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 APRIL 30, 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 registrant 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) (Zip Code)
(208) 664-6757
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
The number of shares of Common Stock, $0.001 par value,
outstanding as of May 22, 1995 was 12,344,000
Transition Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
Part 1 - Financial Information
Item 1. Financial Statements
FISCHER-WATT GOLD COMPANY, INC.
BALANCE SHEETS
April 30, January 31,
ASSETS 1995 1995
(Unaudited)
CURRENT ASSETS:
Cash $ 10,000 $ 6,000
Trading securities 278,000 358,000
Accounts receivable 13,000 2,000
Other current assets 4,000 6,000
------- -------
Total current assets 305,000 372,000
MINERAL INTERESTS 360,000 387,000
MINING AND OTHER EQUIPMENT 51,000 50,000
LESS DEPRECIATION, DEPLETION
AND AMORTIZATION ( 35,000) ( 36,000)
------- -------
376,000 401,000
INVESTMENT IN HONDURAN CORPORATION 100,000 91,000
OTHER ASSETS 27,000 27,000
------- -------
Total assets $ 808,000 $ 891,000
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 95,000 $ 89,000
Notes payable 500,000 500,000
Accrued payroll and benefits 43,000 59,000
Accrued interest expense 45,000 51,000
Other accrued liabilities 32,000 31,000
------- -------
Total current liabilities 715,000 730,000
LONG TERM LIABILITIES:
Nonrecourse debt (Note 5) 96,000 87,000
Total liabilities 811,000 817,000
COMMITMENTS AND CONTINGENCIES,
Notes 1,3, 6
SHAREHOLDERS' (DEFICIT) EQUITY:
Common stock, $0.001 par value,
50,000,000 shares authorized;
12,344,000 shares outstanding
at April and January 1995 12,000 12,000
Additional paid-in capital 5,773,000 5,773,000
Deficit (5,788,000) (5,711,000)
-------- --------
Total shareholders' (deficit) equity (3,000) 74,000
-------- --------
Total liabilities and
shareholders' equity $ 808,000 $ 891,000
-------- --------
The accompanying notes are an integral part of these balance
sheets.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended April 30,
1995 1994
------ ------
REVENUES:
Gain on sale of mineral interest $ - $ 109,000
COSTS AND EXPENSES:
Abandoned properties and prospects 22,000 -
Generative exploration expense 3,000 -
Operating and administrative 48,000 72,000
Public company costs 21,000 21,000
------ ------
94,000 93,000
------ ------
OTHER INCOME (EXPENSE):
Interest expense ( 22,000) ( 19,000)
Unrealized gain on trading securities 50,000 -
Other (expense) income ( 11,000) 20,000
------ ------
17,000 1,000
------ ------
Net (loss) income before income taxes ( 76,000) 17,000
TAX PROVISION ( 1,000) ( 1,000)
------ -------
NET (LOSS) INCOME $ ( 77,000) $ 16,000
------ -------
(LOSS) INCOME PER SHARE AND
COMMON EQUIVALENT $( .01 ) $ .00
------ ------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 12,344,000 12,344,000
---------- ----------
The accompanying notes are an integral part of these statements.
<PAGE>
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
April 30,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income $ ( 77,000) $16,000
Adjustments to reconcile net (loss
income to net cash used in
operating activities-
Unrealized gain on trading securities ( 50,000) -
Gain on sale of mineral interest - (109,000)
Abandoned properties and prospects 22,000 -
Generative exploration expensed 2,000 -
Depreciation and amortization - 1,000
Accrued interest added to
principal balance 20,000 21,000
(Increase) decrease in receivables and
other current assets (9,000) -
Gain on sale of equipment - ( 20,000)
Proceeds from sale of trading securities 117,000 -
Loss on sale of trading securities 13,000 -
(Decrease) increase in accounts payable
and accrued liabilities ( 12,000) ( 55,000)
-------- --------
Net cash provided by (used in)
operating activities 26,000 ( 46,000)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of
mineral interest - 105,000
Property acquisition and development costs(17,000) (13,000)
Investment in Honduran Corporation ( 9,000) -
Investment in Mexican Corporation - ( 1,000)
Equipment acquired ( 2,000) ( 3,000)
-------- --------
Net cash (used in) provided by
investing activities ( 28,000) 88,000
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 6,000 -
-------- --------
Net cash provided by (used in)
financing activities 6,000 -
-------- --------
NET INCREASE (DECREASE) IN CASH 4,000 (58,000)
CASH, at beginning of period 6,000 106,000
CASH, at end of period $ 10,000 $ 48,000
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $2,000 $ 1,000
SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT
NONCASH ACTIVITIES:
Application of bonus on unproven
property to offset accrued
interest expense $ 25,000 $ 25,000
Cost basis of trading securities
sold in connection with loss on
trading securities $130,000 -
Short-term debt eliminated in
connection with sale of
mineral interest $ - $ 90,000
Cost basis in mineral interest
sold in connection with short-
term debt eliminated $ - $ 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 FINANCIAL STATEMENTS
(UNAUDITED)
(1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTES DISCLOSURES
The accompanying financial statements are unaudited; however, in
the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation
have been made. 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").
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 a sale of a mineral interest. Since the
Company has no sustaining income or cash flow from operations,
it is currently funding its operations from proceeds of property
sales and 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 future
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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Gain on Sale of Mineral Interest--Gain on sale of mineral
interests represents the excess of the proceeds realized from the
sale of a mineral interest over the Company's cost basis in that
property. In March 1994, Fischer-Watt optioned its interest in
the San Andres mineral property in Honduras to Greenstone
Resources Ltd. ("Greenstone"). In October 1994, the option was
exercised. Fischer-Watt's gross proceeds from the sale of this
property were $955,000 ($161,000 in cash, $700,000 worth of
Greenstone's restricted common stock plus elimination of its
$94,000 debt to Greenstone). Fischer-Watt's cost basis in the
property was $86,000 resulting in a realized gain of $869,000
from the sale and exercise of the option. (See Note 5)
Bonuses--As an incentive to enter into a joint exploration and
development agreement, Fischer-Watt may receive bonus payments.
The bonus payments are recognized as revenue if the agreement
entered into relates to a proven property. For unproven
properties, bonus payments are first applied as a reduction of
the cost basis of the property with any excess being recognized
as revenue.
Trading Securities
Shares of Greenstone Resources Ltd.--The Company received 427,300
restricted shares of Greenstone Resources Ltd. ("Greenstone"),
common stock upon exercise of the San Andres option (Note 5).
These shares were valued at $700,000 which was the average of the
daily closing price on the Toronto Stock Exchange for the five
trading days preceding the exercise date of the option, adjusted
to United States dollars.
In the quarter ended April 30, 1995, the Company sold 119,000
shares and received net proceeds of $117,000 which resulted in a
loss on the sale of trading securities of $13,000 which is shown
on the statement of operations.
The Company has adopted Statement of Financial Accounting
Standards ("SFAS ") No. 115 which applies to certain investments
in equity securities. At April 30, 1995, the Company held
208,300 shares of Greenstone stock. Since the shares are listed
on both NASDAQ and the Toronto Stock Exchange, the average
closing price (converted to United States dollars) of the two
exchanges was used to determine the fair value. The fair value
was determined to be $278,000 which resulted in an unrealized
gain on trading securities of $50,000. The gain is included in
the statements of operations.
Abandonment of Mineral Interests
Mineral Interests in unproven properties are evaluated on a
quarterly basis for possible impairment. Management evaluation
considers all the facts and circumstances known about each
property including: the results of drilling and other
exploration activities to date; the desirability and likelihood
that additional future exploration activities will be undertaken
by the Company or by others; the land holding costs including
work commitments, rental and royalty payments and other lease and
claim maintenance commitments; the expiration date of the lease
including any earlier dates by which notice of intent to
terminate the lease must be given in order to avoid work
commitments; the accessibility of the property; the ability and
likelihood to joint venture the property with others; and, if
producing, the cost and revenue of operation.
Unproven properties are considered fully or partially impaired,
and are fully or partially abandoned, at the earliest of the time
that: geologic mapping, surface sample assays or drilling results
fail to confirm the geologic concepts involved at the time the
property was acquired; a decision is made not to perform the work
commitments or to make the lease payments required to retain the
property; the Company discontinues its efforts to find a joint
venture partner to fund future exploration activities and has
decided not to fund those costs itself; or, the time the property
interest terminates by contract or by operation of law.
Reclamation Liabilities
Reclamation liabilities are recorded as liabilities (and as a
cost of the related property) in the period in which the drilling
or mining activity which generates the reclamation requirement
occurs.
Generative Exploration Expense
The costs of generative exploration activities that do not result
in the acquisition of mineral interests are expensed.
Income Taxes
Because of the Company's exploration activities and net operating
loss carryovers, the tax rate for the year ended January 31, 1995
was zero. Accordingly, no provision for Federal Income taxes was
mad in the statement of operations for the quarter ended April
30, 1995.
Earnings Per Share
Net (loss) income per common share has been computed on the basis
of the weighted average number of common shares outstanding
during each period. Shares issuable upon exercise of outstanding
stock options have been excluded from the computation as their
effect would be anti-dilutive.
(3) PROPERTY AND EQUIPMENT
A summary of the cost basis of mineral properties and prospects
as of April 30 and January 31, 1995, is:
April 30 January 31
-------- --------
Oatman (United Western), Arizona $ 136,000 $ 136,000
Modoc, California 72,000 72,000
Minas de Oro, Honduras * 41,000 59,000
Tuscarora, Nevada 77,000 77,000
America Mine, California 17,000 16,000
Other mineral interests
(each less than $20,000) 17,000 27,000
-------- --------
$ 360,000 $ 387,000
* In February 1995, an agreement was made to sell all of
Fischer-Watt's interest in Minas de Oro to Tombstone Explorations
Company Ltd. The transaction closed on May 16, 1995. (See Item 2
"Subsequent Event" and Note 4.)
The Company's property interests require minimum payments to be
made, or work commitments to be satisfied, to maintain ownership
of the property. 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 April 30, 1996
Lease Work J.V. Net FWG
Property Payments Commit. Total Share Cost
- - -------- -------- -------- -------- -------- --------
America $48,000 $106,000 $154,000 $154,000 $ -
Minas de Oro* 45,000 157,000 202,000 202,000 -
Tuscarora - 2,000 2,000 2,000 -
Modoc 20,000 - 20,000 20,000 -
Oatman - - - - -
Other 48,000 193,000 241,000 191,000 50,000
------ -------- -------- -------- -------
Totals $161,000 $458,000 $619,000 $569,000 $50,000
* In February 1995, an agreement was made to sell all of
Fischer-Watt's interest in Minas de Oro to Tombstone Explorations
Company Ltd. The transaction closed on May 16, 1995. (See Item 2
"Subsequent Event" and Note 4.)
(4) NOTES PAYABLE
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 bears interest at
the higher of 10% or prime plus 5% and is secured by the
Company's interest in the America Mine property.
AT APRIL 30, 1995, THE COMPANY WAS IN DEFAULT ON THE PAYMENT OF
PRINCIPAL AND INTEREST ON THIS LOAN. Principal and interest of
$542,000 were due and payable. Kennecott has not agreed with the
amount of unpaid interest due to a difference in interpretation
of the timing of the initial starting date of semi-annual,
recoupable, advance royalty payments due Fischer-Watt on the
Minas de Oro property in Honduras. The differing amounts with
accrued interest total approximately $33,000. However, upon
closing of the Tombstone Explorations Company Ltd.'s
("Tombstone") purchase of the Minas de Oro property, the entire
loan amount, plus accrued interest, regardless of the amount, was
canceled. When the Tombstone transaction closed, the Company had
a recognized gain of approximately $650,000, of which $150,000
was cash. (See Item 2 "Subsequent Event".)
(5) GREENSTONE RESOURCES TRANSACTIONS
On November 2, 1993, the Company signed a letter of intent to be
acquired by Greenstone Resources Ltd. During the due diligence
period, Greenstone advanced funds to the Company for current
operations. The proposed merger was terminated by Greenstone in
February 1994. Greenstone advanced $94,000 during that period.
In March 1994, Fischer-Watt 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 consideration for the
option, Greenstone paid Fischer-Watt $105,000 and forgave $90,000
of a $94,000 loan provided to Fischer-Watt pursuant to the
terminated merger transaction. At April 30, 1994, the Company
recognized a gain of $109,000 on this transaction.
Greenstone exercised its option on October 31, 1994 by forgiving
the remaining loan balance of $4,000, 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 and is currently producing 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
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 Company believes that the total loan amount may eventually
exceed $250,000. The loan is nonrecourse as to both principal
and interest to the Company and is to be repaid out of dividends,
if any, from the Copan shares. The shares are pledged to
Greenstone as collateral for the loan which is due on or before
December 31, 1999. At April 30,1995, this loan plus associated
accrued interest totaled $96,000. At May 22, 1995, the Company
owned, or had options to purchase, seven percent of the
outstanding shares of Copan.
(6) 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. However, all of these payments may be avoided
by timely forfeiture of the related property interest. (See Note
3).
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following is a discussion of Fischer-Watt Gold Company,
Inc.'s ("Fischer-Watt" or the "Company") current financial
condition as well as its operations for the three months ended
April 30, 1995 (fiscal 1996) and April 30, 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
Short-Term Liquidity
As of May 22, 1995, the Company had $164,000 in cash and accounts
payable of $64,000. The Company also has 198,300 shares of
Greenstone common stock that had an approximate market value of
$310,000 that could be sold to provide funds for operations.
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. AT APRIL 30,
1995, THE COMPANY WAS IN DEFAULT ON THE PAYMENT OF PRINCIPAL OF
$500,000 AND ACCRUED INTEREST OF $42,000 ON THIS LOAN.
Fischer-Watt and Kennecott disagreed upon the amount of unpaid
interest due to a difference in interpretation of the timing of
the initial starting date of semi-annual, recoupable, advance
royalty payments due Fischer-Watt on the Minas de Oro property in
Honduras. The differing amounts with accrued interest total
approximately $33,000.
Subsequent Event
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. Under the terms of the
agreement, Tombstone agreed to pay Fischer-Watt $150,000 in cash
and deliver 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 provided $150,000 in cash and eliminated the
$500,000 debt and accrued interest to Kennecott Exploration
Company. (See Note 4 to Financial Statements)
The Company's net cash provided by operating activities during
the first quarter of fiscal 1996 was $26,000 compared to $46,000
used during the first quarter of the prior year. This increase
in cash provided of $72,000 is due primarily to the Company's
proceeds from the sale of trading securities as reduced by a net
loss, as adjusted to eliminate noncash items (unrealized gain on
trading securities and abandonments of properties and prospects).
This compares with net income of $16,000 in the prior year which
was primarily the result of gains on the sale of a mineral
interest and on the sale of equipment, reduced by a reduction in
accounts payable. In the April 30, 1994 period, the accounts
payable decreased $55,000 during that quarter as the Company had
some funds available to pay a portion of its overdue bills. The
$12,000 reduction in accounts payable in the April 30, 1995 is
more reflective of normal operations and demonstrated the ability
of the Company to continue its program of repaying its old bills
in a consistent and timely manner.
Net cash provided by investing activities was $88,000 in the
first quarter of fiscal 1995 compared to $28,000 used in the
first quarter of fiscal 1996. This decrease of cash provided
of $116,000 results primarily from the proceeds of the sale of
mineral property in the April 30, 1994 quarter. There were no
property sales in the April 30, 1995 period. The $28,000 of
cash used in investing activities during the first quarter of
fiscal 1996 was not reflective of normal investments in property
acquisition and development costs. If available, significantly
more cash would have been used to explore for and acquire mineral
properties.
Proceeds from long-term debt was $6,000 in the quarter ended
April 30, 1995. There was no net cash provided by, or used
for,financing activities in the first quarter of fiscal 1995.
On April 30, 1995, Fischer-Watt's current ratio was .4:1 based on
current assets of $305,000 and current liabilities of $715,000.
On January 31, 1995, its current ratio was .5:1 based upon
current assets of $372,000 and current liabilities of $730,000.
While the current ratio was little changed, both the current
assets and current liabilities decreased in the current quarter.
A current ratio of less than 1:1 indicates that the Company does
not have sufficient cash and other current assets to pay its
bills and other liabilities incurred at the end of its fiscal
period which are due and payable within the next 12 months.
Long-Term Liquidity
The Company plans to continue its search for long-term debt or
equity capital to fund its proposed operating and exploration
activities until these activities can be funded from production
of mineral resources.
At April 30, 1995, the Company's long-term debt consisted
entirely of a nonrecourse loan from Greenstone Resources Canada
Ltd. The loan was negotiated as part of 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 Company believes that the total loan
amount may eventually exceed $250,000. The loan is nonrecourse
as to both principal and interest to the Company and is to be
repaid out of dividends, if any, from the Copan shares. The
shares are pledged to Greenstone as collateral for the loan which
is due on or before December 31, 1999. At April 30, 1995, this
loan plus associated accrued interest totaled $96,000. At May
22, 1995, the Company owned, or had options to purchase, seven
percent of the outstanding shares of Copan. (See Note 5 to
Financial Statements.)
RESULTS OF OPERATIONS
Fischer-Watt had a net loss of $77,000, or $.01 per share, in the
quarter ended April 30, 1995 compared to net income of $16,000,
or $.00 per share in the quarter ended April 30, 1994. The loss
would have been larger except for an unrealized gain on trading
securities of $50,000 in the current quarter. (See Note 2 to
Financial Statements.)
The most significant reason for the difference in the two periods
was the gain of $109,000 realized from the sale of an option to
purchase Fischer-Watt's interest in the San Andres property
during the first quarter of fiscal 1995. In March 1994,
Fischer-Watt 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 consideration for the option,
Greenstone paid Fischer-Watt $105,000 and forgave $90,000 of a
$94,000 loan provided to Fischer-Watt pursuant to a terminated
merger transaction. Greenstone exercised its option on October
31, 1994 by forgiving the remaining loan balance of $4,000,
paying Fischer-Watt a further $56,000 and issuing it $700,000
worth of Greenstone common stock, valued at the time of exercise.
During the April 30, 1994 quarter, the Company had a $33,000 gain
on the sale of equipment,primarily as a result of vehicles and
equipment sold as a result of agreements with former employees.
No sales of mineral interests or equipment were made in the April
30, 1995 quarter.
Other items
Abandonments totaled $22,000 in the quarter ended April 30, 1995.
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
cost of $22,000. An additional $2,000 of generative exploration
expense was incurred when a prospect in Nevada was abandoned when
the Company decided not to fund the work needed to perfect its
mining claims. There were no abandonments or generative
exploration expense in the quarter ended April 30, 1994.
Operating and administrative costs decreased from $72,000 in the
first quarter of fiscal 1995 to $48,000 in the first quarter of
fiscal 1996. The $24,000 reduction in fiscal 1996 was primarily
the result of lower office occupancy costs and the elimination of
costs associated with the employee termination settlements in the
prior year.
Public company costs were $21,000 in both first quarter of
fiscal 1996 and in the first quarter of fiscal 1995. These costs
do not reflect normal operations and consist primarily of costs
associated with accounting requirements pursuant to Securities
and Exchange rules and regulations.
Interest expense increased to $22,000 in the first quarter of
fiscal 1996 from $19,000 in the first quarter of fiscal 1995.
This increase is due primarily to accrued interest tied to the
prime rate on the note payable to Kennecott. The prime rate
increased four times from fiscal 1995 to fiscal 1996.
Other income decreased from $20,000 in the first quarter of
fiscal 1995 to a $11,000 loss in the first quarter of fiscal
1996. In the first quarter or fiscal 1996, the Company had a
loss on the sale of trading securities of $13,000. In the first
quarter of fiscal 1995 the Company had a gain on the sale of
vehicles and equipment to former employees pursuant to employee
settlement agreements. No such sales occurred in the quarter
ended April 30, 1995.
Part II - Other Information
Item 3. Defaults Upon Senior Securities
In March 1992, Kennecott Exploration Company loaned Fischer-Watt
$500,000. Principal and interest on this loan was repayable in
monthly installments of $100,000 beginning August 1, 1992. The
loan bears interest at the higher of 10% or prime plus 5% and is
secured by the Company's interest in the America Mine property.
As of April 30, 1995, no payments have been made on this loan.
THE COMPANY WAS IN DEFAULT ON THE PAYMENT OF PRINCIPAL AND
INTEREST ON THIS LOAN. As of April 30, 1995, principal and
interest of $542,000 were due and payable.
On May 16, 1995, the default was cured when the sale of the Minas
de Oro mineral interest to Tombstone closed and the note and all
accrued interest were canceled. (See Item 2"Subsequent Event"
and Note 4 to Financial Statements.)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit Item 601
No. Category Exhibit
- - ------- -------- -------
1 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.
2 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.
3 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.
4 10 First Amendment to Exploration Agreement and Mining
Venture Agreement dated March 25, 1992 between
Kennecott Exploration Company and Fischer-Watt Gold
Company, Inc., and filed as Exhibit 45.10 to Form
10-K filed April 22, 1993 and incorporated herein by
reference.
5 10 Financial Advisor Agreement dated July 1, 1993
between Donald Lawrence and Evans Investment
Management and Fischer-Watt Gold Company, Inc.,
whereby Donald Lawrence and Evans Investment
Management will provide financial and investment
advice for a three year period in exchange for shares
of Fischer-Watt's restricted common stock and filed
as Exhibit 48.10 to Form 10-Q filed September 9, 1993
and incorporated herein by reference.
6 10 Greenstone Letter Agreement dated November 2, 1993
whereby Greenstone Resources Ltd., and Fischer-Watt
Gold Company, Inc. agree to a merger of Fischer-Watt
Gold Company, Inc., with a wholly-owned subsidiary of
Greenstone and filed as Exhibit 49.10 to Form 10-Q
filed December 10, 1993 and incorporated herein by
reference.
7 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.
8 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.
9 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.
10 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.
11 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.
12 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.
13 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.
14 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.
15 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.
16 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.
17 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.
18 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.
19 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.
20 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.
21 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.
22 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.
23 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.
24 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.
25 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.
26 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.
27 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.
28 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.
29 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.
30 27 Financial Data Schedule for the quarterly period
ended April 30, 1995.
(b) Reports on Form 8-K - NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
by the undersigned thereunto duly authorized.
FISCHER-WATT GOLD COMPANY, INC.
June 2, 1995 By George Beattie
(Signature)
George Beattie, President,
Chief Executive Officer
(Principal Executive Officer),
Chief Financial Officer
(Principal Financial Officer),
Chairman of the Board and
Director
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made this
16th day of May, 1995, by and between Cerenex Financial A.V.V., an
Aruban corporation, having an office at Orangestadt, Aruba
("Buyer"), and Fischer-Watt Gold Company, Inc., a Nevada
corporation with offices at 1410 Cherrywood Drive, Coeur d'Alene,
Idaho 83814 ("Fischer");
WITNESSES:
WHEREAS, Fischer has previously entered into that certain
Mining Venture Agreement (the "Venture Agreement") with Kennecott
Exploration Company ("Kennecott"), a copy of which is attached as
Exhibit A, relating to those certain mineral concessions in the
Municipality of Minas de Oro, Department of Comayagua, Honduras, a
more complete description of which is attached as Exhibit B (the
"Properties");
WHEREAS, subject to the Venture Agreement, title to the
Properties is held in the name of Minerales Kennecott de Honduras
S.A., ("MKH") a Honduran corporation and an affiliate of Kennecott;
WHEREAS, Tombstone Explorations Co. Ltd. ("Tombstone") and
Fischer have previously entered into that certain Letter Agreement
dated February 28, 1995, wherein Tombstone has expressed the desire
to acquire the interests of Fischer and its subsidiaries in the
Venture Agreement, the Properties and any legal or beneficial
royalties it may hold pursuant thereto and Fischer has expressed
the desire to sell such interest and, in connection therewith
Tombstone has arranged for Buyer to enter into this Agreement;
NOW THEREFORE, in consideration of the promises and covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties agree as follows:
A. REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Fischer the following matters as of the
date hereof, and as of the date of the Closing (as hereinafter
defined):
(a) Organization of Buyer. Buyer is a wholly-owned
subsidiary of Tombstone and is a corporation duly
incorporated, validly existing and in good standing under
the laws of Aruba and has all necessary corporate power
to undertake the transactions contemplated by to this
Agreement;
(b) Corporate Authorization of Buyer. Buyer has taken all
necessary corporate actions to authorize the execution
and delivery of this Agreement and the performance of the
transactions contemplated herein; and
(c) Valid and Binding Agreement. This Agreement when
executed and delivered by Buyer, is valid and binding
upon Buyer, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights
generally and by general principles of equity. The
consummation of the transactions contemplated hereby and
the compliance with the provisions hereof will not, with
or without the giving of notice or the lapse of time or
both, result in any material breach of any provision of
applicable law or the provisions of any order of any
court or other agency of government, the constating
documents of Buyer, or any agreement or other instrument
to which Buyer is a party or by which it is bound.
2. Representations and Warranties of Fischer. Fischer hereby
represents and warrants to Buyer the following matters as of the
date hereof and as of the date of Closing:
(a) Organization of Fischer. Fischer is a corporation duly
organized, validly existing and in good standing under
the laws of Nevada and has all necessary corporate power
to undertake the transactions contemplated by this
Agreement;
(b) Valid and Binding Agreement. This Agreement, when
executed and delivered by Fischer, is valid and binding
upon Fischer and enforceable in accordance with its
terms, except as such enforcement may be limited by
bankruptcy, insolvency or other laws affecting creditors'
rights generally and by general principles of equity.
Subject to obtaining the consents referred to in E.1.c
and F (the "Consents"), the consummation of the
transactions contemplated hereby and the compliance with
the provisions hereof will not, with or without the
giving of notice or the lapse of time or both, require
any consent under or result in any material breach of any
provision of applicable law or the provisions of any
order of any court or other agency of government, the
Articles of Incorporation or By-laws of Fischer, or any
contract, license, lease, permit or other instrument to
which Fischer is a party or by which it is bound or
result in the creation of any lien, charge or encumbrance
pursuant to any of the foregoing;
(c) Corporation Authorization. Fischer has taken all
corporate actions required by law, its Articles of
Incorporation, By-laws or otherwise to authorize the
execution and delivery of this Agreement and all other
documents contemplated by this Agreement to be executed
by Fischer, and to undertake the transactions
contemplated herein;
(d) Compliance with Applicable Law. To the best of the
knowledge of Fischer, there are no material violations or
alleged material violations of any applicable zoning,
regulatory, statutory, employment, environmental or other
laws, orders, regulations or requirements relating to the
Properties;
(e) Status of Properties. Fischer will convey to Buyer at
the Closing, title to the Interest (as hereinafter
defined) free and clear of all liens, mortgages, security
interests, charges, encumbrances, exceptions, demands or
adverse claims of any nature whatsoever, other than the
interests of Kennecott and MKH pursuant to the terms and
conditions of the Venture Agreement, and if valid and
enforceable, that certain personal contract agreement
between Fischer and Begeyge Minera Ltd. dated June 13,
1990, a copy of which is attached as Exhibit B-1 (the
"Begeyge Contract") (collectively, the "Permitted
Exceptions");
(f) Material Contracts. To the best of the knowledge of
Fischer, except for the contracts set forth on Exhibit C
and the Begeyge Contract, there are no contracts,
agreements, understandings or undertakings of any nature
whatsoever relating to the Properties, the Venture
Agreement or the "Assets" as defined in the Venture
Agreement (the "Assets");
(g) Authority. Subject to obtaining the Consents, Fischer
has the legal right and authority to enter into this
Agreement and to perform its obligations under this
Agreement;
(h) Ownership of the Interests. Fischer is the sole
registered and beneficial owner of the Interests and has
good and marketable title to the Interests, free and
clear of all liens, mortgages, security interests,
charges, assignments and encumbrances, demands or adverse
claims of any kind whatsoever, except for the Permitted
Exceptions;
(i) Consents. Except for the Consents, Fischer is not under
any obligation, contractual or otherwise, to request or
obtain the consent of any person, and no consents,
waivers, permits, licenses, certifications,
authorizations or approvals of, or notifications to, any
federal, provincial, state, departmental, municipal or
local government or governmental agency, board,
commission or authority are required to be obtained by
Fischer in connection with the execution, delivery or
performance by Fischer of this Agreement or the
completion of any of the transactions contemplated
herein;
(j) Right to Properties and Assets. Fischer has taken no
action that will prevent or limit Buyer from obtaining
the full benefit of the Properties or the Assets and to
the best of the knowledge of Fischer no person other than
Tombstone, Buyer, Fischer, Kennecott and MKH has any
right, present or future, contingent or absolute,to the
Assets or the Properties;
(k) Legal Matters. There are no actions, suits or
proceedings, judicial or administrative (whether or not
purportedly on behalf of Fischer) pending or, to the best
of the knowledge of Fischer, threatened, at law or in
equity, before or by any court or any federal,
provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting the Interests, the
Properties or the Assets, and to the knowledge of
Fischer, there are no grounds on which any such action,
suit or proceeding might be commenced with any reasonable
likelihood of success;
(l) Description of Properties. The Properties are accurately
described on Schedule B;
(m) Licences and Permits. To the best of the knowledge of
Fischer, Kennecott and MKH hold all licences, permits and
operating authorities as may be requisite for carrying on
their business and operations in connection with the
Properties, such licenses, permits and operating
authorities are in good standing and the business and
operations of Kennecott, MKH and Fischer have been
conducted in full compliance with such licences, permits
and operating authorities;
(n) Compliance. Fischer, and to the best of the knowledge of
Fischer, Kennecott and MKH have prepared and filed all
reports, information returns and other documentation
required to be filed by them in respect of the
Properties, have paid all taxes, rates, assessments and
governmental fees, charges or dues lawfully levied
(collectively, "Taxes"), against or imposed against
Kennecott, MKH and Fischer in respect of the Properties
and the Properties are in good standing;
(o) Disclosure. None of the representations, warranties or
statements of Fischer contained in this agreement contain
any untrue statement or fact or omit to state any fact
necessary in order to make any such representations,
warranties or statements not misleading and all
information relating to the Properties which is known to
Fischer and which may be material to purchase for value
of the Interest, the Properties and the Assets has been
disclosed to Buyer and any such information becoming
known to Fischer before or at the Closing will forthwith
be disclosed to Buyer; and
(p) Note. The Note (as hereinafter defined) was validly
created and issued by Fischer and is valid and
enforceable .
B. SALE AND PURCHASE
1. Sale and Purchase. Subject to the terms and conditions
contained herein and to the satisfaction or waiver of the
conditions precedent, Fischer hereby agrees to sell, deliver,
convey, assign and transfer to Buyer and Buyer agrees to purchase,
at Closing, all of Fischer's right, title and interest in and to
the Venture Agreement including all of its Participating Interest
and the Assets, as described therein(collectively, the
"Interests").
C. PURCHASE PRICE
1. Purchase Price. The purchase price for the Interests (the
"Purchase Price") shall consist of the following payments and
deliveries that Buyer agrees to cause to be paid and delivered to
Fischer:
(a) Cash Payment. At the Closing, Buyer shall make a cash
payment to Fischer in the amount of US$150,000, which
payment shall be made by certified cheque or bank draft
or wire transfer in immediately available funds to an
account designated by Fischer in the United States or
Honduras; and
(b) Note. At the Closing, Buyer shall deliver or cause to be
delivered to Fischer for cancellation that certain
Promissory Note dated March 25, 1992, in the original
principal amount of $500,000 (the "Note"), granted by
Fischer to Kennecott, a copy of which is attached as
Exhibit D.
Within 60 days following the date of Closing, Buyer shall deliver
to Fischer a duly executed and recorded release of that certain
Deed of Trust, Assignment, Security Agreement and Financing
Statement, in favour of First American Title Insurance Company (San
Bernardino office) as trustee and Kennecott as beneficiary.
D. CONDITIONS TO CLOSING
The Closing is subject to the following conditions:
1. Conditions to Obligations of Fischer. The obligation of
Fischer to complete the purchase and sale contemplated hereby is
subject to the conditions that:
(a) Buyer has executed and delivered the instruments and
certificates to be executed and delivered by it as
described in Section E.2. below;
(b) Buyer shall not be a party to, or be threatened by, any
litigation, claim or proceeding of whatever type or
description relating to this Agreement or the
transactions contemplated herein, which seeks to
restrain, prohibit, or otherwise challenge this Agreement
or the transactions contemplated herein, or which in the
reasonable judgment of Fischer would materially affect
the desirability of carrying out this Agreement;
(c) Buyer shall have made all filings and taken all actions
with, and obtained all consents and approvals of, all
governmental authorities or other third persons required
in connection with the execution, delivery and
performance of this Agreement, including without
limitation, approval of The Toronto Stock Exchange, or
shall have provided evidence that such approval is
unnecessary; and
(d) Fischer shall have received prior written consent of
Kennecott, as required under Section 15.2 of the Venture
Agreement.
2. Conditions to Obligations of Buyer. The obligation of Buyer
to complete the purchase and sale contemplated by this Agreement is
subject to the conditions that:
(a) Fischer has delivered to Buyer originally executed copies
of the opinions, instruments and certificates to be
executed and delivered by it as described in Section E.1.
below;
(b) Fischer shall not be a party to, or be threatened by, any
litigation, claim or proceeding of whatever type or
description relating to this Agreement or the
transactions contemplated herein, which seeks to
restrain, prohibit, or otherwise challenge this Agreement
or the transactions contemplated herein, or which in the
reasonable judgment of Buyer would materially affect the
desirability of carrying out this Agreement;
(c) Buyer has reached agreement with Kennecott and MKH
relating to the acquisition of Kennecott's and MKH's
interests in the Properties; and
(d) Tombstone and Buyer shall have received the approval by
all regulatory authorities having jurisdiction over it or
the Interests including, without limitation, approval of
The Toronto Stock Exchange.
E. CLOSING
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 5:00 p.m. on May 16, 1995, at the
offices of Jones & Keller, P.C. 1625 Broadway, Suite 1600 Denver,
Colorado 80202. At the Closing, the parties shall make the
following deliveries:
1. Deliveries by Fischer. Fischer shall deliver to Buyer the
following:
(a) a certificate, substantially in the form set forth on
Exhibit E, from a corporate officer of Fischer to the
effect that the representations and warranties with
respect to Fischer set forth in Section A-2 are, to the
best of such officer's knowledge, true and correct in all
material respects;
(b) an executed and notarized Assignment and Assumption of
Venture Agreement, Participating Interests and Assets
substantially in the form of Exhibit F;
(c) evidence of consent from Kennecott as required under
Section 15.2 of the Venture Agreement in form and content
acceptable to Buyer which Fischer shall use reasonable
efforts to obtain, provided, however, that the failure to
obtain the same shall not be a default of Fischer;
(d) an opinion of Jones & Keller, legal counsel to Fischer in
form and substance satisfactory to Buyer; and
(e) such other instruments and agreements as may be
reasonably required to effect the transactions
contemplated herein, and as may reasonably be requested
by counsel to Buyer.
2. Deliveries by Buyer. Buyer shall deliver the following to
Fischer:
(a) a certificate, substantially in the form set forth on
Exhibit G, from a corporate officer of Buyer to the
effect that the representations and warranties set forth
in Section A-1 are, to the best of his knowledge, true
and correct in all material respects;
(b) a certified cheque or bank draft or wire transfer
evidence of immediately available funds to an account
designated by Fischer in the amount of US$150,000;
(c) an executed and notarized Assignment and Assumption of
Venture Agreement and Assets substantially in the form of
Exhibit F;
(d) the Note marked "cancelled"; and
(e) such other instruments and agreements as may be
reasonably required to effect the transactions
contemplated herein, and as may reasonably be requested
by counsel to Fischer.
F. GOVERNMENTAL CONSENTS
From the date of this Agreement to the Closing and thereafter,
Fischer and Buyer shall use reasonable efforts to obtain the
approval of the appropriate governmental authorities in Honduras
for the transfer of the Properties to Buyer or its
nominee/assignee.
G. ALLOCATIONS
Fischer shall be responsible for all property taxes and assessments
with respect to the Properties, royalty payments to third parties,
and other similar costs and obligations arising with respect to the
Venture Agreement and Properties allocable to the period prior to
Closing and for which it is liable pursuant to the terms of the
Venture Agreement and Buyers shall be responsible for such costs
allocable to the period after the Closing.
H. RELEASE
From and after the Closing, Buyer shall be solely responsible for
the Properties and for the enforceable obligations in the Venture
Agreement and for the Participating Interests and shall assume all
enforceable obligations and duties of Fischer with respect thereto.
Buyer hereby releases Fischer from any and all obligations with
respect to the Interests acquired pursuant to this Agreement,
except as set forth in this Agreement.
I. TERMINATION
Notwithstanding anything in this Agreement to the contrary,
this Agreement may be terminated at any time prior to the Closing
upon the following:
1. by both parties, upon their mutual written consent;
2. by either party, if the Closing has not occurred prior to
5:00 pm, Salt Lake City time, May 16, 1995, unless the
parties have agreed to extend such date;
3. by either party, if there shall have been entered a
final, non-appealable order or injunction by any
governmental entity of competent jurisdiction restraining
or prohibiting the consummation of the transactions
contemplated hereby, or any of them; or
4. by Fischer upon written notice to Buyer, if there shall
have been a material breach of any representation,
warranty, covenant or agreement on the part of Buyer set
forth in this Agreement which has not been cured within
five business days after receipt of such notice; or
5. by Buyer upon written notice to Fischer, if there shall
have been a material breach of any representation,
warranty, covenant or agreement on the part of Kennecott
set forth in this Agreement which has not been cured
within five business days after the receipt of such
notice; or
6. by Buyer, if Kennecott has not given the consent to
transfer as required in Section 15.2 of the Venture
Agreement it being recognized that neither party shall
have any liability for the failure to obtain such
consent.
In the event of a termination of this Agreement pursuant to
this paragraph, this Agreement shall thereafter become void and
shall have no force and effect, and there shall be no obligation or
liability hereunder on the part of any party, except (i) to the
extent that such termination results from the breach by a party
hereto of any of its representations, warranties, covenants or
agreements set forth in this Agreement, in which event the parties
shall retain such legal or equitable remedies as they may enjoy;
and (ii) the parties shall each pay their own expenses incidental
to the preparation and revision of this Agreement, and all
accounting fees and expenses incurred in connection with the
transactions contemplated by this Agreement.
J. CONFIDENTIALITY
1. For a term of one year after the Closing, the terms of this
Agreement and any information regarding the Properties shall not be
disclosed by Fischer to any third party or to the public without
prior consent of the Buyer, which consent shall not be unreasonably
withheld.
2. The consent required by this Section shall not apply to a
disclosure:
(a) by a party to a potential successor by sale (or other
conveyance of rights) or consolidation or merger, or to
a proposed joint venturer or partner in a joint venture
or partnership in which such party may become a
participating partner or venturer;
(b) to a consultant, contractor or subcontractor that has a
bona fide need to be informed;
(c) to a bank or other potential source of financing;
(d) to a court, governmental agency or to the public if the
disclosing party is advised by counsel that disclosure is
required by pertinent law, regulation, rule, order or the
rules of any stock exchange; or
(e) to Kennecott in connection with obtaining the consent of
Kennecott as required in Section E.l.(c) above.
3. In any case to which Section J.2 is applicable, the disclosing
party shall use reasonable commercial efforts to obtain reasonable
confidentiality protections as generally obtained with respect to
the disclosing party's own similar information.
K. INDEMNITIES
Fischer hereby agrees to indemnify and save Buyer harmless
from and against any and all claims, demands, actions, causes of
action, damage, loss, deficiency, cost, liability and expense which
may be made or brought against Buyer or which Buyer may suffer or
incur as a result of, in respect of or arising out of:
(a) any non-performance or non-fulfilment of any covenant or
agreement of Fischer contained in this Agreement or in
any document given in order to carry out the transactions
contemplated hereby;
(b) any misrepresentation, inaccuracy, incorrectness or
breach of any representation or warranty made by Fischer
contained in this Agreement or contained in any document
or certificate given in order to carry out the
transactions contemplated hereby;
(c) all tax rates, assessments and government fees, charges
or dues lawfully levied against or imposed in respect of
the Properties and related to Fischer that may give rise
to a lien or encumbrance on the Properties ("Taxes") and
all penalties, fines and interest related to Taxes,
payable to any Honduran governmental authority, in any
jurisdiction whatsoever and imposed on or payable by
Buyer in respect of the Properties for any taxable year
or period that ends on or before the Closing and, with
respect to any taxable year or period beginning before
and ending after the Closing, the portion of such Taxes
relating to such taxable year or period ending on the
Closing and including, without limitation, any and all
Taxes which may be imposed on Buyer in connection with
the transactions contemplated by this Agreement; and
(d) all costs and expenses including, without limitation,
legal fees on a solicitor and client basis, incidental to
or in respect of the foregoing.
L. REMEDIES
1. In addition to all other remedies contemplated by this
Agreement, each party shall have all remedies provided at law or in
equity with respect to the obligations hereunder including the
remedy of specific performance.
2. Limitation of Liability. In no event shall the liability of
Fischer, for any default of breach of this Agreement, exceed the
amount of the Purchase Price, plus reasonable attorney's fees and
expenses.
3. Causes of Action. No claim, action, demand or cause of
action, however characterized, arising hereunder shall be valid
unless the same is brought within two years after the Closing.
M. ASSET PURCHASE AGREEMENT
The parties intend this to be an asset purchase and sale and
transfer and assumption of leases and contracts only. None of
Fischer' employees, labor contracts, pension benefit obligations or
related employee benefit arrangements, are being acquired by Buyer
under this Agreement.
N. GENERAL
1. Waiver, Remedies. No failure on the part of any party to
exercise, and no delay in exercising a right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right remedy, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right remedy, power or privilege, and
no waiver whatever shall be valid, unless in writing signed by the
other party or parties to be charged and then only to the extent
specifically set forth in such writing.
All remedies, rights, powers and privileges, either under this
Agreement or by law or otherwise afforded to the parties to this
Agreement, shall be cumulative and shall not be exclusive of any
remedies, rights, powers and privileges provided by law. Each
party hereto may exercise all such remedies afforded to it in any
order of priority.
2. Notices. Any notice required or permitted under this
Agreement shall be in writing and sufficient if delivered
personally, sent by facsimile or mailed by registered or certified
mail, postage prepaid, and return receipt requested, addressed to
the appropriate recipient as set forth above, or at such other
address as the recipient shall designate by written notice, as
herein provided, from time to time, as well as to the following
persons:
If to Tombstone or Buyer:
Tombstone Explorations Co. Ltd.
c/o Richard Clark, President
1351 - 409 Granville Street
Vancouver, B.C. V6C 1T2
CANADA
Facsimile: 682-1514
With a copy to:
Bull, Housser & Tupper
3000 - 1055 West Georgia Street
Vancouver, B.C. V6E 3R3
CANADA
Attention: Peter J. O'Callaghan
Facsimile: (604) 641-4949
If to Fischer:
Fischer-Watt Gold Company, Inc.
1410 Cherrywood Drive
Coeur d'Alene, Idaho 83814
U.S.A.
Attention: Mr. George Beattie
Facsimile: (208) 667-6516
with a copy to:
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
Attention: Clifford R. Pearl
Facsimile: (303) 893-6506
Any notice which is personally delivered shall be deemed effective
upon the date of delivery (or refusal to accept delivery) as
indicated on the return receipt; any notice sent by facsimile shall
be deemed to be provided on the date of transmission if sent during
normal business hours of the recipient and, if not, on the next
business day thereafter; and if mailed, on the seventh business day
after mailing.
3. Waivers, Strict Performance. The failure of a party to insist
on the strict performance of any provision of this Agreement or to
exercise any right power or remedy upon a breach hereof shall not
constitute a waiver of any provision of this Agreement or limit the
party's right thereafter to enforce any provision or exercise any
right.
4. Assignment. Prior to Closing, this Agreement may not be
assigned by any party without the written consent of the other
parties, and any attempt to assign this Agreement or delegate
performance hereunder without such consent shall be void.
5. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the British Columbia,
Canada, excluding any conflict of law provisions that would require
the application of the laws of any other jurisdiction.
6. Costs and Expenses. Each party shall pay its own expenses
incurred in connection with the authorization, preparation,
execution and performance of this Agreement including, without
limitation, all fees and expenses of counsel. Buyer shall be
responsible for and shall timely pay all recording and other fees
in connection with the conveyance of the Property.
7. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed an original, and
such counterparts shall together constitute but one and the same
instrument.
8. Survival. The terms and conditions, representations and
warranties and covenants and agreements of the parties shall
survive the Closing and shall continue for a period of two years
thereafter.
9. Binding on Parties. Nothing expressed or implied in this
Agreement is intended by the parties or shall be construed to
confer upon or to give to any person or entity other than the
parties to this Agreement or their successors or assigns any rights
or remedies under or by reason of this Agreement.
10. Force Majeure. Neither party shall be liable to any other
party for its failure to perform any of its obligations under this
Agreement during any period in which performance is prevented, in
whole or part, by any other cause beyond a parties reasonable
control, except for the party's inability to meet financial
commitments. If a party invokes its rights under this Section, the
time for discharging its obligations with respect to the prevented
performance shall be extended for the period of the prevented
performance.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the
parties.
12. Severability. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this
Agreement be determined to be illegal or unenforceable, all other
provisions of this Agreement and each other agreement entered into
pursuant to this Agreement shall be given effect separately from
the provision or provisions determined to be illegal or
unenforceable and shall not be effected thereby.
13. Broker. No person acting on behalf of Fischer or under the
authority of Fischer is or will be entitled to any broker's or
finder's fee or any other commission or similar fee, directly or
indirectly, from any of the parties hereto in connection with any
of the transactions contemplated by this Agreement;
14. Further Assurances. Buyer and Fischer shall execute,
acknowledge, if necessary, and deliver such documents, certificates
or other instruments and shall take such other action as either
shall reasonably require from time to time to complete the
transactions contemplated hereby or as otherwise may be reasonably
requested to carry out the intents and purposes of this Agreement.
If at any time after the date of Closing, Buyer shall consider or
be advised that any further assignment and conveyances are
reasonably necessary to vest, perfect, confirm or record in Buyer
the title or other appropriate right to any of the Properties, or
otherwise to carry out the provisions hereof, Fischer, through its
proper officers and directors, shall execute and deliver any and an
proper assignments, and do all things reasonably necessary to vest,
perfect or confirm the title or other right to any of the
Properties in Buyer and otherwise to carry out the provisions
hereof.
15. Incorporation of Exhibits. All Exhibits attached to this
Agreement are incorporated herein as though fully set forth.
16. Entire Agreement. This Agreement, and the agreements
delivered pursuant hereto, constitutes the entire agreement between
the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, letters of
intent, representations and understandings of the parties in
connection with the transaction contemplated hereby, including
without limitation, that certain Letter Agreement dated February
28, 1995. No supplement modification or amendment shall be binding
unless executing in writing by both parties.
IN WITNESS WHEREOF, the parties hereto have signed or caused
this Agreement to be signed in their respective corporate names as
of the day and date first above written.
FISCHER-WATT GOLD COMPANY, INC.
By: Gerald D. Helgeson
(Signature)
Its: Secretary
CERENEX FINANCIAL A.V.V.
By: Richard P. Clark
(Signature)
Its: President
AGREEMENT TO ASSIGN LEASES AND QUITCLAIM OF INTERESTS
THIS AGREEMENT TO ASSIGN LEASES AND QUITCLAIM OF INTERESTS
(the "Agreement") is made this 20th day of April, 1995 by and
between KENNECOTT EXPLORATION COMPANY, a Delaware corporation, with
an office at 10 East South Temple, Salt Lake City, Utah 84133
("Kennecott") and FISCHER-WATT GOLD COMPANY, INC., a Nevada
corporation, with an office at 340 Freeport Boulevard, Suite 3,
Sparks, Nevada 89431 ("Fischer-Watt").
RECITALS
A. Pursuant to that certain Assignment of Leases dated July
15, 1994, and the related Agreement to Assign Leases dated July 7,
1994, Fischer-Watt assigned to Kennecott certain leases located in
Imperial County, California, it being the intent of the parties
that all of the real property interests relating to that project of
Fischer-Watt would be transferred to Kennecott.
B. The parties have discovered that certain property
interests were inadvertently omitted in such assignments and now
desire to cause an assignment and transfer of those interests,
which property interests are more particularly described in Exhibit
"A" to this Agreement (the "Property").
B. Fischer-Watt desires to sell, assign and transfer all of
its right, title and interest in the Property and Kennecott desires
to purchase all of Fischer-Watt's right, title and interest in the
Property on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained in this Agreement, Kennecott and Fischer-Watt
agree as follows:
1. Assignment of the Property.
1.1 Upon the terms and conditions set forth in this
Agreement, Fischer-Watt hereby sells, transfers, conveys, assigns,
and delivers to Kennecott, all of Fischer-Watt's right, title and
interest in the Property by an Assignment of Leases in the form
attached to this Agreement as Exhibit "B" and by the Quitclaim Deed
attached to this Agreement as Exhibit "C", reserving only to
Fischer-Watt a 2.5% Net Smelter Return royalty which shall be
calculated and paid as provided in Exhibit "D" to this Agreement.
1.2 In consideration of the sale, transfer, conveyance,
assignment and delivery of Fischer-Watt's right, title and interest
in the Property as provided in Section 1.1, Kennecott agrees:
(a) to pay a 2.5% Net Smelter Return royalty to Fischer-Watt
on all minerals produced and sold from the Property as
provided in Exhibit "D" to this Agreement.
(b) to reimburse Fischer-Watt for any and all land holding
and related costs under the leases related to such Property,
and any taxes or other costs incurred by Fischer-Watt, from
and after July 15, 1994 to the date hereof.
(c) to offer to reassign the Property to Fischer-Watt, if
Kennecott at any time on or before the fourth anniversary of
the date hereof determines to relinquish the interest in the
Property acquired under this Agreement. Fischer-Watt shall
accept Kennecott's offer in writing within 20 days after
Kennecott notifies Fischer-Watt of the offer. Fischer-Watt's
failure to provide written notice of its acceptance of the
offer within such 20 day period shall be deemed to be an
election to decline the offer and Kennecott may thereafter
relinquish the Property. Kennecott's obligation to make the
payments as provided in Section 1.2(a) shall terminate upon
the date that Kennecott gives notice of the offer to Fischer-Watt under
this Section 1.2(c). This Section 1.2(c) shall apply only if Kennecott
intends to relinquish the Property and shall not apply to any assignment
by Kennecott of the Property subject to the terms of this Agreement.
1.3 The consideration described above is the sole and
complete consideration given by Kennecott to Fischer-Watt for the
assignment of the Property by Fischer-Watt to Kennecott.
2. Fischer-Watt' Representations and Warranties.
Fischer-Watt represents and warrants to Kennecott as follows:
2.1 Fischer-Watt is a corporation, duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation and Fischer-Watt has the corporate power and
authority to enter into this Agreement.
2.2 The execution, delivery and performance of this Agreement
by Fischer-Watt have been authorized by all necessary corporate
action, create binding obligations on Fischer-Watt, and do not and
will not:
(a) require any consent or approval of Fischer-Watt's
stockholders;
(b) contravene Fischer-Watt's charter or bylaws;
(c) violate any provision of law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
presently in effect having applicability to Fischer-Watt; or
(d) result in a breach of or constitute a default under any
agreement to which Fischer-Watt is a party.
2.3 No consent, approval, permit, license, or authorization
of any governmental body is required in connection with the
execution, delivery, or performance of this Agreement by Fischer-Watt.
2.4 As of the date hereof, Fischer-Watt is lawfully seized of
a defeasible estate in the Property as set forth in Exhibit "A,"
and has the right and power to assign and quitclaim the Property as
provided in this Agreement.
2.5 Fischer-Watt has provided to Kennecott true and complete
copies of all instruments affecting title to the Property.
2.6 As of the date hereof, and to the best of its knowledge,
the Leases relating to the Property are in good standing, Fischer-Watt has
not taken any action or failed to take any required action that with the
passage of time would result in a default under the Leases, and Fischer-Watt
has not received any notice or threat of default under the Leases.
2.7 As of the date hereof, and except as otherwise provided
in Section 2.10, the Property is free from all liens or
encumbrances created by Fischer-Watt, or any person claiming by,
through, or under Fischer-Watt. Fischer-Watt will defend its title
to the Property against all persons who may claim the same by,
through, or under Fischer-Watt, but not otherwise.
2.8 Fischer-Watt has not committed, nor will Fischer-Watt in
the future commit, any act or acts which will encumber or cause a
lien to be placed against the Property.
2.9 Fischer-Watt has not deposited any petroleum, hazardous
waste, hazardous substances, pollutants, contaminants, or toxic
materials (as those terms are defined by any applicable local,
state or federal law presently in effect) on the Property, nor
conducted any activities that have caused an adverse environmental
condition on the Property.
2.10 Fischer-Watt has no material contractual commitments or
obligations which relate to or affect the Property.
3. Representations and Warranties of Kennecott.
Kennecott represents and warrants to Fischer-Watt as follows:
3.1 Kennecott is a corporation, duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation and Kennecott has the corporate power and
authority to enter into this Agreement.
3.2 The execution, delivery and performance of this Agreement
by Kennecott have been authorized by all necessary corporate
action, create binding obligations on Kennecott, and do not and
will not:
(a) require any consent or approval of Kennecott's
stockholders;
(b) contravene Kennecott's charter or bylaws;
(c) violate any provision of law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
presently in effect having applicability to Kennecott; or
(d) result in a breach of or constitute a default under any
agreement to which Kennecott is a party.
3.3 No consent, approval, permit, license, or authorization
of any governmental body is required in connection with the
execution, delivery, or performance of this Agreement by Kennecott.
4. Confidentiality.
4.1 The terms of this Agreement shall be the exclusive
property of the Parties and, except as provided in Section 4.2,
shall not be disclosed to any third party or the public without the
prior written consent of the other Party, which consent shall not
be unreasonably withheld.
4.2 The consent required by Section 4.1 shall not apply to a
disclosure:
(a) By a Party to a potential successor by sale of all or
substantially all of its interest in the Property, or to a
potential successor by consolidation or merger, or to a
proposed joint venturer or partner in a joint venture or
partnership in which such Party may become a participating
partner or venturer.
(b) To an affiliate, consultant, contractor or subcontractor
that has a bona fide need to be informed.
(c) To a bank or other potential source of financing.
(d) To a court, governmental agency or to the public if the
disclosing Party believes in good faith that disclosure is
required by pertinent law, regulation, rule, order or the
rules of any stock exchange.
4.3 In any case to which Section 4.2 is applicable, the
disclosing Party shall give notice to the other Party concurrently
with the making of such disclosure. As to a disclosure pursuant to
Section 4.2(a) or (b), only such confidential information as such
third party shall have a legitimate business need to know shall be
disclosed and such third party shall first agree in writing to
protect the confidential information from further disclosure to the
same extent as the Parties are obligated under this Section 4.
5. General Provisions.
5.1 This Agreement may be assigned by either Party; however,
any such assignment shall be subject to the rights and interests
granted by this Agreement to the other Party and shall not relieve
the assigning Party from any obligation to the other Party that
arose prior to the assignment.
5.2 The failure of a Party to insist on the strict
performance of any provision of this Agreement or to exercise any
right, power or remedy upon a breach hereof shall not constitute a
waiver of any provision of this Agreement or limit the Party's
right thereafter to enforce any provision or exercise any right.
5.3 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Utah, except for its rules
pertaining to conflicts of laws. In the event that any condition
or other provision of this Agreement is held to be invalid or void
by any court of competent jurisdiction, the same shall be deemed
severable from the remainder of this Agreement and shall in no way
affect any other covenant or condition. If such condition,
covenant or other provision shall be deemed invalid due to its
scope or breadth, such provision shall be deemed valid to the
extent of the scope or breadth permitted by law.
5.4 There are no implied covenants given by either Party or
otherwise contained in this Agreement.
5.5 Each of the Parties agrees that it shall take from time
to time such actions and execute such additional instruments as may
be reasonably necessary or convenient to implement and carry out
the intent and purpose of this Agreement.
5.6 This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Parties.
In the event of any conflict between this Agreement and any Exhibit
attached hereto, the terms of this Agreement shall be controlling.
5.7 No modification of this Agreement shall be valid unless
made in writing and duly executed by the Parties.
5.8 This Agreement may be executed in counterparts, each of
which when so executed shall be deemed an original, and such
counterparts shall together constitute but one and the same
instrument.
5.9 The section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
5.10 All representations, warranties, covenants, and
agreements of the Parties shall survive the delivery of the
Assignment of Leases and Quitclaim Deed and shall not merge with or
be extinguished by delivery of any document of transfer
contemplated by this Agreement.
5.11 Nothing expressed or implied in this Agreement is
intended by the Parties or shall be construed to confer upon or to
give to any person or entity other than the Parties to this
Agreement or their successors or assigns any rights or remedies
under or by reason of this Agreement.
5.12 All notices, requests, demands, and other communications
pertaining to or contemplated by this Agreement shall be addressed
to the Party to whom such communication is to be directed as
follows:
if to Kennecott Exploration Company:
10 East South Temple
Salt Lake City, Utah 84133
Telecopier: (801) 322-8303
with a copy to:
Kennecott Corporation
10 East South Temple
Salt Lake City, Utah 84133
Attention: Legal Department
Telecopier: (801) 322-8081
if to Fischer-Watt Gold Company, Inc.:
340 Freeport Boulevard, Suite 3
Sparks, Nevada 89431
Telecopier: (702) 358-4026
with a copy to:
George Beattie
1410 Cherrywood Drive
Coeur d'Alene, Idaho 83814
Telecopier: ((208) 765-9461
and to:
Cliff Pearl
Jones and Keller
1625 Broadway, Suite 1600
Denver, Colorado 80202
Telecopier: (303) 893-6506
All Notices shall be given (I) by personal delivery to the Party,
or (ii) by electronic communication, with a confirmation sent by
commercial courier, registered or certified mail return receipt
requested, or (iii) by registered or certified mail return receipt
requested or by commercial courier. All Notices shall be effective
and shall be deemed delivered (I) if by personal delivery, on the
date of delivery if delivered during normal business hours, and, if
not delivered during normal business hours, on the next business
day following delivery, (ii) if by electronic communication, on the
next business day following receipt of the electronic
communication, and (iii) if solely by mail or by commercial
carrier, on the next business day after actual receipt. A Party
may change its address by Notice to the other Party.
5.13 This Agreement contains the entire understanding of the
Parties and supersedes all prior agreements, communications and
understandings between the Parties relating to the subject matter
of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
FISCHER-WATT GOLD COMPANY, INC.
By George Beattie
(Signature)
Its President
KENNECOTT EXPLORATION COMPANY
By Thomas C. Patton
(Signature)
Its President
<PAGE>
EXHIBIT "A"
Property
The Property consists of the following real property situated as
follows:
Fee Interests:
All that real property situated in Section 19, Township 19 South,
Range 9 East, of Imperial County, California:
1. An undivided 12.5 percent ownership interest in the mineral
estate in and to the: SE1/4 SW1/4 NE1/4;
NE1/4 SE1/4 NE1/4;
NE1/4 SE1/4 SE1/4;
SE1/4 NE1/4 SW1/4; and
S/2 NW1/4 SW1/4.
Being the same property quitclaimed to Fischer-Watt by that
certain Quitclaim, Assignment and Agreement between Homestake
Mining Company of California and Fischer-Watt Gold Company, Inc.,
dated effective as of December 26, 1990.
Assignment of Leases:
Mining Lease dated April 1, 1990 between Wes and Mary
Martin, Owner, and Homestake Mining Company of California, as
Lessee; a short form of which is recorded in Book 1658, Page
1269, Official Records, Imperial County, California;
Mining Lease dated April 1, 1990 between Emily Martin,
Owner, and Homestake Mining Company of California, as Lessee; a
short form of which is recorded in Book 1658, Page 1273, Official
Records, Imperial County, California.
<PAGE>
EXHIBIT "B"
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES effective as of April 20, 1995, is
between FISCHER-WATT GOLD COMPANY, INC., a Nevada corporation
("Assignor"), with an office at 340 Freeport Boulevard, Suite 3,
Sparks, Nevada 89431, and KENNECOTT EXPLORATION COMPANY, a
Delaware corporation ("Assignee") with an office at 10 East South
Temple, Salt Lake City, Utah 84133.
IN CONSIDERATION OF good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Assignor conveys, transfers and assigns to Assignee all of
Assignor's interest in certain real property situated in Imperial
County, California which property is more particularly described
as follows:
That certain Mining Lease dated April 1, 1990 between Wes
and Mary Martin, Owner, and Homestake Mining Company of
California, as Lessee; a short form of which is recorded in
Book 1658, Page 1269, Official Records, Imperial County,
California;
That certain Mining Lease dated April 1, 1990 between Emily
Martin, Owner, and Homestake Mining Company of California,
as Lessee; a short form of which is recorded in Book 1658,
Page 1273, Official Records, Imperial County, California.
Assignor's warranty of title to Assignee shall be limited to
claims asserted by any person claiming by, through or under
Assignor.
DATED this 20 day of April, 1995.
FISCHER-WATT GOLD COMPANY, INC.
By George Beattie
(Signature)
Its President
COUNTY OF Kootenai )
) ss.
STATE OF Idaho )
On this 20 day of April, 1995, before me, Robert A. Sampson,
a notary public, personally appeared George Beattie, personally
known to me or proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in
his authorized capacity and that by his signature on the
instrument the entity on behalf of which he acted, executed the
instrument.
IN WITNESS WHEREOF, I hereunto set my hand and seal.
My commission expires 3-30-2001
Robert A. Sampson (SEAL)
(Signature)
Notary Public
<PAGE>
EXHIBIT "C"
QUITCLAIM DEED
FOR $10 AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, FISCHER-WATT
GOLD COMPANY, INC., a Nevada corporation ("Fischer-Watt"), with
an office at 340 Freeport Boulevard, Suite 3, Sparks, Nevada
89431, hereby sells, assigns, transfers and quitclaims to
KENNECOTT EXPLORATION COMPANY, a Delaware corporation with an
office at 10 East South Temple, Salt Lake City, Utah 84133, all
of Fischer-Watt's rights, titles and interests in and to the real
property described below:
All that real property situated in Section 19, Township 19 South,
Range 9 East, of Imperial County, California consisting of an
undivided 12.5 percent ownership interest in the mineral estate
in and to:
SE1/4 SW1/4 NE1/4;
NE1/4 SE1/4 NE1/4;
NE1/4 SE1/4 SE1/4;
SE1/4 NE1/4 SW1/4; and
S/2 NW1/4 SW1/4.
Being the same property quitclaimed to Fischer-Watt by that
certain Quitclaim, Assignment and Agreement between Homestake
Mining Company of California and Fischer-Watt Gold Company, Inc.,
dated effective as of December 26, 1990.
Dated this 20 day of April, 1995.
FISCHER-WATT GOLD COMPANY, INC.
By George Beattie
(Signature)
Its President
COUNTY OF Kootenai )
) ss.
STATE OF Idaho )
On this 20 day of April, 1995, before me, Robert A. Sampson,
a notary public, personally appeared George Beattie, personally
known to me or proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in
his authorized capacity and that by his signature on the
instrument the entity on behalf of which he acted, executed the
instrument.
IN WITNESS WHEREOF, I hereunto set my hand and seal.
My commission expires 3-30-2001
Robert A. Sampson (SEAL)
(Signature)
Notary Public
<PAGE>
EXHIBIT "D"
NET SMELTER RETURN CALCULATION
Pursuant to the terms of the Agreement to Assign Leases and
Quitclaim of Interests between Kennecott Exploration Company and
Fischer-Watt Gold Company, Inc. dated January ___, 1995,Kennecott
Exploration Company (the "Payor") grants to Fischer-Watt Gold Company, Inc.
(the "Royalty Holder") a 2.5% Net Smelter Return royalty to Fischer-Watt
on all minerals produced and sold from the Property as provided herein.
A. Net Smelter Return Definition.
1. Except as provided in paragraph 2 below, in the event
that the Payor sells ores, concentrates, precipitates, cathodes,
leach solutions or any other primary, intermediate or final
product or any other mineral substances (other than fine gold
and/or silver bullion or dore bullion) produced from the
Property, Net Smelter Return for the calendar quarter shall mean
the amount of Revenues (as defined below) actually received by
the Payor from the sale of such mineral substances, less to the
extent paid or incurred by the Payor, (a) the cost of transporta-
tion between the Payor's mill and the buyer, (b) the cost of
assaying, sampling, custom-smelting and refining such products,
including any independent representative and umpire charges, and
(c) taxes (other than income taxes) imposed upon or in connection
with producing, transporting and selling such products.
2. If the Payor produces as a final product or has pro-
duced as a final product through a tolling/refining contract or
any other transaction that results in the Payor owning title to
fine gold and/or silver bullion or dore bullion produced from the
Property, Net Smelter Return for a calendar quarter shall mean
the amount of fine gold and/or silver bullion produced or the
amount of payable gold and/or silver contained in dore bullion
produced from the Property during the quarter multiplied by (I)
for gold, the average London Bullion Brokers P.M. Gold Fixing for
the calendar quarter of production and (ii) for silver, the
average London Bullion Market Association daily Silver Fixing for
the calendar quarter of production, less the following costs
attributed to that production, to the extent paid or incurred by
the Payor prior to the date payment is due to the Royalty Holder
as prescribed in Section C.1(b) of this Exhibit, (a) the costs of
transportation from the Payor's mill to the smelter/refiner, (b)
the cost of assaying, sampling, custom-smelting and refining said
bullion, including tolling costs, independent representative and
umpire charges, and including any penalties assessed by the
purchaser of said fine gold and/or silver bullion, (c) taxes
(other than income taxes) imposed upon or in connection with
producing, transporting and selling said fine gold and/or silver
bullion and (d) costs of sale, if any, actually paid or incurred
by the Payor prior to the date payment is due the Royalty Holder
as described above.
For purposes of this Section A.2., the average gold and
silver prices for the production quarter shall be determined by
dividing the sum of all daily prices posted during the calendar
quarter by the number of days that prices were posted. The
posted prices shall be obtained from The Wall Street Journal,
Reuters, or another reliable source. If either the London
Bullion Brokers P.M. Gold Fixing or the London Bullion Market
Association daily Silver Fixing ceases to be published, the Payor
and the Royalty Holder shall agree upon a similar alternative
method for determining the average spot market price for gold
and/or silver, as the case may be, which shall be used in calcu-
lating Net Smelter Return.
The Payor and the Royalty Holder acknowledge that the
purpose of this Section A.2. is to assure that Net Smelter Return
is determined in a timely manner for fine gold and/or silver
bullion produced or dore bullion produced during a calendar
quarter regardless of whether an actual sale of gold and/or
silver to a third party is made by the Payor. The parties
further acknowledge that the Payor shall have the right to market
and sell to third parties the gold and silver produced from the
Property in any manner it chooses, including the forward sale of
gold and silver on the commodity markets. The Royalty Holder
shall have absolutely no right to participate whatsoever in any
sales of mineral substances by the Payor on the commodity market
or otherwise share in any profits or losses received by the Payor
as a result of the Payor's marketing activities.
3. In no event shall the Payor deduct the cost of mining,
milling, leaching or any other processing costs incurred by the
Payor in the determination of Net Smelter Return.
4. In the event smelting or refining are carried out in
facilities owned or controlled, in whole or in part, by the
Payor, then charges, costs and penalties for such smelting or
refining shall mean the amount the Payor would have incurred if
such smelting or refining were carried out at facilities not
owned or controlled by the Payor then offering comparable ser-
vices for comparable products on prevailing terms, but in no
event greater than actual costs incurred by the Payor with
respect to such smelting and refining.
B. Other Definitions.
1. "Payor" shall mean the person or entity obligated to
pay a Net Smelter Return royalty to the Royalty Holder pursuant
to the terms of the Agreement to Assign Leases.
2. "Royalty Holder" shall mean the person or entity
entitled to receive a Net Smelter Return royalty pursuant to the
terms of the Agreement to Assign Leases.
3. "Revenues" shall mean the total amounts received by the
Payor from the sale of mineral substances produced from the
Property at the point of sale, less all selling costs, provided
such sales are arm's length transactions, and provided further
that sales to affiliates of the Payor are valued at the fair
market value of the products sold. For the purposes of this
Exhibit, mineral substances may be in a primary, intermediate or
final form.
C. Payments of Net Smelter Return Royalty.
1. The amount of Net Smelter Return royalty due the
Royalty Holder shall be payable in the following alternative
manners depending on the Payor's method of selling mineral
substances produced from the Property:
(a) If the Payor produces and sells ores, concen-
trates, precipitates, cathodes, leach solutions or
any other primary, intermediate product or mineral
substances other than fine gold and/or silver
bullion or dore bullion, the Net Smelter Return
royalty paid to the Royalty Holder shall be
calculated by multiplying the amount of Net
Smelter Return determined in Section A.1 by 2.5 %.
Payment shall be made within 30 days after the
Payor's receipt of Revenues from such sales during
a calendar quarter.
(b) If the Payor produces fine gold and/or silver
bullion or dore bullion, the Net Smelter Return
royalty paid to the Royalty Holder shall be
calculated by multiplying the amount of Net
Smelter Return determined in Section A.2 by 2.5 %.
Payment shall be made within 30 days after the end
of a calendar quarter.
2. The Payor shall provide copies of all data relating to
the Net Smelter Return royalty calculation (including, but not
limited to, settlement sheets used in calculating the Royalty
Holder's Net Smelter Return royalty) to the Royalty Holder at the
same time that the Royalty Holder's Net Smelter Return royalty
payments are paid.
D. Audits and Disputes.
1. The Royalty Holder, upon written notice, shall have the
right to have an independent firm of certified public accountants
audit the records that relate to the calculation of the Net
Smelter Return interest within 24 months after receipt of a
payment described in Section C. of this Exhibit for a calendar
quarter.
2. The Royalty Holder shall be deemed to have waived any
right it may have had to object to a payment made for any calen-
dar quarter, unless it provides notice in writing of such objec-
tion within 24 months after receipt of final payment for the
calendar quarter. If the parties are unable to resolve the
dispute within 60 days after the receipt of such notice, the
dispute shall be resolved by arbitration in Salt Lake City, Utah,
pursuant to the commercial arbitration rules of the American
Arbitration Association. The resolution pursuant to such arbi-
tration shall be binding on the parties. Alternatively, the
parties may elect to submit the dispute to a mutually acceptable
certified public accountant, or firm of certified public accoun-
tants, for a binding resolution thereof. Unless the parties
agree to share the costs of arbitration, the arbitrator shall
determine what part of the costs and expenses incurred in any
such proceeding shall be borne by each party participating in the
arbitration.
E. General.
1. Unless otherwise specified, capitalized terms used
herein shall have the same meaning as given to them in the
Agreement to Assign Leases to which this Exhibit C is attached.
2. The Payor shall keep true and accurate books and
records for the purposes of this Exhibit. Such books and records
shall be kept on the accrual basis in accordance with generally
accepted accounting principles and practices consistently
applied.
3. The Royalty Holder or its authorized representative on
not less than 2 days' notice to the Payor, may enter upon all
surface and subsurface portions of the Property for the purpose
of inspecting the Property, all improvements thereto and
operations thereon, and may inspect and copy all records and data
pertaining to the calculation of its interest, including without
limitation such records and data which are maintained electroni-
cally. The Royalty Holder or its authorized representative shall
enter the Property at the Royalty Holder's own risk and may not
unreasonably hinder operations on or pertaining to the Property.
The Royalty Holder shall indemnify and hold harmless the Payor
and its Affiliates (including without limitation direct and
indirect parent companies), and its or their respective direc-
tors, officers, shareholders, employees, agents and attorneys,
from and against any Liabilities which may be imposed upon,
asserted against or incurred by any of them by reason of injury
to the Royalty Holder or any of its agents or representatives
caused by the Royalty Holder's exercise of its rights herein.
4. All notices or communications hereunder shall be made
and effective in accordance with the provisions of the Agreement
to Assign Leases.
5. The Net Smelter Return interest shall attach to any
amendments, relocations or conversions of any mining claims or
leases comprising the Property, or to any renewals or extensions
of leases, and to any mineral rights acquired by the Payor and
any Affiliates in lands embraced within any mining claims or
leases comprising the Property within one year after the loss or
relinquishment of any mining claim or lease comprising the
Property. The Net Smelter Return interest shall be a real
property interest that runs with the Property and shall be
applicable to any person who produces and sells Products from the
Property.
6. All information and data provided to Royalty Holder
shall be subject to the confidentiality provisions of the
Agreement to Assign Leases.
7. Notwithstanding anything to the contrary herein, the
Payor shall have the right to mine and market amounts of precious
metals or other minerals reasonably necessary for non-bulk
sampling, assaying, metallurgical testing and evaluation of the
minerals potential of the Property without initiating the
obligation to make production royalty payments hereunder.
8. The Payor shall have the right to commingle ore and
minerals from the Property with ore from other lands and
properties; provided, however, that the Payor shall calculate
from representative samples the average grade of the ore and
shall weigh (or calculate by volume) the ore before commingling.
If concentrates are produced from the commingled ores by the
Payor, the Payor shall also calculate from representative samples
the average recovery percentage for all concentrates produced
during the calendar quarter. In obtaining representative sam-
ples, calculating the average grade of the ore and average
recovery percentages, the Payor may use any procedures accepted
in the mining and metallurgical industry which it believes
suitable for the type of mining and processing activity being
conducted and, in the absence of fraud, its choice of such
procedures shall be final and binding on the Royalty Holder. In
addition, comparable procedures may be used by the Payor to
apportion among the commingled ores penalty charges, if any,
imposed by the purchaser of such ore or concentrates.
9. The Royalty Holder may assign its interest in the Net
Smelter Return royalty, in whole or in part, provided however,
that the Payor shall not be obligated to make Net Smelter Return
royalty payments to any such assignee until the Payor has been
provided with a certified or authenticated copy of a properly
executed and recorded instrument conveying all or a portion of
the Net Smelter Return royalty to the assignee.
<PAGE>
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES effective as of January __, 1995,
is between FISCHER-WATT GOLD COMPANY, INC., a Nevada corporation
("Assignor"), with an office at 340 Freeport Boulevard, Suite 3,
Sparks, Nevada 89431, and KENNECOTT EXPLORATION COMPANY, a
Delaware corporation ("Assignee") with an office at 10 East South
Temple, Salt Lake City, Utah 84133.
IN CONSIDERATION OF good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Assignor conveys, transfers and assigns to Assignee all of
Assignor's interest in certain real property situated in Imperial
County, California which property is more particularly described
as follows:
That certain Mining Lease dated April 1, 1990 between Wes
and Mary Martin, Owner, and Homestake Mining Company of
California, as Lessee; a short form of which is recorded in
Book 1658, Page 1269, Official Records, Imperial County,
California;
That certain Mining Lease dated April 1, 1990 between Emily
Martin, Owner, and Homestake Mining Company of California,
as Lessee; a short form of which is recorded in Book 1658,
Page 1273, Official Records, Imperial County, California.
Assignor's warranty of title to Assignee shall be limited to
claims asserted by any person claiming by, through or under
Assignor.
DATED this ____ day of January, 1995.
FISCHER-WATT GOLD COMPANY, INC.
By
Its
COUNTY OF ____________ )
) ss.
STATE OF _______________ )
On this _____ day of January, 1995, before me,
_______________________, a notary public, personally appeared
________________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the person whose name
is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity and that by
his signature on the instrument the entity on behalf of which he
acted, executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and seal.
My commission expires __________________.
Notary Public
<PAGE>
QUITCLAIM DEED
FOR $10 AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, FISCHER-WATT
GOLD COMPANY, INC., a Nevada corporation ("Fischer-Watt"), with
an office at 340 Freeport Boulevard, Suite 3, Sparks, Nevada
89431, hereby sells, assigns, transfers and quitclaims to
KENNECOTT EXPLORATION COMPANY, a Delaware corporation with an
office at 10 East South Temple, Salt Lake City, Utah 84133, all
of Fischer-Watt's rights, titles and interests in and to the real
property described below:
All that real property situated in Section 19, Township 19 South,
Range 9 East, of Imperial County, California consisting of an
undivided 12.5 percent ownership interest in the mineral estate
in and to:
SE1/4 SW1/4 NE1/4;
NE1/4 SE1/4 NE1/4;
NE1/4 SE1/4 SE1/4;
SE1/4 NE1/4 SW1/4; and
S/2 NW1/4 SW1/4.
Being the same property quitclaimed to Fischer-Watt by that
certain Quitclaim, Assignment and Agreement between Homestake
Mining Company of California and Fischer-Watt Gold Company, Inc.,
dated effective as of December 26, 1990.
Dated this ____ day of January, 1995.
FISCHER-WATT GOLD COMPANY, INC.
By
Its
COUNTY OF ____________ )
) ss.
STATE OF _______________ )
On this _____ day of January, 1995, before me,
_______________________, a notary public, personally appeared
________________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the person whose name
is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity and that by
his signature on the instrument the entity on behalf of which he
acted, executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and seal.
My commission expires __________________.
Notary Public
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 1995 CONTAINED IN
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED APRIL 30, 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> 3-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1995
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<CASH> 10
<SECURITIES> 278
<RECEIVABLES> 13
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 305
<PP&E> 411
<DEPRECIATION> 35
<TOTAL-ASSETS> 808
<CURRENT-LIABILITIES> 715
<BONDS> 96
<COMMON> 12
0
0
<OTHER-SE> (15)
<TOTAL-LIABILITY-AND-EQUITY> 808
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 55
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> (76)
<INCOME-TAX> 1
<INCOME-CONTINUING> (77)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
