<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 19, 1998
--------------------------------
GLAMIS GOLD LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
British Columbia, Canada
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-31986 (86-689) None
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
5190 Neil Road, Suite 310, Reno, Nevada 89502
- --------------------------------------------------------------------------------
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (702) 827-4600
------------------------------
n/a
(Former name or former address, if changed since last report)
Exhibit begins on Page 47
Page 1 of 111 Pages
<PAGE> 2
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ITEM 2: Issuance of Securities
On October 19, 1998 the Registrant completed the acquisition (the
"Acquisition") of 100% of the issued and outstanding common
shares of Mar-West Resources Ltd. ("Mar-West"), a public
corporation the shares of which were listed on the Vancouver
Stock Exchange. The consideration paid by the Registrant for the
Acquisition was the issuance of 7,539,906 common shares of the
Registrant (the "Shares") and the payment of Cdn$6,710,724 in
cash to the shareholders of Mar-West. The cash portion of the
consideration paid came from the Registrant's working capital. As
part of the Acquisition share purchase options in respect of
1,067,000 common shares of Mar-West were cancelled and replaced
with share purchase options (the "Replacement Options") providing
for the acquisition of 533,500 common shares of the Registrant.
The Acquisition was carried out through an arrangement pursuant
to section 252 of the Company Act (British Columbia) (the
"Arrangement"). Under the Arrangement shareholders of Mar-West
were entitled to receive in exchange for each common share of
Mar-West held, either:
(a) 0.5 of a Share (the "All Share Consideration"); or
(b) 0.4 of a Share and Cdn.$0.48 (the "Cash/Share
Consideration").
Each holder of common shares of Mar-West was deemed to elect to
receive the All Share Consideration unless they made a proper
election to receive the Cash/Share Consideration. No fractional
Shares were issued under the Acquisition. A holder of common
shares of Mar-West who was entitled to receive a fractional Share
received cash in lieu thereof based on a whole Share being valued
at Cdn.$4.80.
The Acquisition was made pursuant to a letter agreement dated
August 14, 1998, which was superseded by an Arrangement Agreement
made as of August 14, 1998. The terms of the Acquisition were
determined through negotiations between the Registrant and
Mar-West. Prior to the closing of the Acquisition the companies
had no common directors, officers or controlling shareholders. As
at August 14, 1998, Chester F. Millar, a director and Chairman of
the Registrant held 278,900 common shares of Mar-West which
represented 1.68% of the outstanding Mar-West Shares on such
date. The fairness of the terms of the Acquisition to the
Mar-West security holders was ruled upon by the Supreme Court of
British Columbia.
The Shares and Replacement Options were not registered under the
United States Securities Act of 1933, as amended (the "Securities
Act") in reliance upon the exemption from the registration
requirements of the Securities Act provided by Section 3(a)(10)
thereof.
Mar-West is a mineral exploration company with interests in gold
exploration properties in Honduras, El Salvador and Guatemala.
The Registrant intends to continue the exploration and
development of the mineral interests held by Mar-West.
<PAGE> 3
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ITEM 7: Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The following financial statements of Mar-West are
attached to and form part of this Form 8-K:
(i) Unaudited Interim Consolidated Financial
Statements comprised of:
- Cover Page.
- Notice to Reader of Campbell, Saunders &
Co.
- Interim consolidated balance sheet as at
June 30, 1998 and July 31, 1997.
- Interim consolidated statement of deficit
for the 6 months ended June 30, 1998 and
July 31, 1997.
- Interim consolidated statement of
operations for the 6 months ended June 30,
1998 and July 31, 1997.
- Interim consolidated cash flow statement
for the 6 months ended June 30, 1998 and
July 31, 1997.
- Schedule of deferred exploration costs for
the 6 months ended June 30, 1998.
(ii) Audited Consolidated Financial Statements
comprised of:
- Cover Page.
- Report of Campbell, Saunders & Co.,
Independent Auditors, dated May 8, 1998.
- Statement of Management's Responsibility
for Financial Reporting.
- Consolidated balance sheet as at December
31, 1997 and April 30, 1997.
- Consolidated statement of deficit for the
8 months ended December 31, 1997, the 12
months ended April 30, 1997 and for the
period from inception to December 31, 1997.
<PAGE> 4
- 4 -
- Consolidated Statement of Operations for
the 8 months ended December 31, 1997, the 12
months ended April 30, 1997 and for the
period from inception to December 31, 1997.
- Consolidated Statement of Changes in
Financial Position for the 8 months ended
December 31, 1997, the 12 months ended April
30, 1997 and for the period from inception
to December 31, 1997.
- Notes to audited consolidated financial statements.
- Schedule of Consolidated General and
Administrative Expenses for the 8 months ended
December 31, 1997, the 12 months ended April 30,
1997 and for the period from inception to December
31, 1997.
- Schedule of Deferred Exploration Costs for the 8
months ended December 31, 1997.
(b) Pro Forma Financial Information
The following unaudited Pro Forma Financial
Consolidated Statements of the Registrant are
attached to and form part of the Form 8-K:
- Cover Page.
- Pro Forma Consolidated Balance Sheet as at June
30, 1998.
- Pro Forma Consolidated Statement of Operations
for the 6 month period ended June 30, 1998.
- Pro Forma Consolidated Statement of Operations
for the 12 month period ended December 31, 1997.
- Notes to Pro Forma Consolidated Financial
Statements.
(c) Exhibits
10.47 Arrangement Agreement between the registrant
and Mar-West Resources Ltd. made as of
August 14, 1998.
10.48 Amended Incentive Share Purchase Option Plan
dated for reference September 30, 1995.
23.1 Consent of Campbell, Saunders & Co.
<PAGE> 5
- 5 -
99.1 Press Release dated October 19, 1998.
SIGNATURES
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)
October 21, 1998
"DANIEL J. FORBUSH"
---------------------------------------
Daniel J. Forbush
Secretary, Treasurer and Chief
Financial Officer
<PAGE> 6
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND JULY 31, 1997
(UNAUDITED - SEE NOTICE TO READER)
(EXPRESSED IN CANADIAN DOLLARS)
<PAGE> 7
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[CAMPBELL, SAUNDERS & CO. ACCOUNTANTS LETTERHEAD]
[LOGO]
NOTICE TO READER
We have compiled the interim consolidated balance sheet of MAR-WEST RESOURCES
LTD. as at June 30, 1998 and the interim consolidated statements of deficit,
operations and cash flows for the six months then ended from information
provided by management. We have not audited, reviewed or otherwise attempted to
verify the accuracy or completeness of such information. Readers are cautioned
that these statements may not be appropriate for their purposes.
/s/ CAMPBELL, SAUNDERS & CO.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
July 31, 1998
<PAGE> 8
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 1998 AND JULY 31, 1997
(UNAUDITED - SEE NOTICE TO READER)
(EXPRESSED IN CANADIAN DOLLARS)
ASSETS
<TABLE>
<CAPTION>
June 30, July 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT
Cash and short-term deposits $ 1,059,967 $ 828,910
Government of Canada bonds and
other short-term other investments 4,573,723 3,274,912
Advances and other receivables 723,047 115,917
Prepaid expenses and deposits 40,584 50,288
----------- -----------
6,397,321 4,270,027
ADVANCES FOR EXPLORATION COSTS 79,536 243,397
DEFERRED EXPLORATION COSTS (Schedule) 6,162,875 4,813,040
OIL AND GAS INTERESTS 18,296 13,681
CAPITAL ASSETS 293,795 305,824
LONG-TERM INVESTMENTS 297,000 192,000
----------- -----------
$13,248,823 $ 9,837,969
=========== ===========
LIABILITIES
CURRENT
Accounts payable and accrual liabilities $ 452,229 $ 479,454
----------- -----------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 18,325,746 13,278,191
DEFICIT (5,529,152) (3,919,676)
----------- -----------
12,796,594 9,358,515
$13,248,823 $ 9,837,969
=========== ===========
</TABLE>
APPROVED BY THE DIRECTORS:
/s/ SIMON RIDGWAY DIRECTOR
- --------------------------
SIMON RIDGWAY
/s/ TIM OSLER DIRECTOR
- --------------------------
TIM OSLER
<PAGE> 9
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JULY 31, 1997
(UNAUDITED - SEE NOTICE TO READER)
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
June 30, July 31,
1998 1997
(6 Months) (6 Months)
---------- ----------
<S> <C> <C>
DEFICIT - BEGINNING OF PERIOD $5,450,560 $3,738,541
Net loss for the period 78,592 181,135
---------- ----------
DEFICIT - END OF PERIOD $5,529,152 $3,919,676
========== ==========
</TABLE>
<PAGE> 10
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JULY 31, 1997
(UNAUDITED - SEE NOTICE TO READER)
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
June 30, July 31,
1998 1997
(6 Months) (6 Months)
----------- -----------
<S> <C> <C>
REVENUE
Interest and other income $ 167,253 $ 74,339
Management fee 23,200 -
----------- -----------
190,453 74,339
----------- -----------
EXPENSES
General and administrative
Advertising and promotional materials 60,674 58,485
Amortization 9,077 9,584
Automobile 317 1,059
Bank charges and interest 1,373 2,613
Legal, audit and accounting 27,527 18,309
Management fees 31,580 16,560
Office and miscellaneous 19,867 18,792
Rent and utilities 20,367 13,631
Salaries and benefits 53,819 68,620
Shareholder communication 8,144 1,949
Telephone and fax 11,495 9,445
Transfer agent and regulatory fees 5,028 14,238
Travel and accommodation 15,664 9,270
----------- -----------
264,932 242,555
Deferred exploration costs written-off 4,113 12,919
----------- -----------
269,045 255,474
----------- -----------
NET LOSS FOR THE PERIOD $ (78,592) $ (181,135)
=========== ===========
LOSS PER SHARE $ (0.005) $ (0.015)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 16,606,053 12,060,623
=========== ===========
</TABLE>
<PAGE> 11
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JULY 31, 1997
(UNAUDITED - SEE NOTICE TO READER)
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
June 30, July 31,
1998 1997
(6 Months) (6 Months)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (78,592) $ (181,135)
Items not involving cash
Amortization 9,077 9,584
Deferred exploration costs written-off 4,133 12,919
----------- -----------
(65,382) (158,632)
Changes in non-cash working capital items (67,165) 283,784
----------- -----------
(132,547) 125,152
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of capital stock 27,000 3,957,676
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net sale (purchase) of Government of Canada bonds
and other short-term investments 1,734,227 (1,468,069)
Advances for exploration costs 7,779 (99,894)
Expenditures on deferred exploration costs (1,686,918) (2,015,002)
Purchase of capital assets -- (110,065)
Proceeds on disposal of capital assets 1,883 --
Purchase of long-term investments (105,000) --
----------- -----------
(48,029) (3,693,030)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (153,576) 389,798
Cash and cash equivalents - beginning of period 1,213,543 439,112
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 1,059,967 $ 828,910
=========== ===========
ANALYSIS OF CASH AND CASH EQUIVALENTS
Cash and short-term deposits $ 1,059,967 $ 828,910
=========== ===========
</TABLE>
<PAGE> 12
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
SCHEDULE OF DEFERRED EXPLORATION COSTS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED - SEE NOTICE TO READER)
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Honduran Properties
-----------------------------------------------------------------
Sabana
Minoro San Martin Grande
(Tombstone) (Curion) Group 0ther
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE-BEGINNING OF PERIOD $ 1,113,732 $ 1,430,208 $ 212,734 $ 621,552
----------- ----------- ----------- -----------
EXPENDITURES DURING THE
PERIOD
Amortization -- 8,864 -- --
Automobile -- 10,984 -- --
Bank charges -- -- -- --
Camp, food & supplies -- 18,016 -- 123
Drafting, maps & printing -- 9,518 -- 250
Drilling -- 338,112 -- --
Equipment hire -- 65,006 -- --
Exploration administration -- 69,428 -- 2,115
Geochemistry -- 83,626 -- 1,227
Geological consulting -- 476,135 -- 8,926
Geophysics -- 3,958 -- --
Insurance -- 7,482 -- 355
Legal and accounting -- 360 -- --
Licences, duties & taxes -- 81 -- --
Materials -- 13,908 -- 13
Medical expenses -- 354 -- --
Office & miscellaneous -- 5,672 -- 5
Property payments -- 1,392 -- --
Rent & utilities -- 2,091 -- --
Repairs & maintenance -- 1,092 -- --
Rehabilitation -- 374 -- --
Salaries & wages -- 30,178 -- --
Security -- 16 -- --
Shipping -- 3,478 -- 59
Telephone & communications -- 11,185 -- 26
Travel & accommodation -- 20,961 -- 1,397
----------- ----------- ----------- -----------
-- 1,182,271 -- 14,496
----------- ----------- ----------- -----------
Payment to Joint Venture
partner 87,900 -- -- --
Expenditures written-off -- -- -- (4,113)
Expenses recovered -- (232,467) -- --
----------- ----------- ----------- -----------
87,900 (232,467) -- (4,113)
----------- ----------- ----------- -----------
BALANCE-END OF PERIOD $ 1,201,632 $ 2,380,012 $ 212,734 $ 631,935
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
El Salvador Guatemala Total
----------- ---------------------------- -----------
Santa Rosa
District Cerro
(Tombstone) Blanco Other
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE-BEGINNING OF PERIOD $ 335,614 $ 202,241 $ 586,705 $ 4,502,786
----------- ----------- ----------- -----------
EXPENDITURES DURING THE
PERIOD
Amortization 1,395 -- 2,540 12,799
Automobile 687 1,518 10,345 23,534
Bank charges -- 25 -- 25
Camp, food & supplies 450 12,060 13,679 44,328
Drafting, maps & printing -- 4,836 1,133 15,737
Drilling -- 139,598 -- 477,710
Equipment hire -- 20,775 4,865 90,646
Exploration administration -- 129 704 72,376
Geochemistry 2,169 34,234 16,885 138,141
Geological consulting 8,484 106,392 51,305 651,242
Geophysics -- 39,838 -- 43,796
Insurance 337 2,415 2,995 13,584
Legal and accounting -- 76 4,111 4,547
Licences, duties & taxes 9 -- 1,496 1,586
Materials -- 953 92 14,966
Medical expenses -- 389 335 1,078
Office & miscellaneous 721 6,978 12,470 25,846
Property payments -- 6,917 6,746 15,055
Rent & utilities 3,526 1,454 16,826 23,897
Repairs & maintenance 8 145 534 1,779
Rehabilitation -- -- -- 374
Salaries & wages 2,923 22,564 13,389 69,054
Security -- 9 2,527 2,552
Shipping 76 2,595 27 6,235
Telephone & communications 1,008 2,798 5,604 20,621
Travel & accommodation 852 14,317 11,057 48,584
----------- ----------- ----------- -----------
22,645 421,015 179,665 1,820,092
----------- ----------- ----------- -----------
Payment to Joint Venture
partner -- -- -- 87,900
Expenditures written-off -- -- -- (4,113)
Expenses recovered (11,323) -- -- (243,790)
----------- ----------- ----------- -----------
(11,323) -- -- (160,003)
----------- ----------- ----------- -----------
BALANCE-END OF PERIOD $ 346,936 $ 623,256 $ 766,370 $ 6,162,875
=========== =========== =========== ===========
</TABLE>
<PAGE> 13
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
<PAGE> 14
- 14 -
[CAMPBELL, SAUNDERS & CO. CHARTERED ACCOUNTANTS LETTERHEAD]
[NEXIA INTERNATIONAL LOGO]
AUDITORS' REPORT
TO: The Shareholders of
MAR-WEST RESOURCES LTD.
We have audited the consolidated balance sheet of MAR-WEST RESOURCES LTD. as at
December 31, 1997 and April 30, 1997 and the consolidated statements of
operations, deficit and changes in financial position for the eight months ended
December 31, 1997, for the twelve months ended April 30, 1997 and for the period
from inception to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1997
and April 30, 1997 and the results of its operations and changes in its
financial position for the eight months ended December 31, 1997, for the twelve
months ended April 30, 1997 and for the period from inception to December 31,
1997 in accordance with generally accepted accounting principles in Canada. As
required by the British Columbia Company Act, we report that, in our opinion,
these principles have been applied on a basis consistent with that of the year
ended April 30, 1997.
The consolidated financial statements as at April 30, 1996 and for the year
ended April 30, 1996 have been audited by other chartered accountants who
expressed an opinion without reservation on those statements in their report
dated August 2, 1996. The cumulative statements of operations and deficit and
changes in financial position for the period from inception to December 31, 1997
include amounts for the period to April 30, 1996, which were audited by other
chartered accountants whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for the period from inception to
April 30, 1996 is based solely on the reports of the other chartered
accountants.
/s/ Campbell, Saunders & Co.
CHARTERED ACCOUNTANTS
Vancouver, B.C.
May 8, 1998
<PAGE> 15
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MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying financial statements and related data are the responsibility of
management. Management is responsible for ensuring that the financial statements
are prepared in accordance with generally accepted accounting principles.
The integrity of the financial reporting process is also the responsibility of
management. Management maintains systems of internal controls designed to
provide reasonable assurance that transactions are authorized, assets are
safeguarded, and reliable financial information is produced. Management selects
accounting principles and methods that are appropriate to the Company's
circumstances, and makes decisions affecting the measurement of transactions in
which estimates or judgements are required to determine the amounts reported.
The Board of Directors is responsible for ensuring that management fulfils its
responsibilities for financial reporting. The Board has responsibility for
reviewing and approving the financial statements.
The Audit Committee has responsibility for reviewing the annual financial
statements and the external auditors' report and recommending the annual
financial statements to the board of directors for approval.
The external auditors audit the financial statements annually on behalf of the
shareholders. The external auditors have free access to management, and the
Audit Committee.
/s/ SIMON RIDGWAY, DIRECTOR
- -------------------------------------
SIMON RIDGWAY, DIRECTOR
<PAGE> 16
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(EXPRESSED IN CANADIAN DOLLARS)
ASSETS
<TABLE>
<CAPTION>
December April 30, April 30,
31, 1997 1997 1996
(Note 18)
<S> <C> <C> <C>
CURRENT
Cash and short-term deposits $ 1,213,543 $ 130,111 $ 625,859
Government of Canada bonds and other
short-term investments 6,307,950 4,599,713 --
Advances and other receivables (Note 10) 476,460 114,849 72,826
Prepaid expenses and deposits 52,808 98,492 17,527
------------ ------------ ------------
8,050,761 4,943,165 716,212
ADVANCES FOR EXPLORATION COSTS (Note 3) 87,315 130,875 --
DEFERRED EXPLORATION COSTS (Note 4) 4,502,786 3,674,784 1,823,507
OIL AND GAS INTERESTS (Note 5) 18,296 13,681 3
CAPITAL ASSETS (Note 6) 317,554 294,432 174,679
LONG-TERM INVESTMENTS (Note 7) 192,000 192,000 --
------------ ------------ ------------
$ 13,168,712 $ 9,248,937 $ 2,714,401
============ ============ ============
LIABILITIES
CURRENT
Accounts payable and accrued
liabilities (Note 10) $ 285,031 $ 248,608 $ 60,172
DEPOSIT -- -- 250,000
ADVANCES RECEIVED FOR EXPLORATION COSTS 35,495 -- --
PURCHASE PRICE PAYABLE, MINORO JOINT
VENTURE, HONDURAS -- -- 214,600
------------ ------------ ------------
320,526 248,608 524,772
------------ ------------ ------------
CONTINGENCIES (Note 11)
COMMITMENTS (Note 12)
SUBSEQUENT EVENTS (Note 13)
SHAREHOLDERS' EQUITY
CAPITAL STOCK (Note 8)
Common shares, without par value
December 31, 1997, 100,000,000 authorized,
16,600,943 issued
April 30, 1997, 100,000,000 authorized,
11,912,484 issued
April 30, 1996, 100,000,000 authorized,
6,276,199 issued 18,298,746 10,078,739 4,177,492
SPECIAL WARRANTS (Note 8) -- 2,790,000 934,650
DEFICIT (5,450,560) (3,868,410) (2,922,513)
------------ ------------ ------------
12,848,186 9,000,329 2,189,629
------------ ------------ ------------
$ 13,168,712 $ 9,248,937 $ 2,714,401
============ ============ ============
</TABLE>
APPROVED BY THE DIRECTORS:
/s/ SIMON RIDGWAY DIRECTOR
- -------------------------------------
SIMON RIDGWAY
/s/ ROBERT WASYLYSHYN DIRECTOR
- -------------------------------------
ROBERT WASYLYSHYN
<PAGE> 17
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF DEFICIT
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Cumulative 8 Months
Inception Ended Years ended April 30,
to December December --------------------------
31, 1997 31, 1997 1997 1996
(Note 18)
<S> <C> <C> <C> <C>
DEFICIT - BEGINNING OF PERIOD $ -- $3,868,410 $2,922,513 $2,688,558
Net loss for the period 5,450,560 1,582,150 945,897 233,955
---------- ---------- ---------- ----------
DEFICIT - END OF PERIOD $5,450,560 $5,450,560 $3,868,410 $2,922,513
========== ========== ========== ==========
</TABLE>
<PAGE> 18
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Cumulative
----------- 8 Months
Inception Ended Years ended April 30,
to December December -------------------------------
31, 1997 31, 1997 1997 1996
(Note 18)
<S> <C> <C> <C> <C>
REVENUE
Oil well participation income (loss) $ 146,334 $ -- $ -- $ (1,426)
Management fee income 60,900 60,900 -- --
Option payments received for mineral
properties 70,000 -- -- --
------------ ------------ ------------ ------------
277,234 60,900 -- (1,426)
------------ ------------ ------------ ------------
EXPENSES
General and administrative
(Schedule) 2,593,441 501,020 469,646 174,345
Deferred exploration costs
written-off (Note 9) 2,487,110 1,249,827 647,797 33,824
Loss on disposal of oil and gas
interest 329,336 -- -- --
Oil and gas interests written-off 709,390 -- -- 31,687
------------ ------------ ------------ ------------
6,119,277 1,750,847 1,117,443 239,856
Expense recoveries (50,520) -- -- --
------------ ------------ ------------ ------------
6,068,757 1,750,847 1,117,443 239,856
------------ ------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (5,791,523) (1,689,947) (1,117,443) (241,282)
Gain on disposal of capital asset 583 -- -- 583
Interest and other income 350,086 107,797 171,546 6,744
Investments written-off (9,706) -- -- --
------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD $ (5,450,560) $ (1,582,150) $ (945,897) $ (233,955)
============ ============ ============ ============
LOSS PER SHARE $ (0.108) $ (0.102) $ (0.052)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 14,695,681 9,234,348 4,437,788
============ ============ ============
</TABLE>
<PAGE> 19
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MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Cumulative
------------ 8 Months
Inception ended Years ended April 30,
to December December -------------------------------
31, 1997 31, 1997 1997 1996
(Note 18)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss for the period $ (5,450,560) $(1,582,150) $ (945,897) $ (233,955)
Items not involving cash
Amortization 36,988 12,751 10,383 --
Depletion 17,106 -- -- --
Deferred exploration costs
written-off 2,487,110 1,249,827 647,797 --
Investments written-off 9,706 -- -- --
Oil and gas interests written-off 709,390 -- -- 31,687
Gain on disposal of capital asset (583) -- -- (583)
Loss on disposal of oil and gas
interest 329,336 -- -- --
------------ ----------- ----------- -----------
(1,861,507) (319,572) (287,717) (202,851)
Cash provided by (used for) changes in
non-cash working capital items
Advances and other receivables (476,460) (361,611) (42,023) (68,991)
Prepaid expenses and deposits (52,808) 45,684 (80,965) (17,527)
Accounts payable and accrued
liabilities 285,031 36,423 188,436 (2,106)
------------ ----------- ----------- -----------
(2,105,744) (599,076) (222,269) (291,475)
------------ ----------- ----------- -----------
FINANCING ACTIVITIES
Decrease in amounts due to
related parties -- -- -- (3,322)
Increase (decrease) in deposit -- -- (250,000) 250,000
Increase in advances received for
exploration costs 35,495 35,495 -- --
Increase (decrease) in purchase price,
payable Minoro Joint Venture, Honduras -- -- (214,600) 214,600
Net proceeds from issuance of shares 18,298,746 8,220,007 5,901,247 805,375
Increase (decrease) in special warrants -- (2,790,000) 1,855,350 934,650
------------ ----------- ----------- -----------
18,334,241 5,465,502 7,291,997 2,201,303
------------ ----------- ----------- -----------
INVESTING ACTIVITIES
Purchase of investments (9,706) -- -- --
Increase in Government of Canada bonds
and other short term investments (6,307,950) (1,708,237) (4,599,713) --
Advances for exploration cost (87,315) 43,560 (130,875) --
Deferred exploration costs,
excluding amortization (6,917,012) (2,063,872) (2,468,899) (1,305,479)
Expenditures on oil and gas interests (1,132,527) (4,615) (13,678) --
Acquisition of capital assets (427,543) (49,830) (160,311) (159,675)
Increase in long-term investments (192,000) -- (192,000) --
Proceeds on disposal of capital asset 700 -- -- 700
Proceeds on disposal of oil and gas
interest 58,399 -- -- --
------------ ----------- ----------- -----------
(15,014,954) (3,782,994) (7,565,476) (1,464,454)
------------ ----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND SHORT-TERM
DEPOSITS 1,213,543 1,083,432 (495,748) 445,374
Cash and short-term deposits - beginning
of period -- 130,111 625,859 180,485
------------ ----------- ----------- -----------
CASH AND SHORT-TERM DEPOSITS - END OF
PERIOD $ 1,213,543 $ 1,213,543 $ 130,111 $ 625,859
============ =========== =========== ===========
</TABLE>
<PAGE> 20
- 20 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 1 - NATURE OF OPERATIONS
The Company was incorporated under the laws of the Province of British Columbia,
Canada, on July 26, 1979.
The Company is in the process of exploring and developing its mineral
properties. The underlying value of the related deferred exploration costs is
entirely dependent on the existence of economically recoverable reserves, the
ability of the Company to obtain the necessary financing to complete
development, and upon profitable future production. The Company has no producing
mineral properties.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all subsidiaries.
Investments Subject to Significant Influence
Investments in companies over which the Company is able to exercise
significant influence are accounted for by the equity method.
Interests in Joint Ventures
Interests in joint ventures are recorded using the proportionate
consolidation method.
Deferred Exploration Costs
The Company defers all exploration and development costs relating to mineral
properties and areas of geological interest until the properties to which
they relate are placed into production, sold or abandoned.
If production commences, these costs will be transferred to "producing
mines", exploration and development costs and amortized over proven reserves
against earnings on the unit-of-production method.
The amounts shown for the deferred exploration costs represent costs
incurred to date and are not intended to reflect present or future values.
Option Agreements
From time to time, the Company acquires or disposes of properties pursuant
to option agreements. As options are exercisable entirely at the discretion
of the optionee, amounts payable or receivable are not recorded.
Option payments made, some of which may include shares of the Company, are
recorded as deferred exploration costs when the payments are made or the
shares issued. Option payments received are treated as a reduction in the
carrying value of the related deferred exploration costs.
Oil and Gas Interests
The Company follows the full cost method accounting for its oil and gas
interests whereby all costs associated with acquisition, exploration and
development are capitalized.
A separate full cost centre is maintained for each prospect. Depletion is
calculated on the unit-of-production method based on estimated proven oil
and gas reserves in each prospect. The accumulated costs of an abandoned
area will be charged against earnings at the time of abandonment.
Translation of Financial Statements of Integrated Foreign Operations
Financial statements of integrated foreign operations are translated as
follows:
a) Monetary items are translated at the rate of exchange in effect at the
balance sheet date;
<PAGE> 21
- 21 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
b) Non-monetary items are translated at historical exchange rates, unless
such items are carried at market, in which case they are translated at
the rate of exchange in effect at the balance sheet date;
c) Revenue and expense items are translated at the average rate for the
year; and
d) Amortization of assets translated at historical exchange rates is
translated at the same exchange rates as the assets to which it relates.
Exchange gains and losses are recorded as income or expense in the period in
which they occur.
Capital Assets
Capital assets are recorded at cost and are amortized over their estimated
useful lives as follows:
On the straight-line method:
<TABLE>
<S> <C>
Office furniture and equipment 10 years
Mining Equipment 10 years
Vehicles 10 years
Leasehold improvements 5 years
</TABLE>
Long-term Investments
Long-term investments are recorded at cost unless there has been a permanent
impairment in value in which case long-term investments are written down to
net realizable values.
Loss Per Share
Basic loss per share has been calculated based on the weighted average
number of common shares outstanding.
Cash and Short-term Deposits
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash and short-term deposits.
Environmental Protection and Rehabilitation Costs
Liabilities related to environmental protection and rehabilitation costs
will be accrued and charged to income when their likelihood of occurrence is
established.
NOTE 3 - ADVANCES FOR EXPLORATION COSTS
Advances for exploration costs comprise the following:
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
-------- -------- ---------
<S> <C> <C> <C>
Advances for expenditures in El Salvador $ 22,346 $ 86,575 $ --
Advances for expenditures in Guatemala 52,411 -- --
Advances for expenditures on the Choluteca
Group, Honduras -- 31,979 --
Other advances 12,558 12,321 --
-------- -------- ---------
$ 87,315 $130,875 $ --
======== ======== =========
</TABLE>
<PAGE> 22
- 22 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 4 - DEFERRED EXPLORATION COSTS
Deferred exploration costs comprise the following:
<TABLE>
<CAPTION>
December April April
Acquisition Exploration 31, 1997 30, 1997 30, 1996
<S> <C> <C> <C> <C> <C>
Honduras
Choluteca Group (BMG) $ -- $ -- $ -- $ 1,465,480 $ 418,627
Expenses recovered -- -- -- (170,744) --
---------- ----------- ----------- ----------- ----------
-- -- -- 1,294,736 418,627
---------- ----------- ----------- ----------- ----------
San Martin (Curion) 1,096 2,119,601 2,120,697 853,254 92,718
Expenses recovered -- (690,489) (690,489) (437,000) --
---------- ----------- ----------- ----------- ----------
1,096 1,429,112 1,430,208 416,254 92,718
---------- ----------- ----------- ----------- ----------
Sabana Grande Group 6,737 205,997 212,734 209,046 48,970
---------- ----------- ----------- ----------- ----------
Minoro Property
(Tombstone) 309,534 804,198 1,113,732 998,591 637,453
---------- ----------- ----------- ----------- ----------
Other properties 10,973 610,579 621,552 517,026 209,927
---------- ----------- ----------- ----------- ----------
$ 328,340 $ 3,049,886 $ 3,378,226 $ 3,435,653 $1,407,695
========== =========== =========== =========== ==========
El Salvador (Tombstone)
Sante Rosa District $ -- $ 335,614 $ 335,614 $ 168,666 $ --
========== =========== =========== =========== ==========
Guatemala
Jutiapa II and Others $ 407 $ 788,539 $ 788,946 $ 70,465 $ --
========== =========== =========== =========== ==========
Canada
Nimpkish Lake,
British Columbia $ -- $ -- $ -- $ -- $ 356,287
Eldorado, Yukon -- -- -- -- 15,000
McQuesten Group, Yukon -- -- -- -- 44,525
---------- ----------- ----------- ----------- ----------
$ -- $ -- $ -- $ -- $ 415,812
========== =========== =========== =========== ==========
$ 328,747 $ 4,174,039 $ 4,502,786 $ 3,674,784 $1,823,507
========== =========== =========== =========== ==========
</TABLE>
HONDURAS
1) Choluteca Group (BMG)
By an agreement dated January 24, 1996 (as amended by agreements dated
July 3 and July 16, 1996) (collectively, "the Choluteca Agreement")
between the Company, its wholly owned subsidiary Minerales Entre-Mares
(Honduras) S.A. ("Entre-Mares") and Minera BMG ("BMG"), a wholly owned
Nevada subsidiary of Battle Mountain Gold Company (Battle Mountain),
Entre-Mares entered into a joint venture with BMG to develop the Choluteca
concessions. During the eight months ended December 31, 1997 the Company
and Battle Mountain decided not to proceed with the project. The joint
venture has been terminated and the costs related to the project
written-off.
Summarized financial information regarding the Company's proportionate
share of assets, liabilities and changes in financial position of the
Joint Venture are as follows:
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
<S> <C> <C> <C>
Cash $ 19,480 $ 20,737 $ --
Deferred exploration costs -- 117,879 --
Capital assets 202 249 --
Accounts payable and accrued liabilities -- 260 --
Cash provided by (used in) operating activities (209) 260 --
Cash provided by financing activities 4,618 138,605 --
Cash used in investing activities (5,666) (118,128) --
</TABLE>
<PAGE> 23
- 23 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 4 - DEFERRED EXPLORATION COSTS (Cont'd)
2) San Martin Property (Curion)
The San Martin property consists of one exploration concession acquired on
December 8, 1995 by Entre-Mares. The concession encompasses 14,100
hectares.
Pursuant to an option agreement dated February 22, 1996, the Company
granted to Curion Ventures Corp. ("Curion"), a public British Columbia
company, an option to earn a 50% interest by funding expenditures on the
San Martin Property of not less than $500,000, such funds to be advanced
to the Company as follows:
a) $50,000 upon acceptance of the agreement by the Vancouver Stock
Exchange (VSE) (received);
b) $200,000 within seven days of acceptance of the agreement by the VSE
(received); and
c) $250,000 within 45 days of the Company delivering a report to Curion
summarizing the results of the exploration funded by the initial
$250,000 and recommending further work of at least $250,000 and
containing a budget for such further work.
In November, 1996 the Company and Curion renegotiated their February 22,
1996 option agreement. The Company accepted 248,571 Curion shares at a
price of $0.35 per share in full settlement of the $87,000 indebtedness of
Curion to the Company representing the amount owed by Curion from the
first stage program. Upon settlement of the debt, the Company assigned to
Curion a 20% working interest in the property. A $500,000 second stage
expenditure program on the property commenced. The Company agreed to
finance Curion for its 20% share of the costs of this second stage program
by purchasing 300,000 units of Curion at a price of $0.35 per unit, each
unit consisting of one common share and one non-transferable share
purchase warrant. Each warrant entitles the Company to purchase one common
share of Curion at a price of $0.35 for a period of one year until March
19, 1998. The Company exercised these warrants on March 19, 1998 (Note
13(b)).
The Company is the operator.
3) Sabana Grande Group
The Sabana Grande property consists of four exploration concessions in the
Department of Francisco Morazan. The various concessions were granted over
a five month period from September, 1995 to January, 1996 on direct
application by Entre-Mares.
4) Minoro Property (Tombstone)
By an agreement dated May 16, 1995, Tombstone Explorations Co. Ltd.
("Tombstone") of Vancouver, British Columbia, a public British Columbia
company whose common shares trade on the Vancouver and Toronto Stock
Exchanges, acquired a 100% interest in the Minoro Project, Honduras, from
Kennecott and Fischer-Watt for a total purchase price of U.S.$1,150,000.
By an agreement dated August 8, 1995, as amended January 10, 1996
(collectively, the "Minoro Agreement"), the Company acquired from
Tombstone, by way of the purchase of 20% of the shares of Minoro Aruba
A.V.V., at that time a wholly owned subsidiary of Tombstone, an undivided
20% indirect interest in the Minoro Project. The consideration paid by the
Company for the 20% interest was U.S.$230,000, representing the Company's
20% share of the purchase price paid by Tombstone to Kennecott and
Fischer-Watt.
The Company also granted an option to Tombstone to purchase 200,000 common
shares of the Company exercisable for two years from August 8, 1995 at
$1.25 per share during the first year and $1.50 per share during the
second year. These options were exercised during the year ended April 30,
1997.
In connection with the acquisition by the Company of its interest in the
Minoro Project, Tombstone purchased 600,000 units of the Company at $0.50
per unit. Each unit consisted of one common share and one-half of a share
purchase warrant. Each whole warrant entitled Tombstone to purchase an
additional common share of the Company at $0.50 for one year. The warrants
were all exercised in January, 1996.
During the year ended April 30, 1997 Tombstone purchased 550,000 units of
the Company at $1.50 per unit. Each unit consisted of one common share and
one share purchase warrant. Each whole warrant entitled Tombstone to
purchase an additional common share of the Company at $1.75 on or before
August 31, 1997. These warrants were exercised in August, 1997.
<PAGE> 24
- 24 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 4 - DEFERRED EXPLORATION COSTS (Cont'd)
As at December 31, 1997 Tombstone has a common director with the Company,
and owns 1,129,800 common shares (approximately 6.81%) and no share
purchase warrants of the Company.
The Minoro Project is subject to production payments payable to Begeyge
Mineral Limitada ("Begeyge"), a Costa Rican company at arm's length to the
Company and Tombstone, pursuant to an agreement dated January 23, 1996
between Begeyge and Tombstone. The production payments are equal to 1.5%
of net smelter returns from gold and silver and 0.75% of net smelter
returns from base metals. Advance payments (deductible from future
production payments) of U.S.$45,000 are payable each year. The obligation
to make the production payments can be cancelled upon payment to Begeyge
of U.S.$1,300,000 before June 13, 1997 or U.S.$1,500,000 thereafter.
Production payments and advance payments are not deductible from the
purchase price. The Minoro Project is also subject to a royalty of 5% net
smelter returns payable to Cerenex Financial A.V.V., a wholly owned
subsidiary of Minoro Aruba A.V.V.
5) Other Properties
In addition to the above, the Company holds an interest in a number of
other properties in Honduras, the potential of which are still being
evaluated.
EL SALVADOR
In October 1996 the Company formed a joint venture with Tombstone
Explorations Co. Ltd. to explore and develop mineral properties in El
Salvador, Central America. The terms of the joint venture call for a
straight 50/50 joint venture with both companies contributing equally. The
Company is the operator of the joint venture. Several application for
mineral concessions have been made to the relevant ministry under the name
of EXMINSA S.A., the operating entity of the joint venture. Several
prospects owned by third parties are also being evaluated and terms are
under negotiation.
Summarized financial information regarding the Company's proportionate
share of assets, liabilities and changes in financial position of the
Joint Venture are as follows:
<TABLE>
December April April
31, 1997 30, 1997 30, 1996
<S> <C> <C> <C>
Cash $ 9,297 $ 10,448 $ --
Accounts receivable and prepaid expenses 5,004 3,001 --
Deferred exploration costs 335,614 39,710 --
Capital assets 8,370 8,552 --
Accounts payable and accrued liabilities 110 -- --
Cash used in operating activities (829) (3,001) --
Cash provided by financing activities 294,303 61,711 --
Cash used in investing activities (294,625) (48,262) --
</TABLE>
GUATEMALA
On November 14, 1997 the Company was granted a three-year title to the
Jutiapa II Concession by the Ministry of Mines in Guatemala. Several other
applications for mineral concessions have been submitted to the same
Ministry. Three concession titles were granted to the Company by the
Ministry of Mines in Guatemala subsequent to December 31, 1997 (Note
13(a)).
NOTE 5 - OIL AND GAS INTERESTS
Oil and gas interests comprise the following:
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
<S> <C> <C> <C>
Challan County, Washington State, USA $ 3 $ 3 $ 3
Adcock Unit, Texas, USA 18,293 13,678 --
------- ------- --
$18,296 $13,681 $ 3
======= ======= ===
</TABLE>
The Company is not proceeding with the Challan County project and the related
costs were written-down in the year ended April 30, 1996.
The Company has an approximate 1.32% interest in the Adcock Unit in Texas USA.
<PAGE> 25
- 25 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 6 - CAPITAL ASSETS
Capital assets comprise the following:
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
Accumulated Net Book Net Book Net Book
Cost Amortization Value Value Value
<S> <C> <C> <C> <C> <C>
Office furniture and equipment $157,569 $ 35,007 $122,562 $100,854 $ 39,551
Mining equipment and vehicles 238,271 47,293 190,978 188,867 135,128
Leasehold improvements 5,235 1,221 4,014 4,711 --
-------- -------- -------- -------- --------
$401,075 $ 83,521 $317,554 $294,432 $174,679
======== ======== ======== ======== ========
</TABLE>
NOTE 7 - LONG-TERM INVESTMENTS
Long-term investments comprise the following:
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
<S> <C> <C> <C>
Curion Ventures Corp. (Curion) - 548,571 shares -
at cost (quoted value December 31, 1997 - 142,628)
(see Note 4) $192,000 $192,000 $ -
======== ======== ========
</TABLE>
300,000 Curion shares are subject to a hold period and may not be traded in
British Columbia until March 20, 1998.
In addition, the Company owns 300,000 non-transferable share purchase warrants
of Curion. Each share purchase warrant entitles the Company to purchase one
common share of Curion at a price of $0.35 until March 19, 1998. All shares
purchased by the Company on exercise of these share purchase warrants are
subject to a hold period and may not be traded in British Columbia until March
20, 1998. Subsequent to December 31, 1997, the Company exercised the 300,000
non-transferable share purchase warrants (Note 13(b)).
NOTE 8 - CAPITAL STOCK AND SPECIAL WARRANTS
CAPITAL STOCK
Capital stock comprises the following:
Authorized:
100,000,000 Common shares without par value at December 31, 1997,
April 30, 1997 and April 30, 1996
<TABLE>
<CAPTION>
Number Amount
--------- -----------
<S> <C> <C>
Opening balance -- $ --
Issued for cash
For seed stock 554,000 69,500
By way of public offering 300,000 180,000
For escrow shares 750,000 7,500
Share issue costs -- (33,300)
--------- -----------
Balance - April 30, 1980 1,604,000 $ 223,700
Issued for cash 30,000 18,000
--------- -----------
Balance - April 30, 1981 1,634,000 $ 241,700
Issued for cash
By way of public offering 300,000 975,000
Share issue costs -- (73,867)
--------- -----------
Balance - April 30, 1982 1,934,000 $ 1,142,833
</TABLE>
<PAGE> 26
- 26 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 8 - CAPITAL STOCK AND SPECIAL WARRANTS (Cont'd)
<TABLE>
<CAPTION>
Number Amount
--------- -----------
<S> <C> <C>
Issued for cash
On exercise of options 75,000 21,250
Issued as consideration for deferred exploration costs 235,000 146,900
Issued for settlement of debt 45,000 47,000
--------- -----------
Balance - April 30, 1983 2,289,000 $ 1,357,983
Issued for cash
On exercise of options 123,500 35,125
By way of private placement 300,000 105,000
Issued as consideration for deferred exploration costs 45,000 20,250
Issued for settlement of debt 50,000 25,500
Issued for settlement of director's bank guarantee 8,800 9,680
Issued for services 15,000 7,750
Share issue costs -- (5,000)
--------- -----------
Balance - April 30, 1984 2,831,300 $ 1,556,288
--------- -----------
4:1 Rollback (first consolidation) 707,825 $ 1,556,288
Issued for cash
By way of private placement 45,000 13,750
Issued for settlement of debt 41,500 14,461
Issued for directors' fees 67,144 23,500
Issued for management fees 58,717 20,551
--------- -----------
Balance - April 30, 1985 920,186 $ 1,628,550
Issued for cash 406,568 316,489
Issued as consideration for deferred exploration costs 100,000 87,500
Issued for settlement of debt 261,409 203,639
--------- -----------
Balance - April 30, 1986 1,688,163 $ 2,236,178
Issued for cash
On exercise of options 55,000 34,100
Issued as consideration for deferred exploration costs 48,233 33,000
Issued for settlement of debt 68,750 45,772
--------- -----------
Balance - April 30, 1987 1,860,146 $ 2,349,050
Issued for cash
On exercise of options 115,000 68,100
Issued as consideration for deferred exploration costs 100,000 65,000
Issued for settlement of debt 39,615 25,750
--------- -----------
Balance - April 30, 1988 2,114,761 $ 2,507,900
Issued as consideration for deferred exploration costs 50,000 8,250
Issued for settlement of debt 90,000 27,000
--------- -----------
Balance - April 30, 1989 2,254,761 $ 2,543,150
Issued as consideration for deferred exploration costs 156,250 33,437
Issued for settlement of debt 191,950 38,305
--------- -----------
Balance - April 30, 1990 2,602,961 $ 2,614,892
Issued for cash
On exercise of options 52,500 7,875
Issued as consideration for oil & gas interest 100,000 36,000
Issued as consideration for deferred exploration costs 200,000 70,000
--------- -----------
Balance - April 30, 1991 2,955,461 $ 2,728,767
</TABLE>
<PAGE> 27
- 27 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 8 - CAPITAL STOCK AND SPECIAL WARRANTS (Cont'd)
<TABLE>
<CAPTION>
Number Amount
<S> <C> <C>
Issued for cash
On exercise of options 185,000 27,750
Issued as consideration for deferred exploration costs 100,000 19,450
----------- ------------
Balance - April 30, 1992 and April 30, 1993 3,240,461 $ 2,775,967
----------- ------------
3:1 Rollback (Second Consolidation) 1,080,153 $ 2,775,967
Issued for cash
By way of private placement 348,220 86,485
Issued for services 51,780 12,945
Issued for settlement of debt 551,046 144,720
----------- ------------
Balance - April 30, 1994 2,031,199 $ 3,020,117
Issued for cash
By way of private placement 1,400,000 320,000
On exercise of share purchase warrants 220,000 77,000
Shares cancelled during the year (180,000) (45,000)
----------- ------------
Balance - April 30, 1995 3,471,199 $ 3,372,117
Issued for cash
On exercise of options 40,000 20,000
By way of private placement 600,000 300,000
On exercise of share purchase warrants 1,627,500 480,000
For escrow shares 537,500 5,375
----------- ------------
Balance - April 30, 1996 6,276,199 $ 4,177,492
Issued for cash
On exercise of options 401,500 438,735
On conversion of special warrants 4,159,000 5,032,500
On exercise of agents' compensation options
and related share purchase warrants 216,285 209,083
On exercise of share purchase warrants 849,500 719,550
Issued as payment of finders fee for Eldorado property 10,000 13,700
Share issue costs -- (512,321)
----------- ------------
Balance - April 30, 1997 11,912,484 $ 10,078,739
Issued for cash
On exercise of options 166,500 203,895
On conversion of special warrants 1,500,000 3,000,000
On exercise of agents' compensation options
and related share purchase warrants 336,959 572,348
On exercise of share purchase warrants 2,685,000 4,698,750
Share issue costs -- (254,986)
----------- ------------
Balance - December 31, 1997 16,600,943 $ 18,298,746
=========== ============
</TABLE>
As at December 31, 1997 the above issued shares included 268,750 (April 30, 1997
- - 562,500) common shares held in escrow by the Company's registrar and transfer
agent. On July 8, 1997, 293,750 shares were released from escrow.
Basis for assigning amounts to non-cash issuance of capital stock
Shares issued for non-cash consideration (e.g. for acquisition of mineral
properties, for settlement of debt) are assigned amounts based on the
estimated fair market value of the Company's shares at the time the agreement
was entered into to settle the amount by issuance of shares.
<PAGE> 28
- 28 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 8 - CAPITAL STOCK AND SPECIAL WARRANTS (Cont'd)
Directors and employees share purchase options
As at December 31, 1997 the following share purchase options, each entitling
the holder to purchase one common share of the Company, were outstanding:
<TABLE>
<CAPTION>
Type Number Exercise Price Expiry Date
<S> <C> <C> <C>
Directors 150,000 $0.50 April 25, 2000
33,000 $0.90 January 23, 2001
105,000 $1.03 November 29, 2001
50,000 $1.54 February 11, 2002
-------
338,000
=======
Employees 50,000 $1.53 June 28, 2001
54,000 $1.03 November 29, 2001
130,000 $1.54 February 11, 2002
100,000 $1.64 May 7, 2002
110,000 $2.00 June 26, 2002
-------
444,000
=======
</TABLE>
Share purchase warrants
As at December 31, 1997 the following share purchase warrants, each warrant
entitling the holder to purchase one common share of the Company were
outstanding:
<TABLE>
<CAPTION>
Number Exercise Price Expiry Date
<S> <C> <C>
750,000 $2.30 March 19, 1998
</TABLE>
All 750,000 share purchase warrants expired without being exercised (Note
13(c)).
Agents' compensation options and related share purchase warrants
As at December 31, 1997 the following agents' compensation options and related
share purchase warrants were outstanding:
81,000 agents' compensation options. Each agents' compensation option
entitles the agent to purchase one unit at $2.00 per unit. Each unit
consists of one common share and one-half of an agents' share purchase
warrant. One agents' share purchase warrant entitles the agent to
purchase an additional common share at $2.30 until March 19, 1998.
All 81,000 agents' compensation options expired without being exercised (Note
13(c)).
SPECIAL WARRANTS
Special warrants comprise the following:
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
---------- ----------- -----------
<S> <C> <C> <C>
1,500,000 special warrants at $2.00 each $ -- $ 3,000,000 $ 1,005,000
Agents' commission -- (210,000) (70,350)
---------- ----------- -----------
$ -- $ 2,790,000 $ 934,650
========== =========== ===========
</TABLE>
On March 19, 1997, the Company completed an issue of 1,500,000 special warrants
at $2.00 each by way of a brokered private placement. Each special warrant is
convertible, at no additional consideration, into one unit consisting of one
common share and one-half of a share purchase warrant. One whole share purchase
warrant entitles the holder to purchase one common share at $2.30 until March
19, 1998. The agents received a cash commission of 7% plus 105,000 special
compensation options. Each special compensation option is convertible, without
payment of any consideration, into 105,000 agents' compensation options. Each
agents' compensation option entitles the agent to subscribe for an agents' unit
at a price of $2.00 per agents' unit until March 19, 1998. Each agents' unit
consists of one
<PAGE> 29
- 29 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 8 - CAPITAL STOCK AND SPECIAL WARRANTS (Cont'd)
common share and one-half of an agents' share purchase warrant. One whole
agents' share purchase warrant entitles the agent to acquire one common share at
a price of $2.30 until March 19, 1998. If a receipt for a prospectus qualifying
the distribution of 1,500,000 units and 105,000 agents' compensation options
obtained on the conversion of special warrants and special compensation options
was not issued by Regulators on or before July 17, 1997, the number of shares
and share purchase warrants obtained on conversion of special warrants and the
exercise of agents' compensation options would increase by 10% to 1.1 common
shares and 0.55 of a share purchase warrant.
A prospectus, dated July 16, 1997 and receipted by Regulators on July 17, 1997,
qualified the distribution of 1,500,000 units consisting of 1,500,000 common
shares and 750,000 share purchase warrants to be issued, at no additional
consideration, upon the exercise of 1,500,000 special warrants previously issued
by the Company by way of a brokered private placement on March 19, 1997. The
prospectus also qualified the distribution of 105,000 agents' compensation
options to agents to be issued, without payment of any consideration, upon
exercise of 105,000 special compensation options previously issued on March 19,
1997. On July 18, 1997 the 1,500,000 special warrants were converted into
1,500,000 common shares and 750,000 share purchase warrants.
NOTE 9 - DEFERRED EXPLORATION COSTS WRITTEN-OFF
Deferred exploration costs written-off relate to projects the Company decided
not to proceed with and comprise the following:
<TABLE>
<CAPTION>
8 Months
Ended Years ended April 30,
December -----------------------
31, 1997 1997 1996
(Note 18)
<S> <C> <C> <C>
Choluteca, Honduras $1,234,842 $ -- $ --
Canada
Nimpkish Lake, British Columbia -- 356,287 --
Eldorado, Yukon -- 194,715 --
McQuesten Group, Yukon -- 83,877 --
Other 14,985 12,918 33,824
---------- -------- -------
$1,249,827 $647,797 $33,824
========== ======== =======
</TABLE>
NOTE 10 - RELATED PARTY TRANSACTIONS
a) Prior to November 1, 1996 the Company agreed to pay a minimum of US$1,500
per month for management services and up to a maximum of US$3,000 per
month for geological consulting and management services provided by the
Company's president. Pursuant to a management service agreement dated
November 1, 1996 (replacing the aforementioned agreements) the Company
agreed to pay U.S.$60,000 per year for the services of the Company's
president. The term of the agreement is for two years. During the eight
months ended December 31, 1997 the Company paid a total of $55,852 (year
ended April 30, 1997 - $61,922, year ended April 30, 1996 - $47,484) for
the services of the Company's president pursuant to above referred to
agreements.
b) During the eight months ended December 31, 1997 the Company paid (other
than to the Company's president) $75,675 (year ended April 30, 1997 -
$61,610, year ended April 30, 1996 - nil) to directors and/or companies
controlled by directors for geological exploration services.
c) The Company and Tombstone Explorations Co. Ltd. (Tombstone) have one
common director. As detailed in Note 4, the Company acquired its interest
in the Minoro Property from Tombstone. Accounts payable at December 31,
1997 includes $229,517 (April 30, 1997 - $52,082, April 30, 1996 - nil)
payable to Tombstone representing the Company's 20% share of certain
expenditures on the Minoro Project. Also as detailed in Note 4, the
Company formed a joint venture with Tombstone in El Salvador. Other
receivables at December 31, 1997 includes $391,614 (April 30, 1997 - nil,
April 30, 1996 - nil) receivable from Tombstone representing Tombstone's
50% share of certain expenditures on the El Salvador joint venture.
Amounts receivable and payable between the Company and Tombstone are
subject to review by each party.
d) During the eight months ended December 31, 1997 the Company incurred
management fees of nil (year ended April 30, 1997 - nil, year ended April
30, 1996 - $3,000) to a former director of the Company.
<PAGE> 30
- 30 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 11 - CONTINGENCIES
a) The Company has diligently investigated rights of ownership of all of the
mineral concessions in which it has an interest and, to the best of its
knowledge, all agreements relating to such ownership rights are in good
standing. However, this should not be construed as guarantee to title. The
concessions may be subject to prior claims, agreements or transfers and
rights of ownership may be affected by undetected defects.
b) At present the Company is not aware of any liability related to
environmental protection and rehabilitation costs. However, due to the
nature of the Company's business there is no assurance that such liability
will not arise in the future.
NOTE 12 - COMMITMENTS
a) The Company has a five year lease for office premises. The total lease
commitments to the expiry of the lease is as follows:
<TABLE>
<S> <C> <C>
For the years ended -December, 1998 $ 62,600
-December, 1999 71,100
-December, 2000 71,100
-December, 2001 79,500
--------
$284,300
</TABLE>
b) The Company has a management service agreement for the services of the
president of the Company (see Note 10).
NOTE 13 - SUBSEQUENT EVENTS
a) On April 16, 1998 the Company was granted a three-year title to the Pocito
I Concession by the Ministry of Mines in Guatemala. On April 27, 1998 the
Company was granted three-year titles to the Penoncito Concession and the
Joya Grande Concession by the Ministry of Mines in Guatemala.
b) On March 19, 1998 the Company exercised 300,000 non-transferable share
purchase warrants of Curion at a price of $0.35 per share purchase
warrant.
c) On March 19, 1998, 750,000 share purchase warrants to acquire common
shares of the Company exercisable at $2.30 each and 81,000 agents'
compensation options to acquire common shares of the Company exercisable
at $2.00 each expired without being exercised.
d) On May 7, 1998 the Vancouver Stock Exchange accepted for filing 350,000
directors and employees share purchase options to purchase common shares
of the Company at $1.08 per share. These options are exercisable up to
April 8, 2003.
<PAGE> 31
- 31 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 14 - GEOGRAPHIC SEGMENTED INFORMATION
The Company's business is the acquisition, exploration and development of
mineral resource properties. Foreign geographic segments are engaged in
exploration and development activities and have not commenced any material
operating activities. Details of identifiable assets by geographic segments are
as follows:
<TABLE>
<CAPTION>
Deferred
exploration
costs and
Capital related
Cash and Other Assets & advances
Total Short-term Current Long-term & oil & gas
Assets Investments Assets Investments interests
----------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
December 31, 1997
North America $ 8,235,514 $7,443,414 $492,774 $281,030 $ 18,296
Honduras 3,592,148 39,975 25,834 135,555 3,390,784
El Salvador 380,631 9,297 5,004 8,370 357,960
Guatemala 960,419 28,807 5,656 84,599 841,357
----------- ---------- -------- -------- ----------
$13,168,712 $7,521,493 $529,268 $509,554 $4,608,397
=========== ========== ======== ======== ==========
April 30, 1997
North America $ 5,099,890 $4,659,779 $153,847 $272,583 $ 13,681
Honduras 3,718,563 50,713 45,440 142,457 3,479,953
El Salvador 277,242 10,448 3,001 8,552 255,241
Guatemala 153,242 8,884 11,053 62,840 70,465
----------- ---------- -------- -------- ----------
$ 9,248,937 $4,729,824 $213,341 $486,432 $3,819,340
=========== ========== ======== ======== ==========
April 30, 1996
North America $ 988,597 $ 535,351 $ 19,457 $ 17,974 $ 415,815
Honduras 1,725,804 90,508 70,896 156,705 1,407,695
----------- ---------- -------- -------- ----------
$ 2,714,401 $ 625,859 $ 90,353 $174,679 $1,823,510
=========== ========== ======== ======== ==========
</TABLE>
NOTE 15 - COMPARATIVE FIGURES
Certain prior year's comparative figures have been reclassified to conform with
the financial statement presentation for the eight months ended December 31,
1997.
NOTE 16 - INCOME TAXES
As at December 31, 1997, the Company has losses carried forward for Canadian
income tax purposes of approximately $1,129,027 for deduction against future
years' taxable income. These losses carried forward expire as follows:
<TABLE>
<S> <C>
1999 $ 64,612
2000 22,594
2001 90,875
2002 81,007
2003 208,789
2004 661,150
----------
$1,129,027
==========
</TABLE>
In addition, the Company has various resource expenditure pools which may be
carried forward with no expiry date and used to offset taxable income in future
years.
The possible income tax benefits of these losses have not been reflected in the
financial statements.
<PAGE> 32
- 32 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 17 - FINANCIAL INSTRUMENTS
a) Fluctuations in Foreign Currency Exchange Rates
The Company conducts mineral property exploration activities globally
and as such the amount of its deferred exploration costs will be
effected by fluctuation in foreign currency exchange rates. The Company
does not use foreign exchange forward contracts to manage foreign
exchange risk.
b) Fair Value
Cash and short-term deposits, Government of Canada bonds and other
short-term investments, advances and other receivables, accounts payable
and accrued liabilities.
Due to the short period to maturity of the instruments, the carrying
values as presented in the consolidated balance sheet are reasonable
estimates of fair value.
Long-term Investments
Long-term investments are carried in the consolidated balance sheet
at cost and fair value information as at December 31, 1997 is
presented in Note 7.
c) Credit Risk
The Company has no significant exposure to credit risk.
d) Interest Rates
The Company is not exposed to significant interest rate risk due to the
short term maturity of its monetary current assets and current
liabilities and the fact that the Company has no long term debt.
NOTE 18 - CHANGE OF FISCAL YEAR END
The fiscal year end of the Company was changed from April 30 to December 31
effective for December 31, 1997.
<PAGE> 33
- 33 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 19 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in Canada (Canadian GAAP) which in
these financial statements, conform in all material respects with those in the
United States (U.S. GAAP), except as follows:
<TABLE>
<CAPTION>
Cumulative
---------- 8 Months
Inception Ended Years ended April 30,
to December December ----------------------------
31, 1997 31, 1997 1997 1996
<S> <C> <C> <C> <C> <C>
Net loss for the year/period
As determined by Canadian GAAP $(5,450,560) $(1,582,150) $ (945,897) $ (233,955)
Deferred exploration costs
written-off for Canadian GAAP -- 1,249,827 647,797 --
Oil and gas explorations expenditures
written-off for Canadian GAAP -- -- -- 31,687
Deferred exploration costs and (a)
advances for exploration costs
incurred (4,590,101) (2,034,269) (2,629,949) (1,309,342)
Oil and gas exploration
expenditures (a) (18,296) (4,615) (13,678) --
Increase in compensation expense
resulting from the release of
112,500 post-first consolidation
(37,500 post-second consolidation)
common shares from escrow on
February 19, 1987 (issue price
of $0.04, fair value on date
of release of $2.475) (b) (273,937) -- -- --
Increase in compensation expense
resulting from the release of 293,750
post-second consolidation common
shares from escrow on July 8, 1997
(weighted average issue price of
$0.015, fair value on date of
release of $1.38) (b) (401,001) (401,001) -- --
------------ ----------- ----------- -----------
As determined by U.S. GAAP $(10,733,895) $(2,772,208) $(2,941,727) $(1,511,610)
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
8 Months
ended Years ended April 30,
December -------------------------
31, 1997 1997 1996
<S> <C> <C> <C>
Loss per share - U.S. GAAP (b) $ (0.19) $ (0.34) $ (0.39)
=========== =========== ==========
Weighted average shares outstanding - U.S. GAAP 14,345,400 8,671,848 3,875,288
=========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
------------ ----------- -----------
<S> <C> <C> <C> <C>
Total assets
As determined by Canadian GAAP $ 13,168,712 $ 9,248,937 $ 2,714,401
Deferred exploration costs (a) (4,502,786) (3,674,784) (1,823,507)
Advances for exploration costs (a) (87,315) (130,875) --
Oil and gas exploration expenditures (a) (18,296) (13,681) (3)
Revaluation (devaluation) of investments (c) (49,372) 98,743 --
------------ ----------- -----------
As determined by U.S. GAAP $ 8,510,943 $ 5,528,340 $ 890,891
============ =========== ===========
</TABLE>
<PAGE> 34
- 34 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 19 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Cont'd)
<TABLE>
<CAPTION>
December April April
31, 1997 30, 1997 30, 1996
------------ ----------- ----------
<S> <C> <C> <C> <C>
Capital stock
As determined by Canadian GAAP $ 18,298,746 $10,078,739 $4,177,492
Increase in capital stock on revaluation of
shares released from escrow as detailed
above (b) 674,938 273,937 273,937
------------ ----------- ----------
As determined by U.S. GAAP $ 18,973,684 $10,352,676 $4,451,429
============ =========== ==========
Unrealized holding gains/(losses)
As determined by Canadian GAAP $ -- $ -- $ --
Revaluation (devaluation) of securities
available-for-sale (c) (49,372) 98,743 --
------------ ----------- ----------
As determined by - U.S. GAAP $ (49,372) $ 98,743 $ --
============ =========== ==========
Deficit
As determined by Canadian GAAP $ 5,450,560 $ 3,868,410 $2,922,513
Increase in deficit resulting from increase in
compensation expense on revaluation of shares
released from escrow as detailed above (b) 674,938 273,937 273,937
Deferred exploration costs (a) 4,502,786 3,674,784 1,823,507
Advances for exploration costs (a) 87,315 130,875 --
Oil and gas exploration expenditures (a) 18,296 13,681 3
------------ ----------- ----------
As determined by U.S. GAAP $ 10,733,895 $ 7,961,687 $5,019,960
============ =========== ==========
</TABLE>
a) Under Canadian GAAP all exploration expenses relating to resource
properties and areas of geological interest are deferred until the
properties to which they relate are placed into production, sold or
abandoned. Under U.S. GAAP these costs are not capitalized but expensed as
incurred.
b) Under Canadian GAAP shares issued with escrow restrictions are recorded at
their issue price and are not revalued upon release from escrow. Under
U.S. GAAP escrow shares which are released upon the Company meeting
certain performance criteria are considered to be contingently issuable.
These shares are excluded from the weighted average shares calculation and
the difference between the fair value of the shares at the time of their
release from escrow and the shares original issue price (being the market
price at that time) is accounted for as a compensation expense at the time
the shares are released from escrow. During the year ended April 30, 1988,
112,500 post-first consolidation (June 2, 1993 - 1 new for 3 old
consolidation being 37,500 post-second consolidation) common shares were
released from escrow. During the eight months ended December 31, 1997,
293,750 post-second consolidation common shares were released from escrow.
c) Under Canadian GAAP investments in securities are held at cost and not
revalued at each balance sheet date. Under U.S. GAAP investments in
securities held as available for sale are recorded at their fair values at
each balance sheet date with any unrealized holding gains or losses
recorded as a net amount in a separate component of shareholders' equity
until realized.
d) Net loss and loss per share
Under U.S. GAAP weighted average shares outstanding for the purpose of
determining primary loss per share are calculated using the treasury stock
method for fiscal years ending to December 15, 1997. Under Canadian
accounting principles, weighted average shares outstanding for the purpose
of determining basic loss per share are calculated using a simple weighted
average. The differences between Canadian and U.S. GAAP relating to these
different methods of calculating loss per share is not quantified as the
impact of using the treasury stock method is determined to be
anti-dilutive.
<PAGE> 35
- 35 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 19 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Cont'd)
FASB Statement No. 128 "Earnings Per Share" is effective for fiscal
periods ending after December 15, 1997. Adoption of this statement does
not significantly affect the reported U.S. GAAP earnings per share data
for the eight months ended December 31, 1997 and the years ended April 30,
1997 and April 30, 1996.
e) Stock-based Compensation
Statement of Financial Accounting Standards No. 123 "Accounting for
stock-based Compensation" is effective for fiscal years beginning after
December 15, 1995 and encourages, but does not require companies to record
the compensation cost for stock-based employee compensation plans at fair
value at the grant date. The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No.25, "Accounting for Stock Issued to
Employees", and related interpretations. Accordingly, compensation costs
for stock options is measured at the excess if any, of the quoted market
price of the Company's stock at the date of grant of the stock option over
the amount an employee must pay to acquire the stock.
Employee stock options granted by the Company are required by local
regulatory rules to be granted at an exercise price equal to the quoted
market price of the Company's shares (as calculated in accordance with
local regulatory rules) at the grant date. The grant of employee stock
options are subject to filing of the stock option agreements with and the
acceptance of the agreements by local regulators.
The fair value of the options granted during the eight months ended
December 31, 1997 and the year ended April 30, 1997 was estimated at the
date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
8 Months Ended Year Ended Year Ended
December April April
31, 1997 30, 1997 30, 1996
-------------- ---------- ----------
<S> <C> <C> <C>
Expected life 5 years 5 years 5 years
Risk-free interest rate 5.5% 5.5% 5.5%
Volatility 80% 105%-109% 86%-103%
</TABLE>
Based on the above, the fair value of the employee stock options at the
grant date was calculated to be zero requiring no compensation cost to be
recorded.
The following is a summary of the stock based compensation plan during the
eight months ended December 31, 1997 and the year ended April 30, 1997:
<TABLE>
<CAPTION>
8 Months Ended Year Ended
December 31, 1997 April 30, 1997
------------------------- -------------------------
Number of Weighted Number of Weighted
Share Average Share Average
Purchase Exercise Purchase Exercise
Options Price Options Price
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Outstanding and exercisable
at beginning of year/period 738,500 $1.12 600,000 $0.92
Granted 210,000 1.83 540,000 1.32
Exercised (166,500) 1.22 (401,500) 1.09
-------- ----- -------- -----
Outstanding and exercisable
at end of year/period 782,000 1.29 738,500 1.12
======== ===== ======== =====
</TABLE>
f) Statement of Financial Accounting Standards No. 121 (the statement) issued
in March 1995 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In performing the review for
recoverability, the Company should estimate future cash flows expected to
result from the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is
recognized. Otherwise, an impairment loss is not recognized. The statement
is effective for financial statements for fiscal years beginning after
December 15, 1995. Earlier application is encouraged. Restatement of
previously issued financial statements is not permitted. Impairment losses
resulting from the application of the statement should be reported in the
period in which the recognition criteria are first applied and met.
<PAGE> 36
- 36 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 19 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Cont'd)
The Company's long lived assets are deferred exploration costs (December
31, 1997 - $4,502,786, April 30, 1997 - $3,674,784, April 30, 1996 -
$1,823,507), advances for exploration costs (December 31, 1997 - $87,315,
April 30, 1997 - $130,875, April 30, 1996 - nil), oil and gas interests
(December 31, 1997 - $18,296, April 30, 1997 - $13,681, April 30, 1996 -
$3) and capital assets (December 31, 1997 - $317,554, April 30, 1997 -
$294,432, April 30, 1996 - $174,679). Under U.S. GAAP deferred exploration
costs, advances for exploration costs and oil and gas exploration
expenditures are expensed (see (a) above). Application of the statement
will not have a material effect on the Company's financial statements
based on the carrying amounts of the long lived assets as at December 31,
1997. The Company is an exploration stage company and changes in the
significant assumptions underlying future cash flow estimates may have a
material effect on future carrying values.
g) The Company has certain interests in jointly controlled entities which
have been proportionately consolidated in the Company's financial
statements. For purposes of U.S. GAAP, these interests would be accounted
for by the equity method. Net loss, loss per share and shareholders'
equity under U.S. GAAP are not impacted by the proportionate consolidation
of these interests in jointly controlled entities.
h) Significant components of the Company's Canadian deferred income tax
assets under United States generally accepted accounting principles
disclosure requirements are:
<TABLE>
<CAPTION>
8 Months
Ended Years Ended April 30,
December ---------------------------
31, 1997 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Deferred tax assets
Net operating loss carryforwards $ 172,000 $ 131,000 $ 96,000
Additions to resource and other
pool balances 448,000 743,000 539,000
--------- --------- ---------
Total deferred tax assets before allowance 620,000 874,000 635,000
Valuation allowance for deferred tax assets (620,000) (874,000) (635,000)
--------- --------- ---------
Total deferred tax assets $ -- $ -- $ --
========= ========= =========
</TABLE>
i) Statement of changes in financial position compared to statement of cash
flows
Under Canadian GAAP financing and investing activities which do not
involve the cash resources of the Company (e.g. the issuance of shares for
the acquisition of mineral properties or finders fees) are considered to
be similar to a cash inflow followed immediately by a cash outflow and the
related financing and investing aspects of the transaction are disclosed
separately in the statement of changes in financial position.
Under U.S. GAAP a statement of cash flows is required which reflects only
cash transactions affecting financing and investing activities.
The following transactions would be excluded from the statements of cash
flows under U.S. GAAP:
<TABLE>
<CAPTION>
Cumulative
---------- 8 Months
Inception Ended Years ended April 30,
to December December ---------------------------
31, 1997 31, 1997 1997 1996
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating activities
As determined by Canadian
GAAP $(2,105,744) $(599,076) $(222,269) $(291,475)
Payment of directors
management fees and other
services by issuance of
capital stock 74,426 -- -- --
----------- --------- --------- ---------
As determined by U.S. GAAP $(2,031,318) $(599,076) $(222,269) $(291,475)
=========== ========= ========= =========
</TABLE>
<PAGE> 37
- 37-
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
NOTE 19 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES OF AMERICA
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Cont'd)
<TABLE>
<CAPTION>
Cumulative
---------- 8 Months
Inception Ended Years ended April 30,
to December December -------------------------------
31, 1997 31, 1997 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Financing activities
As determined by Canadian
GAAP $ 18,334,241 $ 5,465,502 $ 7,291,997 $ 2,201,303
Settlement of debt by
issuance of capital stock 572,147 -- -- --
Capital stock issued for
non-cash consideration (1,180,060) -- (13,700) --
Decrease in deposits
applied to deferred
exploration costs 250,000 -- 250,000 --
Issuance of capital stock
on conversion of special
warrants (3,724,650) (2,790,000) (934,650) --
Non-cash decrease in
special warrants by
issuance of capital stock 3,724,650 2,790,000 934,650 --
------------ ----------- ----------- -----------
As determined by U.S. GAAP $ 17,976,328 $ 5,465,502 $ 7,528,297 $ 2,201,303
============ =========== =========== ===========
Investing activities
As determined by Canadian
GAAP $(15,014,954) $(3,782,994) $(7,565,476) $(1,464,454)
Payment of acquisition
costs of resource
properties by issuance
of capital stock 533,487 -- 13,700 --
Deferred exploration costs
from previously
advanced deposit (250,000) -- (250,000) --
------------ ----------- ----------- -----------
As determined by U.S. GAAP $(14,731,467) $(3,782,994) $(7,801,776) $(1,464,454)
============ =========== =========== ===========
</TABLE>
<PAGE> 38
- 38 -
MAR-WEST RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
SCHEDULE OF CONSOLIDATED GENERAL AND ADMINISTRATIVE EXPENSES
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Cumulative 8 Months
---------- Ended Years ended April 30,
Inception December --------------------------
to 1997 31, 1997 1997 1996
----------- --------- --------- --------
<S> <C> <C> <C> <C>
Advertising and promotional materials $ 277,408 $ 110,313 $ 138,323 $ 23,614
Amortization 36,988 12,751 10,383 --
Automobile 93,166 764 2,408 2,587
Bad debts 6,704 -- -- --
Bank charges and interest 57,457 3,893 4,325 1,272
Consulting 65,625 50,000 -- --
Depletion 17,106 -- -- --
Directors fees 108,700 -- -- --
Foreign exchange loss (gain) (8,359) (6,633) (5,128) 2,740
Legal, audit and accounting 380,055 34,476 30,378 20,613
Management fees (Note 10) 462,906 42,926 7,980 16,500
Office and miscellaneous 181,171 31,654 26,136 6,071
Rent and utilities 138,871 27,527 20,524 17,035
Salaries, benefits and administration 308,594 95,705 144,985 36,833
Shareholder communication 47,908 35,344 12,564 --
Telephone and fax 92,923 15,811 27,017 6,743
Transfer agent and regulatory fees 159,680 20,679 22,772 19,286
Travel and accommodation 166,538 25,810 26,979 21,051
----------- --------- --------- --------
$ 2,593,441 $ 501,020 $ 469,646 $174,345
=========== ========= ========= ========
</TABLE>
<PAGE> 39
- 39 -
MAR-WEST RESOURCES LTD.
SCHEDULE OF DEFERRED EXPLORATION COSTS
FOR THE EIGHT MONTHS ENDED DECEMBER 31, 1997
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
Honduran Properties
-------------------------------------------------------------------------------
Choluteca Sabana
Minoro Group San Martin Grande
(Tombstone) (BMG) (Curion) Group 0ther
<S> <C> <C> <C> <C> <C>
BALANCE-BEGINNING OF PERIOD $ 998,591 $ 1,294,736 $ 416,254 $ 209,046 $ 517,026
----------- ----------- ----------- --------- ---------
EXPENDITURES DURING THE
PERIOD
Acquisition costs -- -- -- -- --
Amortization -- -- 8,484 -- 2,134
Automobile -- 9 30,091 -- 2,736
Bank charges -- 4 -- -- 2
Camp, food & supplies -- 290 21,191 -- 4,436
Drafting, maps & printing -- 392 19,757 166 1,259
Drilling -- 37,629 378,951 -- --
Due diligence -- -- -- -- --
Equipment hire -- -- 19,622 -- --
Exploration administration -- 95 108,184 1 16,344
Geochemistry -- -- 107,927 -- 16,481
Geological consulting -- 9,700 356,647 4,050 56,890
Geophysics -- -- 28,060 -- --
Insurance -- 242 7,781 -- 3,126
Legal and accounting -- 33 16,590 -- 2,800
Licenses, duties & taxes -- -- 611 -- 116
Materials -- -- 9,896 -- 1,512
Medical expenses -- -- 1,117 -- 364
Office & miscellaneous -- 833 1,805 -- 368
Property payments -- -- 13,894 -- --
Rent & utilities -- 2,405 2,251 -- 57
Repairs & maintenance -- 31 7,743 -- 11
Salaries & wages -- 1,648 40,393 -- 3,401
Security -- -- -- -- --
Shipping -- 15 4,388 -- 277
Telephone & communications -- 147 25,698 -- 1,520
Travel & accommodation -- 4 56,362 -- 5,148
----------- ----------- ----------- --------- ---------
-- 53,477 1,267,443 4,217 118,982
----------- ----------- ----------- --------- ---------
Payment to Joint Venture 115,141 -- -- -- --
Expenditures written-off -- (1,234,842) -- (529) (14,456)
Expenses recovered -- (113,371) (253,489) -- --
----------- ----------- ----------- --------- ---------
115,141 (1,348,213) (253,489) (529) (14,456)
----------- ----------- ----------- --------- ---------
BALANCE-END OF PERIOD $ 1,113,732 $ -- $ 1,430,208 $ 212,734 $ 621,552
=========== =========== =========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Other Total
---------------------------- -----------
El
Salvador
(Tombstone) Guatemala
<S> <C> <C> <C>
BALANCE-BEGINNING OF PERIOD $ 168,666 $ 70,465 $ 3,674,784
--------- ----------- -----------
EXPENDITURES DURING THE
PERIOD
Acquisition costs -- 407 407
Amortization -- 3,339 13,957
Automobile 15,893 6,038 54,767
Bank charges -- 847 853
Camp, food & supplies 4,515 46,812 77,244
Drafting, maps & printing 1,668 16,345 39,587
Drilling -- -- 416,580
Due diligence -- 915 915
Equipment hire -- 25,842 45,464
Exploration administration 117,218 2,689 244,531
Geochemistry 78,000 80,784 283,192
Geological consulting 208,325 209,436 845,048
Geophysics -- 14,708 42,768
Insurance 4,931 15,528 31,608
Legal and accounting 1,260 13,501 34,184
Licenses, duties & taxes 211 9,667 10,605
Materials 5,416 4,142 20,966
Medical expenses 635 915 3,031
Office & miscellaneous 870 25,115 28,991
Property payments 28,056 11,629 53,579
Rent & utilities 199 31,616 36,528
Repairs & maintenance 197 21,398 29,380
Salaries & wages 22,992 108,045 176,479
Security -- 2,225 2,225
Shipping 221 888 5,789
Telephone & communications 391 11,476 39,232
Travel & accommodation 11,564 54,174 127,252
--------- ----------- -----------
502,562 718,481 2,665,162
--------- ----------- -----------
Payment to Joint Venture -- -- 115,141
Expenditures written-off -- -- (1,249,827)
Expenses recovered (335,614) -- (702,474)
--------- ----------- -----------
(335,614) -- (1,837,160)
--------- ----------- -----------
BALANCE-END OF PERIOD $ 335,614 $ 788,946 $ 4,502,786
========= =========== ===========
</TABLE>
<PAGE> 40
- 40 -
Pro Forma Consolidated Financial Statements of
GLAMIS GOLD LTD.
(Expressed in thousands of U.S. dollars)
Six months ended June 30, 1998 and
Year ended December 31, 1997
(Unaudited)
Refer to note 1 to the pro forma consolidated financial
statements for a description of the transaction, the
entities involved and what this pro forma presentation
shows.
<PAGE> 41
- 41 -
GLAMIS GOLD LTD.
Pro Forma Consolidated Balance Sheet
(Expressed in thousands of U.S. dollars)
(Unaudited)
June 30, 1998
<TABLE>
<CAPTION>
====================================================================================================
Mar-West Pro forma
Glamis Resources Glamis
Gold Ltd. Resources Ltd. Pro forma Gold Ltd.
June 30, June 30, adjustments June 30,
1998 1998 (note 2) (note 3) 1998
====================================================================================================
<S> <C> <C> <C> <C>
Assets
Cash ad cash equivalents $ 28,660 $ 3,843 $ (4,329)(b) $ 28,174
Other current assets 11,160 520 -- 11,680
Plant and equipment and mine
development costs 59,113 4,470 961 (a) 78,991
106 (a)
14,341 (b)
Other assets 2,190 203 -- 2,393
- ----------------------------------------------------------------------------------------------------
$ 101,123 $ 9,036 $ 11,079 $ 121,238
====================================================================================================
Liabilities and Shareholders'
Equity
Liabilities:
Current liabilities $ 3,673 $ 308 $ -- $ 3,981
Reserve for reclamation costs 2,305 -- -- 2,305
Deferred income taxes 2,500 -- -- 2,500
- ----------------------------------------------------------------------------------------------------
8,478 308 -- 8,786
Shareholder's equity:
Share capital (note 4) 89,724 12,499 961 (a) 109,531
106 (a)
19,701 (b)
(13,460)(b)
Contributed surplus 63 -- -- 63
Cumulative translation
adjustment (61) -- -- (61)
Retained earnings (deficit) 2,919 (3,771) 3,771 (b) 2,919
- ----------------------------------------------------------------------------------------------------
92,645 8,728 11,079 112,452
- ----------------------------------------------------------------------------------------------------
$ 101,123 $ 9,036 $ 11,079 $ 121,238
====================================================================================================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 42
- 42 -
GLAMIS GOLD LTD.
Pro Forma Consolidated Statement of Operations
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
Six months ended June 30, 1998
<TABLE>
<CAPTION>
==============================================================================================
Glamis Mar-West Pro forma Pro forma
Gold Ltd. Resources Ltd. adjustments Glamis Gold Ltd.
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from gold production $ 17,144 $ -- $ -- $ 17,144
Cost of production 10,620 -- -- 10,620
- ----------------------------------------------------------------------------------------------
6,524 -- -- 6,524
Expenses:
Depreciation and depletion 4,530 6 -- 4,536
Royalties 1,094 -- -- 1,094
Selling, general and administrative 1,346 177 -- 1,523
Exploration 7 -- -- 7
Write-down of investments
and properties -- 3 -- 3
- ----------------------------------------------------------------------------------------------
6,977 186 -- 7,163
- ----------------------------------------------------------------------------------------------
Loss from operations (453) (186) -- (639)
Interest and other income 893 132 -- 1,025
Interest and amortization of
financing costs (97) -- -- (97)
- ----------------------------------------------------------------------------------------------
Earnings (loss) before income taxes 343 (54) -- 289
Provision for income taxes 140 -- -- 140
- ----------------------------------------------------------------------------------------------
Net earnings (loss) $ 203 $ (54) $ -- $ 149
- ----------------------------------------------------------------------------------------------
Earnings per share (note 5) $ 0.01 $ 0.00
==============================================================================================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 43
- 43 -
GLAMIS GOLD LTD.
Pro Forma Consolidated Statement of Operations
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
Year ended December 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Glamis Mar-West Pro forma Pro forma
Gold Ltd. Resources Ltd. adjustments Glamis
Gold Ltd.
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from gold production $ 42,235 $ -- $ -- $ 42,235
Cost of production 28,003 -- -- 28,003
- ----------------------------------------------------------------------------------------------
14,232 -- -- 14,232
Expenses:
Depreciation and depletion 11,040 14 -- 11,054
Royalties 2,870 -- -- 2,870
Selling, general and administrative 3,295 469 -- 3,764
Exploration 926 -- -- 926
Write-down of investments
and properties 4,583 1,376 -- 5,959
Restructuring costs 722 -- -- 722
- ----------------------------------------------------------------------------------------------
23,436 1,859 -- 25,295
- ----------------------------------------------------------------------------------------------
Loss from operations (9,204) (1,859) -- (11,063)
Interest and other income 1,339 142 -- 1,481
Interest and amortization of
financing costs (49) -- -- (49)
- ----------------------------------------------------------------------------------------------
Loss before income taxes (7,914) (1,717) -- (9,631)
Provision for income taxes:
Current (recovery) (985) -- -- (985)
Deferred 1,350 -- -- 1,350
- ----------------------------------------------------------------------------------------------
365 -- -- 365
- ----------------------------------------------------------------------------------------------
Net loss for the year $ (8,279) $ (1,717) $ -- $ (9,996)
==============================================================================================
Loss per shares (note 5) $ (0.27) $ (0.26)
==============================================================================================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 44
- 44 -
GLAMIS GOLD LTD.
Notes to Pro Forma Consolidated Financial Statements
(Tables expressed in thousands of U.S. dollars)
(Unaudited)
Six months ended June 30, 1998 and
Year ended December 31, 1997
================================================================================
1. PLAN OF ARRANGEMENT AND BASIS OF PRESENTATION:
The accompanying pro forma consolidated financial statements have been
prepared for purposes of inclusion in a Form 8-K being filed by Glamis Gold
Ltd. ("Glamis"). The pro forma consolidated financial statements give effect
to the arrangement between Glamis and Mar-West Resources Ltd. ("Mar-West")
which resulted in the exchange by the shareholders of Mar-West of their
common shares of Mar-West, at their election, into one common share of
Glamis for each two Mar-West shares, or 0.8 of a Glamis share and Cdn. $0.96
($0.62) for each two Mar-West shares.
For accounting purposes, the transaction has been accounted for as an
acquisition of Mar-West by Glamis. The pro forma consolidated financial
statements have been prepared using the purchase method whereby the net
assets of Mar-West have been recorded at their fair values.
These pro forma consolidated financial statements include:
(a) a pro forma consolidated balance sheet prepared from the unaudited
consolidated balance sheet of each of Glamis and Mar-West as at June 30,
1998, which gives effect to the acquisition of Mar-West and the
assumptions as described in note 3, as if these transactions occurred on
June 30, 1998;
(b) a pro forma consolidated statement of operations for the six month
period ended June 30, 1998 prepared from the unaudited consolidated
statements of operations of each of Glamis and Mar-West for the six
month period ended June 30, 1998, which gives effect to the acquisition
of Mar-West and the assumptions as described in note 3, as if these
transactions occurred on January 1, 1998; and
(c) a pro forma consolidated statement of operations for the year ended
December 31, 1997 prepared from the consolidated statement of operations
of Glamis for the year ended December 31, 1997 and the consolidated
statement of operations of Mar-West for the twelve month period ended
December 31, 1997, which gives effect to the acquisition of Mar-West and
the assumptions as described in note 3, as if these transactions
occurred on January 1, 1997.
These pro forma consolidated financial statements are not necessarily
indicative of the financial position of Glamis as at the time of closing of
the transaction referred to above, nor of the future operating results of
Glamis as a result of the transaction.
The pro forma consolidated financial statements should be read in
conjunction with:
(i) the consolidated financial statements of Glamis for the year ended
December 31, 1997;
(ii) the consolidated financial statements of Glamis for the six months
ended June 30, 1998;
(iii) the consolidated financial statements of Mar-West for the eight
months ended December 31, 1997 and for the year ended April 30, 1997;
and
(iv) the consolidated financial statements of Mar-West for the six months
ended June 30, 1998.
<PAGE> 45
- 45 -
GLAMIS GOLD LTD.
Notes to Pro Forma Consolidated Financial Statements, page 2
(Tables expressed in thousands of U.S. dollars)
(Unaudited)
Six months ended June 30, 1998 and
Year ended December 31, 1997
================================================================================
2. SIGNIFICANT ACCOUNTING POLICY:
Foreign currency translation:
The consolidated balance sheet of Mar-West has been translated into United
States dollars using the rate of exchange prevailing at June 30, 1998.
The consolidated statements of operations for Mar-West have been translated
into United States dollars using the average rates of exchange during the
respective periods.
3. PRO FORMA ASSUMPTIONS:
The pro forma consolidated balance sheet has been prepared based on the
balance sheets of Glamis and Mar-West as at June 30, 1998 and gives effect
to the following transactions as if they had occurred at June 30, 1998:
(a) Issuance of common shares prior to the arrangement:
(i) The issuance of 1,250,000 common shares of Mar-West at a value of
$961,000 (Cdn. $1,375,000) as part consideration to acquire the
remaining 20% of the San Martin Gold Project; and
(ii) The issuance of 25,000 common shares of Glamis at a value of
$106,000 as part of an agreement to acquire the remaining 40% of
the Cienguita Joint Venture ("Cienguita").
(b) Acquisition of Mar-West:
The issuance of 7,539,906 common shares of Glamis at a value of Cdn.
$4.05 ($2.61) per common share, being the estimated fair value at
October 14, 1998, plus cash of Cdn. $6,711,000 ($4,329,000), for total
consideration of $24,030,000.
<PAGE> 46
- 46 -
GLAMIS GOLD LTD.
Notes to Pro Forma Consolidated Financial Statements, page 3
(Tables expressed in thousands of U.S. dollars)
(Unaudited)
Six months ended June 30, 1998 and
Year ended December 31, 1997
================================================================================
4. SHARE CAPITAL:
(a) After giving effect to the pro forma assumptions in note 3, the issued
and fully paid share capital of Glamis is as follows:
<TABLE>
<CAPTION>
=========================================================================================
Number
of shares Amount
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Balance, June 30, 1998 31,235,707 $ 89,724
Issued subsequent to June 30, 1998:
Pursuant to the agreement to acquire the remaining
40% interest in Cienguita (note 3(a)(ii)) 25,000 106
- -----------------------------------------------------------------------------------------
Pro forma balance prior to the acquisition of Mar-West
(note 4(a)) 31,260,707 89,830
Acquisition of Mar-West by way of common shares and
cash (note 3(b)) 7,539,906 19,701
- -----------------------------------------------------------------------------------------
Pro forma balance 38,800,613 $109,531
=========================================================================================
</TABLE>
(b) Options, warrants and other share capital rights:
Reference should be made to the notes to the consolidated financial
statements referred to above for each of Glamis and Mar-West for
commitments to issue common shares pursuant to options, warrants and
rights. The arrangement agreement provides that on the effective date of
the arrangement, all outstanding commitments to issue common shares of
Mar-West pursuant to options, warrants and rights will be converted into
options, warrants and rights of Glamis on the basis of each right to
acquire two Mar-West shares held will be converted into a right to
acquire one Glamis share, with no change to the exercise price.
Accordingly, on closing, the 1,067,000 outstanding share purchase
options of Mar-West were converted into 533,500 share purchase options
of Glamis.
5. EARNINGS (LOSS) PER SHARE:
The calculations of pro forma earnings per share in the pro forma
consolidated statement of operations for the six months ended June 30, 1998
is based on the number of common shares of Glamis that would have been
outstanding for the six month period ended June 30, 1998 had the
transactions described in note 3 occurred on January 1, 1998.
The calculations of pro forma loss per share in the pro forma consolidated
statement of operations for the year ended December 31, 1997 is based on the
number of common shares of Glamis that would have been outstanding for the
year ended December 31, 1997 had the transactions described in note 3
occurred on January 1, 1997.
<PAGE> 1
- 47 -
EXHIBIT 10.47
ARRANGEMENT AGREEMENT
made among
GLAMIS GOLD LTD.
and
MAR-WEST RESOURCES LTD.
DATED as of August 14, 1998
<PAGE> 2
- 48 -
T A B L E O F C O N T E N T S
================================================================================
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
INTERPRETATION
<S> <C>
Definitions........................................................................ 8
Currency........................................................................... 10
Interpretation Not Affected by Headings............................................ 10
References to Agreement............................................................ 10
Number and Gender.................................................................. 10
Actions to be Taken on Business Days............................................... 10
Governing Law...................................................................... 10
Schedules.......................................................................... 11
ARTICLE 2
PURPOSE AND COVENANTS
Purpose............................................................................ 11
Covenants of the Company........................................................... 11
Covenants of Glamis................................................................ 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of the Company...................................... 15
Representations and Warranties of Glamis........................................... 18
ARTICLE 4
CONDITIONS PRECEDENT
Mutual Conditions Precedent........................................................ 20
Conditions to Obligations of the Company........................................... 21
Conditions to Obligations of Glamis................................................ 24
</TABLE>
<PAGE> 3
- 49 -
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 5
NON-SATISFACTION OF CONDITIONS
<S> <C>
Non-Satisfaction of Conditions in Section 4.1...................................... 26
Non-Satisfaction of Conditions in Section 4.2 and Section 4.3...................... 27
ARTICLE 6
IMPLEMENTATION OF TRANSACTIONS
Company Shareholder Elections...................................................... 27
Business Day of the Effective Date................................................. 27
Transmittal Letters................................................................ 27
Trustee to Hold Cash in Separate Account........................................... 28
Pre-Closing........................................................................ 28
Filing of Final Order.............................................................. 28
Arrangement and Closing............................................................ 28
ARTICLE 7
GENERAL
Notice ............................................................................ 29
Amendment.......................................................................... 30
Amendment Resulting from Final Order............................................... 30
Termination........................................................................ 30
Survival........................................................................... 31
Binding Effect..................................................................... 31
Prohibition Against Assignment..................................................... 31
Equitable Remedies................................................................. 31
Survival of Representations and Warranties......................................... 31
Disclosure......................................................................... 32
Entire Agreement................................................................... 32
Time of Essence.................................................................... 32
Counterpart Executions and Facsimile Transmissions................................. 32
</TABLE>
<PAGE> 4
- 50 -
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT is made as of the 14th day of August, 1998.
BETWEEN:
GLAMIS GOLD LTD., a company incorporated under the
laws of the Province of British Columbia
("Glamis")
AND:
MAR-WEST RESOURCES LTD., a company incorporated
under the laws of the Province of British Columbia
(the "Company")
WHEREAS:
(A) Glamis wishes to acquire all of the issued and outstanding Common shares
of the Company; and
(B) It has been determined that the most expeditious means of effecting such
acquisition is for the Company and its shareholders to enter into an arrangement
with Glamis under the Company Act of British Columbia whereby all of the issued
and outstanding Common shares of the Company will be exchanged for Common shares
or a combination of Common shares and cash of Glamis.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the mutual
covenants and agreements hereinafter contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto agree as follows:
<PAGE> 5
- 51 -
ARTICLE 1
INTERPRETATION
DEFINITIONS
1.1 In this Agreement and in the recital hereto, unless there is something in
the context or subject matter inconsistent therewith, the following words and
phrases shall have the meanings hereinafter set out:
ARRANGEMENT means the arrangement among the Company, the Company
Shareholders and Glamis under section 252 of the Company Act as set out
in Schedule A attached hereto, or any amendment or variation thereto
made in accordance with Section 7.2 and Section 7.3 hereof;
BUSINESS DAY means a day which is not a Saturday or a "holiday", as such
term is defined in the British Columbia Interpretation Act, R.S.B.C.
1979, c. 206, as amended from time to time;
CASH/SHARE CONSIDERATION means the 0.4 of a Glamis Common Share and
$0.48 cash to be issued to a Company Shareholder in exchange for one
Company Common Shares provided that the Election is properly made by the
Company Shareholder;
COMPANY ACT means the Company Act (British Columbia), R.S.B.C. 1996, c.
62, as amended from time to time;
COMPANY COMMON SHARES means the issued and outstanding Common shares
without par value in the capital of the Company and "COMPANY
SHAREHOLDERS" means the holders from time to time of Company Common
Shares;
COMPANY SUBSIDIARIES means Mar-West Aruba A.V.V., Minerales Entre-Mares
(Honduras) S.A. and Entre Mares De Guatemala S.A.
CONSIDERATION ELECTION FORM means a form delivered to the Company
Shareholders pursuant to Section 6.1 whereby they may elect to take
Cash/Share Consideration in exchange for their Company Common Shares;
COURT means the Supreme Court of British Columbia;
EFFECTIVE DATE means the date on which a certified copy of the Final
Order has been accepted for filing by the Registrar;
<PAGE> 6
- 52 -
ELECTION means the election duly and properly made by a Company
Shareholder pursuant to the Consideration Election Form to take
Cash/Share Consideration in exchange for each of his Company Common
Shares;
ELECTION DEADLINE means, with respect to the delivery of the
Consideration Election Form, 48 hours prior to the Meeting if delivered
to the Trustee and the time of commencement of the Meeting if delivered
to the Chairman of the Meeting;
FINAL ORDER means the order of the Court approving the Arrangement;
GLAMIS COMMON SHARES means the Common shares without par value in the
capital of Glamis;
GLAMIS SUBSIDIARIES means Glamis Gold, Inc., Chemgold, Inc., Glamis Rand
Mining Company, Glamis Imperial Corporation, Glamis Exploration, Inc.,
Minera Glamis S.A. de C.V., and 344684 B.C. Ltd.
INTERIM ORDER means the order of the Court providing for, among other
things, the calling of the Meeting;
MEETING means an extraordinary general meeting of Company Shareholders
to be held as soon as possible after the date of execution hereof,
called for the purpose of considering the Arrangement, including any
adjournments thereof;
REGISTRAR means the Registrar of Companies under the Company Act;
SECURITIES ACT means the United States Securities Act of 1933, as
amended;
SECURITIES EXCHANGE ACT means the United States Securities Exchange Act
of 1934, as amended;
STOCK EXCHANGES means The Toronto Stock Exchange and The New York Stock
Exchange;
SUPERIOR PROPOSAL means an unsolicited bona fide proposal regarding any
merger, amalgamation, arrangement, takeover bid, sale of substantial
assets, sale of treasury shares or similar transaction involving the
Company or any of the Company Subsidiaries which the board of directors
of the Company determines, after consultation with its financial
advisors would, if consummated in accordance with its terms, result in a
transaction of greater value to the Company Shareholders than the
Arrangement;
TAX ACT means the Income Tax Act of Canada, R.S.C. 1985, c.1 (5th
supplement) as amended, including the regulations promulgated
thereunder;
<PAGE> 7
- 53 -
TRUSTEE means Montreal Trust Company of Canada;
U.S. COMMISSION means the United States Securities and Exchange
Commission;
and words and phrases used herein that are defined in the Company Act shall have
the same meaning herein as in the Company Act unless the context otherwise
requires.
CURRENCY
1.2 All sums of money which are referred to in this Agreement and the
Arrangement are expressed in lawful money of Canada unless otherwise stated.
INTERPRETATION NOT AFFECTED BY HEADINGS
1.3 The division of this Agreement and the Arrangement into sections and the
further division thereof and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement or the Arrangement.
REFERENCES TO AGREEMENT
1.4 The terms "Arrangement Agreement", "this Agreement", "hereof", "herein",
"hereunder" and similar expressions refer to this Agreement and not to any
particular section or other portion hereof and include any agreement or
instrument supplementary or ancillary hereto and, unless otherwise indicated, a
reference herein to a section is to the appropriate section of this Agreement.
NUMBER AND GENDER
1.5 In this Agreement and the Arrangement, words importing the singular number
only shall include the plural and vice versa, words importing the use of any
gender shall include all genders and words importing persons shall include firms
and corporations and vice versa.
ACTIONS TO BE TAKEN ON BUSINESS DAYS
1.6 In the event that any date on which any action is required to be taken
hereunder by any of the parties is not a Business Day, such action shall be
required to be taken on the next succeeding day which is a Business Day.
GOVERNING LAW
1.7 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia.
<PAGE> 8
- 54 -
SCHEDULES
1.8 The following schedules are hereby incorporated in and form part of this
Agreement:
Schedule A - Plan of Arrangement;
Schedule B - Affiliate Agreement;
Schedule C - List of Outstanding Agreements, Options and Warrants
providing for the acquisition of Company Common Shares and
Glamis Common Shares;
Schedule D - Voting and Standstill Agreement.
ARTICLE 2
PURPOSE AND COVENANTS
PURPOSE
2.1 The parties hereto have entered into this Agreement for the purpose of
effecting the Arrangement on the Effective Date.
COVENANTS OF THE COMPANY
2.2 The Company will:
(a) take all necessary action to give effect to the transactions
contemplated by this Agreement and the Arrangement, including, without
limitation, obtaining all necessary regulatory and other approvals and
making all necessary regulatory and other filings required to be
obtained or made by it in connection with this Agreement and the
Arrangement;
(b) as soon as reasonably practicable, after the date of execution
hereof, make an application to the Court under section 252 of the
Company Act for the Interim Order;
(c) prepare an information circular to be distributed to Company
Shareholders in connection with the Meeting, which circular shall be
prepared and distributed to Company Shareholders in accordance with
applicable law and will, with respect to information concerning the
business and affairs of the Company and the Arrangement, contain no
untrue statement of a material fact and will not omit to state a
material fact
<PAGE> 9
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that is required to be stated or that is necessary to make a statement
contained therein not misleading in light of the circumstances in which
such statement is made and which circular will contain a recommendation
of the board of directors of the Company that the Company Shareholders
vote in favour of the Arrangement at the Meeting;
(d) as soon as reasonably practicable, after the date of execution
hereof, convene the Meeting in accordance with the Interim Order,
solicit proxies to be voted at the Meeting in favour of the Arrangement
and conduct the Meeting in accordance with the Interim Order, the
Articles of the Company and as otherwise may be required by law;
(e) until the Effective Date:
(i) carry on its business in the usual and normal manner, except
as otherwise contemplated in this Agreement or as otherwise
agreed to in writing by Glamis;
(ii) not, save and except in the case of the receipt of a
Superior Proposal, discuss merger or joint venture proposals or
the issuance of its treasury shares or the sale of any of its (on
a consolidated basis) mineral properties with others and it will
not solicit or assist others in making a proposal to acquire the
Company;
(iii) not enter into or change the terms of any employment,
consulting or severance agreements or other similar arrangements
with any of its directors, officers or any other person or pay
any compensation to any such director, officer or other person
other than as explicitly provided in any such agreement; and
(iv) not enter into any material transactions or issue or agree
to issue any Common Shares, whether by option or otherwise,
without the prior approval of Glamis, provided that the Company
may issue Company Common Shares pursuant to share purchase
options and other rights or agreements to purchase or receive
Company Common Shares which are outstanding or in effect on the
date hereof;
(f) use all reasonable efforts to cause each of the conditions precedent
set out in Article 4 hereof which require action by it to be complied
with on or before the Effective Date;
(g) subject to the approval of the Arrangement by the Company
Shareholders and the provisions hereof, make the appropriate application
to the Court for the Final Order and in doing so advise the Court, prior
to the granting of the Final Order that,
<PAGE> 10
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if the Arrangement is approved, the Glamis Common Shares and options to
be issued pursuant to the Arrangement will not require registration
under the Securities Act by virtue of Section 3(a)(10) thereof and the
Final Order;
(h) subject to the provisions hereof, file the Final Order with the
Registrar pursuant to Section 6.7;
(i) not declare or pay any dividends, make any distribution of its
properties or assets to its shareholders, purchase or redeem any of its
shares or issue any additional shares, other than pursuant to the terms
of stock options outstanding on the date hereof or as may be made in
connection with any other agreement in effect on the date hereof;
(j) not change the terms of any outstanding agreements, options,
warrants or other rights to acquire shares of its capital or other of
its securities, provided that the Company shall be entitled to release,
or permit the release, from escrow of any Company Common Shares held in
escrow;
(k) take all such action as may be required to maintain its interest in
the real property and mineral property interests owned or held by it on
the date hereof and will comply with all applicable laws, rules,
regulations and governmental orders and decrees relating to such real
property and mineral property interests;
(l) not alter or amend, in any way, its Memorandum or Articles as the
same exist at the date of this Agreement;
(m) deliver to Glamis, prior to the date on which application is made to
the Court for the Final Order, a letter identifying all persons who are,
or may be deemed to be, at the time of the Meeting, "affiliates" of the
Company within the meaning of Rule 145(c) and Rule 144(a)(1) under the
Securities Act and will use its best efforts to cause each person who is
identified as an "affiliate" to deliver to Glamis, prior to the
Effective Date, a written agreement in substantially the form of
Schedule B attached hereto;
(n) deliver to Glamis as soon as reasonably possible after the execution
hereof, but in any event prior to the record date for the Meeting,
Voting and Standstill Agreements in the form of Schedule D, duly
executed by Simon T. Ridgway, Elvietri Holdings A.V.V., Henry E.
Neugebauer, Richard P. Clark, Robert S. Wasylyshyn, Tim Osler and
Tombstone Explorations Co. Ltd.;
(o) if the Arrangement is terminated pursuant to Section7.4(e) and the
transaction contemplated by the Superior Proposal closes within 180 days
of the Company so terminating the Arrangement hereunder, the Company
shall pay to Glamis,
<PAGE> 11
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immediately after the closing of the transaction contemplated by the
Superior Proposal, $1,000,000;
(p) the Company will, until the Effective Date, maintain its status as a
registrant under the Securities Exchange Act and will timely file all
documents required to be filed with the U.S. Commission as a result of
such status or as a result of the Arrangement; and
(q) the Company will, prior to the Effective Date, provide Glamis with a
current opinion from local counsel to the Company pertaining to
Minerales Entre-Mares (Honduras) S.A.'s title to the mineral interests
comprised in the San Martin project in Honduras and pertaining to Entre
Mares de Guatemala S.A.'s title to the mineral interests comprised in
the Cerro Blanco project in Guatemala.
COVENANTS OF GLAMIS
2.3 Glamis will:
(a) take all necessary action to give effect to the transactions
contemplated by this Agreement and the Arrangement, including, without
limitation, obtaining all necessary regulatory and other approvals and
making all necessary regulatory and other filings required to be
obtained or made by it in connection with this Agreement and the
Arrangement;
(b) on or prior to the Effective Date, conditionally allot and reserve
for issuance a sufficient number of Glamis Common Shares to meet the
obligations of Glamis under this Agreement and the Arrangement;
(c) take such action as may be necessary to ensure that there shall not
be any impediment to the general free tradeability of the Glamis Common
Shares to be issued in connection with the Arrangement or in connection
with the exercise of any options of Glamis issued under the Arrangement:
(i) in Canada by Canadian residents who are not affiliates (as
such term is used in the Securities Act) of the Company or
Glamis, subject only to any restrictions imposed under provincial
securities legislation relating to sales of securities from the
holdings of "control persons", market preparations and
consideration payments; and
(ii) in the United States, subject only to any restrictions
imposed by Rules 144 and 145 under the Securities Act relating to
sales of such Glamis Common Shares by "affiliates" of the Company
or Glamis;
<PAGE> 12
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(d) use all reasonable efforts to cause each of the conditions precedent
set out in Article 4 hereof which require action by it to be complied
with on or before the Effective Date;
(e) prior to the Effective Date, not declare or pay any dividends
representing a return of capital or make any distribution of its
properties, assets or shares to all of its shareholders;
(f) prior to the Effective Date, not alter or amend its Memorandum or
Articles as the same exist at the date of this Agreement;
(g) take all necessary action to have listed and posted for trading on
the Stock Exchanges the Glamis Common Shares to be issued under this
Agreement and the Arrangement and upon the exercise of any options of
Glamis issued under this Agreement and the Arrangement;
(h) until the Effective Date, not enter into any agreement to acquire
any other entity that would result in an adverse material change in its
affairs without the prior written agreement of the Company;
(i) provide such information concerning Glamis as may reasonably be
required to be included in the information circular to be distributed to
Company Shareholders in connection with the Meeting and such information
shall contain no untrue statement of a material fact and shall not omit
to state a material fact that is required to be stated or that is
necessary to make a statement contained therein not misleading in light
of the circumstances in which such statement is made; and
(j) Glamis will, until the Effective Date, maintain its status as a
registrant under the Securities Exchange Act and will timely file all
documents required to be filed with the U.S. Commission as a result of
such status or as a result of the Arrangement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 The Company represents and warrants to and in favour of Glamis as follows
and acknowledges that Glamis is relying upon such representations and
warranties:
(a) each of the Company and the Company Subsidiaries is a corporation
duly incorporated and validly existing under the laws of its
jurisdiction of incorporation
<PAGE> 13
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and has all necessary corporate power and capacity and qualifications to
own or lease its property and assets, to conduct its business as now
conducted by it and to perform its obligations under this Agreement;
(b) the authorized capital of the Company consists of 100,000,000 common
shares without par value, of which an aggregate of 16,625,943 Common
shares were validly issued and outstanding as fully paid and
non-assessable as at the date herewith, and such issued Company Common
Shares will be the only shares of the Company outstanding on the
Effective Date, other than Company Common Shares which may be issued
between the date hereof and the Effective Date pursuant to stock options
and other rights or agreements to purchase or receive Company Common
Shares which are outstanding or in effect on the date hereof;
(c) with respect to outstanding rights to acquire securities of the
Company:
(i) in addition to the obligation described in clause (ii) below,
an aggregate of not more than 1,067,000 Company Common Shares and
no other shares in the capital of or securities of the Company
are issuable upon the exercise of all outstanding agreements,
options, warrants and other rights to acquire shares in the
capital of or securities of the Company,
(ii) the Company is obligated to issue 1,250,000 Company Common
Shares pursuant to the acquisition by it of a 20% interest in the
San Martin project in Honduras, and
(iii) Schedule C attached hereto accurately lists all outstanding
agreements, options, and warrants providing for the acquisition
or issuance of any unissued shares in the capital of the Company
in effect on the date hereof;
(d) the Company owns, directly or indirectly, as described in its
financial statements for the year ended December 31, 1997, the Company
Subsidiaries free and clear of any liens, pledges, charges or other
encumbrances, and no person has any agreement, option, warrant or other
right to acquire any shares in the capital of any of the Company
Subsidiaries;
(e) the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the
board of directors of the Company and this Agreement constitutes a valid
and binding obligation of the Company enforceable against it in
accordance with its terms, subject to bankruptcy and similar laws
affecting the enforcement of creditors' rights generally and to
equitable remedies being in the discretion of the court;
(f) the execution of this Agreement and the performance of the terms
hereof will not result in any breach of, be in conflict with, constitute
a default under (whether
<PAGE> 14
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after notice or lapse of time or both) or result in the acceleration of
indebtedness pursuant to any contract, lease, agreement, instrument or
other commitment, written or oral, to which the Company or any of the
Company Subsidiaries is a party or by which the Company or any of the
Company Subsidiaries is bound or any judgment, decree, order, statue,
rule, licence or regulation applicable to the Company or any of the
Company Subsidiaries;
(g) the Company has delivered or will deliver to Glamis its audited
consolidated financial statements for each of the fiscal years in the
five-year period ended December 31, 1997 and its interim consolidated
financial statements for the period ended March 31, 1998 and such
statements and the notes thereto present fairly the consolidated
financial condition of the Company and the results of operations for the
respective periods indicated in such statement and have been prepared in
accordance with Canadian generally accepted accounting principles
applied on a consistent basis except as otherwise stated in the notes to
such statements and the Company has no liabilities (whether accrued,
absolute, contingent or otherwise) of a nature required to be set out in
such statements and the notes thereto in accordance with Canadian
generally accepted accounting principles other than as set out in such
statements and the notes thereto;
(h) since December 31, 1997, except as has been publicly disclosed in
documents filed with the regulatory authorities or in news releases
generally circulated,
(i) the Company and the Company Subsidiaries have conducted their
respective businesses only in the ordinary course,
(ii) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) material to the Company and the
Company Subsidiaries, taken as a whole, has been incurred, and
(iii) there has not been any material adverse change in the
financial condition, results of operations or businesses of the
Company and the Company Subsidiaries taken as a whole;
(i) no person is entitled to any broker's or finder's fee or other fee,
commission or compensation payable by the Company in connection with the
transactions contemplated by this Agreement except for fees payable to
the Company's professional, financial and technical advisers, filing and
other fees payable to regulatory authorities and other miscellaneous
fees and expenses;
(j) the Company and its direct and indirect subsidiaries do not have any
employment, management, or service agreements which provide for material
lump sum payments upon a change of control of the Company or upon their
termination by the Company;
<PAGE> 15
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(k) the Company has no outstanding agreements or obligations in respect
of the repurchase, redemption, exchange or conversion of any of its
outstanding securities and there are no pre-emptive rights or, to the
knowledge of the Company, voting, shareholders or other similar
agreements pertaining to the Company Common Shares; and
(l) the Company is a "reporting issuer" not in default in British
Columbia and is a registrant in good standing under the Securities
Exchange Act.
REPRESENTATIONS AND WARRANTIES OF GLAMIS
3.2 Glamis represents and warrants to and in favour of the Company as follows
and acknowledges that the Company is relying upon such representations and
warranties:
(a) Each of Glamis and the Glamis Subsidiaries is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has all necessary corporate power and capacity and
qualifications to own or lease its property and assets, to conduct its
business as now conducted by it and to perform its obligations under
this Agreement;
(b) the authorized capital of Glamis consists of 200,000,000 common
shares without par value, of which an aggregate of 31,270,707 Shares
were validly issued and outstanding as fully paid and non-assessable and
5,000,000 preferred shares with a par value of $10 of which nil are
issued and outstanding as at the date hereof;
(c) an aggregate of not more than 1,780,000 Glamis Common Shares are
issuable upon the exercise of all outstanding agreements, options,
warrants and other rights to acquire shares in the capital of Glamis;
(d) Glamis owns, directly or indirectly, all of the issued and
outstanding shares in the capital of each of the Glamis Subsidiaries,
free and clear of any liens, pledges, charges or other encumbrances, and
no person has any agreement, option, warrant or other right to acquire
any shares in the capital of any of the Glamis Subsidiaries;
(e) the execution and delivery of this Agreement has been duly approved
by the board of directors of Glamis and this Agreement constitutes a
valid and binding obligation of Glamis enforceable against it in
accordance with its terms, subject to bankruptcy and similar laws
affecting the enforcement of creditors' rights generally and to
equitable remedies being in the discretion of the court;
(f) the execution of this Agreement and the performance of the terms
hereof will not result in any breach of, be in conflict with, constitute
a default under (whether after notice or lapse of time or both) or
result in the acceleration of indebtedness pursuant to any contract,
lease, agreement, instrument or other commitment, written
<PAGE> 16
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or oral, to which Glamis or any of the Glamis Subsidiaries is a party or
by which Glamis or any of the Glamis Subsidiaries is bound or any
judgment, decree, order, statue, rule, licence or regulation applicable
to Glamis or any of the Glamis Subsidiaries;
(g) Glamis has delivered or will deliver to the Company its audited
consolidated financial statements for each of the fiscal years in the
five-year period ended December 31, 1997 and its interim consolidated
financial statements for the period ended June 30, 1998, and such
statements and the notes thereto present fairly the consolidated
financial condition of Glamis and the results of operations for the
respective periods indicated in such statements and have been prepared
in accordance with Canadian generally accepted accounting principles
applied on a consistent basis except as otherwise stated in the notes to
such statements and Glamis has no liabilities (whether accrued,
absolute, contingent or otherwise) of a nature required to be set out in
such statements and the notes thereto in accordance with Canadian
generally accepted accounting principles other than as set out in such
statements and the notes thereto;
(h) since December 31, 1997, except as has been publicly disclosed in
documents filed with the regulatory authorities or in news releases
generally circulated,
(i) Glamis and the Glamis Subsidiaries have conducted their
respective businesses only in the ordinary course,
(ii) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) material to Glamis and the
Glamis Subsidiaries, taken as a whole, has been incurred, and
(iii) there has not been any material adverse change in the
financial condition, results of operations or businesses of
Glamis and the Glamis Subsidiaries, taken as a whole;
(i) no person is entitled to any broker's or finder's fee or other fee,
commission or compensation payable by Glamis in connection with the
transactions contemplated by this Agreement, except for fees payable to
Glamis' professional, financial and technical advisers, filing and other
fees payable to regulatory authorities and other miscellaneous fees and
expenses;
(j) the shareholders of Glamis are not required to approve this
Agreement, the Arrangement or any of the transactions contemplated
herein;
(k) the issued and outstanding Glamis Common Shares are listed on the
Stock Exchanges; and
<PAGE> 17
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(l) Glamis is a reporting issuer not in default in all provinces of
Canada and is a registrant in good standing under the Securities
Exchange Act.
ARTICLE 4
CONDITIONS PRECEDENT
MUTUAL CONDITIONS PRECEDENT
4.1 The respective obligations of the parties hereto to complete the
transactions contemplated hereby shall be subject to the satisfaction, on or
before the Effective Date, of each of the following conditions:
(a) the Arrangement and the transactions contemplated thereby shall have
been approved by the Company Shareholders at the Meeting in accordance
with the provisions of the Company Act, the Articles of the Company, the
Interim Order and any applicable regulatory requirements;
(b) the Final Order shall have been granted by the Court, which order
shall reflect the intent of the parties hereto as expressed by this
Agreement and shall be in form and substance satisfactory to Glamis and
the Company acting reasonably and having regard to this Agreement;
(c) the Final Order shall have been accepted by the Registrar for
filing;
(d) there shall not be in force any order or decree of a court of
competent jurisdiction, any federal, provincial, municipal or other
governmental department or any commission, board, agency or regulatory
body restraining, interfering with or enjoining the consummation of the
transactions contemplated by this Agreement including, without
limitation, the Arrangement;
(e) there shall not be in force any cease trade orders by any regulatory
body or any other impediment to the general free tradeability of the
Glamis Common Shares to be issued in connection with the Arrangement or
in connection with the exercise of any options of Glamis issued under
the Arrangement:
(i) in Canada by Canadian residents who are not affiliates (as
such term is used in the Securities Act) of the Company or Glamis
(other than any restrictions imposed under provincial securities
legislation relating to sales of securities from the holdings of
"control persons", market preparations and consideration
payments); and
<PAGE> 18
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(ii) in the United States, subject only to any restrictions
imposed by Rules 144 and 145 under the Securities Act relating to
sales of such Glamis Common Shares by "affiliates" of the Company
or Glamis;
(f) the Stock Exchanges on the part of Glamis and the Vancouver Stock
Exchange on the part of the Company shall have approved the transactions
contemplated hereby, including, in particular, the Arrangement; and
(g) the Stock Exchanges shall have approved or conditionally approved
the listing thereon of the Glamis Common Shares issuable to Company
Shareholders pursuant to the Arrangement as of the Effective Date,
subject to compliance with the usual requirements of such Stock
Exchanges.
CONDITIONS TO OBLIGATIONS OF THE COMPANY
4.2 The obligation of the Company to complete the transactions contemplated
hereby is subject to the satisfaction, on or before the Effective Date, of each
of the following conditions, which conditions are for the sole benefit of the
Company and may be waived by it in whole or in part by notice in writing to
Glamis without prejudice to the rights of the Company to rely on any other or
others of such conditions:
(a) the Company shall have received an opinion from its financial
adviser, in form and substance satisfactory to the Company acting
reasonably, to the effect that the terms of the Arrangement are fair
from a financial perspective to the holders of Company Common Shares and
such shall not have been withdrawn prior to the Effective Date;
(b) receipt by the Company of all required shareholder and regulatory
approvals for it to complete the Arrangement;
(c) there shall not have occurred any adverse material change in the
affairs of Glamis from August 14, 1998 to the Effective Date;
(d) except as affected by the transactions contemplated by this
Agreement, the representations and warranties of Glamis contained in
Section3.2 shall be true and correct in all material respects on the
Effective Date with the same effect as though such representations and
warranties had been made at and as of such date and the Company shall
have received a certificate to that effect, dated the Effective Date, of
two officers of Glamis;
(e) the Company shall not have received and accepted or approved or
recommended acceptance or approval to the Company Shareholders of a
Superior Proposal;
<PAGE> 19
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(f) each of the covenants, acts and undertakings of Glamis to be
performed on or before the Effective Date pursuant to the terms of this
Agreement shall have been duly performed by Glamis;
(g) Glamis shall have delivered to the Company:
(i) certified copies of resolutions duly passed by the board of
directors of Glamis approving this Agreement and the consummation
of the transactions contemplated hereby and conditionally
allotting for issuance the aggregate number of Glamis Common
Shares that may be required to be issued to the Company
Shareholders in accordance with the terms of the Arrangement; and
(ii) evidence of the approval or conditional approval of the
Stock Exchanges of the listing on such Stock Exchanges of the
Glamis Common Shares issuable to the Company Shareholders
pursuant to the Arrangement, subject only to compliance with the
usual requirements of such Stock Exchanges;
(h) the Company shall have received written confirmation, in form and
substance satisfactory to it acting reasonably to the effect that
Company Shareholders resident in Canada who hold their Company Common
Shares as "capital property" within the meaning of the Tax Act and who
do not make the Election, would be entitled to effect the share exchange
contemplated by the Arrangement on a tax-free basis under the Tax Act
and under equivalent provincial legislation by making, where required,
the appropriate elections and complying with any other requirements in
respect thereof;
(i) the Company shall have received an opinion of Lang Michener Lawrence
& Shaw, dated the Effective Date, satisfactory in form and substance in
all material respects to the Company and its counsel acting reasonably
and addressed to the Company and its directors to the effect that:
(i) Glamis is duly incorporated and validly exists under the laws
of the Province of British Columbia and has the corporate power
and capacity to own or lease its property and assets and to
conduct its business as now conducted by it;
(ii) Glamis has the corporate power and capacity to execute,
deliver and perform its obligations under this Agreement;
(iii) Glamis has taken all necessary corporate action to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder;
<PAGE> 20
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(iv) this Agreement has been duly executed and delivered by
Glamis and constitutes a legal, valid and binding obligation of
Glamis, enforceable against it in accordance with its terms,
subject to bankruptcy and similar laws affecting the enforcement
of creditors' rights generally and to equitable remedies being in
the discretion of the court;
(v) the authorized and issued capital of Glamis is as represented
in Section 3.2(b) hereof;
(vi) the Glamis Common Shares will, upon their issuance in
accordance with the terms of the Arrangement, be duly authorized
and validly issued and outstanding as fully paid and
non-assessable shares;
(vii) the execution, delivery and performance of this Agreement
does not and the Arrangement will not:
(A) result in the breach of or violate any terms or
provisions of the Memorandum or Articles of Glamis; or
(B) conflict with or violate any Canadian law or
administrative regulations or any judicial or
administrative order, award, judgment or decree, in each
case known to Lang Michener Lawrence & Shaw, to which
Glamis is a party or by which it is bound;
(viii) the issue of Glamis Common Shares to Company Shareholders
in the Provinces of Canada pursuant to the Arrangement, the issue
of options to purchase Glamis Common Shares pursuant to the
Arrangement and the issue of Glamis Common Shares upon the
exercise of such options will be exempt from the registration and
prospectus filing requirements of the securities laws of such
Provinces and there will be no restrictions on or applicable hold
periods in respect of the resale of any such Glamis Common Shares
by such recipients under such securities laws, except for
applicable restrictions imposed under provincial securities
legislation relating to sales of securities from the holdings of
"control persons", market preparations and consideration
payments;
(ix) Glamis is a "reporting issuer" not in default in all
provinces of Canada;
(x) the Stock Exchanges have approved or conditionally approved
the listing thereon of the Glamis Common Shares issuable to
Company Shareholders pursuant to the Arrangement as of the
Effective Date and of the Glamis Common Shares issuable upon the
exercise of options to purchase Glamis Common Shares issuable
pursuant to the Arrangement, subject to compliance with the usual
requirements of such Stock Exchanges;
<PAGE> 21
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and as to such other matters as the Company and its counsel may
reasonably request and, in giving such opinion, Lang Michener Lawrence &
Shaw may rely, with respect to matters governed by the laws of any
jurisdiction other than the Province of British Columbia or the laws of
Canada applicable therein, upon the opinion of local counsel in such
jurisdiction (provided that, in the case of such opinion, Lang Michener
Lawrence & Shaw is of the belief that the opinion of such counsel is one
upon which Lang Michener Lawrence & Shaw and the Company and its
directors and shareholders may properly rely) and, as to matters of
fact, upon certificates of an officer or officers of Glamis or other
appropriate persons;
(j) the Company shall have received an opinion from Perkins Coie LLP,
dated the Effective Date, satisfactory in form and substance in all
material respects to the Company and its counsel acting reasonably and
addressed to the Company to the effect that the issuance of the Glamis
Shares to the Company's shareholders and the issuance of options to
purchase Glamis Common Shares to holders of options of Mar-West
pursuant to the Arrangement Agreement is exempt from the registration
requirements of the Securities Act pursuant to Section 3(a)(10) thereof;
and
(k) Simon T. Ridgway shall, provided that he is a Canadian resident for
the purposes of the Company Act, have been validly appointed as a
director of Glamis.
CONDITIONS TO OBLIGATIONS OF GLAMIS
4.3 The obligation of Glamis to complete the transactions contemplated hereby is
subject to the satisfaction of each of the following conditions on or before the
Effective Date, which conditions are for the sole benefit of Glamis and may be
waived by it in whole or in part by notice in writing to the Company without
prejudice to the rights of Glamis to rely on any other or others of such
conditions:
(a) each of the covenants, acts and undertakings of the Company to be
performed on or before the Effective Date pursuant to the terms of this
Agreement shall have been duly performed by it;
(b) the Company shall have delivered to Glamis:
(i) certified copies of resolutions duly passed by the board of
directors of the Company approving this Agreement and the
consummation of the transactions contemplated hereby; and
(ii) certified copies of the resolutions of the Company
Shareholders duly passed at the Meeting approving the Arrangement
and the consummation of the transactions contemplated thereby;
(c) except as affected by transactions contemplated by this Agreement,
the representations and warranties of the Company contained in
Section 3.1 shall be true and correct in all material respects on the
Effective Date with the same effect as though
<PAGE> 22
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such representations and warranties had been made at and as of such time
and Glamis shall have received a certificate to that effect, dated the
Effective Date, of two officers of the Company, and Glamis shall have no
knowledge to the contrary;
(d) Glamis shall have received prior to the record date for the Meeting
Voting and Standstill Agreements in the form of Schedule D duly executed
by Simon T. Ridgway, Elvietri Holdings A.V.V., Henry E. Neugebauer,
Richard P. Clark, Robert S. Wasylyshyn, Tim Osler and Tombstone
Explorations Co. Ltd.;
(e) Glamis shall have received resignations and releases in favour of
the Company from all of the directors and officers of the Company and
shall have received resignations and releases from those directors and
officers of the Company Subsidiaries as are designated by Glamis;
(f) Glamis shall have received an opinion of Blake Cassels & Graydon
("Blakes"), special counsel to the Company, dated the Effective Date,
satisfactory in form and substance in all material respects to Glamis
and its counsel acting reasonably and addressed to Glamis to the effect
that:
(i) the Company is duly incorporated and validly exists under the
laws of the Province of British Columbia and has the corporate
power and capacity to own or lease its property and assets and to
conduct its business as now conducted by it;
(ii) the Company has the corporate power and capacity to execute,
deliver and perform its obligations under this Agreement;
(iii) the Company has taken all necessary corporate action to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder;
(iv) this Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of
it, enforceable against it in accordance with its terms, subject
to bankruptcy and similar laws affecting the enforcement of
creditors' rights generally and to equitable remedies being in
the discretion of a court;
(v) the authorized and issued capital of the Company is as set
out in Section 3.1(c) hereof;
(vi) the execution, delivery and performance of this Agreement
does not and the Arrangement will not:
(A) result in the breach of or violate any terms or
provisions of the Memorandum or Articles of the Company;
or
<PAGE> 23
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(B) conflict with or violate any Canadian law or
administrative regulations or any judicial or
administrative order, award, judgment or decree, in each
case known to Blakes, to which the Company is a party or
by which it is bound; and
and as to such other matters as Glamis and its counsel may
reasonably request and, in giving such opinion, Blakes may rely,
with respect to matters governed by the laws of any jurisdiction
other than the Province of British Columbia or the laws of Canada
applicable therein, upon the opinion of local counsel in such
jurisdiction (provided that, in the case of such opinion, Blakes
is of the belief that the opinion of such local counsel is one
upon which Blakes and Glamis may properly rely) and, as to
matters of fact, upon certificates of an officer or officers of
the Company or other appropriate persons;
(vii) the Company is a "reporting issuer" not in default of its
obligation to file financial statements and pay proscribed fees
in British Columbia;
(g) Glamis shall have received an opinion from local counsel to the
Company, dated within 10 days prior to the Effective Date that the
Company Subsidiaries are duly incorporated and validly exist under the
laws of the jurisdiction of their incorporation and have the corporate
power and capacity to own or lease its property and assets and to
conduct its business as now conducted by it;
(h) Glamis shall have received all required regulatory approvals;
(i) there shall not have occurred any adverse material change in the
affairs of the Company from August 14, 1998 to the Effective Date; and
(j) the Company shall not have received Notices of Dissent in respect of
more than 3% of the issued Company Common Shares as at the date of the
information circular for the Meeting.
ARTICLE 5
NON-SATISFACTION OF CONDITIONS
NON-SATISFACTION OF CONDITIONS IN SECTION 4.1
5.1 If any of the conditions set out in Section 4.1 have not been satisfied on
or before December 31, 1998, Glamis and the Company shall have no obligation to
tender further performance under this Agreement or complete the transactions
contemplated hereby, save and except for the Company's obligations under Section
2.2(o).
<PAGE> 24
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NON-SATISFACTION OF CONDITIONS IN SECTION 4.2 AND SECTION 4.3
5.2 If any of the conditions set out in Section 4.2 and Section 4.3 have not
been satisfied on or before the due date specified therein, the Company
(in respect of Section 4.2) and Glamis (in respect of Section 4.3), shall have
no obligation to tender further performance under this Agreement or to complete
the transactions contemplated hereby, save and except for the Company's
obligations under Section 2.2(o).
ARTICLE 6
IMPLEMENTATION OF TRANSACTIONS
COMPANY SHAREHOLDER ELECTIONS
6.1 The Company shall forward to the Company Shareholders with the proxy
material for the Meeting, a Consideration Election Form allowing the Company
Shareholders to elect to take Cash/Share Consideration in exchange for their
Company Common Shares. If a Company Shareholder has not returned an
Consideration Election Form to the Company prior to the Election Deadline, such
Company Shareholder will be deemed to have elected to receive 0.5 of one Glamis
Common share for every one Company Common Shares held.
BUSINESS DAY OF THE EFFECTIVE DATE
6.2 In order to facilitate the exchange of Company Common Shares for Glamis
Common Shares or a combination of Glamis Common Shares and cash under the
Arrangement, the Glamis Common Shares and cash to which the Company Shareholders
would be entitled under the Arrangement and pursuant to their duly completed and
returned Consideration Election Forms, will be delivered by Glamis to the
Trustee within one Business Day of the Effective Date, and the Trustee shall
hold such for the Company Shareholders in accordance with their entitlements
under the Arrangement and pursuant to duly completed and returned Consideration
Election Forms.
TRANSMITTAL LETTERS
6.3 Forthwith after the Effective Date, Glamis shall cause the Trustee to send
(by first class mail) to each person who was a holder of Company Common Shares
immediately prior to the Effective Date at his address shown on the Company's
register of members, a transmittal letter specifying what consideration the
person is entitled to, pursuant to the Arrangement and the members duly
completed and returned Consideration Election Form, if any, and shall request
those persons to, and they shall, surrender for cancellation the share
certificates representing their Company Common Shares held immediately prior to
the Effective Date. As the share certificates together with properly completed
transmittal letters are received, Glamis shall cause the Trustee to mail (by
first class mail) the consideration due to the holder thereof as aforesaid.
<PAGE> 25
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6.4 Any Company Shareholder who fails to deliver a properly completed
transmittal letter together with their certificates for Company Common Shares
within 6 years of the Effective Date shall be deemed to have forfeited its right
to receive consideration therefor pursuant to the Arrangement and Glamis shall
cause the Trustee to forward the Glamis Common Shares and any cash which is
subject to such forfeiture to Glamis.
TRUSTEE TO HOLD CASH IN SEPARATE ACCOUNT
6.5 Glamis shall cause the Trustee to hold the cash proceeds in a separate
account and Glamis shall cause the cash proceeds to be paid as aforesaid,
without interest, to Company Shareholders and Glamis. All interest earned on the
funds in such account shall belong to Glamis.
PRE-CLOSING
6.6 Unless this Agreement is terminated earlier pursuant to the provisions
hereof, the parties hereto shall meet at the offices of Lang Michener Lawrence &
Shaw, 1500 - 1055 West Georgia Street, Vancouver, British Columbia at 8:00 a.m.
on or before the 2nd Business Day after the Final Order is granted by the Court
(or at such other time or on such other date as they may agree) and each party
shall deliver to the other party:
(a) the documents required to be delivered by it hereunder to complete
the transactions contemplated hereby (provided that each such document
required to be dated the Effective Date shall be dated as of the
Effective Date and held in escrow to be released upon the acceptance of
the Final Order for filing by the Registrar); and
(b) written confirmation as to the satisfaction or waiver by it of the
conditions in its favour set out herein (other than the acceptance of
the Final Order for filing by the Registrar).
FILING OF FINAL ORDER
6.7 Within one Business Day after the day on which the parties have met as
provided in Section 6.6, a certified copy of the Final Order shall be sent to
the Registrar pursuant to section 252(3) of the Company Act with the request
that such certified copy of the Final Order be accepted for filing forthwith.
ARRANGEMENT AND CLOSING
6.8 The Company shall promptly advise Glamis as to the date on which a certified
copy of the Final Order is accepted for filing by the Registrar and the
documents held in escrow pursuant to Section 6.1(a) shall, upon such acceptance,
be released and the parties shall exchange such other documents as may be
necessary or desirable in connection with the completion of the transactions
contemplated by this Agreement and the Arrangement.
<PAGE> 26
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ARTICLE 7
GENERAL
NOTICE
7.1 Any notice, direction or other instrument required or permitted to be given
hereunder shall be in writing and may be given by delivering the same or sending
the same by facsimile transmission addressed as follows:
To Glamis:
Glamis Gold Ltd.
310 - 5190 Neil Road
Reno, Nevada 89502
Fax:(702) 827-5044
Attention: Daniel J. Forbush, Chief Financial Officer,
Secretary and Treasurer
To the Company:
Mar-West Resources Ltd.
855 - 409 Granville Street
Vancouver, B. C. V6C 1T2
Fax:(604) 662-8829
Attention: Simon T. Ridgway, President and Chief Executive Officer
Any such notice, direction or other instrument, whether delivered or transmitted
by facsimile transmission, shall be deemed to have been given at the time and on
the date on which it was delivered to or received in the office of the
addressee, as the case may be, if delivered or transmitted prior to 5:00 p.m.
(Vancouver time) on a Business Day or at 9:00 a.m. (Vancouver time) on the
subsequent Business Day if delivered or transmitted subsequent to such time.
Either party hereto may change its address for service from time to time by
notice given to the other party hereto in accordance with the foregoing. Any
notice, direction or other instrument delivered under this Agreement shall be
signed by one or more duly authorized officers of the party delivering it.
The delivery of any notice, direction or other instrument, or a copy thereof, to
a party hereunder shall be deemed to constitute the representation and warranty
of the party who has delivered it to the other party that such delivering party
is authorized to deliver such notice, direction or other instrument at such time
under this Agreement (unless the receiving party has actual knowledge to the
contrary) and the receiving party shall not be required to make any inquiry to
confirm such authority.
<PAGE> 27
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AMENDMENT
7.2 This Agreement may, at any time, and from time to time before and after the
holding of the Meeting but not later than the Effective Date, be amended by
written agreement of Glamis and the Company (or, in the case of a waiver, by
written instrument of the party given the waiver) without, subject to applicable
law, further notice to or authorization on the part of the Company Shareholders
or the Court. Without limiting the generality of the foregoing, any such
amendment may:
(a) change the time for performance of any of the obligations or acts of
the parties hereto;
(b) waive any inaccuracies or modify any representation contained herein
or in any documents to be delivered pursuant hereto; and
(c) waive compliance with or modify any of the covenants herein
contained or waive or modify performance of any of the obligations of
the parties hereto;
provided that, notwithstanding the foregoing, the terms of the Arrangement and
this Agreement shall not be amended in a manner prejudicial to the Company
Shareholders without the approval of such shareholders given in the same manner
as required for the approval of the Arrangement or as may be ordered by the
Court.
AMENDMENT RESULTING FROM FINAL ORDER
7.3 This Agreement and the Arrangement may be amended in accordance with the
Final Order by written agreement of Glamis and the Company.
TERMINATION
7.4 This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of matters presented in connection with the
Arrangement by the Company Shareholders:
(a) by mutual consent of Glamis and the Company;
(b) by either Glamis or the Company (provided that the terminating party
is not then in material breach of any representation, warranty, covenant
or agreement contained in this Agreement) if there has been a material
breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of the other party, and such breach has
not been cured or best efforts are not being employed to cure such
breach, within 10 days after notice is given to the party committing
such breach;
(c) by either Glamis or the Company if the Arrangement shall not have
received the approval of the Company Shareholders or of the Court;
<PAGE> 28
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(d) by either Glamis or the Company if
(i) the conditions to its obligations to close shall have become
impossible to satisfy, or
(ii) any permanent injunction or other order of a court or other
competent authority preventing the Arrangement shall become final
and non-appealable; or
(e) by the Company if its board of directors has accepted or approved,
or recommended acceptance or approval to the Company Shareholders of a
Superior Proposal.
SURVIVAL
7.5 Section 2.2(o) and Section 7.9 hereof shall survive any termination of this
Agreement.
BINDING EFFECT
7.6 This Agreement shall be binding upon and enure to the benefit of the parties
hereto and their respective successors.
PROHIBITION AGAINST ASSIGNMENT
7.7 No party may assign its rights or obligations under this Agreement.
EQUITABLE REMEDIES
7.8 All covenants herein as to the enforceability of any covenant, agreement or
document shall be qualified as to applicable bankruptcy and other laws affecting
the enforcement of creditors' rights generally and to the effect that specific
performance, being an equitable remedy, may not be ordered by a court in any
particular circumstances.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.9 The representations and warranties herein contained shall survive the
performance of the parties' respective obligations hereunder and the termination
of this Agreement but shall expire on the date two years from the date hereof.
<PAGE> 29
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DISCLOSURE
7.10 Glamis and the Company shall consult with each other before issuing any
press release or making any other public disclosure with respect to the
Arrangement or any other transactions contemplated by this Agreement.
ENTIRE AGREEMENT
7.11 This Agreement constitutes the whole of the agreement between the parties
hereto with respect to the transactions and matters herein contemplated and
supersedes all prior agreements, whether written or oral, in connection
herewith.
TIME OF ESSENCE
7.12 Time shall be of the essence of this Agreement.
COUNTERPART EXECUTIONS AND FACSIMILE TRANSMISSIONS
7.13 This Agreement may be executed in two counterparts, each of which when
delivered (whether in originally executed form or by facsimile transmission)
shall be deemed to be an original and both of which together shall constitute
one and the same document.
IN WITNESS WHEREOF this Agreement has been signed, sealed and delivered by the
parties hereto as of the date first above written.
The Common Seal of )
GLAMIS GOLD LTD. )
was affixed in the presence of: )
)
) C/S
Authorized Signatory )
)
Signed: "Daniel J. Forbush" )
- -------------------------- )
Authorized Signatory )
<PAGE> 30
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The Common Seal of )
MAR-WEST RESOURCES LTD. )
was affixed in the presence of: )
)
Signed: "Richard P. Clark" ) C/S
- ------------------------- )
Authorized Signatory )
)
Signed: "Henry E. Neugebauer" )
- ----------------------------- )
Authorized Signatory )
<PAGE> 31
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Schedule A
PLAN OF ARRANGEMENT
IN THE MATTER OF AN ARRANGEMENT between Mar-West Resources Ltd., the
holders from time to time of the issued and outstanding common shares
without par value in the capital of Mar-West Resources Ltd. and Glamis
Gold Ltd. pursuant to section 252 of the British Columbia Company Act,
R.S.B.C. 1996, c. 62, as amended
ARTICLE 1
INTERPRETATION
1.1 In this Arrangement, unless the context otherwise requires, the following
words and phrases shall have the meanings hereinafter set out:
ARRANGEMENT means the arrangement pursuant to section 252 of the Company
Act as described herein;
ARRANGEMENT AGREEMENT means the agreement made as of the 14th day of
August, 1998 between Glamis and the Company entered into for the purpose
of effecting this Arrangement;
CASH/SHARE CONSIDERATION means the 0.4 of a Glamis Common Share and
$0.48 cash to be issued to a Company Shareholder in exchange for one
Company Common Shares provided that the Election is properly made;
COMPANY ACT means the British Columbia Company Act, R.S.B.C. 1996, c.
62, as amended from time to time;
COMPANY means Mar-West Resources Ltd.;
COMPANY COMMON SHARES means the issued and outstanding Common shares
without par value in the capital of the Company and COMPANY SHAREHOLDERS
means the holders from time to time of Company Common Shares;
CONSIDERATION ELECTION FORM means a form delivered to the Company
Shareholders pursuant to Section 6.1 of the Arrangement Agreement
whereby they may elect to take Cash/Share Consideration in exchange for
their Company Common Shares;
<PAGE> 32
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COURT means the Supreme Court of British Columbia;
DISSENT RIGHT means the right of dissent and appraisal pursuant to
Article 6 hereof;
DISSENTING SHAREHOLDER means a Company Shareholder who has delivered a
Notice of Dissent pursuant to Article 6;
EFFECTIVE DATE means the date on which a certified copy of the Final
Order has been accepted for filing by the Registrar;
EFFECTIVE TIME means 5:00 p.m. (Vancouver time) on the Effective Date;
ELECTION means the election duty and properly made by a Company
Shareholder pursuant to the Consideration Election Form to take
Cash/Share Consideration in exchange for each of his Company Common
Shares;
ELECTION DEADLINE means, with respect to the delivery of the
Consideration Election Form, 48 hours prior to the Meeting if delivered
to the Trustee and the time of commencement of the Meeting, if delivered
to the Chairman of the Meeting;
FINAL ORDER means the order of the Court approving the Arrangement;
GLAMIS means Glamis Gold Ltd.;
GLAMIS COMMON SHARES means the Common shares without par value in the
capital of Glamis;
MEETING means an extraordinary general meeting of Company Shareholders
convened to approve the Arrangement including any adjournment thereof;
NOTICE OF DISSENT means the notice described in Section 6.2;
REGISTRAR means the Registrar of Companies under the Company Act;
SECURITIES ACT means the United States Securities Act of 1933, as
amended;
TAX ACT means the Income Tax Act of Canada, Chap. 63, S.C. 1970.71.72,
as amended; and
TRUSTEE means Montreal Trust Company of Canada.
<PAGE> 33
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ARTICLE 2
ARRANGEMENT AGREEMENT
2.1 This Arrangement is made pursuant to and subject to the provisions of the
Arrangement Agreement.
ARTICLE 3
ARRANGEMENT
3.1 At the Effective Time the following will occur:
(a) each Company Shareholder who does not make the Election by the
Election Deadline shall be deemed not to have made the Election. The
Company Common Shares of each such non-electing Company Shareholder
(other than Dissenting Shareholders) shall be, and be deemed to be,
transferred to Glamis in exchange for 0.5 of a Glamis Common Share;
(b) the Company Common Shares of each Company Shareholder who makes the
Election by the Election Deadline shall be and be deemed to be exchanged
for the Cash/Share Consideration;
(c) the exchange of Company Common Shares for Glamis Common Shares and,
if applicable, cash will be made in accordance with Article 5 after
certificates for such Company Common Shares have been validly
surrendered to the Trustee, together with the letter of transmittal
specified in Section 5.3 and such other documents as the Trustee may
require, at any time following the Effective Date and up until the end
of the prescription period referred to in Section 5.4, and upon the
receipt thereof the Company Shareholder shall be entitled to receive
from the Trustee the Glamis Common Shares and, if the Company
Shareholder made his Election, cash;
(d) the Company Common Shares of Dissenting Shareholders will be, and be
deemed to be, purchased for cancellation by the Company for an amount to
be determined and paid in the manner described in Article 6, unless such
Notice of Dissent is withdrawn or the Company Shareholder does not fully
comply with the procedures described in Article 6 or acts inconsistently
therewith, in which case the Company Common Shares for which such Notice
of Dissent was delivered will be deemed to be exchanged for Glamis
Common Shares on the basis of 0.5 of a Glamis Common Share for each such
Company Common Share and such Glamis Common Shares will be delivered to
the Dissenting Shareholder after certificates for such Company Common
Shares have been validly surrendered to the Trustee, together with a
completed letter of transmittal as described in Section 5.3;
<PAGE> 34
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(e) Holders of outstanding share purchase options of the Company will be
converted into share purchase options of Glamis on the basis of one
Glamis Common Share for two Company Common Shares with no change in the
exercise price;
(f) each Company Shareholder shall cease to be a holder of Company
Common Shares and the name of the Company Shareholder shall be removed
from the register of holders of Company Common Shares;
(g) there shall be allotted and issued to each Company Shareholder as
fully paid and non-assessable the number of Glamis Common Shares
issuable to such Company Shareholder on the basis set forth in
subsections (a) and (b) hereof, and the Company Shareholder's name shall
be added to the register of holders of Glamis Common Shares as the
registered holder of such Glamis Common Shares;
(h) each Company Shareholder shall, subject to Article 5 hereof and as
soon as reasonably practicable, be entitled to receive a certificate or
certificates representing such Glamis Common Shares and a cheque for
such cash as the Company Shareholder may have elected to take or be
entitled to in respect of a fraction of a Glamis Common Share;
(i) Glamis shall become the holder of the Company Common Shares
exchanged for the Glamis Common Shares or Glamis Common Shares and cash,
as the case may be;
(j) Glamis shall be entered on the register of holders of Company Common
Shares as the holder of the Company Common Shares so exchanged; and
(k) a Company Shareholder who is entitled to a fractional Glamis Common
Share under the Arrangement, will receive in lieu thereof, cash, based
on a whole Glamis Common Share being valued at $4.80.
ARTICLE 4
ELECTIONS
4.1 Company Shareholders making the Election must deposit a properly completed
and signed Consideration Election Form with the Trustee by the Election
Deadline. Glamis, acting reasonably, will have the discretion to determine
whether Consideration Election Forms have been properly completed, signed and
submitted and to disregard immaterial defects in Consideration Election Forms.
The decision of Glamis acting reasonably in such matters shall be conclusive and
binding. Neither Glamis nor the Trustee will be under any obligation to notify
any person of any defect in a Consideration Election Form submitted. A
Consideration Election Form may not be revoked after receipt thereof by the
Trustee.
<PAGE> 35
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4.2 A Company Shareholder of record who holds Company Common Shares as a
nominee, custodian, depositary, trustee or in any other representative capacity
for beneficial owners of Company Common Shares ("Representative") may submit
multiple Conversion Election Forms.
4.3 A Company Shareholder who does not deposit a Conversion Election Form with
the Trustee by the Election Deadline or whose Election is defective or
incomplete shall be deemed not to have made the Election, and the Company Common
Shares held by such Company Shareholder (other than a Dissenting Shareholder)
shall be transferred to Glamis on the basis of 0.5 of a Glamis Common Shares for
each Company Common Share held.
4.4 The Company shall use all reasonable efforts to mail the Conversion Election
Form to all persons who become Company Shareholders during the period between
the record date for the Meeting and the close of business (Vancouver time) on
the date seven (7) calendar days prior to the date of the Meeting and to make
the Conversion Election Form available to all persons who become Company
Shareholders subsequent to such day and no later than the Election Deadline.
ARTICLE 5
CERTIFICATES
5.1 After the Effective Time, certificates formerly representing Company Common
Shares which are held by a Company Shareholder that submitted a properly
completed Consideration Election Form to the Company prior to the Election
Deadline shall represent only the right to receive certificates representing
Glamis Common Shares and the right to receive cash pursuant to the Election so
made by the Company Shareholder and cash in lieu of receiving a fractional
Glamis Common Share and certificates formerly representing Company Common Shares
which are held by a Company Shareholder who did not submit a properly completed
Consideration Election Form to the Company prior to the Election Deadline, shall
represent only the right to receive certificates representing Glamis Common
Shares and cash in lieu of receiving a fractional Glamis Common Share.
5.2 No dividends or other distributions declared or made after the Effective
Date with respect to the Common Share with a record date after the Effective
Date shall be payable or paid to the holder of any unsurrendered certificate or
certificates which, immediately prior to the Effective Date, represented
outstanding Company Common Shares.
5.3 As soon as reasonably practicable after the Effective Date, the Trustee
shall forward to each Company Shareholder, at the address of such Company
Shareholder as it appears on the appropriate register for such securities, a
letter of transmittal and instructions for obtaining delivery of the certificate
or certificates representing the Glamis Common Shares
<PAGE> 36
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34 allotted and issued to such holder pursuant to the Arrangement and any cash
due to the Company Shareholder under the Arrangement and his duly made Election.
Company Shareholders may take delivery of the certificate or certificates
representing the Glamis Common Shares allotted and issued to them and cash to
which they may be entitled pursuant to the Arrangement by delivering the
certificates representing the Company Common Shares formerly held by them to the
Trustee at the offices indicated in the letter of transmittal. Such certificates
shall be accompanied by a duly completed letter of transmittal together with
such other documents as the Trustee may require and the certificates
representing the Glamis Common Shares issued to and a cheque for any cash due to
such Company Shareholder shall be registered in, or made payable to such name or
names and delivered to such address or addresses as such Company Shareholder may
direct in such letter of transmittal as soon as reasonably practicable after
receipt by the Trustee of the required documents.
5.4 Any certificate, which immediately prior to the Effective Date represented
outstanding Company Common Shares which has not been surrendered, with all other
instruments required by this Article, on or prior to the 6th anniversary of the
Effective Date, shall cease to represent any claim or interest of any kind or
nature as against it or in the Company, Glamis or the Trustee.
ARTICLE 6
RIGHTS OF DISSENT AND APPRAISAL
6.1 Notwithstanding Section 3.1, holders of Company Common Shares may exercise
rights of dissent (the "Dissent Right") in connection with the Arrangement
pursuant to the Interim Order and this Article 6.
6.2 A Company Shareholder who wishes to exercise a Dissent Right must give
written notice of dissent ("Notice of Dissent") to the Company by depositing
such Notice of Dissent with the Company, or mailing it to the Company by
registered mail, at its head office at 855 - 409 Granville Street, Vancouver,
British Columbia, V6C 1T2, marked to the attention of the secretary, or by
personally serving it on any director or officer of the Company, in all cases
not later than 48 hours before the Meeting. To be valid a Notice of Dissent
must:
(a) state that the Company Shareholder is exercising the Dissent Right;
and
(b) specify the number of Company Common Shares in respect of which the
Company Shareholder is exercising the Dissent Right.
6.3 The giving of a Notice of Dissent does not deprive a Company Shareholder of
his or her right to vote at the Meeting on the extraordinary resolution
approving the
<PAGE> 37
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Arrangement. A vote against the extraordinary resolution or the execution or
exercise of a proxy does not constitute a Notice of Dissent.
6.4 A Company Shareholder is not entitled to exercise a Dissent Right with
respect to any Company Common Shares if the Company Shareholder votes (or
instructs or is deemed, by submission of any incomplete proxy, to have
instructed his or her proxyholder to vote) in favour of the extraordinary
resolution approving the Arrangement. However, a Company Shareholder may vote as
a proxy for a shareholder whose proxy required an affirmative vote, without
affecting his or her right to exercise the Dissent Right.
6.5 If the extraordinary resolution approving the Arrangement is passed and the
Arrangement becomes effective, the Company will, as soon as practicable after
the Effective Date, give each Company Shareholder that has delivered a Notice of
Dissent prior notice of its intent to act on such resolution (a "Notice of
Implementation").
6.6 On receiving a Notice of Implementation in accordance with Section 6.5, the
Dissenting Shareholder is entitled to require the Company to purchase all of the
Company Common Shares in respect of which the Notice of Dissent was given.
6.7 The Dissenting Shareholder may only exercise the right under Section 6.6 by
delivering to the Company at the address specified in Section 6.2 within 5 days
after the Company gives the Notice of Implementation in accordance with
Section 6.5:
(a) a notice that he or she requires the Company to purchase all the
Company Common Shares referred to in Section 6.6, and
(b) the share certificates representing all the Company Common Shares
referred to in Section 6.6,
and whereupon the Dissenting Shareholder is bound to sell those Company Common
Shares to the Company and the Company is bound to purchase them.
6.8 The price to be paid to the Dissenting Shareholder for his or her Company
Common Shares shall be their fair value as of the day before the date on which
the extraordinary resolution referred in Section 6.5 was passed and every
Dissenting Shareholder who has complied with Section 6.7 will be paid the same
price.
6.9 If the Arrangement becomes effective, the Company will be required to
determine the fair value of the Company Common Shares and to make a written
offer to pay such amount to the Dissenting Shareholders. If such offer is not
made or accepted within 30 days after the Effective Date of the Arrangement, the
Company may apply to the court to fix the fair value of the Company Common
Shares. There is no obligation on the Company to apply to the court. If the
Company fails to make such an application, a Dissenting Shareholder has the
right to apply within a further 20 days. If an application is made by
<PAGE> 38
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either party, the Dissenting Shareholder will be entitled to be paid the amount
fixed by the court.
6.10 On an application to the court under Section 6.9,
(a) all Dissenting Shareholders whose Company Common Shares have not
been purchased by the Company will be joined as parties and will be
bound by the decision of the court, and
(b) the Company will notify each affected Dissenting Shareholder of the
date, place and consequences of the application and of his or her right
to be heard in person or by counsel.
6.11 On an application to the court under Section 6.9, the court will fix a fair
value for the Company Common Shares of all Dissenting Shareholders.
6.12 Any notice required to be given by the Company or a Dissenting Shareholder
to the other in connection with the exercise of the Dissent Right, will be
deemed to have been given and received, if delivered on the day of delivery, if
mailed, on the early of the date of receipt and the second business day after
the day of mailing, or, if sent by telecopier or other similar form of
transmission, the first business day after the date of transmittal.
6.13 The holder of Company Common Shares who:
(a) properly exercises the Dissent Right by complying with all of the
procedures (the "Dissent Procedures") required to be complied with by a
Dissenting Shareholder will
(i) be bound by the provisions of this Article 6,
(ii) be deemed not to have participated in the Arrangement, and
(iii) cease to have any rights as a Company Shareholder other
than the right to be paid the fair value of the Company Common
Shares by the Company in accordance with the Dissent Procedures;
or
(b) seeks to exercise the Dissent Right, but
(i) who for any reason does not properly fulfil each of the
Dissent Procedures required to be completed by a Dissenting
Shareholder, or
(ii) subsequent to giving his or her Notice of Dissent, acts
inconsistently with such dissent,
<PAGE> 39
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will be deemed to have participated in the Arrangement on the basis of receiving
one Glamis Common Share for each two Company Common Shares held by the
Dissenting Shareholder and will be issued such Glamis Common Shares as he or she
is entitled.
ARTICLE 7
TAX ELECTION FORMS UNDER SUBSECTION 85(1) OF INCOME TAX ACT
7.1 Each Company Shareholder resident in Canada who would otherwise realize a
gain for the purposes of the Tax Act on the share exchange described in Section
3.1(a) hereof shall be entitled (in addition to any deferral rights which are,
in law, automatic) to effect such exchange in accordance with the provisions of
subsection 85(1) of the Tax Act and under equivalent provincial legislation.
Each Company Shareholder who wishes to avail himself of the elective provisions
of subsection 85(1) of the Tax Act and under equivalent provincial legislation
in respect of the share exchange described in Section 3.1(a) hereof shall
provide to Glamis, on or before December 31, 1998, a properly completed T2057
election form (or such other form which is prescribed for the purposes of
subsection 85(1) of the Tax Act from time to time) and Glamis shall execute such
form as transferee, provided such form is received by Glamis on or before
December 31, 1998, and shall return such form, duly executed, to such Company
Shareholder at the address provided on the form for filing by such Company
Shareholder. Glamis shall not be responsible for any loss or damage resulting
from such an election being incomplete, invalid or from the late filing of such
a form and the proper completion, timely filing and validity of the election
shall be the sole responsibility of the Company Shareholder.
ARTICLE 8
REFERENCE DATE
8.1 This Plan of Arrangement is dated for reference August 14, 1998.
<PAGE> 40
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Schedule B
AFFILIATE AGREEMENT
Glamis Gold Ltd.
310 - 5190 Neil Road
Reno, Nevada
89502
Gentlemen:
Pursuant to the terms of the Arrangement Agreement dated as of August 14, 1998
(the "Agreement") between Glamis Gold Ltd., a company incorporated under the
laws of the Province of British Columbia ("Glamis") and Mar-West Resources Ltd.,
a company incorporated under the laws of the Province of British Columbia
("Mar-West"), Glamis will acquire Mar-West through an arrangement with Mar-West
and its shareholders pursuant to provisions of the Company Act of British
Columbia (the "Arrangement"). Certain capitalized terms used but not defined
herein shall, unless the context requires otherwise, have the respective
meanings ascribed to them in the Agreement.
The undersigned has been advised that as of the date hereof it may be deemed to
be an "affiliate" of Mar-West, as the term "affiliate" is (i) defined for
purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and/or
(ii) used in and for purposes of Accounting Series, Releases 130 and 135, as
amended, of the Commission.
The undersigned understands that the representations, warranties and covenants
set forth herein will be relied upon by Glamis, shareholders of Glamis,
Mar-West, other shareholders of Mar-West and their respective counsel and
accounting firms.
The undersigned represents and warrants to and agrees with Glamis that:
1. The undersigned has full power to execute and deliver this Affiliate
Agreement and to make the representations and warranties herein and to
perform its obligations hereunder.
2. The undersigned has carefully read this Affiliate Agreement and the
Agreement and discussed its requirements and other applicable
limitations upon its ability to sell, transfer or otherwise dispose of
Glamis Common Shares, to the extent the undersigned felt necessary, with
its counsel or counsel for Mar-West.
<PAGE> 41
- 87 -
3. The undersigned shall not make any sale, transfer or other disposition
of Glamis Common Shares in violation of the Act or the Rules and
Regulations.
4. The undersigned has been advised that the issuance of Glamis Common
Shares to the undersigned in connection with the Arrangement is exempt
from registration under the Act. However, the undersigned has also been
advised that, since, at the time the Arrangement was submitted for a
vote of the Mar-West Shareholders, the undersigned may be deemed to have
been an affiliate of Mar-West and the distribution by the undersigned of
any Glamis Common Shares has not been registered under the Act, the
undersigned may not sell, transfer or otherwise dispose of Glamis Common
Shares issued to the undersigned in the Arrangement unless (i) such
sale, transfer or other disposition has been registered under the Act,
or (ii) such sale, transfer or other disposition is made in conformity
with the requirements of Rule 145 or (if the undersigned is not an
affiliate of Glamis or if an affiliate of Glamis, solely by virtue of
holding a position as a director or officer of Glamis) Rule 904
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to Glamis, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
5. The Undersigned understands that persons who will be an affiliate of
Glamis after the Arrangement and persons who are an affiliate of either
Mar-West or Glamis prior to the Arrangement may not resell the Glamis
Common Shares received by them under the Arrangement in the absence of
registration under the Securities Act, unless an exemption from
registration is available, such as the exemption contained in Rule
145(d) under the Securities Act, or unless registration is not required
pursuant to the exclusion from registration provided by Regulation S
under the Securities Act.
The undersigned also understands that in general under Rule 145(d) as
currently in effect, persons who will be an affiliate of Glamis after
the Arrangement and persons who are affiliates of either Glamis or
Mar-West prior to the Arrangement will be entitled to resell during any
three-month period that number of Glamis Common Shares that does not
exceed the greater of one percent of the then outstanding securities of
such class, or, if such securities are listed on a United States
securities exchange, the average weekly trading volume of such
securities during the four-week period preceding the date of sale,
subject to certain restrictions on manner of sale, notice requirements,
aggregation rules and the availability of public information about
Glamis. Former affiliates of Glamis or Mar-West who are not affiliates
of Glamis after the Arrangement and who hold their Glamis Common Shares
for a period of one year after the Arrangement, may resell their Glamis
Common Shares without regard to the volume and manner of sale
limitations set forth in the preceding sentence, subject to the
availability of certain public information about Glamis. Former
affiliates of Glamis or Mar-West who hold their Glamis Common Shares for
a period of two years after the Arrangement may freely resell such
Glamis Common Shares provided
<PAGE> 42
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that such persons have not been an affiliate of Glamis during the
three-month period preceding the resale.
6. Glamis is under no obligation to register the sale, transfer or other
disposition of Glamis Common Shares by the undersigned or on its behalf
under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available. Glamis
agrees that it shall make available adequate current public information
as required by Rule 144(c) promulgated by the Commission under the Act.
7. Stop transfer instructions may be given to Glamis' transfer agents with
respect to the Glamis Common Shares.
8. The undersigned is the beneficial owner of (has sole or shared voting or
investment power with respect to) all the Mar-West Common Shares and
options to purchase Mar-West Shares indicated below (the "Mar-West
Securities"). Except for the Mar- West Securities, the undersigned does
not beneficially own any Mar-West Shares or any other equity securities
of Mar-West or any options, warrants or other rights to acquire any
equity securities of Mar-West.
Number of Mar-West Shares
beneficially owned by the undersigned:
-----------------
<PAGE> 43
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Number of Mar-West Shares subject
to options beneficially owned by the undersigned:
-----------------
Very truly yours,
---------------------------------------
(print name of shareholder above)
By:
------------------------------------
Title: Director
Accepted this _____ day of ____________, 1998 by
GLAMIS GOLD LTD.
By:
-----------------------------------
Name:
Title:
<PAGE> 44
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Schedule C
LIST OF OUTSTANDING AGREEMENTS, OPTIONS AND WARRANTS
PROVIDING FOR THE ACQUISITION OF COMMON SHARES
OF MAR-WEST AND GLAMIS
LIST OF OUTSTANDING AGREEMENTS, OPTIONS AND WARRANTS OF MAR-
WEST PROVIDING FOR THE ACQUISITION OF COMMON SHARES OF MAR-WEST
AGREEMENTS
Agreement to issue 1,250,000 Common shares in respect of the acquisition of a
20% interest in the San Martin project.
OPTIONS
1,067,000 Common shares are conditionally allotted for issuance under share
purchase options at exercise prices ranging from $0.50 per share to $2.00 per
share.
LIST OF OUTSTANDING AGREEMENTS, OPTIONS AND WARRANTS OF GLAMIS
PROVIDING FOR THE ACQUISITION OF COMMON SHARES OF GLAMIS
OPTIONS
2,100,000 Common shares are conditionally allotted for issuance under share
purchase options at exercise prices ranging from $12.50 per share to $4.60 per
share.
<PAGE> 45
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Schedule D
VOTING AND STANDSTILL AGREEMENT
THIS AGREEMENT is dated as of August 14, 1998
AMONG:
GLAMIS GOLD LTD., a company incorporated under the laws of
British Columbia with its registered and records offices at 1500
- 1055 West Georgia Street, Vancouver, British
Columbia, V6E 4N7
("Glamis")
AND:
EACH OF SIMON T. RIDGWAY, Businessman, ELVIETRI
HOLDINGS A.V.V., a company incorporated under the laws
of Aruba, HENRY E. NEUGEBAUER, a Businessman,
RICHARD P. CLARK, a Businessman, ROBERT S.
WASYLYSHYN, a Businessman, TIM OSLER, a
Businessman, and TOMBSTONE EXPLORATIONS CO.
LIMITED, a company incorporated under the laws of British
Columbia
(collectively, the "Subject Shareholders" and singly a "Subject
Shareholder")
WHEREAS:
(A) Each of the following Subject Shareholders represents that he is the
registered or beneficial owner of the number of fully paid common shares in the
capital of Mar-West Resources Ltd. ("MarWest") set out beside his name below:
<TABLE>
<CAPTION>
NAME NO. OF SHARES
---- -------------
<S> <C>
SIMON T. RIDGWAY 562,500
ELVIETRI HOLDINGS A.V.V. 1,074,540
HENRY E. NEUGEBAUER 65,000
RICHARD P. CLARK 87,300
ROBERT S. WASYLYSHYN 94,900
</TABLE>
<PAGE> 46
- 93-
<TABLE>
<CAPTION>
NAME NO. OF SHARES
---- -------------
<S> <C>
TIM OSLER 75,100
TOMBSTONE EXPLORATIONS CO. LIMITED 822,100
</TABLE>
(the aggregate of 2,781,440 of such shares being hereinafter collectively
referred to as the "Subject Shares");
(B) Glamis and MarWest have entered into a Letter Agreement (the "Letter
Agreement") dated August 14, 1998, which contemplates an arrangement (the
"Arrangement") under section 252 of the Company Act (British Columbia) (the
"Company Act") pursuant to which the issued and outstanding common shares of
MarWest will be exchanged for common shares of Glamis or common shares of Glamis
and cash, thereby resulting in the acquisition by Glamis of all the issued and
outstanding common shares of MarWest;
(C) Under the applicable requirements of the Company Act, in order to effect the
Arrangement, the holders of the outstanding common shares of MarWest must
approve the Arrangement by a majority of not less than three-quarters of the
votes cast in respect of such matter at a meeting of the members of MarWest;
(D) It is intended that a meeting of the members of MarWest be convened as soon
as practicable to approve the Arrangement (such meeting and any adjournment
thereof being hereinafter referred to as the "Meeting"); and
(E) Glamis and the Subject Shareholders desire to enter into this Agreement to
document the terms and conditions upon which the Subject Shareholders will vote
in favour of the approval of the Arrangement and to confirm certain other
agreements of the Subject Shareholders as provided herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises
and of the mutual covenants set out herein, it is agreed by and between the
parties hereto as follows:
PART 1
AGREEMENT TO VOTE IN FAVOUR OF ARRANGEMENT
<PAGE> 47
- 93-
AGREEMENT TO VOTE
1.1 Provided that the board of directors of MarWest have not accepted and
approved, or accepted and recommended to the shareholders of MarWest, a Superior
Proposal (as defined in Section 2.1) prior to the time of the Meeting, each
Subject Shareholder shall vote, or cause to be voted, all of his Subject Shares
in favour of the resolution to approve the Arrangement at the Meeting.
PART 2
PROHIBITION AGAINST SOLICITING OFFERS
2.1 Each Subject Shareholder covenants with Glamis that he will not, directly or
indirectly, solicit, initiate, assist, facilitate, promote or encourage
proposals or offers from, any person, entity or group in connection with a
merger or joint venture proposal for MarWest or the issuance of its treasury
shares or the sale (on a consolidated basis) of any of its mineral properties,
provided that the Subject Shareholders shall not be prevented from considering,
negotiating, approving and recommending to MarWest's shareholders an unsolicited
bona fide proposal regarding any merger, amalgamation, arrangement, takeover
bid, sale of substantial assets, sale of treasury shares or similar transaction
involving the Company or any of its subsidiaries which the board of directors of
MarWest determines, after consultation with its financial advisors would, if
consummated in accordance with its terms, result in a transaction of greater
value to the shareholders of MarWest than the Arrangement (any such transaction
being a "Superior Proposal").
PART 3
NO DISPOSITION OF SUBJECT SHARES
3.1 Each Subject Shareholder covenants with Glamis that he will not sell,
transfer, assign, pledge or hypothecate, except as may have been contractually
agreed to prior to August 14, 1998, or otherwise dispose of his Subject Shares
or any common shares of MarWest acquired by him after the date hereof and prior
to the date of the Meeting, save and except where such is done pursuant to a
Superior Proposal that the board of directors of MarWest has accepted or
approved or recommended acceptance or approval to MarWest's shareholders.
<PAGE> 48
- 94-
PART 4
CHANGE OF COMMON SHARES
4.1 The provisions of this Agreement relating to the common shares of MarWest
shall apply mutatis mutandis to any voting shares or other voting securities
into which such common shares may be converted, changed, reclassified,
redivided, redesignated, subdivided or consolidated and to any voting shares or
other voting securities of MarWest or of any successor or continuing company or
corporation to MarWest that may be received by the Subject Shareholders as the
registered holders of common shares of MarWest on a reorganization,
amalgamation, consolidation or merger, statutory or otherwise.
PART 5
REPRESENTATIONS AND WARRANTIES OF SUBJECT SHAREHOLDERS
5.1 Each of the Subject Shareholders represents and warrants that:
(a) he has all necessary power and capacity to enter into and consummate
the transactions contemplated by this Agreement and, upon the execution
hereof, this Agreement shall constitute a legal, valid and binding
agreement enforceable against him in accordance with the terms hereof;
and
(b) the execution of this Agreement and the performance of the terms
hereof will not result in any breach of, be in conflict with or
constitute a default under (whether after notice or lapse of time or
both) any contract, lease, agreement, instrument or other commitment,
written or oral, to which he is a party or by which he is bound or any
judgment, decree, order, statute, rule, licence or regulation applicable
to him.
PART 6
TERMINATION
6.1 This Agreement shall terminate if and as of the date on which the
Arrangement Agreement is terminated pursuant to the provisions thereof.
<PAGE> 49
- 95-
PART 7
GENERAL
NOTICE
7.1 Any notice, direction or other instrument required or permitted to be given
hereunder shall be in writing and may be given by delivering the same or sending
the same by facsimile transmission addressed as follows:
To Glamis:
Glamis Gold Ltd.
5190 Neil Road, Suite 310
Reno, Nevada 89502
Telecopier: (702) 827-5088
Attention: C. Kevin McArthur, President
To any of the Subject Shareholders:
c/o Mar-West Resources Ltd.
855 - 409 Granville Street
Vancouver, British Columbia
V6C 1T2
Telecopier: (604) 662-8829
Attention: Simon T. Ridgway, President
Any such notice, direction or other instrument, whether delivered or transmitted
by facsimile transmission, shall be deemed to have been given at the time and on
the date on which it was delivered to or received in the office of the
addressee, as the case may be, if delivered or transmitted prior to 5:00 p.m.
(local time at the office of the addressee) on a business day or at 9:00 a.m.
(local time at the office of the addressee) on the subsequent business day if
delivered or transmitted subsequent to such time.
Any party hereto may change its address for service from time to time by notice
given to the other parties hereto in accordance with the foregoing.
Any notice, direction or other instrument delivered under this Agreement by a
body corporate shall be signed by one or more duly authorized officers of the
party delivering it.
<PAGE> 50
- 96-
The delivery of any notice, direction or other instrument, or a copy thereof, to
a party hereunder shall be deemed to constitute the representation and warranty
of the party who has delivered it to the other parties that such delivering
party is authorized to deliver such notice, direction or other instrument at
such time under this Agreement (unless the receiving party has actual knowledge
to the contrary) and a receiving party shall not be required to make any inquiry
to confirm such authority.
FURTHER ASSURANCES
7.2 Each Subject Shareholder shall execute and deliver all such documents and
take all such further action as may be necessary or desirable in order to
consummate the transactions contemplated by this Agreement.
GOVERNING LAW
7.3 This Agreement shall be governed by and construed and enforced in accordance
with the laws of the Province of British Columbia.
BINDING EFFECT
7.4 This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors, permitted assigns, heirs,
administrators, executors and legal personal representatives.
TIME OF ESSENCE
7.5 Time shall be of the essence of this Agreement.
GENDER
7.6 Words importing the masculine gender include the feminine or neuter, words
in the singular include the plural, words importing a corporate entity include
individuals and vice versa.
IN WITNESS WHEREOF this Agreement has been executed the day and year first above
written.
<PAGE> 51
- 97-
The Corporate Seal of )
GLAMIS GOLD LTD. )
was affixed in the presence of: )
)
- --------------------------------------- ) C/S
Authorized Signatory )
The Corporate Seal of )
ELVIETRI HOLDINGS A.V.V. )
was affixed in the presence of: )
)
- --------------------------------------- ) C/S
Authorized Signatory )
The Corporate Seal of )
TOMBSTONE EXPLORATIONS CO. )
LIMITED was affixed in the )
presence of: )
) C/S
- --------------------------------------- )
Authorized Signatory
Signed, Sealed and Delivered by )
SIMON T. RIDGWAY )
in the presence of: )
)
- --------------------------------------- ) ----------------------------
Witness ) SIMON T. RIDGWAY
)
)
- ---------------------------------------
Name )
)
)
- ---------------------------------------
Address )
<PAGE> 52
- 98 -
Signed, Sealed and Delivered by )
HENRY E. NEUGEBAUER )
in the presence of: )
)
) ----------------------------
Witness ) HENRY E. NEUGEBAUER
)
)
- -----------------------------------------------
Name )
)
)
- -----------------------------------------------
Address )
Signed, Sealed and Delivered by )
RICHARD P. CLARK )
in the presence of: )
)
) ----------------------------
Witness ) RICHARD P. CLARK
)
)
- -----------------------------------------------
Name )
)
)
- -----------------------------------------------
Address )
Signed, Sealed and Delivered by )
ROBERT S. WASYLYSHYN )
in the presence of: )
)
) ----------------------------
Witness ) ROBERT S. WASYLYSHYN
)
)
Name )
)
)
- -----------------------------------------------
Address )
<PAGE> 53
- 99 -
Signed, Sealed and Delivered by )
TIM OSLER )
in the presence of: )
)
) ----------------------------
Witness ) TIM OSLER
)
)
- ---------------------------------------
Name )
)
)
- ---------------------------------------
Address )
<PAGE> 1
- 100 -
EXHIBIT 10.48*
GLAMIS GOLD LTD.
A M E N D E D
INCENTIVE SHARE PURCHASE OPTION PLAN
Dated for Reference September 30, 1995
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In the Plan:
ASSOCIATE has the meaning ascribed thereto in the Securities Act
(British Columbia);
BOARD means the board of directors of the Company;
COMMON SHARES means Common shares without par value in the capital of
the Company;
COMPANY means Glamis Gold Ltd.
DIRECTOR means a director of the Company;
EFFECTIVE DATE of an Option means the date on which the Option is
granted, whether or not the grant is subject to any Regulatory approval;
EMPLOYEE means an employee of the Company or of a Subsidiary of the
Company;
EXPIRY DATE of an Option means the day on which an Option lapses;
INSIDER means
(i) an insider of the Company as defined in the Securities Act
(British Columbia), other than a person who is such an insider
solely by virtue of being a director or senior officer of a
subsidiary of the Company, and
(ii) an Associate of a person who is an Insider by virtue of
Section (i);
<PAGE> 2
- 101 -
OFFICER means an individual who is an officer of the Company as an
appointee of the Board;
OPTION means a right to purchase Common Shares granted under the Plan to
a Service Provider;
OPTION COMMITTEE means a committee to which the Board delegates the
power to grant Options hereunder;
OPTION COMMITMENT means a notice of a grant of an Option under the Plan,
substantially in the form of the Schedule hereto, delivered by the
Company to the Optionee;
OPTIONED SHARES means Common Shares subject to an Option;
OPTIONEE means a person to whom an Option is granted by the Company
under the Plan;
PLAN means this Incentive Share Purchase Option Plan;
REGULATORY APPROVAL means the approval of The Toronto Stock Exchange and
every other stock exchange or securities regulatory agency that may have
jurisdiction in the circumstances;
RETIRED means, with respect to an Officer or Employee, the early or
normal retirement of the Officer or Employee from his duties with the
Company, and, with respect to a Director, retirement in accordance with
the Articles of the Company;
SERVICE PROVIDER means:
(i) an Employee or Insider; and
(ii) any other person or company engaged to provide ongoing
management or consulting services for the Company or a subsidiary
of the Company or any other entity controlled by the Company;
SHARE COMPENSATION ARRANGEMENT means a stock option plan, stock purchase
plan or other compensation or incentive mechanism involving the issuance
or potential issuance of shares in the capital of the Company to one or
more Service Providers, including a share purchase from treasury which
is financially assisted by the Company OR A SUBSIDIARY OF THE COMPANY by
way of a loan, guarantee or otherwise;
SUBSCRIPTION PRICE means the amount payable on an exercise of an Option;
<PAGE> 3
- 102 -
SUBSIDIARY means a subsidiary as determined under the Company Act
(British Columbia);
TOTALLY DISABLED, with respect to an Employee or Officer, means that,
solely because of disease or injury, the Employee or Officer is deemed
by a qualified physician selected by the Company to be unable to work at
his occupation with the Company and, with respect to a Director, means
that, solely because of disease or injury, the Director is deemed by a
qualified physician selected by the Company to be unable to carry out
his or her responsibilities on the Board.
A reference to a statute includes all regulations made thereunder, all
amendments to the statute or regulations in force from time to time, and
any statute or regulation that supplements or supersedes such statute or
regulations.
ARTICLE 2
THE PLAN
PURPOSE OF PLAN
2.1 The purpose of the Plan is to recognize contributions made by Service
Providers and to provide for an incentive for their continuing relationship with
the Company and its Subsidiaries.
ELIGIBILITY
2.2 Options to purchase unissued Common Shares may be granted hereunder to
Service Providers by the Board in its discretion.
INCORPORATION OF TERMS OF PLAN
2.3 Subject to specific variations approved by the Board, all terms and
conditions set out herein will be incorporated into and form part of each Option
granted under the Plan.
MAXIMUM NUMBER OF SHARES TO BE ALLOTTED
2.4 The maximum aggregate number of Common Shares that may be
(a) allotted for issuance under the Plan, is 2,600,000;
(b) reserved for issuance to any one person under the Plan shall be 5%
of the Common Shares outstanding at the time of the grant (on a
non-diluted basis), less the
<PAGE> 4
- 103 -
aggregate number of Common Shares reserved for issuance to such person
under any other option to acquire Common Shares;
(c) reserved for issuance to Insiders under the Plan shall be 10% of the
Common Shares outstanding at the time of the grant (on a non-diluted
basis), less the aggregate number of Common Shares reserved for issuance
to Insiders under any other Share Compensation Arrangement,
(d) issued under the Plan in any one year period to an Insider and his
Associates, is 5% of the number of Common Shares issued and outstanding
(on a non-diluted basis) immediately before that time,less any Common
Shares issued to such person or his Associates pursuant to any other
Share Compensation Arrangement during the preceding one year period;
(e) issued within any one-year period to Insiders pursuant to the
exercise of Options shall not exceed 10% of the number of Common Shares
issued and outstanding (on a non-diluted basis) immediately before that
time, less any Common Shares acquired by Insiders pursuant to any other
Share Compensation Arrangement during the preceding one year period;
except as approved by the holders of common shares of the Company (but only if
and to the extent such approval is required by The Toronto Stock Exchange).
2.5 For the purposes of subparagraphs 2.4(c) and (d), the number of Common
Shares issued and outstanding shall be determined on the number of Common Shares
that are outstanding immediately prior to the time of calculation, excluding
Common Shares issued pursuant to Share Compensation Arrangements over the
preceding one-year period.
2.6 For purposes of calculations under Section 2.4(c), there will be excluded
from consideration any allotment or issuance of a share to a person at a time
when that person was not an Insider, or was not an Associate of an Insider, as
the case may be.
SHAREHOLDER APPROVAL
2.7 If and to the extent that an approval referred to in Section 2.4 is required
by The Toronto Stock Exchange, the approval must be given by a resolution passed
by a majority of the votes cast thereon at a meeting of holders of all classes
of common shares of the Company, and may be given by way of confirmation at the
first meeting of such shareholders following establishment of the Plan, and no
Optioned Share will be issued pursuant to any Option before it has been
determined that no such approval is required or, if it is required, before it
has been given.
<PAGE> 5
- 104 -
SHARE NOT ACQUIRED
2.8 For the purposes of Section 2.4, a Common Share that might have been but was
not acquired under an Option which has expired or been cancelled or terminated
will be considered as not having been the subject of the Option.
POWERS OF BOARD
2.9 The Board will be responsible for the general administration of the Plan,
the proper execution of its provisions, the interpretation of the Plan and the
determination of all questions arising pursuant to the Plan, and without
limiting the generality of the foregoing, the Board will have the power to
(a) grant Options pursuant to the Plan,
(b) allot Common Shares for issuance on the exercise of Options,
(c) subject to Regulatory Approval, amend, suspend, terminate or
discontinue the Plan, or revoke or alter any action taken pursuant to
the Plan, except that no amendment, suspension, termination or
discontinuance of the Plan will alter or impair any Option without the
written consent of the Optionee, and
(d) delegate its powers to an Option Committee.
ARTICLE 3
TERMS AND CONDITIONS OF OPTIONS
SUBSCRIPTION PRICE
3.1 The Subscription Price per Common Share to be acquired on the exercise of an
Option will be either
(a) the closing price per share for the Common Shares on The Toronto
Stock Exchange on the last trading day on such exchange before the
Effective Date of the Option,
(b) if at the time of granting the Option the Board is of the opinion
that the price determined under Section (a) would not be a
representative price, the simple average of the high and low trading
prices per share for the Common Shares on The Toronto Stock Exchange on
the last five trading days on such exchange before the Effective Date of
the Option on which a trade of Common Shares occurred, or
<PAGE> 6
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(c) such other price as determined by the Board and as approved by The
Toronto Stock Exchange in respect of share purchase options issued under
the Plan which are the result of options to acquire shares of acquired
companies being converted into options to acquire common shares.
TERM OF OPTIONS
3.2 The term of an Option will be such period after the Effective Date thereof,
not exceeding ten years, as the Board determines at the time of granting of the
Option.
VESTING OF OPTION RIGHTS
3.3 The Board may fix the terms of any Option granted in such manner as the
Board determines in its discretion.
LIMITATION ON RIGHT TO EXERCISE
3.4 No Option may be exercised after the time at which the Optionee ceases to be
a Service Provider, except as follows:
(a) if the Optionee ceases to be a Service Provider by reason of the
death of the Optionee, the personal representatives of the Optionee may,
from time to time no later than the Expiry Date of the Option and one
year after the time of death, exercise the Option as to a total number
of shares not exceeding the number of shares as to which the Optionee
was entitled to and did not exercise at the time of death;
(b) if the Optionee ceases to be a Service Provider by reason that the
Optionee has Retired or become Totally Disabled, the Optionee or, if the
Optionee dies after that time the personal representatives of the
Optionee, may from time to time no later than the Expiry Date of the
Option and 2 years after ceasing to be a Service Provider, exercise the
Option as to a total number of shares as to which the Optionee would
from time to time have been entitled to acquire if he had remained as a
Service Provider;
(c) if the Optionee ceases to be a Service Provider by reason that
(i) the Optionee is dismissed from office or employment
for cause in circumstances under which Section (b) does
not apply, or
(ii) the Optionee terminates his employment in order to
become employed by an employer which is in competition
with the Company,
the Optionee or, if the Optionee dies after ceasing to be a Service
Provider, the personal representatives of the Optionee, may from time to
time no later than the
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Expiry Date of the Option and 30 days after that time, exercise the
Option as to a total number of shares not exceeding the number of shares
as to which the Optionee was entitled to and did not exercise at the
time of ceasing to be a Service Provider; and
(d) if the Optionee ceases to be a Service Provider in circumstances
other than as provided in subparagraphs (a), (b) and (c), the Optionee
or, if the Optionee dies after that time, the personal representatives
of the Optionee, may from time to time no later than the Expiry Date of
the Option and 90 days after ceasing to be a Service Provider, exercise
the Option as to a total number of shares not exceeding the number of
shares as to which the Optionee was entitled to and did not exercise at
the time of ceasing to be a Service Provider.
NON ASSIGNABILITY
3.5 Except as provided in Section 3.4 an Option may be exercised only by the
Optionee to whom it is granted and will not be assignable.
ADJUSTMENT
3.6 The number of Common Shares subject to an Option will be subject to
adjustment in the events and in the manner following:
(a) if the Common Shares are subdivided or consolidated after the
Effective Date of an Option, or the Company pays to holders Common
Shares of record as of a date after the Effective Date of an Option a
dividend payable in Common Shares, the number of Common Shares which
would be acquired on any exercise of the Option thereafter will be
adjusted to the number of such shares that the Optionee would hold
through the combined effect of such exercise and such subdivision,
consolidation or stock dividend if the time of the subdivision or
consolidation or the record date of such stock dividend had been
immediately after the exercise, and the number of such shares referred
to in Section 2.4(a) as previously allotted or considered as allotted or
issued for the purposes of Section 2.4(c) will be correspondingly
adjusted;
(b) if there is any capital reorganization, reclassification or other
change or event affecting the Common Shares to which Section(a) does not
apply, the board will determine whether in the circumstances it is just
and equitable that there be some alteration in the securities or other
consideration to be acquired by Optionees on the exercise of Options
then outstanding and will make such amendments to the Plan as the Board
considers appropriate in the circumstances to ensure a just and
equitable result; and
(c) the Company will not be required to issue any fractional share in
satisfaction of its obligations hereunder or any payment in lieu
thereof.
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DISPUTES
3.7 If any question arises at any time with respect to the Subscription Price or
number of Optioned Shares deliverable upon exercise of an Option in any of the
events set out in this Section3.7, such question will, subject to receipt of
applicable regulatory approval, be conclusively determined by the Company's
auditor, or, if the auditor declines to so act, any other firm of chartered
accountants in Vancouver, British Columbia that the Company may designate, and
such auditor or other firm will have access to all appropriate records and its
determination will be binding upon the Company and all Optionees.
ARTICLE 4
PROCEDURE
OPTION COMMITMENT
4.1 Upon the granting of an Option hereunder, the Chairman or President of the
Company, or if the Board has delegated its duties hereunder to a Option
Committee, any member of such committee, will execute and deliver to the
Optionee an Option Commitment detailing the terms of the Option and upon such
delivery the Optionee will be a participant in the Plan and have the right to
purchase the Optioned Shares at the Subscription Price set out therein, subject
to the terms of the Option Commitment and the Plan.
MANNER OF EXERCISE
4.2 An Optionee being entitled to and wishing to exercise an Option may do so
only by delivering to the Company at its head office:
(a) a written notice addressed to the Company specifying the number of
Optioned Shares being acquired pursuant to the Option; and
(b) a certified cheque or bank draft payable to the Company for the
aggregate Subscription Price for the Optioned Shares being acquired.
SHARE CERTIFICATES
4.3 Upon an exercise of an Option the Company will direct its transfer agent to
issue a share certificate to an Optionee for the appropriate number of Optioned
Shares not later than five days thereafter.
<PAGE> 9
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ARTICLE 5
GENERAL PROVISIONS
GOVERNING LAW
5.1 The Plan will be construed in accordance with and the rights of the Company
and the Optionees will be governed by the laws of British Columbia and the laws
of Canada applicable therein.
NOTICE
5.2 Each notice, demand or communication required or permitted to be given under
the Plan will be in writing and will be delivered to the person to whom it is
addressed. The date of delivery of such notice, demand or communication will be
the date of receipt by the addressee.
Board approval of this Amended Plan is hereby evidenced by the signature of the
Company's President as of the 23rd day of October, 1998.
GLAMIS GOLD LTD.
Per: "C. Kevin McArthur"
-----------------------------
C. Kevin McArthur, President
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SCHEDULE
SHARE PURCHASE OPTION COMMITMENT
Notice is hereby given that, effective __, 199__ (the "Effective Date") Glamis
Gold Ltd. (the "Company") has, pursuant to the Company's Incentive Share
Purchase Option Plan (the "Plan"), granted to - (the "Optionee"), an Option (the
"Option") to acquire up to Common Shares (the "Optioned Shares") up to 5:00 p.m.
Vancouver Time on _________, 19__ (the "Expiry Date") at a Subscription Price of
Cdn. $_______ per share.
Optioned Shares may be acquired as follows:
The grant of the Option evidenced hereby is made on and subject to the terms and
conditions of the Plan, which are incorporated by reference herein. The number
of Optioned Shares will be adjusted if and to the extent required in accordance
with Section 3.7 of the Plan.
To exercise the Option, the Optionee must, unless otherwise agreed to by the
Company, deliver to the Company at its head office a written notice specifying
the number of Optioned Shares the Optionee wishes to acquire, together with a
certified cheque or bank draft payable to the Company for the aggregate
Subscription Price for such shares. A share certificate evidencing the Optioned
Shares thereby acquired will be issued to the Optionee by the Company's transfer
agent in accordance with the Plan.
GLAMIS GOLD LTD.
Per:
---------------------------------
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EXHIBIT 23.1
CAMPBELL, SAUNDERS & CO.
CHARTERED ACCOUNTANTS
October 19, 1998
The Board of Directors
Glamis Gold Ltd.
Dear Sirs:
We consent to the inclusion of our report dated May 8, 1998, relating to the
Consolidated Balance Sheet of Mar-West Resources ltd. as at December 31, 1997
and April 30, 1997 and the Consolidated Statements of Operations, Deficit and
Changes in Financial Position for the 8 months ended December 31, 1997, for the
12 months ended April 30, 1997 and for the period from inception to December 31,
1997, in the Form 8-K of Glamis Gold Ltd. dated October 21, 1998 and to the
incorporation by reference of such in the Registration Statements on Form S-8 of
Glamis Gold ltd.
Yours very truly,
"signed"
Chartered Accountants
Vancouver, Canada
October 19, 1998
650 West Georgia Street, Suite 1200, P.O. Box 11544, Vancouver, B.C. V6B 4N7
Telephone: 604 681 5500 Fax: 604 685 7100
CAMPBELL, SAUNDERS & CO. IS A MEMBER OF NEXIA INTERNATIONAL,
A WORLDWIDE NETWORK OF INDEPENDENT ACCOUNTING FIRMS
<PAGE> 1
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EXHIBIT 99.1
NEWS RELEASE
GLAMIS GOLD LTD.
FOR IMMEDIATE RELEASE
TRADING SYMBOL: TSE NYSE - GLG OCTOBER 23, 1998
================================================================================
GLAMIS CLOSES THE MAR-WEST ACQUISITION
RENO, NV, USA - GLAMIS GOLD LTD. ANNOUNCES THAT IT HAS COMPLETED THE ACQUISITION
OF MAR-WEST RESOURCES LTD. MAR-WEST IS NOW A WHOLLY OWNED SUBSIDIARY OF GLAMIS.
GLAMIS ISSUED APPROXIMATELY 7,539,900 COMMON SHARES AND PAID CDN$ 6,710,711 TO
CONSUMMATE THE TRANSACTION.
"THIS IS A GREAT DAY FOR GLAMIS," SAID CHESTER F. MILLAR, CHAIRMAN OF THE BOARD
OF GLAMIS. "WE LOOK FORWARD TO THE DEVELOPMENT OF THE SAN MARTIN PROPERTY INTO
THE FOURTH PRODUCING MINE IN THE HISTORY OF OUR COMPANY."
GLAMIS IS A LOW-COST, GROWTH-ORIENTED MINING COMPANY ENGAGED IN THE OPEN PIT
MINING AND EXTRACTION OF PRECIOUS METALS BY THE HEAP LEACH PROCESS. GLAMIS ENDED
THE JUNE 30, 1998 PERIOD IN A STRONG FINANCIAL POSITION WITH WORKING CAPITAL OF
$36.1 MILLION WHICH INCLUDES CASH OF $28.7 MILLION AND REMAINS ESSENTIALLY DEBT
FREE.
ON BEHALF OF THE BOARD;
/s/ DANIEL J. FORBUSH
DANIEL J. FORBUSH, C.P.A.
CHIEF FINANCIAL OFFICER, TREASURER & SECRETARY
================================================================================
For further information contact:
Daniel J. Forbush Website: www.glamis.com
Glamis Gold Ltd. email to : [email protected]
5190 Neil Road, Suite 310
Reno, NV 89502
Tel: (702) 827-4600 ext. 103 * Fax: (702) 827-5044
