporation ("RCC") will be appointed as lead manager of an offering,
according to the terms detailed in the term sheet attached as Schedule A, (the
"Offering) of approximately US$35,000,000 of common shares (the "Common
Shares") of Glamis Gold Ltd. ("Glamis" or the "Corporation"). The Common
Shares will be marketed on an underwritten basis via a syndicate of
underwriters (the "Underwriters") led by RCC with final pricing to occur after
the marketing presentations upon filing of a final prospectus. Glamis will
grant the Underwriters a greenshoe option to increase the size of the offering
by up to 15% of the Offering to cover over allotments. The Offer is subject to
the following terms and conditions:
(i) Glamis will file and obtain receipts for a preliminary short-form
prospectus, qualifying the Common Shares for distribution to the
public, and make a public announcement regarding the Offering;
(ii) After comments have been satisfied with respect to the preliminary
short-form prospectus, Glamis will file and obtain receipts for the
final short-form prospectus, in a form satisfactory to the
Underwriters, from all Provinces of Canada, with the exception of
Quebec, at such date as proposed by the Underwriters and subject to
regulatory approval;
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(iii) Closing ("Closing") will take place in Vancouver, British Columbia, on
or about July 15, 1996, or such other date as Glamis and RCC agree, at
which time delivery of the Common Shares and a certified cheque
payable to RCC in the amount of the commission equal to 4.0% of the
cross proceeds will be provided to RCC against delivery of a certified
cheque payable to Glamis in the amount of the gross proceeds of the
Offering.
(iv) The Underwriters shall have the right to conduct adequate due
diligence and obtain satisfactory results therefrom prior to filing
the preliminary and final prospectuses and, if applicable, any
amendments thereto and, if requested by the Underwriters, immediately
prior to Closing, and shall have the right to terminate this offer if
such due diligence identifies a material adverse change which has not
been disclosed to the public;
(v) Execution of an underwriting agreement mutually satisfactory to Glamis
and the Underwriters which shall include, among other things, Glamis's
qualification to issue a Short Form Prospectus, an indemnity of Glamis
in favour of the Underwriters, their directors, officers, employees
and agents, in our usual form and industry standard "disaster out" and
"material change out" clauses in the form of Schedule B attached, such
clauses to commence upon acceptance of this Offer and to terminate on
Closing;
(vi) Glamis agrees not to issue any additional Common Shares or financial
instruments convertible or exercisable into Common Shares of Glamis
(other than for purposes of Directors', Officers' or Employee Stock
Options or to satisfy existing instruments issued at the day hereof)
for a period of 90 days from Closing without the prior consent of RCC,
such consent not to be unreasonably withheld;
(vii) The Common Shares will be eligible for distribution in the United
States under Reg. D Rule 506 or in such other manner as to not
require registration under the United States Securities Act of 1933
and any legend required on a share certificate will be in a form
reasonably satisfactory to RCC; and
(viii) Whether or not the transaction herein contemplated shall be completed,
all expenses of or incidental to the sale of the Common Shares shall
be borne by the Corporation.The Underwriters "out of pocket" expenses
(including the fees and disbursements of legal counsel for the
Underwriters) shall be borne by the Underwriters except that the
Underwriters will be reimbursed by the Corporation for these fees,
disbursements and expenses to the extent they are reasonable to a
maximum of $100,000 if the sale of Common Shares is completed or if
the sale of Common Shares is not completed due to any failure of the
Corporation to comply with the terms of this agreement or the
Underwriting Agreement;
(ix) As lead manager, RCC will form a syndicate of underwriters including
Canaccord Capital Corporation, Richardson Greenshields of Canada
Limited and Toronto Dominion Securities Inc. RCC will have
responsibility for all syndicate matters and agrees to consult Glamis
on all syndicate arrangements.
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Chester, we look forward to working closely with you and completing a highly
successful offering for Glamis.
Yours truly,
RESEARCH CAPITAL CORPORATION
Signed: "John P. Palumbo"
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John P. Palumbo
Vice Chairman
Accepted and Agreed as of June 4, 1996.
GLAMIS GOLD LTD.
Signed; "Chester F. Millar"
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Chester F. Millar
Chairman & Director
<PAGE> 4
SCHEDULE A
GLAMIS GOLD LTD.
TERMS AND CONDITIONS
COMMON SHARES
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Issuer Glamis Gold Ltd.
Issue Treasury issue of Common Shares.
Offering Price To be determined at the time of filing a final prospectus.
Amount of Issue Approximately US $35,000,000.
Greenshoe A greenshoe option entitling RCC to purchase up to an additional 15% of the
Option Offering at a price per Common Share equal to the Offering Price at any time
prior to Closing.
Use of Proceeds For ongoing development of the Imperial Project and other development activities.
Form of Offering Marketed underwritten deal by way of a short-form prospectus qualifying the
Common Shares for public distribution in all provinces of Canada, except Quebec,
and in the United States as a private placement under Reg. D.
Prospectus Glamis shall file a preliminary short form prospectus in each of the Canadian
Provinces, except Quebec, and use its best efforts to obtain final prospectus receipts.
Listing The Common Shares will be listed on TSE and NYSE.
Eligibility At the time of Closing, the Common Shares will be eligible investments under the
usual statutes and will not be foreign property under the Income Tax Act.
Closing Date On or about July 15, 1996.
Commission 4.0% of the gross proceeds of the offering.
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<PAGE> 5
SCHEDULE B
GLAMIS GOLD LTD.
Termination Rights
The Underwriters may terminate their obligations on or before the Closing Date
in the following circumstances:
If at any time prior to the Closing:
(b) there shall have occurred any adverse material change in
relation to Glamis, or a development that could result in an
adverse material change in relation to Glamis; or
(c) there shall have occurred any change in the applicable
securities laws of any province of Canada, or any state of the
United States or any inquiry, investigation or other
proceeding is made or any order is issued under or pursuant to
any statute of Canada or any province thereof or any statute
of the United States or any state thereof or any stock
exchange in relation to Glamis or any of its securities
(except for any inquiry, investigation or other proceeding or
order based upon activities of the Underwriters and not upon
activities of Glamis);
which, in the opinion of any of the Underwriters, prevents or restricts trading
in or the distribution of the Shares or adversely affects or might reasonably
be expected to adversely affect the investment quality or marketability of the
Common Shares; or
(d) if there should develop, occur or come into effect or
existence any event, action, state, condition or major
financial occurrence of national or international consequence
or any law or regulation which, in the opinion of any of the
Underwriters, seriously adversely affects, or involves, or
will seriously adversely affect or involve, the financial
markets or the business, operations or affairs of Glamis and
its subsidiaries, taken as a whole; or
(c) a cease trading order is made by any Securities Commission or
other competent authority by reason of the fault of Glamis or
its respective directors, officers and agents and such cease
trading order is not rescinded within 48 hours prior to
Closing;
each Underwriter shall be entitled, at its respective option, to terminate and
cancel its obligations to Glamis under Underwriting Agreement by written notice
to that effect given to Glamis prior to the Closing. In the event of any such
termination pursuant to the provisions of this section (or any termination
pursuant to the provisions of the Underwriting Agreement) by one of the
Underwriters, each of the other Underwriters shall be deemed contemporaneously
to have terminated its obligations under the Underwriting Agreement unless any
such other Underwriter
<PAGE> 6
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shall, within 24 hours after notice of termination is given, notify Glamis to
the effect that it is assuming the obligations of the Underwriters terminating
their obligations.
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GLAMIS GOLD
LTD. CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED JUNE 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,897
<SECURITIES> 0
<RECEIVABLES> 866
<ALLOWANCES> 0
<INVENTORY> 14,408
<CURRENT-ASSETS> 20,632
<PP&E> 99,474
<DEPRECIATION> 49,799
<TOTAL-ASSETS> 72,187
<CURRENT-LIABILITIES> 3,358
<BONDS> 2,779
0
0
<COMMON> 56,872
<OTHER-SE> 9,178
<TOTAL-LIABILITY-AND-EQUITY> 66,050
<SALES> 21,307
<TOTAL-REVENUES> 21,307
<CGS> 12,011
<TOTAL-COSTS> 12,011
<OTHER-EXPENSES> 8,248
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 89
<INCOME-PRETAX> 959
<INCOME-TAX> 314
<INCOME-CONTINUING> 645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 645
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
