<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OCTOBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-17386
FISCHER-WATT GOLD COMPANY, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0227654
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1410 Cherrywood Drive, Coeur d'Alene, ID 83814
(Address of principal executive offices)
(208) 664-6757
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
The number of shares of Common Stock, $0.001 par value,
outstanding as of December 1, 1995 was 18,411,500
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
Part 1 - Financial Information
Item 1. Financial Statements
FISCHER-WATT GOLD COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
October 31, January 31,
ASSETS 1995 1995
(Unaudited)
------- -------
CURRENT ASSETS:
Cash $ 494,000 $ 6,000
Marketable securities - 358,000
Inventories 460,000 -
Accounts receivable 600,000 2,000
Other current assets 14,000 6,000
------- -------
Total current assets 1,568,000 372,000
PROPERTY PLANT AND EQUIPMENT 1,873,000 437,000
Less: Accumulated depreciation,
depletion and amortization (127,000) ( 36,000)
------- -------
1,746,000 401,000
OTHER ASSETS
Investments-
Compania Minerales de
Copan S.A. de C. V. - 91,000
Minera Montoro S.A. de C.V. 12,000 -
Other assets 33,000 27,000
------- -------
Total assets $3,359,000 $ 891,000
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 972,000 $ 226,000
Bank indebtedness 208,000 -
Notes payable 300,000 500,000
Income and other
taxes payable 94,000 4,000
------- -------
Total current liabilities 1,574,000 730,000
LONG TERM LIABILITIES:
Nonrecourse debt (Note 5) - 87,000
Bank debt 45,000 -
--------- --------
Total liabilities 1,619,000 817,000
COMMITMENTS AND CONTINGENCIES,
Notes 1,4,6,8 and 9
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, $0.001 par value,
50,000,000 shares authorized;
16,145,000 shares outstanding
at October 31 and 12,344,000
at January 31, 1995 16,000 12,000
Additional paid-in capital 6,278,000 5,773,000
Deficit (4,554,000) (5,711,000)
--------- ---------
Total shareholders' equity 1,740,000 74,000
--------- ---------
Total liabilities and
shareholders' equity $3,359,000 $ 891,000
========== =========
The accompanying notes are an integral part of these balance
sheets.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
October 31, October 31,
1995 1994 1995 1994
-------- -------- -------- --------
REVENUES:
Sales of precious metals $595,000 $ - $595,000 $ -
Interest - - - 27,000
Gain on sale of
mineral interest 887,000 760,000 1,530,000 869,000
------- ------- -------- -------
1,482,000 760,000 2,125,000 896,000
--------- ------- --------- --------
COSTS AND EXPENSES:
Production costs 304,000 - 304,000 -
Depreciation and
depletion 127,000 - 127,000 -
General corporate 80,000 54,000 244,000 204,000
Exploration expense - - 3,000 -
Other expense - net 135,000 - 98,000 -
Abandoned properties
and prospects 4,000 - 183,000 197,000
Interest expense 119,000 24,000 143,000 63,000
Gain on
marketable securities - 6,000 (206,000) -
------- -------- -------- --------
769,000 72,000 896,000 464,000
------- -------- -------- --------
Income before
tax provision 713,000 688,000 1,229,000 432,000
TAX PROVISION 61,000 10,000 72,000 11,000
------- -------- -------- --------
NET INCOME $652,000 $678,000 $1,157,000 $421,000
======== ======== ========= ========
NET INCOME PER SHARE
AND COMMON EQUIVALENT $ .04 $ .05 $ .08 $ .03
===== ===== ===== =====
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING (000's) 15,193 12,344 14,973 12,344
The accompanying notes are an integral part of these statements.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
October 31,
1995 1994
-------- --------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net income $1,157,000 $ 421,000
Adjustments for non-cash items
Change in value of
marketable securities ( 206,000) -
Gain on sale of mineral interest (1,530,000) (869,000)
Abandoned properties and prospects 183,000 197,000
General exploration 3,000 -
Depreciation and depletion 128,000 2,000
Accrued interest added to
principal balance - 59,000
Gain on sale of equipment - ( 20,000)
Proceeds from sale of
marketable securities 580,000 -
Gain on sale of marketable securities (16,000) -
Other (36,000) -
Change in non-cash working capital
items related to operations
Inventories (162,000) -
Accounts receivable (111,000) -
Other current assets (42,000) (2,000)
Accounts payable (155,000) (117,000)
Bank indebtedness ( 13,000) -
Income and other taxes payable 44,000 10,000
-------- --------
Total (176,000) (319,000)
-------- --------
INVESTING ACTIVITIES:
Proceeds from sales of
mineral interests 150,000 155,000
Proceeds of partial disposition
of property - 43,000
Property acquisition and
development costs (16,000) -
Bonuses applied to reduce cost basis - 33,000
Investment in Honduran Corporation (22,000) (116,000)
Investment in Mexican Corporation (15,000) ( 10,000)
Proceeds from sale of equipment - 2,000
Equipment acquired ( 3,000) ( 3,000)
-------- --------
Total 94,000 104,000
-------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of stock 570,000 -
Proceeds from long-term debt - 116,000
-------- --------
Total 570,000 116,000
-------- --------
NET INCREASE (DECREASE) IN CASH 488,000 ( 99,000)
CASH, at beginning of period 6,000 106,000
------- --------
CASH, at end of period $494,000 $ 7,000
======= =======
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ - $ 7,000
SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT
NONCASH ACTIVITIES:
Application of gain on sale of
Honduran Corporation to cost of
shares of Bermuda Corporation $ 887,000 -
Liabilities assumed in connection
with purchase of Oronorte $1,000,000 -
Application of bonus on unproven
property to offset accrued
interest expense $ 25,000 $ 50,000
Short term debt incurred in connection
with purchase of shares of GOC $ 300,000 -
Cost basis of trading securities
sold in connection with (gain)
loss on trading securities $ 564,000 -
Application of reclamation bond to
offset cost basis of mineral property $ - $ 40,000
Short-term debt eliminated in
connection with sale of
mineral interest $ 605,000 $ 94,000
Accrued interest eliminated in
connection with sale of
mineral interest $ 52,000 $ -
Cost basis in mineral interests
sold in connection with
debt eliminated $ 164,000 $ 86,000
Fair market value of vehicles and
office equipment offset against
wages and expenses due to
former employees $ - $ 33,000
The accompanying notes are an integral part of these statements.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTES DISCLOSURES
The accompanying consolidated financial statements are unaudited.
In the opinion of management, all adjustments of a normal
recurring nature considered necessary for a fair presentation
have been included in these financial statements. These financial
statements and notes thereto should be read in conjunction with
the financial statements and related notes included in
Fischer-Watt Gold Company, Inc.'s ("Fischer-Watt" or the
"Company") Annual Report on Form 10-K for the year ended January
31, 1995 ("Form 10-K"). Operating results for the three and nine
months ended October 31, 1995 are not necessarily indicative of
the results that are expected for the full year ending January
31, 1996.
(2) ACCOUNTS RECEIVABLE
Accounts receivable are comprised of the following at the dates
indicated:
October 31, January 31,
1995 1995
---------- ----------
Trade receivables $191,000 -
Note receivable 108,000 -
Taxes recoverable 232,000 -
Miscellaneous 69,000 $ 2,000
-------- --------
$600,000 $ 2,000
======= ======
On August 28, 1995, the Company agreed to loan Great Basin
Management Co., Inc., up to $108,447 to assist Great Basin in
retaining property positions held by its subsidiary, Great Basin
Exploration and Mining Co., Inc. The loan was fully funded in the
quarter ended October 31, 1995. There is no requirement for
Great Basin Management Co., Inc. to repay the loan unless the
proposed merger between Fischer-Watt Gold Company, Inc., and
Great Basin Management Co., Inc. does not take place. In the
event that the merger does not occur by certain dates (as
amended), the entire amount is due and payable within 30 days
together with interest at 11.75% per annum. The loan is secured
by a note and a security interest in all of Great Basin
Management Co., Inc.'s interest in all of the outstanding shares
of stock in Great Basin Exploration and Mining Co., Inc.
(3) INVENTORIES
Inventories are comprised of the following at October 31, 1995:
Concentrate inventory $ 275,000
Materials and supplies 185,000
--------
$ 460,000
========
(4) ACQUISITIONS
(a.) Acquisition of El Limon Mine
Effective August 24, 1995, the Company acquired directly and
indirectly, 95.7% of the issued and outstanding common shares of
Compania Minera Oronorte S.A. ("Oronorte"), a company
incorporated under the laws of Colombia.
Details of the consideration paid for the acquisition are
comprised as follows:
Interest in Minerales de Copan $1,000,000
Assumption of liabilities 1,000,000
Less: Forgiven indebtedness to
Greenstone Resources Ltd. (115,000)
----------
$1,885,000
=========
Details of the net assets acquired are as follows:
Value attributed to:
Working capital (including cash
of $185,000) $ 7,000
Property, plant and equipment 1,878,000
---------
$1,885,000
=========
Concurrent with the closing agreement dated October 20, 1995, the
Company entered into an agreement with Dual Resources Ltd.
("Dual"), whereby the Company purchased 2,800,000 shares of
Oronorte from Dual for cash consideration of $300,000, which
amount was paid by Greenstone to Dual on behalf of the Company.
Reference is made to Note 6 - Notes Payable.
As part of the agreement with Dual, an obligation of 213,712,000
Colombian pesos, or $225,000 was canceled. This obligation of
Oronorte arose during 1994 when Oronorte acquired a property
known as El Carmen from Dual in consideration for 2,800,000
shares of Oronorte and a promissory note in the amount of
213,712,000 Colombian pesos ($225,000) net of applicable
withholding taxes. the cancellation of the debt has been
displayed as a reduction of the carrying value of mineral
properties.
(b.) (Acquisition of Great Basin Management Co., Inc.
On August 28, 1995, the Company signed a letter of intent to
enter into a business combination with Great Basin Management
Company, Inc. ("GBM") GBM is a privately held minerals
exploration company based in Reno, Nevada. GBM owns Great Basin
Exploration and Mining Company, Inc. ("GBEM") which has several
mineral properties in Nevada's Battle Mountain - Eureka Trend, a
major gold producing district in central Nevada in addition to
mineral interests in Arizona and Canada. Under the terms of the
letter of intent, GBM and Fischer-Watt shall combine through the
merger of GBM with and into a newly formed, wholly-owned
subsidiary of Fischer-Watt Gold Company, Inc. GBM is actively
negotiating with prospective joint venture partners on several of
its properties and evaluating other mineral prospects. At the
closing, as to be defined in a definitive agreement, Fischer-Watt
will issue 4,125,660 shares of its common stock. The letter of
intent is subject to each party's due diligence and obtaining any
necessary approvals. Either party may terminate the letter of
intent if the definitive agreement has not been executed by
December 31. 1995 (as extended).
(5) PROPERTY AND EQUIPMENT
A summary of the cost basis of mineral properties, plant and
equipment and prospects as of October 31 and January 31, 1995, is
as follows:
October 31 January 31
---------- ----------
El Limon $1,705,000 $ -
Oatman (United Western), Arizona 10,000 136,000
Modoc, California 72,000 72,000
Minas de Oro, Honduras - 59,000
Tuscarora, Nevada 45,000 77,000
America Mine, California 18,000 16,000
La Victoria, Honduras 23,000 -
Other mineral interests
(each less than $40,000) - 27,000
--------- --------
$1,873,000 $ 387,000
========= ========
(6) NOTES PAYABLE
Notes payable, as at the dates indicated, are comprised of the
following:
October 31, January 31
1995 1995
---------- -----------
Greenstone Resources Ltd. $300,000 $ -
Kennecott Exploration Co. - 500,000
---------- ----------
$300,000 $500,000
========== ==========
(a) Greenstone Resources Ltd.
Pursuant to an agreement among Dual, Greenstone and the Company,
dated October 20, 1995, Greenstone effected a payment of $300,000
to Dual on behalf of the Company. Reference is made to Note 4 -
Acquisition of El Limon Mine. The note bears interest at the
rate of 10% per annum and is payable, in full, on June 20, 1996.
Payment of this note has been guaranteed by a shareholder of the
Company.
(b) Kennecott Loan
In March 1992, Kennecott loaned Fischer-Watt $500,000. Principal
and interest on this loan were repayable in monthly installments
of $100,000 beginning August 1, 1992. The loan bore interest at
the higher of 10% or prime plus 5% and was secured by the
Company's interest in the America Mine property. The Company was
in default as to payment of principal and interest on this loan
from August 1,1992 until May 16, 1995 when the note and
associated interest were canceled in conjunction with the sale of
the Company's mineral interest in the Minas de Oro, Honduras
property.
(7) GREENSTONE RESOURCES TRANSACTIONS
In March 1994, the Company accepted an offer from Greenstone to
acquire an option to purchase all of Fischer-Watt's interests in
the San Andres project in Honduras. As partial consideration for
the option, Greenstone loaned the Company some funds. Greenstone
exercised its option on October 31, 1994 by forgiving the loan
balance paying Fischer-Watt a further $56,000 and issuing it
$700,000 worth of Greenstone common stock, valued at the time of
exercise. Upon exercise of the option, Greenstone was assigned
Fischer-Watt's option to acquire 51% of Compania Minerales de
Copan, S.A. de C.V. from Milner Consolidated Silver Mines (25.5%)
and North American Palladium Resources (25.5%) as well as all of
Fischer-Watt's other rights and interest in the San Andres
project subject to the shares described below. Minerales de Copan
owns the San Andres project which produces gold from a small open
pit, heap leach operation within the project boundaries.
On August 4, 1994, the Company received the first instalment of a
loan from Greenstone Resources Canada Ltd. The loan was
negotiated as part of the San Andres option agreement. The loan
was to provide all of the funds to purchase up to nine percent of
the shares of Compania Minerales de Copan S.A. de C.V. ("Copan").
The loan was nonrecourse as to both principal and interest to the
Company and was to be repaid out of dividends, if any, from the
Copan shares. The shares were pledged to Greenstone as
collateral for the loan which was due on or before December 31,
1999. At October 31, 1995 this loan plus associated accrued
interest, totaling $115,000, were eliminated in conjuntion with
the sale of the Company's interest in the Copan shares.
On August 28, 1995, the Company agreed to convey all of these
shares and options to acquire additional shares as part of the
purchase price for the shares of Greenstone of Colombia. Under
the terms of the agreement which closed on October 20, 1995, the
nonrecourse debt and accrued interest associated with this debt
was forgiven.
(8) COMMITMENTS
Property Leases
The Company's property interests require minimum payments to be
made, or work commitments to be satisfied, to maintain ownership
of the property not in production. However, all of these
payments may be avoided by timely forfeiture of the related
property interest. If the joint venture partner, or the Company,
fails to meet these commitments, the Company could lose its
rights to explore, develop or mine the property. The table below
lists the various properties and the required financial
commitments.
PROPERTY COMMITMENTS
For the year ending October 31, 1996
Lease Work J.V. Net FWG
Property Payments Commit. Total Share Cost
- -------- -------- -------- -------- -------- --------
America $48,000 $104,000 $152,000 $152,000 $ -
La Victoria 25,000 50,000 75,000 - 75,000
Tuscarora - 2,000 2,000 2,000 -
Modoc 6,000 - 6,000 6,000 -
Oatman - - - - -
Other 17,000 187,000 204,000 179,000 25,000
------ -------- -------- -------- -------
Totals $96,000 $343,000 $439,000 $339,000 $100,000
====== ======= ======= ======= ========
(9) CONTINGENCIES
Future Financing and Realization
While Fischer-Watt was profitable in the latest fiscal year, it
had negative cash flow from operations in the latest fiscal year
and suffered losses from operations and negative cash flow from
operations in each of its prior years. The entire profit was
attributable to sales of mineral interests. The Company has not
yet established sustaining income or cash flow from operations.
It is currently funding its operations from proceeds of a private
placement of the Company's common stock and has previously funded
its operations from the sale of stock received as part of the
sale price of a mineral interest. The ability of the Company to
continue as a going concern is dependent upon establishing
successful mining operations or additional financing, or
disposition of some of the Company's assets. While the Company
has been successful in raising cash from these sources in the
past, there can be no assurance that its cash raising efforts
will succeed.
On October 20, 1995, the Company acquired the El Limon Mine in
northern Colombia, effective August 24, 1995. Reference is made
to Notes 4 and 6. Part of the consideration paid for the
acquisition is the assumption of $1,000,000 in liabilities,
settlement of an obligation to Dual aggregating 213,712,000
Colombian pesos ($225,000) and assumption of certain lease
obligations. The undiscounted value of unpaid and future lease
payments as at August 24, 1995 was approximately $400,000.
Colombian law regulates the movement of foreign currency into and
out of Colombia. Prior to the Company's assumption of day-to-day
management of the affairs of its newly acquired Colombian
operation, Greenstone had invested approximately $2,300,000 in
excess of the funds legally registered in Colombia as an
investment. The ability to repatriate this amount may be
impaired and the amount subject to certain penalties and
interest. The Company has undertaken to approach the appropriate
regulatory authorities to resolve this issue. The amount of such
penalties, if any, have not been determined.
The payment of $300,000 to Dual was made to acquire the shares of
Oronorte and the debt of Oronorte to Dual Resources Ltd. of
Colombia. As a consequence of Greenstone making the payment in
United States dollars to Dual, the parent company, in Canada,
rather than in Colombia in pesos, the debt is not considered
settled for purposes of Colombian law. The Company has not
determined the penalties and interest or income tax effect, if
any, as a consequence of the method of payment.
As at October 31, 1995, Greenstone Resources Ltd of Colombia
("GOC"), owed approximately $120,000 on account of unpaid 1993
income and other taxes. Further, the branch has a refund of
$140,000 due in respect of unsettled 1994 income and resource
taxes. The Colombian tax authorities do not allow the right to
offset the liability against the taxes recoverable amount. By
paying the 1993 tax liability, the Company would obtain a refund
of 1994 taxes and cause recision of approximately $210,000 of
penalties and interest accrued in respect of unpaid taxes. The
Company has not determined the effect, if any, of paying these
taxes to obtain recision of penalties and interest on behalf of
Greenstone.
Subject to final assessment of liabilities and Greenstone's right
to offset certain assets against liabilities, the Company has
determined the excess of liabilities, as defined by the Closing
Agreement dated October 20, 1995, to be $411,000. This amount
may be reduced by the amount of tax penalties and interest
rescinded or increased by assessed penalties and interest for
perceived violations of Colombian foreign currency regulations.
Management is unable to comment on Greenstone' ability or
willingness to fund its share of excess liabilities in accordance
with the terms of the Closing Agreement dated October 20, 1995.
(10) SUBSEQUENT EVENTS
(a) Bank Debt
Subsequent to October 31, 1995, the Company settled $140,000 of
its Colombian unit's bank debt by selling its office building in
Medellin to a creditor bank.
(b) Leases
Further, the Company has entered into agreements to deliver two
leased drill rigs to a third party and settle the outstanding
lease obligations in respect of the two other drills. This will
reduce the future aggregate lease payments by approximately
$83,000.
(c) Financing
Further, the Company completed a private placement that was
started in October 1995. Approximately $300,000 was received for
the sale of 2,266,700 units. The securities sold in the private
placement were units, priced at $.30 per unit, each consisting of
two shares of common stock and a warrant to purchase one share of
common stock at an exercise price of $.30 through August 31,
1997. These securities were not registered under the Securities
Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
On October 31, 1994 Greenstone Resources Ltd. (Greenstone)
exercised its option to purchase the company's rights and
interests in the San Andres gold project located in Honduras.
Under the terms of this agreement, Greenstone paid $105,000 in
cash for this option and forgave 95% of the funds loaned to the
Company during merger negotiations which were terminated in
February 1994. In exercising their option, Greenstone paid
consideration consisting of forgiveness of the remaining 5% of
the merger loan, $55,000 in cash and 427,300 shares of
Greenstone. At the time of issue, these shares had a value of
$700,000. Pursuant to certain terms contained in the agreement,
Greenstone agreed to advance the Company the funds required to
acquire approximately 9% of the issued and outstanding shares of
the San Andres project which was held numerous shareholders. As
a result of the San Andres transaction, for the first time in
several years, the Company had enough cash on hand to schedule
repayment of creditors and begin searching for mineral operations
opportunities.
In order to conserve the limited cash, the Reno office was closed
in December of 1994 and all administrative operations were
consolidated in Coeur d'Alene, Idaho.
In May 1995, the Company closed the sale of its 20% interest in
the Minas de Oro gold project in Honduras to Cerenex Financial A.
V., is a subsidiary of Tombstone Explorations Co. Ltd. of
Vancouver, B. C.
Under the terms of this sale, the Company received consideration
consisting of $150,000 in cash and cancellation of its $500,000
note plus accrued interest to Kennecott Exploration Company. In
a separate transaction, Kennecott also sold its 80% interest in
the Minas de Oro property. With the receipt of this cash and
cancellation of the debt, the Company dramatically improved its
financial condition.
Acquisition of Colombian Unit
In August 1995, the Company entered into an agreement with
Greenstone Resources Ltd. to acquire the El Limon Mine which is
an underground gold mine in northern Colombia, and the rights to
several exploration concessions. This mine produced gold for the
past six years.
The consideration paid to acquire the direct and indirect
ownership of the El Limon Mine consisted of:
1. The Company's approximate 9% interest in the San Andres
project in Honduras,
2. Assumption of a maximum of $1,000,000 in debt and
accounts payable owed by GOC and Oronorte, and
3. Assumption of $375,000 in equipment lease payments.
In addition to the interest in the El Limon received from
Greenstone, Greenstone also canceled the remaining $115,000 debt
owed to them by the Company.
The Company assumed operational control of Oronorte on August
24, 1995 and immediately took the following steps:
1. Entered into negotiations with all creditors and
suppliers to schedule payments of overdue debt.
2. Settled certain lease obligations subsequent to the
period end, with the consequence that future cash payments for
equipment not in use have been substantially reduced. The leased
equipment which, at August 24, 1995, required payments up to
$375,000 consisted of:
a. Three Longyear Model 44 surface diamond drills,
b. One Longyear Model 38 surface diamond drill,
c. One cyanide leaching plant designed to leach
flotation concentrates and produce gold dore on site.
The drills, with the exception of one Model 44 were put up for
sale and as of December 15, 1995, two of them have been sold.
The funds received have been applied against future payment
obligations to the leasing company.
A study of the cyanide leaching plant feasibility had been made
by Greenstone and indicated that its operation was not
advantageous. This plant has been put up for sale and as of
December 15th, the Company is negotiating with a prospective
buyer.
3. Began efforts to close the books of GOC and Oronorte as
at August 24, 1995. This work has been substantially completed
and Greenstone has been notified that the bank debt and accounts
payable amount will exceed the Company's obligation to pay
certain defined liabilities by $411,000. Greenstone was also
notified of the existence of certain contingent liabilities.
Reference is made to Note 9 to Financial Statements.
4. Began efforts to raise initial funds to support
operations at El Limon while studies were made to determine
changes and additions which should be made in the overall
operations of Oronorte. This resulted in the Company raising a
net amount of approximately $820,000 through completion of a
private placement. The securities sold were units priced at $.30
per unit, each unit consisting of two shares of common stock and
a warrant to purchase one additional share at an exercise price
of $.30 through August 31, 1997.
Operations
Production from the El Limon Mine comes from a single vein which
on average dips at 42 degrees and has an average width of 1.6
feet. The average grade of this vein is 1.2 ounces of gold per
ton. This is high grade ore; however, the geometry of the vein
makes it necessary to mine to a width of 4.0 feet which dilutes
the grade of the ore by 60%. An initial step has been taken to
alleviate this dilution by setting up a program of hand sorting
the combination of ore and waste after it is blasted and before
it is hoisted to the surface. The waste removed in the hand
sorting is put back into mined out areas underground.
The vein is a white, opaque quartz which normally breaks into
pieces under two inches in diameter when blasted and the waste
rock which is a dark-colored granite or gneiss breaks into much
larger pieces. At the present time, the blasted ore and waste is
very dirty and the visual separation based on the color
differential is not possible. Hand separation must be made on
fragmentation size alone. Despite this limitation, however, a
fifteen percent increase in the ore grade being hoisted and sent
to the processing plant has been recorded in October.
The next step in this grade control program will be to wash the
blasted ore and waste so that a separation by color can be made.
However, washing will send a large volume of very fine material
containing a large percentage of gold to the bottom of the mine
shaft. At the present time, the mine does not have the ability
to recover this material and bring it to the surface. A
preliminary engineering study indicates that a slurry pumping
system can accomplish this task at an estimated cost of $70,000.
The processing plant at El Limon is capable of treating 100 tons
per day. As the efficiency of the grade control program is
increased, less waste will be fed to the plant, thus making room
for more ore to be processed on a daily basis. This additional
ore can be obtained from expansion of operations at El Limon
and/or development of other properties within reasonable ore
delivery range of the present processing plant.
Mine Development
Expansion of the El Limon will be difficult because it is
serviced through a small interior shaft, which in the past has
only been advanced one level at a time as reserves were depleted
on the previous level. At the present time, the majority of
production is coming from Level 5, approximately 600 feet below
the surface. Sinking the shaft below each working level is a
slow process as the waste from the shaft advance competes for
hoisting time with the ore production. Skip capacity in this
shaft is only one ton.
Development of two other properties, under control of Oronorte,
has begun in order to augment production from the El Limon. The
first of these, the La Aurora is approximately six kilometers
from the El Limon processing facility. At this property, an
interior shaft has been extended 130 feet down on a vein and work
is in progress drifting horizontally along this strong structure
to develop ore reserves. To date approximately 200 feet of the
vein has been exposed. Some ore grade material has been
encountered but no ore reserves have been developed. While these
results are disappointing, it is the nature of the veins in this
district to run in and out of ore as they are mined.
The second property, the Juan Vara is approximately two
kilometers from the El Limon processing plant. A report on this
property has been written by a professor of geology of the
College of Mines in Medellin, Colombia. In this report a
discussion of previous production describes a vein similar in
grade and structure to the El Limon. During a recent visit to
the Juan Vara by the geologic staff of El Limon, old collapsed
workings were found and samples taken from the vein exposed in a
stream bed assayed 0.21 ounces of gold per ton. A diamond drill
is being moved on to the property now and several holes will be
drilled to indicate the attitude of the vein below the old
workings.
The geometry of both the La Aurora and the Juan Vara vein in
relation to the surface topography will make it very easy to
develop them (if warranted) with rubber tired mining equipment
and a rehabilitated one cubic yard LHD (Load Haul Dump) has been
purchased in the United States and will be shipped along with
spare parts on the 28th of December. Arrangements have also been
made to send a mechanic/operator to the El Limon to train
employees in the operation and maintenance of this equipment.
As noted earlier, Fischer-Watt assumed operating control of the
El Limon Mine on August 24, 1995 and began to make modifications
to operational practices. In October, the mine produced 1,032
ounces of gold compared to an average monthly production rate of
611 ounces for the previous nine months. Since August 24, 1995,
the mine has produced a total of 1,783 ounces of gold to the
account of the Company. In November, 1,025 ounces of gold were
produced. An equipment breakdown in the processing plant in
early December along with the Christmas holiday will probably
hold December production to approximately 900 ounces of gold.
The improvement in gold production for October and November was
in part due to the improved grade of ore in some working areas of
the mine and the first phase of the grade control program which
has been put into play. It is anticipated that the improved
grade from existing working areas will continue through March of
1996. During that time, new development along the vein will
continue on level 5 of the mine. In addition to this work, the
shaft has been extended approximately 150 feet below Level 5 and
development of Level 6 will begin during January 1996. In order
to proceed with this development, additional track mounted
equipment must be purchased. In order to save money, this
equipment will be rehabilitated, used equipment which is not
available in Colombia. A search has begun in the United States
through reputable used equipment dealers. It is estimated that
$300,000 will be required to purchase this equipment.
Several weeks after negotiating the purchase of the El Limon Mine
with Greenstone, Fischer-Watt finalized the purchase of another
property in the area with the assistance of Greenstone.
In 1994 Greenstone attempted to sell 40% of Oronorte on both the
Bogota and Medellin stock exchanges in order to raise money for
expanding Oronorte production from 10,000 ounces of gold to
30,000 ounces. The Carmen was the property which was to be used
for this expansion. Behre Dolbear & Company, Inc., performed an
evaluation study for Greenstone on this plan and pronounced it
economically feasible. Behre Dolbear study carries reserves on
the Carmen at 194,073 ounces. Fischer-Watt finalized the
purchase of this property for $300,000 with a note payable June
20, 1996. Payment of this note has been guaranteed by a
shareholder of the Company. Reference is made to Note 6 to
Financial Statements.
A large Colombian gold dredging company, Mineros de Antioquia has
asked the Company if it would be interested in a joint venture on
the Carmen property. Management has written them a proposal
whereby Mineros may earn a forty percent working interest in the
property by spending exploration funds sufficient to bring it to
the bankable feasibility stage. At that point, both companies
would make proportionate contributions to continue the
development of the property. Initial reaction to this proposal
has been positive and two of the Company's management team will
travel to Medellin on January 10, 1996 to continue negotiations.
Merger
The Company has signed a letter of intent in principle to acquire
Great Basin Management Co., Inc. and its wholly-owned, privately-held
subsidiary Great Basin Exploration and Mining Co., Inc., of Reno, Nevada.
Great Basin and its wholly-owned subsidiary will merge into a
newly-formed, wholly-owned subsidiary of the Company. The
Company will issue approximately 4,126,000 shares of its common
stock as consideration for the transaction.
Great Basin has several key properties in Nevada's Battle
Mountain-Eureka Trend and has recently farmed out one of these
properties to Digger Resources, a Canadian company, and another
property to Cominco Ltd., a large Canadian mining company. In
both instances, Great Basin retains a 20% carried interest in the
property until feasibility.
Financial Condition and Results of Operations
The following is a discussion of the Company's current financial
condition as well as its operations for the three months and nine
months ended October 31, 1995 (fiscal 1996) and October 31, 1994
(fiscal 1995). This discussion should be read in conjunction
with the Financial Statements in Item 1 of this report as well as
the Financial Statements in Form 10-K for the fiscal year ended
January 31, 1995 on file with the Securities and Exchange
Commission, as the discussion set forth below is qualified in its
entirety by reference thereto.
LIQUIDITY AND FINANCIAL POSITION
As of October 31, 1995, the Company had $494,000 in cash and
a consolidated working capital deficiency of $6,000.
During October and November the Company completed a private
placement which raised approximately $820,000 to finance the
expansion and operation of Fischer-Watt's El Limon Mine in
Colombia. The securities sold in the private placement were
units, priced at $.30 per unit, each consisting of two shares of
common stock and a warrant to purchase one share of common stock
at an exercise price of $.30 through August 31, 1997. These
securities were not registered under the Securities Act of 1933
and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements.
On August 28, 1995, the Company signed an agreement to purchase
100% of Greenstone Resources Ltd.'s wholly-owned Colombian
branch, Greenstone of Colombia ("GOC"). Greenstone of Colombia
owns 94.9% of Compania Minera Oronorte S. A. ("Oronorte"). Under
the terms of the agreement which closed on October 20, 1995,
Fischer-Watt conveyed all rights and interests it held in
Compania Minerales de Copan S.A. de C.V. ("Copan") to Greenstone
Resources Ltd. In return, Fischer-Watt acquired all ownership
rights of GOC which include GOC's interest in Oronorte which owns
an operating gold mine and related cash and receivables and
saleable gold in inventory of not less than $450,000, subject to
certain liabilities not exceeding $1,000,000 and equipment lease
obligations not exceeding $375,000. Fischer-Watt has taken
operating control of GOC and its subsidiaries and their
respective operations.
The El Limon is an underground mine in the Department of
Antioquia in northern Colombia. It produces gold concentrates
that are exported to Japan for smelting. The Company assumed
operation of the mine on August 24, 1995 and has produced 1,783
ounces of gold and 1,697 ounces of silver through October 31,
1995. During this initial operating period, the Company has been
conducting engineering studies to explore the feasibility of
expanding production, improving operating efficiency and reducing
costs. The Company is searching for funds to subsidize
operations until planned changes in operations can take effect.
At December 1, 1995, the Company had enough cash to fund the next
three months of operations.
On August 28, 1995, the Company signed a letter of intent to
enter into a business combination with Great Basin Management
Company, Inc. ("GBM") GBM is a privately held minerals
exploration company based in Reno, Nevada. GBM owns Great Basin
Exploration and Mining Company, Inc. ("GBEM") which has several
mineral properties in Nevada's Battle Mountain - Eureka Trend, a
major gold producing district in central Nevada in addition to
mineral interests in Arizona and Canada. Under the terms of the
letter of intent, GBM and Fischer-Watt shall combine through the
merger of GBM with and into a newly formed, wholly-owned
subsidiary of Fischer-Watt Gold Company, Inc. GBM is actively
negotiating with prospective joint venture partners on several of
its properties and evaluating other mineral prospects. At the
closing, as to be defined in a definitive agreement, Fischer-Watt
will issue 4,125,660 shares of its common stock. The letter of
intent is subject to each party's due diligence and obtaining any
necessary approvals. Either party may terminate the letter of
intent if the definitive agreement has not been executed by
December 31. 1995 (as extended).
On August 28, 1995, the Company agreed to loan GBM up to $108,000
for specified purposes in connection with maintaining certain
mineral property positions. There are no plans to loan GBM any
additional funds. As of December 1, 1995, all of the loan had
been funded. The loan is secured by all of GBM's interest to
all of the outstanding shares of GBEM. There is no requirement
to repay the loan or any interest thereon unless the proposed
merger between the Company and GBM has not occurred by December
31, 1995, in which event the entire amount of the loan and
accrued interest shall be due and payable on February 1, 1996 (as
extended).
In March 1992, Kennecott loaned Fischer-Watt $500,000. Principal
and interest on this loan were repayable in monthly installments
of $100,000 beginning August 1, 1992. The loan bore interest at
the higher of 10% or prime plus 5% and was secured by the
Company's interest in the America Mine property. The Company was
in default as to payment of principal and interest on this loan
from August 1, 1992 until May 16, 1995 when the note and
associated interest were canceled in conjunction with the sale of
the Company's mineral interest in the Minas de Oro, Honduras
property. Reference is made to Note 6 to Financial Statements.)
Short-Term Liquidity
While Fischer-Watt was profitable in the latest fiscal year, it
had negative cash flow from operations in the latest fiscal year
and suffered losses from operations and negative cash flow from
operations in each of its prior years. The most of the profit
recorded in the current nine months is attributable to sales of
mineral interests. The Company has not yet established sustaining
income or cash flow from its Colombian operation. It is currently
funding its operations from proceeds of a private placement of
the Company's common stock and has previously funded its
operations from the sale of saleable securities received as
consideration for the sale price of a mineral interest. The
ability of the Company to continue as a going concern is
dependent upon establishing successful mining operations or
additional financing, or disposition of some of the Company's
assets. While the Company has been successful in raising cash
from these sources in the past, there can be no assurance that
its cash raising efforts will succeed.
Net cash utilized in operating activities during the first nine
months of fiscal 1996 was $176,000 compared to $319,000 used
during the first nine months of the prior year. The increase in
cash is derived from three principal sources during the current
period. These sources are proceeds from the sale of Greenstone
common shares, disposal of mineral interests and the issuance of
3,800,800 shares in the capital of the company.
For the period August 24, 1995 through October 31, 1995, the
Company injected $498,000 into the Colombian unit to reduce
payables, bank debt and to ensure adequate operating supplies at
the mine. Subsequent to October 31, 1995, the Company sold its
Medellin office building to settle certain bank debt aggregating
approximately $140,000. In addition the Company has settled
certain lease obligations with the consequence that future cash
payments for equipment not in use have been substantially
reduced. The leased equipment which required payments up to
$375,000 consisted of four surface diamond drill rigs and a
cyanide leaching plant. The drills, with the exception of one
were put up for sale and as of December 15, 1995, two of them
have been sold. The funds received have been applied against
future payment obligations to the leasing company.
A study of the cyanide leaching plant feasibility had been made
by Greenstone and indicated that its operation was not
advantageous. This plant has been put up for sale and as of
December 15,1995 the Company is negotiating with a prospective
buyer.
Long-Term Liquidity
The Company plans to continue its search for long-term debt or
equity capital to fund its operating and exploration activities
until these activities can be funded from production of mineral
resources. Reference should also be made to comments under the
heading short-term liquidity.
RESULTS OF OPERATIONS
Three Months Ended October 31, 1995 Compared with Three Months
Ended October 31, 1994
El Limon Mine
The El Limon Mine is a small underground deposit with an expected
life of approximately five years. Development and mining
operations were begun in November 1990. During the three months
ended October 31, 1995, 1367 ounces of gold were sold at an
average price of $383 per ounce. The cost per ounce of gold
produced was $242 per ounce. The Company's income from operation
of the El Limon Mine was $164,000. These results are not
indicative of what might be expected for a full year as the
Company may increase or decrease the amount of exploration and
development expense to ensure more work areas in the mine that
would expand production.
Results for the current period and comparable period ended
October 31, 1994 includes gains on the disposal of mineral
interests and sales of shares of Greenstone acquired during the
prior year. At October 31, 1995, all of the Greenstone shares
had been sold and the Company presently has no plans to sell
other mineral prospects.
General corporate costs will continue to increase as the activity
level of the Company expands in response to increased legal,
accounting and travel costs associated with administration of an
active, growing public company.
Copan Share Purchase and Sale
On August 4, 1994, the Company received the first instalment of a
loan from Greenstone Resources Canada Ltd. The loan was
negotiated for in the San Andres option agreement. The loan is
to provide all of the funds to purchase up to nine percent of the
shares of Compania Minerales de Copan S.A. de C.V.(Copan). The
loan was non-recourse as to both principal and interest to the
Company and was to be repaid out of dividends, if any, from the
Copan shares. The shares were pledged to Greenstone as
collateral for the loan which was due on or before December 31,
1999.
On August 28, 1995, the Company signed an agreement to convey all
of the stock and options to acquire stock to Greenstone. Under
the terms of the agreement, which was closed on October 20, 1995,
the nonrecourse debt and accrued interest associated with this
debt was Reference is made to Note to Financial Statements.
Other items
Abandonments in the quarter ended October 31, 1995 were $6,000
compared with none in the second quarter of fiscal 1995. The El
Cerrito, a Minera Montoro property in Mexico was abandoned after
Montoro's joint venture partner's exploratory drilling program
did not produce encouraging results, and consequently, the
property was returned to Montoro.
Interest expense increased to $119,000 in the third quarter of
fiscal 1996 from $24,000 in the third quarter of fiscal 1995.
This increase is due primarily to the inclusion of results of the
Colombian unit which experiences high interest rates on
outstanding debts and unpaid taxes. Interest expense in future
periods will be substantially less as the Company completes the
reduction in debt. Interest expense for the third quarter ended
October 31, 1995 includes interest and penalties, in respect of
unpaid taxes, aggregating approximately $60,000. There is a
resolution before the Colombian Congress that would have the
effect, if enacted, of rescinding penalties and interest
aggregating approximately $210,000 accrued on the Colombian
unit's books at October 31, 1995.
Nine Months Ended October 31, 1995 Compared with Nine Months
ended October 31, 1994
Sale of Minas de Oro mineral interest
On February 28, 1995, Tombstone Explorations Co. Ltd.
("Tombstone"), a Vancouver-based mining and exploration company
entered into a letter agreement with Fischer-Watt to purchase
Fischer-Watt's interest in the Minas de Oro property in Honduras.
Minas de Oro was joint ventured with Kennecott Exploration
Company ("Kennecott") who had an 80 percent working interest.
Tombstone agreed to buy the Kennecott interest and to acquire
Fischer-Watt's $500,000 promissory note to Kennecott, as well as
Fischer-Watt's interest in the property. Tombstone paid
Fischer-Watt $150,000 in cash and delivered for cancellation,
Fischer-Watt's $500,000 promissory note to Kennecott plus all
accrued interest. The transaction closed on May 16, 1995 with the
sale of the Minas de Oro interests to Cerenex Financial A. V. V.,
a subsidiary of Tombstone. The sale resulted in a gain of
$641,000. Reference is made to Note 6 to Financial Statements.
Sale of Option on San Andres
In the nine months ended October 31, 1994, a gain of $109,000 was
realized from the sale of an option to purchase Fischer-Watt's
interest in the San Andres property.
Other items
Abandonments decreased from $197,000 in the first nine months of
fiscal 1995 to $183,000 in the first nine months of fiscal 1996.
The Oatman property in Arizona was partially abandoned after an
independent evaluation indicated that it was unlikely that its
cost would be fully recovered based on the current mineral lease
on the property. The $125,000 writedown reduced its net cost
basis to $10,000. The Tuscarora mineral interest in Nevada was
partially abandoned in the amount of $32,000 based on the results
of the same independent evaluation leaving the remaining basis at
$45,000. The Rio Tinto property in Honduras was abandoned when an
exploration program conducted at the end of fiscal 1995 and the
beginning of fiscal 1996 could not confirm mineral values
discovered under earlier exploration programs. Rio Tinto had a
cost basis of $22,000. In the nine months ended October 31,
1994, Sukut, Costa Rica, having a cost basis of $197,000 was the
only property abandoned.
Part II - Other Information
Item 3. Defaults Upon Senior Securities
In March 1992, Kennecott Exploration Company loaned Fischer-Watt
$500,000. Principle and interest on this loan was repayable in
monthly installments of $100,000 beginning August 1, 1992. The
loan bore interest at the higher of 10% or prime plus 5% and was
secured by the Company's interest in the America Mine property.
On May 16, 1995 the note and associated interest were canceled in
conjunction with the sale of the Company's mineral interest in
the Minas de Oro, Honduras property thus curing the default.
(See above and Note 4 to Financial Statements.)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit Item 601
No. Category Exhibit
1 2 Letter of Intent dated August 28, 1995 whereby Fischer-
Watt Gold Company, Inc., and Great Basin Management
Company, Inc., agree to form a business combination.
2 2 August 28, 1995 agreement between Fischer-Watt Gold
Company, Inc., and Greenstone Resources Ltd., whereby
Fischer-Watt agrees to purchase 100% of Greenstone
Resources Ltd.'s wholly-owned Colombian branch,
Greenstone of Colombia ("GOC").
3 10 Letter Agreement between BMR Gold Corporation and
Fischer-Watt Gold Company, Inc., regarding the America
Mine Property effective September 20, 1989, and filed
as Exhibit 19.1 to Form 10-Q filed November 20, 1989
and incorporated herein by reference.
4 10 Fischer-Watt Gold Company, Inc., non-qualified stock
option plan of May 1987 and filed as Exhibit 36.10 to
Form 10-K filed April 23, 1991 and incorporated herein
by reference.
5 10 Employment Agreement effective September 1, 1993
between Fischer-Watt Gold Company, Inc., and George
Beattie whereby Fischer-Watt agrees to employ Mr.
Beattie for a two-year period as Chief Executive
Officer and filed as Exhibit 20.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
6 10 Loan Agreement dated November 12, 1993 between Fischer-
Watt Gold Company, Inc., and Greenstone Resources Ltd.,
whereby Greenstone agreed to lend Fischer-Watt working
capital during the prospective merger's due diligence
period and filed as Exhibit 21.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
7 10 Letter from Greenstone Resources Ltd., dated
February 1,1994 to Fischer-Watt Gold Company, Inc.,
whereby Greenstone advised that the merger agreement
dated November 2, 1993 between Greenstone and
Fischer-Watt Gold is terminated as of that date and
filed as Exhibit 22.10 to Form 10-K filed May 11, 1994
and incorporated herein by reference.
8 10 Option Agreement between Greenstone Resources Ltd., and
Fischer-Watt Gold Company, Inc., dated March 24, 1994,
whereby Greenstone has the right to purchase all of
Fischer-Watt's interest in the San Andres property in
Honduras and filed as Exhibit 23.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
9 10 Exploration Agreement between Fischer-Watt Gold
Company, Inc.'s 50% owned Mexican company, Minera
Montoro S.A. de C.V., and Gatro South America Holdings
Limited (GSA) dated March 25, 1994, whereby GSA funds
a Generative Exploration program in Baja California,
Mexico and filed as Exhibit 24.10 to Form 10-K filed
May 11, 1994 and incorporated herein by reference.
10 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and W. Perry Durning, a former employee, whereby terms
for payment of unpaid wages and expenses were accepted
by the parties and filed as Exhibit 25.10 to Form 10-K
filed May 11, 1994 and incorporated herein by
reference.
11 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Joel Heath, a former employee, whereby terms for
payment of unpaid wages and expenses were accepted by
the parties and filed as Exhibit 26.10 to Form 10-K
filed May 11, 1994 and incorporated herein by
reference.
12 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Robert Gordon, a former employee, whereby terms for
payment of unpaid wages and expenses were accepted by
the parties and filed as Exhibit 27.10 to Form 10-K
filed May 11, 1994 and incorporated herein by
reference.
13 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Frank L. Hillemeyer, a former employee, whereby
terms for payment of unpaid wages and expenses were
accepted by the parties and filed as Exhibit 28.10 to
Form 10-K filed May 11, 1994 and incorporated herein by
reference.
14 10 Compromise Wage and Expense Settlement Agreement dated
March 22, 1994 between Fischer-Watt Gold Company, Inc.,
and Michael D. Johnson, a former employee, whereby
terms for payment of unpaid wages and expenses were
accepted by the parties and filed as Exhibit 29.10 to
Form 10-Q filed June 14, 1994 and incorporated herein
by reference.
15 10 Agreement to Assign Leases dated July 7, 1994 between
Fischer-Watt Gold Company, Inc., and Kennecott
Exploration Company whereby Fischer-Watt agrees to
assign its interests in the Modoc property located in
Imperial County, California to Kennecott, reserving a
Net Smelter Return royalty. This agreement was filed
as Exhibit 22.10 to Form 10-Q filed September 13, 1994
and incorporated herein by reference.
16 10 Letter agreement between Fischer-Watt Gold Company,
Inc., and La Cuesta International (LCI) dated August
11, 1994 whereby LCI agrees to lease the Oatman
property located in Mohave County, Arizona. This
agreement was filed as Exhibit 23.10 to Form 10-Q filed
September 13, 1994 and incorporated herein by
reference.
17 10 Stock Pledge Agreement between Fischer-Watt Gold
Company, Inc., and Greenstone Resources Canada Ltd.,
dated July 31, 1994 whereby Fischer-Watt grants a
security interest in shares of Compania Minerales de
Copan S.A. de C.V., acquired under Stock Loans, to
Greenstone. This agreement was filed as Exhibit 24.10
to Form 10-Q filed September 13, 1994 and incorporated
herein by reference.
18 10 Option Agreement - Lock-up Agreement between Fischer-
Watt Gold Company, Inc., and Greenstone Resources Ltd.,
dated October 17, 1994 whereby the San Andres option
agreement was amended to provide for an early advance
of $50,000 as partial payment of the option in exchange
for restrictions on the disposition of Greenstone
shares. This agreement was filed as Exhibit 22.10 to
Form 10-Q filed December 14, 1994 and incorporated
herein by reference.
19 10 English translation of an Exploration Agreement between
Fischer-Watt's Mexican subsidiary, Minera Montoro, S.A.
de C.V. and Minera Cuicuilco, S.A. de C.V. dated
October 18, 1994 whereby Minera Cuicuilco is granted
the rights to explore the Cerrito property in Baja
California, Mexico and was filed as Exhibit 23.10 to
Form 10-Q filed December 14, 1994 and incorporated
herein by reference.
20 10 Acquisition agreement dated November 10, 1994 among
Greenstone Resources Canada Ltd., Greenstone Resources
Ltd., and Fischer-Watt Gold Company, Inc., whereby the
parties finalize the Option Agreement of March 24, 1994
to purchase the San Andres property in Honduras and
modify the Lock-Up Agreement dated October 17, 1994.
This agreement was filed as Exhibit 29.10 to Form 10-K
filed May 15, 1995 and incorporated herein by
reference.
21 10 Letter agreement dated February 28, 1995 between
Tombstone Explorations Co. Ltd., and Fischer-Watt Gold
Company, Inc., whereby Tombstone agrees to purchase all
of Fischer-Watt's rights to the Minas de Oro property
in Honduras. This agreement was filed as Exhibit
30.10 to Form 10-K filed May 15, 1995 and incorporated
herein by reference.
22 10 Letter agreement dated April 13, 1995 between Begeyge
Minera Limitada and Fischer-Watt Gold Company, Inc.,
whereby Fischer-Watt will acquire rights to the
La Victoria, Honduras property. This agreement was
filed as Exhibit 31.10 to Form 10-K filed May 15, 1995
and incorporated herein by reference.
23 10 Option whereby Fischer-Watt Gold Company, Inc., grants
Gerald D. Helgeson an option to purchase 100,000 shares
of Fischer-Watt restricted common stock. This option
was filed as Exhibit 32.10 to Form 10-K filed May 15,
1995 and incorporated herein by reference.
24 10 Option whereby Fischer-Watt Gold Company, Inc., grants
Larry J. Buchanan an option to purchase 100,000 shares
of Fischer-Watt restricted common stock. This option
was filed as Exhibit 33.10 to Form 10-K filed May 15,
1995 and incorporated herein by reference.
25 10 Amendment dated April 20, 1995 to Agreement to Assign
Leases dated July 7, 1994 between Fischer-Watt Gold
Company, Inc., and Kennecott Exploration Company
whereby Fischer-Watt agrees to assign its interests
in the Modoc property located in Imperial County,
California to Kennecott and filed as Exhibit 28.10 to
Form 10-QSB filed June 14, 1995 and incorporated herein
by reference.
26 10 Asset Purchase Agreement dated May 16, 1995 between
Fischer-Watt Gold Company, Inc., and Cerenex Financial
A. V. V., whereby the February 28, 1995 sale of Minas
de Oro is closed and filed as Exhibit 29.10 to Form
10-QSB filed June 14, 1995 and incorporated herein by
reference.
27 10 Option effective June 1, 1995, replacing an option
filed as Exhibit 26.10 to Form 10-QSB filed June 14,
1995, whereby Fischer-Watt Gold Company, Inc., grants
Gerald D.Helgeson an option to purchase 200,000 shares
of Fischer-Watt restricted common stock and filed as
Exhibit 31.10 to Form 10-QSB filed September 15, 1995
and incorporated herein by reference.
28 10 Option effective June 1, 1995, replacing an option
filed as Exhibit 27.10 to Form 10-QSB filed June 14,
1995, whereby Fischer-Watt Gold Company, Inc., grants
Larry J. Buchanan an option to purchase 100,000 shares
of Fischer-Watt restricted common stock and filed as
Exhibit 32.10 to Form 10-QSB filed September 15, 1995
and incorporated herein by reference.
29 10 Option effective June 1, 1995 whereby Fischer-Watt
Gold Company, Inc., grants Anthony P. Taylor an option
to purchase 100,000 shares of Fischer-Watt restricted
common stock and filed as Exhibit 33.10 to Form 10-QSB
filed September 15, 1995 and incorporated herein by
reference.
30 10 Option effective June 1, 1995 whereby Fischer-Watt
Gold Company, Inc., grants Kelly Boatright an option
to purchase 25,000 shares of Fischer-Watt restricted
common stock and filed as Exhibit 34.10 to Form 10-QSB
filed September 15, 1995 and incorporated herein by
reference.
31 10 Option effective June 1, 1995 whereby Fischer-Watt Gold
Company, Inc., grants Donald N. Lawrence III an option
to purchase 100,000 shares of Fischer-Watt restricted
common stock and filed as Exhibit 35.10 to Form 10-QSB
filed September 15, 1995 and incorporated herein by
reference.
32 10 Loan agreement dated August 28, 1995, between Fischer-
Watt Gold Company, Inc., and Great Basin Management
Company, Inc., whereby Fischer-Watt agrees to loan
Great Basin Management Company, Inc., up to $108,000
and filed as Exhibit 36.10 to Form 10-QSB filed
September 15, 1995 and incorporated herein by
reference.
33 10 Amendment dated October 31, 1995 to Loan agreement
dated August 28,1995, between Fischer-Watt Gold
Company, Inc., and Great Basin Management Company,
Inc., whereby Fischer-Watt changes the dates of the
loan to Great Basin Management Company, Inc.
34 10 Extension of Time For Payment of Secured Promissory
Note dated October 31, 1995 to the Loan agreement dated
August 28, 1995, between Fischer-Watt Gold Company,
Inc., and Great Basin Management Company, Inc., whereby
Fischer-Watt agrees to extend the time for payment of
the Secured Promissory Note.
35 10 Second Amendment dated November 30, 1995 to Loan
agreement dated August 28,1995, between Fischer-Watt
Gold Company, Inc., and Great Basin Management
Company,Inc., whereby Fischer-Watt changes the dates
of the loan to Great Basin Management Company, Inc.
36 10 Second Extension of Time For Payment of Secured
Promissory Note dated October 31, 1995 to the Loan
agreement dated August 28, 1995, between Fischer-Watt
Gold Company, Inc., and Great Basin Management Company,
Inc., whereby Fischer-Watt agrees to extend the time
for payment of the Secured Promissory Note.
37 10 Promissory Note dated October 20, 1995 whereby
Greenstone Resources of Colombia Ltd., a wholly owned
Bermuda subsidiary of Fischer-Watt Gold Company, Inc.,
promises to pay $300,000 to Greenstone Resources Ltd.
38 11 Statement regarding per share earnings for the
quarterly period ended July 31, 1995 and filed as
Exhibit 36.10 to Form 10-QSB filed September 15, 1995
and incorporated herein by reference.
39 11 Statement regarding per share earnings for the
quarterly period ended October 31, 1995.
40 27 Financial Data Schedule for the quarterly period ended
April 30, 1995 and filed as Exhibit 30.10 to Form
10-QSB filed June 14, 1995 and incorporated herein by
reference.
41 27 Financial Data Schedule for the six month period ended
July 31,1995 and filed as Exhibit 39.27 to Form 10-QSB
filed September 15, 1995 and incorporated herein by
reference.
42 27 Financial Data Schedule for the nine month period ended
October 31, 1995.
43 99 Promissory Note from Fischer-Watt Gold Company, Inc.
to Kennecott Exploration Company in the amount of
$500,000 dated March 25, 1992 and filed as Exhibit
44.28 to Form 10-K filed April 22, 1993 and
incorporated herein by reference.
44 99 Minutes of Special Meeting of Board of Directors of
Fischer-Watt Gold Company, Inc., dated October 19,
1994, whereby George Beattie's employment contract
dated September 1, 1993 is extended to September 1,
1997. These minutes were filed as Exhibit 28.99 to
Form 10-K filed May 15, 1995 and incorporated herein
by reference.
(b) Reports on Form 8-K
1. The Registrant filed a Current Report on Form 8-K
on November 3, 1995 reporting that on October 20, 1995, the
Company had acquired from subsidiaries of Greenstone Resources
Ltd. all of the outstanding shares of Greenstone Resources of
Colombia Ltd., a Bermuda Corporation and 470,000 shares of
Compania Minera Oronorte S. A. Greenstone Resources of Colombia
Ltd., owns 61,450,000 shares of Compania Minera Oronorte S. A.
Also on such date, the Company acquired 2,800,000 shares of
Compania Minera Oronorte S. A., from Dual Resources. This
resulted in Fischer-Watt Gold Company, Inc., owning 99.9% of
Compania Minera Oronorte S. A., which owns the El Limon Mine in
Colombia, South America.
2. The Registrant filed a Current Report on Form 8-K on
November 17, 1995 reporting that on November 15, 1995, the
Company gave notice that it has made an offering of securities
not registered under the Securities Act of 1933 in the form of a
news release dated November 15, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FISCHER-WATT GOLD COMPANY, INC.
December 20, 1995 By /s/ George Beattie
George Beattie, President,
Chief Executive Officer
(Principal Executive Officer),
Chief Financial Officer
(Principal Financial Officer),
Chairman of the Board
and Director
AMENDMENT TO LOAN AGREEMENT
This Amendment to Loan Agreement is entered into this 31st
day of October, 1995, by and between Fischer-Watt Gold Company,
Inc., a Nevada corporation (the "Lender"), and Great Basin
Management Co., Inc., a Nevada corporation (the "Borrower").
WHEREAS the Borrower and the Lender have entered into that
certain loan agreement dated August 28, 1995 (the "Loan
Agreement"), pursuant to which the Borrower has borrowed from the
Lender and the Lender has lent to the Borrower,
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants, terms and conditions set forth herein, and
other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the
parties hereto agree that Section 2.1 of the Loan Agreement is
hereby amended to read, in its entirety, as follows:
2.1 There is no requirement to repay the Loan or any interest
thereon unless the Proposed Merger has not occurred by December
1, 1995, in which event the entire amount of the Loan and accrued
interest shall be due and payable on January 1, 1996 (the "Due
Date").
IN WITNESS WHEREOF the parties have caused this Amendment to
Loan Agreement to be executed by their respective officers duly
authorized.
FISCHER-WATT GOLD COMPANY, INC.
By: /s/ George Beattie
President
GREAT BASIN MANAGEMENT CO., INC.
By: /s/ Dr. Anthony Taylor
President
EXTENSION OF TIME FOR PAYMENT OF SECURED PROMISSORY NOTE
Fischer-Watt Gold Company, Inc., a Nevada corporation
("FWG"), and Great Basin Management Co., Inc., a Nevada
corporation (the "Corporation"), hereby agree to extend the time
for payment of that certain Secured Promissory Note, dated August
28, 1995, in the face amount of $108,447, executed by the
Corporation in favor of FWG (the "Note"), to January 1, 1996 and
that after such extension the liabilities of the Corporation
pursuant to the Note shall remain as if no extension had been
had.
FISCHER-WATT GOLD COMPANY, INC.
By: /s/ George Beattie
President
GREAT BASIN MANAGEMENT CO., INC.
By: /s/ Dr. Anthony Taylor
President
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement is entered into this
30th day of November 1995, by and between Fischer-Watt Gold
Company, Inc., a Nevada corporation (the "Lender"), and Great
Basin Management Co., Inc., a Nevada corporation (the
"Borrower").
WHEREAS the Borrower and the Lender have entered into that
certain loan agreement dated August 28, 1995 (the "Loan
Agreement"), as amended October 31, 1995, pursuant to which the
Borrower has borrowed from the Lender and the Lender has lent to
the Borrower,
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants, terms and conditions set forth herein, and
other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the
parties hereto agree that Section 2.1 of the Loan Agreement is
hereby amended to read, in its entirety, as follows:
2.1 There is no requirement to repay the Loan or any interest
thereon unless the Proposed Merger has not occurred by January 1,
1995, in which event the entire amount of the Loan and accrued
interest shall be due and payable on February 1, 1996 (the "Due
Date").
IN WITNESS WHEREOF the parties have caused this Amendment to
Loan Agreement to be executed by their respective officers duly
authorized.
FISCHER-WATT GOLD COMPANY, INC.
By: /s/ George Beattie
President
GREAT BASIN MANAGEMENT CO., INC.
By: /s/ Dr. Anthony Taylor
President
SECOND EXTENSION OF TIME FOR PAYMENT
OF SECURED PROMISSORY NOTE
Fischer-Watt Gold Company, Inc., a Nevada corporation
("FWG"), and Great Basin Management Co., Inc., a Nevada
corporation (the "Corporation"), hereby agree to extend the time
for payment of that certain Secured Promissory Note, dated August
28, 1995, in the face amount of $108,447, executed by the
Corporation in favor of FWG (the "Note"), to February 1, 1996 and
that after such extension the liabilities of the Corporation
pursuant to the Note shall remain as if no extension had been
had.
FISCHER-WATT GOLD COMPANY, INC.
By: /s/ George Beattie
President
GREAT BASIN MANAGEMENT CO., INC.
By: /s/ Dr. Anthony Taylor
President
PROMISSORY NOTE
US$300,000 October 20,1995
Toronto, Ontario, Canada
FOR VALUE RECEIVED, the undersigned hereby promises to pay
to the order of Greenstone Resources Ltd.,("Greenstone"), the
principal sum of Three Hundred Thousand US Dollars (US$300,000)
and interest thereon at the rate of ten percent (10%) per annum.
The principal sum of this note and all interest shall be due and
payable on June 20, 1996.
All payments hereunder shall first be applied to accrued but
unpaid interest and the balance, if any, to principal. If,
however, Greenstone has incurred costs and expenses of collection
in enforcing this note as described below, such payments shall
first be applied to accrued but unpaid interest, then to such
costs and expenses of collection, and the balance, if any, to
principal.
The undersigned waives demand, presentment for payment,
protest and notice of protest, and non-payment. The undersigned
agrees to pay Greenstone all costs and expenses of collection,
including without limitation, reasonable attorney's fees and
other legal expenses, incurred by Greenstone in enforcing this
note.
This note shall be governed by and construed in accordance
with the law of the Province of Ontario, Canada.
GREENSTONE RESOURCES OF
COLOMBIA LTD., a Bermuda
corporation
By: /s/ George Beattie
George Beattie, President
GUARANTEE
For value received, Fischer-Watt Gold Company, Inc., hereby
unconditionally guarantees the payment of principal and interest
on the foregoing promissory note when and as due in accordance
with its terms.
FISCHER-WATT GOLD COMPANY,
INC., a Nevada Corporation
By: /s/ George Beattie
George Beattie, President
Fischer-Watt Gold Company, Inc.
Computation of Earnings Per Share
For the Nine Months Ended October 31, 1995
Assumptions:
Three Months Nine Months
Ended Ended
October 31, 1995 October 31, 1995
Net income for the period $ 652,000 $1,157,000
Common shares outstanding 16,145,000 16,145,000
Options outstanding to
purchase equivalent shares 5,747,000 5,747,000
20% limitation on assumed
repurchase 3,229,000 3,229,000
Average exercise price per share $ .47 $ .47
Average market value per quarter
per common share to be used $ .25 $ .20
Computations:
Application of assumed proceeds
($ 2,692,000)
Toward repurchase of outstanding
common shares at applicable
market value $ 807,000 $ 807,000
Reduction of debt 300,000 300,000
Purchase of U.S. Government
Securities 1,585,000 1,585,000
_________ _________
$ 2,692,000 $ 2,692,000
Adjustment of net income:
Actual net income $ 652,000 $ 1,157,000
Interest increase (5.0%)
less 9% tax effect 16,000 48,000
_________ _________
Adjusted net income $ 668,000 $ 1,205,000
Adjustment of shares outstanding:
Actual outstanding 12,675,000 12,455,000
Net additional shares issuable
(5,747,000 - 3,229,000) 2,518,000 2,518,000
_________ ________
Adjusted shares outstanding 15,193,000 14,973,000
Earnings per share:
Before adjustment $ .05 $ .09
After adjustment $ .04 $ .08
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED OCTOBER 31, 1995 CONTAINED IN
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000844788
<NAME> FISCHER-WATT GOLD COMPANY, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1995
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1
<CASH> 494
<SECURITIES> 0
<RECEIVABLES> 600
<ALLOWANCES> 0
<INVENTORY> 460
<CURRENT-ASSETS> 1568
<PP&E> 1873
<DEPRECIATION> 127
<TOTAL-ASSETS> 3359
<CURRENT-LIABILITIES> 1574
<BONDS> 300
<COMMON> 16
0
0
<OTHER-SE> 1724
<TOTAL-LIABILITY-AND-EQUITY> 3359
<SALES> 2289
<TOTAL-REVENUES> 2125
<CGS> 595
<TOTAL-COSTS> 1123
<OTHER-EXPENSES> (204)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 143
<INCOME-PRETAX> 1229
<INCOME-TAX> 72
<INCOME-CONTINUING> 1157
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1157
<EPS-PRIMARY> .09
<EPS-DILUTED> .08
</TABLE>
