<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1997
REGISTRATION NO. 333-22598
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
AMAX GOLD INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 06-1199974
(I.R.S. EMPLOYERIDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION
OFINCORPORATION OR ORGANIZATION)
---------------
9100 EAST MINERAL CIRCLE ENGLEWOOD, COLORADO 80112
(303) 643-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DEBORAH J. FRIEDMAN, ESQ. VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY AMAX
GOLD INC. 9100 EAST MINERAL CIRCLE ENGLEWOOD, COLORADO 80112 (303) 643-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
PAUL HILTON, ESQ.
LAURA B. GILL, ESQ. DAVIS, GRAHAM & STUBBS LLP 370 SEVENTEENTH STREET DENVER,
COLORADO 80202 (303) 892-9400
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after the effective date of this Registration Statement as
determined by the Registrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
---------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(1)(3) FEE(1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(4).....
- -------------------------------------------------------------------------------
Common Stock, par value
$.01 per share(5).....
- -------------------------------------------------------------------------------
Preferred Stock, par
value $1.00 per
share(6)..............
- -------------------------------------------------------------------------------
Warrants(7)............
- -------------------------------------------------------------------------------
Total................ $200,000,000 100% $200,000,000 $60,607
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) In U.S. dollars or the equivalent thereof in one or more foreign
currencies or currency units or composite currencies, including the
European Currency Unit. Pursuant to Rule 429(b) under the Securities Act
of 1933, securities in the amount of $108,000,000 are being carried
forward from Registration Statement No. 33-53963, previously filed by the
Registrant on Form S-3, and the amount of the filing fee associated with
such securities that was paid previously with such filing was $37,242.
(2) The proposed maximum initial offering price per unit will be determined,
from time to time, by the Registrant.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all securities issued from time to time pursuant to this
Registration Statement exceed $200,000,000.
(4) Subject to Footnote (3), there are being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold from time
to time by the Registrant. If any such Debt Securities are issued at an
original issue discount, then the offering price shall be in such greater
principal amount as shall result in an aggregate initial offering price of
up to $200,000,000.
(5) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of shares of Common Stock as may be sold from time to
time by the Registrant. There are also being registered hereunder an
indeterminate number of shares of Common Stock as may be issued upon
conversion of Debt Securities or Preferred Stock.
(6) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold from time
to time by the Registrant.
(7) Subject to Footnote (3), there are being registered hereunder an
indeterminate number of warrants to purchase Debt Securities, Common Stock
or Preferred Stock as may be sold from time to time by the Registrant.
---------------
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
included in this Registration Statement will also be used in connection with
the issuance of securities registered pursuant to Registration Statement No.
33-53963 previously filed by the Registrant on Form S-3 and declared effective
on July 21, 1994. This Registration Statement, which is a new registration
statement, also constitutes Post-Effective Amendment No. 1 to Registration
Statement No. 33-53963, and such Post-Effective Amendment shall hereafter
become effective concurrently with the effectiveness of this Registration
Statement and in accordance with Section 8(c) of the Securities Act of 1933.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
[LOGO OF AMAX GOLD APPEARS HERE]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
Amax Gold Inc. (the "Company" or "Amax Gold") may offer from time to time (i)
debt securities ("Debt Securities"), consisting of debentures, notes, bonds
and/or other unsecured evidences of indebtedness in one or more series, (ii)
shares of preferred stock, par value $1.00 per share ("Preferred Stock"), in
one or more series, (iii) shares of common stock, par value $.01 per share
("Common Stock") and (iv) warrants ("Warrants") to purchase Debt Securities,
Preferred Stock or Common Stock. The Debt Securities, Preferred Stock, Common
Stock and Warrants (collectively, the "Securities") may be offered either
together or separately in amounts, at prices and on terms to be determined at
the time of offering. The Securities offered pursuant to this Prospectus will
be limited to an aggregate initial offering price not to exceed
U.S.$200,000,000 (or the equivalent in foreign currency or currency units).
The accompanying Prospectus Supplement sets forth with regard to the particular
Securities in respect of which this Prospectus is being delivered (i) in the
case of Debt Securities, the title, aggregate principal amount, denominations
(which may be in United States dollars, in any other currency, currencies or
currency unit, including the European Currency Unit), maturity, rate, if any
(which may be fixed or variable) or method of calculation thereof, and time of
payment of any interest, any terms for redemption at the option of the Company
or the holder, any terms for sinking fund payments, any conversion or exchange
rights, any modification of the covenants, any listing of such Debt Securities
on a securities exchange and the initial public offering price and any other
terms in connection with the offering and sale of such Debt Securities, (ii) in
the case of Preferred Stock, the designation, aggregate principal amount, and
stated value and liquidation preference per share, initial public offering
price, dividend rate (or method of calculation), dates on which dividends shall
be payable, any redemption or sinking fund provisions, any conversion or
exchange rights, whether the Company has elected to offer the Preferred Stock
in the form of depositary shares, any listing of such Preferred Stock on a
securities exchange, and any other terms in connection with the offering and
sale of such Preferred Stock; (iii) in the case of Common Stock, the number of
shares of Common Stock and the terms of the offering and sale thereof; and (iv)
in the case of Warrants, the number and terms thereof, the number of shares of
Common Stock or Preferred Stock, or amount of Debt Securities, issuable upon
their exercise, the exercise price, the periods during which the Warrants are
exercisable, the terms of the Preferred Stock or Debt Securities issuable upon
exercise, any listing of such Warrants on a securities exchange and any other
terms in connection with the offering, sale and exercise of such Warrants. If
so specified in the applicable Prospectus Supplement, Securities may be issued
in whole or in part in the form of one or more temporary or permanent global
securities. The Prospectus Supplement will also contain information, as
applicable, about certain United States federal income tax considerations
relating to the Securities in respect of which this Prospectus is being
delivered.
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR CERTAIN CONSIDERATIONS RELEVANT TO
AN INVESTMENT IN THE SECURITIES.
The Company's outstanding Common Stock and $3.75 Series B Convertible Preferred
Stock are listed on the New York Stock Exchange (the "NYSE") under the symbols
"AU" and "AUPrB", respectively. The Common Stock is also listed on The Toronto
Stock Exchange (the "TSE") under the symbol "AXG". Each Prospectus Supplement
will indicate if the Securities offered thereby will be listed on any
securities exchange.
The Company may sell Securities to or through one or more underwriters, and
also may sell Securities directly to other purchasers or through agents. Such
underwriters may include Salomon Brothers Inc. The accompanying Prospectus
Supplement sets forth the names of any underwriters, dealers or agents involved
in the sale of the Securities in respect of which this Prospectus is being
delivered, the principal amounts, if any, to be purchased by such underwriters
and the compensation, if any, of such underwriters or agents. See "Plan of
Distribution" herein.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is March 26, 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS OR IN THE PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY UNDERWRITER, AGENT, DEALER OR OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its Regional
Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W. Plaza, Washington,
D.C. 20549. The Company is also subject to the information and reporting
requirements of the securities regulatory authorities of certain provinces of
Canada and files similar reports, proxy statements and other information with
such authorities. The Common Stock is listed on the NYSE and the TSE. Such
reports, proxy statements and other information can also be inspected and
copied at the respective offices of these exchanges at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005 and The Toronto Stock
Exchange, 2 First Canadian Place, Toronto, Ontario, Canada M5X 1J2. The
Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's web site
is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Securities offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and the exhibits thereto for further information with respect to the
Company and the Securities. The Registration Statement and the exhibits
thereto can be obtained from or inspected and copied at the public reference
facilities maintained by the Commission as described in the prior paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996,
filed with the Commission on March 13, 1996.
2. Consent Solicitation Statement, dated August 19, 1996, filed with
the Commission on August 23, 1996.
3. Consent Solicitation Statement, dated November 29, 1996, filed with
the Commission on December 3, 1996.
4. The description of the Common Stock and Preferred Stock contained in
the Registration Statement on Form 8-B, filed with the Commission on
June 21, 1995.
2
<PAGE>
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
shall be deemed to be incorporated herein by reference and to be a part hereof
from the date of filing of such documents. Any statement contained herein, or
in a document all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein or in the Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will furnish without charge to each person, including any
beneficial owner of Securities, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
incorporated by reference herein, except for the exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests should be directed to Investor Relations, 9100 East
Mineral Circle, Englewood, Colorado 80112. Telephone requests may be directed
to Investor Relations at (303) 643-5625.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus and any Prospectus Supplement,
including statements made in documents incorporated by reference herein or
therein, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements include statements regarding expected dates for
commencement of mining, gold production and commercial production, projected
quantities of future gold production, estimated reserves and recovery rates,
anticipated production rates, costs and expenditures, prices realized by the
Company, growth plans and sources of financing and repayment alternatives.
Factors that could cause actual results to differ materially include, among
others: risks and uncertainties relating to general domestic and international
economic and political conditions, the volatile price of gold (that has
recently declined below $350 per ounce), the political and economic risks
associated with foreign operations, cost overruns, construction delays,
unanticipated ground and water conditions, unanticipated grade and geological
problems, metallurgical and other processing problems, availability of
materials and equipment, the timing of receipt of necessary governmental
permits, the occurrence of unusual weather or operating conditions, force
majeure events, lower than expected ore grades, the failure of equipment or
processes to operate in accordance with specifications or expectations, labor
relations, accidents, delays in anticipated start-up dates, environmental
risks, the results of financing efforts and financial market conditions and
other risk factors detailed in "Risk Factors" and the Company's filings with
the Commission. Many of such factors are beyond the Company's ability to
control or predict. Readers are cautioned not to put undue reliance on
forward-looking statements. The Company disclaims any intent or obligation to
update publicly these forward-looking statements, whether as a result of new
information, future events or otherwise.
3
<PAGE>
THE COMPANY
Amax Gold is engaged in the mining and processing of gold and silver ore and
in the exploration for, and acquisition and development of, gold-bearing
properties, principally in the Americas and Russia.
The Company owns a 100 percent interest in the Fort Knox mine near
Fairbanks, Alaska, which is expected to achieve commercial production in early
1997. The Company's operating properties consist of a 50 percent interest in
the Refugio mine in Chile; a 100 percent interest in the Hayden Hill mine in
Lassen County, California; and a 90 percent interest in the Guanaco mine in
Chile. The Company has agreed to acquire, subject to certain conditions, from
Cyprus Amax Minerals Company ("Cyprus Amax") a 50 percent interest in the
Kubaka gold mine in the Russian Federation. The first gold was poured at
Kubaka in late February 1997, and the Company expects to complete the
acquisition of the Kubaka mine in mid-1997. With the completion of development
at the Refugio and Fort Knox mines and the pending acquisition of the Kubaka
mine, the Company expects its total production for 1997 to approach 700,000
ounces of gold at an average cash cost of approximately $220 to $230 per ounce
of gold.
The Company's share of production from its operating properties in the
United States and Chile totaled 268,331 and 238,255 ounces during 1996 and
1995, respectively, and its share of reserves in all its properties as of
December 31, 1996 totaled approximately 229 million tons of ore reserves with
a weighted average grade of 0.028 ounces of gold per ton, with 6.4 million
contained ounces of gold. Assuming the acquisition of Kubaka is completed, the
Company's share of reserves at the Kubaka mine would be approximately 2.47
million tons of ore with an average grade of 0.540 ounces of gold per ton,
containing approximately 1.33 million ounces of gold.
The Company was incorporated in Delaware in 1987 and reincorporated in 1995.
Cyprus Amax owns approximately 52.5 percent of the Company's outstanding
common stock and has the right to acquire additional shares in connection with
the Kubaka acquisition and under certain financing arrangements, including
arrangements entered into to finance the Fort Knox project. See "Risk
Factors--Relationship with Cyprus Amax" and "Certain Transactions and
Relationship with Cyprus Amax."
The Company's Common Stock is listed on the NYSE and the TSE and its $3.75
Series B Convertible Preferred Stock is listed on the NYSE. The Company's
executive offices are located at 9100 East Mineral Circle, Englewood, Colorado
80112, and its telephone number is (303) 643-5500.
4
<PAGE>
PROVEN AND PROBABLE GOLD ORE RESERVES
The following table sets forth the Company's proven and probable gold ore
reserves as of December 31, 1996. Reserves are that part of a mineral deposit
that can be economically and legally extracted or produced at the time of
reserve determination and are customarily stated in terms of ore when dealing
with metals. Reserves represent in-place grades and do not reflect losses in
the milling or heap leaching processes but do include allowance for ore
dilution in the mining process. Reference to tons and ounces are to short tons
of 2,000 pounds and to troy ounces of 31.103 grams, respectively. Information
regarding the status of properties as producing, under construction or
development, is as of December 31, 1996.
The ore reserves at the Fort Knox and Refugio mines were independently
verified by Mineral Resources Development, Inc. ("MRDI"). Ore reserves at the
Haile property have been verified by Derry, Michener, Booth & Wahl ("DMBW").
MRDI and DMBW are independent mining consulting firms and are experts in
mining, geology and ore reserve determination.
PROVEN AND PROBABLE GOLD ORE RESERVES
<TABLE>
<CAPTION>
CONTAINED OUNCES
(000S)
AVERAGE GOLD ----------------
TONS ORE GRADE COMPANY'S
(000S) (OUNCES PER TON) TOTAL SHARE
------- ---------------- ------ ---------
<S> <C> <C> <C> <C>
Producing mines:
Fort Knox(1)....................... 161,315 0.025 4,079 4,079
Refugio(2)......................... 107,204 0.029 3,117 1,558
Guanaco(3)......................... 2,673 0.045 119 119
Hayden Hill(4)..................... 5,635 0.029 164 164
------ -----
Total producing mines............ 7,479 5,920
------ -----
Development properties:
Haile(5)........................... 8,736 0.089 780 488
------ -----
Total gold....................... 8,259 6,408
====== =====
Properties pending acquisition:
Kubaka(6).......................... 4,949 0.540 2,665 1,332
------ -----
Total gold--including
pending acquisition............. 10,924 7,740
====== =====
</TABLE>
- --------
(1) Reserves at Fort Knox were calculated based on a $400 per ounce gold price
and a gold cut-off grade of 0.013 ounces per ton. The Company estimates
the average gold recovery rate will be approximately 90 percent.
(2) Reserves at Refugio were calculated based on a $375 per ounce gold price
and variable cut-off grades. The Company estimates the average gold
recovery rate will be approximately 66 percent. The Company has a 50%
interest in the Refugio mine.
(3) The Company owns a 90 percent interest in the Guanaco mine. Under existing
stockholder arrangements, the Company receives 100 percent of production
and therefore, 100 percent of Guanaco's reserves have been included in the
Company's reserves. Reserves were calculated based on a $400 per ounce
gold price and a cut-off grade of 0.021 ounces per ton. The Company
estimates the average gold recovery rate will be approximately 57 percent.
(4) Reserves at Hayden Hill were calculated based on a $400 per ounce gold
price and variable cut-off grades. The Company estimates the average gold
recovery rate will be approximately 60 percent.
(5) Reserves at Haile were calculated based on a $400 per ounce gold price.
The Company estimates that average gold recovery rates will range from 65
percent to 85 percent. The Company has a 62.5% joint venture interest in
the Haile property.
(6) Reserves at Kubaka were calculated based on a $400 per ounce gold price.
The Company estimates the average gold recovery rate will be approximately
97 percent. The Company expects to acquire a 50% interest in the Kubaka
mine.
5
<PAGE>
GOLD PRODUCTION AND PRODUCTION COSTS
The following table sets forth the Company's gold production, cash operating
costs, total cash costs and total production costs per ounce of gold produced,
ounces of gold sold and average realized prices for the periods indicated.
Production is defined as gold or silver produced in the form of dore plus any
inventory in mill carbon circuits.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Gold production (ounces)
Refugio.......................................... 30,612 -- --
Guanaco.......................................... 96,018 70,850 57,675
Hayden Hill...................................... 103,502 80,031 65,785
Sleeper.......................................... 38,199 82,062 106,912
Wind Mountain.................................... -- 5,312 10,513
------- ------- -------
Total gold production.......................... 268,331 238,255 240,885
======= ======= =======
Cash operating costs ($ per ounce of gold
produced)(1)
Refugio.......................................... 224 -- --
Guanaco.......................................... 278(2) 362 408
Hayden Hill...................................... 219 249 368
Sleeper.......................................... 241 319 258
Wind Mountain.................................... -- 191 133
------- ------- -------
Average cash operating costs................... 244 306 318
======= ======= =======
Total cash costs ($ per ounce of gold produced)(1)
Refugio.......................................... 242 -- --
Guanaco.......................................... 290(2) 375 420
Hayden Hill...................................... 229 253 382
Sleeper.......................................... 247 325 264
Wind Mountain.................................... -- 202 159
------- ------- -------
Average total cash costs....................... 255 313 329
======= ======= =======
Total production costs ($ per ounce of gold
produced)(1)
Refugio.......................................... $ 337 $ -- $ --
Guanaco.......................................... 450(2) 526 567
Hayden Hill...................................... 346 362 511
Sleeper.......................................... 333 392 365
Wind Mountain.................................... -- 217 164
------- ------- -------
Average total production costs................. $ 381 $ 417 $ 445
======= ======= =======
Ounces of gold sold................................ 262,975 238,094 235,664
======= ======= =======
Average price per ounce sold....................... $ 412 $ 406 $ 401
======= ======= =======
</TABLE>
- --------
(1) Effective January 1, 1996, the Company adopted the Gold Production Cost
Standard developed by the Gold Institute in order to facilitate
comparisons among companies in the gold industry. Cash production costs
reported in prior periods have been restated as cash operating costs and
total cash costs in accordance with the new standard. Cash operating costs
calculated under the new standard include all operating costs (including
overhead) at the mine sites, but exclude royalties, production taxes and
reclamation. Total cash costs include royalties and production taxes, but
exclude reclamation. Total production costs remain unchanged and include
reclamation and depreciation, depletion and amortization.
(2) Cash costs in 1996 do not include the impact of the write-down of heap
leach inventories.
6
<PAGE>
RISK FACTORS
In addition to the other information set forth in this Prospectus and the
accompanying Prospectus Supplement, prospective purchasers of Securities
should consider carefully the following risk factors in evaluating an
investment in the Securities. This Prospectus contains forward-looking
statements which involve certain assumptions, risks and uncertainties. The
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including
those set forth in the following risk factors and elsewhere in this
Prospectus.
RISK OF SUBSTANTIAL LEVERAGE
At December 31, 1996, the Company had current assets of $62.9 million and
current liabilities and long-term debt of $484.9 million. In order to finance
the Fort Knox project, the Company borrowed $250 million from a group of banks
and as of March 20, 1997, had borrowed $142.3 million from Cyprus Amax under a
demand loan arrangement. The Company's share of borrowings to finance the
Refugio mine was $38.25 million at March 20, 1997. Assuming the Kubaka
acquisition is completed, the Company will acquire a subsidiary that has
guaranteed $144 million of borrowings for the Kubaka project from financial
institutions. Substantially all of the Company's properties are subject to
liens to secure these borrowings. The Company currently projects that cash
flows from its operating properties will be sufficient to meet capital and
working capital needs of these properties and to repay its indebtedness owed
to banks. However, these projections are based on a number of assumptions
including, for example, assumptions regarding gold prices, estimated
production and future production costs, that are inherently uncertain and many
of which are beyond the control of the Company. If these assumptions prove not
to be correct, this could have a material adverse affect on the Company's
ability to meet its cash needs. The Company currently anticipates that
repayment of the Cyprus Amax demand loan could be funded through additional
external funding, including proceeds from the sale of Securities offered
hereby. If Cyprus Amax elects to require cash repayment of the demand loan
before such financing can be arranged, the Company would not have sufficient
cash from operations to pay the obligations that then would come due.
HISTORY OF NET LOSSES
The Company has incurred losses of $34.2 million, $23.9 million and $35.5
million in the fiscal years ending December 31, 1996, 1995 and 1994,
respectively. The loss in 1996 includes a $35.5 million pre-tax write-down,
and the loss in 1994 includes a $21.1 million pre-tax write-down. The
Company's ability to operate profitably will depend on the future success of
projects in their early stages of operation or final stages of development.
There can be no assurance that such projects will enable the Company to become
profitable.
DEVELOPMENT AND OPERATING RISKS
The Company's business operations are subject to risks and hazards inherent
in the mining industry, including but not limited to unanticipated grade and
other geological problems, water conditions, surface or underground
conditions, metallurgical and other processing problems, mechanical equipment
performance problems, the unavailability of materials and equipment,
accidents, labor force and force majeure factors, unanticipated transportation
costs and weather conditions, and potential political instabilities of foreign
governments, any of which can materially and adversely affect, among other
things, the development of properties, production quantities and rates, costs
and expenditures and production commencement dates.
The Company's long-term prospects will depend on its ability to develop
new large-scale projects in a cost-effective manner. The Company currently has
no new development projects of the scope of Refugio, Fort Knox and Kubaka. Over
the past two years, the Company completed development of
7
<PAGE>
Refugio and Fort Knox and managed development of Kubaka; however, each of
these projects experienced costly construction delays, and Fort Knox and
Kubaka experienced unanticipated and substantial increases in development
costs. There can be no assurance that the Company will be successful at
identifying, acquiring and developing major new gold projects in the future.
Early stage operation of a mine presents challenges that differ from both
that of a development project and of a mature operating mine. As a project
moves from development stage to an operating mine, the complexity of
technical, geological, regulatory, political and management issues increases,
any of which could affect the ability to conduct profitable mining.
Accordingly, expenditures on any and all projects, actual production
quantities and rates, and cash operating costs may be materially and adversely
affected and may differ materially from anticipated expenditures, production
quantities, rates and costs. In addition, the Kubaka project faces substantial
uncertainties related to its remote location in Russia and the uncertain
Russian regulatory environment. It is not unusual in new mining operations to
experience unexpected problems during the start-up phase. For example, the
Company experienced start-up delays at its Refugio mine in 1996 due to
mechanical problems with the secondary and tertiary crushers and collapse of
fill underlying the fine ore storage bin, and the Company had to take a $64.1
million pre-tax write-down in July 1993 at its Hayden Hill mine when the mine
was reconfigured for a heap leach operation due to insufficient grade for a
milling operation. Any future similar events could materially and adversely
affect the Company's business, financial condition, results of operations and
cash flows.
GOLD PRICE VOLATILITY
The profitability of the Company's operations can be significantly affected
by changes in the market price of gold. The market price of gold has
fluctuated widely and is affected by numerous factors beyond the Company's
control, including international economic trends, currency exchange
fluctuations, expectations for inflation, speculative activities, consumption
patterns (such as purchases of gold jewelry and the development of gold coin
programs), purchases and sales of gold bullion holdings by central banks or
other large gold bullion holders or dealers and global or regional political
events, particularly in major gold-producing countries such as South Africa
and some of the countries that formerly comprised the Soviet Union. Gold
market prices are also affected by worldwide production levels, which have
increased in recent years. The aggregate effect of these factors, all of which
are beyond the Company's control, is impossible for the Company to predict. In
addition, the market price of gold has on occasion been subject to rapid
short-term changes because of market speculation. The following table sets
forth for the years indicated the high and low closing sale prices of gold,
first position, as provided by the Commodity Exchange, Inc. ("COMEX") in New
York:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1997* 1996 1995 1994 1993 1992 1991 1990 1989
----- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High.............................. $369 $415 $395 $398 $407 $359 $403 $422 $419
Low............................... $338 $368 $372 $371 $326 $330 $344 $347 $358
</TABLE>
- --------
* Through March 20, 1997
If the gold price is below the Company's cash production costs and remains
below such level for any sustained period, the Company could experience
additional losses and could determine that it is not economically feasible to
continue production at some or all of its operations or to continue the
development of some or all of its projects.
The Company has historically used hedging techniques successfully to reduce
the Company's exposure to gold price volatility. The gold price has declined
recently, and if it remains low for a significant period of time, the
Company's ability to achieve a similar premium over the average COMEX gold
price in the future could be affected adversely. In addition, the Company does
not expect initially
8
<PAGE>
to hedge Kubaka production, which will decrease the percentage of the
Company's total production being hedged during the period that Kubaka is in
production. There can be no assurance that the Company will be able to achieve
in the future realized prices for the Company's production in excess of
average COMEX prices as a result of its hedging activities.
RESERVE ESTIMATES
The ore reserve estimates presented in this Prospectus or incorporated
herein by reference are necessarily imprecise and depend to some extent on
statistical inferences drawn from limited drilling, which may, on occasion,
prove unreliable. Should the Company encounter mineralization or formations at
any of its mines or projects different from those predicted by drilling,
sampling and similar examinations, reserve estimates may be adjusted and
mining plans may be altered in a way that might adversely affect the Company's
operations. Moreover, short-term operating factors relating to the ore
reserves, such as the need for sequential development of ore bodies and the
processing of new or different ore grades, may adversely affect the Company's
profitability in any particular accounting period.
Proven and probable reserves at the Company's mines and development projects
were calculated at December 31, 1996 based upon varying gold prices ranging
from $375 to $400 per ounce of gold. Recently, gold prices have been
significantly below these levels with recent prices of less than $350 per
ounce. Prolonged declines in the market price of gold may render ore reserves
containing relatively lower grades of gold mineralization, such as those
currently identified at Fort Knox, Refugio and Hayden Hill, uneconomic to
exploit (unless the utilization of forward sales or other hedging techniques
is sufficient to offset such declines) and could reduce materially the
Company's reserves. Should such reductions occur, material write-downs of the
Company's investment in mining properties might be required, and there could
be material delays in the development of new projects, increased net losses
and reduced cash flow.
The Company, from time to time, has been required to write down its assets
as a result of mining experience and reevaluation of geologic data, which also
required reductions in proven and probable reserves at the affected property.
For example, in 1993, reserves at the Hayden Hill property were reduced by
over 400,000 ounces of gold when the mine was reconfigured as a heap leach
operation, and the Company recognized a pre-tax write-down of $64.1 million.
The Company also experienced additional write-downs in 1994 and 1996. There
can be no assurance that operational experience at the Company's projects over
time will not result in future write-downs of asset values.
FOREIGN OPERATIONS
Following the consummation of the Kubaka acquisition, a significant portion
of the Company's mining operations will be located in Chile and Russia.
Foreign operations and investments are subject to the risks normally
associated with conducting business in foreign countries, including foreign
exchange controls and currency fluctuations, limitations on repatriation of
earnings, foreign taxation, uncertainty in the legal system and policies of
particular countries, including renegotiation or nullification of existing
licenses or other contracts, labor disputes and uncertain political and
economic environments as well as risks of war and civil disturbances or other
risks which could cause production difficulties or stoppages, restrict the
movement of funds or result in the deprivation or loss of contract rights or
the taking of property by nationalization or expropriation without fair
compensation. Foreign operations could also be impacted by laws and policies
of the United States affecting foreign trade, investment and taxation. Of
particular significance in Russia is the right of Russian authorities to
purchase gold produced from Kubaka, with payment 50 percent in U.S. dollars
and 50 percent in roubles at then current London gold prices. The amount to be
paid in roubles is intended to be roughly equivalent to the Kubaka mine rouble
expenses, which if expenses denominated in roubles are less than payments in
roubles, could expose the Company to currency exchange risks and the risk that
9
<PAGE>
viable and adequate currency exchange mechanisms may not be available. Any
gold that the Russian authorities elect not to purchase may be exported from
Russia and sold to third parties.
Certain risks of foreign operations can be offset by insurance coverage. The
Company has obtained political risk insurance coverage for its equity
investment in Chile, and at the closing of the Kubaka acquisition will obtain
political risk insurance coverage for 90 percent of its equity investment in
the Kubaka mine. The Kubaka senior lenders have assumed the political risk
relating to such debt.
MINING RISKS AND INSURANCE
The business of gold mining generally is subject to a number of risks and
hazards, including environmental hazards, industrial accidents and rock falls,
labor disputes, flooding, earthquakes, interruptions due to inclement or
hazardous weather conditions and other acts of God. Such risks could result in
damage to, or destruction of, mineral properties or production facilities,
personal injury, environmental damage, process and production delays, monetary
losses and possible legal liability. While the Company maintains through
Cyprus Amax, and intends to continue to maintain, insurance consistent with
industry practice, no assurance can be given that such insurance will continue
to be available, be available at economically acceptable premiums or be
adequate to cover any resulting liability.
ENVIRONMENTAL RISKS
Mining is subject to potential risks and liabilities associated with
pollution of the environment and the disposal of waste products occurring as a
result of mineral exploration and production. Environmental liability may
result from mining activities conducted by others prior to the Company's
ownership of a property. To the extent the Company is subject to uninsured
environmental liabilities, the payment of such liabilities would reduce funds
otherwise available to the Company and could have a material adverse effect on
the Company. Should the Company be unable to fund fully the cost of remedying
an environmental problem, the Company might be required to suspend operations
or enter into interim compliance measures pending completion of the required
remedy. The potential exposure may be significant and could have a material
adverse effect on the Company.
In the context of environmental permitting, including the approval of
reclamation plans, the Company must comply with standards, laws and
regulations which may entail greater or lesser costs and delays depending on
the nature of the activity to be permitted and how stringently the regulations
are implemented by the permitting authority. It is possible that the costs and
delays associated with compliance with such laws, regulations and permits
could become such that the Company would not proceed with the development of a
project or the operation or further development of a mine. Laws and
regulations involving the protection and remediation of the environment are
constantly changing and are generally becoming more restrictive. The Company
has made, and expects to make in the future, significant expenditures to
comply with such laws and regulations.
Pending and anticipated bills which affect environmental laws applicable to
mining in the United States may alter substantially the Clean Water Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, and the Endangered Species Act.
Adverse developments and operating requirements in these acts could impair the
ability of the Company as well as others to develop mineral resources.
Revisions to current versions of these bills could occur prior to passage. In
addition, the EPA continues to reevaluate its authority for regulation of
mining operations, most recently in its Draft Hardrock Mining Framework (the
"Draft Framework"), under which the EPA would regulate more aggressively
mining operations through the use of existing statutory authority.
Operations at the Company's Guanaco and Refugio mines are subject to
regulation under the laws of Chile. In March 1994, the country's first
comprehensive environmental framework law became
10
<PAGE>
effective. Among other things, this law provides for a comprehensive permit
program and environmental impact analysis for future exploration and mining
activities, creates a liability scheme for forms of environmental damage, and
contemplates the issuance of regulations imposing operating standards. Until
regulations are promulgated, the full impact of the new law on the mining
industry in Chile will be unclear.
Environmental law in Russia is continuing to develop. Many environmental
laws have been passed since 1991, but regulatory procedures are not well
established. While the Kubaka mine has received federal permission to operate,
additional regulations may be adopted in the future that could result in
higher costs and project delays.
OTHER GOVERNMENTAL REGULATIONS
The Company's mining operations and exploration activities are subject to
extensive federal, state, local and foreign laws and regulations governing
prospecting, development, production, exports, taxes, labor standards,
occupational health, mine safety and other matters. The Company believes that
it is in substantial compliance with all such material laws and regulations.
New laws and regulations, amendments to existing laws and regulations, or more
stringent implementation of existing laws and regulations could have a
material adverse impact on the Company, prohibit, reduce or delay production
at operating mines or prevent the development of new mining properties.
PROPOSED FEDERAL MINING LEGISLATION
The Company expects that the U.S. Congress will consider in its current
session a major revision of the General Mining Law, which governs mining
claims and related activities on federal public lands. Similar legislation has
been introduced in earlier sessions of Congress, but final legislation has not
been enacted. The Company expects that any new legislation would impose a
royalty upon production of minerals from federal lands and could contain
additional requirements for mined land reclamation and environmental control
and reclamation measures. If enacted, such legislation could impair the
Company's ability to develop future mineral prospects on unpatented mining
claims. Currently, only Hayden Hill would be affected by federal mining
legislation.
EXPLORATION RISKS
Mineral exploration, particularly for gold, is highly speculative in nature,
involves many risks and frequently is nonproductive. There can be no assurance
that the Company's mineral exploration efforts will be successful. Once
mineralization is discovered, it usually takes a number of years from the
initial phases of exploration until production is possible, during which time
the economic feasibility of production may change. Substantial expenditures
are required to establish ore reserves through drilling, to determine
metallurgical processes to extract the metal from the ore and, in the case of
new properties, to construct mining and processing facilities. As a result of
these uncertainties, no assurance can be given that the Company's exploration
programs will result in the expansion or replacement of existing reserves,
some of which are being depleted by current production.
The Company has entered into an Exploration Joint Venture Agreement (the
"Exploration JV") with Cyprus Amax effective January 1, 1994, under which the
Company and Cyprus Amax pool their efforts for the principal purpose of
discovering and developing future gold prospects, with Cyprus Amax providing
75 percent and the Company providing 25 percent of the initial exploration
funding for prospects in which the Company elects to participate. The
Exploration JV is intended to broaden the geographic reach of the Company's
gold exploration program and reduce its cost by sharing key personnel and
spreading the high risks associated with exploration. Nevertheless, the
Company initially will have only a 25 percent interest in any prospects
discovered through the Exploration JV. Amax Gold may purchase Cyprus Amax's 75
percent interest in gold prospects developed through the
11
<PAGE>
Exploration JV prior to a decision to place such prospects in production, but
only at the then fair market value for such interest (which may be determined
by mutual agreement). This ultimately could increase the Company's cost of
acquiring such prospects.
TITLE TO PROPERTIES
The validity of unpatented mining claims, which constitute a significant
portion of the Company's property holdings in the United States, is often
uncertain and may be contested. A portion of the Hayden Hill mine is located
on unpatented federal lode and placer mining claims. Unpatented mining claims
generally are considered subject to greater title risk than patented mining
claims and real property interests owned in fee simple. Substantially all of
the Fort Knox property is located on State of Alaska mining claims or mining
leases that are subject to certain title risks similar to those affecting
federal unpatented mining claims. The State of Alaska mining claims and mining
leases included in the Fort Knox property cannot be patented under Alaska law.
In addition, the State of Alaska lands included within the Fort Knox
property on which actual production and milling operations are occurring have
been designated as Alaska Mental Health Trust Lands. While this designation
was made subject to all encumbrances or interests of record (including the
Fort Knox upland mining lease and millsite permit) applications for future
permits or rights (or applications for material modifications to existing
permits or rights), if any, involving interests in Mental Health Trust Lands
would be analyzed in light of what is determined to be in the best interests
of the Alaska Mental Health Trust rather than what is determined to be in the
best interests of the State of Alaska generally. There is no prohibition on
the Alaska Mental Health Trust seeking an increase on the amount of royalties
payable on minerals produced from Mental Health Trust Lands.
Mining operations in Chile and Russia are conducted under concessions,
mining leases or licenses issued by the government pursuant to applicable
laws. Such leases and licenses contain various requirements regarding
operations of the property. The license applicable to the Kubaka mine also
includes requirements regarding recovery rates and other related matters. The
legal regime applicable to the mining of gold in Russia is in a period of
development and transition.
CONFLICTS OF INTEREST; TRANSACTIONS WITH AND RELIANCE ON CYPRUS AMAX
As of March 20, 1996, Cyprus Amax held approximately 52.5 percent of the
outstanding shares of the Company's Common Stock, which would increase to 59.1
percent after the Kubaka acquisition, excluding any issuance of contingent
shares. Under various agreements, Cyprus Amax's ownership of the Company's
Common Stock potentially could increase to approximately 71.1 percent prior to
any sale of Securities hereunder, assuming the issuance of the maximum number
of shares of Common Stock to Cyprus Amax under such agreements. Directors and
officers of Cyprus Amax comprise three of the six members of the Company's
Board of Directors. Milton H. Ward, Chairman of the Board and Chief Executive
Officer of the Company, is Chairman, President and Chief Executive Officer of
Cyprus Amax; Gerald J. Malys, a director of the Company, is Senior Vice
President and Chief Financial Officer of Cyprus Amax; and Allen Born, a
director of the Company, is also a director of Cyprus Amax. As long as Cyprus
Amax is the holder of greater than 50% of the outstanding shares of Common
Stock, it will continue to be able to elect all the directors of the Company
and to direct corporate policy. Further, Cyprus Amax may have effective
control even if its ownership interest is less than a majority of the
outstanding Common Stock.
The Company has engaged in and expects to continue to engage in certain
transactions with Cyprus Amax. These transactions have involved various
financing arrangements, an exploration joint venture agreement and a services
agreement related to certain administrative services provided by each company
to the other. Because certain officers and directors of the Company are also
officers and directors of Cyprus Amax, the terms of any agreement between the
Company and Cyprus Amax
12
<PAGE>
may not be the result of arms-length negotiations. The Company has required
that any material transaction with Cyprus Amax or its affiliates must be
approved by a special committee of the Company's Board of Directors, comprised
of directors who are not officers or directors of Cyprus Amax or its
affiliates or officers of Amax Gold. There can be no assurance, however, that
the terms of any transactions between the Company and Cyprus Amax have been or
will be as favorable as the Company could obtain from unrelated parties.
The Company has been substantially dependent on Cyprus Amax for financial
support. There can be no assurance that such financing or services could be
obtained externally in a timely manner or on terms acceptable to the Company
in the event they were not available from Cyprus Amax in the future. See "--
Risk of Substantial Leverage."
The Company has announced that it is considering seeking a strategic
partner, merger or other business combination transaction. Depending on the
outcome of any such transaction involving Amax Gold, Cyprus Amax's ownership
interest could be decreased and its financial, exploration and administrative
support of Amax Gold could be reduced. In addition, Cyprus Amax would have the
ability to approve or reject, among other matters, any merger or business
combination transaction involving Amax Gold.
USE OF PROCEEDS
Unless a Prospectus Supplement indicates otherwise, the Company intends to
use the net proceeds to be received from the sale of the Securities for
repayment of indebtedness, to finance the Company's operations, for the
continued development of its gold projects and for other general corporate
purposes.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The consolidated ratio of earnings to fixed charges and preferred stock
dividends for the Company was as follows for the years ended December 31,
1996, 1995, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996* 1995* 1994* 1993* 1992
----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to fixed charges
and preferred stock dividends (unaudited)...... -- -- -- -- 3.06x
</TABLE>
- --------
* For the years ended December 31, 1996, 1995, 1994 and 1993, earnings were
inadequate to cover fixed charges and preferred stock dividends by $73.7
million, $36.7 million, $52.7 million and $121.8 million, respectively, due
primarily to operating losses in each of these years and asset write-downs
in 1996, 1994 and 1993 of $35.5 million, $21.1 million and $87.7 million,
respectively.
For purposes of the ratio of earnings to fixed charges, "earnings" consist
of income before income taxes, before the cumulative effect of accounting
changes and the 10 percent minority interest in the losses of Compania Minera
Amax Guanaco, and excluding amortization of capitalized interest and fixed
charges. "Fixed charges" consist of total interest and bank fees, whether
expensed or capitalized, and one-third of rents, which management believes is
a reasonable approximation of an interest factor.
13
<PAGE>
BUSINESS
GENERAL
Amax Gold Inc. ("Amax Gold" or the "Company") and its subsidiaries are
engaged in the mining and processing of gold and silver ore and in the
exploration for, and acquisition and development of, gold-bearing properties,
principally in the Americas and Russia.
The Company owns a 100 percent interest in the Fort Knox mine near
Fairbanks, Alaska, which is nearing completion of construction and
commencement of commercial production. The Company's operating properties
consist of a 50 percent interest in the Refugio mine in Chile; a 100 percent
interest in the Hayden Hill mine in Lassen County, California; and a 90
percent interest in the Guanaco mine in Chile. The Company has agreed to
acquire, subject to certain conditions, from Cyprus Amax a 50 percent interest
in the Kubaka gold mine in the Russian Federation. The first gold was poured
at Kubaka in late February 1997, and the Company expects to complete the
acquisition of Kubaka in early 1997. The Company also owns a 62.5 percent
joint venture interest in the Haile property in Lancaster County, South
Carolina, as well as a 100 percent interest in the Sleeper mine in Humboldt
County, Nevada and in the Wind Mountain mine in Washoe County, Nevada. The
Sleeper and Wind Mountain mines are in reclamation.
The Company's share of production from its operating properties in the
United States and Chile totaled 268,331 and 238,255 ounces during 1996 and
1995, respectively. The Company's cost of sales declined to $262 per ounce for
1996 compared to $329 for 1995, and the Company's average price realized for
1996 was $412 per ounce, compared to $406 per ounce for 1995. The Company's
share of reserves in all its properties as of December 31, 1996 totaled
approximately 229 million tons of ore reserves with an average grade of 0.028
ounces of gold per ton, with 6.4 million contained ounces of gold. Assuming
the acquisition of Kubaka is completed, the Company's share of reserves in the
Kubaka mine would be 2.47 million tons of ore reserves, with an average grade
of 0.540 ounces of gold per ton, containing 1.33 million ounces of gold.
RESERVES
See "The Company--Proven and Probable Gold Ore Reserves" for a summary of
the Company's gold ore reserves.
PRINCIPAL MINES
Set forth below is a description of the status and operations of each of the
Company's principal mines. Production data is presented in "The Company--Gold
Production and Production Costs."
Fort Knox Mine
The Fort Knox mine is located in the Fairbanks Mining District, 15 miles
northeast of Fairbanks, Alaska. Construction of the Fort Knox project began in
the first quarter of 1995. Fort Knox reached mechanical completion in November
1996, produced its first gold bars in December 1996 and is expected to achieve
commercial production in early 1997.
Fort Knox includes an open pit mine and a conventional 36,000 tons per day
(13.1 million tons per year) process plant, a tailings storage facility and a
reservoir to supply process water. The process facilities are designed as a
zero discharge system. The mine and plant are designed to operate year round
and to produce approximately 300,000 to 350,000 ounces of gold per year, and
total cash costs are expected to average between $215 and $235 per ounce, with
higher production rates and lower unit operating costs expected in the early
years of production.
In 1995 and 1996, the Company encountered significant construction cost
overruns at Fort Knox, which increased its estimated total cost to $370
million, excluding approximately $26 million of
14
<PAGE>
capitalized interest. As of February 28, 1997, approximately $340 million had
been spent on construction, excluding approximately $27 million of capitalized
interest.
Refugio Mine
The Company owns a 50 percent interest in the Refugio mine, located in the
Maricunga Mining District in central Chile, approximately 75 miles east of
Copiapo. The property, situated between 13,800 feet and 14,800 feet above sea
level, is held by Compania Minera Maricunga, a Chilean contractual mining
company indirectly owned 50 percent by the Company and 50 percent by Bema Gold
Corporation, a publicly traded company based in Vancouver, British Columbia.
Construction of the Refugio mine was substantially completed in early 1996
with the development of an open pit mine and a three stage crushing and heap
leach operation capable of processing 33,000 tons of ore per day, or 11.9
million tons per year. The mine and plant are designed to produce an estimated
200,000 to 250,000 ounces of gold per year (of which the Company's share is 50
percent), and total cash costs are expected to average between $245 and $265
per ounce, with higher production and lower unit operating costs expected in
the early years of production. Production commenced in April 1996; however,
start-up was delayed due to mechanical problems with the secondary and
tertiary crushers and the collapse of fill underlying the fine ore storage
bin. Placement of ore on the pads, leaching and gold production continued,
however, until resolution of these mechanical problems in the third quarter of
1996, and commercial production was achieved in October 1996.
Hayden Hill Mine
The Hayden Hill mine is located in Lassen County, California, approximately
120 miles northwest of Reno, Nevada. The Hayden Hill operation is an open pit
mine with two pits, heap leach pads and tailings disposal facilities. The mine
began production in June 1992. Milling operations were discontinued in 1993
due to the lack of an adequate supply of high-grade mill ore, and the mine was
reconfigured as a heap leach only operation. From 1992 through 1996, mining at
Hayden Hill produced 331,171 ounces of gold, making it one of the Company's
most productive mines. Mining is expected to be completed at the end of 1997,
with some residual leaching in 1998.
Guanaco Mine
The Company owns a 90 percent interest in and operates the Guanaco mine,
located in the Guanaco Mining District in northern Chile approximately 145
miles southeast of Antofagasta, Chile. Guanaco is an open pit mine with heap
leach facilities capable of processing up to 2.4 million tons of ore per year.
The facility includes three stages of crushing, permanent pad heap leaching
and Merrill Crowe zinc precipitation of gold. Under existing shareholder
arrangements, the Company expects to receive 100 percent of production through
completion of mining; accordingly, 100 percent of Guanaco's reserves have been
included in the Company's reserves.
The Guanaco mine began production in April 1993, hampered by ordinary start-
up delays and initial crusher throughput problems and by process water
shortages, which were resolved in the fourth quarter of 1994. During 1995,
despite continued problems with crusher throughput, production at Guanaco
increased primarily due to higher grades and recoveries. Based on a detailed
study of continuity of ore, costs and production rates at Guanaco, the Company
recorded a $35.5 million writedown on the mine in the fourth quarter of 1996.
The Company expects to complete mining at Guanaco during mid-1997, with
residual leaching continuing into 1998.
Sleeper Mine
The Sleeper mine is located in Humboldt County, Nevada, approximately 28
miles north of Winnemucca. Mining was completed as planned in the first
quarter of 1996. Milling was completed in August of 1996 and operations were
completed at the end of the third quarter. Residual leaching is expected to
continue into 1997, and reclamation has commenced at the Sleeper mine.
15
<PAGE>
Kubaka Mine (Acquisition Pending)
During January 1996, Amax Gold entered into an agreement to acquire Cyprus
Amax's 50 percent interest in the Kubaka mine, which agreement was amended in
October 1996 to take into account certain additional financing relating to the
Kubaka mine. The acquisition is expected to close in mid-1997.
The Kubaka mine is an open pit, mill recovery, gold mine located in the
Magadan Region of the Russian Far East, approximately 200 miles south of the
Arctic Circle and 600 miles northeast of the major port city of Magadan. The
Company's share of proven and probable reserves, calculated at December 31,
1996, would be approximately 2.47 million tons with an average grade of 0.540
ounces of gold per ton, containing approximately 1.33 million contained
ounces. Gold production commenced at Kubaka in February 1997.
The property is held under a license from the Russian government that
requires development of the Kubaka mine and exploration and development of a
neighboring property. The Kubaka license is for a period of 18 years and
limits the ownership by a foreign party (i.e., the Company) to a maximum of 50
percent. The Kubaka license establishes certain production requirements for
Kubaka.
The total capital costs of the Kubaka mine are estimated to be approximately
$228 million. The project shareholders have contributed a total of $86 million
(with each of Cyprus Amax and the other 50 percent shareholders contributing
$43 million) of the required capital. As of March 20, 1997, the project has
borrowed $144 million.
CERTAIN TRANSACTIONS AND RELATIONSHIP WITH CYPRUS AMAX
Cyprus Amax currently owns approximately 52.5 percent of the outstanding
shares of Common Stock of the Company. Upon consummation of the Kubaka
acquisition, Cyprus Amax will become the owner of approximately 59.1 percent
of the Company's outstanding Common Stock (taking into account all shares
required to be issued in connection with the Kubaka acquisition, but excluding
any issuance of contingent shares). Cyprus Amax's ownership interest is
subject to increase pursuant to certain agreements discussed below.
Directors and officers of Cyprus Amax comprise three of the six members of
the Company's board of directors. Milton H. Ward, Chairman of the Board and
Chief Executive Officer of the Company, is Chairman, President and Chief
Executive Officer of Cyprus Amax; Gerald J. Malys, a director of the Company,
is Senior Vice President and Chief Financial Officer of Cyprus Amax; and Allen
Born, a director of the Company, is also a director of Cyprus Amax.
Cyprus Amax is party to a number of contracts with the Company, which are
described below.
Fort Knox Financing Arrangement. The Company entered into a financing
arrangement with Cyprus Amax (the "Fort Knox Financing Arrangement") under
which Cyprus Amax has guaranteed (the "Cyprus Amax Guaranty") the Company's
$250 million secured financing (the "Fort Knox Loan") until economic
completion of the Fort Knox Project and has provided the Company with a $250
million demand loan facility (the "Demand Loan Facility"), in exchange for
which the Company (i) paid Cyprus Amax a financing and guaranty fee of $10
million (the "Financing and Guaranty Fee"), (ii) pays Cyprus Amax 1.75 percent
annually on amounts outstanding under the Fort Knox Loan ("Interest
Differential Payments"), (iii) reimburses Cyprus Amax for any payments made or
costs incurred under the Cyprus Amax Guaranty, (iv) has agreed to make no
additional borrowings under DOCLOC I (defined below) without the prior consent
of Cyprus Amax, and (v) has granted Cyprus Amax a first priority security
interest in the collateral for the Fort Knox Loan, and if required, security
interests in certain additional assets to the extent available. All of the
Company's obligations to Cyprus Amax are payable in cash
16
<PAGE>
or, at the election of Cyprus Amax, in shares of Common Stock, valued at the
time of issuance of the shares.
On November 1, 1996, Cyprus Amax elected to receive payment in shares of
Common Stock of an aggregate of $15,171,767 for the Financing and Guaranty Fee
and all accrued interest on the Demand Loan Facility and Interest Differential
Payments due through October 31, 1996. On November 12, 1996, the Company
issued 2,771,098 shares of Common Stock to Cyprus Amax as payment for such
obligations.
As of March 20, 1997, the Company had borrowed $142.3 million under the
Demand Loan Facility. If Cyprus Amax elected to receive payment for all
remaining obligations in shares of Common Stock, Cyprus Amax would be entitled
to receive (as of March 20, 1997) an additional 20,315,558 shares of Common
Stock under the Fort Knox financing arrangement.
Revolving Credit Agreements. Under the Revolving Loan Agreement dated April
15, 1994 between the Company and Cyprus Amax ("DOCLOC I"), the Company can
borrow up to $100 million and repay any indebtedness with up to 2,000,000
shares of the Company's $2.25 Series A Convertible Preferred Stock, par value
$1.00 per share ("Series A Preferred Stock"). Such shares of Series A
Preferred Stock may be redeemed by the Company for 12,099,213 shares of Common
Stock at a price equal to the greater of $5.854 per share or the average
closing price per share over a period prior to redemption. Cyprus Amax may
acquire at any time up to 12,099,213 shares of Common Stock at a price of
$8.265 per share, in which event DOCLOC I would be terminated and any
outstanding principal and interest would be deemed repaid. Under the Fort Knox
financing arrangement, the Company may not borrow under DOCLOC I without the
prior consent of Cyprus Amax.
In March 1995, the Company and Cyprus Amax entered into a convertible line
of credit ("DOCLOC II"), under which the Company borrowed the entire $80
million available. During 1995 Cyprus Amax acquired 14,919,806 shares of
Common Stock at $5.362 per share pursuant to DOCLOC II, DOCLOC II was
terminated and the outstanding indebtedness was deemed repaid.
Stock Issuance Agreement. In September 1995, the Company and Cyprus Amax
entered into an Agreement Regarding Stock Issuance pursuant to which, with the
agreement of both parties, obligations owing from the Company to Cyprus Amax
from time to time may be paid in shares of Common Stock, valued at the most
recent 30-day average closing price. Of the 879,500 shares issuable, 128,042
shares were issued to Cyprus Amax in 1995 as payment for $835,473 due Cyprus
Amax under DOCLOC II.
Exploration Joint Venture Agreement. The Company entered into an Exploration
Joint Venture Agreement with Cyprus Amax effective January 1, 1994. Under the
Exploration Agreement, the Company and Cyprus Amax have agreed to pool their
efforts for the principal purpose of discovering and developing future gold
prospects, with Cyprus Amax providing 75 percent and the Company providing 25
percent of the initial exploration funding for prospects in which Amax Gold
elects to participate. Both parties are free to pursue independently any
prospect not covered by the venture. A subsidiary of Cyprus Amax manages
exploration activities, with equal participation by the Company in decisions
affecting property acquisitions and divestitures. Either party may withdraw
upon giving 60 days' notice to the other party. The Company has the first
right to acquire any gold property owned by the joint venture, and Cyprus Amax
has the first right to acquire properties containing deposits of minerals or
precious metals other than gold or silver. The agreement will terminate on
December 31, 1997, unless extended by mutual agreement.
Kubaka Acquisition Agreement. Pursuant to the Amended and Restated Agreement
and Plan of Reorganization, dated October 9, 1996 (the "Kubaka Acquisition
Agreement"), the Company will acquire, subject to the satisfaction of certain
conditions, Cyprus Amax's 50 percent ownership interest in Omolon Gold Mining
Company, a Russian closed joint stock company ("Omolon"), which holds a
17
<PAGE>
license to mine the Kubaka project located in the Magadan Region of the
Russian Federation for a purchase price payable in shares of Common Stock as
follows: (i) approximately 11.8 million shares of Common Stock to be paid upon
closing the Kubaka acquisition; (ii) approximately 4.2 million shares of
Common Stock to be paid within ten days of commencement of commercial
production of the Kubaka gold property; and (iii) a contingent payment in
shares of Common Stock (a) equal to $10 per gold equivalent ounce (up to a
maximum of $45 million) of the Company's pro rata share of proven and probable
reserves which the Company acquires the right to mine in the Russian
Federation (excluding properties covered by the Kubaka license or properties
acquired under the Exploration Joint Venture Agreement) on or before June 30,
2004, and (b) valued at the then current 10-day average stock price.
Cyprus Amax has agreed to guarantee Omolon's obligations under $130 million
of secured borrowing from financial institutions and $14 million of
subordinated debt. Cyprus Amax also is obligated to fund additional cost
overruns at the Kubaka project and to indemnify the senior lenders against
certain specified liabilities, including environmental liabilities. Upon the
closing of the Kubaka acquisition, the Company will become the guarantor of
the $130 million of secured borrowing and will indemnify Cyprus Amax for any
payments it makes on the $14 million of subordinated debt.
Services Agreement. Pursuant to the Services Agreement, the Company and
Cyprus Amax provide a variety of managerial and other services to each other
on a full cost reimbursement basis. In 1996, the Company paid Cyprus Amax
approximately $3.4 million for services, including insurance coverage, and
Cyprus Amax paid the Company approximately $2.0 million for services,
including reimbursement for services at the Kubaka project.
Employee Transfer Agreement. Pursuant to the Employee Transfer Agreement,
the Company and Cyprus Amax have amended their respective benefit plans to
allow employees to transfer from one company to the other company with minimal
effect on an employee's benefits.
DESCRIPTION OF DEBT SECURITIES
The following is a summary of certain provisions of the Debt Securities to
which a Prospectus Supplement may relate. The particular terms of any Debt
Securities and the extent, if any, to which such general provisions may apply
will be described in the Prospectus Supplement relating to such Debt
Securities.
The Debt Securities will be general unsecured obligations of the Company.
The Debt Securities will be issued in one or more series under an Indenture
(the "Indenture") to be entered into between the Company and the trustee named
in the Indenture. A copy of the form of the Indenture is filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The trustee
under the Indenture (and any successor thereto under the Indenture) is
referred to herein as the "Trustee." The statements herein relating to the
Debt Securities and the Indenture are summaries only and do not purport to be
complete. Such summaries make use of terms defined in the Indenture. Wherever
such terms are used herein or particular provisions of the Indenture are
referred to, such terms or provisions, as the case may be, are incorporated by
reference as part of the statements made herein, and such statements are
qualified in their entirety by such reference. Certain defined terms in the
Indenture are capitalized herein.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which can be issued thereunder and provides that Debt Securities
may be issued from time to time thereunder in one or more series, each in an
aggregate principal amount authorized by Amax Gold prior to issuance.
18
<PAGE>
The Debt Securities may be issued at various times with different maturity
dates and different principal repayment provisions, may bear interest at
different rates, may be payable in currencies other than United States
dollars, in composite currencies or in amounts determined by reference to the
price, rate or value of one or more specified commodities, currencies or
indices, and may otherwise vary, all as provided in the Indenture. Debt
Securities of a series may be issued in registered form without coupons
("Registered Debt Securities"), in bearer form with or without coupons
attached ("Bearer Debt Securities") or in the form of one or more global
securities in registered or bearer form (each a "Global Security"). Bearer
Securities, if any, will be offered only to non-United States persons and to
offices located outside the United States of certain United States financial
institutions.
Unless otherwise indicated in a Prospectus Supplement, the Debt Securities
will not benefit from any covenant or other provision that would afford
holders of such Debt Securities protection in the event of a highly leveraged
transaction involving Amax Gold.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Debt Securities: (i) the title and aggregate principal amount of
the Debt Securities; (ii) the date or dates on which the Debt Securities will
mature; (iii) the rate or rates (which may be fixed or variable) per annum, if
any, at which the Debt Securities will bear interest or the method of
determining such rate or rates; (iv) the date or dates from which such
interest, if any, will accrue and the date or dates at which such interest, if
any, will be payable; (v) the terms for redemption or early payment, if any,
including any mandatory or optional sinking fund or analogous provision; (vi)
the terms for conversion or exchange, if any, of the Debt Securities; (vii)
whether such Debt Securities will be issued as Registered Debt Securities,
Bearer Debt Securities or any combination thereof, and any limitations on
issuance of such Bearer Debt Securities and any provisions regarding the
transfer or exchange of such Bearer Debt Securities (including exchange for
registered Debt Securities of the same series); (viii) whether such Debt
Securities will be issued in the form of one or more global securities and
whether such global securities are to be issued in temporary global form or
permanent global form; (ix) information with respect to book-entry procedures,
if any; (x) the currency, currencies or currency unit or units in which such
Debt Securities will be denominated and in which the principal of, and premium
and interest, if any, on such Debt Securities will be payable; (xi) whether,
and the terms and conditions on which, Amax Gold or a holder may elect that,
or the other circumstances under which, payment of principal of (or premium,
if any) or interest, if any, on such Debt Securities is to be made in a
currency or currencies or currency unit or units other than that in which such
Debt Securities are denominated; (xii) each office or agency where the Debt
Securities may be presented for registration of transfer or exchange, if
applicable; (xiii) the place or places where the principal of (and premium, if
any) or interest, if any, on the Debt Securities will be payable; (xiv) any
additional covenants or events of default not currently set forth in the
Indenture that may be included in the terms of the Debt Securities; (xv)
whether such Debt Securities are subordinate in right of payment to any Senior
Indebtedness of the Company and, if so, the terms and conditions of such
subordination and the aggregate principal amount of such Senior Indebtedness
outstanding as of a recent date; (xvi) any index or formula to be used to
determine the amount of payments of principal of (and premium, if any) or
interest, if any, on such Debt Securities, and any commodities, currencies,
currency units or indices, or value, rate or price, relevant to such
determination; and (xvii) any other specific terms of the Debt Securities.
Reference is also made to the applicable Prospectus Supplement for information
with respect to the price (expressed as a percentage of the aggregate
principal amount of the Debt Securities) at which the Debt Securities will be
issued, if other than 100 percent.
No service charge will be made for any registration of transfer or exchange
of the Debt Securities, but Amax Gold may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
(Section 3.5)
The Company has from time to time entered into, and will in the future enter
into, credit agreements to fund its operations. Such credit agreements may be
secured by the assets of the
19
<PAGE>
Company, secured by the assets of the Company's subsidiaries and/or guaranteed
by the Company or the Company's subsidiaries. To the extent that such credit
agreements are so secured or guaranteed, the lenders under such credit
agreements will have priority over the holders of the Debt Securities with
respect to the assets of the Company or its subsidiaries which secure such
credit agreements and guarantees.
Debt Securities may be sold at a discount (which may be substantial) below
their stated principal amount bearing no interest or interest at a rate which
at the time of issuance is below market rates. Any material United States
federal income tax consequences and other special considerations applicable to
any Debt Securities will be described in the Prospectus Supplement relating to
any such Debt Securities.
If any of the Debt Securities are sold for any foreign currency or currency
unit or if the principal of (or premium, if any) or interest, if any, on any
series of the Debt Securities is payable in any foreign currency or currency
unit, the restrictions, elections, tax consequences, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency unit will be set forth in the Prospectus Supplement
relating thereto.
SUBORDINATION
The Debt Securities will constitute either indebtedness designated as Senior
Indebtedness ("Senior Debt Securities"), Senior Subordinated Indebtedness
("Senior Subordinated Debt Securities") or Subordinated Indebtedness
("Subordinated Debt Securities"). Senior Debt Securities, Senior Subordinated
Debt Securities and Subordinated Debt Securities will each be issued under a
separate indenture (individually an "Indenture" and collectively the
"Indentures") to be entered into prior to the issuance of such Debt
Securities. The Indentures will be substantially identical, except for
provisions relating to subordination. There will be a separate Trustee
(individually a "Trustee" and collectively the "Trustees") under each
Indenture. Information regarding the Trustee under an Indenture will be
included in any Prospectus Supplement relating to the Debt Securities issued
thereunder.
The Senior Debt Securities will rank pari passu with all other unsecured and
unsubordinated debt of the Company and senior to the Senior Subordinated Debt
Securities and Subordinated Debt Securities. The payment of the principal of
(and premium, if any) and interest, if any, on Senior Subordinated Debt
Securities and Subordinated Debt Securities will, to the extent set forth in
the respective Indentures governing such Senior Subordinated Debt Securities
and Subordinated Debt Securities, be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company. The terms of
such subordination will be set forth in the Prospectus Supplement relating to
the Debt Securities issued thereunder.
The Company currently conducts substantial operations through subsidiaries,
and the holders of Debt Securities will have a junior position to any claims
of creditors and any preferred stockholders of the Company's subsidiaries.
Claims of creditors of such subsidiaries, including trade creditors, secured
creditors, taxing authorities and creditors holding guarantees, and claims of
holders of any such preferred stock will generally have priority as to the
assets of such subsidiaries over the claims and equity interest of the Company
and, thereby indirectly, the holders of indebtedness of the Company, including
the Debt Securities.
CONVERSION OR EXCHANGE OF SUBORDINATED DEBT SECURITIES
If so indicated in the applicable Prospectus Supplement with respect to a
particular series of Debt Securities, such series will be convertible or
exchangeable into Securities, Common Stock of the Company or other securities
or other property on the terms and conditions set forth therein. (Article 14)
20
<PAGE>
COVENANTS
The Indenture requires the Company to covenant, among other things, with
respect to each series of Debt Securities: (i) to duly and punctually pay the
principal of (and premium, if any) and interest, if any, on such series of
Debt Securities; (ii) to maintain an office or agency in each Place of Payment
where Debt Securities may be presented or surrendered for payment, transferred
or exchanged and where notices to the Company may be served; (iii) if the
Company shall act as its own Paying Agent for any series of Debt Securities,
to segregate and hold in trust for the benefit of the persons entitled thereto
a sum sufficient to pay the principal (and premium, if any) or interest, if
any, so becoming due; (iv) to deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement to the effect that the
Company has fulfilled all its obligations under the Indenture throughout such
year; (v) to preserve its corporate existence; (vi) to maintain its
properties; and (vii) to pay its taxes and other claims, in each case, as
required by the Indenture. In addition, the Prospectus Supplement with respect
to any series of Debt Securities may describe additional covenants applicable
to such series which are not currently set forth in the Indenture. (Article
10)
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement with respect to any
series of Debt Securities, the following are Events of Default under the
Indenture with respect to the Debt Securities of such series issued under the
Indenture: (a) failure to pay principal of (or premium, if any, on) any Debt
Security of such series when due; (b) failure to pay interest, if any, on any
Debt Security of such series when due, which failure continues for 30 days;
(c) failure to deposit any mandatory sinking fund payment, when due, in
respect of the Debt Securities of such series; (d) failure to perform any
other covenant of the Company in the Indenture (other than a covenant included
in the Indenture for the benefit of a series of Debt Securities other than
such series), which failure continues for 60 days after written notice as
provided in the Indenture; (e) certain events of bankruptcy, insolvency or
reorganization; and (f) any other Event of Default as may be established with
respect to Debt Securities of such series (including, without limitation, any
Event of Default arising out of a default which results in the acceleration of
certain indebtedness or a default in the payment of any amounts due on certain
indebtedness). (Sections 3.1 and 5.1) If an Event of Default in clause (a),
(b), (c), (d) or (f) above with respect to any outstanding series of Debt
Securities occurs and is continuing, either the Trustee or the holders of at
least 25 percent in principal amount of all outstanding Debt Securities of
such series (or of all outstanding Debt Securities under the Indenture) may
declare the principal amount of all the Debt Securities of the applicable
series to be due and payable immediately. If an Event of Default described in
clause (e) shall occur, the principal amount of the Debt Securities of all
series ipso facto shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee, any holder or any other
person. At any time after a declaration of acceleration has been made, but
before a judgment has been obtained, the holders of a majority in principal
amount of the outstanding Debt Securities of such series (or of all
outstanding Debt Securities under the Indenture, as the case may be) may,
under certain circumstances, rescind and annul such acceleration. In addition,
the Prospectus Supplement with respect to any series of Debt Securities may
describe additional Events of Default applicable to such series which are not
currently set forth in the Indenture. (Section 5.2)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities known to
the Trustee, give to the holders of the Debt Securities of such series notice
of all uncured and unwaived defaults known to it; provided, however, that,
except in the case of a default in the payment of the principal of (or
premium, if any) or any interest on, or any sinking fund installment with
respect to, any Debt Securities of such series, the Trustee will be protected
in withholding such notice if it in good faith determines that the withholding
of such notice is in the interest of the holders of the Debt Securities of
such series; and provided, further, that such notice shall not be given until
at least 30 days after the occurrence of a default in the performance, or
21
<PAGE>
breach, of any covenant or warranty of the Company under the Indenture, other
than for the payment of the principal of (or premium, if any) or any interest
on, or any sinking fund installment with respect to, any Debt Securities of
such series. For the purpose of this provision, "default" with respect to Debt
Securities of any series means any event which is, or after notice or lapse of
time, or both, would become, an Event of Default with respect to the Debt
Securities of such series. (Section 6.2)
The holders of a majority in principal amount of the outstanding Debt
Securities of any series (or, in certain cases, of all outstanding Debt
Securities under the Indenture) have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of such series
(or of all outstanding Debt Securities under the Indenture, as the case may
be). (Section 5.12) Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the holders of the Debt Securities unless they shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request. (Section 6.3)
The holders of a majority in principal amount of the outstanding Debt
Securities of any series (or, in certain cases, of all outstanding Debt
Securities under the Indenture) may on behalf of the holders of all Debt
Securities of such series (or of all outstanding Debt Securities under the
Indenture, as the case may be) waive any past default under the Indenture,
except a default in the payment of the principal of (or premium, if any) or
interest on any Debt Security or in respect of a provision which under the
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Debt Security affected. (Section 5.13) The holders of a
majority in principal amount of the outstanding Debt Securities affected
thereby may, on behalf of the holders of all such Debt Securities, waive
compliance by Amax Gold with certain restrictive provisions of the Indenture.
(Section 10.9)
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 10.4)
MODIFICATION
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of a majority in principal amount
of each series of outstanding Debt Securities affected thereby; provided,
however, that no such modification or amendment may, without the consent of
the holder of each outstanding Debt Security affected thereby, (a) change the
stated maturity date of the principal of, or any installment of interest on,
any Debt Security, (b) reduce the principal amount of, or the premium (if any)
or interest on, any Debt Security, (c) change the Place of Payment or
currency, currencies, or currency unit or units of payment of principal of, or
premium (if any) or interest on, any Debt Security, (d) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Security or (e) reduce the percentage in principal amount of outstanding
Debt Securities the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults. (Section 9.2)
The Indenture provides that the Company and the Trustee may, without the
consent of any holders of Debt Securities, enter into supplemental indentures
for the purposes, among other things, of adding to the Company's covenants,
securing the Debt Securities, adding additional Events of Default or curing
ambiguities or inconsistencies in the Indenture, provided any such action to
cure ambiguities or inconsistencies shall not adversely affect the interests
of the holders of the Debt Securities or any related coupons in any material
respect. (Section 9.1)
22
<PAGE>
CONSOLIDATION, MERGER AND SALE OF ASSETS
Amax Gold, without the consent of any holders of outstanding Debt
Securities, may consolidate with or merge into, or convey, transfer or lease
its assets substantially as an entirety to, any person, provided that the
person formed by such consolidation or into which the Company is merged or
which acquires or leases the assets of Amax Gold substantially as an entirety
is a corporation, partnership or trust organized under the laws of any United
States jurisdiction and assumes by supplemental indenture the Company's
obligations on the Securities and under the Indenture, that after giving
effect to the transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing, and that certain other conditions are met.
(Section 8.1) Upon compliance with these provisions by a successor person, the
Company will be relieved of its obligations under the Indenture and the Debt
Securities. (Section 8.2)
DISCHARGE AND DEFEASANCE
Unless the Prospectus Supplement in respect of any series of Debt Securities
shall state otherwise, Amax Gold may terminate its obligations under the
Indenture with respect to Debt Securities of any series, other than its
obligation to pay the principal of (and premium, if any) and interest on such
Debt Securities and certain other obligations, if (i) Amax Gold irrevocably
deposits or causes to be irrevocably deposited with the Trustee as trust funds
money or Government Obligations maturing as to principal and interest
sufficient to pay the principal of, any interest on, and any mandatory sinking
funds in respect of, all outstanding Debt Securities of such series on the
stated maturity of such payments or on any redemption date, (ii) Amax Gold has
delivered to the Trustee an opinion of counsel to the effect that the holders
of Debt Securities of such series will not recognize income, gain or loss for
United States federal income tax purposes as a result of such discharge and
will be subject to United States federal income tax on the same amount and in
the same manner and at the same time as would have been the case if such
discharge had not occurred, (iii) Amax Gold complies with any additional
conditions specified to be applicable with respect to the covenant defeasance
of Debt Securities of such series, and (iv) no default or Event of Default
with respect to the Debt Securities of such issue shall have occurred and be
continuing on the date of such deposit or, in so far as they relate to certain
events of bankruptcy or insolvency, at any time in the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period).
The terms of any series of Debt Securities may also provide for legal
defeasance pursuant to the Indenture. In such case, if Amax Gold (i)
irrevocably deposits or causes to be irrevocably deposited money or Government
Obligations as described above and complies with the other provisions
described above (except that the opinion referred to in clause (ii) above must
be based on a ruling by the Internal Revenue Service or other change under
applicable federal income tax law), (ii) makes a request to the Trustee to be
discharged from its obligations on the Debt Securities of such series and
(iii) complies with any additional conditions specified to be applicable with
respect to legal defeasance of Securities of such series, then the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
outstanding Debt Securities of such series and the obligations of Amax Gold
under the Indenture and the Debt Securities of such series to pay the
principal of (and premium, if any) and interest on the Debt Securities of such
series shall cease, terminate and be completely discharged, and the holders
thereof shall thereafter be entitled only to payment out of the money or
Government Obligations deposited with the Trustee as aforesaid, unless Amax
Gold's obligations are revived and reinstated because the Trustee is unable to
apply such trust fund by reason of any legal proceeding, order or judgment.
(Articles 4 and 13)
FORM, EXCHNAGE, REGISTRATION AND TRANSFER
Debt Securities are issuable in definitive form as Registered Debt
Securities, as Bearer Debt Securities or both. Unless otherwise indicated in
an applicable Prospectus Supplement, Bearer Debt
23
<PAGE>
Securities will have interest coupons attached. Debt Securities are also
issuable in temporary or permanent global form. (Section 3.1)
Registered Debt Securities of any series will be exchangeable for other
Registered Debt Securities of the same series and of a like aggregate
principal amount and tenor of different authorized denominations. In addition,
with respect to any series of Bearer Debt Securities, at the option of the
holder, subject to the terms of the Indenture, such Bearer Debt Securities
(with all unmatured coupons, except as provided below, and all matured coupons
in default) will be exchangeable into Registered Debt Securities of the same
series of any authorized denominations and of a like aggregate principal
amount and tenor. Bearer Debt Securities surrendered in exchange for
Registered Debt Securities between a Regular Record Date or a Special Record
Date and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest, and interest
accrued as of such date will not be payable in respect of the Registered Debt
Security issued in exchange for such Bearer Debt Security, but will be payable
only to the holder of such coupon when due in accordance with the terms of the
Indenture. (Section 3.5)
In connection with its sale during the restricted period (as defined below),
no Bearer Debt Security (including a Debt Security in permanent global form
that is either a Bearer Debt Security or exchangeable for Bearer Debt
Securities) shall be mailed or otherwise delivered to any location in the
United States (as defined under "--Limitations on Issuance of Bearer Debt
Securities") and a Bearer Debt Security may be delivered outside the United
States in definitive form in connection with its original issuance only if
prior to delivery the person entitled to receive such Bearer Debt Security
furnishes written certification, in the form required by the Indenture, to the
effect that such Bearer Debt Security is owned by: (a) a person (purchasing
for its own account) who is not a United States person (as defined under "--
Limitations on Issuance of Bearer Debt Securities"); (b) a United States
person who (i) is a foreign branch of a United States financial institution
purchasing for its own account or for resale or (ii) acquired such Bearer Debt
Security through the foreign branch of a United States financial institution
and who for purposes of the certification holds such Bearer Debt Security
through such financial institution on the date of certification and, in either
case, such United States financial institution certifies to Amax Gold or the
distributor selling the Bearer Debt Security within a reasonable time stating
that it agrees to comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder, or (c) a United States or foreign
financial institution for purposes of resale within the "restricted period" as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7).
A financial institution described in clause (c) of the preceding sentence
(whether or not also described in clauses (a) and (b)) must certify that it
has not acquired the Bearer Debt Security for purpose of resale, directly or
indirectly, to a United States person or to a person within the United States
or its possessions. In the case of a Bearer Debt Security in permanent global
form, such certification must be given in connection with notation of a
beneficial owner's interest therein in connection with the original issuance
of such Debt Security or upon exchange of a portion of a temporary global Debt
Security. (Section 3.3)
Debt Securities may be presented for exchange as provided above, and
Registered Debt Securities may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any transfer agent designated by Amax
Gold for such purpose with respect to any series of Debt Securities and
referred to in the applicable Prospectus Supplement, without a service charge
and upon payment of any taxes and other governmental charges as described in
the Indenture. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. Amax Gold
may appoint the Trustee as Security Registrar. (Section 3.5) If a Prospectus
Supplement refers to any transfer agents (in addition to the Security
Registrar) initially designated by the Company with respect to any series of
Debt Securities,
24
<PAGE>
Amax Gold may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent
acts, except that, if Debt Securities of a series are issued solely as
Registered Debt Securities, Amax Gold will be required to maintain a transfer
agent in each Place of Payment for such series and, if Debt Securities of a
series are issued as Bearer Debt Securities, the Company will be required to
maintain (in addition to the Security Registrar) a transfer agent in a Place
of Payment located outside the United States for Bearer Securities of such
series. Amax Gold may at any time designate additional transfer agents with
respect to any series of Debt Securities. (Section 10.2)
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days prior to the day
of mailing or first publication, as the case may be, of the relevant notice of
redemption of Debt Securities of that series for redemption and ending on the
close of business on (A) if Debt Securities of the series are issued only as
Registered Debt Securities, the day of mailing of the relevant notice of
redemption and (B) if Debt Securities of the series are issued as Bearer Debt
Securities, the day of the first publication of the relevant notice of
redemption except that, if Securities of the series are also issued as
Registered Debt Securities and there is no publication, the day of mailing of
the relevant notice of redemption; (ii) register the transfer of or exchange
any Registered Debt Security, or portion thereof, called for redemption,
except the unredeemed portion of any Registered Debt Security being redeemed
in part; or (iii) exchange any Bearer Debt Security called for redemption,
except to exchange such Bearer Debt Security for a Registered Debt Security of
that series and like tenor which is simultaneously surrendered for redemption.
(Section 3.5)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and any premium) and interest on Bearer Debt Securities will
be payable, subject to any applicable laws and regulations in the designated
currency or currency unit, at the offices of such Paying Agents outside the
United States as Amax Gold may designate from time to time, at the option of
the Company, by check or by transfer to an account maintained by the payee
with a bank located outside the United States; provided, however, that the
written certification described above under "--Form, Exchange, Registration
and Transfer" has been delivered prior to the first actual payment of
interest. (Section 3.7) Unless otherwise indicated in the applicable
Prospectus Supplement, payment of interest on Bearer Debt Securities on any
Interest Payment Date will be made only against surrender to the Paying Agent
of the coupon relating to such Interest Payment Date. (Section 10.1) No
payment with respect to any Bearer Debt Security will be made at any office or
agency of Amax Gold in the United States or by check mailed to any address in
the United States or by transfer to any account maintained with a bank located
in the United States, nor shall any payments be made in respect of Bearer Debt
Securities upon presentation to Amax Gold or its designated Paying Agents
within the United States. Notwithstanding the foregoing, payments of principal
of (and any premium) and interest on Bearer Debt Securities denominated and
payable in U.S. dollars will be made at the office of the Company's Paying
Agent in the United States, if (but only if) payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States
is illegal or effectively precluded by exchange controls or other similar
restrictions. (Section 10.2)
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and any premium) and interest on Registered Debt Securities
will be made in the designated currency or currency unit at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time,
except that at the Company's option, payment of any interest may be made by
check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Debt Securities will be made to the person in whose name such
25
<PAGE>
Registered Debt Security is registered at the close of business on the Regular
Record Date for such interest. (Section 3.7)
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee will be designated as a Paying Agent for
the Company for payments with respect to Debt Securities which are issuable
solely as Registered Debt Securities, and Amax Gold will maintain a Paying
Agent outside the United States for payments with respect to Debt Securities
(subject to limitations described above in the case of Bearer Debt Securities)
which are issued solely as Bearer Debt Securities, or as both Registered Debt
Securities and Bearer Debt Securities. Any Paying Agents outside the United
States and any other Paying Agents in the United States initially designated
by Amax Gold for the Debt Securities will be named in an applicable Prospectus
Supplement. Amax Gold may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that, if Debt Securities of a
series are issued solely as Registered Debt Securities, Amax Gold will be
required to maintain a Paying Agent in each Place of Payment for such series
and, if Debt Securities of a series are issued as Bearer Securities, Amax Gold
will be required to maintain (i) a Paying Agent in the United States for
principal payments with respect to any Registered Debt Securities of the
series (and for payments with respect to Bearer Debt Securities of the series
in the circumstances described above, but not otherwise), and (ii) a Paying
Agent in a Place of Payment located outside the United States where Securities
of such series and any coupons appertaining thereto may be presented and
surrendered for payment. (Section 10.2)
All moneys paid by Amax Gold to a Paying Agent for the payment of principal
of and any premium or interest on any Debt Security which remain unclaimed at
the end of three years after such principal, premium or interest shall have
become due and payable will (subject to applicable escheat laws) be repaid to
the Company and the holder of such Debt Security or any coupon will thereafter
look only to the Company for payment thereof. (Section 10.3)
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series which are issuable as Bearer Debt
Securities will initially be represented by one or more temporary global Debt
Securities, to be deposited with a common depository in London for the
Euroclear System ("Euroclear") and CEDEL S.A. ("CEDEL") for credit to the
designated accounts. Not later than the date determined as provided in any
such temporary global Debt Security and described in the applicable Prospectus
Supplement, each such temporary global Debt Security will be exchangeable for
definitive Bearer Debt Securities, definitive Registered Debt Securities or
all or a portion of a permanent global security, or any combination thereof,
as specified in the applicable Prospectus Supplement, but, unless otherwise
specified in the applicable Prospectus Supplement, only upon receipt of
written certification in the form and to the effect described under "--Form,
Exchange, Registration and Transfer." No Bearer Debt Security delivered in
exchange for a portion of a temporary global Debt Security will be mailed or
otherwise delivered to any location in the United States in connection with
such exchange. (Section 3.4)
Unless otherwise specified in the applicable Prospectus Supplement, interest
in respect of any portion of a temporary global Debt Security payable in
respect of an Interest Payment Date occurring prior to the issuance of
definitive Debt Securities or a permanent global Debt Security will be paid to
each of Euroclear and CEDEL with respect to the portion of the temporary
global Debt Security held for its account. Each of Euroclear and CEDEL will
undertake in such circumstances to credit such interest received by it in
respect of a temporary global Debt Security to the respective accounts for
which it holds such temporary global Debt Security only upon receipt in each
case of written certification in the form and to the effect described above
under "--Form, Exchange, Registration and Transfer" as of the relevant
Interest Payment Date regarding the portion of such temporary global Debt
Security on which interest is to be so credited. (Section 3.4)
26
<PAGE>
PERMANENT GLOBAL SECURITIES
If any Debt Securities of a series are issuable in permanent global form,
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such permanent global Debt
Securities may exchange such interests for Debt Securities of such series and
of like tenor and principal amount in any authorized form and denomination. No
Bearer Debt Security delivered in exchange for a portion of a permanent global
Debt Security shall be mailed or otherwise delivered to any location in the
United States in connection with such exchange. A person having a beneficial
interest in a permanent global Debt Security, will, except with respect to
payment of principal of and any premium and interest on such permanent global
Debt Security, be treated as a holder of such principal amount of Outstanding
Debt Securities represented by such permanent global Debt Security as shall be
specified in a written statement of the holder of such permanent global Debt
Security or, in the case of a permanent global Debt Security in bearer form,
of the operator of Euroclear or CEDEL which is provided to the Trustee by such
person. Principal of and any premium and interest on a permanent global Debt
Security will be payable in the manner described in the applicable Prospectus
Supplement. (Section 2.5)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued, in whole or in part, in the
form of one or more global Debt Securities that would be deposited with a
depository or its nominee identified in the applicable Prospectus Supplement.
The specific terms of any depository arrangement with respect to any portion
of a series of Debt Securities and the rights of, and limitations on, owners
of beneficial interests in any such global Debt Security representing all or a
portion of a series of Debt Securities will be described in the applicable
Prospectus Supplement. (Section 2.6)
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Debt Securities (including securities in permanent global form that are either
Bearer Debt Securities or exchangeable for Bearer Debt Securities) will not be
offered or sold during the restricted period (as defined in United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)) (generally, the first 40
days after the closing date, and, with respect to unsold allotments, until
sold) within the United States or to United States persons (each as defined
below) other than to an office located outside the United States of a United
States financial institution (as defined in Section 1.165-12(c)(1)(v) of the
United States Treasury Regulations), purchasing for its own account or for
resale or for the account of certain customers, that provides a certificate
stating that it agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code and the United States Treasury
Regulations thereunder, or to certain other persons described in Section
1.163-5(c)(2)(i)(D)(1)(iii)(B) of the United States Treasury Regulations.
Moreover, such Bearer Debt Securities will not be delivered in connection with
their sale during the restricted period within the United States. Any
underwriters and dealers participating in the offering of Bearer Debt
Securities must covenant that they will not offer or sell during the
restricted period any Bearer Debt Securities within the United States or to
United States persons (other than the persons described above) or deliver in
connection with the sale of Bearer Debt Securities during the restricted
period any Bearer Debt Securities within the United States and that they have
in effect procedures reasonably designed to ensure that their employees and
agents who are directly engaged in selling the Bearer Debt Securities are
aware of the restrictions described above. No Bearer Debt Security (other than
a temporary global Bearer Debt Security) will be delivered in connection with
its original issuance nor will interest be paid on any Bearer Debt Security
until receipt by Amax Gold of the written certification described above under
"--Form, Exchange, Registration and Transfer." Each Bearer Debt Security,
other than a temporary global Bearer Debt Security, will bear a legend to the
following effect: "Any United States person who holds this obligation will be
subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code."
27
<PAGE>
As used herein, "United States person" means any citizen or resident of the
United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States and any estate or trust
the income of which is subject to United States federal income taxation
regardless of its source, and "United States" means the United States of
America (including the states and the District of Columbia) and its
possessions.
MEETINGS
The Indenture contains provisions for convening meetings of the holders of
Debt Securities of a series. A meeting may be called at any time by the
Trustee, and also, upon request, by Amax Gold or the holders of at least 10
percent in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given as described under "--Notices" below.
Except for any consent that must be given by the holder of each Outstanding
Debt Security affected thereby, as described under "--Modification" above, any
resolution presented at a meeting or adjourned meeting at which a quorum is
present may be adopted by the affirmative vote of the holders of a majority in
principal amount of the Outstanding Debt Securities of that series; provided,
however, that, except for any consent that must be given by the holder of each
Outstanding Debt Security affected thereby, as described under "--
Modification" above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the holders of a specified percentage, which is less
than a majority in principal amount of the Outstanding Debt Securities of a
series, may be adopted at a meeting or adjourned meeting duly reconvened at
which a quorum is present by the affirmative vote of the holders of such
specified percentage in principal amount of the Outstanding Debt Securities of
that series. Except for any consent that must be given by the holder of each
Outstanding Debt Security affected thereby, as described under "--
Modification" above, any resolution passed or decision taken at any meeting of
holders of Debt Securities of any series duly held in accordance with the
Indenture will be binding on all holders of Debt Securities of that series and
any related coupons. The quorum at any meeting called to adopt a resolution,
and at any reconvened meeting, will be persons holding or representing a
majority in principal amount of the Outstanding Debt Securities of a series.
(Article 16)
NOTICES
Except as otherwise provided in the Indenture, notices to holders of Bearer
Debt Securities will be given by publication at least twice in a daily
newspaper in the City of New York and London or other capital city in Western
Europe and in such other city or cities as may be specified in such
Securities. Notices to holders of Registered Debt Securities will be given by
mail to the addresses of such holders as they appear in the Security Register.
(Section 1.6)
THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee, to
the extent it is a creditor of Amax Gold, to obtain payment of claims in
certain cases and to realize on certain property received with respect to any
such claims, as security or otherwise. (Section 6.13) The Trustee is permitted
to engage in other transactions, except that, if it acquires any conflicting
interest within the meaning of the Trust Indenture Act of 1939, it must
eliminate such conflict or resign. (Section 6.8)
28
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The Company's Certificate of Incorporation currently authorizes the issuance
of 10,000,000 shares of Preferred Stock, par value $1.00 per share, issuable
in series. The Board of Directors of the Company is authorized to approve the
issuance of one or more series of Preferred Stock without further
authorization of the stockholders of Amax Gold and to fix the number of
shares, the designations, the relative rights and preferences and the
limitations of any such series.
In August 1994, the Company issued 1,840,000 shares of $3.75 Series B
Convertible Preferred Stock (the "Series B Preferred Stock"), all of which are
currently outstanding. In addition, Amax Gold has reserved for issuance
2,000,000 shares of Series A Preferred Stock, issuable in repayment of
outstanding indebtedness under the DOCLOC I. See "Description of Capital
Stock--Series A Preferred Stock" and "--Series B Preferred Stock."
The applicable Prospectus Supplement will set forth the number of shares,
particular designation, relative rights and preferences and the limitations of
any series of Preferred Stock in respect of which this Prospectus is
delivered. The terms of the Company's currently authorized Series A Preferred
Stock and Series B Preferred Stock do not limit the issuance of other series
of Preferred Stock ranking as to dividends and payments upon liquidation on a
parity with or junior to such existing Preferred Stock. Similarly, the Series
A Preferred Stock and Series B Preferred Stock do not require that a series of
Preferred Stock be issued on a parity with the Series A Preferred Stock and
the Series B Preferred Stock. The particular terms of any such series will
include the following:
(i) The maximum number of shares to constitute the series and the
designation thereof;
(ii) The annual dividend rate, if any, on shares of the series, whether
such rate is fixed or variable or both, the date or dates from which
dividends will begin to accrue or accumulate, whether dividends will be
cumulative and whether such dividends shall be paid in cash, Common Stock
or otherwise;
(iii) Whether the shares of the series will be redeemable and, if so, the
price at and the terms and conditions on which the shares of the series may
be redeemed, including the time during which shares of the series may be
redeemed and any accumulated dividends thereon that the holders of shares
of the series shall be entitled to receive upon the redemption thereof;
(iv) The liquidation preference, if any, applicable to shares of the
series;
(v) Whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the shares of
the series for retirement or for other corporate purposes, and the terms
and provisions relating to the operation of such fund;
(vi) The terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class
or classes of capital stock of Amax Gold or another corporation or any
series of any other class or classes, or of any other series of the same
class, including the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
(vii) The voting rights, if any, of the shares of the series;
(viii) The currency or units based on or relating to currencies in which
such series is denominated and/or in which payments will or may be payable;
(ix) The methods by which amounts payable in respect of such series may
be calculated and any commodities, currencies or indices, or price, rate or
value, relevant to such calculation;
(x) Any listing of the shares of the series on a securities exchange; and
(xi) Any other preferences and relative, participating, optional or other
rights or qualifications, limitations or restrictions thereof.
Any material United States federal income tax consequences and other special
considerations to any offered Preferred Stock will be described in the
Prospectus Supplement relating to the offering and sale of such Preferred
Stock.
29
<PAGE>
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase shares of Common Stock, shares of
Preferred Stock or Debt Securities. Warrants may be issued, subject to
regulatory approvals, independently or together with any Common Stock,
Preferred Stock or Debt Securities, as the case may be, and may be attached to
or separate from such Common Stock, Preferred Stock or Debt Securities. Each
series of Warrants will be issued under a separate warrant agreement (each a
"Warrant Agreement") to be entered into between the Company and a warrant
agent (the "Warrant Agent"). The Warrant Agent will act solely as an agent of
the Company in connection with the Warrants of such series and will not assume
any obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants
and the applicable Warrant Agreement will be set forth in the applicable
Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms of
any Warrants in respect of which this Prospectus is delivered: (i) the title
of such Warrants; (ii) a description of the securities (which may include
shares of Common Stock, shares of Preferred Stock or Debt Securities) for
which such Warrants are exercisable; (iii) the price or prices at which such
Warrants will be issued; (iv) the periods during which the Warrants are
exercisable; (v) the number of shares of Common Stock or Preferred Stock or
the amount of Debt Securities for which each Warrant is exercisable; (vi) the
exercise price for such Warrants, including any changes to or adjustments in
the exercise price; (vii) the currency or currencies, including composite
currencies, in which the exercise price of such Warrants may be payable;
(viii) if applicable, the designation and terms of the shares of Preferred
Stock with which such Warrants are issued; (ix) if applicable, the terms of
the Debt Securities with which such Warrants are issued; (x) if applicable,
the number of Warrants issued with each share of Common Stock or Preferred
Stock or Debt Security; (xi) if applicable, the date on and after which such
Warrants and the related shares of Common Stock or Preferred Stock or Debt
Securities will be separately transferable; (xii) if applicable, a discussion
of certain United States federal income tax considerations; (xiii) any listing
of the Warrants on a securities exchange; and (xiv) any other terms of such
Warrants, including terms, procedures and limitations relating to the exchange
and exercise of such Warrants.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The Company is authorized by its Certificate of Incorporation to issue 200.0
million shares of Common Stock and 10.0 million shares of Preferred Stock. As
of December 31, 1996, there were 99,308,979 shares of Common Stock issued and
outstanding and 1,840,000 shares of the Series B Preferred Stock issued and
outstanding. In addition, 2,000,000 shares of the Series A Preferred Stock
have been authorized by the Board for issuance. All of the shares of Series A
Preferred Stock are reserved for issuance under DOCLOC I. See "--Preferred
Stock--Series A Preferred Stock."
COMMON STOCK
A summary of the terms and provisions of the Common Stock is set forth
below.
Dividends. The holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board out of funds legally available therefor,
provided that if any shares of Series A Preferred Stock, Series B Preferred
Stock, any Preferred Stock issued under this Prospectus and any accompanying
Prospectus Supplement, or any other shares of preferred stock are at the time
outstanding, the payment of dividends on Common Stock or other distributions
(including Company repurchases of Common Stock) will be subject to the
declaration and payment of all cumulative dividends on outstanding shares of
the Series A Preferred Stock, Series B Preferred Stock, any
30
<PAGE>
Preferred Stock issued under this Prospectus and any accompanying Prospectus
Supplement and any other shares of preferred stock which are then outstanding.
Liquidation. In the event of the dissolution, liquidation or winding up of
the Company, holders of Common Stock are entitled to share ratably in any
assets remaining after the satisfaction in full of the prior rights of
creditors, including holders of the Company's indebtedness, and the payment of
the aggregate liquidation preference of the Series A Preferred Stock, the
Series B Preferred Stock, any Preferred Stock issued under this Prospectus and
any accompanying Prospectus Supplement and any other shares of preferred stock
then outstanding.
Voting. The Company's stockholders are entitled to one vote for each share
on all matters voted on by stockholders, including election of directors.
Shares of Common Stock held by the Company or any entity controlled by the
Company do not have voting rights and are not counted in determining the
presence of a quorum. Directors are elected annually. Holders of Common Stock
have no cumulative voting rights.
No Other Rights. The holders of Common Stock do not have any conversion,
redemption or preemptive rights.
Transfer Agent. The transfer agents for the Common Stock are Bank of New
York, 101 Barclay Street, 12 West, New York, New York 10286 and Montreal Trust
Company, 151 Front Street West, 8th Floor, Toronto, Ontario, Canada MJ5 2N1.
Listing. Shares of the Company's outstanding Common Stock are listed on the
NYSE and the TSE.
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more
series. The Company's Board of Directors is authorized, without stockholder
approval, to fix the voting rights, dividend rights and terms, any conversion
rights, rights and terms of redemption (including sinking fund provisions),
liquidation preferences and any other rights, preferences and restrictions of
any series of Preferred Stock and the number of shares constituting such
series and designation thereof. The terms of such Preferred Stock may affect
adversely the voting power and other rights of the holders of Common Stock and
may make it more difficult for a third party to gain control of the Company.
SERIES A PREFERRED STOCK. The Series A Preferred Stock was designated as a
series of preferred stock in connection with DOCLOC I. The Series A Preferred
Stock consists of 2.0 million shares. A summary of the terms and provisions of
the Series A Preferred Stock is set forth below.
Dividends. The holders of shares of Series A Preferred Stock are entitled to
receive dividends at an annual rate of $2.25 per share, which is cumulative,
accrues without interest and is payable in cash in equal semi-annual
installments. The Company may elect to pay any dividend due and payable in
shares of Common Stock in lieu of a dividend payment in cash, unless the
holder of Series A Preferred Stock delivers written notice stating that such
holder elects to receive cash. The Series A Preferred Stock ranks, as to
dividends, on a parity with the Series B Preferred Stock and no dividends may
be made on the Series A Preferred Stock for any period unless full cumulative
dividends have been paid, are paid contemporaneously or are set apart for
payment on the Series B Preferred Stock.
Liquidation Preference. Upon the liquidation, dissolution or winding up of
the Company, the holders of Series A Preferred Stock are entitled to receive
from the assets of the Company an amount equal to the dividends accrued and
unpaid thereon to the date of final distribution to such holders, whether or
not declared, without interest, and a sum equal to $50.00 per share, and no
more. Payment to the holders of shares of Series A Preferred Stock will be
made before any payment is made or any
31
<PAGE>
assets distributed to holders of Common Stock or any other class or series of
the Company's capital stock ranking junior as to liquidation rights to the
Series A Preferred Stock. The Series A Preferred Stock ranks, as to
liquidation rights, on a parity with the Series B Preferred Stock.
Redemption at the Option of the Company. The Company, at its option, may at
any time redeem the Series A Preferred Stock in whole or, from time to time,
in part, for that number of shares of Common Stock obtained by dividing $50.00
by the lesser of (i) the call price (defined below) and (ii) the conversion
price (defined below), plus accrued and unpaid dividends, whether or not
declared or due, to the date fixed for redemption. The Company may issue up to
a maximum of 12,099,213 shares of Common Stock upon redemption and conversion
of and the payment of dividends on the Series A Preferred Stock, subject to
adjustment of the conversion price. In the case of the redemption of shares of
Series A Preferred Stock that would result in the issuance of more than
12,099,213 shares of Common Stock, the Company would pay an amount in cash in
lieu of such shares equal to the lesser of the call price or the conversion
price multiplied by the number of shares in excess of 12,099,213. Such cash
payment will be made in 12 consecutive substantially equal quarterly payments.
The call price with respect to a redemption of Series A Preferred Stock is
equal to the greater of (i) $5.854 (subject to adjustment of the conversion
price) and (ii) the average closing price per share of Common Stock as
calculated for a ten day trading period ending on the fifth trading day prior
to the date the notice of redemption is mailed.
Conversion. The holder of any shares of Series A Preferred Stock will have
the right, at the holder's option, to convert any or all shares of Series A
Preferred Stock held by such holder into Common Stock at any time. Each share
of Series A Preferred Stock is convertible into that number of shares of
Common Stock obtained by dividing $50.00 by the conversion price in effect at
the time. The conversion price is $8.265 and is subject to adjustment upon
payment by the Company of a dividend or the making by the Company of a
distribution on Common Stock in shares of Common Stock, upon the subdivision,
combination or issuance by reclassification of Common Stock, or upon the
issuance of rights, options or warrants to purchase shares of Common Stock at
a price per share less than the then current market price. The maximum number
of shares of Common Stock that the Company may issue upon redemption and
conversion of and the payment of dividends on the Series A Preferred Stock is
12,099,213 shares, subject to adjustment of the conversion price. No
fractional shares of Common Stock will be issued upon conversion but, in lieu
thereof, an appropriate amount will be paid in cash. No adjustment will be
made to the conversion price unless such adjustment would require an increase
or decrease of at least one percent of such price.
Voting Rights. The holders of Series A Preferred Stock are not entitled to
vote except as described below or as required by law. Shares of Series A
Preferred Stock held by the Company or any entity controlled by the Company do
not have voting rights and are not counted in determining the presence of a
quorum. If dividends on the Series A Preferred Stock are in arrears in an
amount equal to at least three semi-annual dividend payments (whether or not
consecutive), the number of members of the Board will be increased by two and
the holders of Series A Preferred Stock, voting separately as a class, will
have the right to vote for and elect two additional directors of the Company
during the period that such dividends remain in arrears.
The affirmative vote or consent of the holders of at least 66b percent of
all outstanding shares of Series A Preferred Stock is required for the Company
(i) to amend, alter or repeal any provision of the Restated Certificate of
Incorporation or the Bylaws of the Company so as to affect adversely the
relative rights, preferences, qualifications, limitations or restrictions of
the Series A Preferred Stock, (ii) to authorize, issue or increase the
authorized amount of any additional class or series of stock, or any security
convertible into stock of such class or series ranking senior to the Series A
Preferred Stock as to the payment of dividends or upon liquidation,
dissolution or winding up of the Company or (iii) to effect any
reclassification of the Series A Preferred Stock.
32
<PAGE>
No Preemptive Rights. The Series A Preferred Stock does not have any
preemptive or subscription rights in respect of any securities of the Company.
Cyprus Amax, however, does have the right to convert from time to time all or
a portion of DOCLOC I and any outstanding indebtedness and/or Series A
Preferred Stock into up to 12,099,213 shares of Common Stock at a conversion
price of $8.265 per share (or $100 million if all 12,099,213 shares of Common
Stock are converted).
SERIES B CONVERTIBLE PREFERRED STOCK. There are 1,840,000 shares of Series B
Preferred Stock currently outstanding. A summary of the terms and provisions
of the Series B Preferred Stock is set forth below.
Dividends. The holders of shares of Series B Preferred Stock are entitled to
receive dividends at an annual rate of $3.75 per share, which is cumulative,
accrues without interest and is payable in cash in equal quarterly
installments. The Series B Preferred Stock ranks, as to dividends, on a parity
with the Series A Preferred Stock and no dividends may be made on the Series B
Preferred Stock for any period unless full cumulative dividends have been
paid, are paid contemporaneously or are set apart for payment on any Series A
Preferred Stock outstanding.
Liquidation Preference. Upon the liquidation, dissolution or winding up of
the Company, the holders of Series B Preferred Stock are entitled to receive
from the assets of the Company an amount equal to the dividends accrued and
unpaid thereon to the date of final distribution to such holders, whether or
not declared, without interest, and a sum equal to $50.00 per share, and no
more. Payment to the holders of shares of Series B Preferred Stock will be
made before any payment is made or any assets distributed to holders of Common
Stock or any other class or series of the Company's capital stock ranking
junior as to liquidation rights to the Series B Preferred Stock. The Series B
Preferred Stock ranks, as to liquidation rights, on a parity with the Series A
Preferred Stock.
Redemption at Option of the Company. Shares of Series B Preferred Stock are
not redeemable prior to August 15, 1997. On and after such date, the Series B
Preferred Stock will be redeemable at the option of the Company, in whole or,
from time to time, in part, at the following redemption prices per share, if
redeemed during the 12-month period commencing on August 15 of the year
indicated:
<TABLE>
<CAPTION>
PRICE
YEARS PER SHARE
----- ---------
<S> <C>
1997............................................................ $52.625
1998............................................................ 52.250
1999............................................................ 51.875
2000............................................................ 51.500
2001............................................................ 51.125
2002............................................................ 50.750
2003............................................................ 50.375
2004 and thereafter............................................. 50.000
</TABLE>
plus in each case accrued and unpaid dividends to, but excluding, the date of
redemption.
Conversion. The holder of any shares of Series B Preferred Stock will have
the right, at the option of the holder, to convert any and all shares of
Series B Preferred Stock held by such holder into shares of Common Stock at
any time. Each share of Series B Preferred Stock is convertible into that
number of shares of Common Stock obtained by dividing $50.00 by the conversion
price in effect at the time. The conversion price is $8.25 and is subject to
adjustment upon certain events, including (i) the issuance of Common Stock as
a dividend or distribution on the Common Stock; (ii) a combination,
subdivision or reclassification of the Common Stock; (iii) the issuance to all
holders of Common Stock of rights, options or warrants entitling them to
subscribe for or to purchase Common Stock at a price per share less than the
then current market price; and (iv) the distribution to all holders of Common
Stock of capital stock (other than Common Stock), evidences of indebtedness of
the
33
<PAGE>
Company, assets (excluding regular periodic cash dividends), or rights,
options or warrants to subscribe for or to purchase securities of the Company.
No adjustment will be made to the conversion price unless such adjustment
would require an increase or decrease of at least one percent of such price.
Voting Rights. The holders of Series B Preferred Stock are not entitled to
vote except as described below or as required by law. Shares of Series B
Preferred Stock held by the Company or any entity controlled by the Company do
not have voting rights and are not counted in determining the presence of a
quorum. If dividends on the Series B Preferred Stock are in arrears in an
amount equal to at least six quarterly dividend payments (whether or not
consecutive), the number of members of the Board will be increased by two and
the holders of Series B Preferred Stock, voting separately as a class, will
have the right to elect two additional directors to the Company's Board of
Directors during that period that such dividends remain in arrears.
The affirmative vote or consent of the holders of at least 66 2/3 percent of
all outstanding shares of Series B Preferred Stock is required for the Company
(i) to amend, alter or repeal any provision of the Certificate of
Incorporation or By-laws of the Company so as to affect adversely the relative
rights, preferences, qualifications, limitations or restrictions of the Series
B Preferred Stock, (ii) to authorize, issue or increase the authorized amount
of any additional class or series of stock, or any security convertible into
stock of such class or series, ranking senior to the Series B Preferred Stock
as to the payment of dividends or upon liquidation, dissolution or winding up
of the Company or (iii) to effect any reclassification of the Series B
Preferred Stock.
No Preemptive Rights. The Series B Preferred Stock does not have any
preemptive or subscription rights in respect of any securities of the Company.
PLAN OF DISTRIBUTION
The Company may offer Securities to or through underwriters, through agents
or directly to other purchasers. Such underwriters may include Salomon
Brothers Inc.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from
time to time), at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Each
Prospectus Supplement will describe the method of distribution of the
Securities offered therein.
The Company may sell Securities directly, through agents designated from
time to time, through underwriting syndicates led by one or more managing
underwriters or through one or more underwriters acting alone. Each Prospectus
Supplement will set forth the terms of the Securities to which such Prospectus
Supplement relates, including the name or names of any underwriters or agents
with whom the Company has entered into arrangements with respect to the sale
of such Securities, the public offering or purchase price of such Securities
and the net proceeds to the Company from such sale, any underwriting discounts
and other items constituting underwriters' compensation, any discounts and
commissions allowed or paid to dealers, if any, any commissions allowed or
paid to agents, and the securities exchange or exchanges, if any, on which
such Securities will be listed. Dealer trading may take place in certain of
the Securities, including Securities not listed on any securities exchange.
Securities may be purchased to be reoffered to the public through
underwriting syndicates led by one or more managing underwriters, or through
one or more underwriters acting alone. The underwriter or underwriters with
respect to each underwritten offering of Securities will be named in the
Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the
34
<PAGE>
managing underwriter or underwriters will be set forth on the cover page of
such Prospectus Supplement. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to purchase the
Securities will be subject to certain conditions precedent and each of the
underwriters with respect to a sale of Securities will be obligated to
purchase all of its Securities if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
Securities may be offered and sold by the Company through agents designated
by the Company from time to time. Any agent involved in the offer and sale of
any Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the Prospectus Supplement relating to such
offering. Unless otherwise indicated in such Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its
appointment.
Offers to purchase Securities may be solicited directly by the Company and
sales thereof may be made by the Company directly to institutional investors
or others who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
The Company may also issue contracts under which the counterparty may be
required to purchase Securities. Such contracts would be issued for Securities
in amounts, at prices and on terms to be set forth in a Prospectus Supplement.
The anticipated place and time of delivery of Securities will be set forth
in the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or agents to solicit offers by certain institutions to
purchase Securities from the Company pursuant to delayed delivery contracts
providing for payment and delivery at a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved
by the Company. Unless otherwise set forth in the applicable Prospectus
Supplement, the obligations of any purchaser under any such contract will not
be subject to any conditions except that (i) the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject, and (ii) if the Securities
are also being sold to underwriters acting as principals for their own
account, the underwriters shall have purchased such Securities not sold for
delayed delivery. The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
Any underwriter or agent participating in the distribution of the Securities
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the Securities so offered and sold and any discounts or commissions
received by them from the Company and any profit realized by them on the sale
or resale of the Securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
Underwriters and agents may be entitled, under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such underwriters or agents may be
required to make in respect thereof. Certain of such underwriters and agents,
including their associates, may be customers of, engage in transactions with
and perform services for, the Company and its subsidiaries in the ordinary
course of business.
35
<PAGE>
LEGAL MATTERS
The validity of the Securities offered will be passed upon for the Company
by Davis, Graham & Stubbs LLP, Denver, Colorado.
EXPERTS
The consolidated financial statements as of December 31, 1996, 1995 and 1994
and for each of the years ended December 31, 1996, 1995 and 1994, incorporated
in this Prospectus by reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The Company's ore reserves at the Fort Knox and Refugio mines set forth in
the table under the heading "Proven and Probable Gold Ore Reserves" have been
independently verified by MRDI, and such information has been included herein
in reliance upon the authority of such firm as experts in mining, geology and
ore reserve determination.
The Company's ore reserves at the Haile project set forth in the table under
the heading "Proven and Probable Gold Ore Reserves" have been verified by
DMBW, and such information has been included herein in reliance upon the
authority of such firm as experts in mining, geology and ore reserve
determination.
36
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses, other than underwriting fees and
commissions, expected to be borne by the Registration, in connection with the
distribution of the Securities being registered:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 31,724
NASD filing fee.................................................... 20,000
Blue Sky fees and expenses......................................... 2,000
Stock exchange listing fees........................................ 160,000
Rating agency fees................................................. 75,000
Transfer agent fees................................................ 5,000
Trustee fees....................................................... 10,000
Legal.............................................................. 300,000
Printing........................................................... 200,000
Accounting......................................................... 50,000
Miscellaneous...................................................... 46,276
--------
Total............................................................ $900,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 8 of the Company's Certificate of Incorporation and Article VI of
the Company's Bylaws (collectively the "Governance Documents") confers on the
Company's officers and directors indemnification rights.
Section 102 of the Delaware General Corporation Law (the "DGCL") allows a
corporation to eliminate the personal liability of a director of a corporation
to the corporation or to any of its stockholders for monetary damage for a
breach of his fiduciary duty as a director, except in the case where the
director breached his duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the payment of
a dividend or approved a stock repurchase in violation of Delaware corporate
law or obtained an improper persona benefit. Article 8 of the Company's
Certificate of Incorporate eliminates directors' personal liability in
accordance with such Section 102 of the DGCL.
Section 145 of the Delaware Law authorizes corporations to indemnify
directors and officers against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement reasonably incurred in
connection with civil, criminal, administrative, or investigative actions,
suits or proceedings to which such persons are parties or threatened to be
made a party by reason of their corporate position (other than actions by or
in the right of the corporation to procure a judgment in its favor--so called
"derivative suits") if such persons acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. With respect to
derivative suits, Section 145 prescribes a similar standard of care but limits
the available indemnification to expenses (including attorneys' fees)
reasonably incurred in connection with the defense or settlement of such
action or suit and further provides that if the derivative suit results in a
judgment that the person seeking indemnification is liable to the corporation,
no such indemnification is to be made without court approval. Section 145(f)
of the DGCL also specifically permits corporations to provide their officers,
directors, employees and agents with indemnification and advancement of
expenses in addition to those specifically required and/or permitted to be
provided pursuant to other provisions of such Section 145.
II-1
<PAGE>
Under the provisions of the Governance Documents, each person who was or is
made a party to, or is threatened to be made a party to or is involved in, any
action, suit or other legal proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that such person is or
was a director or officer of the Company, or is or was performing services at
the Company's request for another entity, including service with respect to
employee benefit plans, shall be indemnified to the full extent permitted by
DGCL as in effect or as it may be amended, against all costs, charges,
expenses, liabilities and losses (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
actually and reasonably incurred by such person in connection with such
proceeding. The rights to indemnification conferred pursuant to the Governance
Documents are contract rights and include the right to receive payment for
expenses of defending a proceeding as to which there may be a right to
indemnification prior to its final disposition, provided that if the DGCL
requires (and it currently does), such advance payment shall be made only upon
receipt by the Company of an undertaking to the effect that all amounts so
advanced will be repaid if it is ultimately found that the party who received
such amounts is not entitled to be indemnified. The effect of providing that
the indemnification rights are contract rights is to permit indemnified
individuals to enforce such provisions directly against the Company. In
addition, the Governance Documents authorize the Company to provide other
permissible indemnification. Finally, the Governance Documents provide that
the Company may (and it does) maintain insurance to protect itself and any of
its officers, directors, employees or agents, to the limit of such coverage,
against any expense, liability or loss, even if the Company would not have the
power itself to indemnify such person against such expense, liability or loss
under the DGCL.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement--Equity**
1.2 Form of Underwriting Agreement--Debt**
4.1 Certificate of Incorporation, dated April 13, 1995 and filed with the
Secretary of State of the State of Delaware on April 26, 1995, filed
as Appendix F to the Company's Proxy Statement for the 1995 Annual
Meeting of Stockholders, dated April 27, 1995, and incorporated herein
by reference.
4.2 By-Laws, adopted on April 26, 1995, as amended and restated effective
June 21, 1995, filed as Exhibit 3(ii) to the Company's Registration
Statement on Form 8-B, filed June 21, 1995, and incorporated herein by
reference.
4.3 Certificate of Designations for the $2.25 Series A Convertible
Preferred Stock, filed as Exhibit 4.1 to the Company's Registration
Statement on Form 8-B, filed June 21, 1995, and incorporated herein by
reference.
4.4 Certificate of Designations for the $3.75 Series B Convertible
Preferred Stock, filed as Exhibit 4.2 to the Company's Form 8-B, filed
June 21, 1995, and incorporated herein by reference.
4.5 Form of Indenture for Subordinated Debt Securities**
4.6 Form of Debt Security (included in Exhibit 4.3)**
4.7 Form of Common Stock Warrant Agreement**
4.8 Form of Common Stock Warrant Certificate (included in Exhibit 4.7)
4.9 Form of Preferred Stock Warrant Agreement**
4.10 Form of Preferred Stock Warrant Agreement (included in Exhibit 4.9)
4.11 Form of Debt Securities Warrant Agreement**
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
4.12 Form of Debt Securities Warrant Agreement (included in Exhibit 4.11)
5.1 Opinion of Davis, Graham & Stubbs LLP
12.1 Statement re: Computation of Ratios*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Derry, Michner, Booth & Wahl
23.3 Consent of Mineral Resources Development, Inc.
23.4 Consent of Davis, Graham & Stubbs (see Exhibit 5.1)
24 Powers of Attorney (included on signature pages)
25 Form T-1 C Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939**
99.1 Consent Solicitation Statement, dated August 19, 1996, regarding the
Fort Knox financing arrangement*
99.2 Consent Solicitation Statement, dated November 29, 1996, regarding
acquisition of Kubaka*
</TABLE>
- --------
*Filed previously with Registration Statement on Form S-3, Registration No.
333-22598.
**To be filed by amendment or incorporated herein by reference.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes that, for the purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
a. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
i. to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
ii. to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
iii. to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
II-3
<PAGE>
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, that are incorporated by reference in the
Registration Statement.
b. That for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
a Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registration pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
c. That for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
d. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the Trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN ENGLEWOOD, COLORADO ON THE 26TH DAY OF MARCH
1997.
Amax Gold Inc.
/s/ S. Scott Shellhaas
By: _________________________________
S. SCOTT SHELLHAAS PRESIDENT AND
CHIEF OPERATING OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below hereby constitutes and appoints Deborah J. Friedman, S. Scott Shellhaas
and David L. Mueller, and each of them, his or her true and lawful agent,
proxy and attorney-in-fact, each acting alone, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to (i) act on, sign and file with the Securities and
Exchange Commission any and all amendments (including post-effective
amendments) to this registration statement together with all schedules and
exhibits thereto and any subsequent registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, together with all
schedules and exhibits thereto, (ii) act on, sign and file such certificates,
instruments, agreements and other documents as may be necessary or appropriate
in connection therewith, (iii) act on and file any supplement to any
prospectus included in this registration statement or any such amendment or
any subsequent registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and (iv) take any and all actions which
may be necessary or appropriate in connection therewith, granting unto such
agents, proxies and attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing necessary or
appropriate to be done, as fully for all intents and purposes as he or she
might or could do in person, hereby approving, ratifying and confirming all
that such agents, proxies and attorneys-in-fact, any of them or any of his or
her or their substitutes may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/s/ Milton H. Ward Chairman of the Board
_____________________________________ and Chief Executive March 26,
MILTON H. WARD Officer (principal 1997
executive officer)
/s/ David L. Mueller Vice President,
_____________________________________ Controller and March 26,
DAVID L. MUELLER Assistant Secretary 1997
(principal financial
and accounting officer)
/s/ Richard H. Block Director
_____________________________________ March 26,
RICHARD H. BLOCK 1997
/s/ Allen Born Director
_____________________________________ March 26,
ALLEN BORN 1997
/s/ Gerald J. Malys Director
_____________________________________ March 26,
GERALD J. MALYS 1997
/s/ Vernon F. Taylor, Jr. Director
_____________________________________ March 26,
VERNON F. TAYLOR, JR. 1997
/s/ Russell L. Wood Director
_____________________________________ March 26,
RUSSELL L. WOOD 1997
II-5
<PAGE>
EXHIBIT 5.1
March 26, 1997
Amax Gold, Inc.
9100 East Mineral Circle
Englewood, Colorado 80112-3299
RE: Registration Statement on From S-3
Relating to $200,000,000 Aggregate
Principal Amount of Debt and Equity Securities
- ----------------------------------------------
Gentlemen:
We have acted as a special counsel for Amax Gold Inc., a Delaware corporation
(the "Company), in connection with the preparation of a Registration Statement
on Form S-3 (No. 333-22598) (the "Registration Statement") filed by the Company
with the Securities and Exchange Commission. The Registration Statement relates
to the registration under the Securities Act of 1933 (the "1933 Act") of an
aggregate of $200,000,000 principal amount of debt securities which may be
issued by the Company (the "Debt Securities") and equity securities which may be
issued by the Company (the "Equity Securities") (together the "Securities").
This opinion is delivered in accordance with the requirements on Item 601(b)(5)
of Regulation S-K under the 1933 Act.
We have examined the form of the Indenture filed by the Company as an exhibit to
the Registration Statement (the "Indenture"). In addition we have examined and
relied on originals or copies certified or otherwise identified to our
satisfaction, of such documents, corporate records and other instruments, have
made such inquiries as to questions of fact of officers and representatives of
the Company and have made such examinations of law as we have deemed necessary
or appropriate for purposes of giving the opinion expressed below. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies.
<PAGE>
We have assumed for purposes of this opinion (i) that all necessary filings with
the Secretary of State of the State of Delaware with respect to the Equity
Securities have been made, (ii) that the Board of Directors of the Company has
authorized the issuance and sale of the particular security to be sold; (iii)
the corporate power, authority and legal right of the trustee under the
Indenture to execute, deliver and perform its obligations under the Indenture,
that the performance of such obligations by the trustee will not violate its
charter or by-laws and that the trustee has the legal ability to exercise its
trust powers in the State of Colorado, and (iv) that the Indenture will have
been duly authorized, executed and delivered by the trustee at the time of
issuance of Debt Securities.
We are members of the bar of the State of Colorado, and the opinion set forth
below is restricted to matters controlled by the laws of the State of Colorado
and the General Corporation Law of Delaware.
Based upon and subject to the foregoing, we are of the opinion that:
1. The issuance and sale by the Company of up to $200,000,000 of Securities, as
provided in the Registration Statement, have been duly and validly authorized by
all necessary corporate action of the Company.
2. The Equity Securities, when issued and sold as provided in the Registration
Statement, will be legally issued, fully paid and non-assessable.
3. When (i) the Registration Statement has become effective under the 1933 Act,
(ii) the applicable Indenture has been qualified under the Trust Indenture Act
of 1939 and has been duly executed and delivered by the parties thereto, (iii)
the definitive terms of any Debt Securities and of their issue and sale have
been duly established in conformity with the resolutions of the board of
directors of the Company and the Indenture so as not to violate any applicable
law or agreement or instrument then binding on the Company, (iv) such Debt
Securities have been duly executed and authenticated in accordance with the
Indenture and (v) such Debt Securities have been issued and sold as contemplated
in the Registration Statement, the prospectus contained therein (the
"Prospectus") and in the applicable supplement to the Prospectus, such Debt
Securities will constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture, except (A) the
enforceability thereof may be limited
<PAGE>
by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (B) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
We hereby consent to the filing of this opinion with the Commission as Exhibit 5
to the Registration Statement. We also consent to the reference to this firm
under the heading "Legal Matters" in the Prospectus included in the Registration
Statement as the counsel who will pass upon the validity of the securities. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ DAVIS, GRAHAM & STUBBS LLP
DAVIS, GRAHAM & STUBBS LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 12, 1997, which appears on page 9 of the 1996 Annual Report to
Shareholders of Amax Gold Inc., which is incorporated by reference in Amax Gold
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Denver, Colorado
March 26, 1997
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF DMBW, INC. APPEARS HERE]
March 25, 1997
Amax Gold Inc.
9100 East Mineral Circle
Englewood, CO 80112
RE: Haile Project Reserve Study
Ladies and Gentlemen:
We hereby authorize the reference to the following described report prepared by
DMBW, Inc. (Derry, Michener, Booth & Wahl)("DMBW") in the Registration Statement
on Form S-3 (Registration No. 333-22598) to be filed by Amax Gold Inc.
("AGI")(File No. 1-9620), with the Securities and Exchange Commission ("SEC"):
1. Audit of April 1, 1994 Ore Reserves at the Haile Mine, dated April 22, 1994,
prepared for Amax Gold, Inc.
We also confirm that we have read the description of the Haile Project ore
reserves as contained in the Annual Report and have no reason to believe that
there is any misrepresentation in the information contained on a Registration
Statement on Form S-3, which is derived from our report, or known to us as a
result of services we performed in connection with the preparation of such
report.
Sincerely,
DMBW, Inc.
[Derry, Michener, Booth & Wahl]
/s/ I.S. Parrish [SEAL APPEARS HERE]
- -------------------------------
By: I.S. Parrish
Title: President/Economic Geologist
<PAGE>
EXHIBIT 23.3
[LETTERHEAD OF MINERAL RESOURCES DEVELOPMENT, INC. APPEARS HERE]
March 25, 1997
Amax Gold Inc.
9100 East Mineral Circle
Englewood, CO 80112
RE: Refugio Gold Project Reserve Study
Ladies and Gentlemen:
We hereby authorize the reference to the Refugio Gold Project, Maricunga Mining
District, Chile, 1996 Reserve Update, dated February 26, 1997, prepared for Amax
Gold, Inc., by Mineral Resources Development, Inc., in the Registration
Statement on Form S-3 (Registration No. 333-22598) of Amax Gold, Inc. (File No.
1-9620), to be filed with the United States Securities and Exchange Commission.
We also confirm that we have read the descriptions of the Refugio Project ore
reserves as contained in the Registration Statement on Form S-3 and have no
reason to believe that there is any misrepresentation in the information
contained herein that is derived from our reports or known to us as a result of
services we performed in connection with the preparation of such reports.
Sincerely,
MINERAL RESOURCES DEVELOPMENT, INC.
/s/ F.P. Howald
- -----------------------------------
By: Frank P. Howald
Title: Vice President, Project Management
