SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the
Registrant [ ]
Check the appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CENTURION MINES CORPORATION
(Name of Registrant as Specified in Its Charter)
Spenst Hansen
____________________________
(Name of Person Filing Proxy Statement)
Payment of Filing Fee
(Check the appropriate box):
[X] $125 per Exchange Act Rules
0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2), or Item 22(a)(2)
of Schedule 14A
[ ] $500 per each party to the
controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per
Exchange Act Rules 14a-6(i)(4)
and 0-11.
1. Title of each class of securities
to which transaction applies: ____
2. Aggregate number of securities
to which transaction applies: ____
3. Per unit price or other underlying
value of transaction computed
pursuant to Exchange Act Rule 0-11:
(Set forth the amount on which the
filing fee is calculated and state
how it was determined) _____
4. Proposed maximum aggregate value
of transaction: _____
5. Total Fee paid
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is
offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing
for which the offsetting fee was
paid previously. Identify the previous
filing by registration statement number,
or the Form or Schedule and the date of
its filing.
1. Amount Previously Paid: [ ]
2. Form Schedule or Registration
Statement No.: [ ]
3. Filing Party: [ ]
4. Date Filed: [ ]
[END OF SCHEDULE 14A]
- -----------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
CENTURION MINES CORPORATION
April 29, 1997
To the Shareholders:
Notice is hereby given that the 1997 Annual Meeting of
Shareholders of Centurion Mines Corporation (the 'Company')
will be held at 3:00 p.m. MDT on Tuesday, April 29, 1997,
at 331 South Rio Grande Street, Suite 201, Salt Lake City,
Utah. The following matters are on the agenda for the
meeting:
1. To Elect Directors;
2. To ratify the appointment of Jones, Jensen & Company,
CPA's, as independent auditors for the current fiscal
year;
3. To approve an amendment to the 1991 Stock Option and
Stock Award Plan, as amended, to allow for the
administration of an additional two and one-half million
shares under such plan;
4. To approve a recommendation by the Board of Directors that
not less than one-third of the shares outstanding on a record
date shall constitute a quorum for purposes of taking action
by shareholder vote;
5. To increase the authorized capitalization of the Company
from 30,000,000 to 40,000,000 shares of common stock; and
6. To transact any other business that may properly come
before the meeting or any adjournment or postponement.
The Directors have fixed the close of business on March 28,
1997, as the record date for the determination of
shareholders entitled to notice of and to vote at the
meeting or any adjournment or postponement thereof.
A complete list of such shareholders will be available
at the corporate office of the Company during normal
business hours and shall be open to the examination
of any such shareholder for any purpose relevant to
the Meeting.
A record of the Company's activities during fiscal 1996 and financial
statements for the year ended September 30, 1996, are contained in the
Company's annual report which is included in the proxy statement that
accompanies this Notice.
You are cordially invited to attend the Meeting. Any
Shareholder who does not expect to attend the Meeting in
person is requested to complete, date, and sign the
enclosed form of Proxy and return it promptly to Centurion
Mines Corporation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SPENST HANSEN
- ---------------------------------------
Chairman of the Board of Directors,
President, and Chief Executive Officer
Salt Lake City, Utah
March 6, 1997
YOUR VOTE IS IMPORTANT TO CENTURION. EVEN IF YOU EXPECT TO
ATTEND THE ANNUAL MEETING, WE URGE YOU TO COMPLETE, DATE, AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED. COMPLETING THE ENCLOSED PROXY WILL NOT PREVENT YOU
FROM VOTING YOUR SHARES IN PERSON IF YOU DO ATTEND THE MEETING.
[END OF PROXY NOTICE]
- ----------------------------------------------------------------
(This proxy solicitation is on behalf of the Board of Directors)
[COMPANY LOGO]
CENTURION MINES CORPORATION
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD April 29, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
DATE, TIME, AND PLACE
The enclosed proxy is solicited on behalf of Centurion Mines
Corporation ('Centurion' or the 'Company') for use at the Annual
Meeting of Shareholders ('Annual Meeting' or 'Meeting') to be held
Tuesday, April 29, 1997, at 3:00 p.m. MDT at 331 South Rio Grande
Street, Suite 201, Salt Lake City, Utah. The purposes for the Annual
Meeting are set forth in the preceding notice of meeting. This proxy
statement, which contains the information required to be included in
the annual report to shareholders, is set for mailing to shareholders
on or about March 28, 1997.
VOTING SECURITIES, RECORD DATE, AND PRINCIPAL
STOCKHOLDERS
The only voting security of the Company is its Common
Stock, par value $0.01 per share ('Common Stock'). Only
holders of record of Common Stock at the close of business
on March 28, 1997, the Record Date for the meeting, are
entitled to notice of and to vote at the meeting. On March
20, 1997, there were 28,041,300 shares of Common Stock
outstanding. A majority of such shares, present in person or
represented by proxy, is required to constitute a quorum.
Each share of Common Stock is entitled to one vote on each
proposal. All voting is non-cumulative.
Information with respect to the principal holders of the
voting securities is furnished in the section entitled
'Security Ownership of Certain Beneficial Owners and
Management,' below. The closing average price of the
Company's Common Stock on the Nasdaq SmallCap Market on March
20, 1997, was $0.69 per share.
REVOCABILITY OF PROXY
Any shareholder who returns a proxy may revoke it before
the proxy is exercised by filing a written statement to
that effect with the Company Secretary, and either
appearing in person and voting at the Meeting, or returning
a duly executed proxy bearing a later date.
DISSENTERS' RIGHT OF APPRAISAL
In accordance with both the Company's governing rules
and Utah state law, certain corporate actions, generally,
may create shareholders' rights of dissent and
entitlement to payment of the fair market value of shares
held. However, none of the proposals at the Annual Meeting
creates such shareholder dissenters' rights.
THE SOLICITATION
The Company is making this solicitation of proxies and has
been and will be bearing the direct and indirect costs
of solicitation. Certain directors, officers, and employees
of the Company may also solicit proxies in person or by
mail, telephone or facsimile without special compensation
for their services. Arrangements have been made with
brokerage firms and other nominee holders to mail
solicitation material to the beneficial owners of Common
Stock held of record by them. Centurion has agreed
to pay reasonable out-of-pocket expenses incurred in
mailing solicitation material to beneficial owners.
PROXY CARDS. The enclosed Proxy Card serves to appoint
proxies for record holders of the Company's Common Stock.
Shares represented by a Proxy delivered to the Company
and not revoked will be voted at the meeting in accordance
with the markings and instructions on the Proxy Card.
IF NO MARKINGS OR INSTRUCTIONS ARE INDICATED ON THE PROXY CARD,
IT WILL BE VOTED IN FAVOR OF ELECTING ALL NOMINATED DIRECTORS,
AND IN FAVOR OF ALL OTHER PROPOSALS ON THE MEETING AGENDA.
VOTING PROCEDURES AND TABULATION
The Company will appoint one or more inspectors of election
to act at the Meeting and report the results. Prior to
the meeting, each inspector will sign an oath to perform
his duties in an impartial manner and according to the best
of his ability. Inspectors will ascertain the number of
shares outstanding and the voting power of each, determine
the shares represented at the Meeting and the validity of
proxies and ballots, count all votes and ballots, and
perform certain other duties as required by law. Inspectors
will tabulate the number of votes cast for or withheld
in the election of directors, and the number of votes cast
for or against all other proposals, including abstentions
and other non-votes.
The required quorum necessary to transact business at this annual
meeting is a majority of the issued Common Stock outstanding
on the Record Date. If a quorum is present, a plurality
of the votes cast for directors will determine the
directors elected and the approval of each proposal at the
Meeting requires the affirmative vote of a majority of the
Common Stock actually voted on such proposal. Abstentions
and broker non-votes will be counted to determine if a
quorum is present but will not otherwise affect the voting
on any proposal.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The Company is not aware of any person who has been a
director or executive officer of the Company at any time
since October 1, 1995, who has had any substantial interest,
direct or indirect, in the matters proposed to be acted upon
at the Annual Meeting in which such person receives any
extra or special benefit not shared on a pro rata basis
by all other holders of Common Stock.
----------------------------------------
Proposal One
ELECTION OF DIRECTORS
INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES.
A Board of five directors is to be elected at the Meeting.
The nominees are the present directors, all of whom are standing
for re-election, and one additional nominee. No director
nominee has declined the nomination or is unable or unfit to serve.
Under the Articles of Incorporation, the Company must have a
minimum of three and a maximum of nine directors. Each director
serves until the next annual shareholders meeting or until a
successor is duly elected.
<TABLE>
<CAPTION>
The following table sets forth information about the nominees.
NAME AGE POSITION(S) HELD DIRECTOR SINCE
<S> <C> <C> <C>
Spenst Hansen 62 Director, CEO and President November 1984
Orson Mabey, III 33 Director, Vice President February 1990
J.D.H. Morgan 58 Director April 1991
Mark D. Dotson 39 Director April 1995
Howard M. Crosby 44 Director Nominee --
</TABLE>
There are no family relationships among any directors or
officers of the Company.
SPENST HANSEN, PH.D., has been principally employed by
Centurion since November of 1984. Mr. Hansen currently
serves as the Chief Executive Officer, President, Director,
and Chairman of the Board of Directors. Mr. Hansen has
worked on mining projects in the western United States for
more than 22 years, and has been directly involved with
Centurion's Tintic District mining properties since 1979.
From 1982 to 1989, he also conducted an independent geo-
physical and geologic contracting business as a sole
proprietorship under the name Axis Geophysics Company.
Mr. Hansen still retains ownership of this company.
Mr. Hansen was awarded the Ph.D. Degree in geology from
the University of Missouri, Columbia, Missouri; a Masters
Degree in mining engineering from the Missouri School of
Mines, Rolla, Missouri; and a Bachelor of Science Degree
in geological engineering from the University of Utah,
Salt Lake City, Utah. Mr. Hansen is a registered
professional geologist in California (#2067) and Idaho (#38).
Mr. Hansen also serves as a Director of Royal Silver Mines,
Inc. (formerly Royal Silver Mines, Inc.), Centurion
Exploration, Inc., Dotson Exploration Company, and
Keystone Surveys, Inc.
ORSON MABEY, III is a Senior Trading Analyst developing
commercial trading applications for Tosco Corporation, the
largest independent petroleum refiner on the eastern coast
of the United States. From 1987 to 1993, Mr. Mabey was
employed by Amerada Hess Corporation as Senior Trading
Analyst. Mr. Mabey earned a Masters degree in
international management in August of 1987 from the
American Graduate School of International Management in
Glendale, Arizona, and a Bachelor of Arts degree in Finance
from the University of Utah, Salt Lake City, Utah, in June
of 1986.
J.D.H. (DAVID) MORGAN has been principally employed by
Lehman Brothers during the last five years. Mr. Morgan has
worked in the metals industry for over 25 years. He holds
an engineering degree from Cambridge University and a
Masters degree in mineral processing from the Royal
School of Mines, London University. He is a Chartered
Engineer and a member of the Institution of Mining and
Metallurgy. For the past ten years, Mr. Morgan has
been a securities analyst specializing in mining equities
covering North America and most of the world's other main
mining markets. He is a member of the International
Stock Exchange, London, and the Institute of Investment
Management and Research. From 1985 to 1994, he was a
Director of Equity Research with Lehman Brothers
International. Currently, he is an independent mining
share specialist based in London and a consultant to
Rodman & Renshaw, Inc. in Chicago.
MARK D. DOTSON has been principally employed as President,
Chief Executive Officer, and member of the Board of
Directors of Dotson Exploration Company, a wholly-owned
subsidiary of Centurion, at Milford, Utah. He has served
in those positions and has been the Exploration Manager for
Dotson Exploration Company since 1988. In addition to
that employment, Mr. Dotson also has been the Manager of
West Hills Excavating, L.L.C., and a member of its Board
of Directors since February 1994. Mr. Dotson also serves
as a city councilman for the City of Milford in Utah.
Mr. Dotson is a prospector and self-taught geologist with
many years of geologic experience in the field and numerous
years of business experience in the corporate realm. In
addition to his own and other training, Mr. Dotson also has
taken field extension courses in geology from various univer-
sities.
HOWARD M. CROSBY is a director nominee for election at the
Company's 1997 Annual Shareholders Meeting. Previously, he has
served as President, CEO and/or Board Chairman of several of the
Company's current and prior subsidiaries. He received a B.A.
degree from the University of Idaho in 1974. Since 1989, Mr.
Crosby has been president of Crosby Enterprises, Inc., a
family-owned business advisory and public relations firm. From
September 1992 to May 1993, Mr. Crosby was employed by Digitran
Systems, Inc., of Logan, Utah, in the marketing department. In
May of 1993, Mr. Crosby entered into a business consulting
relationship with Centurion Mines Corporation.
BOARD MEETINGS. The Board of Directors held three formal
meetings during the fiscal year ended September 30, 1996,
attended by all directors in person or by telephone. All
other Board business and corporate actions were undertaken
by unanimous consent resolutions without a meeting.
STANDING AUDIT, NOMINATING, COMPENSATION, AND SIMILAR
COMMITTEES. The Company does not have standing audit, nomi-
nating or compensation committees of the Board of Directors,
or other committees performing similar functions.
DIRECTOR LIABILITY LIMITATION. At the April 19, 1991,
annual shareholders meeting, the shareholders approved
an amendment to Centurion's Articles of Incorporation,
limiting the personal liability of directors to the Company
and its shareholders, to the extent allowed by Utah law.
In effect, the shareholders approved the adoption of
statutory provisions which permit a Utah corporation to
eliminate the personal liability of directors for monetary
damages for breach of fiduciary duty.
COMPENSATION OF DIRECTORS. There are no contractual arrangements
with any member of the Board of Directors. Directors receive for
their services a retainer fee payable in shares of the Company's
Common Stock, currently at the rate of 5,000 shares earned per
quarter of completed service. During the year ended September 30,
1996, 80,000 shares were earned, of which 60,000 were issued
during fiscal 1996 and 20,000 were issued during the first
quarter of fiscal 1997.
As additional compensation, directors receive options,
granted May 27, 1993 and June 4, 1995, vesting at a rate of
10,000 options per quarter. See footnotes 2 and 3 to the "Summary
Compensation Table" listed below. Contemporaneously with those
grants to directors, options with identical terms were also
granted to the CEO and President of the Company, and to a key
consultant of the Company, vesting at a rate of 20,000 and 10,000
per quarter, respectively. In sum, options to purchase a total
of 560,000 shares were authorized under each of the two grants.
To date, 265,000 options have been exercised.
During fiscal 1996, Centurion approved the recommendation by the
Board of Directors to authorize the fixing of an entitlement to
authorize at a later date a one-time grant of out-of-the-money
options to purchase Common Stock, but only condition that certain
terms were satisfied, as follows: the grant, vesting, and
issuance of the options was to be conditional upon the stock
price achieving an average price of at least 25% over the market
price of the stock on the date of Board approval and maintaining
that average price for at least 30 consecutive trading days
before the end of fiscal 1996. That event, if it had occurred,
would have triggered the authorization to grant the options, and
upon subsequent vesting the options would have had an exercise
price set at 150% of the closing price on the Board approval
date. These out-of-the-money options would have been exercisable
until September 30, 2000. However, the conditions were not met
during fiscal 1996 and, therefore, no out-of-the-money options
were ever authorized and the entitlement was cancelled by Board
resolution. Subsequent to the end of fiscal 1996, a similar
entitlement of conditional authorization of out-of-the-money
options was approved on the same terms. However, as of the date
of this document, the entitlement conditions for triggering the
authorization to grant these out-of-the-money options have not
been met and, therefore, none have been authorized.
EXECUTIVE OFFICERS. The following table sets forth the
name, age, position(s) held, and length of service for
each of Centurion's executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITIONS OFFICER SINCE
<S> <C> <C> <C>
Spenst Hansen SEE TABLE OF DIRECTORS ABOVE.
Orson Mabey, III SEE TABLE OF DIRECTORS ABOVE.
Richard S. Havenstrite 37 Vice President, Operations October 1996
Carlos M. Chavez 45 Secretary June 1994
Randy Sutherland 39 Treasurer/Asst. Secretary August 1995
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934. Section 16(a) of the Securities and Exchange
Act of 1934 requires officers, directors, and persons who
own more than ten percent of a registered class of a
company's equity securities to file initial reports of
beneficial ownership and to report changes in ownership of
a those securities with the Securities and Exchange
Commission and the National Association of Securities
Dealers. They are also required to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the
copies of Forms 3, 4, and 5 furnished to the Company or
written representations that no other transactions were
required, the Company has determined that the pertinent
Officers, Directors, and principal shareholders have
complied with all applicable Section 16(a) requirements
during fiscal 1996.
COMPENSATION OF EXECUTIVE OFFICERS.
EXECUTIVE COMPENSATION. The following table sets forth
the compensation paid by Centurion during each of the
last three fiscal years to its Chief Executive Officer,
and to the other four most highly compensated officers
and executive officers, but only if the total annual
salary and bonus of any such executive officer exceeded
$100,000 for Fiscal 1996 (the "Named Executive Officer").
This information includes the dollar value of base
salaries, bonus awards and number of stock options
granted, and certain other compensation, if any.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------- ------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Securities
and Other Underlying All
Princi- Annual Restricted Options/ LTIP Other
pal Pos- Compen- Stock SAR's Pay- Compen-
sition Year Salary Bonus sation Award(s) (#) outs($) sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------- ---- ------- ----- ------ ------------- ---------- --------- -------
CEO
Spenst 1996 $36,000 $0 $0 $ 92,812 <F1> 0 $0 $0
Hansen 1995 36,000 0 0 97,500 <F2> 270,000 <F4> 0 0
1994 36,000 0 0 161,249 <F3> 0 0 0
_____________________________________________________________________________________
<FN>
<F1> Column (f) represents the dollar value of all restricted awards of stock
received as part of non-cash compensation in lieu of director and CEO fees
that Mr. Hansen earned during each of fiscal 1996, 1995, and 1994. The
aggregate number of his restricted stock award holdings remaining at September
30, 1996 was 30,000 shares (including any awards reported in column (f) that
are still subject to restrictions), and their fair market value at the end of
fiscal year 1996 was $30,000, based on the closing price of $1.00 on September
30, 1996. Of those 30,000 shares, 15,000 shares had vested as of March 4,
1997. The remaining 15,000 shares will vest on April 1, 1997, which is
under three years from the grant date. No dividends are paid on any of the
restricted awards of stock reported in column (f).
<F2> This dollar value corrects the value reported in the Company's Form 10-K for
fiscal 1995, of $67,967, as a result of the recalculation of the total number
of awarded shares earned by Mr. Hansen in fiscal 1995, including shares that
were not issued to him until fiscal 1996.
<F3> This dollar value corrects the value reported in the Company's Form 10-K for
fiscal 1995 and Form 10-K/A#2 for fiscal 1994, of $53,500, as a result of the
recalculation of the total number of awarded shares earned by Mr. Hansen in
fiscal 1994, including shares that were not issued to him until fiscal 1996.
<F4> This amount is a combination of options from two separate awards: (i) 30,000
vested, but unexercised options (remaining from an original award of 240,000
options granted May 27, 1993) that were renewed and extended on June 4, 1995,
under the same terms and exercise provisions as the following options that
were newly granted on that same date; and (ii) 240,000 options granted June 4,
1995, to be awarded during the eight quarters beginning April 1, 1995 and
ending March 31, 1997, consisting quarterly of 10,000 options as partial
compensation for service as director, and 20,000 options as partial
compensation for service as CEO. The options vest at the end of each quarter
and are exercisable through March 31, 1998 at a price of $1.50 per share,
which was the closing price on the grant date.
</FN>
</TABLE>
Other than the Company's incentive Stock Option Plan, there
are no retirement, pension, or profit sharing plans for the
benefit of the Company's Officers and Directors.
OPTION/SAR GRANTS TABLE. Information concerning individual
grants of stock options, whether or not in tandem with
stock appreciation rights ('SARs'), and freestanding SARs
made during fiscal 1996 to each of the Named Executive
Officers is reflected in the table below.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN FISCAL 1996
Potential
Realizable Value
at Assumed Annual Alternative
Rates of Stock to (f) and
Price Appreciation (g): Grant
Individual Grants for Option Term Date Value
_______________________________________________ _________________ _________
(a) (b) (c) (d) (e) (f) (g) (h)
<S> <C> <C> <C> <C> <C> <C> <C>
Percent of Total
Number of Options/ Exer-
Securities SARs Granted cise Grant
Underlying to Employees or Expir- Date
Options/SARs in Fiscal Base ation Present
Name Granted (#) Year Price Date 5%($) 10%($) Value ($)
_______________________________________________________________________________
Spenst
Hansen 0 <F1> N/A N/A N/A N/A N/A N/A
_______________
<FN>
<F1> No options were granted in fiscal 1996; options that vested in
fiscal 1996 were granted (or renewed) during fiscal 1995 as is
more fully set forth in footnote 4 ("<F4>") to the "Summary
Compensation Table" above.
</FN>
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL 1996 YEAR-END
OPTION/SAR VALUE TABLE. The following table sets
forth certain information with respect to each exercise
of stock options and SARs during fiscal 1996 by each of
the Named Executive Officers, and the fiscal 1996 year-
end value of unexercised options and SARs. The dollar
values in columns (c) and (e) are calculated by
determining the difference between the exercise or base
price of the options and the fair market value of the
underlying stock at the time of exercise and at fiscal
year-end if unexercised, respectively. The unexercised
options, some of which may be exercisable, have not been
exercised and it is possible they might never be exercised.
Actual gains realized, if any, on stock option exercises
and common stock holdings are dependent on the future
performance and value of the Common Stock and overall
stock market conditions. There can be no assurance
that the projected gains and values shown in this Table
will be realized.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1996
AND OPTION/SAR VALUES AT SEPTEMBER 30, 1996
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Dollar Options/SARs Options/SARs
Acquired Value at FY-End(#) at FY-End($)
on Exer- Real- Exercisable/ Exercisable/
Name cise (#) ized($) Unexercisable Unexercisable
___________________________________________________________________
<S> <C> <C> <C> <C>
Spenst
Hansen 160,000 <F1> $ 50,000/ N/A <F3>
120,000 <F2>
<FN>
<F1> These 160,000 shares were acquired in three separate exercises of options
as follows: 90,000 on December 6, 1995; 30,000 on February 14, 1996; and
40,000 on March 25, 1996. The value reported in column (c) was calculated
from the difference between the closing prices on the three purchase
dates and the exercise price of $1.50 per share.
<F2> The 50,000 options reported as exercisable in column (d) consist of the
options remaining of those that had vested during fiscal 1996 from the
total that had been granted June 4, 1995. 120,000 options from that
grant had not vested before the end of fiscal 1996, and are reported in
column (d) as unexercisable at fiscal year-end.
<F3> None of the options that were unexercised at fiscal year-end had an
in-the-money value at that date.
</FN>
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS. The Company does not
have any formalized long-term incentive plans, excluding
restricted stock, stock option and SAR plans, which
provide compensation intended to serve as incentive for
performance to occur over a period longer than one fiscal
year, whether such performance is measured by reference
to financial performance of the Company or an affiliate,
the Company's stock price, or any other measure.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION. There are no compensation committee
interlocks. With respect to insider participation,
officers Spenst Hansen and Orson Mabey, III participated in
deliberations of the Company's Board of Directors
during fiscal 1996 concerning executive officer
compensation.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION.
The following is a summary of the Executive Compensation Report
of the Board of Directors:
The Board of Directors reviews and sets compensation levels
of the executive officers of the Company by evaluating their
respective performance in light of a number of factors, including
the Board's assessment of the performance of the Company, as well as
the range of compensation paid by the Company in comparison to the range
of compensation paid by similar mining companies in the western United
States, and in the mining industry in general. The Board weighs other
factors, such as the officer's performance relative to the continued
acquisition of favorable mineral properties, the progress of exploration,
development, and production related activities at the Company's properties,
and relative to the Company's financial performance.
The Company's executive compensation policy continues to look at three
variable elements: base salary, stock awards and option grants. The policy
factors which determine the setting of these compensation elements are
largely aimed at attracting and retaining executives considered essential
to the Company's long-term success. The granting of stock and/or options
is designed as an incentive to increasingly focus management's interests
in closer alignment with the interests of shareholders. The Company's
executive compensation policy seeks to engender committed leadership and
strategic management to favorably posture the Company for continued growth,
stability and strength of shareholder equity.
In fiscal 1996, the salary of Spenst Hansen, the Company's Chief Executive
Officer, remained at $36,000 per annum, unchanged since the beginning of
fiscal 1994. However, the Board of Directors emphasizes that this salary
amount is not based on, and should not be construed as a reflection of, Mr.
Hansen's performance during fiscal 1996 because Mr. Hansen has consistently
declined any increase in salary for over three years, in order to keep
payroll expenses at a minimum. Indeed, in comparison with CEO salaries
within this sector of the mining industry, Mr. Hansen's salary is
significantly lower. The Board believes that a truer measure of Mr. Hansen's
contributions and achievements during fiscal 1996 is evidenced by the plan
of operations and activities that have been implemented to bring the OK
Copper Mine project into production during fiscal 1997. No other Named
Executive Officer received a salary increase during fiscal 1996. Further-
more, the Board of Directors did not modify the amount of shares or options
that Directors and the CEO are entitled to receive as partial compensation
for service to the Company.
PERFORMANCE GRAPH. The following is a line graph comparing
(1) the yearly percentage change in the Company's cumulative total
shareholder return on its Common Stock with (2) the cumulative total
return of the Nasdaq Stock Market for all U.S. companies and (3) the
cumulative total return of a peer group of similarly capitalized
mining companies.
[THE GRAPH IS PRINTED IN THE PAPER VERSION BUT
HAS BEEN OMITTED FROM THE EDGAR FILING. THE
FOLLOWING CHART AND LEGEND ARE PROVIDED AS A
NON-GRAPHIC REPRESENTATION OF PERFORMANCE.]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN <F1>
AMONG THE COMPANY, A SELF-DETERMINED PEER GROUP <F2>,
AND THE NASDAQ STOCK MARKET (U S COMPANIES) <F3>
----------------------------------------------------------------
<F4> <F5>
INDEX OF: 09/30/91 09/30/92 09/30/93 09/30/94 09/29/95 09/30/96
__________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
CENTURION $100.00 $ 59.70 $316.40 $155.20 $149.30 $ 92.50
Peer Group 100.00 97.60 145.60 146.00 117.30 242.60
Nasdaq Stock Market 100.00 112.10 146.80 148.00 204.40 242.60
<FN>
<F1> The numbers listed in the table and depicted in the graph above
represent year-end and monthly index levels derived from compounded
daily returns that include all dividends, if any.
<F2> THE COMPANIES IN THE SELF-DETERMINED PEER GROUP ARE AS FOLLOWS:
Brush Creek Mining & Dev Inc Chief Consolidated Mng Co
Cornucopia Resources Ltd Gold Reserve Corp
Gold Standard Inc La Teko Resources Ltd
Pacific Sentinel Gold Corp Piedmont Mining Co Inc
Quest International Res Corp United States Gold Corp
<F3> The indexes are re-weighted daily, using the market capitalization
on the previous trading day.
<F4> The index level for all series was set at $100.00 on 09/30/91.
<F5> If the monthly interval, based on the fiscal year-end, is not
a trading day, the preceding trading day is used.
</FN>
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Centurion
rents certain technical geological equipment and field
vehicles from Axis Geophysics Company (Axis), a sole
proprietorship operated by Spenst Hansen, an Officer,
Director, and principal shareholder of Centurion. Centurion
is billed approximately 25 percent less for this equipment
than prevailing rates for similar services in the industry.
Centurion paid Axis approximately $36,000, $30,000, and $24,000,
during the years ended September 30, 1996, 1995, and
1994, respectively. Although the transactions were not the
result of arm's length negotiations, they were unanimously
approved by the Board of Directors of Centurion and are
believed by management to be more favorable than could have
been obtained from unrelated third parties.
Keystone Surveys, Inc. ('Keystone'), a corporation owned by
Mr. Hansen, has in the past leased non-management personnel
to Centurion. Centurion was charged 123 percent of the
gross wages as payment in full of covered employees' wages
and Keystone's costs, including all employer paid federal,
state, and local taxes (approximately 16 percent of gross
wages), and administrative charges (approximately 7 percent).
Centurion paid Keystone approximately $0, $10,800, and $238,000
during the years ended September 30, 1996, 1995, and 1994,
respectively. Keystone Surveys ceased leasing personnel to
Centurion in December 1994. This function was taken over by
Centurion Exploration, Inc.
During fiscal 1994, Spenst Hansen purchased surface rights
to approximately ten acres in Mammoth, Utah, from Mammoth
Mining Company for $10,000. This purchase included
existing buildings in varying degrees of disrepair and
was transacted to initiate preservation of the historical
significance of the buildings.
ADVANCES TO RELATED PARTIES. During the years ended
September 30, 1992 and 1993, Centurion advanced $995
and $1,054, respectively, to Keystone Surveys, Inc.,
a company affiliated with Mr. Hansen. These advances
were to allow Keystone to acquire certain mining properties
as nominee for the benefit of Centurion. If these
properties are determined by Centurion to be desirable,
they will be transferred to Centurion at cost. None of
the advances bear interest or are secured. There is not
a limit concerning how long such advances may remain
outstanding. To date, the advances have not been repaid.
No advances were made to Keystone Surveys or other related
parties during fiscal 1996, 1995 or 1994 on behalf of other
companies controlled by Mr. Hansen, or to any other
business entity not a subsidiary of the Company.
CONSULTING AGREEMENT AND BENEFITS. Commencing October 1, 1992,
Mr. Barry Katona entered into a Consulting Agreement with the
Company which provided for an annual retainer of $75,000. During
fiscal years 1996, 1995 and 1994, Mr. Katona was paid $75,000 each
year under the terms of the Consulting Agreement and less than
$10,000 per year for reimbursement of business expenses. The
Agreement has been extended to December 31, 1998. Mr. Katona has
agreed to accept stock in lieu of cash.
EXERCISE OF STOCK OPTIONS. During the year ended September
30, 1992, the Company allowed Mr. Katona to exercise
options to purchase 100,000 shares of the Company's common
stock at $.235 per share in exchange for a $23,500
unsecured, non-interest bearing promissory note. These
100,000 shares have been held in escrow until the repayment of
this loan. The receivable related to this sale of stock has been
reflected as contra-equity in the accompanying consolidated
financial statements. Mr. Katona paid $2,350 to release 10,000
shares from escrow during February 1997, but the remaining 90,000
shares continue to be held in escrow. In May 1993, the Company
granted an additional option to Mr. Katona for 10,000 shares of
common stock accrued quarterly over a two year period, for a total
of 80,000 shares of common stock, at a price of $1.50 per share
under the 1991 Stock Option and Stock Award Plan, exercisable until
March 31, 1998. None of these options has been exercised.
LEGAL PROCEEDINGS. The Company is not aware of any pending legal
proceedings incidental to the Company's business or properties
that involve primarily a claim for damages in excess of 10
percent of current assets, excluding interest and costs. The
Company is involved as a defendant in a state court action
actively contesting a claim that it breached a lease agreement.
The plaintiff in that suit is seeking damages in the amount of
$100,000, which is significantly less than 10 percent of current
assets. Management of the Company believes that there is only a
very small likelihood of a significant unfavorable outcome and,
therefore, no adjustments to the financial statements have been
made to reflect a material uncertainty regarding the Company's
exposure to liability. Management and legal counsel are of the
opinion that the ultimate disposition of such litigation should
have no material adverse effect on the Company's financial
position or results of operations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 4, 1997,
the beneficial ownership of Common Stock with respect
to: (1) All persons known to the Company to be the
beneficial owners of more than five percent of the
outstanding shares of Common Stock (the 'Principal
Shareholders'); (2) Each Director and Director nominee
of the Company; (3) Each Named Executive Officer
(as that term is defined in the section entitled
'Executive Compensation', above) who is listed in
the 'Summary Compensation Table', above, and (4) All
Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED <F1>
NO. OF SHARES PERCENT OF CLASS
------------- ----------------
<S> <C> <C>
1. NAME AND ADDRESS OF
PRINCIPAL SHAREHOLDER(S)
Spenst M. Hansen 4,752,062 <F2> 17.25%
48 West 300 South
Suite 1401 North
Salt Lake City, UT 84101
2. DIRECTORS
Spenst M. Hansen 4,752,062 <F2> 17.25%
Orson Mabey, III 343,333 <F3> 1.25%
J.D.H. (David) Morgan 310,000 <F4> 1.12%
Mark D. Dotson 120,000 <F5> 0.44%
Howard M. Crosby (nominee) 122,000 0.44%
3. NAMED EXECUTIVE OFFICERS
(EXCLUDING ANY
DIRECTOR NAMED ABOVE)
None n/a n/a
4. ALL DIRECTORS AND
EXECUTIVE OFFICERS AS
A GROUP (8 PERSONS) 5,760,545 <F6> 20.91%
_________________
<FN>
<F1> In determining beneficial ownership, for purposes of this table only,
the amount reported for each individual or group listed above includes
all shares that such person or group has the right to acquire within 60
days of March 4, 1997, such as, but not limited to, all awards of shares
that will vest within such 60-day period, and all shares purchasable
through the exercise of options, warrants or rights within such 60-day
period. Unless otherwise noted, all shares are owned beneficially and of
record.
<F2> Includes 15,000 shares for director and CEO fees that will vest within
60 days, and options to purchase 110,000 shares, of which 80,000 have
previously vested and are currently exercisable, and of which 30,000
will vest and become immediately exercisable within 60 days.
<F3> Includes 5,000 shares for director fees that will vest within 60 days,
and options to purchase 160,000 shares, of which 150,000 have previously
vested and are currently exercisable, and of which 10,000 will vest and
become immediately exercisable within 60 days.
<F4> Includes 5,000 shares for director fees that will vest within 60 days,
and options to purchase 160,000 shares, of which 150,000 have previously
vested and are currently exercisable, and of which 10,000 will vest and
become immediately exercisable within 60 days.
<F5> Includes 5,000 shares for director fees that will vest within 60 days,
and options to purchase 80,000 shares, of which 70,000 have previously
vested and are currently exercisable, and of which 10,000 will vest and
become immediately exercisable within 60 days.
<F6> Includes 39,200 shares for director and/or CEO fees, and for awards of
shares that will vest within 60 days, and options to purchase 580,000
shares, of which 510,000 have previously vested and are currently
exercisable, and of which 70,000 will vest and become immediately
exercisable within 60 days.
</FN>
</TABLE>
----------------------------------------
Proposal Two
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Jones Jensen & Company served as the independent accountants for
the Company for the year ended September 30, 1996. There have been
no disagreements during the three fiscal years ended September 30,
1994, 1995 and 1996, or at any other time with the Company's present
or former independent public accountants. Management of the Company
intends to continue with its selection of Jones Jensen & Company for
the fiscal year ending September 30, 1997.
A representative of Jones Jensen & Company is expected to be present
at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
'FOR' THE RATIFICATION OF THE APPOINTMENT OF JONES,
JENSEN & COMPANY AS CENTURION'S INDEPENDENT ACCOUNTANTS.
----------------------------------------
Proposal Three
AMENDMENT TO STOCK OPTION AND AWARD PLAN
At the 1991 Annual Meeting, the shareholders approved the
Company's Stock Option and Stock Award Plan ('the Plan')
as set forth in the 1991 proxy statement. The purpose of
the Plan is to enable Centurion to attract and retain
experienced and able directors, officers, and employees.
The Plan provides incentives to directors, officers and
employees to extend their best efforts for Centurion and
its shareholders. Under the Plan, the Board of Directors
may grant incentive stock options or stock awards only to
eligible directors, officers, employees, or other persons
who make significant contributions to the continued well-
being and successful operation of the Company. As of
September 30, 1996, the shareholders have approved 2,500,000
shares of stock to be issued and administered under the Plan.
The Company has filed a Form S-8 registration statement and
amendments covering the 2,500,000 shares of stock to be
administered under the Plan. As of September 30, 1996,
1,649,997 shares of stock have been awarded and unexercised
options to acquire 450,000 shares of stock were outstanding
under the terms of the Plan. The purpose of this proposal is to
ensure the availability of shares under the Plan to effectively
maintain and develop a cohesive management team, attract additional
qualified individuals, and reward contributions to the Company's
success. A summary of the Plan is available to shareholders
(without charge) upon request.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE
AMENDMENT TO THE PLAN AUTHORIZING AN ADDITIONAL TWO
AND ONE-HALF MILLION SHARES FOR ADMINISTRATION UNDER
THE PLAN.
----------------------------------------
Proposal Four
AUTHORIZATION TO CHANGE RATIO OF SHARES NECESSARY
TO CONSTITUTE QUORUM FOR VOTING PURPOSES
The following proposal is being offered for stockholder approval
pursuant to the corporation laws of the State of Utah. Currently,
the number of shares required to constitute a quorum is a majority,
or "greater than one-half" of the shares that are outstanding as of a
record date set for such purposes and are entitled to be represented
and to vote on a shareholder actions. Section 16-10a-725 of the Utah
Revised Business Corporation Act, however, permits a corporation to
provide in its articles of incorporation that fewer than a majority of
the shares outstanding as of a record date, may constitute a quorum for
transacting business. The Board of Directors recommends that the present
requirement of a majority be changed to be "not less than one-third" of
the shares as are outstanding on a particular record date. By way of
information and pursuant to Section 10-16a-727(2) of the Utah Revised
Business Corporation Act, to approve this change will require that it be
adopted under the current quorum and voting requirements as now in effect,
that is, by the affirmative vote of a majority of the currently issued and
outstanding shares entitled to vote.
This proposal is being recommended to the shareholders in recognition of
the transformations that have occurred as a result of increases in the
size of the Company, the number of its shareholders, and in the amount of
authorized capitalization that its shareholders have approved since the
incorporation of the Company. In particular, as a result of these shareholder-
approved increases, the authorized capitalization of the Company will have
doubled from 20,000,000 shares in 1993 to 40,000,000 shares in 1997, if
that amount is approved at this Meeting. The Board believes that these
increases, accompanied by equivalent increases in the number of beneficial
shareholders, parallel the growth and maturity of the Company and its
shareholder base. Because of these increases, the Board believes that now
is an appropriate time to prepare the Company for even larger growth and
stability. Consequently, the Board recommends that the quorum requirement
be changed to insure that shareholder proposals and voting at a shareholder
meeting not be prevented from taking place because of the nearly doubling
in the amount of outstanding shares that has occurred since the annual
meeting held four years ago. Thus, this proposal is set out to facilitate
future shareholder meetings and voting so that corporate action may continue
to be implemented smoothly, efficiently, and cost-effectively.
RAMIFICATIONS OF THE PROPOSAL. It is possible that a person, entity, or
group consisting of such persons or entities, could gain control of the
Company with less solicitation than under the present requirement. For
example, at this Meeting, over 14 million shares must be present or
represented by proxy for there to be a majority sufficient to constitute a
quorum, whereas fewer than 10 million shares would be required for there to
be no less than one-third of shares entitled to vote were this proposal
approved. However, it should be recognized that at the 1993 annual meeting,
only 8.8 million shares were required to constitute a quorum. Thus, the
Board believe that it is not likely that this proposal would have an adverse
or materially detrimental effect on the control the Company or of voting, but
that the failure to approve this proposal could result in practical
difficulties attempting to accumulate sufficient shares necessary to
constitute a quorum in order to convene a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THIS PROPOSAL TO REDUCE THE QUORUM REQUIREMENT.
----------------------------------------
Proposal Five
AUTHORIZATION TO INCREASE CAPITALIZATION
The Company is presently authorized to issue THIRTY MILLION SHARES
(30,000,000) of common stock, par value $0.01, pursuant to Article
IV of the Articles of Incorporation. At March 6, 1997, there were
27,951,300 shares of the Company's common stock issued and
outstanding. The current proposal seeks shareholder approval to
amend the Articles of Incorporation to authorize an increase in the
Company's capitalization to FORTY MILLION SHARES (40,000,000). The
purpose of the proposed increase is to ensure the availability of
sufficient authorized but unissued shares to be later issued and
used in accomplishing lawful corporate purposes in which the
issuance of stock may be essential or advisable in the judgment of
the Board of Directors.
If the capitalization is increased, there exists a potential for a
maximum dilution of approximately 25 percent in proportionate
ownership of shares held before the increase. Regardless of
approval of this increase, however, the Company has no present
intent to issue additional shares to either the current Principal
Shareholders, the directors, the executive officers, or any other
person or entity, except as already provided under the 1991 Plan
and the terms of compensation to Directors and Named Executive
Officers, or as may be approved at this Meeting, nor to issue any
material amount of shares to any person or entity in connection
with any acquisition, reorganization, or share exchange. It is not
intended or anticipated that this increase will have any material,
dilutive effect on the shares currently outstanding, except
perhaps, with respect to an issuance of shares in response to a
hostile takeover attempt if such should occur.
The anti-takeover effect of the proposed increase in capitalization
is as follows: with the availability of additional shares,
management could counter a hostile takeover attempt by arranging
with a friendly entity or other person to be issued shares from the
amount proposed for additional authorization, hypothetically up to
approximately ten million (10,000,000) shares. If that were done,
of course, the proportional share ownership of all other
shareholders would be diluted. The affirmative vote of a majority
of the currently issued and outstanding shares entitled to vote is
required for approval of the above-proposed amendment to the
Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL TO
INCREASE THE COMPANY'S AUTHORIZED CAPITALIZATION TO FORTY MILLION SHARES.
----------------------------------------
Proposal Six
OTHER BUSINESS
The Company has not received any shareholder proposals
for this Annual Meeting. The Board of Directors knows
of no other business, other than that stated in this
proxy statement, to be presented for action at the
1997 Annual Meeting. If other business is properly
presented at the Meeting, however, which was not known,
or did not become known to the Board a reasonable time
before the solicitation, then the person designated in
the enclosed Proxy will vote, or refrain from voting,
in accordance with his best judgment.
----------------------------------------
FINANCIAL AND OTHER INFORMATION
The audited financial statements regarding the Company for the
fiscal year ended September 30, 1996 are presented below, following
the signature page of this proxy statement. A summary of selected
financial data, and the information contained in the disclosures
entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations", are presented below.
SELECTED FINANCIAL DATA
The selected financial data included in the following table have
been derived from and should be read in conjunction with and are
qualified by the Company's consolidated financial statements and notes
set forth elsewhere in this report. Historical financial data for
certain periods may be derived from financial statements not included
herein.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA FISCAL YEAR ENDED SEPTEMBER 30,
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 <F1> 1992 <F1>
------------ ------------ ------------ ----------- -----------
RESULTS OF OPERATIONS:
Revenues $ 0 $ 0 $ 0 $ 0 $ 830,100
Loss before extra-
ordinary item (1,660,483) (2,635,655) (2,372,790) (1,142,513) (401,993)
Net income (loss) (1,660,483) (2,635,655) (2,372,790) (1,142,513) 155,216
Loss per common share
before extraordinary item (.07) (.11) (.12) (.06) (.02)
Net income (loss)
per common share (.07) (.11) (.12) (.06) (.01)
BALANCE SHEET DATA:
Total assets $ 9,770,328 $ 8,658,470 $ 8,492,800 $ 4,161,162 $ 2,955,912
Working capital
(deficit) 16,695 (51,771) 637,171 290,104 294,467
Long-term debt 106,436 0 0 0 0
Stockholders' equity 9,256,926 8,265,862 7,940,307 3,828,689 2,669,776
<FN>
<F1> Certain reclassifications have been made to the fiscal 1993 and 1992 consolidated financial
statements in order to conform to the fiscal 1995 presentation. (See Note 2.d to the Consolidated
Statements.)
</FN>
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL.
There is considerable risk in any mining venture, and there can
be no assurance that the Company's operations will be successful or
profitable. From inception of the Company to September 30, 1996, the
Company has an accumulated deficit of $10,654,508. Exploration for
commercially mineable ore deposits is highly speculative and involves
risks greater than those involved in the discovery of mineralization.
Mining companies use the evaluation work of professional geologists,
geophysicists and engineers in determining whether to acquire an
interest in a specific property, or whether or not to commence
exploration or developmental work. These professional evaluations are
not always scientifically exact, and in some instances result in the
expenditure of substantial amounts of money on a property before it is
possible to make a final determination as to whether or not the property
contains economically mineable ore bodies. The economic viability of a
property can not be finally determined until extensive exploration and
development work plus a detailed economic feasibility study have been
performed. Also, the market prices for mineralization produced are
subject to fluctuation and uncertainty, which may negatively affect the
economic viability of properties on which expenditures have been made.
As of September 30, 1996, $8,849,485 of the Company's total
assets of $9,770,328 are investments in mineral properties for which
additional exploration is required to determine if they contain ore
reserves that are economically recoverable. The realization of these
investments is dependent upon the success of future property sales, the
existence of economically recoverable reserves, the ability of the
Company to obtain financing or make other arrangements for development,
and upon future profitable production. The ultimate outcome of this
matter cannot be determined at this time; and, accordingly, no provision
for any asset impairment which may result in the event the Company is
not successful in developing or selling these properties has been made
in the Company's consolidated financial statements.
FINANCIAL CONDITION.
At September 30, 1996, the Company had a positive cash balance of
$133,556 and accounts receivable of $33,842, of which $28,842 was collected
subsequent to year end, and positive working capital of $16,695. Subsequent
to September 30, 1996, the Company received an additional $193,500 from the
sale of common shares. These funds will be used for future operating expenses.
The Company's long-term debt is in the form of equipment leases.
LIQUIDITY AND CAPITAL RESOURCES.
In comparison with its financial condition at September 30, 1996, the
Company had, at September 30, 1995, $17,510 of cash, accounts receivable of
$202,839, and negative working capital of $51,771. As in fiscal 1995, manage-
ment determined for fiscal 1996 that it would be in the best interests of the
Company to limit the private placement of common stock. The $5,000 receivable
at September 30, 1995, and the $5,000 receivable at September 30, 1996, were
for routine items due the Company. Prepaid mining leases decreased primarily
due to a net relinquishment of leased mineral properties. Mineral properties,
however, increased from $7,974,092 at September 30, 1995, to $8,849,485 at
September 30, 1996, as a result of investments in, and the acquisition and
exploration of, properties and equity investments in cash.
Accounts payable decreased from $216,649 as of September 30, 1995, to
$206,622 as of September 30, 1996, primarily because of management's efforts
to reduce expenses. The accrued expenses payable increased from $11,818 as
of September 30, 1995 to $45,587 as of September 30, 1996. For fiscal 1995,
this expense item was the result of an accrual for directors' fees and em-
ployees' salaries; for fiscal 1996, this expense item was the result of the
accrual of employees' salaries, associated taxes and workers compensation
insurance. Directors' fee shares are issued only upon the fulfillment of cer-
tain conditions, but the fees are recorded on the Company's books at the
earliest time that fees could become due, even though all of the conditions
may not be met until a later date.
The amount of cash used by the Company's operations decreased
from $1,986,290 for fiscal 1995, to $521,981 for fiscal 1996. This
decrease is primarily the result of a significant increase in the amount
of "other income" thereby reducing the net loss for fiscal 1996. Also,
the amount of cash used by the Company on acquisition and exploration of
mineral properties increased from $307,220 in fiscal 1995 to $506,262 in
fiscal 1996. This increase primarily is due to the acquisition of
certain field and exploration equipment, whose purchase allows Company
personnel to perform necessary exploration work with less dependence
upon the availability of outside equipment and at a lower cost to the
Company. The Company expended $250,551 in fiscal 1996 and $266,556 in
fiscal 1995, to acquire equipment. The Company funded its cash
expenditures primarily by issuing common shares for cash in the amount
of $1,578,266 in fiscal 1996, and $1,867,000 in fiscal 1995. As in
fiscal 1995, the Company expended $0 in fiscal 1996 to acquire interests
in subsidiary companies.
During the years ended September 30, 1996 and 1995, the Company
made non-interest bearing advances to related parties of $25,000 and
$182,904, respectively, and received payments from related parties of
$193,997 and $68,133, respectively. During the years ended September
30, 1996 and 1995, the Company received advances from a shareholder of
$5,961 and $33,400, respectively, and made payments of $32,800 and
$32,850, respectively, on those advances.
Management expects the Company's consolidated cash expenditures
will approximate $3,170,000 during fiscal 1997. The anticipated cash
expenditures consist of the following: $900,000 for exploration and
development activities; $750,000 for production-related activities;
$100,000 for acquisition of mineral properties; $220,000 for property
lease payments; and $1,200,000 for general and administrative expenses.
These cash expenditures are expected to be primarily funded from: 1)
$150,000 from the sale of properties; 2) $1,820,000 of production
income; 3) $1,000,000 from the partial liquidation of Royal common
stock; and 4) $200,000 from joint venture partners. At September 30,
1996, the Company had working capital of $16,695. The Company also
contemplates financing further exploration of its mineral properties
through joint venture arrangements.
The Company's long-term debt is partially related to the lease of
equipment that was acquired during fiscal 1996. The other multi-year
obligations of the Company are note payments on mining claims the
Company has purchased, payments on mining claim leases that are
cancelable at the Company's option, and a long-term debt obligation to a
related company. Moreover, if the Company is not successful in raising
additional equity capital, achieving production profitability, selling
some of its mineral properties, or negotiating joint venture
arrangements, the Company will reduce the level of expenditures by
releasing some properties to match its cash flow position.
The Company does not have sufficient capital to fully explore and
develop its mineral properties. The Company plans to continue financing
its exploration activities through joint ventures, production
activities, equity funding, or by selling properties and retaining
royalty interests. In addition, the Company expects to receive
royalties from properties that were sold during fiscal 1993 and which
currently are under exploration and development by larger mining
companies.
RESULTS OF OPERATIONS.
Fiscal 1996 as Compared to Fiscal 1995.
During fiscal 1996 and 1995 the Company had no revenues. Centurion did
not receive advance mineral royalties or reimbursements related to venture
properties. No properties were sold in fiscal 1996 or 1995; therefore, there
was no corresponding cost of mineral properties sold.
General and administrative expenses increased to $1,886,451 in
fiscal 1996 from $1,776,876 in fiscal 1995. The increase primarily is
the result of the increase in personnel and payroll expense. Accounting
fees decreased from $118,000 in fiscal 1995 to $51,209 in fiscal 1996,
primarily as a result of the decrease in the number and value of common
shares issued to accounting personnel for services and in the fees paid
to the Company's independent public accountants. Also, fees paid to
consultants for technical, promotional and administrative work decreased
from $679,000 during fiscal 1995 to $476,975 in fiscal 1996 due to a
decrease in the number of consultants engaged by the Company. Office
leasing costs increased from $51,000 in fiscal 1995 to $76,600 in fiscal
1996, due to the requirement for additional office space during fiscal
1996.
The costs for office and technical supplies and of producing the
Company's annual report decreased from $79,000 in fiscal 1995 to $52,600
in fiscal 1996, primarily as a result of cost-cutting policies
implemented by management of the Company. Legal expenses decreased from
$202,000 in fiscal 1995 to $131,501 in fiscal 1996, primarily because
fewer mineral properties and companies were acquired in fiscal 1996 than
in 1995, thereby reducing the legal fees and costs.
In an effort to preserve cash, the Company has traditionally paid
some of its expenses by issuing shares of common stock. (See "Summary
of Stock Issuances," below.) The Company paid directors' fees during
each of fiscal 1995 and 1996 by issuing shares of common stock and
accounting for accruals of unissued shares. Centurion issued and accrued
the same number of shares for directors' fees during fiscal 1995 as
during fiscal 1996. The value of the shares issued and accrued,
however, increased from $203,300 to $341,975 during 1995 and 1996,
respectively. Because of the non-consolidation of Royal's accounts with
Centurion's, the value of share issuances by Royal to its directors is
not added to Centurion's general and administrative expense for fiscal
1996.
Management of the Company believes the nature and level of
general and administrative expenditures is appropriate, given the lack
of operating revenue. The Company is continually evaluating potential
mineral properties to acquire, administering exploration activities on
current mineral properties, and preparing promotional materials for use
in seeking additional sources of funds either through joint venture
arrangements or additional equity investments. During fiscal 1996, the
Company was successful in obtaining additional equity investments and in
acquiring various mineral properties.
Mineral lease expense increased from $204,821 in fiscal 1995 to
$266,152 in fiscal 1996. The increase was due to the acquisition of
additional mineral properties held under lease.
Depreciation expense increased from $106,328 in fiscal 1995 to
$136,282 in fiscal 1996. The Company acquired additional field and
mining equipment, vehicles, and computer equipment for evaluation of the
increased amount of technical data.
The increase in interest and other income from $29,956 in fiscal
1995 to $155,254 in fiscal 1996, was the result primarily of joint
venture payments to Centurion, an increase in the amount of management
consulting fees paid to the Company, and from consideration received in
the sale of an option agreement regarding Royal Silver shares.
For fiscal 1996, the Company did not incur any loss from dilution
of equity investment in any of its subsidiaries. However, during fiscal
1994, the Company's ownership interest in Royal decreased from 80.1
percent to 65.5 percent, resulting in a loss of $40,877 to the Company,
as a result of an issuance by Royal of 127,500 shares of its common
stock for compensation to its directors, and certain of its officers and
consultants. In fiscal 1995, the Company experienced a loss of $686,809
on its investments accounted for under the equity method, due to the
reduction in its ownership in Royal to 21.1 percent brought about as a
result of the Royal-Celebration reorganization. The Company also
experienced a loss of $154,431 from the disposition of assets, resulting
from the abandonment of property held by Mazama Gold Corporation. In
fiscal 1996, the Company recognized a gain of $482,413 from the sale of
shares of common stock of Royal Silver Mines, Inc.
As a result of the lack of revenues, the losses from operations
and the negative income (expense), the Company had a net loss of
$1,660,483, or $.07 per common share, in fiscal 1996 as compared to a
net loss of $2,635,655, or $.11 per common share, in fiscal 1995.
As noted, property sales cannot be predicted, and continuing
revenues will not be generated by the Company until royalties on the
properties sold are received or until the Company has a property in
production. The Company is continuing to pursue opportunities to sell
additional properties, as well as placing certain of its mineral
properties into production.
FISCAL 1995 AS COMPARED TO FISCAL 1994.
During fiscal 1995 and 1994 the Company had no revenues. Centurion did
not receive advance mineral royalties or reimbursements related to venture
properties. No properties were sold in fiscal 1995 or 1994; therefore, there
was no corresponding cost of mineral properties sold.
General and administrative expenses decreased to $1,776,876 in
fiscal 1995 from $2,341,714 in fiscal 1994. The decrease is the result
of several factors. Accounting fees decreased from $159,000 in fiscal
1994 to $118,000 in fiscal 1995 as a result of the decrease in the
number and value of common shares issued to accounting personnel for
services and in the fees paid to the Company's independent public
accountants. Also, fees paid to consultants for technical, promotional
and administrative work decreased only slightly from $689,000 during
fiscal 1994 to $679,000 during fiscal 1995. The cost of consultative
engagements for both fiscal 1995 and 1994 was approximately the same due
to the substantial amount of such consultative activities necessary for
the acquisition of properties and subsidiary companies, and the
supervisory administration of the exploration and development of these
properties and companies. Office space leasing costs also decreased,
from $54,000 in fiscal 1994 to $51,000 in fiscal 1995.
Office and technical supplies and the costs of the Company's
annual report increased from $70,000 in fiscal 1994 to $79,000 in fiscal
1995. The Company used these materials to respond to the increase in
requests for information about the Company from the investment community
and for providing technical information used to evaluate the Company's
mineral properties. Legal expenses increased from $92,000 in fiscal
1994 to $202,000 in fiscal 1995; the increase is due largely to
non-recurring litigation costs (of matters that have been resolved or
terminated in its favor), and is also the result of the acquisition of
properties and subsidiaries, and costs related to additional regulatory
or environmentally-related filings and activities.
In an effort to preserve cash, the Company has traditionally paid
some of its expenses by issuing shares of common stock. (See "Summary
of Stock Issuances," below.) Directors' fees were paid by issuing
shares of common stock or accruals for unissued shares during each of
fiscal 1994 and 1995. Centurion issued and accrued the same number of
shares for Directors' fees during fiscal 1994 as during fiscal 1995.
The value of the shares issued and accrued, however, decreased from
$211,000 to $171,000 for fees earned during 1994 and 1995, respectively.
Because of the non- consolidation of Royal's accounts with Centurion's,
the value of share issuances by Royal to its Directors is not added to
Centurion's general and administrative expense for fiscal 1995, thereby
resulting in the largest decrease in general and administrative expense
as compared to fiscal 1994, during which Royal was a consolidated
subsidiary of Centurion, and had issued shares valued at $649,000 to its
Directors and Officers.
Management of the Company believes the nature and level of
general and administrative expenditures is appropriate, given the lack
of operating revenue. The Company is continually evaluating potential
mineral properties to acquire, administering exploration activities on
current mineral properties, and preparing promotional materials for use
in seeking additional sources of funds either through joint venture
arrangements or additional equity investments. During fiscal 1995, the
Company was successful in obtaining additional equity investments and in
acquiring various mineral properties.
Mineral lease expense increased from $138,761 in fiscal 1994 to
$204,821 in fiscal 1995. The increase was due to the acquisition of
additional mineral properties held under lease.
Depreciation expense increased from $38,823 in fiscal 1994 to
$106,328 in fiscal 1995. The Company acquired additional field and
mining equipment, vehicles, and computer equipment for evaluation of the
increased amount of technical data.
Interest and other income decreased from $48,856 in fiscal 1994
to $29,956 in fiscal 1995, as a result of the reduction in the Company's
investment of cash received from private placements.
For fiscal 1995, the Company did not incur any loss from dilution
of equity investment in any of its subsidiaries. However, during fiscal
1994, Royal issued 127,500 shares of common stock to its Directors,
certain Officers, and consultants for compensation. That issuance
decreased the Company's ownership interest in Royal from 80.1 percent to
65.5 percent, resulting in a loss of $40,877 to the Company. In fiscal
1995, the Company experienced a loss of $686,809 on its investments
accounted for under the equity method, due to the reduction in its
ownership in Royal to 21.1 percent brought about as a result of the
Royal-Celebration reorganization. The Company also experienced a loss
of $154,431 from the disposition of assets, resulting from the
abandonment of property held by Mazama Gold Corporation. Both of these
losses are non-recurring in nature, and did not occur in fiscal 1994.
As a result of the lack of revenues, the losses from operations
and the negative income (expense), the Company had a net loss of
$2,635,655, or $.11 per common share, in fiscal 1995 as compared to a
net loss of $2,372,790, or $.12 per common share, in fiscal 1994.
As noted, property sales cannot be predicted, and continuing
revenues will not be generated by the Company until royalties on the
properties sold are received or until the Company has a property in
production. The Company is continuing to pursue opportunities to sell
additional properties.
OTHER MATTERS.
The Financial Accounting Standards Board has issued new
Statements of Financial Accounting Standards entitled "Accounting for
Impairment of Long-Lived Assets" and "Accounting for Stock-Based
Compensation." The Company does not believe that adoption of these
standards will have a material effect on the financial statements,
although the Company has not performed a detailed analysis of the impact
of these statements. See Note 2 to Financial Statements.
The Company's operations are subject to comprehensive regulations
with respect to environmental safety and similar matters by the U.S.
Department of the Interior, the U.S. Department of Agriculture, the U.S.
Environmental Protection Agency, the U.S. Mine Safety and Health
Administration, and similar state and local agencies. Failure to comply
with applicable laws, regulations and permits can result in delays in
operations, injunctive actions, damages, and civil and criminal
penalties. As the Company expands or changes its existing operations or
proposes new operations, it may be required to obtain additional or
amended permits or authorizations. The Company believes its operations
are presently in substantial compliance with applicable air and water
quality laws and regulations.
Given management's significant reliance on the issuance of
capital stock for various purposes, the following table summarizes by
category the number of shares and the total value assigned to the shares
for each of the fiscal years 1996, 1995, and 1994. All shares issued to
affiliates of the Company are assigned a dollar value on the books at
their market value. Nonrestricted, free-trading shares issued to
non-affiliates are also valued at market. The value assigned is
determined based on the average of the bid and ask price on the date of
issuance. By comparison, the value assigned to restricted shares is
determined based on other issuances of restricted shares for cash, which
generally has been 85 percent of the value of nonrestricted shares on
the date of issuance.
<TABLE>
<CAPTION>
SUMMARY OF STOCK ISSUANCES
<S> <C> <C> <C>
FYE 1996 FYE 1995 FYE 1993
---------------------- ---------------------- ----------------------
<C> <C> <C> <C> <C> <C> <C> <C>
$ Value $ Value $ Value
Description # Shares Assigned # Shares Assigned # Shares Assigned
- -------------------------- --------- ---------- --------- ---------- --------- ----------
Stock issued For Services:
Compensation - Employee 258,350 369,297 193,700 527,430 100,250 297,673
Directors' Fees 245,000 341,975 143,000 203,300 40,000 93,188
Consulting - Geologic 16,800 22,344 38,700 78,174 1,100 2,385
Services - Nonemployee 36,100 52,345 23,250 45,403 17,000 28,600
--------- ---------- --------- ---------- --------- ----------
556,250 785,961 398,650 854,307 158,350 421,846
Repayment of Cash Advances
and Notes Payable 25,000 38,760 8,000 13,050 8,534 20,000
Lease Payments 100 156 25,100 40,803 0 0
Mineral Property
& Business Acquisitions:
Dotson Exploration 136,400 218,404 105,000 186,050 120,600 433,796
Royal Silver Mines 0 0 0 0 800 456,956
Jefferson-Pacific 0 0 0 0 140,000 366,800
South Iron Blossom 20,000 30,000 0 0 0 0
--------- ---------- --------- ---------- --------- ----------
181,500 287,320 105,000 186,050 261,400 1,257,552
Issuance of Shares for
Cash in Private Placements
and Regulation S Offerings 1,388,656 1,353,266 900,000 1,252,000 2,616,000 5,047,510
Upon Exercise of Stock Options 150,000 225,000 210,000 315,000 25,000 37,500
--------- ---------- --------- ---------- --------- ----------
1,538,656 1,578,266 1,110,000 1,567,000 2,641,000 5,085,010
--------- ---------- --------- ---------- --------- ----------
TOTALS: 2,276,406 $2,651,547 1,646,750 $2,661,210 3,069,284 $6,784,408
========= ========== ========= ========== ========= ==========
</TABLE>
------------------------------------------------------
INFORMATION REGARDING 1998 ANNUAL SHAREHOLDERS MEETING
Consistent with SEC regulations, shareholders may submit
proposals appropriate for shareholder action at the
Company's Annual Meeting to be held in 1998. For proposals
to be considered for inclusion in the 1998 Proxy Statement,
they must be received by the Company no later than
November 1, 1997. Shareholder proposals should be
directed to Centurion Mines Corporation, Attn: Corporate
Secretary, 331 South Rio Grande Street, Suite 201, Salt
Lake City, Utah 84101.
THE COMPANY UNDERTAKES TO PROMPTLY FURNISH (WITHOUT
CHARGE) A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 1996, PREVIOUSLY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, TO
ANY SHAREHOLDER OF RECORD UPON WRITTEN REQUEST, WHICH
SHALL ALSO INCLUDE A GOOD FAITH REPRESENTATION THAT, AS
OF MARCH 28, 1997, THE PERSON MAKING THE REQUEST WAS THE
BENEFICIAL OWNER OF COMMON STOCK OF THE COMPANY ENTITLED
TO VOTE AT THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/ Spenst Hansen
By: _________________________________________
Spenst Hansen, Chairman of the Board of
Directors, President and Chief Executive
Officer of Centurion Mines Corporation
[END OF PROXY STATEMENT]
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Centurion Mines Corporation and Subsidiaries
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheets of Centurion
Mines Corporation and Subsidiaries as of September 30, 1996 and 1995 and the
related consolidated statements of operations, cash flows and stockholders'
equity for the years ended September 30, 1996, 1995 and 1994. These consol-
idated financial statements are the responsibility of the Company's manage-
ment. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the over-
all financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above pre-
sent fairly, in all material respects the financial position of Centurion
Mines Corporation and Subsidiaries as of September 30, 1996 and 1995 and the
results of their operations and their cash flows for the years ended Septem-
ber 30, 1996, 1995 and 1994 in conformity with generally accepted accounting
principles.
Jones, Jensen & Company
Salt Lake City, Utah
October 28, 1996
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
------
September 30,
-------------------------
1996 1995
---------- ----------
CURRENT ASSETS
Cash $ 133,556 $ 17,510
Accounts receivable 5,000 5,000
Accounts receivable - related
parties (Note 10) 28,842 197,839
Prepaid mining leases 76,578 89,747
Marketable securities (Note 6) 150,000 -
---------- ----------
Total Current Assets 393,976 310,096
---------- ----------
MINERAL PROPERTIES (Note 3) 8,849,485 7,974,092
---------- ----------
PROPERTY AND EQUIPMENT (Note 2)
Furniture and office equipment 240,717 215,530
Field equipment 441,756 314,513
Leasehold improvements 8,845 8,845
Vehicles 125,151 100,220
Leased automobiles and equipment 84,620 -
Less - accumulated depreciation
and amortization (385,412) (270,716)
---------- ----------
Total Property and Equipment 515,677 368,392
---------- ----------
OTHER ASSETS 11,190 5,890
---------- ----------
TOTAL ASSETS $9,770,328 $8,658,470
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
-------------------------
1996 1995
---------- ----------
CURRENT LIABILITIES
Accounts payable $ 206,622 $ 216,649
Accrued expenses 45,587 11,818
Payable to related party (Note 10) 6,074 -
Advances from shareholder (Note 10) 6,561 33,400
Leases payable-current portion(Note 8) 31,895 -
Notes payable-current portion (Note 7) 80,542 100,000
----------- ----------
Total Current Liabilities 377,281 361,867
----------- ----------
LONG-TERM DEBT
Leases payable (Note 8) 32,445 -
Notes payable-related party (Note 10) 35,530 -
Notes payable 38,461 -
----------- ----------
Total Long-Term Debt 106,436 -
----------- ----------
Total Liabilities 483,717 361,867
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARIES 29,685 30,741
COMMITMENTS AND CONTINGENCIES
(Notes 11, 12, and 13) - -
----------- ----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value;
30,000,000 shares authorized,
23,804,671 and 22,157,921 shares
issued and outstanding, respectively 260,811 238,047
Additional paid-in capital 19,673,873 17,045,090
Accumulated deficit (10,654,508) (8,994,025)
Receivable related to sale
of common stock (23,250) (23,250)
----------- ----------
Total Stockholders' Equity 9,256,926 8,265,862
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,770,326 $8,658,470
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended September 30,
--------------------------------------------
1996 1995 1994
REVENUES
Operating revenue $ - $ - $ -
------------ ------------ ------------
Total Revenues - - -
------------ ------------ ------------
OPERATING COSTS
General and
administrative 1,829,076 1,737,027 2,079,381
General and
administrative
- related party
(Note 10) 57,375 39,849 262,333
Mineral leases 266,152 204,821 138,761
Depreciation and
amortization 136,282 106,328 38,823
------------ ------------ ------------
Total Operating Costs 2,288,885 2,088,025 2,519,298
------------ ------------ ------------
LOSS FROM OPERATIONS (2,288,885) (2,088,025) (2,519,298)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest and
other income 155,946 29,956 48,856
Interest expense (11,013) (2,501) (980)
Loss from dilution
of equity investment
in subsidiary - - (40,877)
Loss on investments
accounted for under
the equity method - (686,809) -
Gain (Loss) from
disposition of assets 482,413 (154,431) -
------------ ------------ ------------
Total Other Income
(Expense) 627,346 (813,785) 6,999
------------ ------------ ------------
NET INCOME (LOSS) BEFORE
MINORITY INTERESTS (1,661,539) (2,901,810) (2,512,299)
MINORITY INTERESTS IN
LOSS OF CONSOLIDATED
SUBSIDIARIES 1,056 266,155 139,509
------------ ------------ ------------
NET INCOME(LOSS) $ (1,660,483) $ (2,635,655) $ (2,372,790)
============ ============ ============
NET INCOME (LOSS)
PER COMMON SHARE $ (.07) $ (.11) $ (.12)
============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 24,599,843 23,266,388 20,480,292
============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Receivable
_______________________ Additional Related to
Number Paid-in Accumulated Sale of
of Shares Amount Capital Deficit Common Stock
___________ ___________ ____________ ____________ ____________
<S> <C> <C> <C> <C> <C>
Balance, 9/30/93 19,088,637 $190,887 $7,646,632 $(3,985,580) $ (23,250)
Issuance of shares
to employees,
officers and
consultants for
services at prices
ranging from $1.42
to $3.94 per share 118,350 1,183 327,476 - -
Issuance of shares
for directors fees
at prices ranging
from $1.63 to
$4.13 per share 40,000 400 92,787 - -
Issuance of shares
for cash at prices
ranging from $.50
to $2.75 per share 2,641,000 26,410 5,058,600 - (300,000)
Issuance of shares
for purchase of
mineral properties
at prices ranging
from $2.40 to $4.50
per share 120,600 1,206 452,890 - -
Issuance of shares
for payment of a
note at $2.34 per
share 8,534 85 19,915 - -
Issuance of shares
for the purchase
of equity
investments at
prices ranging
from $2.02 to
$4.38 per share 140,800 1,408 802,048 - -
Net loss for the
year ended 9/30/94 - - - (2,372,790) -
Balance, 9/30/94 22,157,921 $221,579 $14,400,348 $(6,358,370) $(323,250)
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Common Stock Receivable
_______________________ Additional Related to
Number Paid-in Accumulated Sale of
of Shares Amount Capital Deficit Common Stock
___________ ___________ ____________ ____________ ____________
Balance, 9/30/94 22,157,921 $221,579 $14,400,348 $(6,358,370) $(323,250)
Issuance of shares
to employees,
officers and
consultants for
services at prices
ranging from $1.25
to $2.25 per share 280,750 2,808 689,002 - -
Issuance of shares
for directors fees
at prices ranging
from $1.25 to
$2.13 per share 143,000 1,430 201,870 - -
Issuance of shares for
cash at prices rang-
ing from $1.07 to
$1.62 per share 1,110,000 11,100 1,555,900 - -
Issuance of shares
in lieu of
outstanding debt
at prices ranging
from $1.53 to $1.72
per share 8,000 80 12,970 - -
Issuance of shares
for the purchase of
equity investments
at $1.77 per share 105,000 1,050 185,000 - -
Stock subscription
received - - - - 300,000
Net loss for the year
ended 9/30/95 - - - (2,635,655) -
Balance, 9/30/95 23,804,671 $238,047 $17,045,090 $(8,994,025) $ (23,250)
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Common Stock Receivable
_______________________ Additional Related to
Number Paid-in Accumulated Sale of
of Shares Amount Capital Deficit Common Stock
___________ ___________ ____________ ____________ ____________
Balance, 9/30/95 23,804,671 $238,047 $17,045,090 $(8,994,025) $ (23,250)
Issuance of shares
to employees,
officers and
consultants for
services at prices
ranging from $1.00
to $1.87 per share 311,250 3,112 440,874 - -
Issuance of shares
for directors fees
at prices ranging
from $1.21 to
$1.84 per share 245,000 2,450 339,525 - -
Issuance of shares for
cash at prices rang-
ing from $0.66 to
$1.50 per share 1,538,656 15,387 1,562,879 - -
Issuance of shares
in lieu of
outstanding debt
at prices ranging
from $1.25 to $1.87
per share 25,000 250 38,510 - -
Issuance of shares
for the purchase of
property at prices
ranging from $1.31
to $1.84 per share 156,500 1,565 246,995 - -
Net loss for the year
ended 9/30/96 - - - (1,660,483) -
Balance, 9/30/96 26,081,077 $260,811 $19,673,873 $(10,654,508) $ (23,250)
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
</TABLE>
<TABLE>
<CAPTION>
For the Years Ended September 30,
1996 1995 1994
______________ ______________ ______________
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (1,660,483) $ (2,635,655) $ (2,372,790)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Compensation and other expenses paid
through issuance of common stock 443,986 691,810 328,659
Issuance of common stock to directors
for compensation 341,975 203,300 93,187
Gain on disposition of assets (6,799) - -
Depreciation and amortization 136,282 106,328 38,823
Minority interests (1,056) (266,155) 112,744
Changes in assets and liabilities net of
effect of acquisitions:
Accounts receivable - (5,000) 145,763
Accounts receivable - related parties 168,997 (114,771) (64,381)
Marketable securities (150,000) - -
Prepaid mining leases 13,169 9,927 (19,229)
Other assets (5,300) 5,156 49,142
Accounts payable and related
party payables 163,479 125,002 (95,733)
Accrued expenses 33,769 (106,232) 118,050
Net Cash Used By
Operating Activities (521,981) (1,986,290) (1,665,765)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (250,551) (266,556) (217,903)
Acquisition and exploration of
mineral properties (506,262) (307,220) (1,555,156)
Cash paid for equity investments, net of
cash acquired - - (914,649)
Net Cash Used by
Investing Activities $(756,813) $(573,776) $(2,687,708)
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the Years Ended September 30,
1996 1995 1994
______________ ______________ ______________
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash $ 1,578,266 $ 1,867,000 $ 4,785,010
Payments on leases payable (14,394) - -
Payments on notes payable (142,193) - -
Advances from shareholder 5,961 33,400 9,490
Payments to shareholder (32,800) (32,850) (6,667)
Net Cash Provided by
Financing Activities 1,394,840 1,867,550 4,787,833
NET INCREASE (DECREASE) IN CASH 116,046 (692,516) 434,360
CASH, BEGINNING OF YEAR 17,510 710,026 275,666
CASH, END OF YEAR $ 133,556 $ 17,510 $ 710,026
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 600 $ 700 $ 800
Interest $ 11,013 $ 2,248 $ 980
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the year ended September 30, 1996, Centurion issued 25,000 shares
of common stock valued at $38,760 in lieu of cash payments for outstanding
debt. Centurion also issued 156,500 shares of common stock for the
acquisition of mineral properties and field equipment valued at $248,560.
During the year ended September 30, 1996, Centurion acquired mineral
properties valued at $161,196 and property and equipment valued at $78,734
through the issuance of promissory notes and lease agreements (See Notes 7
and 8).
During the year ended September 30, 1995, Centurion issued 8,000 shares of
common stock valued at $13,050 in lieu of cash payments for outstanding debt.
Centurion also issued 105,000 shares of common stock valued at $186,050 for
equity positions in subsidiaries.
During the year ended September 30, 1994, Centurion issued 120,600 shares of
common stock valued at $454,096 for the acquisition of mineral properties.
Centurion also issued 8,534 shares of common stock valued at $20,000 in lieu
of a cash payment on a note owed for the acquisition of mineral properties.
In addition, Centurion issued 140,800 shares of common stock valued at
$803,456 for equity positions in subsidiaries.
The accompanying notes are an integral part of these consolidated
financial statements.
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Centurion Mines Corporation (" Centurion") was incorporated on
June 21, 1984 under the laws of the State of Utah. Centurion
and its subsidiaries (collectively the "Company") operate as a
mineral resource company actively engaged in the acquisition
and exploration of mineral properties containing gold, silver,
copper and other metals. The Company conducts its business as
a "junior" natural resource company, meaning that it intends
to receive income from property sales or joint ventures with
larger companies.
A majority of the $8,849,485 of mineral properties included in
the accompanying consolidated balance sheet as of September
30, 1996 is related to exploration properties. The Company
has not determined whether the exploration properties contain
ore reserves that are economically recoverable. The ultimate
realization of the Company's investment in exploration
properties is dependant upon the success of future property
sales, the existence of economically recoverable reserves, the
ability of the Company to obtain financing or make other
arrangements for development and upon future profitable
production. The ultimate realization of the Company's
investment in exploration properties cannot be determined at
this time and, accordingly, no provision for any asset
impairment that may result, in the event the Company is not
successful in developing or selling these properties, has been
made in the accompanying consolidated financial statements.
The Company has incurred operating losses from inception to
date and as of September 30, 1996 has an accumulated deficit
of $10,654,508. During the year ended September 30, 1996, the
Company's operations used $521,981 of cash and the Company
used $756,813 of cash in investing activities. The Company's
cash was provided from the sale of 1,538,656 shares of common
stock for $1,578,266. Management expects that the Company's
cash expenditures for the fiscal year ended September 30, 1997
will consist of the following: $900,000 for exploration
activities, $750,000 for production related activities,
$100,000 for acquisition of mineral properties, $220,000 for
property lease payments, and $1,200,000 for general and
administrative expenses. Management also expects that the
Company's cash receipts for the fiscal year ended September
30, 1997 will consist of the following: $150,000 from the sale
of properties, $1,820,000 of production income, $1,000,000
from the partial liquidation of Centurion's ownership in Royal
Silver Mines, Inc. stock, and $200,000 from joint venture
partners. In addition 1) at September 30, 1996, the Company
had a positive working capital of $16,695; 2) the Company is
currently negotiating to sell additional properties and
contemplates financing further exploration of its mineral
properties through joint venture arrangements. However, if the
Company is not successful in raising additional equity
capital, is not able to sell some of its mineral properties,
or is not able to negotiate joint venture arrangements, the
Company will reduce the level of expenditures to match its
cash flow position.
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the
accounts of Centurion and its subsidiaries, Centurion
Exploration Incorporated ("CEI"), Dotson Exploration Company
("DEC") and Mazama Gold Corporation ("Mazama"), wholly-owned
subsidiaries; Mammoth Mining Company ("MMC") , an 81.8
percent-owned subsidiary; The Gold Chain Mining Company
("GCMN"), a 61.1 percent-owned subsidiary; and Tintic
Coalition Mines Corporation ("TCM"), an 80 percent-owned
subsidiary. All significant intercompany transactions and
accounts have been eliminated in consolidation. Centurion
acquired its interests in MMC, GCMN, and DEC during the year
ended September 30, 1994. Centurion acquired its interests in
CEI and TCM during the year ended September 30, 1993. The
interest in Mazama was acquired during the year ended
September 30, 1992 (See Note 5).
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a
September 30 year end.
b. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
c. Mineral Properties
Costs of acquiring, exploring and developing mineral
properties are capitalized by project area. Costs to maintain
the mining mineral rights and leases are expensed as incurred.
When a property reaches the production stage, the related
capitalized costs will be amortized, using the units of
production method on the basis of periodic estimates of ore
reserves. Mineral properties are assessed at least annually
to determine if a property has been disproved or should be
abandoned based on other economic factors. The assessment is
based on the Company's evaluation of the geological
information gathered on the property and management's
evaluation of the property's future expectation of
profitability. Should a property be disproved or abandoned,
its capitalized costs are charged to operations. The Company
charges to operations the allocable portion of capitalized
costs attributable to properties sold. Capitalized costs are
allocated to properties sold based on the proportion of claims
sold to the remaining claims within the project area.
d. Property and Equipment
Property and equipment are recorded at cost. Major additions
and improvements are capitalized, while minor replacements,
maintenance and repairs that do not increase the useful life
of the assets are expensed as incurred.
- --------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
d. Property and Equipment (Continued)
Depreciation of property and equipment is determined using the
straight-line method over the expected useful lives of the
assets as follows:
Description Useful Lives
Furniture and equipment 5 years
Field equipment 5 years
Leasehold improvements Life of lease
Vehicles 5 years
Depreciation expense for the years ended September 30, 1996,
1995 and 1994 was $136,282, $106,328 and $38,823,
respectively.
e. Capitalized Interest
Interest costs that relate to the acquisition and development
of mining properties that are not in production are
capitalized. Interest costs related to operations are
expensed as incurred. During the years ended September 30,
1996, 1995, and 1994, the Company capitalized $0, $0 and $0,
respectively, of interest costs to mineral properties and
expensed $11,013, $2,501, and $980, respectively.
f. Reclassification
Certain reclassifications have been made to the September 30,
1994 and 1995 consolidated financial statements in order to
conform to the September 30, 1996 presentation.
g. Net Income (Loss) Per Common Share
Net income (loss) per common share has been calculated based
on the weighted average number of shares of common stock
outstanding during the period. Common stock options and other
common stock equivalents were excluded from the calculation of
the weighted average number of shares outstanding for the
years ended September 30, 1996, 1995 and 1994 since they were
antidilutive. No material dilution resulted from common stock
equivalents outstanding for the year ended September 30, 1996.
h. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
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CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
i. Recently Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board issued
a new statement titled "Accounting for Impairment of Long-
Lived Assets." This new standard is effective for years
beginning after December 15, 1995 and would change the
company's method of determining impairment of long-lived
assets. Although the Company has not performed a detailed
analysis of the impact of this new standard on the Company's
financial statements, the Company does not believe that
adoption of the new standard will have a material effect on
the financial statements.
In October 1995, the Financial Accounting Standards Board
issued a new statement titled "Accounting for Stock-Based
Compensation" (FAS 123). The new statement is effective for
fiscal years beginning after December 15, 1995. FAS 123
encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options, and
other equity instruments to employees based on fair value.
Companies that do not adopt the fair value accounting rules
must disclose the impact of adopting the new method in the
notes to the financial statements. Transactions in equity
instruments with non-employees for goods or services must be
accounted for on the fair value method. Although the Company
has not performed a detailed analysis of the impact of this
new standard on the Company's financial statements, the
Company does not believe that adoption of the new standard
will have a material effect on the financial statements.
NOTE 3 - MINERAL PROPERTIES
The following summarizes the Company's investments in
significant mineral properties as of September 30, 1996 and
1995 and briefly describes the properties and activity related
to each property.
1996 1995
---------- ----------
Utah Gold Belt Properties $ 254,002 $ 253,377
Tintic Districts 6,659,089 6,128,745
Kings Canyon Project 234,034 130,605
Dotson Property 1,008,693 767,698
Other 693,667 693,667
$8,849,485 $7,974,092
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 3 - MINERAL PROPERTIES (Continued)
a. Utah Gold Belt Properties
The Utah Gold Belt is a major mineralized structural zone in
the Oquirrh Mountain range situated on the west side of the
Salt Lake Valley which has been a major producer of copper,
gold, and silver. The Company has mineral rights to
approximately 33 acres of land. During the fiscal year ended
September 30, 1992, the Company sold a portion of its Utah
Gold Belt properties to Kennecott Utah Copper Corporation
("Kennecott Copper") and retained mineral royalties on the
properties ranging from 2.5 to 5 percent. One of the
properties sold to Kennecott Copper, known as Barney's Canyon
South, is currently under development by Kennecott Copper.
The Company's investment in these properties decreased during
the year ended September 30, 1995 since the Company's
ownership interest in Royal Silver Mines, Inc. decreased to
21% at September 30, 1995 causing it to no longer be a
consolidated subsidiary of the Company (See Note 5). Royal
Silver Mines, Inc. holds properties at the Utah Gold Belt.
During the years ended September 30, 1996, 1995 and 1994, the
Company expended $625, $581 and $6,672, respectively, on
exploration of these properties.
b. Tintic Districts
The Main Tintic project covers approximately 14,756 acres of
land which are held in a combination of forms, including
private mining leases, state mineral leases, patented and
unpatented mining claims situated approximately 70 miles
southwest of Salt Lake City, Utah. The area includes various
historic mines which produced large amounts of gold, silver
and other metals. The project area contains several zones of
known gold mineralization that were not explored or developed
by the early miners. Centurion's current targets on the Main
Tintic project include breccia-pipe deposits of gold, silver,
and copper.
During the years ended September 30, 1996, 1995 and 1994, the
Company expended $292,023, $542,802 and $2,768,482,
respectively, on exploration and development of these
properties. The Company expended $238,321, $32,100 and
$358,610 on acquisition of additional properties in the Tintic
Districts during fiscal years 1996, 1995 and 1994,
respectively.
c. Kings Canyon Project
The Kings Canyon project includes approximately 45,795 acres
of unpatented lode mining claims and state mineral leases
situated in the Confusion Mountain Range of West-Central Utah,
about 60 miles west of Delta, Utah. This project represents a
newly discovered district of precious metal mineralization,
with evidence for economic gold deposits over a 50 square mile
area. Exploration efforts to date have delineated a
substantial gold resource.
- ----------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 3 - MINERAL PROPERTIES (Continued)
c. Kings Canyon Project (Continued)
Future production royalties on approximately 75 percent of the
acreage will be four percent of gold and silver taken in kind
and four percent of net smelter returns on all other metals.
On the remaining acreage the Company will receive production
royalties ranging from one to four percent.
During the years ended September 30, 1996, 1995 and 1994, the
Company expended $103,429, $39,186 and $33,119, respectively,
on exploration related to the project.
d. Dotson Property
The Dotson property consists of approximately 8,700 acres of
patented and unpatented mining claims in Millard County, Utah.
The claims have proven copper deposits.
During the years ended September 30, 1996, 1995, and 1994, the
Company expended $240,995, $452,773 and $267,377,
respectively, on exploration of these claims.
NOTE 4 - JOINT VENTURE AGREEMENTS
On July 16, 1996, Centurion entered into a joint venture
agreement with BHP Minerals, a unit of The Broken Hill
Proprietary Company, Ltd., on the "Little Bingham" copper/gold
mining property located approximately 70 miles southwest of
Salt Lake City, Utah.
The joint venture will include 12,000 acres, and will be
directed towards exploration for a large commercial porphyry
type copper/gold deposit. Under the terms of the joint
venture, BHP will have the option to earn a 75% interest in
the project by paying all costs through a positive production
feasibility study with periodic cash payments to Centurion.
After earn-in, Centurion can maintain a working interest by
paying 25% of all costs or may convert to a 15% net profits
royalty interest with all costs being paid by BHP.
NOTE 5 - INVESTMENTS IN SUBSIDIARIES AND OTHER MINING COMPANIES
The following describes the specific transactions and activity
related to each of the consolidated subsidiaries as of
September 30, 1996 and 1995.
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 5 - INVESTMENTS IN SUBSIDIARIES AND OTHER MINING COMPANIES
(Continued)
a. Mazama Gold Corporation.
Mazama was incorporated on June 4, 1991 for the purpose of
acquiring, exploring and developing mineral properties in the
Okanogan, Washington area. The original capital investment of
$1,000 was provided by Dr. Spenst Hansen and the original
1,000 shares of stock were issued to him. During fiscal years
1991 and 1992, Centurion loaned funds to Mazama to finance its
acquisition and exploration of mineral properties in
Washington. As of September 30, 1992, Centurion had loaned
$150,603 to Mazama. Effective September 30, 1992, Centurion
converted $150,000 of its loan to Mazama to a 99.3 percent
equity investment. The acquisition was accounted for as a
purchase and the financial statements of Mazama have been
included in the accompanying consolidated financial statements
since the acquisition date. The purchase price has been
allocated to the assets of Mazama based on their historical
net book value. Dr. Hansen's original intent was to
incorporate Mazama on behalf of Centurion.
Therefore, to complete the organization of Mazama as a 100
percent owned subsidiary of Centurion, during October 1992,
Dr. Hansen assigned to Centurion the Mazama shares originally
issued in his name for reimbursement of the original capital
investment of $1,000. The Company is currently inactive.
b. Tintic Coalition Mines Corporation.
TCM was incorporated on April 27, 1993 for the purpose of
acquiring, exploring and developing mineral properties in the
southern portion of the Tintic Mining District. The original
capital investment of $1,020 was principally provided by Dr.
Spenst Hansen and 102,000 shares of stock were issued.
During April 1993, Centurion acquired a partial interest in
680 acres of mineral property by issuing 25,000 shares of
common stock, valued at $25,000, and paying $14,965 in cash.
On May 12, 1993, Centurion exchanged its interest in the
mineral property for 3,996,450 shares of common stock of TCM.
Also, on May 12, 1993, TCM agreed to exchange 1,000,000 shares
of its common stock for the remaining interest in the 680
acres of mineral property.
On June 23, 1993, Centurion acquired an additional 411,550
shares of TCM's common stock for $8,231 in cash to increase
Centurion's ownership interest in TCM to 80 percent. The
411,550 shares were acquired at an increased price because TCM
now owned property. In addition, the Company incurred direct
costs of $2,505 in connection with these transactions which
have been included in Centurion's investment in TCM.
c. Mammoth Mining Company and its Subsidiary.
In May of 1994, Centurion purchased Jefferson Pacific Corp.
(JPC), which owned 58.6 percent of Mammoth Mining Company. In
the following months, Centurion purchased additional shares of
MMC from its shareholders, bringing Centurion's ownership of
MMC to 81.8 percent.
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 5 - INVESTMENTS IN SUBSIDIARIES AND OTHER MINING COMPANIES
(Continued)
c. Mammoth Mining Company and its Subsidiary (Continued).
MMC has land and lease ownership in the Tintic Mining
District. It also has a 61.1 percent ownership in a separate
subsidiary company, The Gold Chain Mining Company. The Gold
Chain Mining Company is currently inactive.
d. Dotson Exploration Company.
On February 9, 1994, Centurion entered into an agreement to
purchase 41,000 shares of Dotson Exploration Company, (DEC),
from Mark Dotson, the sole shareholder, for $350,000. These
shares gave Centurion 51 percent ownership of DEC. According
to the original agreement, Centurion was given the ability to
convert dollars spent on the development of DEC properties and
leases at a rate of $12 for each share. By September 30,
1994, DEC had issued an additional 32,667 shares of its stock,
giving Centurion a total of 64.8 percent ownership in DEC.
During the year ended September 30, 1995, Centurion issued
105,000 shares of common stock at $1.77 per share to acquire
the remaining outstanding shares of DEC making it a 100
percent owned subsidiary of Centurion at September 30, 1995
and 1996.
Dotson Exploration Company has land and lease ownership in the
Milford, Utah Mining District. Exploration activities by
Centurion on these properties have confirmed the appearance of
copper ore reserves.
e. Centurion Exploration Incorporated.
On July 15, 1993, Centurion formed CEI as a wholly-owned
subsidiary for the purpose of participating in a joint venture
agreement with Kennecott. Centurion transferred certain
mineral properties to CEI at its historical cost basis. The
corporation now provides personnel to the Company (other than
management personnel).
NOTE 6 - MARKETABLE SECURITIES
The Company currently owns 1,572,767 shares of Royal Silver
Mines, Inc. common stock, a related company, which is
approximately 15% of the total outstanding shares at September
30, 1996. 100,000 shares of the total amount owned were
purchased on July 12, 1996 at a cost of $150,000. The Company
carries these marketable securities at the lower of cost or
market value of $150,000 and $0 at September 30, 1996 and
1995, respectively. The Company also received $50,000 from
Royal Silver Mines, Inc. during the year ended September 30,
1996 which granted Royal a two-year option to repurchase up to
800,000 of their shares at a price equal to $1.75 per share.
This $50,000 has been recorded in the accompanying
consolidated financial statements as other income. Royal had
not exercised any of this option at September 30, 1996.
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 7 - NOTES PAYABLE
Notes payable consisted of the following at September 30, 1996
and 1995:
September 30,
--------------------------
1996 1995
--------- ----------
Purchase note payable for patented mining
claims in the Beaver Lake Mining District,
non-interest bearing, payable in $25,000
quarterly increments. $ - $ 100,000
Purchase note payable for patented mining
claims in the Bradshaw Mining District,
non-interest bearing, payable in $40,000
worth of free-trading Centurion stock in
semi-annual increments. 111,003 -
Purchase note payable for patented mining
claims in the Chrysocolla Mining District,
non-interest bearing, payable in $8,000
annual increments. 8,000 -
--------- ----------
Total Notes Payable 119,003 100,000
Less: Current Portion (80,542) (100,000)
--------- ----------
Long-Term Notes Payable $ 38,461 $ -
========= ===========
Maturities of long-term debt are as follows:
Year Ending
September 30, Amount
------------------------- ---------
1997 $ 80,542
1998 38,461
1999 -
2000 -
2001 and thereafter -
---------
Total $ 119,003
=========
NOTE 8 - LEASES PAYABLE
The Company leases certain equipment and vehicles.
Obligations under these capital leases have been recorded in
the accompanying consolidated financial statements at the
present value of future minimum lease payments. The
capitalized cost of $84,620 less accumulated depreciation of
$12,415 is included in property and equipment in the
accompanying consolidated financial statements. Depreciation
expense for these assets for the years ended September 30,
1996, 1995 and 1994 was $12,415, $0 and $0, respectively.
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 8 - LEASES PAYABLE (Continued)
Leases payable consisted of the following at September 30,
1996 and 1995:
September 30,
--------------------------
1996 1995
--------- ----------
Lease payable to a leasing company,
secured by property, interest at 11.5%,
payable in monthly installments of $462,
final payment due July, 2001 $20,499 $ -
Lease payable to a leasing company,
secured by property, non-interest bearing,
payable in monthly installments of $626,
final payment due February, 1997 3,759 -
Lease payable to a leasing company,
secured by automobile, interest at 11.5%,
payable in monthly installments of $379,
final payment due April, 1998 6,653 -
Lease payable to a leasing company,
secured by automobile, interest at 11.0%,
payable in monthly installments of $470,
final payment due June, 1998 8,893 -
Lease payable to a leasing company,
secured by automobile, interest at 11.0%
payable in monthly installments of $1,485
final payment due March, 1998 24,536 -
------- ---------
Total Leases Payable 64,340 -
Less: Current Portion (31,895) -
------- ----------
Long-Term Leases Payable $32,445 $ -
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 8 - LEASES PAYABLE (Continued)
The future minimum lease payments under these capital leases
and the net present value of the future minimum lease payments
are as follows:
Year Ending
September 30, Amount
--------------------- -----------
1997 $ 37,307
1998 21,336
1999 5,548
2000 5,548
2001 and thereafter 4,623
-----------
Total future minimum lease payments 74,362
Less, amount representing interest (10,022)
-----------
Present value of future minimum
lease payments $ 64,340
===========
NOTE 9 - INCOME TAXES
As of September 30, 1996, the Company had net operating loss
carryforwards available to offset future taxable income of
approximately $10,000,000. For federal income tax purposes,
only a portion of the tax net operating loss can be utilized
in any given year if the company which generated the loss has
had a more than 50 percent change in ownership or if such a
change occurs in the future as defined in the Internal Revenue
Code.
The following summarizes the periods for which the net
operating loss carryforwards will be available.
Expiration Date
---------------
2000 $ 63,000
2001 154,000
2002 213,000
2003 378,000
2004 495,000
2005 781,000
2006 549,000
2007 1,146,000
2008 2,021,000
2009 2,600,000
2010 1,700,000
------------
$ 10,100,000
============
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CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 10 - RELATED PARTY TRANSACTIONS
The Company paid compensation to officers, directors and
others by issuing, on certain occasions, restricted shares of
its common stock. The value of the restricted shares issued
as compensation has been recorded at 67 percent of the quoted
market value of the trading common stock on the date the
shares were issued.
Officers and directors of the Company were issued common stock
for compensation as follows:
Year Ended September 30,
-----------------------------------
1996 1995 1994
---------- ---------- ---------
Compensation
------------
Value of common shares issued $ 341,975 $ 203,300 $ 129,811
========= ========== =========
Number of shares issued 245,000 143,000 54,750
========= ========== =========
The Company has rented certain geological equipment from a
sole proprietorship owned and operated by an officer, director
and principal shareholder of the Company. The equipment was
rented on a day-to-day basis. Payment for the use of the
equipment was made with cash and stock as described above and
amounted to $0, $0 and $24,218 during the years ended
September 30, 1996, 1995 and 1994, respectively.
A corporation that is owned by an officer, director and
principal shareholder of the Company provided personnel to the
Company (other than management personnel) up through September
30, 1994. Total cash and stock payments to this corporation
were $0, $0 and $238,115 during the years ended September 30,
1996, 1995 and 1994, respectively.
The Company made non-interest bearing advances to shareholders
and companies whose shareholders and officers are also
shareholders and officers of the Company. As of September 30,
1996, and 1995, $28,842 and $197,839, respectively, was due to
the Company as a result of these advances.
The Company, also has received advances from an officer,
director, and principal shareholder of the Company in order to
pay minimal operating expenses. As of September 30, 1996 and
1995, $6,561 and $33,400, respectively, was due from the
Company as a result of these advances. As of September 30,
1996 and 1995, $6,074 and $0, respectively, was due to other
related parties as a result of operating expense advances.
During September 1996, the Company signed a promissory note to
a related company for $35,530. The note bears interest at 8%
and matures during October, 1997.
During the year ended September 30, 1996, the Company issued
1,171,959 shares of its common stock to related parties for
$1,099,996 in cash.
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 11 - COMMITMENTS AND CONTINGENCIES
a. Cancelable Mineral Leases and Royalty Agreements
The Company has entered into various cancelable mining leases
and royalty agreements as a lessee. Future minimum lease and
royalty payments under the Company's current agreements will
be approximately $250,000 annually. In addition to the lease
payments required above, certain leases also have minimum
work requirements of approximately $150,000 each year.
Certain leases also have provisions allowing the Company to
purchase all rights to the properties thereby reducing future
commitments for royalty payments.
The leases have original terms of 3 to 20 years and are
cancelable at the Company's option at any time, which would
terminate any future lease payments or work commitments. The
lease agreements also provide that the lease will remain in
effect as long as exploration or development is being
conducted with reasonable diligence or production continues in
commercial quantities. Most of the above agreements also have
provisions for additional royalty payments based on "net
smelter returns" or gross revenues from mineral sales. These
royalties range from 2 to 8 percent and are applicable only
after production and sales have begun. Minimum annual royalty
payments previously paid will be deducted from the additional
royalty payments.
b. Noncancelable Operating Leases
The Company occupies its facilities and uses certain other
equipment under noncancelable operating leases and monthly
rentals. These leases expire during fiscal years 1997 through
1998. Minimum future rentals to be paid under these
arrangements will amount to approximately $130,860 for leases
and $4,200 for rentals for the year ending September 30,
1997. Rent expense for the years ended September 30, 1996,
1995 and 1994 was approximately $76,600, $45,500 and $54,000,
respectively.
c. Consulting Agreement
Centurion has entered into an agreement with a consultant
whereby Centurion has agreed to pay a base annual salary of
$75,000, plus certain benefits, for assistance with investor
relations and business development. The consultant previously
served as an officer of Centurion and is currently an officer
of Tintic Coalition. Centurion's Board of Directors may also
authorize bonuses on an ad hoc basis. In the event of
termination, other than for cause, within specified periods
before and after a change in control, as defined in the
agreement, Centurion will pay a lump sum severance benefit
equal to three times the base salary. The consultant has
agreed to accept shares of Centurion's common stock in lieu of
cash payments, or to accrue his compensation under the
agreement if Centurion's cash position is not sufficient to
provide for the payments. This consulting agreement expires
September 30, 1998.
- ---------------------------------------------------------------------
CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 11 - COMMITMENTS AND CONTINGENCIES (Continued)
d. Pending Litigation
The Company is listed as the defendant in a case brought in
the District Court of the Third Judicial District in Tooele
County for an alleged breach of contract on a lease agreement.
The Company intends to contest the case vigorously and
believes that there is only a very small likelihood of a
significant unfavorable outcome. Therefore, no adjustment has
been made in the financial statements to reflect the
uncertainty.
NOTE 12 - COMMON STOCK AND OPTIONS
a. Stock Option and Stock Award Plan
On April 19, 1991, Centurion's shareholders approved the 1991
Stock Option and Stock Award Plan (the Plan). The purpose of
the Plan is to enable Centurion to attract and retain
experienced and able directors, officers and employees. The
Plan will provide incentives to directors, officers and
employees to extend their best efforts for the Company and its
shareholders. Under the provisions of the Plan, the Board of
Directors may grant incentive stock options or stock awards
only to eligible directors, officers or employees. As of
September 30, 1996, the shareholders have approved 2,500,000
shares of stock to be issued and administered under the Plan
and the Company has filed a Form S-8 registration statement
and amendments covering the 2,500,000 shares. As of September
30, 1996, 1,649,997 shares of common stock have been awarded
under the Plan.
b. Stock Options and Warrants
Beginning with the quarter ended June 30, 1993 and ending
March 31, 1995, Centurion granted options to its directors,
certain of its executive officers, and a key consultant to
purchase an aggregate of 560,000 shares of common stock at
$1.50 per share, the fair market value of the Company's common
stock on the grant date. Due to the non-reelection of one of
the Company's directors, 20,000 of the options were forfeited
during fiscal year 1994. From April 1, 1995 to September 30,
1996, Centurion granted additional options to its directors,
certain of its executive officers, and a key consultant to
purchase an aggregate of 295,000 shares of common stock on the
same terms as the earlier grant of options. As of September
30, 1996, options to purchase 450,000 shares of common stock
remained exercisable. The options are exercisable through
March 31, 1998, or six months after the option holder ceases
to be a director, officer or consultant to the Company. Stock
option activity for the years ended September 30, 1994, 1995,
and 1996 consisted of the following:
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CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 12 - COMMON STOCK AND OPTIONS (Continued)
b. Stock Options and Warrants (Continued)
Number Price
of Shares per Share
--------- ---------
Outstanding at September 30, 1993 560,000 $1.50
Exercised during the year (25,000) 1.50
Forfeited during the year (20,000) -
Outstanding at September 30, 1994 515,000 1.50
Exercised during the year (210,000) 1.50
Outstanding at September 30, 1995 305,000 1.50
Granted during the year 295,000 1.50
Exercised during the year (150,000) 1.50
Outstanding at September 30, 1996 450,000 $1.50
During fiscal 1996, Centurion authorized a one-time grant of
out-of-the-money options to purchase common stock on the
following terms: vesting was conditional upon the stock price
achieving an average price of at least 25% over the market
price of the stock on the grant date, and maintaining that
average price for at least 30 consecutive trading days before
the end of fiscal 1996. Upon vesting, the options were to be
exercisable at a price of 50% above that on the grant date,
and if vested, would be exercisable until September 30, 2000.
However, the conditions to vesting were not met during fiscal
1996 and, therefore, these out-of-the-money options did not
vest. Consequently, because they could not be exercisable at
any time before their expiration date, they were cancelled by
board resolution. Subsequent to the end of fiscal 1996,
Centurion reauthorized similar out-of-the-money options on the
same terms. As of the date of this filing, the conditions to
vesting of these re-authorized options had not been met, and
none of these options are exercisable (See Note 13).
c. Private Placements
Centurion's Board of Directors has, from time to time,
authorized private placements of restricted shares of
Centurion's common stock. During fiscal year 1994, Centurion
sold 2,641,000 shares of common stock to individual investors
for $5,085,010 at prices ranging from $.50 to $2.75 per share.
During fiscal year 1995, Centurion sold 1,110,000 shares of
common stock to individual investors for $1,567,000 at prices
ranging from $1.25 to $1.62 per share. During fiscal year
1996, Centurion sold 1,538,656 shares of common stock to
individual investors for $1,215,475 at prices ranging from
$0.66 to $1.50 per share.
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CENTURION MINES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
NOTE 12 - COMMON STOCK AND OPTIONS (Continued)
d. Common Stock Issuances
During the years ended September 30, 1996, 1995, and 1994,
Centurion has issued restricted shares of common stock to
employees, officers and consultants for services provided.
The shares issued have been valued based on other issuances of
restricted shares for cash during the periods.
NOTE 13 - SUBSEQUENT EVENTS
Subsequent to September 30,1996, the following events have
occurred.
1. The Company granted options to purchase 750,000 shares
of common stock to its CEO at $1.44, which represents
150% of the closing stock price on the grant date.
None of the options will vest until the daily closing
price of the Company's common stock maintains an
average level of at least $1.20 which represents 125%
of the closing stock price on the grant date, for a
period of no less than 30 consecutive trading days, to
be achieved on or before September 30, 1997. The
options are exercisable only upon vesting and expire
on September 30, 2001.
[END OF PROXY SOLICITATION MATERIAL]
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