<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to_________
Commission file number 1-9620
KINAM GOLD INC.
(formerly Amax Gold Inc.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1199974
- ----------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
185 SO. STATE ST., # 820, SALT LAKE CITY, UTAH 84111
- ---------------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (801) 363-9152
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Common Stock Outstanding, $0.01 per value, as of August 12, 1999 - 92,213,928
shares
Total Pages - 12
Exhibit Index Located on Page 11
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KINAM GOLD INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
1999 1998 1999 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 53.9 $ 74.5 $ 111.6 $ 137.2
-------- --------- --------- ---------
Costs and expenses
Cost of sales 35.9 42.5 73.0 83.0
Depreciation and depletion 20.0 28.9 40.6 48.5
General and administrative (1.1) -- (2.0) 0.4
Exploration 0.1 1.7 0.5 2.8
-------- --------- --------- ---------
Total costs and operating expenses 54.9 73.1 112.1 134.7
-------- --------- --------- ---------
Income (loss) from operations (1.0) 1.4 (0.5) 2.5
Interest expense (2.1) (8.3) (4.9) (19.1)
Interest income 0.3 0.2 0.5 0.5
Other (0.8) (1.0) -- 5.4
-------- --------- --------- ---------
Loss before income tax expense and extraordinary item (3.6) (7.7) (4.9) (10.7)
Income tax expense (0.6) -- (1.1) --
-------- --------- --------- ---------
Loss before extraordinary item (4.2) (7.7) (6.0) (10.7)
Extraordinary item - loss on early extinguishment of debt -- (11.5) -- (11.5)
-------- --------- --------- ---------
Net loss (4.2) (19.2) (6.0) (22.2)
-------- ------- ------- -------
Preferred stock dividends (1.7) (1.7) (3.4) (3.4)
-------- ------- ------- -------
Loss attributable to common shares $ (5.9) $ (20.9) $ (9.4) $ (25.6)
======== ========= ========= =========
Loss before extraordinary item $ (0.06) $ (0.09) $ (0.10) $ (0.13)
Extraordinary item - loss on early extinguishment of debt -- (0.10) -- (0.10)
-------- ------- ------- -------
Loss per common share $ (0.06) $ (0.19) $ (0.10) $ (0.23)
======== ========= ========= =========
Weighted average common shares outstanding 92.2 107.8 92.2 111.4
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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KINAM GOLD INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in millions except par value of stock)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(unaudited)
---------- ----------
<S> <C> <C>
ASSETS
Cash and equivalents $ 19.9 $ 18.5
Restricted cash -- 0.5
Inventories 48.4 52.5
Receivables 28.2 33.7
Other 1.6 2.0
-------- --------
Current assets 98.1 107.2
Property, plant and equipment, net 476.3 480.0
Other 13.8 14.8
-------- --------
Total assets $ 588.2 $ 602.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand loan $ 81.9 $ 90.3
Current maturities of long-term debt 20.6 23.7
Accrued and other current liabilities 17.5 18.4
Accounts payable, trade 16.3 18.8
Reclamation reserve, current portion 2.6 2.6
-------- --------
Current liabilities 138.9 153.8
Advance from parent 213.2 196.6
Long-term debt 119.6 123.0
Reclamation reserve, non-current portion 29.9 28.8
Other 23.9 27.7
-------- --------
Total liabilities 525.5 529.9
Shareholders' equity:
Preferred stock, par value $1.00 per share, authorized
10,000,000 shares, 2,000,000 shares designated as
$2.25 Series A Convertible Preferred Stock,
no shares issued and outstanding; and 1,840,000 shares
designated as $3.75 Series B Convertible Preferred
Stock, issued and outstanding 1,840,000 shares 1.8 1.8
Common Stock, par value $.01 per share, authorized
200,000,000 shares, issued and outstanding 92,213,928
shares in 1999 and 1998 0.9 0.9
Paid-in capital 409.4 409.4
Accumulated deficit (349.4) (340.0)
-------- --------
Total shareholders' equity 62.7 72.1
-------- --------
Total liabilities and shareholders' equity $ 588.2 $ 602.0
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
KINAM GOLD INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
-------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (6.0) $ (22.2)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and depletion 40.6 48.5
Extraordinary item - loss on early extinguishment of debt -- 11.5
Increase in reclamation reserves 1.1 7.5
Loss on sale of assets -- 0.6
Change in working capital items 3.8 (21.5)
Other (2.8) (4.0)
------- --------
Net cash flow provided from operating activities 36.7 28.4
------- --------
Investing Activities:
Capital expenditures (6.1) (10.0)
Business acquisition (30.1) --
Proceeds from sale of assets 2.1 2.0
------- --------
Net cash used in investing activities (34.1) (8.0)
------- --------
Financing Activities:
Proceeds from financings 16.6 272.8
Repayments of financings (14.9) (269.2)
Deferred financing costs -- (0.1)
Issuance of common stock -- 0.7
Merger costs -- (14.5)
Cash dividends paid (3.4) (3.4)
------- --------
Net cash flow (used in) provided from financing activities (1.7) (13.7)
------- --------
Net increase in cash and equivalents 0.9 6.7
Cash and equivalents at January 1 19.0 19.5
------- --------
Cash and equivalents at June 30 $ 19.9 $ 26.2
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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KINAM GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying interim unaudited consolidated financial statements include all
adjustments that are, in the opinion of management, necessary for a fair
presentation. Results for any interim period are not necessarily indicative of
the results that may be achieved in future periods. The financial information as
of this interim date should be read in conjunction with the financial statements
and notes thereto contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
On June 1, 1998, Kinam Gold, Inc. (the "Company") completed a merger agreement
with Kinross Gold Corporation ("Kinross") providing for a combination of their
businesses. Kinross currently owns 100% of the Company's outstanding common
stock.
2. INVENTORIES
Inventories consist of the following (in millions):
<TABLE>
<CAPTION>
June 30, 1999 December 31,
1998 1998
------------- ------------
<S> <C> <C>
Gold:
Finished goods $ 13.6 $ 18.9
Work-in-process 1.9 2.8
Materials and supplies 33.6 30.8
-------- --------
$ 49.1 $ 52.5
======== ========
</TABLE>
3. LONG-TERM DEBT
The Company borrowed $16.3 million from Kinross during the three months ended
June 30, 1999 to partially fund the acquisition of the True North property
located near the Ft. Knox mine in Alaska. Debt repayments relating to the Kubaka
mine totaled $5.6 million and were funded by net cash flow provided from
operating activities. Scheduled capital lease payments were also funded by net
cash flow provided from operating activities.
4. HEDGE CONTRACTS
Forward sales contracts, generally on a spot deferred basis, and call option
contracts options are entered into from time to time to protect the Company from
the effect of price changes on precious metals sales. As of June 30, 1999 the
Company has no outstanding hedge contracts.
During July 1998, the Company liquidated its hedge position and received
approximately $45.9 million in cash. In connection with the transaction, the
Company recognized a gain of $41.7 million, net of costs previously incurred.
The gain is being included in revenue over the period the underlying hedge
contracts were originally scheduled to expire.
5. COMMITMENTS AND CONTINGENCIES
Reclamation, site restoration and closure costs are accrued on a
units-of-production basis using estimates based upon current federal, state and
applicable foreign laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and generally
becoming more restrictive. Any changes in these laws and regulations could
impact future estimated
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<PAGE> 6
reclamation costs. Total reclamation costs for the Company at the end of current
operating mine lives are estimated to be approximately $51.0 million.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PRODUCTION RESULTS
The following table sets forth the Company's ounces of gold production,
production costs, ounces of gold sold and average realized prices for the three
months and six months ended June 30, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------------
1999 1998 1999 1998
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Gold production (ounces)
Fort Knox 91,133 106,508 163,945 193,740
Kubaka 65,128 60,483 127,129 120,900
Refugio 24,308 18,983 50,733 43,256
Guanaco 6,373 9,150 12,903 19,692
Hayden Hill 5,092 10,650 8,849 25,732
------- ------- ------- -------
TOTAL GOLD PRODUCTION 192,034 205,774 363,559 403,320
------- ------- ------- -------
Cash operating costs ($ per ounce of gold produced)
Fort Knox 179 155 199 170
Kubaka 94 152 96 148
Refugio 242 293 241 291
Guanaco 146 107 150 120
Hayden Hill 141 84 149 98
------- ------- ------- -------
AVERAGE CASH OPERATING COSTS 156 161 166 169
------- ------- ------- -------
Total cash costs ($ per ounce of gold produced)
Fort Knox 179 155 199 170
Kubaka 133 180 135 175
Refugio 257 308 255 305
Guanaco 165 105 168 130
Hayden Hill 156 97 160 111
------- ------- ------- -------
AVERAGE TOTAL CASH COSTS 172 171 183 180
------- ------- ------- -------
Total production costs ($ per ounce of gold produced)
Fort Knox 287 314 310 325
Kubaka 271 290 294 284
Refugio 327 421 328 418
Guanaco 165 105 168 130
Hayden Hill 156 262 160 302
------- ------- ------- -------
AVERAGE TOTAL PRODUCTION COSTS 279 303 298 312
======= ======= ======= =======
Ounces of gold sold 190,955 238,785 384,915 424,236
Average price per ounce sold 282 312 290 323
======= ======= ======= ======
</TABLE>
Cash operating costs at the mine sites include overhead, net of credits for
silver by-products. Total cash costs include cash operating costs plus royalties
and applicable production taxes. Total production costs include total cash costs
plus reclamation and depreciation and depletion.
6
<PAGE> 7
RESULTS OF OPERATIONS
Kinam Gold Inc. reported a second quarter 1999 net loss of $4.2 million, or $.06
per share, on revenue of $53.9 million, compared with a 1998 second quarter net
loss of $19.2 million, or $.19 per share on revenue of $74.5 million. The 1998
second quarter results included a $11.5 million loss on the early extinguishment
of debt relating to the Fort Knox Mine. Excluding the special item, the 1998
second quarter net loss was $7.7 million, or $.09 per share. Loss from
operations of $1.0 million for the second quarter of 1999 compared with income
from operations of $1.4 million for the 1998 second quarter. Lower gold sales
combined with significantly lower realized prices offset by lower depreciation
rates contributed to the operating income decrease.
For the first six months of 1999 the Company had a net loss of $6.0 million or
$.10 per share on revenue of $111.6 million, compared with a loss of $22.2
million, or $.23 per share on revenue of $137.2 million for the first six months
of 1998. The six month loss from operations of $0.5 million compared with 1998
income from operations of $2.5 million.
Kinam Gold's average realized price in the second quarter and first six months
of 1999 was $282 per ounce and $290 per ounce, respectively, compared with $312
per ounce and $323 per ounce, respectively, for the comparable 1998 periods due
primarily to the closing of the Company's hedge position in 1998 combined with
lower spot prices. The average spot price for the second quarter 1999 of $273
per ounce was $9 per ounce lower than the $282 per ounce realized, and was
primarily due to the amortization of the gain realized when the hedge position
was closed in 1998.
The Company's second quarter 1999 gold production decreased to 192,034 ounces,
compared with 205,774 ounces in the second quarter of 1998. The 53% owned Kubaka
mine reported record production of 65,128 ounces for Kinam Gold's account during
the second quarter of 1999, compared with 60,483 in the second quarter of 1998
when Kinam's ownership was 50%. Production at the Kubaka mine continues to
exceed expectations due to higher mill feed grades and higher mill throughput.
Fort Knox's production of 91,133 ounces in the second quarter of 1999 compared
with 106,508 ounces in the second quarter of 1998 due primarily to processing
expected lower grade ore. With the closing of the True North acquisition, the
Company will now focus exploration and permitting activities on the nearby True
North property which management believes will provide higher grade ore and allow
Ft. Knox to increase production. At Refugio, the Company's 50% share of
quarterly production was 24,308 ounces in the second quarter of 1999, compared
with 18,893 ounces for the second quarter of 1998 due primarily to improved
operating efficiencies. Mining was completed at both Hayden Hill and Guanaco
during 1997, which resulted in the decrease in production at each mine.
Production at Hayden Hill and Guanaco will continue to decline during 1999 as
residual leaching continues.
The Company's second quarter 1999 cost of sales decreased to $35.9 million,
compared with $42.5 million in the second quarter of 1998. Consolidated total
cash costs increased slightly to $172 per ounce for the second quarter of 1999,
compared with $171 per ounce in the second quarter of 1998. Fort Knox total cash
costs of $179 per ounce for the second quarter of 1999 compared with $155 per
ounce in the second quarter of 1998 due primarily to lower production levels
associated with expected lower grades. As a result of higher mill throughput and
higher grades, Kubaka's second quarter 1999 total cash costs of $133 per ounce
were significantly lower than 1998 second quarter total cash costs of $180 per
ounce. Refugio's total cash costs improved to $257 per ounce for the second
quarter of 1999, compared with $308 per ounce in the second quarter of 1998. The
Company commenced self-mining and also became operator of Refugio during the
second quarter of 1999. In addition to purchasing the mobile fleet in the second
quarter of 1999 further capital expenditures will be required to complete the
replacement of the tertiary crusher during 1999. The Company believes that
substantially lower production costs will be seen in the foreseeable future.
Hayden Hill and Guanaco's second quarter 1999 total cash costs were $156 per
ounce and $165 per ounce, respectively, compared with $97 per ounce and $105 per
ounce, respectively for the second quarter of 1998. Six-month total cash costs
of $183 per ounce in 1999 compared with $180 per ounce in 1998.
7
<PAGE> 8
Second quarter 1999 depreciation and depletion decreased to $20.0 million from
$28.9 million in the second quarter of 1998, due primarily to decreased sales,
and lower depreciation rates due to the 1998 write downs.
Net general and administrative income increased $1.1 million for the second
quarter of 1999. The increased income is mainly attributed to the reduction of
the Company's corporate staff subsequent to the Company's merger with Kinross in
June 1998 (the "Kinross Merger").
The $1.6 million decrease in exploration expense to $0.1 million for the second
quarter of 1999 resulted primarily from the decreased exploration activity in
order to conserve cash due to continued low gold prices.
Lower interest expense of $2.1 million for the second quarter of 1999, compared
with $8.3 million for the 1998 second quarter, was attributed to lower debt
balances primarily as a result of the repayment of loans subsequent to the
Kinross Merger and no interest charge on a demand loan extended to the Company
by Kinross.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash flow provided from operating activities for the first six
months of 1999 increased to $36.7 million, compared with $28.4 million for the
first six months of 1998 due primarily to lower interest payments and lower cash
costs at Kubaka and Refugio, partially offset by lower realized gold prices and
lower sales.
During the second quarter of 1999 the Company completed the acquisition of the
True North property near the Ft. Knox Mine in Alaska for $28.1 million. The
purchase was partially funded by a $16.6 million advance from Kinross while the
balance was funded by net cash flow provided from operating activities.
Capital spending of $6.1 million for the first six months of 1999 was lower than
the $10.0 million spent during the comparable period of 1998. During the first
six months of 1999, approximately $3.1 million was spent at Refugio to purchase
the mobile fleet and replace the tertiary crusher. In addition $0.6 million was
spent at Kubaka and $2.4 million at Ft. Knox. Due to low gold prices, the
Company continues to only spend capital on sustaining projects.
Scheduled debt payments were made with net cash flow provided by operating
activities. With continued reductions in capital spending expected for the
remainder of 1999 and with the anticipated higher production and lower cash
costs, the Company expects to generate sufficient funds for general corporate
purposes, capital expenditures, and scheduled debt and interest payments.
YEAR 2000
The review and impact analysis of the Company's operating facilities is
proceeding according to the plan that was disclosed in the Company's Annual
Report on Form 10-K for the Year Ended December 31, 1998. The Fort Knox and
Kubaka mines have completed the review, analysis and remediation work to their
process control systems and these systems are now Year 2000 compliant. The
review of Refugio operating facilities is 75% complete with no major issues to
report and completion is expected in August 1999.
The review and impact analysis of business information systems is progressing on
schedule with approximately 80% of the system upgrades complete and the
remainder scheduled for completion in September 1999. All of the Company's
business information systems are on track to be Year 2000 ready by September 1,
1999.
8
<PAGE> 9
Questionnaires have been sent to 200 vendors of goods and services from the
various mine locations. To date the Company has received responses from
approximately 90% of such vendors, indicating they are now Year 2000 compliant.
Year 2000 contingency planning is still expected to take place during the third
quarter of 1999. It is still the Company's intention to focus contingency plans
on potential electrical disruptions, even though various electrical utilities
have assured the Company that they are Year 2000 compliant.
Total project spending estimates for the year are lower than previous estimates.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
With the exception of historical matters, the matters discussed in this report
are forward-looking statements that involve risks and uncertainties that could
cause actual results to differ material from projected results. Such
forward-looking statements include statements regarding expected dates for gold
sales, reserve additions, production improvements at Refugio and Fort Knox,
projected quantities of future gold production, estimated reserves and recovery
rates, anticipated production rates, costs and expenditures, prices realized by
the Company and expected to be realized, expected future cash flows, anticipated
financing needs, growth plans and sources of financing and repayment
alternatives, timing and results of the pending business combinations and issues
relating to Year 2000 compliance. Factors that could cause actual results to
differ materially from such forward-looking statements include, among others:
risks and uncertainties relating to general domestic and international economic
and political conditions, the cyclical and volatile price of gold, the political
and economic risks associated with foreign operations, cost overruns,
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 and
approvals, 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, environmental risks, the results of financing efforts and
financial market conditions and other risk factors detailed in the Company's
Securities and Exchange Commission filings. Refer to the Risk Factors on pages
11 to 15 of the Company's Annual Report on Form 10K as filed with the Securities
and Exchange Commission, for a more detailed discussion of risks. 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
COMMODITY PRICE RISKS
The Company's revenues are derived primarily from the sale of gold production.
The Company's net income can vary significantly with fluctuations in the market
prices of gold. At various times, in response to market conditions, the Company
has entered into gold forward sales contracts for some portion of expected
future production to mitigate the risk of adverse price fluctuations. The
significant decline in spot gold prices in 1998 increased the value of the
Company's forward sales contracts. The Company closed out these contracts in
1998 for $45.9 million in cash. Based on the Company's projected 1999 sales
volume, each $10 per ounce change in the average realized price on gold sales
would have an approximate $7.1 million impact on revenues and pre-tax earnings.
FOREIGN CURRENCY EXCHANGE RISK
The Company conducts the majority of its operations in the U.S., Russia, and
Chile. Currency fluctuations affect the cash flow that the Company will realize
from its operations as gold is sold in U.S. dollars, while production costs are
incurred in Russian rubles and U.S. dollars. The Company's results
9
<PAGE> 10
are positively affected when the U.S. dollar strengthens against these foreign
currencies and adversely affected when the U.S. dollar weakens against these
foreign currencies. The Company's cash and equivalent balances are held in U.S.
dollars. Holdings denominated in other currencies are relatively insignificant.
In the last half of 1998, the Russian ruble weakened against the U.S. dollar and
the Company benefited primarily through lower Russian labour and material costs.
In Russia, the temporal method is used to consolidate the financial results. The
major currency related exposure at any balance sheet is on ruble-denominated
cash balances and working capital. Because the bullion inventory is denominated
in U.S. dollars there are no related foreign exchange risks. The foreign
exchange exposure on the balance of the working capital items is nominal. Gold
sales during 1998 were denominated 50% in U.S. dollars and 50% in rubles. The
U.S. dollars received are used to service the U.S. dollar denominated debt and
the foreign supplies inventory purchases, while the rubles received from the
gold sales are used to pay local operating costs. The Company has and will
continue to convert any excess rubles into U.S. dollars to repay U.S.
denominated third party and inter-corporate debt obligations. Assuming estimated
1999 ruble payments of 350 million rubles at an exchange rate of 20 rubles to
one U.S. dollar, each 2 rubles change to the U.S. dollar could result in an
approximate $1.0 million change in the Company's pre-tax earnings.
In Chile, the currency measurement is the U.S. dollar as the majority of
transactions are denominated in U.S. dollars. Local expenditures are recorded
based on the prevailing exchange rate at the time and bullion settlement
receivables are denominated in U.S. dollars. The vast majority of expenditures
are denominated in U.S. dollars resulting in little peso-related exposure.
INTEREST RATE RISKS
The Company has interest rate swaps to fix interest rates on a portion of its
floating rate debt. The costs associated with these contracts are amortized to
interest expense over the terms of the agreements. As at June 30, 1999, the
Company carried $123.3 million of variable rate debt, all denominated in U.S.
dollars. Interest expense would change by approximately $1.0 million for every
one percent change in interest rates.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in legal proceedings and claims which arise in the
ordinary course of its business. The Company believes these claims are without
merit and is vigorously defending them. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect
the financial position, results of operations or cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on June 10, 1999. Messrs.
John A. Brough, Arthur H. Ditto, John M.H. Huxley, John W. Ivany and Brian W.
Penny were elected as directors of the Company until the next annual meeting of
shareholders or until their successors are elected or appointed.
All of the issued and outstanding common shares were voted in favour of the
election of the foregoing directors.
10
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number
-------------
<S> <C>
(10) Purchase and Sale Agreement between Newmont Alaska
Limited, Kinross Gold Corporation and
Fairbanks Gold Mining, Inc.
(27) Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K - None
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KINAM GOLD INC.
By /s/ Brian W. Penny
------------------------------
Treasurer and Director
(principal financial officer)
Dated: August 12, 1999
12
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
-------------
<S> <C>
(10) Purchase and Sale Agreement between Newmont Alaska
Limited, Kinross Gold Corporation and
Fairbanks Gold Mining, Inc.
(27) Financial Data Schedule
</TABLE>
<PAGE> 1
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement is effective as of May 14, 1999, between
Newmont Alaska Limited ("Newmont"), a Delaware corporation, Kinross Gold
Corporation ("Kinross"), a Canadian corporation, and Fairbanks Gold Mining, Inc.
("FGMI"), a Delaware corporation. Newmont Gold Company ("NGC"), a Delaware
corporation, joins for the limited purposes set forth herein.
RECITALS
A. Newmont, as successor in interest, owns a sixty-five percent (65%)
participating interest in the True North Joint Venture pursuant to a Venture
Agreement dated June 9, 1995, as amended, between Newmont Exploration Limited
and La Teko Resources, Inc. ("Venture Agreement"). Pursuant to the Venture
Agreement, Newmont owns a sixty-five percent (65%) interest in certain
properties in the Fourth Judicial District of the State of Alaska and in related
assets, all as more particularly described herein.
B. Newmont desires to sell to FGMI, and Kinross and FGMI desire that FGMI
purchase from Newmont, Newmont's entire interest in the Venture Agreement and in
the properties and other assets related thereto.
Therefore, in consideration of the mutual covenants contained in this
Agreement, and other valuable consideration, the receipt of which is hereby
acknowledged by the parties, Newmont, NGC, Kinross, and FGMI agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In this Agreement, the following terms shall have
the meanings set forth or cross-referenced below:
<PAGE> 2
"Affiliate" means any person, partnership, joint venture, corporation or
other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a Party. For purposes of the preceding
sentence, "control" means possession, directly or indirectly, of the power to
direct or cause direction of management and policies through ownership of voting
securities, contract rights, voting trust, or otherwise.
"Agreement" means this Purchase and Sale Agreement and the Exhibits
attached hereto (all of which Exhibits shall be deemed to be incorporated herein
by reference and made a part hereof as if set out in full herein).
"Agreement Date" means the date of this Agreement, which is the date first
set forth above.
"Claims" means the State of Alaska mining claims described in Exhibit B.
"Equipment" means the personal property and other equipment identified in
Exhibit D.
"Fee Lands" means the lands described in Exhibit A.
"Files and Records" means all files, reports, and accounting records
relating to the Purchased Assets, including without limitation those relating to
title, except for: (i) any reports, summaries or other documents prepared by or
for Newmont or NGC for any negotiations with Kinross or La Teko Resources, Inc.
or any Affiliate thereof; and (ii) opinions or work product (other than title
reports and title opinions related to the Properties) prepared by counsel on
behalf of Newmont or a Newmont Affiliate.
"Party" or "Parties" means Kinross, FGMI and Newmont, and their successors
and permitted assigns, as parties to this Agreement. NGC is a Party only for the
limited purposes set forth herein.
"Permits" means the existing permits and applications for permits,
described on Exhibit E, appurtenant or relating to the Properties.
2
<PAGE> 3
"Properties" means the Claims, Fee Lands, and Property Agreements.
"Property Agreements" means the Venture Agreement, leases and other
agreements described in Exhibit C.
"Purchased Assets" means all of Seller's right, title, and interest in the
Properties, the Files and Records, the Technical Data, and the Equipment.
"Technical Data" means the following, if any: engineering studies and
working papers, consultants reports and working papers, pre-feasibility reports,
feasibility reports, mine plans, surface and underground maps, assays, samples,
cores, analyses, geologic and geophysical maps, engineering maps, photographs,
drill logs, exploration reports, environmental studies, correspondence with
governmental officials and entities, reserve studies and reports, metallurgical
studies and reports, and all other information and data in printed or electronic
form concerning the condition, geology, mineral potential, physical
characteristics, minability, or other technical matters related to the
Properties, except any studies, reports, analyses or other documents prepared by
or for Newmont or NGC for any negotiations with Kinross or La Teko Resources,
Inc. or any Affiliate thereof.
ARTICLE 2
CLOSING
2.1 Closing.
(a) Newmont, Kinross and FGMI shall, subject to satisfaction of the
Conditions precedent set forth in Sections 2.2 (a) and (b), consummate and close
the transactions contemplated by Sections 3.1, 3.2, 4.1, and 4.2 of this
Agreement ("Closing") within 30 days from the Agreement Date, on a date
("Closing Date") and at a place and time mutually agreed by the Parties.
(b) In the event the Parties fail to close the transactions
contemplated by this Agreement within the time frame prescribed in Section
2.1(a), or within such additional time as
3
<PAGE> 4
may be agreed upon in writing by the Parties, as a result of any of the
conditions set forth in Sections 2.2(a) and (b) not having been satisfied, this
Agreement shall terminate and the Parties shall have no further rights or
obligations pursuant hereto, except for the obligations under Section 7.11,
which shall survive any termination of this Agreement, but any cause of action
held by a Party related to a breach of this Agreement prior to such termination
shall survive.
2.2 Conditions Precedent to Closing.
(a) Conditions Precedent to Obligations of Newmont. The obligations of
Newmont to complete the Closing are subject to the satisfaction prior to or at
the Closing, or the waiver by Newmont at its sole discretion prior to the
Closing, of each of the following conditions:
(i) La Teko Resources, Inc. shall have executed a written waiver
of its preemptive rights under Section 15.3 of the Venture Agreement;
(ii) For each Property Agreement, Kinross and FGMI, in
cooperation with Newmont, shall have obtained from the lessors or grantors a
novation substantially in the form attached as Exhibit F, signed by the lessors
or grantors. Provided that the Closing occurs, Newmont agrees to share equally
any reasonable payments made to the lessors or grantors by Kinross or FGMI to
obtain novations for those Property Agreements requiring transfer consent from
the lessor or grantor, and to fund solely any reasonable payments made to the
lessors or grantors by Kinross or FGMI to obtain novations for those Property
Agreements not requiring transfer consent from the lessor or grantor;
(iii) Kinross and FGMI shall have obtained a full release of the
Guaranty of NGC dated April 3, 1998, pursuant to which NGC guaranteed to the
Alaska Mental Health Trust Authority the performance of Newmont Alaska
Exploration LLC (Newmont's predecessor in interest) under the Upland Mining
Lease dated April 7, 1998, between Alaska Mental Health Trust Authority and
Newmont Alaska Exploration LLC;
4
<PAGE> 5
(iv) Kinross and FGMI shall have posted a reclamation bond with
the appropriate regulatory agencies in an amount and in a form required by those
agencies for a full release of Newmont's existing reclamation bond;
(v) The representations and warranties of Kinross and FGMI made
herein, which shall be deemed to have been made again on and as of the Closing
Date, shall be true as of the Closing in all material respects; and
(vi) No action shall have been commenced that constitutes a
material challenge to the consummation of the transaction contemplated hereby
and no preliminary or permanent injunction or other order shall have been issued
that prevents consummation of the transactions contemplated hereby.
(b) Conditions Precedent to Obligations of Kinross and FGMI. The
obligations of Kinross and FGMI to complete the Closing are subject to the
satisfaction prior to or at the Closing, or the written waiver by Kinross and
FGMI at their sole discretion prior to the Closing, of each of the following
conditions:
(i) The representations and warranties of Newmont made hereunder,
which shall be deemed to have been made again on and as of the Closing Date,
shall be true as of the Closing in all material respects;
(ii) For each Property Agreement, Kinross and FGMI, in
cooperation with Newmont as provided in Section 2.2(a)(ii), shall have obtained
from the lessors or grantors a novation substantially in the form attached as
Exhibit F, signed by the lessors or grantors; and
(iii) No action shall have been commenced that constitutes a
material challenge to the consummation of the transaction contemplated hereby
and no preliminary or permanent injunction or other order shall have been issued
that prevents consummation of the transactions contemplated hereby.
5
<PAGE> 6
(c) Termination. Kinross or FGMI may terminate this Agreement, by
written notice to Newmont any time prior to the Closing, in the event it
discovers a material defect in Newmont's or the Venture's title to the
Properties that arose through events other than the action or inaction of La
Teko Resources, Inc. Upon such termination, except for Section 7.11, which shall
remain effective, the Agreement shall be deemed null and void, and the Parties
shall have no further rights or obligations pursuant hereto.
ARTICLE 3
CONSIDERATION FOR PURCHASED ASSETS
3.1 Purchase Price. At the Closing, Kinross and FGMI shall pay to Newmont
twenty eight million dollars ($28 million) by wire transfer of immediately
available funds, pursuant to written instructions provided by Newmont to Kinross
at least 48 hours before the scheduled time of Closing.
3.2 Additional Payments Due at Closing. At the Closing, Kinross and FGMI
shall also pay to Newmont, by wire transfer of immediately available funds, an
amount equal to holding costs paid by Newmont to the lessors or grantors, or the
United States or the State of Alaska or instrumentality thereof, to maintain the
Property Agreements and the Claims ("Property Holding Costs") the due date of
which occurs after April 30, 1999 and on or before the Closing Date. Newmont
shall not be entitled to reimbursement for any Property Holding Costs paid by
Newmont, or becoming due, prior to May 1, 1999, nor for any property taxes paid
prior to the Closing Date. Upon Closing, Kinross and FGMI shall be fully
responsible for all Property Holding Costs, property taxes, and all other
obligations and liabilities relating to the Properties or the Property
Agreements that become due after the Closing Date, regardless of whether such
costs, taxes, obligations, or liabilities accrued prior to the Closing Date. At
least five days prior to the Closing Date, Newmont shall provide written notice
to Kinross of the amount due at the Closing under this Section 3.2.
ARTICLE 4
CONVEYANCES TO KINROSS
6
<PAGE> 7
4.1 Transfer of the Interests. Subject to satisfaction of the conditions
set forth in Section 2.2(a) and (b), and to receipt of the payments under
Sections 3.1 and 3.2, Newmont agrees to transfer to FGMI all of its interest in
the Purchased Assets as follows. At the Closing, Newmont shall execute and
deliver to FGMI the following documents:
(a) Special Warranty Deed of the Fee Lands in the form of Exhibit G.
(b) Mining Quit Claim Deed of the Claims in the form of Exhibit H.
(c) Assignment and Assumption Agreement of the Property Agreements in
the form of Exhibit I.
(d) Bill of Sale of the Equipment, Files and Records, and the
Technical Data in the form of Exhibit J. Newmont may retain copies of all
written, graphic or electronic Files and Records and Technical Data. As of the
Closing Date, Kinross and FGMI shall assume all obligations for storing and
transporting the Files and Records and Technical Data.
(e) Confidentiality Agreement in the form of Exhibit L with respect to
copies of the Files and Records and Technical Data retained by Newmont.
4.2 Transaction Costs. All fees, taxes, and recording costs required in
connection with the filing and recordation of the conveyances delivered to FGMI
at the Closing shall be paid by Kinross and FGMI.
ARTICLE 5
WARRANTIES, REPRESENTATIONS AND INDEMNITIES
5.1 Capacity of Parties; No Brokers. As of the Agreement Date, and as of
the date it executes this Agreement, Newmont, Kinross and FGMI each warrants and
represents that:
7
<PAGE> 8
(a) it is a corporation duly organized and in good standing in its
state of incorporation and is qualified to do business and is in good standing
in those states where necessary in order to carry out the purposes of this
Agreement;
(b) it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein, and all corporate and other actions
required to authorize it to enter into and perform this Agreement have been
properly taken;
(c) it is not subject to any governmental order, judgment, decree,
debarment, sanction or laws that would preclude the execution or implementation
of this Agreement;
(d) this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms, provided, however, no
representation is made as to (i) the remedy of specific performance or other
equitable remedies for the enforcement of this Agreement or other agreement
contemplated thereby, or (ii) limitations on remedies established by applicable
bankruptcy, insolvency, moratorium, and other similar laws affecting generally
the rights of creditors and secured parties;
(e) to its knowledge, the execution, delivery, and performance of this
Agreement will not violate any provision of any indenture, agreement, or other
instrument to which it or any of its Affiliates is a party or by which its
properties are bound, except for such matters as would not have a material
adverse effect on this Agreement taken as a whole; and
(f) it has not incurred any obligation or liability, contingent or
otherwise, for brokers or finders fees with respect to the matters provided for
in this Agreement.
5.2 Warranties and Representations of Newmont. As of the Agreement Date,
Newmont represents and warrants that the following provisions are true and
correct:
(a) Environmental Conditions. To Newmont's knowledge, all of Newmont's
and its Affiliates' mineral exploration activities conducted on the Properties
pursuant to the Venture Agreement or independently (if any) were conducted in
compliance with all federal, state and local
8
<PAGE> 9
laws and regulations relating to environmental protection. Except for the
existing 48 acres of disturbance associated with its exploration activities
under the Venture Agreement, all disturbance caused by Newmont or its Affiliates
has been reclaimed in accordance with federal, state and local laws.
(b) Taxes. To Newmont's knowledge, all tax returns and reports
relating to the Purchased Assets (including, without limiting the scope of the
foregoing, all federal, state, and local property tax, unemployment
compensation, social security, sales, excise, severance and franchise tax laws)
have been duly filed and the taxes due thereunder paid, if any.
(c) Pending Litigation. To Newmont's knowledge, there are no actions,
suits, arbitrations, or proceedings currently pending or threatened against
Newmont or its Affiliates or otherwise, affecting the Purchased Assets.
(d) Title to Purchased Assets. Subject to the Venture Agreement and
the Property Agreements, title to the Properties is free and clear of liens or
encumbrances arising by, through, or under Newmont or its Affiliates.
(e) Compliance with Laws and Regulations. To Newmont's knowledge,
Newmont is in compliance with the Permits and with all currently effective
applicable laws and regulations concerning the Purchased Assets and the
operations of Newmont on the Properties.
(f) Status of Contracts. To Newmont's knowledge, the Property
Agreements are valid and in good standing, and there is no default thereunder.
(g) Consents. To Newmont's knowledge, no consents or approvals are
required for the conveyance of the Properties to Kinross except as may be
provided in the Property Agreements and, except as provided in the Venture
Agreement, no preferential purchase rights applicable to Newmont's interest in
the Properties exist.
5.3 Indemnities.
9
<PAGE> 10
(a) Kinross and FGMI Indemnity. Notwithstanding any provisions in the
Venture Agreement, Kinross and FGMI shall indemnify and hold harmless Newmont,
its Affiliates and successors, and its officers, directors, agents, and
employees from and against all loss, penalties, expense, damage and liability
(including, without limitation, loss due to injury or death, reasonable
attorney's fees, experts' fees and other expenses incurred in defending against
litigation, or administrative enforcement actions, either pending or threatened)
arising out of, relating to, or incurred in connection with:
(i) environmental conditions at or in connection with the
Properties, both to the extent the Properties have been previously used by
Newmont and its Affiliates and to the extent the Properties have been or will be
used by Kinross, FGMI, their Affiliates, or other third parties, which arises in
whole or in part under any federal, state or local law, including common law,
now existing or hereafter enacted, adopted or amended, including, without
limitation, any statutory or common law governing liability to third parties for
personal injury or property damage related to such environmental conditions,
provided that if Newmont is found by a court of competent jurisdiction to have
breached its representation and warranty under Section 5.2(a), Kinross' and
FGMI's indemnity shall not apply to any loss, cost, penalties, expense, damage,
or liability resulting from the conditions upon which that breach is founded;
(ii) any acts, omissions, conditions or events, occurring after
the Closing other than environmental liabilities covered separately by Kinross'
and FGMI's indemnification obligation in Section 5.3(a)(i);
(iii) any acts, omissions, conditions or events, occurring prior
to the Closing except those for which Newmont is providing an indemnity in
Section 5.3(b)(ii); and
(iv) any breach by Kinross or FGMI of any of their
representations, warranties, or covenants contained in this Agreement.
Kinross and FGMI shall be jointly and severally liable for any indemnity
obligations under this Section 5.3(a).
10
<PAGE> 11
(b) Newmont and NGC Indemnity. Notwithstanding any provisions in the
Venture Agreement, Newmont and NGC shall indemnify and hold harmless Kinross,
FGMI, their Affiliates and successors, and their officers, directors, agents,
and employees from and against all loss, penalties, expense, damage and
liability (including, without limitation, loss due to injury or death,
reasonable attorney's fees, experts' fees and other expenses incurred in
defending against litigation, or administrative enforcement actions, either
pending or threatened) arising out of, relating to, or incurred in connection
with:
(i) except for environmental liabilities covered by Kinross' and
FGMI's indemnity obligation in Section 5.3(a)(i), acts or omissions, taken or
not taken by Newmont or its Affiliates, related to the Properties, occurring
during the period prior to the Closing when Newmont or its Affiliates held an
interest therein; and
(ii) any breach by Newmont of any of Newmont's representations,
warranties, or covenants contained in this Agreement.
Newmont and NGC shall be jointly and severally liable for any indemnity
obligations under this Section 5.3(b).
(c) Indemnity Procedures.
(i) A Party claiming indemnification under this Section 5.3 (the
"Indemnitee") shall notify in writing the Party or Parties from whom
indemnification is claimed (the "Indemnitor") in reasonable detail of the
nature, basis and estimated amount of the claim within a reasonable time after
discovery by the Indemnitee of the basis therefor or the assertion thereof by a
third party against the Indemnitee. Notice of a claim filed in any court or
administrative agency, or submitted to arbitration, shall be given to the
Indemnitor within 10 days of the Indemnitee's receipt of knowledge of such
filing but failure to provide notice within the 10 days shall not result in
forfeiture of indemnification rights except to the extent that the ability of
the Indemnitor to defend against the claim is materially impaired. In the event
of such notice by the Indemnitee to the Indemnitor of a third party claim, the
Indemnitor shall have 20 days after receipt
11
<PAGE> 12
thereof in which to admit or deny responsibility for indemnification of the
Indemnitee by written notice to the Indemnitee, and
(A) As to claims with respect to which the Indemnitee and the
Indemnitor may share responsibility, each Party may elect to participate in
the defense of the claim through counsel of its choice and at its expense,
and neither Party shall settle or compromise the claim without the consent
of the other;
(B) If the Indemnitor denies responsibility or fails to admit or deny
responsibility for a claim within 20 days of the notice, the Indemnitee
shall have the sole option and right to defend the claim, including the
right to settle or compromise the claim without consent of the Indemnitor,
by counsel of its choice; and
(C) Except with respect to a claim as to which the Indemnitee and the
Indemnitor share responsibility, if the Indemnitor admits responsibility
for indemnification, the Indemnitor may at the same time elect to control
the defense of the claim by counsel of its choice and at its expense, which
counsel shall consult with the Indemnitee or its counsel at the
Indemnitee's expense, and except as limited herein shall in such case have
the right to settle or compromise the claim provided that Indemnitee
receives a full and complete release for any liability relating to the
claim, and the Indemnitee shall cooperate in such defense and agree to and
accept any money settlement or compromise approved by the Indemnitor. If
the Indemnitor does not so elect to control the defense, the Indemnitee
shall appear and defend the claim by counsel of its choice, and the
Indemnitor may participate in such defense by counsel of its choice at its
expense, which counsel shall be consulted by and shall assist counsel for
the Indemnitee, in which case the Indemnitor shall reimburse the Indemnitee
for its reasonable legal fees and expenses on a monthly basis.
ARTICLE 6
DISPUTE RESOLUTION
6.1 Rights Upon Default. In the event any party defaults on any one or
more of its obligations or covenants under this Agreement, each party shall have
all rights and remedies provided by law, including the right of specific
performance.
12
<PAGE> 13
6.2 Attorney's Fees. In any litigation between the parties to this
Agreement or persons claiming under them resulting from, arising out of, or in
connection with this Agreement or the construction or enforcement thereof, the
substantially prevailing party or parties shall be entitled to recover from the
defaulting party or parties all reasonable costs, expenses, attorney's fees,
experts' fees and other costs of suit incurred by it in connection with such
litigation, including such costs, expenses and fees incurred prior to the
commencement of the litigation, in connection with any appeals, and in
collecting any final judgment entered therein. If a party or parties
substantially prevails on some aspects of such action, but not on others, the
court may apportion any award of costs and attorneys' fees in such manner as it
deems equitable.
ARTICLE 7
GENERAL PROVISIONS
7.1 Notice. All notices and other communications to either party shall be
in writing and shall be sufficiently given if (i) delivered in person, (ii) sent
by electronic communication, with confirmation sent by registered or certified
mail, return receipt requested, or (iii) sent by registered or certified mail,
return receipt requested. All notices shall be effective and shall be deemed
delivered (i) if by personal delivery, on the date of delivery, (ii) if by
electronic communication, on the date of receipt of the electronic
communication, and (iii) if by mail, on the date of delivery as shown on the
actual receipt. A party may change its address from time-to-time by notice to
the other party as indicated above. All notices to Newmont or NGC shall be
addressed to:
Newmont Alaska Limited [or Newmont Gold Company]
1700 Lincoln Street, Suite 2800
Denver, CO 80202
Fax: (303) 837-5851
All notices to Kinross or FGMI shall be addressed to:
c/o Kinross Gold Corporation
57th Floor, Scotia Plaza
13
<PAGE> 14
40 King Street West
Toronto, Ontario M5H 3Y2
CANADA
Fax: (416) 363-6622
with a copy to:
Scott W. Loveless
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, UT 84111
Fax: (801) 532-7750
7.2 Access. From the Agreement Date, until the Closing Date, upon
reasonable notice to Newmont, Newmont shall allow Kinross and FGMI reasonable
access to the Properties for purposes of conducting a non-invasive inspection of
the Properties, and to the Files and Records and Technical Data wherever
situated, and permit Kinross and FGMI to make and use copies and other
reproductions thereof, subject to the Confidentiality Agreement between Newmont
and Kinross dated November 11, 1998 ("Confidentiality Agreement"). Any such
inspections shall be conducted at Kinross' and FGMI's own risk and expense, and
in a manner that does not interfere with any of Newmont's or the Venture's
operations.
7.3 Environmental Permits. At Closing or as soon after the Closing as the
necessary agency approvals are obtained, Newmont shall assign to FGMI all
remaining Permits that it then holds authorizing the conduct of mineral
exploration activities on the Properties, pursuant to an assignment and
assumption in the form of Exhibit K. Upon Closing, FGMI shall assume all
obligations under the Permits, including requirements for completing
reclamation. After the Closing, neither Kinross nor FGMI may conduct any
exploration activities subject to any Newmont Permit on or within the Properties
unless the appropriate federal and state agencies have approved the transfer of
the Permits authorizing such activity from Newmont, accepted financial sureties
posted or provided by FGMI, and have released all financial suce of Purchased
Assets. During the period between the Agreement Date and the Closing, Newmont
shall take such action as is
14
<PAGE> 15
reasonably necessary to cause the representations and warranties of Newmont set
forth in Sections 5.2(a), (b), (d), (e), and (f) to remain true.
7.5 Inurement. All covenants, conditions, indemnities, limitations, and
provisions contained in this Agreement apply to an are binding upon the parties
to this Agreement, their heirs, representatives, successors, and permitted
assigns.
7.6 Implied Covenants. The only implied covenants in this Agreement are
those of good faith and fair dealing.
7.7 Waiver No waiver of any provision of this Agreement, or waiver of any
breach of this Agreement, shall be effective unless the waiver is in writing and
is signed by the party against whom the waiver is claimed. No waiver of any
breach shall be deemed to be a waiver of any other or subsequent breach.
7.8 Modification. No modification, variation, or amendment of this
Agreement shall be effective unless it is in writing and is signed by all
parties to this Agreement.
7.9 Assignment of Interests. Prior to Closing, no party may, without prior
written approval from the other, assign any rights under this Agreement, except
that FGMI may assign to a Kinross Affiliate, provided such Affiliate agrees in
writing to assume all obligations of FGMI under this Agreement. Under any such
assignment to an Affiliate, Kinross and the Affiliate shall be jointly and
severally liable for all obligations under this Agreement. A Party shall not
unreasonably withhold approval under this Section, after considering the prior
mining experience, the financial capabilities, and the environmental compliance
record of the assignee.
7.10 Entire Agreement. Other than the Confidentiality Agreement, which
remains in full force and effect, this Agreement sets forth the entire agreement
of the parties with respect to the Venture Agreement and the Purchased Assets,
and supersedes any other agreement, representation, warranty, or undertaking,
written or oral.
15
<PAGE> 16
7.11 Release of Information. Prior to the Closing, information concerning
this Agreement and related activities shall be voluntarily released only upon
written agreement of all Parties, except as counsel for either Party may deem
legally necessary, in which event such Party shall provide the other Party with
advance notice of the time, contents of, and specific legal reasons for such
release. Prior to the Closing, any release of information by Kinross or FGMI is
subject to the terms of the Confidentiality Agreement. After the Closing, mutual
written agreement of the parties must be obtained prior to voluntarily releasing
information concerning this Agreement or related activities only when Kinross or
FGMI seek to name Newmont or NGC, or when Newmont or NGC seek to name Kinross or
FGMI.
7.12 Further Assurances. Each of the Parties agrees that it shall take from
time to time such actions and execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent and
purpose of this Agreement.
7.13 Construction. The Section headings contained in this Agreement are for
convenience only, and shall not be used in the construction of this Agreement.
The invalidity of any provision of this Agreement shall not affect the
enforceability of any other provision of this Agreement. Wherever the term
"including" is used, it shall be deemed to mean "including without limitation",
and wherever the phrase "shall include" is used, it shall mean "shall include
without limitation."
7.14 Currency. All references to dollars herein shall mean United States
dollars.
7.15 No Third Party Beneficiaries. Each of the provisions of this Agreement
is for the sole and exclusive benefit of the Parties, and none of the provisions
of this Agreement shall be deemed for the benefit of any other person or entity.
7.16 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the local laws of the State of Alaska and not its conflicts of
laws rules.
7.17 Survival of Terms and Conditions. The warranties, representations,
indemnities and covenants contained in this Agreement, including but not limited
to those set forth in Sections 5.1
16
<PAGE> 17
and 5.2, shall survive closing and the recording of any conveyancing documents
pursuant to this Agreement.
7.18 Multiple Counterparts. This Agreement may be executed in multiple
counterparts and all counterparts taken together shall be deemed to constitute
one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
NEWMONT ALASKA LIMITED KINROSS GOLD CORPORATION
By: By:
-------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Title: Title:
----------------------------- ----------------------------
Date: Date:
------------------------------ -----------------------------
NEWMONT GOLD COMPANY FAIRBANKS GOLD MINING, INC.
(for the limited purposes set forth herein)
By: By:
-------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Title: Title:
----------------------------- ----------------------------
Date: Date:
------------------------------ -----------------------------
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,900
<SECURITIES> 0
<RECEIVABLES> 28,200
<ALLOWANCES> 0
<INVENTORY> 48,400
<CURRENT-ASSETS> 98,100
<PP&E> 476,300
<DEPRECIATION> (700,700)
<TOTAL-ASSETS> 588,200
<CURRENT-LIABILITIES> 138,900
<BONDS> 0
0
1,800
<COMMON> 900
<OTHER-SE> 60,000
<TOTAL-LIABILITY-AND-EQUITY> 588,200
<SALES> 111,600
<TOTAL-REVENUES> 111,600
<CGS> 73,000
<TOTAL-COSTS> 112,100
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 4,400<F1>
<INCOME-PRETAX> (4,900)
<INCOME-TAX> (1,100)
<INCOME-CONTINUING> (6,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,400)
<EPS-BASIC> (0.10)
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<FN>
<F1>net of interest income of $0.5 million
</FN>
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