<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1996.
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NEVADA MANHATTAN MINING INCORPORATED
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
NEVADA 1041 88-0219765
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
5038 NORTH PARKWAY CALABASAS, SUITE 100
CALABASAS, CALIFORNIA 91302
(818) 591-4400
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)
------------------------
JEFFREY S. KRAMER
CHIEF FINANCIAL OFFICER
NEVADA MANHATTAN MINING INCORPORATED
5038 PARKWAY CALABASAS, SUITE 100
CALABASAS, CALIFORNIA 91302
(818) 591-4400
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
LLOYD S. PANTELL, ESQ.
REINSTEIN, PANTELL & CALKINS
10940 WILSHIRE BOULEVARD, SUITE 1550
LOS ANGELES, CALIFORNIA 90024
TELEPHONE (310) 443-9559
FACSIMILE (310) 443-3281
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this Registration Statement.
------------------------
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM PRICE MAXIMUM OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Common Stock, $0.01 par
value(2).................... 4,866,120 $6.00 $29,328,720 $8,887.50
- --------------------------------------------------------------------------------------------------
Total............................................................................ $8,887.50
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of completing the amount of the
registration fee pursuant to Rule 457 based upon a bona fide estimate of the
maximum offering price.
(2) Includes 3,388,120 shares of Common Stock held by certain shareholders
referred to in the Prospectus as "Selling Shareholders."
THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
NEVADA MANHATTAN MINING INCORPORATED
CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM SB-2
<TABLE>
<CAPTION>
FORM SB-2 REGISTRATION
STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
---------------------------------------------------------- -------------------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Front Cover of
Prospectus................................................ Outside Front Cover
2. Inside Front and Outside Back Cover Pages of Prospectus... Inside Front Cover Page
3. Summary Information and Risk Factors...................... Summary of Offering; Risk
Factors and Special Material
Considerations
4. Use of Proceeds........................................... Use of Proceeds
5. Determination of Offering Price........................... Risk Factors and Special
Material Considerations
6. Dilution.................................................. Risk Factors and Special
Material Considerations;
Description of Securities Being
Offered
7. Selling Security Holders.................................. Principal and Selling
Shareholders
8. Plan of Distribution...................................... Plan of Distribution
9. Interest of Named Experts and Counsel..................... Inapplicable
10. Directors, Executive Officers, Promoters and Control
Persons................................................... Management; Principal and
Selling Shareholders
11. Security Ownership of Beneficial Owners and Management.... Management; Principal and
Selling Shareholders
12. Description of Securities................................. Description of Securities Being
Offered
13. Interest of Named Experts and Counsel..................... Inapplicable
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................ Management -- Limitations on
Director and Officer Liability
15. Organization Within Last Five Years....................... Inapplicable
16. Description of Business................................... Description of Company's
Business and Property
17. Management's Discussion and Analysis of Financial Position
and Results of Operations................................. Management's Discussion and
Analysis of Financial Position
and Results of Operations
18. Description of Property................................... Description of Company's
Business and Property
19. Certain Relationships and Related Transactions............ Management -- Significant
Employees and Consultants;
Management -- Summary
Compensation Table;
Management -- Options and Stock
Appreciation Rights;
Description of Company's
Business and Property -- the
Nevada Property
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
FORM SB-2 REGISTRATION
STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
-------------------------- ----------------------
<C> <S> <C>
20. Market for Common Equity and Related Stockholder
Matters................................................... Risk Factors and Special
Material Considerations; Plan
of Distribution; Principal and
Selling Shareholders;
Description of Securities Being
Offered
21. Executive Compensation.................................... Management -- Significant
Employees and Consultants;
Management -- Executive
Compensation
22. Financial Statements...................................... Financial Statements
23. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure....................... Inapplicable
</TABLE>
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1996
[LOGO] NEVADA MANHATTAN MINING, INC.
MINING - DEVELOPMENT - EXPLORATION
4,888,120 SHARES
OF COMMON STOCK
($.01 PAR VALUE)
AT $6.00 PER SHARE
Nevada Manhattan Mining, Inc. (The "Company"), is a Nevada corporation
which was formed in 1985 (originally under the name "Epic Enterprises, Ltd.")
for the purpose of engaging in the mining of precious metals with an emphasis in
the mining of gold and silver.
On the terms and conditions which follow, the Company and certain of its
existing shareholders (the "Selling Shareholders") hereby offer a minimum of
250,000 shares and a maximum of 4,888,120 shares of its common stock (the
"Common Stock") at a price of $6.00 per share which shall be issued, if at all,
on or before the Offering Termination Date (presently scheduled for July 31,
1997). The minimum investment for each prospective Investor will be 500 shares
of Common Stock. Of the amount hereby offered, up to 1,500,000 shares represent
Common Stock offered by the Company. The balance of the shares hereby offered
represent Common Stock in the possession of the Selling Shareholders. The Common
Stock will be offered only to persons who meet the suitability requirements
outlined elsewhere in this Prospectus. To the extent that sufficient investment
Subscriptions are accepted by the Offering Termination Date, the Company intends
to utilize the Net Proceeds received from such Subscriptions to further develop
the mining property known as the Manhattan property (the "Nevada Property"); to
enter into a binding agreement with New Concept Mining, Inc. ("New Concept
Mining"); to purchase an interest in the mill currently located in the vicinity
of the Nevada Property; to provide for mill services and/or to purchase various
crushing, grinding, gravity separation, cyanide leach flotation and thickening
equipment and to construct its own mill on site at the Property; to explore and
develop the mining property located in Kalimantan, Indonesia (the "Indonesian
Property"); to pay up to Three Hundred Eighty-Four Thousand Eight Hundred
Dollars ($384,800) as the final installment payment due on the Nevada Property;
and/or working capital.
The offering represented by this Prospectus (the "Offering") involves
certain factors which should be considered by all prospective Investors. See
"RISK FACTORS AND SPECIAL MATERIAL CONSIDERATIONS."
(Cover continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
=========================================================================================================
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit..................................... $6,000 $600 $2,400
- ---------------------------------------------------------------------------------------------------------
Total Minimum................................ $1,500,000 $150,000 $1,350,000
- ---------------------------------------------------------------------------------------------------------
Total Maximum................................ $9,000,000 $900,000 $8,100,000
=========================================================================================================
</TABLE>
(1) The minimum amount of shares which may be purchased by a prospective
Investor will be Five Hundred shares (500) at a price of Six Dollars ($6.00)
per share or a total of Three Thousand Dollars ($3,000). The Company
reserves the right to sell the Common Stock in additional increments of one
hundred (100) shares provided the minimum number of shares (500 shares) is
purchased.
(2) The Company intends to offer the Common Stock on a best-efforts basis. Sales
will only be made by Affiliates of the Company including the Company's board
of directors and executive officers. The Company may also enter into
Underwriting Agreements with broker-dealers who are members of the National
Association of Securities Dealers, Inc. It is anticipated that sales and
underwriting commissions equal to ten percent (10%) of Subscriptions will be
paid to those persons or entities entering into Underwriting Agreements.
(3) Does not include the provision of up to One Hundred Sixty-Eight Thousand
Dollars ($168,000) for Organization and Offering Expenses or the use of
proceeds relative to the sale of Common Stock by the Selling Shareholders.
See Section of the Prospectus entitled "USE OF PROCEEDS."
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 5
(Cover page continued)
In particular, prospective Investors should consider that:
- the Company intends to utilize up to Three Hundred Eighty-Four Thousand
Eight Hundred Dollars ($384,800) of the Net Proceeds derived from this
Offering to pay amounts due under Property Agreements relative to the
Nevada Property, expend approximately One Million Five Hundred Thousand
Dollars ($1,500,000) for the further development of the Nevada Property
and approximately Four Million Nine Hundred Fifteen Thousand Dollars
($4,915,000) in exploration costs relative to the Indonesian Property.
- the Company is a development-stage company and has recently commenced the
mining and extraction of precious metals from the Nevada Property and has
commenced exploration of the Indonesian Property. The Company has not
experienced profits to date from its operations. No assurance can be
given that the Company will be able to profitably conduct mining
operations even if all Subscriptions are sold pursuant to this Offering.
- mining operations are speculative by their nature. Even though the
Company has successfully located commercial quantities of precious metals
on the Nevada Property and has commenced exploration on the Indonesian
Property, prospective Investors should consider that unexpected problems,
expenses, and delays are typically encountered in the development of
complex mining properties thereby further complicating the ability of
companies to successfully develop its mining properties.
- having completed the initial phase of exploration and development on the
Nevada Property and having received permits to commence operations
thereon, additional development and other expenses and further permitting
related to the Nevada Property is likely to be ongoing.
- the Company's mining operations are subject to substantial governmental
regulation including federal, state, and local regulations concerning
mine safety and environmental protection. Compliance with these
regulations may cause significant delays in the ongoing permitting
process or may prevent the Company from ultimately maintaining the
permits necessary to continue commercial mining operations on the Nevada
Property.
- prospective Investors who subscribe to the Common Stock will be subject
to an immediate dilution of up to Five Dollars Forty Cents ($5.40) per
share.
- the Company does not currently intend to pay dividends and the rights of
shareholders of the Common Stock to receive dividends are subordinate to
the holders of the Company's Preferred Stock.
- this Prospectus contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Prospective
Investors are cautioned that such statements assume the existence of
events in the future which cannot be assured will occur or even predicted
with any reasonable level of certainty.
- while the Company has received authority to trade and is currently
trading on the Electronic Bulletin Board of NASDAQ, no assurance that the
current market for the Common Stock can be maintained.
i
<PAGE> 6
SUMMARY OF THE OFFERING
This summary is provided for quick reference only and is qualified in its
entirety by the terms and conditions outlined in the remainder of this
Prospectus and by the financial statements including the notes thereto appended
to this Prospectus. Prospective Investors are urged to carefully review the
entire Prospectus and to consult with their legal and/or professional advisors
before reaching an investment decision.
THE COMPANY
Nevada Manhattan Mining, Incorporated (The "Company"), was formed on June
10, 1985, in the state of Nevada under the name of Epic Enterprises, Ltd. On
September 11, 1987, the Company amended its Articles of Incorporation changing
its name to Nevada Manhattan Mining Incorporated. The Company's articles
currently authorize the issuance of 49,750,000 shares of Common Stock with a par
value of one cent ($.01) per share and 250,000 shares of Series A preferred
stock with a par value of $1.00 per share (the "Preferred Stock") convertible
into Common Stock on the terms and conditions described elsewhere in this
Prospectus. There were 8,676,155 shares of the Company's Common Stock and
135,735 shares of the Preferred Stock issued and outstanding as of August 31,
1996. The average price per share paid for the Common Stock to date has been
approximately $2.00 per share. Holders of the Preferred Stock have paid $10.00
per share with an effective purchase price for the Common Stock (after giving
effect to the conversion thereof on a one-for-ten basis) of $1.00 per share.
The Company was formed primarily to develop the Nevada Property and other
gold mining properties which it had previously owned and has recently acquired.
Pursuant to prior action of both the Company's directors and its shareholders,
certain properties have been abandoned so as to enable the Company to
concentrate on the development of the Nevada Property and exploration of the
Indonesian Property.
The Company has its principal executive offices at 5038 North Parkway
Calabasas, Suite 100, Calabasas, California 91302. Its telephone number is (818)
591-4400.
Management of the Company presently consists of a five-member board of
directors and employs two (2) full-time executive officers and an additional
five (5) full-time employees. The Company has also entered into two consulting
agreements with organizations with substantial experience in gold mining
operations. See "MANAGEMENT," "PRINCIPAL AND SELLING SHAREHOLDERS," and
"DESCRIPTION OF SECURITIES BEING OFFERED."
PRINCIPAL OBJECTIVES OF THIS OFFERING
The Net Proceeds derived from this Offering will be used for the purposes
of:
1. Expending approximately One Million Five Hundred Thousand Dollars
($1,500,000) to further develop the Nevada Property consistent with the
Company's business plan prepared by William R. Wilson and dated as of July
1995 (the "Business Plan");
2. Expanding and/or delineating (to increase reserves and potential
reserves of) the Nevada Property and, to the extent that it enters into a
binding agreement with New Concept Mining, acquiring up to a fifty percent
(50%) interest in the mill currently operating approximately one mile from
the Nevada Property. In addition or in the alternative, the Company may
enter into a contract for milling services with New Concept Mining or
purchase all of the equipment necessary to construct a mill on site on the
Property;
3. Paying up to Two Hundred Thirty-Two Thousand Dollars ($232,000)
plus accrued interest through December 31, 1996, of One Hundred Fifty-Two
Thousand Eight Hundred Dollars ($152,800) to Anthony C. Selig pursuant to
the property agreements secured by a deed of trust issued on March 9, 1989,
by the Company (the "Nevada Property Agreement" and the "Deed of Trust");
4. Expending up to Four Million Nine Hundred Fifteen Thousand Dollars
($4,915,000) to explore and develop the Indonesian Property; and
5. Paying up to One Million Dollars ($1,000,000) in general and
administrative expenses and/or retaining all or a portion of said sum as
working capital.
1
<PAGE> 7
THE OFFERING
The Offering represents a proposal by the Company to sell up to 1,500,000
shares of the Common Stock at $6.00 per share and to register 3,388,120 shares
of outstanding Common Stock held by the Selling Shareholders.
The Offering will expire at 5:00 p.m. (PDT) on April 30, 1997 (the
"Offering Commitment Date"), unless extended by the Company for a period or
periods up to and through July 31, 1997 (the "Offering Termination Date"), or
unless this Offering is terminated prior to such date by the Company. The
Company has designated U.S. Stock Transfer Corporation, Glendale, California,
its current transfer agent and registrar, to act as Transfer Agent. Prior to the
Offering Commitment Date, all Subscription funds will be held in an escrow
account with (the "Bank"). Provided the minimum number of
Subscriptions are accepted by the Offering Commitment Date, the Company will
offer and sell shares of the Common Stock through the Offering Termination Date.
If the minimum amount of Subscription funds are not accepted by the Offering
Commitment Date (i.e. $1,500,000), all funds held in the escrow account will be
returned to the prospective Investors who tendered such funds. Any interest
earned on Subscription funds will be distributed to the prospective Investors
tendering such funds upon activation or termination of the Offering, as the case
may be. The minimum Subscription will be 500 shares or $3,000. The Company
reserves the right to sell additional one hundred (100) share lots of the Common
Stock provided each prospective Investor agrees to subscribe to a minimum of 500
shares.
SUITABILITY REQUIREMENTS
Offers and sales of shares of Common Stock will only be made to persons who
meet the following minimum suitability requirements:
1. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of Fifty
Thousand Dollars ($50,000); or
2. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of
Thirty-Five Thousand Dollars ($35,000) plus, during the year of investment,
anticipates gross income as defined by Internal Revenue Code section 61 in
excess of Sixty-Five Thousand Dollars ($65,000).
PLAN OF DISTRIBUTION
The Common Stock will be offered by the Company and Affiliates on a
"best-efforts" basis to persons whom the Company believes to possess the minimum
suitability standards. In cases where offer and sales of the Common Stock are
affected by the Company and/or its Affiliates, no sales or underwriting
commissions will be paid. The Company has recently entered into a financial
advisory consulting agreement designed to result in the placement of Common
Stock pursuant to this Offering through underwriters. In the event the Company
enters into Underwriting Agreements with persons or entities who are
broker-dealers and members of the National Association of Securities Dealers,
Inc. ("NASD"), the Company may allot up to ten percent (10%) of the Subscription
price for the Common Stock as sales and underwriting commissions and an
additional two percent (2%) of such Subscription price as "due diligence" fees
and expenses.
APPLICATION OF PROCEEDS
Net Proceeds derived from this Offering will be used to attain the
principal objectives of this Offering. If only the minimum Subscriptions are
accepted by the Company prior to the Offering Termination Date, only some of the
principal objectives of this Offering will be met. See "USE OF PROCEEDS."
NO BOARD RECOMMENDATION
An investment in the Common Stock must be made pursuant to a prospective
Investor's independent investment evaluation. The advisability of such an
investment will depend upon a number of factors unique to each prospective
Investor as well as such independent evaluation of the merits of an investment
in the Common Stock. Accordingly, the Company's board of directors makes no
recommendation to prospective Investors or others regarding whether they should
purchase Common Stock.
2
<PAGE> 8
RISK FACTORS AND SPECIAL MATERIAL CONSIDERATIONS
THE PURCHASE OF SHARES OF COMMON STOCK INVOLVES A SUBSTANTIAL DEGREE OF
RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL MEANS WHO HAVE NO NEED FOR
LIQUIDITY IN THEIR INVESTMENT. THIS SECTION OF THE PROSPECTUS SETS FORTH THE
RISKS AND SPECIAL CONSIDERATIONS WHICH THE COMPANY BELIEVES MAY EXIST CONCERNING
AN INVESTMENT IN THE COMMON STOCK. PROSPECTIVE INVESTORS SHOULD RECOGNIZE THAT
FACTORS OTHER THAN THOSE SET FORTH BELOW MAY ULTIMATELY AFFECT AN INVESTMENT IN
A MANNER AND TO A DEGREE WHICH CANNOT BE FORESEEN AT THIS TIME. ALL PROSPECTIVE
INVESTORS ARE URGED TO CONSULT WITH THEIR ADVISORS PRIOR TO MAKING AN INVESTMENT
IN COMMON STOCK SO THAT THEY UNDERSTAND FULLY THE NATURE OF THE UNDERTAKING AND
THE RISKS WHICH MAY BE INVOLVED PRIOR TO INVESTING. FURTHERMORE, ALL PROSPECTIVE
INVESTORS ARE URGED TO REVIEW WITH THEIR COUNSEL, ACCOUNTANTS, AND PROFESSIONAL
ADVISORS THE FINANCIAL STATEMENTS ATTACHED TO THE PROSPECTUS. ANY DOCUMENTS
DESCRIBED IN THIS PROSPECTUS WHICH HAVE NOT BEEN ATTACHED AS EXHIBITS MAY BE
OBTAINED BY PROSPECTIVE INVESTORS AND/OR THEIR ADVISORS UPON REQUEST FROM THE
COMPANY.
FINANCIAL CONDITION OF COMPANY
Although the Company was formed in 1985 to engage in precious metal mining
activities, its net worth is limited. The Company is and still should be
considered in its development stage, having a net worth of Five Million Thirty
Nine Thousand Two Hundred Eighty-Five Dollars ($5,039,285) as of August 31,
1996. Moreover, the Company's net worth and the value of its Common Stock will
ultimately be dependent upon the overall success of mining operations conducted
on the Nevada Property and the Indonesian Property. It should be noted that the
sum of Three Hundred Eighty-Four Thousand Eight Hundred Dollars ($384,800) will
be due and owing under the Nevada Property Agreement and Deed of Trust and that
all sums under the Nevada Property Agreement will be due January 20, 1999. Until
such time as all obligations due under the Nevada Property Agreement are paid in
full and the Deed of Trust reconveyed to the Company, one of the primary assets
of the Company, namely the Nevada Property, will be subject to the terms and
conditions of such instruments. Any default under the Deed of Trust which
remains uncured would subject the Company to the possible loss of the Nevada
Property. Prospective Investors are cautioned that should the Company lose the
Nevada Property, it is likely that all or a substantial portion of their
investment pursuant to this Offering would be lost.
DEPENDENCE UPON MANAGEMENT
The business of the Company is and will be greatly dependent upon the
active participation of Christopher D. Michaels and Jeffery S. Kramer. The
Company also anticipates that it will be dependent upon the active participation
of other key personnel and/or consultants in the future. The Company presently
has employment agreements with both Mr. Michaels and Mr. Kramer and has entered
into agreements with key consultants; nevertheless, the loss of the services of
Mr. Michaels, Mr. Kramer and/or other key personnel (including such consultants)
regardless of reason could adversely affect the Company and the Company's
business. The Company does not maintain any life insurance policies enabling it
to receive benefits in the case of either Mr. Michaels' or Mr. Kramer's death.
To the extent that the services of Mr. Michaels or Mr. Kramer would be
unavailable to the Company for any reason, the Company might be required to
employ other executive personnel to manage and operate the Company. There is no
assurance that the Company under such circumstances would be able to employ
qualified persons on terms suitable to the Company to assure the fulfillment of
the objectives stated in this Prospectus.
LACK OF DIVERSIFICATION
The Company has, in the past, maintained other mining properties for
exploration and development. These properties were located in Bolivia, South
America, and Vancouver, British Columbia. Through its board
3
<PAGE> 9
of directors and shareholders, the Company previously elected to abandon such
other properties. The Company's primary assets presently consist of the Nevada
Property and the Indonesian Property. There can be no assurance given that once
the Company completes its present exploration and development of the Nevada
Property as described in further detail in this Prospectus, it will be able to
establish and produce significant revenues from mining operations or become
profitable. In addition, there can be no assurance that exploration activities
currently being conducted on the Indonesian Property will result in the
establishment of commercial quantities of mineralization on the Indonesian
Property. As a result, prospective Investors should be aware that investment in
the Common Stock represents an additional risk because the Company's activities
are presently confined to the exploration, development, and gold production of
only two mining properties.
RISKS ASSOCIATED WITH MINING OPERATIONS
There are a number of risks inherent in the mining of precious metals which
may have a dramatic impact on the value of the Company and the liquidity of the
Common Stock. These risks include, but are not limited to, the ability to obtain
permits, licenses, and other governmental approvals; equipment availability;
implementation of proper milling techniques; title problems; compliance with
environmental laws, rules, and regulations; accuracy of reserve forecasts; and
dramatic fluctuations in the price of precious metals. Because of these and
other risk factors associated with mining operations, prospective Investors
should be aware that an investment in the Common Stock is speculative and that
the Company can give no assurance that prospective Investors will be able to
realize either a return on investment or a return of capital.
TITLE TO THE NEVADA PROPERTY
Mineral interests in the United States are frequently owned by federal and
state governments and private parties. When a prospective mineral property is
owned by a private party or by a state, some type of property acquisition
agreement is necessary in order for a company to explore or develop such
property. Generally, these agreements take the form of purchase agreements, as
in the case of the mining agreement and property agreement discussed below, or
long-term mineral leases. Any such purchase agreements and leases are generally
subject to termination in the event of a default.
In addition to the acquisition of mineral rights by state or private
parties, the Company also may acquire rights to explore for and produce minerals
on federally owned lands. This acquisition is accomplished through the location
of unpatented mining claims upon unappropriated federal land pursuant to
procedures established by the General Mining Law of 1872, the Federal Land
Policy and Management Act of 1976, and various state laws (or the acquisition of
previously located mining claims from a private party).
The location of a valid mining claim on federal lands requires the
discovery of a valuable mineral deposit, the erection of appropriate monuments,
the posting of a location notice at the point of discovery, the marking of the
boundaries of the claim in accordance with federal law and the laws of the state
in which it is located, and the filing of a notice or certificate of location
and a map with the Bureau of Land Management and the real property recording
official of the county in which the claim is located. Failure to follow the
required procedures will render the mining claim void. If the statutes and
regulations for the location of a mining claim are complied with, the locator
obtains a valid possessory right to develop and produce minerals from the claim.
This right can be freely transferred and is protected against appropriation by
the government without just compensation.
The interests represented by unpatented mining claims possess certain
unique vulnerabilities not associated with other types of property interests.
For example, in order to maintain each unpatented mining claim, the claimant
must pay a claim maintenance fee or, if qualified to do so under the small miner
exemption, annually perform not less than $100-worth of work or improvements on
or for the benefit of the claim and must file with state and federal authorities
appropriate documentation. Failure to pay the claim maintenance fee or perform
assessment work will render the claim subject to being declared void or subject
to relocation by third parties. Failure to make the required filings will make
the property deemed to be abandoned. In addition, under applicable regulations
and court decisions, in order for an unpatented mining
4
<PAGE> 10
claim to be valid, the claimant must be able to prove that the mineral deposit
on which the claim is based can be mined at a profit both at the time the claim
is located and at all times thereafter. Thus, it is conceivable that, during
times of declining metal prices, claims which were valid when located could be
invalidated by the federal government.
No generally applicable title opinions or title insurance has been obtained
with respect to the Nevada Property with the attendant risk that some titles may
be defective. In fact, the agreements which relate to the current ownership of
the parties (i.e. the 1993 Joint Venture Agreement and the Amended Joint Venture
Agreement) contain incomplete and inadequate descriptions of the mining claims.
However, on the basis of periodic status reports and reviews by the Company's
employees of the relevant land records, the Company believes that the joint
venture of which the Company is a party has satisfactory title to the Nevada
Property subject to exceptions which the Company does not believe materially
impair the ability to continue to mine and process the ore and to obtain the
economic benefits thereof.
The Company first acquired its rights in and to the Nevada Property
pursuant to a mining agreement dated April 4, 1987 (the "Nevada Property
Agreement"), with Anthony C. Selig & Associates, Dixie Exploration Corporation,
and Anthony C. Selig (the "Selig Entities"). The Selig Entities acquired their
rights pursuant to a lease and option to purchase agreement which it had entered
into on November 15, 1982 with Argus Resources, Inc. ("Argus"), pursuant to
which the Selig Entities leased all of Argus' patented and unpatented mining
claims comprising the Nevada Property. Under the terms of the Nevada Property
Agreement, the Company was required to pay the Selig Entities the purchase price
for the Nevada Property (ultimately determined to be $600,000). Additionally,
the Company was required to and did issue 1,300,000 shares of Common Stock to
Argus. The installment obligations owed to the Selig Entities were secured by a
deed of trust on the Nevada Property (the "Deed of Trust"). The stock issued to
Argus was subject to a one-for-ten reverse stock split approved by the Company's
shareholders and effected in 1995.
In 1992, the Company entered into an agreement with Argus, whereby Argus
was to control sixty percent (60%) of the Nevada Property and was to act as
operator in consideration of Argus' assumption of all remaining payments due to
the Selig Entities under the Nevada Property Agreement. Argus and the Company
subsequently entered into a joint venture agreement with Marlowe Harvey/Maran
Holdings, Inc. ("Marlowe Harvey"), whereby in consideration of Marlowe Harvey
assuming all of the then remaining obligations owed to the Selig Entities,
Marlowe Harvey would acquire a fifty-one percent (51%) interest in the joint
venture, Argus would earn a twenty-four and one-half percent (24.5%) interest in
the joint venture, and the Company would earn a twenty-four and one-half percent
(24.5%) interest in the joint venture. In turn, the Nevada Property was to be
conveyed to the joint venture.
The Company has executed agreements with interested parties which may
result in the Company increasing its interest in the joint venture from
twenty-four and one-half percent (24.5%) to a minimum fifty percent (50%)
interest in the joint venture. The rights and responsibilities of both the
Company and Marlowe Harvey/Maran Holdings, Inc., are currently the subject of a
lawsuit filed by the Company on November 4, 1996, in Nye County, Nevada. This
lawsuit, described in greater detail elsewhere in this Prospectus, will not
affect the Company's right to its interest in the Nevada Property acquired
pursuant to the various agreements previously entered into by the Company. As a
result of the issues raised by the lawsuit, however, the Company may be required
to hold or pay a portion of the revenues generated from mining operations for
the benefit of Argus and Marlowe Harvey.
TITLE TO THE INDONESIAN PROPERTY
Mineral interests in Indonesia are controlled exclusively by the federal
government through the Ministry of Mines and Energy. Title to a mineral property
in Indonesia is subject to obtaining a contract of work (a "COW" or "KPE") for
the extraction of commercial quantities of minerals after obtaining property
rights from the fee owner. Title is confirmed by the issuance of a government
seal affixed to specific property location maps.
In August 1996, the Company entered into an agreement with Maxwells Energy
and Metals Technology Ltd., a Singapore corporation ("Maxwells"), to acquire a
fifty-one percent (51%) working interest in 10,000
5
<PAGE> 11
hectares (approximately 25,000 acres) of real property located in Kalimantan,
Indonesia. Maxwells had acquired its working interest in and to the Indonesian
Property through an agreement with Abubakar Sidak, an Indonesian resident.
Maxwells has provided the property location maps with affixed governmental seals
and other property information thereby suggesting that title to the working
interest noted above has been vested in the Company. These location maps and
governmental seals were required as a condition to the Company agreeing to
acquire its interest in the Indonesian Property and to pay the consideration for
such interest.
Under its agreement with Maxwells, the Company has assumed the obligation
to conduct exploration activities on the Indonesian Property. While such
obligation required the Company to commence exploration activities within one
year from the date of execution of the agreement, the Company has already
commenced such activities.
In consideration of the acquisition of its fifty-one percent (51%) working
interest, the Company was obliged to issue Four Hundred Thousand (400,000)
shares of its Common Stock to Maxwells upon execution of the agreement. The
Company is further obligated to issue an additional Four Million (4,000,000)
shares of its Common Stock to Maxwells upon confirmation (through independent
valuation) that a value of commercial mineralization or other natural resources
in an amount of at least Twelve Million Dollars ($12,000,000 U.S.) has been
established or upon the establishment of other conditions more particularly
described elsewhere in this Prospectus. The Four Hundred Thousand (400,000)
shares of Common Stock issued to Maxwells have been registered pursuant to Form
B-D filed in connection with this Prospectus.
The Company has entered into a contract with Behre Dolbear & Co., Inc., an
international mining consulting firm to act as independent engineer and to
oversee the exploration and development of the Indonesian Property including
assisting the Company in various matters relating to title and governmental
regulation.
GOVERNMENTAL REGULATION
Mining operations on the Nevada Property will be subject to substantial
federal, state, and local regulation concerning mine safety and environmental
protection. Some of the laws and regulations which will pertain to mining
operations include maintenance of air and water quality standards, the
protection of threatened, endangered and other species of wildlife and
vegetation, the preservation of certain cultural resources and the reclamation
of exploration, mining and processing sites. These laws are continually changing
and, as a general matter, are becoming more restrictive. The location of the
Nevada Property is found in an area which strongly encourages mining operation.
However, the Company's inability to comply with such federal, state, or local
ordinances and regulations on an ongoing basis may cause significant delays in
the permitting process or in the operations anticipated to be conducted on the
Nevada Property. In addition, delays in such compliance could result in
unexpected and substantial capital expenditures. Although no such problems or
delays are anticipated, no assurances can be given that the Company will be able
to comply with all applicable law and regulations and maintain all necessary
permits, licenses and approvals or, in the alternative, that compliance and/or
permitting will be obtained without substantial delays and/or expenses.
With regard to the Nevada Department of Conservation and Natural Resources,
Division of Environmental Protection ("NDEP"), the Company has received
authorization to proceed with its currently planned mining operations on the
Nevada Property pursuant to the applicable statutes and regulations relating to
a small mining operation. In the event, however, the Company's operations exceed
the designated limits for a small mining operation, a full reclamation plan will
need to be prepared, submitted, and approved by NDEP. While the Company believes
that it will be able to obtain such approval, there is no guarantee that the
required approval will in fact be obtained by the Company.
A change in the nature or magnitude of the Company's presently anticipated
operations on the Nevada Property may trigger the need to obtain additional NDEP
and other federal, state or local governmental approvals, licenses or permits.
For example, water processing discharge needs may trigger the requirement that
the Company obtain a water pollution control permit. Other significant permits,
required by a change in operations on the Nevada Property, might include an NDEP
permit, air quality permit, waste management permit, archeological clearance and
wildlife permit. There is no guaranty that the Company will be able to
6
<PAGE> 12
obtain any or all of the required federal, state or local permits that might be
required to expand its operations on the Nevada Property.
Even if the Company does not change its currently planned operations on the
Nevada Property, the Company is nevertheless vulnerable to the various federal,
state and local laws and regulations governing regulations and protection of the
environment, occupational health, labor standards and other matters. The reason
for this is that these laws are continually changing, and as a general matter,
are becoming more restrictive.
To comply with these federal, state and local laws, the Company may in the
future be required to make capital and operating expenditures on environmental
projects both with respect to maintaining at currently planned operations and
the initiation of new operations. Such projects may include, for example, air
and water pollution control equipment, treatment, storage and disposal
facilities for solid and hazardous waste, remedial actions required for the
containment of tailings pond seepage, continuous testing programs, data
collection and analysis land reclamation (specifically including existing mine
and processing waste on the Nevada Property), landscaping and construction
projects. There is no guaranty that the Company will technically or financially
be able to comply with any or all of these potential requirements.
ENVIRONMENTAL REGULATION AND LIABILITY
The Company's proposed mineral operations on the Nevada Property will be
subject to environmental regulation by federal, state, and local authorities.
Under applicable federal and state law, the Company may become jointly and
severally liable with all prior property owners for the treatment, cleanup,
remediation, and/or removal of substances discovered at the Property which are
deemed by federal and/or state law to be toxic or hazardous ("Hazardous
Substances"). Liability may be imposed among other things for the improper
release, discharge, storage, use, disposal, or transportation of Hazardous
Substances only in the areas which the Company disturbs.
Applicable law imposes strict joint and several liability on, among others,
"owners" and "operators" of properties contaminated with Hazardous Substances.
Such liability may result in any and all "owners", "operators", and
"transporters" of contaminated property being required to bear the entire cost
of remediation. The Company may utilize substances which have been deemed by
applicable law to be Hazardous Substances. The potential liability of the
Company under such laws will be derived from the Company's classification as
both an "owner" and "operator" of a contaminated property. While the Company
intends to employ all reasonably practicable safeguards to prevent any liability
under applicable laws relating to Hazardous Substances, mineral exploration by
its very nature will subject the Company to substantial risk that remediation
will be required. If the cleanup or remediation of hazardous substances is
required on the Nevada Property, substantial delays could occur in the
permitting process and/or in the further extraction of gold and other precious
minerals on the Nevada Property.
PUBLIC MARKET
The Company received approval for trading of its Common Stock on the
Electronic Bulletin Board (NASDAQ) in March 1996. From the period from December
1995 until March 1996, the Company published "bid" and "ask" prices on the "pink
sheets". The low and high prices for the Common Stock since commencement of
quotations are as follows:
<TABLE>
<CAPTION>
HIGH DATE LOW DATE
- ------ ---------------------------- ------ ----------------------------
<S> <C> <C> <C>
$7.00 December 5, 1996 $1.25 December 1995
</TABLE>
Since the commencement of trading on the Electronic Bulletin Board, the
average monthly volume of trading of the Company's Common Stock has been
approximately 200,000 shares. Prospective Investors should be aware that the
volume of trading on the Electronic Bulletin Board traditionally has been
limited and there can be no assurance that the Electronic Bulletin Board will
provide an effective market for a shareholder to sell his or her Common Stock of
the Company.
7
<PAGE> 13
The Company contemporaneously herewith has filed an Application for Entry
onto the NASDAQ Small Cap Market. It is anticipated that the Company will be
included in the Small Cap Market for trading as of the effective date of this
Prospectus.
SEC INVESTIGATION
In May 1989, the Company received notice that the Securities and Exchange
Commission (the "Commission") had commenced an informal investigation into the
Company's compliance with the registration and disclosure requirements of the
Securities Act of 1933 (the " '33 Act") and the Securities Exchange Act of 1934
(the " '34 Act"). Thereafter the Commission commenced an extensive review of the
Company's books and records relating to the Company's business and mining
operations, its capital raising activities, and its financial condition and
history. Through all stages of the investigation, the Company cooperated with
the Commission.
The Commission and the Company agreed to terminate the Commission's
investigation by the entry of a consent judgment against the Company and certain
of the Company's past and present key employees. These key employees include
Christopher D. Michaels, Jeffrey Kramer and Stanley Mohr. The terms and
conditions of the consent judgment can be summarized as follows:
1. The Company neither admitted nor denied any of the allegations
alleged by the Commission;
2. The Company and its officers, agents, servants, employees, and
others receiving actual notice of the consent judgment are permanently
restrained and enjoined from selling securities in interstate commerce
unless and until a registration statement is in effect or the security or
transaction is exempt from the registration provisions of the '33 Act
and/or the '34 Act;
3. The Company and its officers, agents, servants, employees, and
others receiving actual notice of the consent judgment are permanently
restrained from engaging in any transaction, practice, or course of
conduct, employing any course of conduct, or obtaining any money or
property by means of an untrue statement of a material fact, or any
omission to state a material fact, necessary to make the statements made in
light of the circumstances under which they were made not misleading.
On April 7, 1994, the Company and the Commission entered into a stipulation
regarding the resolution of all outstanding issues which then existed, which
stipulation was entered as an order by the United States District Court for the
Central District of California. Such stipulation contained an acknowledgement
that the Company and its executive officers had received no ill-gotten gains as
a result of prior activities by the Company in offering and selling its
securities, and that the consent judgment resolved once and for all, all issues
raised by the Commission as a result of the Company's prior activities. The
Company was not required to pay any fines or required to disgorge any monies
previously received by it in connection with its securities.
RELATIONSHIP WITH OTHER OFFERINGS
This Offering has been registered pursuant to Regulation S-B promulgated by
the Commission pursuant to the Securities Act of 1933 and the Securities
Exchange Act of 1934 (the "Federal Securities Laws"). From the period September
1, 1993, through August 31, 1996, the Company has offered and sold 2,803,438
shares of its Common Stock and 135,735 shares of Preferred Stock. These sales
were made primarily to its existing shareholders. The Company has relied upon
applicable exemptions from the registration requirements of the Federal
Securities Laws and upon compatible exemptions from securities registration
under applicable state ("blue sky") laws. In the event that it is determined
that the Company sold and issued these securities without complying with either
the Federal Securities Laws or blue sky laws, the purchasers of these securities
may have the right to rescind the sale of these securities and to recover the
purchase price paid to the Company plus interest accrued on such purchase price.
The Company does not currently have funds with which it could repay the purchase
price and accrued interest from any prior sale of securities. Moreover, it is
doubtful that the Company could continue operations if a significant number of
existing shareholders were to seek to rescind their purchases of securities. The
financial statements of the Company do not reflect a contingent liability for
any such rescission rights.
8
<PAGE> 14
FINANCIAL RISK OF PROPOSED ACTIVITIES
The Net Proceeds derived from this Offering may not be sufficient to
finance the completion of the exploration and development activities
contemplated pursuant to this Offering. Moreover, if not all of the Common Stock
offered pursuant to this Offering is sold, the Company's activities will be
financed through existing capital which the Company then possesses. If the
activities contemplated by the Company's Business Plan do not prove to be
profitable or successful, the Company may suffer a loss with respect to
operations conducted on the Properties, or in the alternative, will abandon
either or both of the Properties as noneconomic. If such is the case,
prospective Investors risk all or a substantial loss of their investment in the
Common Stock.
VALUATION OF COMMON STOCK
The price per share of the Common Stock has been established based upon the
current market price for the Common Stock. The current price is substantially
higher than the average share price paid by existing shareholders of the
Company. The Company has also considered several factors in determining the
purchase price per share for the Common Stock including the state of development
of the Properties, Company's management, the Company's current financial
condition, and the general condition of the securities market. Prospective
Investors should be advised that the price per share is not related to the
Company's value of its assets, net worth, or results of operations conducted on
the Properties. As a result, there is no assurance that prospective Investors
will be able to liquidate their investment in the Common Stock or on terms
resulting in any ultimately favorable return on their investment or upon any
terms.
SIGNIFICANT DILUTION
The net book value of the Company per share as of August 31, 1996, was
approximately forty-eight cents ($.48) per share. After taking into
consideration the conversion rights of the shareholders holding or entitled to
hold Preferred Stock as of August 31, 1996 (but exclusive of any dividends paid
in stock), the total number of shares of Common Stock outstanding as of August
31, 1996, and assuming all 1,500,000 shares of the Company's Common Stock are
sold pursuant to this Offering, the net tangible book value of the Common Stock
immediately after the Offering after deducting One Million Eighty Thousand
Dollars ($1,080,000) in Organization and Offering Expenses will be approximately
One Dollar and Nine Cents ($1.09) per share of Common Stock. Investors who
subscribe to shares of Common Stock will therefore realize an immediate dilution
of Four Dollars and Ninety-One Cents ($4.91) per share of Common Stock. Assuming
only the minimum number of shares are sold pursuant to this Offering, the net
tangible book value of the Common Stock immediately after the Offering after
deducting One Hundred Eighty Thousand Dollars ($180,000) in Organization and
Offering Expenses will be approximately sixty cents ($.60) per share. Investors
who subscribe to shares of Common Stock under these circumstances will therefore
realize an immediate dilution of Five Dollars and Forty Cents ($5.40) per share.
The price to be paid by Investors pursuant to this Offering should be compared
to the prices paid by and the options granted to certain of the Company's
executive officers, directors and the Selling Shareholders. See "DESCRIPTION OF
SECURITIES BEING OFFERED" and "PRINCIPAL AND SELLING SHAREHOLDERS."
FLUCTUATION OF GOLD PRICES
Since its deregulation in August 1971, the market price for gold has been
highly speculative and volatile. Since 1980, gold has fluctuated from a high of
approximately $850 per ounce in January 1980 to a low of approximately $285 per
ounce in 1985. Currently gold is trading at approximately $385 per ounce. In
1995, gold averaged over $380 per ounce. Instability in gold prices may effect
the profitability of the Company's future operations.
9
<PAGE> 15
DIVIDENDS
The Company has not paid cash dividends on any of its Common Stock and does
not anticipate paying any cash dividends on any of its Common Stock for the
foreseeable future. Holders of the Preferred Stock are entitled to an annual
cash or stock dividend offered at the rate of eight percent (8%) per year
payable out of any funds legally available therefor and payable on January 1,
April 1, July 1, and October 1 of each year. Such dividends are cumulative so
that if the full dividends in respect of any previous dividend period is not
paid, holders of the Preferred Stock are entitled to receive any deficiency
before any dividend or other distribution may be made or declared by the Company
with respect to any other class of stock including other series of preferred
shares should the Company elect to issue such additional series.
As of the date of this Prospectus, no quarterly dividends have been paid to
holders of the Preferred Stock. Management of the Company is presently
scheduling payment of accrued dividends in Common Stock as authorized in the
Company's "Certificate of Determination of Preferences of Series A Preferred
Stock" filed with the Nevada Secretary of State on October 25, 1995.
SELECTED FINANCIAL DATA
The financial information accompanying this Prospectus reflects the current
financial condition of the Company. It should be noted that the Company has not
reported a profit from operations since its inception to the present. Management
projects that the further exploration and development of the Properties will
result in profitable operations although, for the reasons stated elsewhere in
this Prospectus, no guarantee to that effect can be made.
USE OF FORWARD-LOOKING STATEMENTS
This Prospectus contains "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are found in the Sections of the Prospectus entitled "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION", "DESCRIPTION OF COMPANY'S BUSINESS AND
PROPERTY" and elsewhere. Prospective Investors are cautioned that the
assumptions upon which such statements are based cannot be guarantied by the
Company to occur in the future or that the overall success of the Company might
be materially adversely affected should such bases (or some of them) not occur.
ADDITIONAL RISK FACTORS
Prospective Investors should review the Company's audited financial
statements included with this Prospectus and the remainder of this Prospectus in
its entirety. Other sections of this Prospectus identify other potential risks
and special material considerations which should be analyzed by each prospective
Investor prior to a decision as to whether to invest in the Common Stock
pursuant to this Offering. Prospective Investors are also cautioned that, as
with any security, there may be other risks and special material considerations
which are not foreseeable at this time which may also materially adversely
affect an investment in the Common Stock.
TERMS OF THE OFFERING
GENERAL
The Company is hereby offering a minimum of 250,000 shares and a maximum of
1,500,000 shares of its Common Stock at $6.00. An additional 3,388,120 of Common
Stock held in the names of the Selling Shareholders are being registered
pursuant to this Offering.
The primary purposes for which Net Proceeds derived from this Offering are
to be used include the following:
1. Further developing the Nevada Property consistent with the
Company's Business Plan;
10
<PAGE> 16
2. Expanding and/or delineating (to increase reserves and potential
reserves) the Nevada Property, acquiring up to a fifty percent (50%)
interest in the mill constructed approximately one mile from the Nevada
Property and/or constructing its own mill on the Property;
3. Paying the sum of up to Two Hundred Thirty-Two Thousand Dollars
($232,000) plus accrued interest through December 31, 1996, of One Hundred
Fifty-Two Thousand Eight Hundred Dollars ($152,800) to Anthony Selig
pursuant to the Nevada Property Agreement and the Deed of Trust;
4. Engaging in exploration activities on the Indonesian Property; and
5. Paying up to One Million Dollars ($1,000,000) in general and
administrative expenses and/or retaining all or a portion of said sum as
working capital.
SUBSCRIPTION
There are hereby offered a total of 1,500,000 shares of the Company's
Common Stock at a price of $6.00 per share. In addition, the Selling
Shareholders are registering 3,388,120 shares pursuant to this Offering. Each
prospective Investor must purchase a minimum of 500 shares of Common Stock. In
addition, each prospective Investor will have the right to purchase additional
blocks of 100-share lots of Common Stock.
The Offering Commitment Date is presently scheduled for April 30, 1997,
although the Company hereby reserves the right to extend this Offering through
December 31, 1997 (the "Offering Termination Date"). On or before the Offering
Commitment Date, the Company will be required to accept Subscriptions amounting
to the purchase of at least 250,000 shares of Common Stock or to terminate the
Offering without having sold any of the Common Stock. The Company reserves the
right to accept Subscriptions through the Offering Commitment Date unless this
Offering is terminated by the Company prior to such date.
Each Subscription for the Common Stock will be held in an escrow account
established with ________ (the "Bank"). Until such time as a minimum number of
Subscriptions are accepted or the Offering Commitment Date is reached without
the acceptance of the minimum number of Subscriptions necessary to activate this
Offering, Subscription funds will be held in the escrow account but may be
invested in short-term certificates of deposit, short-term government
securities, demand deposits and bank money market accounts.
If Subscriptions amounting to at least $1,500,000 (i.e. 250,000 shares) are
not accepted on or before the Offering Commitment Date, all Subscription funds
together with any interest earned on such funds held in the escrow account will
be returned to the persons whose funds were deposited in the escrow account. If
Subscriptions amounting to at least 250,000 shares of Common Stock are accepted
by the Offering Commitment Date, further Subscriptions which are accepted by the
Company will be deposited into an account opened up on behalf of the Company at
the Bank and will not be subject to the terms and conditions of the escrow
account. Any interest earned on Subscription funds will be distributed to
prospective Investors tendering such funds upon activation or termination of the
Offering as the case may be.
The Company reserves the right to discontinue this Offering at any time and
also reserves the right, in its absolute discretion, to reject, in whole or in
part, any Subscription. No assurance can be given that any or all of the Common
Stock will be sold.
SUITABILITY OF INVESTORS
Sales of Common Stock may be made pursuant to this Offering only to persons
who represent that they meet the following minimum requirements:
1. He/she (either alone or together with his/her spouse) has a net
worth (inclusive of home, furnishings, and automobiles) in excess of
$50,000; or
2. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of
$35,000 and during the year of investment anticipates gross income as
defined by Internal Revenue Code section 61 in excess of $65,000.
11
<PAGE> 17
PLAN OF DISTRIBUTION
The Common Stock will be offered by the Company through its Affiliates on a
"best-efforts" basis to prospective Investors who the Company believes to
possess the minimum suitability standards outlined elsewhere in this Prospectus.
In cases where offers and sale of the Common Stock are affected by the Company
and/or its Affiliates, no sales or underwriting commissions will be paid. The
Company has entered into a financial advisory services agreement with Rhone
Finance SA, Geneva, Switzerland, designed to result in the placement of common
stock pursuant to this Offering through underwriters. In the event the Company
enters into Underwriting Agreements with persons or entities who are
broker-dealers and members of the National Association of Securities Dealers,
Inc. ("NASD"), the Company may allot up to ten percent (10%) of the Subscription
price for the Common Stock as sales and underwriting commissions and an
additional two percent (2%) of such Subscription price as "due diligence" fees
and expenses.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ "SMALL CAP" MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY
THE COMPANY
Nevada Manhattan Mining Incorporated (the "Company") was formed on June 10,
1985, under the provisions of the Nevada General Corporation Act and originally
known as "Epic Enterprises Ltd." Pursuant to a Certificate of Amendment to its
Articles of Incorporation, the Company changed its name to "Nevada Manhattan
Mining Incorporated" on September 11, 1987.
The Company's current capitalization consists of 49,750,000 shares of
Common Stock with a par value of one cent per share ($.01) and 250,000 shares of
Series A Preferred Stock with a par value of $1.00 per share. After taking into
account a one-for-ten reverse stock split approved by the Company's shareholders
and effected in January 1995, 8,676,155 shares of the Company's Common Stock and
135,735 shares of the Preferred Stock were issued and outstanding as of August
31, 1996. The average price per share paid for the Common Stock to date has been
approximately $2.00 per share. Investors who subscribed to shares of Preferred
Stock have paid $10.00 per share with an effective purchase price for the Common
Stock upon conversion of $1.00 per share.
The Company has its principal executive offices at 5038 North Parkway
Calabasas, Suite 100, Calabasas, California 91302. Its telephone number is (818)
591-4400.
Management of the Company presently consists of a five-member board of
directors and employs two (2) full-time executive officers and an additional
five (5) full-time employees. The Company has contracted with Harrison Western
Mining and Construction, Lakeland, Colorado, to supply labor, service, materials
and equipment for Nevada Property operations. The Company has also entered into
an agreement with Gold King Mines Corporation to provide mining consulting
services with respect to the Nevada Property and with Behre Dolbear & Company,
Inc., to provide oversight to the exploration and development activities on the
Indonesian Property.
THE COMPANY'S BUSINESS
The Company's business has been and will continue to be the exploration and
mining of precious metals with emphasis in the mining of gold and silver. The
Company's existing properties are known as the Manhattan Property (the "Nevada
Property") which consists of approximately 1800 acres and which is located near
the town of Manhattan, Nevada (approximately 45 miles northeast of Tonopah,
Nevada) and 10,000 hectares (25,000 acres) located in the gold belt area of
Kalimantan, Indonesia (the "Indonesian Property"). A more thorough description
of the Properties is contained in these Sections of the Prospectus below
entitled "The Nevada Property" and "The Indonesian Property."
12
<PAGE> 18
Management of the Company generally reviews all proposed mining projects
submitted by third parties. The Company initially will be heavily dependent upon
the mill constructed approximately one mile from the Nevada Property which is
currently owned and operated by New Concept Mining, Inc. ("New Concept"). The
Company presently intends to use the New Concept mill for milling the ore
produced from the Nevada Property and selling bullion dore bars or concentrate
for sale to third party buyers. Under the terms of an agreement entered into
with the Company, New Concept has agreed to provide the Company with the
capacity to initially process between 1000-1200 tons of ore per month. New
Concept has also agreed to increase processing capacity once the Company's
development program expands. The Company has also been engaged in preliminary
discussions with New Concept to purchase up to one half of the mill for the sum
of Two Hundred Fifty Thousand Dollars ($250,000). These discussions have not yet
resulted in a binding agreement between the Company and New Concept. However,
the Company intends to reserve that amount in Net Proceeds to enable it to
purchase an interest in the mill should a definitive agreement with New Concept
be reached and the Company is successful in selling a sufficient number of
shares of Common Stock pursuant to this Offering. In the alternative, the
Company may use the amount so reserved from Net Proceeds to help finance the
cost of constructing its own mill on the Nevada Property.
Mining operations, in general, and the Company's proposed operations on the
Nevada Property will be subject to extensive federal, state, and local
governmental regulation affecting mining exploration, extraction, use and
disposal of hazardous substances, reclamation of the surface and subsurface as a
result of operations and other aspects of the Company's proposed operations on
the Property.
Some of these regulations and statutes are discussed in further detail in
the section of the Prospectus entitled "RISK FACTORS AND SPECIAL MATERIAL
CONSIDERATIONS."
While regulation of mining operations has been extensive in the past and it
is anticipated will continue to be extensive in the foreseeable future, it is
impossible to anticipate any changes to such regulations. The implementation of
additional regulations or the impact such changes or additional regulations may
have on the Company's proposed operations.
The Company has budgeted the sum of One Hundred Thousand Dollars ($100,000)
from sums anticipated to be spent for compliance with applicable environmental
laws. However, the Company can provide no assurance that the amount so budgeted
for environmental compliance will be consistent with the amounts actually spent
for compliance or that the actual amount of such compliance may not be
substantially greater than that which has been projected to be spent by the
Company pursuant to the budget.
It should be noted that over the past three years, the Company has expended
almost Five Hundred Seventy-Eight Thousand Dollars ($578,000) on research and
development expenses on or relating to the Nevada Property. These expenses
relate primarily to developing the most effective means by which to extract the
ore and transport it to the New Concept mill approximately one mile from the
Nevada Property.
THE NEVADA PROPERTY
The Nevada Property consists of 28 patented and 65 unpatented claims
aggregating approximately 1,800 acres.
The Company originally acquired its rights to the Nevada Property pursuant
to a mining agreement dated April 4, 1987 (the "Nevada Property Agreement"),
with Anthony C. Selig and related entities (the "Selig Entities"). On December
9, 1987, the Selig Entities and the Company entered into an amendment to the
Nevada Property Agreement reducing the purchase price of the Nevada Property
from Two Million One Hundred Thousand Dollars ($2,100,000) to Six Hundred
Thousand Dollars ($600,000) and modifying, amongst other things, the schedule of
semi-annual payments due from the Company to the Selig Entities in consideration
of the purchase of the Nevada Property.
On March 2, 1989, the Company entered into an agreement entitled "Manhattan
Mining Property Agreement" with Argus Resources, Inc., a Nevada corporation;
Argus Mines, Inc., a Nevada corporation (the "Argus Companies") and the Selig
Entities (the "Nevada Property Agreement"). This agreement was entered into
after a dispute had arisen between Argus Resources, Inc., and the Selig Entities
under the lease
13
<PAGE> 19
agreement which had been previously entered into between such parties and which
originally formed the basis upon which the Company derived its title to the
Property. This agreement also modified certain terms and conditions contained
within the Nevada Property Agreement.
Under the terms of the Nevada Property Agreement, as amended, the Company
was required to pay and did pay to the other parties the sum of Twenty Five
Thousand Dollars ($25,000) upon execution of the agreement. The Company also
agreed to pay the Argus Companies the additional sum of One Hundred Sixty-Five
Thousand Dollars ($165,000) in monthly installments of Seven Thousand Five
Hundred Dollars ($7,500), commencing on April 15, 1989, and continuing
thereafter until the entire sum was paid in full. The Nevada Property Agreement,
as amended, further required the Company to issue 1,000,000 shares of Common
Stock as additional consideration to Argus Resources, Inc. In fact, the Company
paid the Argus Companies, Inc., and the Selig Entities all amounts due under the
Nevada Property Agreement, as amended, and issued 1,000,000 of Common Stock to
Argus Resources, Inc.
Pursuant to the terms and conditions of the Nevada Property Agreement, as
amended, the Argus Companies executed a Corporation Quitclaim Deed conveying a
forty percent (40%) undivided interest in the Nevada Property to the Company on
March 9, 1989. Concurrently therewith, the Company delivered a Deed of Trust and
Assignment of Rents (the "Deed of Trust") to the Selig Entities to further
secure the obligations under the Nevada Property Agreement. Both the Corporation
Quitclaim Deed and the Deed of Trust were duly recorded in the office of the
county records by and for Nye County, Nevada.
In June 1993, the Company entered into a Joint Venture Agreement with
Marlowe Harvey/Maran Holdings, Inc. ("Marlowe Harvey"), Argus Resources, Inc.
and the Selig Entities respecting the Nevada Property. Under the terms of the
Joint Venture Agreement, Marlowe Harvey was entitled to a fifty-one percent
(51%) interest in the Nevada Property in consideration of Marlowe Harvey
assuming certain obligations, including the purchase of the Deed of Trust from
the Selig Entities. The remaining forty-nine percent (49%) interest in the
Nevada Property was to be held by equally by Argus Resources, Inc. and the
Company in consideration of their payment of their pro rata share of all amounts
due under the promissory note secured by the Deed of Trust created by the Nevada
Property Agreement, as amended. The failure of either Argus Resources, Inc. or
the Company to pay any amounts due under the note during the first year of the
joint venture was to be deemed a default, requiring the defaulting party to quit
claim its interest in the Nevada Property to the remaining parties. The Argus
Companies, Marlowe Harvey and the Company were also responsible for their pro
rata share of all property development expenses. At the time, Marlowe Harvey was
the operator of the Nevada Property and responsible for all operations relating
to maintaining the Nevada Property in accordance with the Mining Agreement.
On October 20, 1995, the Company and Mr. Harvey "as an individual and for
Maran Holdings and Argus Resources" executed an agreement (the "Amended Joint
Venture Agreement") which purports to amend the June 1993 Joint Venture
Agreement. The Amended Joint Venture Agreement obligates Marlowe Harvey to
convey to the Company within ten days of the date of execution of such Agreement
fifty-two percent (52%) of the outstanding and issued stock in Argus Resources,
Inc.("Argus") in exchange for the payment of One Hundred Forty-Seven Thousand
Dollars ($147,000), to be paid in the future from a percentage of Argus' share
of the net proceeds realized from the sale of gold production on the Nevada
Property. In addition, Marlowe Harvey agreed to convey a 1% interest in the
Nevada Property to the "management" of the Company (Messrs. Michaels and Kramer)
in exchange for a "production payment" of Forty Seven Thousand Dollars
($47,000), likewise to be paid from future production attributable to Argus
Resources, Inc. It was and is the intention of the Company's officers to convey
their rights under the Amended Joint Venture Agreement to the Company in
exchange for the Company's assumption of such officers' obligations under such
Agreement.
Both the obligations of the Company and its officers under the Amended
Joint Venture Agreement were to be secured by the pledge of Common Stock (in the
case of the Company, 1,235,429 shares) with "piggy back" registration rights to
be granted to Marlowe Harvey in two years in the event $147,000 is not paid from
production by that time. If only a portion of the production payment is made by
October 20, 1997, the obligation to seek registration will be ratably reduced.
The Company was further required to issue 1,186,981
14
<PAGE> 20
shares of its Common Stock to Maran Holdings, Inc., an Affiliate of Argus, at
the time at which it was obligated to issue to Argus the shares to be used as
security for the production payment.
The Amended Joint Venture Agreement also required both the Company and its
joint venture partners to each make one-half of the property tax payments and
the payments due to the Selig Entities under the Nevada Property Agreement. Both
of these payments are due in January of each year.
In January 1996, the Company notified Marlowe Harvey that it had been
"ready, willing, and able" to convey the Common Stock pursuant to the terms of
the Amended Joint Venture Agreement. In addition, the Company made all of the
required property tax payments relating to the Nevada Property and the payments
due to the Selig Entities in reliance upon the terms of the Amended Joint
Venture Agreement. Marlowe Harvey has failed to reimburse the Company for its
one-half share of the property tax payments and the payments due to the Selig
Entities which were advanced on its behalf by the Company and has failed to make
the conveyances required by the terms and conditions of the Amended Joint
Venture Agreement. As a result, the Company instituted an action in Nye County,
Nevada on November 4, 1996, seeking specific performance and damages against
Marlowe Harvey, Maran Holdings Inc., Calais Resources Inc., and Argus Resources,
Inc. This action is described in further detail under the Section of this
Prospectus entitled "LEGAL MATTERS, AUDITORS, AND PENDING LEGAL
PROCEEDINGS-Legal Proceedings". Regardless of the outcome of this action, the
Company will continue to operate this property and believes it will continue to
own the interest in the Nevada Property which it acquired by virtue of the
previous agreements it entered into which relate to the Nevada Property.
The Nevada Property is located in an historic mining district which has
experienced mining operations from 1866 to the present with the major activity
in the late 1860s, between 1906 and 1921, and from 1960 to the present. Placer
and lode mining took place principally in the Reliance Mine, the White Caps
Mine, the Union Amalgamated Mine, the Manhattan Consolidated Mine, the Earle
Mine, the Big Four Mine, and the April Fool Mine. The United States Geological
Survey reports historic production through 1959 of 260,000 ounces of lode gold
and 206,000 ounces of placer gold mined in the Manhattan Mining District. Since
1959, the more significant gold production occurred from the Echo Bay and Nevada
Gold Fields mines which border the Nevada Property. Such mines have yielded
production in excess of 500,000 ounces of gold.
The Nevada Property lies in several shallow gullies in a general area which
is located between 7,500 to 7,800 feet in elevation. Mineralization of the
Nevada Property appears to be structurally controlled by a series of parallel
east-northeast trending faults dipping from 50 to 75 degrees southwest and with
some cross or perpendicular faults. The Nevada Property consists of two distinct
areas which require different mining and production techniques. Gold
mineralization in the vicinity of "Litigation Hill" is near the surface and much
less expensive to mine. The lower grade ore will be "leached" while higher
grades of ore will be milled. Gold mineralization located in the White Caps Mine
have revealed two delineated ore bodies below the 600-foot level and a deeper
exploration target requiring substantially higher costs for extraction as
compared to "Litigation Hill." "Dewatering" the mine and driving a decline to
the 800-foot level could become quite costly. Additionally, gold ore obtained
from the White Caps Mine may be required to be processed using autoclave
technology in order to comply with environmental regulations due to the ore's
high content of antimony, mercury, arsenic, and sulphur; nevertheless, the
Company believes that the deep ore bodies located within the White Caps Mine may
have sufficient potential to justify a large development program. Both the
"Litigation Hill" and White Caps Mine areas of the Property will be discussed
below.
The Nevada Property is adjacent to three existing gold mines. Immediately
adjacent to the west of the Nevada Property is the Manhattan Mine formerly owned
by Echo Bay Minerals Company now a part of the Smokey Valley Combined Operation.
This mine has produced approximately 500,000 ounces of gold over the last 10 to
15 years. Operations at this mine have been suspended.
Immediately to the south of the Nevada Property is the Keystone Mine which
was developed by Nevada Gold Fields Company. Proven reserves were reported at
100,000 tons of gold ore averaging .21 ounces per ton. Probable reserves were
reported at an additional 100,000 tons.
15
<PAGE> 21
Approximately 14 miles to the north of the Property is the Smokey Valley
Combined Operation mining activities known as the Round Mountain Mine. This mine
is currently the largest producer of gold ore in the district with production
estimated at more than 350,000 ounces of gold per year and 7,000,000 ounces in
reserve and is one of the largest heap leach operations in the world.
The White Caps Mine was historically one of the more prolific gold mines
located in the Manhattan Mining District. Production of gold began in 1911 and
remained in production until 1935 when the vein was lost and the lower levels of
the mine encountered water. A total of 120,000 ounces of gold were produced
during that period. The mine was closed in 1942 by executive order relating to
all "mining activities non-essential to the [World War II] effort."
The mine was found to be flooded from its deepest point at the 1,300 foot
level to the 450-foot level. Beginning in 1957, a $400,000 program was put in
place to "dewater," renovate, and reactivate the mine. Pumping of water began
that year and by 1958, the water level was down to the 800-foot level. At that
time some exploration resumed at the upper levels of the mine. At the 300-foot
level, antimony-mercury ore grading 60 percent and 8 percent, respectively, was
discovered.
An expensive antimony deposit (also containing gold and mercury values) was
located near the 500-foot level and plans were made to begin mining activities
after the renovation of the mine was completed. While continuing to explore for
gold mineralization on the lower levels of the mine, the owners leased out the
right to mine antimony-gold-mercury ore above the 600-foot levels in 1962 and
production thereafter began.
A diamond drilling program in 1962 relocated the gold ore vein which had
been lost in 1935 when it faulted out at the 600-foot level. Drilling of the
formation began at the head of the winze (i.e. incline shaft) and continued down
to the 1,200-foot level. Eight regularly-spaced holes of approximately 100 feet
in length were drilled. These holes revealed a gold mineralized area 65 feet
wide with values ranging as high as 7.7 ounces per ton and averages over .8
ounces per ton. This mineralization is found in the foot wall of the old winze.
The next phase of the 1962 drilling program consisted of diamond drilling a
"hole" starting at the 1,200-foot level. Six holes of approximately 100 feet in
length each were drilled and revealed gold values averaging over three ounces
per ton with a high of six ounces per ton. This drilling program blocked out a
proven ore reserve of over 14,000 ounces of gold according to a 1964 report
published by the California Mining Journal. The program also indicated that an
ore body containing several hundred thousand ounces of gold is present in the
relocated vein which runs from the 600-foot level down to the 800-foot level and
from the 1,200-foot level down to at least the 1,300-foot level.
Before production could begin, a fire was accidentally started by a pumping
subcontractor at the 300-foot level. The ore bins, shaft, and head frame were
destroyed and the mine was closed in 1964. The low price of gold (then $35 per
ounce), high costs to rebuild the damaged mine, and the lack of funds caused the
White Caps Mine to close in 1964 and has remained closed since that time. The
Company's plans include reentering this mine and resuming gold exploration and
production.
By contrast, "Litigation Hill" was the site of both Earle and Consolidated
Mines, all early producers of high-grade ore until the veins ran out. Recent
geomagnetic activity and a drilling program have located several small
commercial-sized deposits of medium-grade gold ore which can be either milled or
heap leached.
The Company has conducted a geophysics and geochemical survey of Litigation
Hill. A Schlumberger resistivity survey indicated gold mineralization down to a
depth of 1,000 feet (the limit of the instrument's sensitivity). Bulk sampling
of the ore dumps remaining at these mines indicated that the overall average
grade of the dumps of .206 ounces of gold per ton. Over 1,500 tons of ore were
proven with another 500 tons considered to be probable reserves.
The 1987 exploration of underground workings on Litigation Hill showed that
the Earle Mine had experienced massive cave-ins. Two samples were taken from
channel cuts. These samples indicated values of .120 ounces of gold per ton. The
Bath Mine was accessible through a stope which leads directly to the main
16
<PAGE> 22
haulage decline. Channel cut samples were taken on pillars left in
previously-worked stopes. Values varied from .64 to 1.288 ounces of gold per
ton.
The Company initiated a rotary drilling program in 1988. Holes drilled
pursuant to the program varied in depth from 200 feet to 525 feet. Gold values
located in the carbonates at a depth of 70 feet indicate that open pit mining is
suitable for the lower grade ores which are present.
The Company commenced an exploration program during the years 1989 and
1990. This program consisted of two parts: Conducting a magnetic survey of the
Property and drilling 25 reverse circulation drill-angle holes varying in depth
from 50 to 150 feet. The magnetic survey identified the areas around Litigation
Hill and the White Caps Mine as strong targets for further exploration. The
drilling program located several areas of gold mineralization and a small ore
body of about 5,500 tons containing gold values of .18 ounces per ton.
In September 1993, the joint venture partners began a decline (i.e. tunnel)
in order to intercept a drill hole which had been drilled by Freeport Mining
Company in 1983. The drill hole revealed that from 465 feet to 505 feet below
the surface, an average gold grade of .886 ounces of gold per ton over 40 feet
existed. The decline was completed during the spring of 1994, and drill stations
were prepared. Exploration commenced and is ongoing as of the date of this
Prospectus. Drilling commenced and is ongoing as of the date of this Prospectus.
The decline is approximately nine feet by nine feet and runs at an approximately
twelve degree grade. At the 500-foot level, a turnaround or transfer bay has
been added to enable the operators of the mine to successfully remove ore in a
cost-effective method.
The 1993 drilling program also included the mapping and sampling of the old
workings of the Consolidated Mine (which was closed in 1939) as well as the
drilling and sampling of the decline itself in the immediate potential ore zones
contained within the decline.
In July 1995, the Company engaged the services of William R. Wilson, a
minerals industry consultant, to prepare the Business Plan. According to the
Business Plan, two alternative plans for exploration and development of the
Property exist. The first plan would extend the existing decline in the White
Caps Mine to the 565-foot level, rehabilitate and mine old workings in the
Consolidated Manhattan Mine, drift and mine a new area near the drill hole which
was intercepted by the decline formed during the 1993 program, rehabilitate the
White Caps Shaft, and mine the 565-foot level, 670-foot level, 800-foot level,
910-foot level, 1120-foot level, 1200-foot level, and 1300-foot level of the
White Caps Mine.
According to the Business Plan, the major advantage to this alternative
would be that access to the lower levels of the White Caps Mine would be
considerably improved. It is anticipated that the lower levels may yield higher
grade ore as compared to the yields anticipated at current levels of the mine.
A cash analysis pertaining to the first alternative projected capital costs
during the first year of operations to be $1,463,290, operating costs of
$1,719,699 and production of 7,960 ounces of gold resulting in revenues of
$3,088,430. As a result, the cash analysis prepared for the first alternative
projected a positive cash flow of $92,804 after taking into account
depreciation, depletion, and amortization.
The second alternative identified in the Business Plan would extend the
decline in the White Caps Mine to the 565-foot level, rehabilitate any mine old
workings in the Consolidated Manhattan Mine, drift and mine a new area near the
drill hole which was intercepted by the decline formed during the 1993 program,
mine the 565-foot level only in the White Caps Mine, and conduct underground
sampling in the White Caps Mine in the 670-foot through 1,300-foot levels.
The Business Plan identifies the major advantage to this alternative to be
significantly reduced capital costs combined with the opportunity to sample
underground the White Caps Mine without rehabilitating the White Caps shaft. The
disadvantages of this alternative are that mining access to the lower portions
of the White Caps Mine may not be completed and it is still not known whether
access can be obtained to each of the levels below the 560-foot level.
A cash analysis pertaining to the second alternative projected capital
costs during the first year of operations to be $605,840, operating costs of
$1,046,063 and production of 4,568 ounces of gold resulting in
17
<PAGE> 23
revenues of $1,772,539. As a result, the cash analysis prepared for this second
alternative projected a positive cash flow of $425,326 after taking into account
depreciation, depletion, and amortization.
The Business Plan concludes by recommending the second alternative as the
preferable alternative for the Company to follow. In June 1996, the Company
initiated the second alternative by contracting with Harrison Western Mining and
Construction Company, Lakeland, Colorado, to execute this plan.
The Company has begun to establish near-surface gold deposits. Initial
exploration of this nature has revealed two near-surface targets showing
commercial grades and quantities. These are now being developed for processing
and the Company has established an ongoing exploration plan of this nature due
to this success.
All permits for this operation have been issued and the Company is in
compliance with all state, federal, and environmental regulations to the best of
its knowledge and belief.
THE INDONESIAN PROPERTY
In August 1996, the Company acquired an undivided fifty-one percent (51%)
interest in a gold exploration property comprising 10,000 ectares (25,000 acres)
located in Kutai County, Long Bagun District, East Kalimantan, Indonesia (the
"Indonesian Property"). Ownership of the Indonesian Property will be assigned by
the Company to a new wholly-owned subsidiary formed under the laws of the
British Virgin Islands and known as "Kalimantan Resources."
Mineralization of Kalimantan occurred as a result of magmatic "arcing" of
the earth's crust at the ocean floor. There are approximately fifteen known
"arcs" comprising all of Indonesia. Six of these arcs contain all of the gold
and copper deposits currently discovered in Indonesia. The Central Kalimantan
Arc is the area which has evidenced the majority of recent attention of mineral
exploration efforts, and is the area in which the Indonesian Property is
located. Located in the same general area is the Kelian Mine which has
reportedly yielded production of gold ore of approximately 95 tonnes (metric
tons) grading 1.85 ounces of gold per tonne (i.e. 5.8 million ounces) from two
main ore bodies and four satellite zones. This mine is Indonesia's primary gold
deposit and is located approximately eighty-five kilometers to the south of the
Indonesian Property. Further south is Mt. Muro which has reportedly yielded 10
million tonnes grading .38 ounces per tonne, or 1.2 million ounces of gold. At
present, it is impossible to predict whether the Indonesian Property possesses
any recoverable reserves of gold ore or whether the yields noted in the
above-described mines will be indicative of the yields to be established on the
Indonesian Property.
The Company acquired its interest in the Indonesian Property pursuant to a
document entitled "Principles of Agreement" dated August 19, 1996. The parties
to this agreement are Maxwells Energy and Metals Technology Ltd., a Bahamian
company ("Maxwells") and the Company. In exchange for a fifty-one percent (51%)
working interest in the Indonesian Property, the Company agreed to convey to
Maxwells Four Hundred Thousand (400,000) shares of its Common Stock. In
addition, the Company must issue an additional Four Million (4,000,000) shares
of its Common Stock to Maxwells should an investment banker confirm by
independent appraisal that the Indonesian Property is valued to be at least
Twelve Million Dollars ($12,000,000 U.S.) and/or such investment banker provides
financing to the Company based upon an evaluation of at least Twelve Million
Dollars ($12,000,000 U.S.) or upon the appreciation of the Common Stock in an
aggregate amount exceeding Twelve Million Dollars ($12,000,000) within ninety
(90) days of an announcement by the Company of its acquisition of the Indonesian
Property. As of the date of this Prospectus, Four Hundred Thousand (400,000)
shares have been issued to Maxwells and have been registered pursuant to the
Form BD filed in connection with this Prospectus.
While the Company was entitled to defer exploration activities for six (6)
months, exploration activities were commenced in October 1996. If the Indonesian
Property achieves the required appraised mineral value, the Company will have
the further obligation to register with the Securities and Exchange Commission a
total of One Million (1,000,000) shares of the Common Stock issued to Maxwells.
In addition, if the shares of Common Stock reach a "strike" price of $10 per
share for a period of at least thirty (30) days, Maxwells will be entitled to
the issuance of a total of One Million Four Hundred Thousand (1,400,000) shares
regardless of the valuation of the Indonesian Property.
18
<PAGE> 24
Under the agreement with Maxwells, the Company is responsible for one
hundred percent (100%) of all exploration and operating expenses relating to the
Indonesian Property. Maxwells also enjoys antidilution rights with respect to
the Common Stock to be issued under the agreement provided exploration
activities result in a valuation evidencing a yield of at least two million
(2,000,000) ounces of gold.
Maxwells has agreed to provide a voting trust in favor of existing
management. Maxwells is not, however, required to vote its shares with existing
management in connection with the registration of Common Stock issued or to be
issued to Maxwells. Maxwells' consent is also required in the case of any
issuance of the Company's capital stock exceeding Two Hundred Fifty Thousand
Dollars ($250,000). Maxwells has consented to the issuance of 1,500,000 shares
of Common Stock by the Company pursuant to this offering.
The Company has only recently acquired its interest in the Indonesian
Property. As a result, it has not developed as detailed a business plan for
exploration and development as compared to the Nevada Property. The Company has
undertaken efforts to confirm the chain of title which it believes to exist with
respect to the Indonesian Property.
The Company has entered into an agreement with Behre Dolbear & Company,
Inc. ("Behre Dolbear"), an internationally recognized mining consulting firm.
Behre Dolbear will be responsible for providing independent technical advisory
services to the Company as more particularly outlined in the agreement. A more
thorough description of this agreement is described in the Section of the
Prospectus "MANAGEMENT."
USE OF PROCEEDS
The gross proceeds from the sale of the Common Stock by the Company will
range from a minimum of $1,500,000 to a maximum of $9,000,000. The Company
expects the proceeds derived from the sale of the Common Stock to be expended as
follows:
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
SUBSCRIPTIONS SUBSCRIPTIONS
------------- -------------
<S> <C> <C>
Subscriptions(1)................................. $ 1,500,000 $ 9,000,000
Sales and Underwriting Commissions(2)............ 180,000 1,080,000
Legal and Accounting Fees........................ 80,000 120,000
NET PROCEEDS TO COMPANY.......................... 1,240,000 7,800,000
========== ==========
Payment to Anthony C. Selig, et al.(3)........... $ 100,000 $ 384,800
Expansion of Mine, Exploration and Development of
Nevada Property, and Mill Expansion(4)......... 500,000 1,500,000
Exploration Activities on Indonesian
Property(5).................................... 500,000 4,915,200
General and Administrative Expenses(6)........... 240,000 1,000,000
========== ==========
</TABLE>
- ---------------
(1) A minimum of 250,000 shares and a maximum of 1,500,000 shares of Common
Stock will be sold at a price of $6.00 per share.
(2) The Company has allocated up to $1,080,000 from the sale of the Common Stock
for sales and underwriting commissions. The Company anticipates that as a
result of the financial advisory services agreement which it has recently
entered into with Rhone Finance SA, Geneva, Switzerland, it may enter into
Underwriting Agreements with broker-dealers who are members in good standing
with the National Association of Securities Dealers, Inc. Under the terms of
these agreements, the Company will pay up to ten percent in sales
commissions and an additional two percent for "due diligence" fees and
expenses.
(3) Under that certain Mining Agreement dated April 4, 1987, as amended, the
Company is required to pay up to $384,800 in principal and accrued interest
payments to release the deed of trust securing the Company's obligations to
Anthony C. Selig and related entities (the "Selig Entities"). If the Company
is successful in selling at least 250,000 shares of the Common Stock, the
entire principal balance due under the Mining Agreement, as amended,
including all interest which has accrued thereon, may be paid to the Selig
Entities in full whereupon the deed of trust securing the Property will be
released.
19
<PAGE> 25
(4) The Company anticipates expending up to $1,500,000 to expand mining
operations on the Nevada Property consistent with the Business Plan as more
fully described in the Section of the Prospectus entitled "DESCRIPTION OF
COMPANY'S BUSINESS AND PROPERTY." Such expansions would include extending
the existing decline to the White Caps Mine at the 565-foot level,
rehabilitation and mining old workings in the White Caps Mine, drifting and
mining a new area near a drill hole which was intercepted by the decline
formed during the 1993 drilling program, rehabilitation of the White Caps
Shaft, and mining the 565-foot level, 670-foot level, 800-foot level,
910-foot level, 1120-foot level, 1200-foot level, and 1300-foot level of the
White Caps Mine. If only the minimum number of Subscriptions are raised
pursuant to this Offering, the Company will continue with its present course
of business and use revenues derived from ongoing operations to finance and
execute the above-described expansion. The Company has also been engaged in
discussions with the owner of the mill, New Concept Mining, Inc., concerning
the acquisition of up to a fifty percent interest in the mill currently
adjacent to the Nevada Property. To date, no definitive agreement has been
reached. The Company anticipates that if such an agreement is reached, the
Company intends to expend up to $250,000 in consideration of acquiring up to
a fifty percent interest in the mill. In the alternative, the Company will
utilize such amount to help finance the construction of its own mill on the
Nevada Property.
(5) The Company anticipates that up to $4,915,200 will be expended on data
collection, reconnaissance surveying, reporting, field work, sampling, data
processing, laboratory analyses, prospect evaluation, mineralization
mapping, additional acquisitions, and exploration drilling activities. All
of these activities will be undertaken subject to the advice and independent
consulting services provided to the Company by Behre Dolbear & Company, Inc.
("Behre Dolbear"), pursuant to a Consulting Services Agreement dated October
7, 1996, and more particularly described elsewhere in this Prospectus. The
actual work on the Indonesian Property will be performed by Five Engineering
Consultants, Bandung, Indonesia, under the supervision of Behre Dolbear.
(6) The Company currently expends approximately $60,000 per month in general and
administrative expenses. These expenses include salaries of all employees
(including its executive officers and directors), rent, health insurance,
travel and entertainment expenses, postage and courier and stock transfer
expenses. It is anticipated that once exploration and development occurs on
the Properties, general and administrative expenses may be paid from such
operations. To the extent that the Company does not utilize all funds
allocated for general and administrative expenses, such excess will be
retained by the Company as additional working capital.
20
<PAGE> 26
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The Company's Bylaws authorize the creation of the offices of President,
Treasurer (Chief Financial Officer), one or more Vice Presidents, Secretary, and
one or more Assistant Secretaries and Assistant Treasurers as the Board of
Directors deems proper. The Bylaws also provide for not less than three
directors and not more than seven directors who shall hold office until the
following annual meeting of the shareholders. The Bylaws further provide that
the number of directors may be increased by the affirmative vote of the Board of
Directors or a majority in interest of the shareholders at an annual or special
meeting.
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ ---- -----------------------------------------------
<S> <C> <C>
Christopher D. Michaels 52 President and Chairman of the Board
Jeffrey S. Kramer 42 Senior Vice President, Chief Financial Officer
and Director
Stanley J. Mohr 61 Vice President of Shareholder Relations and
Director
Edna Pollock 60 Director
Joseph Rude III, M.D. 52 Director
William Michaels 79 Vice President of Client Relations
</TABLE>
CHRISTOPHER D. MICHAELS cofounded the Company in June 1986. Since then he
has served as President, Chief Executive Officer, and Chairman of the Board and
is entitled to retain his positions with the Company until the next annual
meeting of the Company's shareholders. Mr. Michaels received a bachelor of arts
degree from Alfred University located in New York. After graduation, he accepted
a post with the United States government overseas in the Peace Corps. Since
1980, Mr. Michaels has acted in sales and management positions in corporations
whose primary business consists of mining and minerals. Mr. Michaels has
extensive background and experience in international relations and has spent
considerable time at the Company's Bolivian mine site (closed in 1992) as well
as on the Nevada Property. Mr. Michaels is a party and is subject to the
permanent injunction more particularly described in the Section of the
Prospectus entitled "LEGAL MATTERS, AUDITORS, AND PENDING LEGAL PROCEEDINGS."
Mr. Michaels has also been and is subject to a cease and desist order issued by
the Pennsylvania Securities Commission issued February 27, 1989 prohibiting the
Company, Mr. Michaels and other executive officers from violating Section 201 of
the Pennsylvania Securities Act of 1972 relating to the sale of unregistered
"penny stocks."
JEFFREY S. KRAMER, Senior Vice President, Chief Financial Officer,
Secretary-Treasurer, and Director, has held these positions since 1989 and is
entitled to retain these positions with the Company until the next annual
meeting of the Company's shareholders. He has held management positions with
Continental Cafes. As Chief Financial Officer, Mr. Kramer's responsibilities
include business affairs, contract administration, public relations, broker and
shareholder relations. Mr. Kramer is a party and is subject the regulatory
proceedings described in the Section of the Prospectus entitled "LEGAL MATTERS,
AUDITORS, AND PENDING LEGAL PROCEEDINGS" and the action taken by the
Pennsylvania Securities Commission detailed above with respect to Mr. Michaels.
STANLEY J. MOHR, has been Vice President Client Relations with Nevada
Manhattan since 1986. Mr. Mohr became a Director in 1992 and is entitled to
retain his current positions with the Company until the next annual meeting of
the Company's shareholders. Mr. Mohr has been employed as a marketing executive
with several mining and mineral related companies and has gained extensive
experience in many phases of operations in the mining industry. Mr. Mohr held a
real estate license issued by the state of Nevada from 1976 to 1984. Mr. Mohr
was a party and is subject to the regulatory proceedings more particularly
described in the Section of the Prospectus entitled "LEGAL MATTERS, AUDITORS,
AND LEGAL PROCEEDINGS."
21
<PAGE> 27
EDNA POLLOCK was elected to the Board of Directors on April 3, 1995 and is
entitled to retain her position as director until the next annual meeting of the
Company's shareholders. Ms. Pollock is a court reporter in North Carolina and
has been a shareholder of record since 1989. She has been an active member of
the Shareholders' Advisory Committee for several years representing shareholders
at Director's meetings. Ms. Pollock is a graduate of Columbia University, New
York, New York, having received her bachelor of arts degree in Journalism. She
spent twenty-eight years as a freelance reporter for both the federal and state
courts in North Carolina and acted in her official capacity as a court reporter
at numerous depositions, arbitrations, hearings, and conventions.
DR. JOE RUDE' III was elected to the Board of Directors on April 3, 1995
and is entitled to retain his position as a director until the next annual
meeting of the Company's shareholders. Dr. Rude' is a radiologist and has been
practicing his medical specialty since 1977 Georgia. Dr. Rude' has been a
shareholder of record since 1989 and has been an active member of the
Shareholders' Advisory Committee for several years representing shareholders at
Director's meetings. Since 1995, Dr. Rude' has been a diagnostic radiologist at
Quantum Radiology, Atlanta, Georgia. From 1977 to 1995, he was associated with
Cobb Radiology Associates, Austell, Georgia, which merged with Quantum Radiology
in 1995. Dr. Rude' is a graduate of the University of Texas, Austin, Texas,
where he received his bachelor of arts degree in 1966. In 1970, he was awarded a
medical degree from the University of Texas Southwestern Medical School, Dallas,
Texas. Dr. Rude' is board certified in radiology and served in the United States
Air Force as a flight medical officer from 1971 to 1973.
WILLIAM MICHAELS, Vice President of Client Relations, has served in such
capacity or in other capacities since the Company's inception. Mr. Michaels is
the father of Christopher D. Michaels, the Company's President and Chairman of
the Board. Mr. Michaels is a party and is subject to the regulatory proceedings
more particularly described in the Section of the Prospectus entitled "LEGAL
MATTERS, AUDITORS AND PENDING LEGAL PROCEEDINGS."
SIGNIFICANT EMPLOYEES AND CONSULTANTS
The Company has entered into employment agreements dated January 1, 1995,
with Christopher D. Michaels and Jeffery S. Kramer relating to their respective
positions as executive officers and directors of the Company. Under the terms
and conditions of these employment agreements, both Mr. Michaels and Mr. Kramer
are required to devote substantially all of their business time and effort
during normal business hours to the Company through December 31, 1997. As
compensation for the services rendered and to be rendered to the Company, Mr.
Michaels is entitled to receive annual salaries equal to One Hundred Forty-Eight
Thousand Seven Hundred Twenty-Seven Dollars ($148,727) per annum which Mr.
Kramer is entitled to a salary of One Hundred Thirty-Seven Thousand Two Hundred
Twelve Dollars ($137,212) per annum. Both the salaries of Mr. Michaels and Mr.
Kramer are to be reviewed on each anniversary date of the Agreement by the board
of directors for the purposes of either increasing or decreasing such base
salary. The Board, however, may not reduce the base salary of either Mr.
Michaels or Mr. Kramer by more than twenty percent (20%) of the base salary for
the immediately preceding year. In addition, both Mr. Michaels and Mr. Kramer
have each received 900,000 shares of the Company's Common Stock as part of their
compensation under the terms of their employment agreements.
In addition to the base salaries and stock options, both Mr. Michaels and
Mr. Kramer are entitled to receive reimbursement on a monthly basis for all
reasonable expenses incurred in connection with the performance of their duties
under the employment agreement. Mr. Michaels and Mr. Kramer are also entitled to
certain fringe benefits (including but not limited to paid vacation and
participation in medical insurance plans and employee benefit plans) which now
are or may thereafter become available to all executive officers of the Company
and such other benefits (if any) as may be authorized from time to time by the
board of directors of the Company. The employment agreements also authorize
these officers to receive a "merit bonus" ranging between twenty-five percent
(25%) and seventy-five percent (75%) of such officer's base salary in the event
the Company experiences operating cash flow for a fiscal year equal to not less
than One Million Dollars ($1,000,000). Specifically, if the Company's operating
cash flow for any fiscal year ranges between One Million Dollars ($1,000,000)
and Two Million Dollars ($2,000,000), both Mr. Michaels and
22
<PAGE> 28
Mr. Kramer will be entitled to a "merit bonus" equal to twenty-five percent(25%)
of his base salary; if the operating cash flow is between Two Million Dollars
($2,000,000) and Three Million Dollars ($3,000,000) for any fiscal year, the
"merit bonus" will be equal to fifty percent (50%) of such officer's base pay;
and if the Company's operating cash flow is over Three Million Dollars
($3,000,000) or more during any fiscal year, during the term of the Agreement,
such officer's "merit bonus" will be equal to seventy-five percent (75%) of such
officer's base salary. In the event of termination of the employment agreement
by the Company for cause or by such officer without cause, the "merit bonus" is
not required to be paid. In the event of termination for any other reason, the
"merit bonus" will be prorated for the fiscal year in which termination occurs.
The employment agreements with Messrs. Michaels and Kramer contain a
covenant prohibiting such officer from engaging directly or indirectly as a
principal partner or director or officer of any business competitive with the
Company. However, such officer may hold up to a five percent (5%) equity
interest in any entity engaged in a business competitive with the Company
without violating such covenant.
The agreements contain provisions for termination in the event of such
officer's permanent disability, death, or for cause. In addition, the agreements
provide for severance compensation equal to such officer's highest monthly base
salary times thirty-six. Both Mr. Michaels and Mr. Kramer also possess an option
to acquire up to twenty-five percent (25%) of the number of then outstanding
shares of the Company's capital stock at a price of five cents per share in the
event of an occurrence of a "Change in Control." For the purposes of such
employment agreements, the term "Change in Control" shall be deemed to have
occurred if the Company sells substantially all of its assets to a single
purchaser or to a group of associated purchasers in a single transaction or
series of related transactions; shares of the Company's outstanding capital
stock constituting more than twenty percent (20%) of the voting power of the
Company's outstanding capital stock are sold, exchanged, or otherwise disposed
of in one transaction or in a series of related transactions; or the Company is
a party to a merger or consolidation in which the Company is not the surviving
entity or the Company's shareholders receive shares of capital stock of the new
or continuing corporation constituting less than 80 percent of the voting power
of the new or continuing corporation.
The Company has engaged the services of Arthur J. Mendenhall to act as
project geologist for the Nevada Property. His duties include acting as the
on-site representative of the Company and to provide geological exploration and
mining grade control of the Nevada Property on a daily basis.
Mr. Mendenhall is an experienced mining geologist. He received his bachelor
of science degree in 1971 and his master of science degree in geology from Utah
State University, Logan, Utah. Mr. Mendenhall's work experience includes roles
supervising and monitoring the work of senior geologists in the coring and
sampling of ore; working as senior geologist in the sampling and mapping of
tertiary volcanic rock formations in gold exploration projects; collecting
cuttings and core samples for geochemical analyses; drafting drill hole cross
sections; and supervised drilling operations for bentonite and iron ore. Mr.
Mendenhall has completed the Occupational & Safety Hazard Agency ("OSHA")
forty-hour hazardous waste site training course and OSHA'S refresher course, and
has attended other geological seminars and courses relevant mining. Mr.
Mendenhall is a registered geologist in the Commonwealth of Pennsylvania and a
member of the Geological Society of America.
AGREEMENT WITH GOLD KING MINES CORPORATION
On April 1, 1995, the Company entered into an Agreement with Gold King
Mines Corporation ("Gold King"), Denver, Colorado. Under the terms of this
Agreement, Gold King has agreed to provide the services of William R. Wilson on
a consulting basis at the rate of $400 per day. The initial term of the
consulting agreement was through December 31, 1995, and extended for one-year
periods upon mutual agreement between Gold King and the Company. Gold King and
the Company have extended this consulting agreement for two years.
Mr. Wilson has provided various services to the Company including the
preparation of the Business Plan. Mr. Wilson possesses a professional degree in
metallurgical engineering from the Colorado School of Mines, Golden, Colorado,
and has been awarded a Master's in Business Administration from the University
of Southern California, Los Angeles, California. In his more than thirty years
of experience, Mr. Wilson has, for
23
<PAGE> 29
the past fifteen years served in various seniority executive capacities with
engineering, construction, and consulting firms, many of such capacities as
president or the chief executive officer of mining companies operating in the
United States and internationally. Mr. Wilson is the past chairman of the
Colorado Mining Association. Gold King is a subsidiary of Sheridan Reserve
Corporation, a publicly-traded resource company based in Toronto, Canada.
Mr. Wilson's primary responsibility to the Company has been and will be to
act as project manager for the Nevada Property and to act as the Company's
representative to Harrison Western Mining & Construction Company, the mining
contractor for the Nevada Property. Mr. Wilson will also provide technical and
managerial consulting to the Company on the Indonesian Property.
AGREEMENT WITH BEHRE DOLBEAR & COMPANY
The Company entered into a Consulting Services Agreement (the "Consulting
Agreement") with Behre Dolbear & Company ("Behre Dolbear"), an internationally
recognized mining consulting firm. Under the terms of the Consulting Agreement,
Behre Dolbear will be responsible for providing independent technical advisory
services relating to the Indonesian Property. Such services initially require
Behre Dolbear to advise and validate the exploration program contemplated by the
Company, and would include related technical input for other aspects of project
development. The term of the Consulting Agreement is for six months or upon
satisfactory completion of the consulting services contemplated prior to such
expiration date. The Company has agreed to pay Behre Dolbear the hourly rate of
$137.50 up to a maximum of $1,100 per diem for the services contemplated under
the Consulting Agreement and has to committed to utilize Behre Dolbear a minimum
of two days per month. Unused days will accrue under the Consulting Agreement
but will be forfeited if not prior to the expiration of the term of the
agreement. The Company must also reimburse Behre Dolbear for any travel;
reasonable and necessary lodging expenses (including meals); telegram, cable,
telex charges; a 2.5% "flat" labor charge in lieu of actual telephone charges;
printing, copies, reproduction, and fax charges; postage, courier, express, and
freight charges; use of personal automobiles; royalties on computer software;
professional liability insurance (assessed on a 1.5% flat fee basis); clerical
fees at the rate of $35 per hour; and other costs and expenses incurred by Behre
Dolbear and/or its personnel in performing the services contemplated by the
Consulting Agreement.
AGREEMENT WITH RHONE FINANCE SA
The Company entered into a Financial Advisory Services Agreement with Rhone
Finance SA ("Rhone") on November 26, 1996. Under the terms of this agreement,
the Company agreed to pay Rhone a monthly retainer of $7,500 plus expenses in
consideration of Rhone's agreement to introduce the Company to financial and
institutional investors and to secure appropriate sponsorship by retail and
institutional investment concerns. Should such services prove to be successful,
the Company and Rhone have agreed to negotiate a contract whereby Rhone will be
paid a fee based upon successful funding of the Offering as well as the issuance
of warrants, the amount and exercise price to be negotiated by the parties.
24
<PAGE> 30
EXECUTIVE COMPENSATION
The table set forth below identifies the compensation paid to the Company's
executive officers for the last three completed fiscal years (i.e. fiscal years
ending May 31, 1994; May 31, 1995; and May 31, 1996):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------- -----------------------
------------------------------------------------ RESTRICTED SECURITIES ALL
NAME AND OTHER STOCK UNDERLYING LTIP OTHER
PRINCIPAL ANNUAL AWARD(S) OPTIONAL/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) ($) SARS(#) ($) ($)
-------- ---- --------- -------- ------------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Christopher Michaels,
President and Chairman
of the Board........... 1996 $100,449 -- $6,316.00 $225,000(2) 10,000(3) -- --
1995 $148,727 -- $5,712.00 -- 10,000 -- --
1994 $137,222 -- $5,712.00 -- 10,000 -- --
Jeffrey Kramer, Senior
Vice President and 1996 $117,791 -- $7,658.00 $225,000(4) 10,000(5) -- --
Director............... 1995 $137,212 -- $6,564.00 -- 10,000 -- --
1994 $135,117 -- $6,564.00 -- 10,000 -- --
</TABLE>
- ---------------
(1) The Company incurs the annual cost of health insurance for Messrs. Michaels
and Kramer and their respective dependents.
(2) The Company granted Messrs. Michaels and Kramer the option to purchase
900,000 shares of Common Stock each at an average price of $1.50 per share.
These options were exercised during the year ended May 31, 1996, at which
time the Company's board of directors agreed to issue these shares for
services rendered. The Company has valued these restricted securities to be
worth twenty-five cents ($.25) per share.
(3) The Company has granted stock options to all members of its board of
directors in the amount of 10,000 shares per full year of service as an
active member of the board. These options may be exercised at $1.00 per
share of Common Stock. Options may not be exercised after the expiration of
10 years from the date of the grant and are nontransferable other than by
inheritance. As of the date of this Prospectus, the Company has granted
options aggregating 100,000 shares to Mr. Michaels and 70,000 shares to Mr.
Kramer.
(4) See Footnote 2.
(5) See Footnote 3.
OPTIONS AND STOCK APPRECIATION RIGHTS
The table set forth below provides certain information concerning
individual grants of stock options and stock appreciation rights (whether
granted in connection with stock options or as "freestanding" rights made during
the last fiscal year of the Company ending May 31, 1996) to each of the named
executive officers noted below:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXPIRATION
SARS EMPLOYEES OR BASE EXPIRATION
NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH) DATE
---- ---------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Christopher Michaels................ 100,000 10% $1.00 Various(1)
Jeffrey Kramer...................... 70,000 14% $1.00 Various(2)
Stanley Mohr........................ 40,000 25% $1.00 Various(3)
Edna Pollock........................ 10,000 100% $1.00 May 31, '06
Joe Rude' III....................... 10,000 100% $1.00 May 31, '06
</TABLE>
25
<PAGE> 31
- ---------------
(1) The Company has granted stock options to all members of its board of
directors pursuant to Stock Option Agreements executed at various times.
Under the terms of these agreements, each director has been granted options
to purchase 10,000 shares of Common Stock per full year of service. The
exercise price for such options is $1.00 per share. The years in which stock
options were initially granted to each respective board member are as
follows: Christopher Michaels, 1986; Jeffrey Kramer, 1989; Stanley Mohr,
1993; Edna Pollock, 1996; Joe Rude' III, 1996. Options may not be exercised
after expiration of ten years from the date of grant and are nontransferable
other than by inheritance.
(2) See Footnote 1.
(3) See Footnote 1.
LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY
The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the " '33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has been made
that the officer, director, employee, or agent acted in good faith and in a
manner which such person believed to be in the best interests of the company. A
determination made be made by the shareholders; by a majority of the directors
who were not parties to the action, suit, or proceeding confirmed by opinion of
independent legal counsel; or by opinion of independent legal counsel in the
event a quorum of directors who were not a party to such action, suit, or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees, and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable.
26
<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a development-stage company, with corporate offices in
Calabasas, California, and with interest(s) is certain mining properties located
in the (1) Manhattan Mining District, Nye County, Nevada, (the "Nevada
Property") and (2) in the Indonesian Gold Belt, Kalimantan, Indonesia (the
"Indonesian Property").
The Company maintains that it owns an undivided fifty percent (50%)
interest in the Nevada Property which it currently operates. The Nevada Property
has historically produced 500,000 ounces of gold. The Nevada Property consists
of 28 patented claims and 65 unpatented claims comprising approximately 1,800
acres which included, included, the White Caps Mine, Union Mine, Consolidated
Mine, Earle Mine, Bath Mine, and other assorted mines and claims which are
located in Township 8 North, Range 44, Sections 20, 21, 28, 29, and 30 in the
Manhattan Mining District, approximately 75 kilometers north of Tonopah, Nevada.
Subsequent to extensive exploration activities on the Nevada Property which
included mapping, sampling, drilling, geochemistry, geophysics and trenching,
the Company and its joint venture partners constructed a 1,200-foot decline
completed in 1994 in order to commence gold ore production and subsequent cash
flow. In 1995, the Company prepared a plan of operation under the direction of
William Wilson. Mr. Wilson has a degree in metallurgical Engineering from the
Colorado School of Mines and a degree in business from USC.
The Company is currently operating this plan of development which includes
ore production from the Consolidated Mine and from the area of drill hole WC 49
drilled by Freeport mining in 1982 showing 40 feet of .82 ounces per ton gold.
As well, the program includes the continuation of the decline an additional 800
feet in order to intersect the White Caps Mine at the 565-foot level. The White
Caps Mine had a total depth of 1,300 feet. The White Caps Mine was historically
the largest gold producer in the district with total production exceeding
150,000 ounces. It was shut by an act of government in 1942 in support of World
War II. In 1958, the White Caps Mine was reactivated and production was to
commence in 1962 when a pumping subcontractor started a fire and the mine
burned. Prior to the fire, extensive exploration and development was conducted
which delineated several ore bodies below the 300-foot level. The most
attractive was the drilling performed on the 1,300-foot level which intersected
30 feet averaging 2.73 ounces per ton gold.
The present plan of operation for the next 12 months includes ore
production from the Consolidated Mine, WC 49 and other targets intersected
during the ramping towards the White Caps Mine which should also have
significant remaining ore for production. Once at the 1,300-foot level of the
White Caps mine, the Company plans to produce high grade ore from this level and
the upper levels and to explore underground to establish a larger deposit.
The Company has contracted with Harrison Western Mining & Construction
Company (Lakeland, Colorado), a well respected mine contractor for this
operation.
As well, on the Nevada Property, the Company has begun to establish
near-surface gold deposits. Initial exploration of this nature has revealed two
near-surface targets showing commercial grades and quantities. These are now
being developed for processing and the Company has established an ongoing
exploration plan of this nature due to this success.
Milling of the initial ore produced by the Company from the Nevada Property
will be transported less than one mile to a 250-ton-per-day facility just
completed by New Concept Mining (Monrovia, California). The Company has an
agreement with New Concept Mining to use a portion of the mills capacity and
may, in the future, elect to purchase an interest in this facility or build a
larger facility on its own property as larger ore reserves are established.
All permits for this operation have been issued and the Company is in
compliance with all state, federal, and environmental regulations to the best of
its knowledge and belief.
27
<PAGE> 33
With the recent development of the near surface targets described on the
Nevada Property as stated above, the Company should be able to increase the
current flow of gold ore from the mine to the mill substantially during the
current phased ramping to the 565-foot level of the White Caps Mine. It is
estimated that the near term increases could be as much as 20,000 to 25,000 tons
running an average grade of .20 ounces per ton gold. There can be no assurance
that these increased surface trends will be able to be expanded beyond these
initial areas, but initial exploration related to these additional trends on
other targets is encouraging. The cost impact of exploring these additional
targets should not increase the exploration capital expenditures now projected
for the Nevada Property. If these near surface trends continue, it could
significantly increase the potential of the Nevada Property. The Company has
obtained confirmation from the Nevada Department of Environmental Protection
("NDEP") for the commencement of the exploration and development of these first
near surface targets which fall under the boundaries of the initial permits. It
is anticipated that the first ore derived from these surface targets could be
delivered to the mill by December 1996/January 1997.
The Company has an undivided 51% interest in a gold exploration property
comprised of 10,000 hectares (25,000 acres) located in Kutai County, Long Bagun
District, East Kalimantan, Indonesia and known as the Indonesian Property. The
Company has designated this property as the "Abubakar Property" and formed a
wholly-owned British Virgin Islands subsidiary, "Kalimantan Resources," in order
to comply with contractual obligations for the Company's beneficial interest of
this property. The Company will act as operator.
The Company acquired its interest in the Abubakar property from Maxwells
Energy and Metals Technology Ltd. ("Maxwells"), a Singapore-based Bahamian
company, in August 1996. Maxwells acquired its interest in this property from
Mr. Abubakar Sidik in July 1996. Mr. Abubakar Sidik resides in Bandung,
Indonesia and has had this property interest since July 1988.
The Abubakar property lies in the northeasterly trending Kalimantan gold
belt which includes the important gold deposits of Busang (over 40 million
ounces gold indicated resource), Kelian (produced 450,000 ounces of gold with
5.8million ounces indicated resource) and Mt. Muro (produced 200,000 ounces of
gold with 1.3 million ounces resource indicated).
In October 1996, the Company reached an agreement with Behre Dolbear &
Company, Inc., internationally renowned mining consultants to provide technical
advisory and third party validation services to the Company with respect to the
exploration and development program now under way on the Abubakar property.
The current ongoing work plan for the Abubakar property consists of data
collection, reconnaissance survey and reporting. Completion for this first phase
is scheduled for January 1997. Immediately following, the second phase will
commence and consist of field work, sampling, data processing, laboratory
results, evaluation of prospected area and reporting. It is estimated that this
program should be completed in March/April 1997. Following the completion of the
second phase, the Company plans to prepare a detailed mineralization map
followed by drilling for the purpose of preparing a reserve study with an
economic evaluation.
Work is being performed by Five Engineering Consultants (Bandung,
Indonesia) with independent technical advisory services being provided by Behre
Dolbear & Company, Inc.
In initial information gathering activities, the Company has received
unconfirmed reports of tertiary-age plugs mapped along the northern boundary of
the property. Gold mineralization elsewhere in east Kalimantan is related to
similar intrusive plugs. Reports of small-scale alluvial prospects reported are
likely related to load mineralization generally associated with the series of
tertiary intrusive plugs. Stream sediment and soil sampling previously performed
suggested an unconfirmed 1,000-meter by 200-meter gold geochem anomaly inside
the northern boundary of the property. Argillic alteration and pyritization of
the sediments is apparently widespread. Confirmation of these items will be
performed through the ongoing work program.
The Company is in the early stages of information gathering for the purpose
of expanding its exploration property holdings in the Indonesian Gold Belt.
Three additional acquisitions are now under consideration. Costs incurred for
these potential exploration/acquisition targets relating to these additional
properties will be factored into the overall costs associated with the use of
Net Proceeds found elsewhere in this Prospectus with minimal impact. Should the
Company desire to advance its holdings in the region through the confirmation of
28
<PAGE> 34
the research data, it is estimated that an additional $600,000 may be required
in the early stages of exploration/development and acquisition of these
potential properties. No assurances can be given that these funds will be
available when needed, but the Company feels confident it should be able to
fulfill these needs through this offering and/or additional fund-raising
activities.
If the Company is successful in its fund-raising related to this Offering,
funds will be expended generally in the following manner: $4,915,200 for
Kalimantan Indonesia Property exploration and development; $1,500,000 for
further development of the Nevada Property; and $1,000,000 in working capital.
If the Company does not receive sufficient distribution of the securities
offered hereby, it may not be able to complete the work described above which
could result in the loss of the prospective investors funds. Gold mining and
exploration is a highly speculative business and investors should be aware that
proceeds form this Offering, if fully distributed, will be sufficient to
complete the work described above, but the Company may require additional
capital in the development stage. The Company makes no representation that it
can obtain such additional capital. The Company contracts a great deal of the
work to take place during the next twelve months as described above and,
therefore, expects little, if any, changes in the number of employees.
PRINCIPAL AND SELLING SHAREHOLDERS
The following tables set forth certain information as of August 31, 1996,
regarding the record and beneficial ownership of the Common Stock and Preferred
Stock with respect to: (i) the Selling Shareholders; (ii) any individual or
group of affiliated individuals or persons owning, of record or beneficially,
five percent (5%) or more of the outstanding shares of the Common Stock or the
Preferred Stock; (iii) the amount of shares of Common Stock or Preferred Stock
owned by each executive officer and director of the Company; and (iv) the number
of shares of Common Stock and/or Preferred Stock owned, of record or
beneficially, by the directors of the Company as a group. Except as otherwise
indicated, the Company believes that the beneficial owners listed below, based
upon information provided by such owners, have sole voting and investment power
with respect to such shares.
PRINCIPAL SHAREHOLDERS
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER PERCENT OF CLASS
- -------------- ------------------------------- ------------------- ----------------
<S> <C> <C> <C>
Common Christopher D. Michaels 1,294,510(1) 12.3%
876 Ballina Court
Newbury Park, California 91320
Common Jeffrey S. Kramer 1,180,000(2) 11.2%
6053 Paseo Canyon Drive
Malibu, California 90265
Common Joseph C. Rude' III, M.D. 663,150(3) 8.5%
3065 River N. Pkwy.
Atlanta, Georgia 30328
Common David Weissberg et al 1,780,000(4) 15.6%(5)
29 Blair Drive
Huntington, New York 11743
Common John Holsten 600,000(6) 5.3%(7)
P.O. Box 456
Drexel Hill, PA 19026
Common All Officers and 3,361,410(8) 31.5%
Directors as a Group
(6 persons)
</TABLE>
- ---------------
(1) Includes options to purchase up to 100,000 shares of Common Stock which may
be exercised in whole or in part within 60 days of the date of this
Prospectus.
(2) Includes options to purchase up to 70,000 shares of Common Stock which may
be exercised in whole or in part within 60 days of the date of this
Prospectus.
29
<PAGE> 35
(3) Includes options to purchase up to 10,000 shares of Common Stock which may
be exercised in whole or in part within 60 days of the date of this
Prospectus.
(4) Includes 779,000 shares which are to be issued pursuant to the term and
conditions of an agreement dated March 25 , 1996 and amended May 13, 1996.
(5) For the purposes of the above percentage, 779,000 shares have been added to
the number of shares of Common Stock outstanding as of August 31, 1996, plus
the conversion (on a one-to-ten basis) of all Preferred Stock outstanding as
of August 31, 1996, plus the inclusion of 400,000 shares of Common Stock to
be issued to Maxwell Energy and Metals Technology Ltd. ("Maxwells") and the
shareholders of the Company who agreed to loan shares to the Company to
issue to Maxwells.
(6) On September 25, 1996, the Company entered into an agreement with Mr.
Holsten whereby it agreed to issue 600,000 shares of Common Stock in
exchange for a loan of $200,000 in the event said loan was not repaid within
90 days. In addition, Mr. Holsten was granted the right to purchase up to an
additional 100,000 shares of Common Stock at a price of $1.50 per share.
This right may be exercised within 18 months of the date on which the
600,000 shares of Common Stock are issued.
(7) The percentage noted includes the anticipated issuance of 600,000 shares of
Common Stock to Mr. Holsten thereby bringing the total number of shares
outstanding to 11,263,905.
(8) Includes options to purchase up to 230,000 shares of Common Stock which may
be issued within 60 days of the date of this Prospectus pursuant to options
granted to various directors. See "Management -- Options and Stock
Appreciation Rights."
SELLING SHAREHOLDERS
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF SHARES BENEFICIALLY
OFFERING SHARES OWNED AFTER OFFERING
------------------------ BEING ---------------------
NAME NUMBER PERCENT(1) OFFERED NUMBER PERCENT
- ------------------------------- --------- ---------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Christopher D. Michaels
876 Ballina Court
Newbury Park, CA 91320 1,294,510(2) 12.2%(3) 290,000 1,004,510 9.4%
Jeffrey S. Kramer
6053 Paseo Canyon Drive
Malibu, CA 90625 1,180,000(4) 11.1%(5) 205,000 975,000 9.1%
John Holsten
P.O. Box 456 Drexel
Hill, PA 19026 600,000(6) 5.3%(7) 600,000 0 0%
David Weissberg, et al.
29 Blair Drive
Huntington, NY 11743 1,780,000(8) 15.6%(9) 1,780,000 0 0%
Maxwells Energy & Metals
Technology
1901 Avenue of the Stars
Suite 1925
Los Angeles, CA 90067 400,000(10) 3.8% 200,000 200,000(11) 1.9%
Bruce and Ivone Jackson
23414 Main Street
San Luis, AZ 85349 72,215 .67% 72,215 0 0%
William E. Wilson
1819 E. Brainard Street
Pensacola, FL 32503 63,650 .60% 44,000 19,650 .2%
Robert E. Anderson(12)
Box 441 Camp Mineola Road East
Mattituck, NY 11952 80,500 .75% 41,690 38,810 .36%
</TABLE>
30
<PAGE> 36
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF SHARES BENEFICIALLY
OFFERING SHARES OWNED AFTER OFFERING
------------------------ BEING ---------------------
NAME NUMBER PERCENT(1) OFFERED NUMBER PERCENT
- ------------------------------- --------- ---------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Edward F. Abrams
150 So. Commonwealth Ave.
#107
Los Angeles, CA 90004 85,050 .79% 28,215 56,835 .53%
Irwin Renneisen
660 Newtown Yardley Road
Newtown, PA 18940 100,000 .93% 22,000 78,000 .73%
Financial Stock Marketing
9107 Wilshire Boulevard
Suite 625
Beverly Hills, CA 90210 5,000 .05% 5,000 0 0%
</TABLE>
- ---------------
(1) Except where otherwise described in these footnotes, the percentages noted
in this column represent the ratio that a shareholder's beneficial
ownership bears to the total number of shares outstanding and issued as of
August 31, 1996 (8,676,155), plus the conversion of all Preferred Stock
issued and outstanding as of August 31, 1996, into the Common Stock on a
ten-to-one basis (1,357,350 shares of Common Stock) plus the number of
stock options issued and outstanding to the Company's board as of August
31, 1996 (230,000 shares) plus the issuance of an additional 400,000 shares
to Maxwells and those shareholders who loaned shares of Common Stock to the
Company to issue shares of Common Stock to Maxwells.
(2) Includes options to purchase up to 100,000 shares of Common Stock which may
be exercised in whole or in part within 60 days of the date of this
Prospectus.
(3) For the purposes of calculating the percentage of shares beneficially
owned, it has been assumed that Mr. Michaels has exercised all of his
options and 100,000 shares of Common Stock have been issued pursuant to the
exercise of such options. No other options have been considered to be
exercised for the purposes of this percentage calculation.
(4) Includes options to purchase up to 70,000 shares of Common Stock which may
be exercised within 60 days of the date of this Prospectus.
(5) For the purposes of calculating the percentage of shares beneficially
owned, it has been assumed that Mr. Kramer has exercised all of his options
and 70,000 shares of Common Stock have been issued pursuant to the exercise
of such options. No other options have been considered to be exercised for
the purposes of this percentage calculation.
(6) On September 25, 1996, the Company entered into an agreement with Mr.
Holsten whereby it agreed to issue 600,000 shares of Common Stock in
exchange for a loan of $200,000 in the event said loan was not repaid
within 90 days. In addition, Mr. Holsten was granted the right to purchase
up to an additional 100,000 shares of Common Stock at a price of $1.50 per
share. This right may be exercised within 18 months of the date on which
the 600,000 shares of Common Stock are issued.
(7) The percentage noted includes the anticipated issuance of 600,000 shares of
Common Stock to Mr. Holsten thereby bringing the total number of shares
outstanding to 11,263,905.
(8) On March 25, 1996, the Company entered into an agreement with Dr. David
Weissberg, et al. (the "Weissberg Group"), whereby the Weissberg Group was
entitled to receive 86,500 shares of Preferred Stock. This amount was
thereafter increased to 101,000 shares of Preferred Stock. The Weissberg
Group subsequently converted the Preferred Stock into 1,001,000 shares of
Common Stock. In addition, the Company also granted the Weissberg Group the
right to subscribe to an additional 779,000 shares of Common Stock by
virtue of a right of first refusal contained within the agreement. For the
purposes of this table, it has been assumed that all 1,780,000 shares of
Common Stock have been issued to the Weissberg Group.
31
<PAGE> 37
(9) The percentage noted in this column includes the anticipated issuance of
779,000 shares of Common Stock to be made to the Weissberg Group but does
not include the issuance of 600,000 shares to Mr. Holsten. The total number
of shares issued and outstanding for the purposes of the above percentage
calculation has therefore been set at 11,442,905.
(10) Does not include the right to receive an additional 4,000,000 shares of
Common Stock pursuant to the Principles of Agreement dated August 19, 1996.
Such right is contingent upon events which have not presently occurred.
(11) See Footnote 10.
(12) Majority of shares held by Mr. Anderson are via a living trust created
February 10, 1992.
32
<PAGE> 38
DESCRIPTION OF SECURITIES BEING OFFERED
The authorized capital stock of the Company consists of 50,000,000 shares
of which 49,750,000 shares are Common Stock with a par value of one cent ($.01)
per share and 250,000 shares of Series A Preferred Stock with a par value of
$1.00 per share and convertible into Common Stock on the terms and conditions
hereinbelow described. As of August 31, 1996, there were 8,676,155 shares of the
Company's Common Stock issued and outstanding and 135,735 shares of the
Preferred Stock issued and outstanding. The average price paid per share for the
Common Stock to date has been approximately $2.00 per share while the price per
share paid for the Preferred Stock has been $10.00 per share, with an effective
conversion price (determined on the basis of one-for-ten conversion rights
accorded the Preferred Stock shareholders) to be $1.00 per share.
The following description of the capital stock of the Company and certain
provisions of the Company's Amended Articles of Incorporation and Certificate of
Determination of Preferences of Series A Preferred Stock is a summary and is
qualified in its entirety by the provisions of those documents which have been
filed as exhibits to the Company's Registration Statement of which this
Prospectus is a part.
COMMON STOCK
The issued and outstanding shares of Common Stock, including the shares
being offered hereby, are validly issued, fully paid and nonassessable. Subject
to the rights of holders of Preferred Stock, the holders of outstanding shares
of the Common Stock are entitled to receive dividends out of assets legally
available therefor at such time and at such amounts as the board of directors
may, from time to time, determine. See "Dividend Policy." The shares of Common
Stock are neither redeemable nor convertible and the holders thereof have no
preemptive or subscription rights to purchase any securities of the Company.
Upon liquidation, dissolution, or winding up of the Company, the holders of the
Common Stock are entitled to receive, pro rata, the assets of the Company which
are legally available for distribution after payment of all debts and other
liabilities and subject to the rights of any holders of the Preferred Stock then
outstanding. Before declaring any dividends, the board of directors may set
apart out of any funds of the Company available for dividends such sum or sums
as they may, from time to time, deem in their discretion to be proper working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the directors shall deem conducive to the
interests of the Company. Each outstanding share of the Common Stock is entitled
to one vote on all matters submitted to a vote of stockholders if there is no
cumulative voting in the election of directors.
PREFERRED STOCK
The Company's Amended Articles of Incorporation and its Certificate of
Determination of Preferences of Series A Preferred Stock authorized the Company
to issue up to 250,000 shares of the Preferred Stock. The holders of the
Preferred Stock are entitled to receive dividends at the rate of eight percent
per annum of the original issue price per share out of any funds legally viable
therefor payable on each January 1, April 1, July 1, and October 1 after the
issuance of the Preferred Stock. Dividends on the Preferred Stock are cumulative
so that if the full dividends in respect of any preference dividend is not paid,
the deficiency will be fully paid or declared and set apart for such shares
(without interest) before any dividend or other distribution is paid on or
declared or set apart for any other class or series of the Common Stock or
preferred shares of the Company. The Company enjoys the right to pay any
dividend on the Preferred Stock in cash or through the issuance of additional
shares of Preferred Stock or Common Stock having an issue price equal to the
amount of the dividend or through a combination of cash and stock. In the event
of any liquidation, dissolution, or winding up of the Company, either
voluntarily or involuntarily, the holders of the Preferred Stock will be
entitled to receive prior and in preference to any distribution of any of the
assets or surplus funds of the Company to the holders of the Common Stock or any
other class of preferred shares of the Company an amount equal to $10 per share
plus a further amount equal to any dividends declared but unpaid on such shares.
In the event of any consolidation or merger of the Company, or a sale of all or
substantially all of the assets of the Company, or a series of related
instructions in which more than fifty percent of the voting power of the Company
is disposed of, holders of the Preferred Stock will not be entitled to treat
such event as a liquidation, dissolution, or winding up of the Company. Holders
of the Preferred Stock enjoy the right to convert each share of Preferred
33
<PAGE> 39
Stock into 10 shares of the fully paid and nonassessable shares of the Common
Stock through December 31, 1997. After such date, holders of the Preferred Stock
will not be entitled to convert shares of Preferred Stock into shares of the
Common Stock.
DIVIDEND POLICY
The Company has established a policy of not paying dividends on the Common
Stock and anticipates that this policy shall remain in effect until further
notice. To date, the Company has not paid any dividends in cash or in stock on
the Preferred Stock. Management of the Company is currently planning and
arranging for payment of all cumulative dividends on the Preferred Stock through
the issuance of shares of Common Stock after giving effect to the conversion of
Preferred stock to Common Stock on a ten-for-one basis.
DILUTION
The net tangible book value of the Company at August 31, 1996, was
approximately forty-eight cents ($.48) per share. After taking into
consideration the conversion rights of the shareholders holding Preferred Stock
as of August 31, 1996 (but exclusive of any dividends paid in stock), the total
number of shares of Common Stock outstanding as of August 31, 1996, and assuming
all 1,500,000 shares of the Company's Common stock are sold pursuant to this
Offering, the net tangible book value of the Common Stock immediately after the
Offering (after deducting $1,080,000 for Organization and Offering Expenses)
will be approximately One Dollar and Nine Cents ($1.09) per share of Common
Stock. Investors who subscribe to shares of the Common Stock under circumstances
whereby all 1,500,000 shares of Common Stock are sold pursuant to this Offering
will therefore realize an immediate dilution of Four Dollars Ninety-One Cents
($4.91) per share of Common Stock. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Offering price per share........................................ $6.00
Net tangible book value before Offering(1)...................... $.48
Increase attributable to new Investors.......................... $.61
Pro forma net tangible book value after Offering................ $1.09
-----
Dilution to new Investors(2).................................... $4.91
-----
</TABLE>
- ---------------
(1) Determined by dividing the tangible net worth of the Company at August 31,
1996 by the number of shares outstanding as of that date (after taking into
consideration the conversion rights of Preferred Shareholders).
(2) The difference between the Subscription price of the Common Stock and the
net tangible book value per share of Common Stock after the Offering,
assuming all 1,500,000 shares are sold pursuant to the Offering.
By contrast, the net tangible book value of the Common Stock immediately
after the Offering (after deducting $180,000 in Organization and Offering
Expenses) will be approximately sixty cents ($.60) per share of Common Stock.
Investors who subscribe to Common Stock under these circumstances will therefore
realize an immediate dilution of Five Dollars Forty Cents ($5.40) per share of
Common Stock. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Offering price per share........................................ $6.00
Net tangible book value before Offering(3)...................... $.48
Increase attributable to new Investors.......................... $.12
Pro forma net tangible book value after Offering................ $ .60
-----
Dilution to new Investors(4).................................... $5.40
-----
</TABLE>
- ---------------
(3) See Footnote 2 above.
34
<PAGE> 40
(4) The difference between the Subscription price of the Common Stock and the
net tangible book value per share of Common Stock after the Offering,
assuming only 250,000 shares are sold pursuant to the Offering.
The Offering price for the Common Stock offered pursuant to this Offering
must be compared to the prices paid by and options granted to certain of the
Company's executive officers and the Selling Shareholders. In the case of all
options to purchase Common Stock, each recipient has the right to purchase
shares for a period of ten (10) years from the date of the grant as described in
further detail in the section of this Prospectus entitled
"MANAGEMENT -- Executive Compensation" and "MANAGEMENT -- Options and Stock
Appreciation Rights." In the case of the sale of Common Stock, Messrs. Michaels
and Kramer have paid, on the average, $2.53 and $2.03 per share, respectively,
while the Selling Shareholders have paid between $.25 and $2.00 per share for
the Common Stock.
REGISTRATION RIGHTS
The Company has entered into agreements with various shareholders (the
"Selling Shareholders") to attempt to effect registration of their shares of
Common Stock. The Company has obtained registration of all persons who are
Selling Shareholders pursuant to Form BD filed in connection with this Offering.
The Selling Shareholders and their relation to the Company are more particularly
described in Form BD and in the section of the Prospectus entitled "PRINCIPAL
AND SELLING SHAREHOLDERS".
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock and the Preferred
Stock is US Stock Transfer Corporation, Glendale, California.
LEGAL MATTERS, AUDITORS, AND LEGAL PROCEEDINGS
COUNSEL
Reinstein, Pantell & Calkins has acted as Special Counsel. As such Special
Counsel has assisted the Company in the preparation of this Prospectus and the
registration statement. As required by applicable federal and state securities
laws, Special Counsel has rendered an opinion to the effect that, when issued,
the Common Stock shall be duly and validly issued in accordance with applicable
law.
AUDITORS
The Company has retained Jackson and Rhodes, P.C., Dallas, Texas, to serve
at Company's accountants for calendar year 1996. The financial statements
accompanying this Prospectus have been audited by such firm.
LEGAL PROCEEDINGS
In May 1989, the Company received notice that the Securities and Exchange
Commission (the "Commission") had commenced an informal investigation into the
Company's compliance with the registration and disclosure requirements of the
Securities Act of 1933 (the "'33 Act") and the Securities Exchange Act of 1934
(the "'34 Act"). Thereafter the Commission commenced an extensive review of the
Company's books and records relating to the Company's business and mining
operations, its capital raising activities, and its financial condition and
history. Through all stages of the investigation, the Company cooperated with
the Commission.
The Commission and the Company agreed to terminate the Commission's
investigation by the entry of a consent judgment against the Company and certain
of the Company's past and present key employees. These
35
<PAGE> 41
key employees include Christopher D. Michaels, Jeffrey Kramer and Stanley Mohr.
The term and conditions of the consent judgment can be summarized as follows:
1. The Company neither admitted nor denied any of the allegations
alleged by the Commission;
2. The Company and its officers, agents, servants, employees, and
others receiving actual notice of the consent judgment are permanently
restrained and enjoined from selling securities in interstate commerce
unless and until a registration statement is in effect or the security or
transaction is exempt from the registration provisions of the '33 Act
and/or '34 Act;
3. The Company and its officers, agents, servants, employees, and
others receiving actual notice of the consent judgment are permanently
restrained from engaging in any transaction, practice, or course of
conduct, employing any course of conduct, or obtaining any money or
property by means of an untrue statement of a material fact, or any
omission to state a material fact, necessary to make the statements made in
light of the circumstances under which they were made not misleading.
On April 7, 1994, the Company and the Commission entered into a stipulation
regarding the resolution of all outstanding issues which then existed, which
stipulation was entered as an order by the United States District Court for the
Central District of California. Such stipulation contained an acknowledgement
that the Company and its executive officers had received no ill-gotten gains as
a result of prior activities by the Company in offering and selling its
securities, and that the consent judgment resolved once and for all, all issues
raised by the Commission as a result of the Company's prior activities. The
Company was not required to pay any fines or required to disgorge any monies
previously received by it in connection with its securities.
On November 4, 1996, the Company filed a complaint (the "Action") in Nye
County, Nevada against Marlowe Harvey, Maran Holdings Inc., Calais Resources
Inc., and Argus Resources, Inc. (the "Harvey Entities"). The complaint in the
Action alleges, amongst other things, that the Harvey Entities breached their
obligations under various agreements (including the October 20, 1995 amendment
to the Joint Venture Agreement discussed in further detail in the Section of
this Prospectus entitled "DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY -- The
Nevada Property"). The Action seeks to require the Harvey Entities to
specifically perform their obligations to convey a 1% interest in the joint
venture Nevada Property to the officers of the Company (namely Messrs. Michaels
and Kramer) and a 52% interest in the outstanding and issued stock in Argus
Resources, Inc. The Action also seeks damages of approximately $4,000,000
resulting from the actions or inactions of the defendants. It is unknown at the
present time whether the Harvey Entities have the ability to transfer the
required 52% interest in Argus Resources, Inc. as required under the Amended
Joint Venture Agreement, whether the Harvey Entities have substantive defenses
which would prevent the Company from obtaining specific performance, or whether
the remaining shareholders of Argus Resources, Inc. have approved and/or
ratified the Amended Joint Venture Agreement at any time. If the Company is
successful in obtaining specific performance of the agreements alleged in the
Action, it will effectively continue to own or control an undivided 50% interest
in the Nevada Property.
To date the complaint has been served on all defendants. Responsive
pleadings from the defendants so served are due on or about December 16, 1996.
The Company anticipates that the Harvey Entities will vigorously defend the
Action.
DEFINITIONS
"Accredited Investor" shall mean any Investor who meets one or more of the
categories defined by Rule 501(a) of Regulation D and who also is excluded from
the number of purchasers for the purposes of California Corporations Code
Section 25102(f)(1).
"Affiliate" shall mean (i) any person who directly or indirectly controls
or is controlled by or under a common control with, a person or entity; (ii) a
person owning or controlling ten percent (10%) or more of the outstanding voting
securities of the entity to which said definition relates; and (iii) any officer
or director of such entity.
36
<PAGE> 42
"Business Plan" shall mean the report prepared by William R. Wilson dated
as of July 1995 and entitled "Nevada Manhattan Mining, Inc., Manhattan Mine
Project Review and Business Plan."
"Company" shall mean Nevada Manhattan Mining, Inc., a Nevada corporation.
"Deed of Trust" shall mean the encumbrance currently affecting the Nevada
Property and created in favor of Anthony C. Selig & Associates, Dixie
Exploration, and Anthony C. Selig by virtue of the Nevada Property Agreement.
"Indonesian Property" shall mean the exploration prospect located in
Kalimantan, Indonesia comprising 10,000 hectares and more particularly described
in this Prospectus.
"Investors" shall mean such persons and/or any authorized and qualified
successors who consider an investment in the Company as described in the
Prospectus and who submit completed and executed subscription documents to the
Company.
"Net Proceeds" shall mean those proceeds after deduction of Organization
and Offering Expenses which shall be applied in furtherance of the Company's
business plan in accordance with this Offering.
"Nevada Property" shall mean the 28 patented and 65 unpatented mining
claims comprising approximately 1,800 acres and located in Nye County, Nevada
near the town of Manhattan as more particularly described in this Prospectus.
"Nevada Property Agreement" shall mean the Mining Agreement dated April 4,
1987 by and among the Company and Anthony C. Selig, Anthony C. Selig &
Associates, and Dixie Exploration as amended by subsequent agreements.
"Offering" shall mean the offer of the Common Stock pursuant to the terms
and conditions specified in the Prospectus.
"Offering Termination Date" shall mean the date on which the Company shall
issue, it at all, at least 250,000 shares of Common Stock pursuant to the
Offering. At present, such Date is set for April 30, 1997. In no event shall the
Offering Termination Date extend beyond December 31, 1997.
"Organization and Offering Expenses" shall mean all costs and expenses
incurred on behalf of the Company for professional fees (legal and accounting),
printing expenses, regulatory compliance, and all other costs associated with
the offer and sale of Common Stock. The amount of One Hundred Twenty Thousand
Dollars ($120,000) has been allocated for such expenses.
"Properties" shall mean the Nevada Property and the Indonesian Property.
"Prospectus" shall mean the offering materials dated , 1996
describing the terms and conditions of the Offering.
"Registration Statement" shall mean Form BD and all amendments thereto
filed with the Securities and Exchange Commission and relating to the offer and
sale of Common Stock pursuant to this Offering.
"Special Counsel" shall mean Reinstein, Pantell & Calkins, a partnership
comprised of professional law corporations.
"Subscription" shall mean the number of shares of Common Stock which a
prospective Investor agrees to purchase in the Company or the purchase price for
such purchase of shares as the context requires.
"Transfer Agent" shall mean U.S. Stock Transfer Corporation which shall be
authorized to accept Subscriptions, deposit Subscription funds into the Bank,
instruct the Bank to invest Subscriptions prior to the Offering Termination
Date, and to issue the Common Stock, all in accordance with this Offering.
"Underwriting Agreement" shall mean the agreement entered into between the
Company and broker-dealers who are members in good standing with the National
Association of Securities Dealers, Inc. and who agree to use their "best
efforts" to effect sales of the Common Stock pursuant to this Offering.
37
<PAGE> 43
FURTHER INFORMATION
The Company is not currently a reporting company within the meaning of
Section 12(g) of the Securities Exchange Act of 1934, but anticipates that it
will become a reporting company on or before the Offering Completion Date.
The Company has contemporaneously herewith applied for listing on the
NASDAQ "Small Cap" Market. If approved for listing, certain reports and
information not necessarily contained in this Prospectus will be available for
inspection through the NASDAQ Stock Market, Inc., 1735 K Street, N.W. 2006-1500.
The Company has and intends to continue to furnish its shareholders annual
reports containing financial statements examined by an independent accounting
firm and quarterly reports for the first three fiscal quarters of each fiscal
year containing interim unaudited financial information.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2
under the Securities Act of 1933, as amended, with respect to the Common Stock
offered pursuant to this Offering. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules accompanying the Registration Statement. For further information with
respect to the Company and such the common Stock offered hereby, reference is
made to the Registration Statement and the exhibits and schedules accompanying
the Registration Statement. Copies of the Registration Statement and such
exhibits and schedules may be inspected, without charge, at the public reference
facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N. W.,
Washington, D. C. 20549.
Until , 1997, all dealers effecting transactions in the Common
Stock registered pursuant to the Registration Statement, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
Subscriptions.
38
<PAGE> 44
NEVADA MANHATTAN MINING INCORPORATED
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Balance Sheet at August 31, 1996 (Unaudited) and May 31, 1996 and 1995................ F-3
Statements of Operations for the Three Months Ended August 31, 1996 and 1995
(Unaudited) and the Years Ended May 31, 1996 and 1995............................... F-4
Statements of Changes in Stockholders' Equity for the Three Months Ended August 31,
1996 and 1995 (Unaudited) and the Years Ended May 31, 1996 and 1995................. F-5
Statements of Cash Flows for the Three Months Ended August 31, 1996 and 1995
(Unaudited) and the Years Ended May 31, 1996 and 1995............................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 45
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Nevada Manhattan Mining Incorporated
(A Development Stage Company)
We have audited the accompanying balance sheets of Nevada Manhattan Mining
Incorporated (a development stage company) as of May 31, 1996 and 1995, and the
related statements of operations, changes in stockholders' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nevada Manhattan Mining
Incorporated as of May 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered losses from its development stage
activities and has a net working capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
JACKSON & RHODES P.C.
--------------------------------------
Jackson & Rhodes P.C.
Dallas, Texas
July 10, 1996 (except as to Note 7, which
is as of October 8, 1996)
F-2
<PAGE> 46
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MAY 31,
---------------------------
AUGUST 31, 1996 1996 1995
--------------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash........................................... $ 38,428 $ 233,981 $ --
Accounts receivable............................ -- -- 1,846
Prepaid expenses............................... 8,820 -- 2,545
------------ ------------ ------------
Total current assets................... 47,248 233,981 4,391
------------ ------------ ------------
Property and equipment (Note 2):
Domestic mining properties and equipment....... 4,302,741 3,961,047 3,696,295
Indonesian mining property (Note 7)............ 1,200,000 -- --
Furniture and fixtures......................... 68,953 63,842 64,046
Less accumulated depreciation............... (60,567) (59,067) (52,867)
------------ ------------ ------------
5,511,127 3,965,822 3,707,474
------------ ------------ ------------
$ 5,558,375 $ 4,199,803 $ 3,711,865
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 84,451 $ 88,226 $ 124,983
Accrued liabilities............................ 132,905 181,162 283,169
Notes payable to stockholders.................. 140,394 136,751 93,182
Current portion of long-term debt (Note 3)..... 44,318 44,388 23,278
------------ ------------ ------------
Total current liabilities.............. 402,068 450,527 524,612
Long-term debt (Note 3).......................... 117,022 115,723 105,919
------------ ------------ ------------
Total liabilities...................... 519,090 566,250 630,531
------------ ------------ ------------
Commitments and contingencies (Note 4)........... -- -- --
Stockholders' equity (Note 5):
Common stock to be issued (Notes 5 and 7)...... 1,852,759 -- 495,000
Preferred stock to be issued, $1 par value,
250,000 shares authorized................... -- -- 737,327
Stock subscriptions receivable................. -- -- (50,500)
Preferred stock, $1 par, 250,000 shares
authorized, 135,735 issued.................. 135,735 132,510 --
Common stock, $.01 par; 49,750,000 shares
authorized; 8,353,881, 8,353,881 and
4,658,481 shares issued at each period...... 83,539 83,539 46,585
Additional paid-in capital..................... 15,079,460 15,079,460 12,305,772
Deficit accumulated during the development
stage....................................... (12,112,208) (11,661,956) (10,452,850)
------------ ------------ ------------
Total stockholders' equity............. 5,039,285 3,633,553 3,081,334
------------ ------------ ------------
$ 5,558,375 $ 4,199,803 $ 3,711,865
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 47
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS PERIOD FROM
ENDED AUGUST 31, YEARS ENDED MAY 31, INCEPTION
----------------------- ------------------------- (JUNE 10, 1985) TO
1996 1995 1996 1995 AUGUST 31, 1996
--------- --------- ----------- --------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Expenses:
Costs and expenses of
development stage
activities.......... $ 447,602 $ 137,208 $ 1,198,506 $ 605,482 $ 11,932,184
Interest............... -- -- -- 5,591 5,591
Loss on disposition of
mining properties... -- -- -- -- 161,183
--------- --------- ----------- --------- ------------
447,602 137,208 1,198,506 611,073 12,098,958
--------- --------- ----------- --------- ------------
Net loss................. (447,602) (137,208) (1,198,506) (611,073) $(12,098,958)
============
Cumulative preferred
dividends.............. (2,650) -- (10,600) --
--------- --------- ----------- ---------
Net loss attributable to
common shareholders.... $(450,252) $(137,208) $(1,209,106) $(611,073)
========= ========= =========== =========
Net loss per common
share.................. $ (0.05) $ (0.03) $ (0.16) $ (0.12)
========= ========= =========== =========
Weighted average shares
outstanding............ 8,702,364 5,257,281 7,428,081 5,021,801
========= ========= =========== =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 48
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL DURING THE
STOCK SUBSCRIPTIONS ------------------ ------------------- PAID-IN DEVELOPMENT
TO BE ISSUED RECEIVABLE SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE TOTAL
------------ ------------- ------- -------- --------- ------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock issued
from
inception
(June 10,
1985) to
May 31,
1993
(unaudited):
For cash... $ -- $ -- -- $ -- 3,605,685 $36,057 $11,983,819 $ -- $12,019,876
For
services... -- -- -- -- 219,016 2,190 113,545 -- 115,735
For
property... -- -- -- -- 140,000 1,400 -- -- 1,400
Shares
borrowed
from
officers
(Note 6)... -- -- -- -- -- -- (495,000) -- (495,000)
Losses from
inception
to May 31,
1993
(unaudited).. -- -- -- -- -- -- -- (9,841,777) (9,841,777)
----------- -------- ------- -------- --------- ------- ----------- ------------ -----------
Balance, May
31, 1994... -- -- -- -- 3,964,701 39,647 11,602,364 (9,841,777) 1,800,234
Shares to be
issued to
officers
(Note 6)... 495,000 -- -- -- -- -- 495,000
Shares issued
for cash
(Note 5)... 131,500 (50,500) -- -- 647,213 6,472 638,541 -- 726,013
Shares issued
in
settlement
of claims
(Note 5)... -- -- -- -- 32,500 325 32,175 -- 32,500
Shares issued
as
conversion
of debt
(Note 5)... 605,827 -- 14,067 141 32,692 -- 638,660
Net loss..... -- -- -- -- -- (611,073) (611,073)
----------- -------- ------- -------- --------- ------- ----------- ------------ -----------
Balance, May
31, 1995... 1,232,327 (50,500) -- -- 4,658,481 46,585 12,305,772 (10,452,850) 3,081,334
Issuance of
stock -- previously
purchased... (1,232,327 ) -- 13,150 13,150 554,400 5,544 1,213,633 -- --
Cash received
from stock
subscriptions... -- 50,500 -- -- -- -- -- -- 50,500
Shares issued
for cash... -- -- 119,360 119,360 1,001,000 10,010 1,075,455 -- 1,204,825
Shares issued
for
services
(Note 5)... -- -- -- -- 1,940,000 19,400 465,600 -- 485,000
Shares issued
in
connection
with
shareholder
loan....... -- -- -- -- 200,000 2,000 19,000 -- 21,000
Cumulative
preferred
dividend... -- -- -- -- -- -- -- (10,600) (10,600)
Net loss..... -- -- -- -- -- -- -- (1,198,506) (1,198,506)
----------- -------- ------- -------- --------- ------- ----------- ------------ -----------
Balance, May
31, 1996... -- 132,510 132,510 8,353,881 83,539 15,079,460 (11,661,956) 3,633,553
Shares to be
issued for
property
(Note 7)... 1,200,000 -- -- -- -- -- -- -- 1,200,000
Shares issued
for cash... 412,759 -- 3,225 3,225 -- -- -- -- 415,984
Shares issued
for
services... 240,000 -- -- -- -- -- -- -- 240,000
Cumulative
preferred
dividend... -- -- -- -- -- -- -- (2,650) (2,650)
Net loss..... -- -- -- -- -- -- -- (447,602) (447,602)
----------- -------- ------- -------- --------- ------- ----------- ------------ -----------
Balance,
August 31,
1996
(unaudited)... $ 1,852,759 $ -- 135,735 $135,735 8,353,881 $83,539 $15,079,460 $(12,112,208) $ 5,039,285
=========== ======== ======= ======== ========= ======= =========== ============ ===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 49
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS PERIOD FROM
ENDED AUGUST 31, YEARS ENDED MAY 31, INCEPTION
--------------------- ---------------------- (JUNE 10, 1985) TO
1996 1995 1996 1995 AUGUST 31, 1996
--------- --------- ---------- --------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from developmental
activities:
Net loss....................... $(447,602) $(137,208) $(1,198,506) $(611,073) $(12,098,958)
Adjustments to reconcile net
loss to net cash used in
developmental activities:
Common stock issued for
services.................. 240,000 -- 485,000 -- 725,000
Loss on disposition of
property.................. -- -- -- -- 156,183
Settlement of claim with
debt...................... -- -- -- 32,500 97,265
Depreciation................ 1,500 1,550 6,200 9,150 60,567
Accounts receivable......... -- -- 1,846 (1,846) --
Prepaid expenses............ (8,820) -- 2,545 -- (8,820)
Accounts payable and accrued
liabilities............... (47,810) (23,063) (149,364) (44,744) 210,978
--------- --------- ----------- --------- ------------
Net cash used in
developmental
activities........... (262,732) (158,721) (852,279) (616,013) (10,857,785)
--------- --------- ----------- --------- ------------
Cash flows from investing
activities:
Purchase of property and
equipment................... (346,805) (45,979) (187,481) (146,496) (4,450,811)
--------- --------- ----------- --------- ------------
Cash flows from financing
activities:
Additions to long-term debt.... -- -- -- -- 198,319
Payments on long-term debt..... (2,000) (1,000) (46,153) (42,117) (182,040)
Net change in notes payable to
stockholders................ -- 50,000 64,569 -- 157,751
Proceeds from issuance of stock
and stock to be issued...... 415,984 155,700 1,255,325 726,013 15,172,994
--------- --------- ----------- --------- ------------
Net cash provided by
financing
activities........... 413,984 204,700 1,273,741 683,896 15,347,024
--------- --------- ----------- --------- ------------
Net increase (decrease) in cash
and cash equivalents........... (195,553) -- 233,981 (78,613) 38,428
Cash and cash equivalents:
Beginning of period............ 233,981 -- -- 78,613 --
--------- --------- ----------- --------- ------------
End of period.................. $ 38,428 $ -- $ 233,981 $ -- $ 38,428
========= ========= =========== ========= ============
Supplemental cash flow
information:
Cash paid during the period for
interest.................... $ -- $ -- $ 9,647 $ 12,701
========= ========= =========== =========
</TABLE>
Non-cash transactions:
During the year ended May 31, 1995, the Company issued stock for conversion of
notes payable (see Note 5).
During the year ended May 31, 1996, the Company issued 200,000 shares of
common stock, valued at $21,000 in connection with a loan from a shareholder.
Also during the year ended May 31, 1996, the Company assumed $77,067 in debt
in connection with acquiring an additional interest in the mine (Note 2).
During the period ended August 31, 1996, the Company borrowed 400,000 shares
of common stock from certain officers to issue the shares in connection with
the Indonesian mining property acquisition (Note 7).
See accompanying notes to financial statements.
F-6
<PAGE> 50
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Nevada Manhattan Mining Incorporated was organized under the Laws of the
State of Nevada on June 10, 1985, to acquire, explore, develop, finance and sell
mining rights and properties. As of May 31, 1996 the Company is in the
development stage, in that planned principal operations have not commenced. The
Company has to date acquired properties and begun exploration and development.
Preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Basis of Presentation
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company is
reporting a net loss of $1,198,506 and $611,073 for the years ended May 31, 1996
and 1995 and $447,602 for the period ended August 31, 1996 and net cash
resources were used in developmental activities for each year and for the period
then ended.
The following is a summary of managements' plan to raise capital and
generate additional operating funds. Management has reached an agreement to have
gold ore milled adjacent to the property by a third party, reducing capital
requirements of the Company. The Company and its joint venture partners have
constructed a 1400 foot decline (tunnel) to enhance exploration and facilitate
the extraction of gold ore. The Company has negotiated an agreement with
Harrison Western Mining and Construction Company to begin production in July
1996. Management will attempt to raise additional capital through a private or
public sale of common stock or by loans. Though the Company has been able to
raise funds from private placement of its equity securities in recent years,
there is no assurance of future availability of funds from these sources.
Statement of Cash Flows
For statement of cash flow purposes, the Company considers short-term
investments with original maturities of three months or less to be cash
equivalents.
Property and Equipment
Mining properties acquisition, exploration and development costs are
capitalized as incurred and will be amortized on the units-of-production method
based on economically recoverable mineral reserves. The Company assesses
impairment of mineral properties on an area-by-area basis which aggregates
contiguous areas. Estimated site restoration and closure costs in which the
Company has reclamation responsibilities are charged against operating earnings
on the units-of-production method over the expected economic life of the mines.
Other property and equipment are carried at cost. Depreciation of other
property and equipment is provided using the straight-line method over the seven
year estimated useful lives of the related assets. Maintenance and repairs are
charged to operations as incurred and expenditures for major improvements are
capitalized. Gains and losses from retirement or replacement of property and
equipment are included in operations.
F-7
<PAGE> 51
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company accounts for income taxes pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) which
requires a change from the deferred method to the asset and liability method of
computing deferred income taxes. The objective of the asset and liability method
is to establish deferred tax assets and liabilities for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled.
Net Loss Per Common Share
Per share amounts have been computed on the weighted average number of
common shares and common stock equivalents outstanding for each period. All
share and per share amounts have been restated to retroactively reflect the
reverse stock split explained in Note 5.
2. MINING PROPERTIES AND EQUIPMENT
The Company previously owned a 24.5 percent undivided interest in a mining
property in the Manhattan Mining District, Nye County, Nevada. The property
consists of 28 patented (fee) and 65 unpatented mine claims which include the
Whitecaps Mine, Union Mine, Consolidated Mine, Earl Mine, Bath Mine and other
assorted mines and claims which cover approximately 1200 acres. Under
contractual understandings reached during October 1995, which are in the final
stages of confirmation, the Company has increased its interest to 50 percent and
has assumed an additional $77,067 in debt (Note 3) in connection therewith.
The remaining 50 percent undivided interest in the property is held by
Marlowe Harvey, et al. The Company is committed to paying 50 percent of the
remaining note left on the property (see Note 3). Management of the Company is
active in the supervision of work taking place, plus future planning of all
aspects of operations. The operating permits for the Manhattan Gold Mine were
issued to the Company by the State of Nevada during April 1996. The Company has
negotiated an agreement with Harrison Western Mining and Construction Company
for the beginning of production in July 1996.
Previously, the Company had an interest in a gold producing property in
Bolivia, South America and mining claims in British Columbia, Canada. The
management, directors and stockholders voted to release these properties as they
felt they were not economical to the Company and the future exploration and
development of the Nevada and Indonesian properties would offer the greatest
return to the Company (see Note 7).
3. LONG-TERM DEBT AND NOTES PAYABLE
Notes payable to stockholders accrue interest at rates from 9 percent to 12
percent, are due on demand and are guaranteed by certain Company officers.
F-8
<PAGE> 52
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. LONG-TERM DEBT AND NOTES PAYABLE (CONTINUED)
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
MAY 31,
AUGUST 31, ---------------------
1996 1996 1995
----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Obligation to a stockholder as a result of a
lawsuit settlement, interest imputed at 9%,
payable $1,000 per month until April 2001....... $ 49,980 $ 50,770 $ 52,330
10% note payable to an individual under terms of a
joint venture agreement, payable $50,000 per
year including interest......................... 111,360 109,341 76,867
-------- -------- --------
161,340 160,111 129,197
Current portion................................... 44,318 44,388 23,278
-------- -------- --------
Long-term debt.................................... $ 117,022 $115,723 $105,919
======== ======== ========
</TABLE>
Maturities of long-term debt are as follows for the years ending May 31:
<TABLE>
<S> <C>
1997....................................... $44,388
1998....................................... 48,925
1999....................................... 40,978
2000....................................... 10,267
2001....................................... 15,553
</TABLE>
The Company has capitalized $26,693, $34,242 and $6,871 of interest into
the mining properties during the years ended May 31, 1996 and 1995 and for the
period ended August 31, 1996, respectively.
4. COMMITMENTS AND CONTINGENCIES
Lease
The Company leases office space under terms of an operating lease expiring
on February 28, 1997. Future minimum lease payments for the year ending May 31,
1997 are $20,394. Rent expense amounted to $20,726, $20,394 and $4,997 for the
years ended May 31, 1996 and 1995, and the period ended August 31, 1996,
respectively.
Securities and Exchange Commission
During May 1989, the Company received notice that the Securities and
Exchange Commission ("Commission") had commenced an investigation into the
Company's business activities. In 1993, the Board of Directors of the Company
determined that the entry of a proposed consent judgment and the termination of
the investigation was in the best interest of the Company and received
confirmation that the investigation has been completed.
On March 19, 1994, the Company received the following "Stipulation
Regarding Resolution of Outstanding Issues" from the Commission closing out the
investigation and all related issues:
"Whereas the disposition of funds analysis conducted pursuant to the
Judgment of Permanent Injunction and Other Relief against Defendant
Nevada Manhattan Mining Incorporated entered on August 3, 1993 has
revealed no ill-gotten gains received by any defendant, the
undersigned parties hereby stipulate that all outstanding issues in
this action have been resolved, including disgorgement, and that the
judgment entered against the defendants are final."
F-9
<PAGE> 53
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
While the Company believes that it was in the best interests of the Company
and its stockholders to enter the consent judgment, the entry of the judgment
may impose certain burdens on the Company with respect to its future activities.
The more significant of such burdens are as follows:
(i) The Company may not be able to utilize the exemptions from
registration available under Regulation A and Rule 701 under the 1933 Act.
(ii) The Company may not be able to rely on the private placement
exemptions provided in various state securities laws in connection with the
offer and sale of securities in a transaction which qualifies as an exempt
sale of securities under the 1933 Securities Act.
In such case, the Company would be required to qualify the transaction
under the state securities laws which may not be available. This qualification
would increase the cost of, and extend the time for completing, such private
placement of securities.
Other Contingencies
In January 1995, a group of stockholders and creditors asserted a claim in
regards to a January 1988 settlement agreement. The Company has not been
formally served or any legal process initiated by the stockholders and creditors
in asserting this claim. Management does not believe the ultimate outcome of
this contingency will have a material effect on financial position or results of
operations.
5. STOCKHOLDERS' EQUITY
Stock Options
The Company has granted stock options to all members of the Board of
Directors in the amount of 10,000 shares per full year of service as an active
member of the Board of Directors. The exercise price of options granted is $1.00
per share of common stock. Options may not be exercised after expiration of ten
(10) years from the date of grant and are non-transferable other than by will or
inheritance. These options are the only compensation received for service as
Director.
The following table sets forth information regarding options for the
periods ended:
<TABLE>
<CAPTION>
MAY 31,
AUGUST 31, -------------------
1996 1996 1995
----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C>
Outstanding at beginning of period.......... 240,000 190,000 160,000
Granted..................................... -- 50,000 30,000
------- ------- -------
Outstanding at end of period................ 240,000 240,000 190,000
======= ======= =======
</TABLE>
In connection with their employment contracts, the Company also granted two
officers the right to purchase 900,000 common shares each at an average price of
$1.50 per share. The officers exercised these options during the year ended May
31, 1996 and the Company's Board of Directors then agreed to give the officers
the shares for services rendered. These shares have been valued at $.25 per
share ($450,000) in the accompanying financial statements.
F-10
<PAGE> 54
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. STOCKHOLDERS' EQUITY (CONTINUED)
Reverse Split
In February 1995, the Company's stockholders approved a one-for-ten reverse
split of the Company's common stock. The stated par value per share was not
changed. All share and per share amounts herein have been retroactively restated
to reflect the reverse split.
Stock to be Issued and Stock Subscriptions Receivable
The Company sold 647,213 shares of common stock and 13,150 shares of Series
A Preferred Stock in separate private placements during the year ended May 31,
1995. The preferred stock had not been formally issued as of May 31, 1995, but
was issued during the year ended May 31, 1996. The Company raised $776,513 in
the private placements of which $50,500 was still receivable at May 31, 1995 and
has been reflected as an offsetting amount in stockholders' equity at that date.
During the year ended May 31, 1995, the Company also agreed to issue 73,467
shares of common stock in exchange for conversion of $638,660 of notes payable
to certain individuals.
During the year ended May 31, 1995, the Company also agreed to issue 32,500
shares of common stock to certain individuals to settle certain claims made by
the individuals. The $32,500 value of the shares was charged to general and
administrative expense.
The preferred stock has a $1 par value, a $10 liquidation preference and an
8 percent cumulative dividend payable in cash or kind. Each share is convertible
to ten common shares for a period of thirty months.
During 1988, two Company officers loaned 495,000 (post-reverse split)
common shares to the Company as treasury stock in return for the Company's
promise to return the shares when common shares became available as a result of
a reverse split or an increase in authorized shares. The shares were reissued to
the officers in November 1995. The Company has accounted for the shares, valued
at the market price of the shares when they were loaned to the Company, as a
long-term obligation in the financial statements until the year ended May 31,
1995, when the reverse split occurred and the shares became available for
issuance. At that time, the obligation was considered as common stock to be
issued and included in stockholders' equity.
Warrants
In connection with the private placement of common stock, in October 1994,
the Company also issued warrants to purchase 50,300 shares of common stock at
$1.00 per share. None of these warrants, which expire in October 1996, have been
exercised as of May 31, 1996.
6. INCOME TAXES
The Company has recorded no income tax benefit, nor has deferred taxes in
any year due to a net operating loss carryforward amounting to approximately
$10,000,000 at May 31, 1996, which will expire, if not utilized, from 2002 to
2011.
7. SUBSEQUENT EVENTS
On August 19, 1996, the Company entered into an agreement to acquire a 51%
interest in a metals/minerals mining property in Kalimantan, Indonesia.
Consideration for the purchase consisted of 400,000 shares of common stock due
upon the signing of the agreement and an additional 4,000,000 shares to be
released dependent upon the value of an independent valuation of the property.
The Company has valued the 400,000 shares, approximately 200,000 of which were
borrowed from shareholders of the Company, at
F-11
<PAGE> 55
NEVADA MANHATTAN MINING INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. SUBSEQUENT EVENTS (CONTINUED)
$1,200,000 and has recorded the transaction as shares to be issued in the
accompanying balance sheet at August 31, 1996. The Company intends to return the
shares to the stockholders upon the completion of a prospective public offering
of shares.
On October 8, 1996, the Company borrowed $200,000 from an individual on a
ninety-day note. The loan bears interest at 12% per annum and is secured by
300,000 common shares in the Company. Should the Company default on the loan,
the amount of shares will be increased to a total of 600,000 common shares with
piggy-back registration rights. Additionally, the individual was issued warrants
to purchase 100,000 shares of common stock in the Company at a price of $1.50
per share for a period of 18 months.
F-12
<PAGE> 56
================================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PAGE
----
Summary of the Offering................ 1
Risk Factors and Special Material
Considerations....................... 3
Terms of the Offering.................. 10
Plan of Distribution................... 12
Description of Company's Business and
Property............................. 12
Use of Proceeds........................ 19
Management............................. 21
Management's Discussion and Analysis of
Financial Condition.................. 27
Principal and Selling Shareholders..... 29
Description of Securities Being
Offered.............................. 33
Legal Matters, Auditors, and Pending
Legal Proceedings.................... 35
Definitions............................ 36
Further Information.................... 38
Financial Statements of Company........ F-1
================================================================================
================================================================================
[LOGO]
4,888,120 SHARES
NEVADA MANHATTAN MINING, INC.
MINING DEVELOPMENT EXPLORATION
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
, 1996
================================================================================
<PAGE> 57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the " '33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has been made
that the officer, director, employee, or agent acted in good faith and in a
manner which such person believed to be in the best interests of the company. A
determination made be made by the shareholders; by a majority of the directors
who were not parties to the action, suit, or proceeding confirmed by opinion of
independent legal counsel; or by opinion of independent legal counsel in the
event a quorum of directors who were not a party to such action, suit, or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees, and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification for violations of the
'33 Act is against public policy and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the
Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the registration fee and the NASD fee.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
Registration fee.................................................. $ 8,888
NASD fee.......................................................... $ 10,000
Printing and engraving............................................ $ 60,000
Legal fees and expenses........................................... $ 70,000
Accounting fees and expenses...................................... $ 50,000
Blue sky fees and expenses........................................ $ 10,000
Transfer agent fees............................................... $ 2,500
Miscellaneous..................................................... $ 5,000
-------
Total................................................... $ 216,388
=======
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
From the period September 1, 1993 through August 31, 1996, the Company sold
a total of 2,803,438 shares of its Common Stock and 135,735 shares of Preferred
Stock at an aggregate offering price of $2,906,307.
Sales of both the Common Stock and the Preferred Stock were effected
through the executive officers of the Company to existing shareholders.
No underwriters were employed in connection with the offer and sale of the
aforementioned securities. Thus no underwriting discounts or commissions were
paid.
II-1
<PAGE> 58
All of the above-referenced sales were made by the Company in reliance upon
the exemptions from registration contained in Section 4(2) of the Securities Act
of 1933 and Regulation D promulgated pursuant to such exemption.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
---------- ------------------------------------------------------------------------
<S> <C>
3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10, 1985
3.(ii) Certificate of Amendment to Articles of Incorporation of Epic
Enterprises, Ltd., Filed September 11, 1987
3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed October 26, 1987
3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed August 31, 1995
3.(v) Certificate of Determination of Preferences of Series A Preferred Stock
of Nevada Manhattan Mining Incorporated Filed October 25, 1995
3.(vi) Bylaws of Epic Enterprises, Ltd.
4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd.
4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of
Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed
October 25, 1995
5 Opinion on Legality
10.(i) Mining Agreement Dated April 4, 1987
10.(ii) Amendment to Mining Agreement Dated December 9, 1987
10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989
10.(iv) Corporation Quitclaim Deed Filed March 9, 1989
10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989
10.(vi) Joint Venture Agreement Dated June 1993
10.(vii) Letter Agreement Dated August 10, 1995
10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995
10.(ix) Contract Between Nevada Manhattan Mining, Inc, and Harrison Western
Construction Corp.
10.(x) Principles of Agreement Dated August 19, 1996
10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D. Michaels
10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer
10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1,
1995
10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear &
Company, Inc.
10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D.
10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D.
10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten
10.(xviii) Financial Advisory Agreement with Rhone Finance SA dated November 26,
1996
21 Subsidiaries of Small Business Issuer
23.(i) Consent of Jackson & Rhodes P.C.
</TABLE>
II-2
<PAGE> 59
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
---------- ------------------------------------------------------------------------
<S> <C>
23.(ii) Consent of William R. Wilson
23.(iii) Consent of Behre Dolbear & Company
27 Financial Data Schedule
99 Business Plan Dated July 1995
</TABLE>
(B) FINANCIAL STATEMENT SCHEDULES.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 28. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the Calculation of
Registration Fee table in the effective Registration Statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Company pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described in the
II-3
<PAGE> 60
Prospectus or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. If
a claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed a part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 61
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Calabasas, State of California on December 5, 1996.
NEVADA MANHATTAN MINING
INCORPORATED
By /s/ CHRISTOPHER D. MICHAELS
------------------------------------
Christopher D. Michaels
President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ CHRISTOPHER D. MICHAELS President and Director December 5, 1996
- ---------------------------------------------
CHRISTOPHER D. MICHAELS
/s/ JEFFREY S. KRAMER Senior Vice President December 5, 1996
- --------------------------------------------- Chief Financial Officer
JEFFREY S. KRAMER
/s/ STANLEY J. MOHR Director December 5, 1996
- ---------------------------------------------
STANLEY J. MOHR
</TABLE>
II-5
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------ ------------
<S> <C> <C>
3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10,
1985....................................................................
3.(ii) Certificate of Amendment to Articles of Incorporation of Epic
Enterprises, Ltd., Filed September 11, 1987.............................
3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed October 26, 1987....................
3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed August 31, 1995.....................
3.(v) Certificate of Determination of Preferences of Series A Preferred Stock
of Nevada Manhattan Mining Incorporated Filed October 25, 1995..........
3.(vi) Bylaws of Epic Enterprises, Ltd.........................................
4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd.............
4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of
Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed
October 25, 1995........................................................
5 Opinion on Legality.....................................................
10.(i) Mining Agreement Dated April 4, 1987....................................
10.(ii) Amendment to Mining Agreement Dated December 9, 1987....................
10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989.................
10.(iv) Corporation Quitclaim Deed Filed March 9, 1989..........................
10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989............
10.(vi) Joint Venture Agreement Dated June 1993.................................
10.(vii) Letter Agreement Dated August 10, 1995..................................
10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995.............
10.(ix) Contract Between Nevada Manhattan Mining, Inc. and Harrison Western
Construction Corp.......................................................
10.(x) Principles of Agreement Dated August 19, 1996...........................
10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D.
Michaels................................................................
10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer..........
10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1,
1995....................................................................
10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear &
Company, Inc. ..........................................................
10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D.........
10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D. .........
10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten.........
10.(xviii) Financial Advisory Agreement with Rhone Finance SA dated November 26,
1996
21 Subsidiaries of Small Business Issuer...................................
23.(i) Consent of Jackson & Rhodes P.C. .......................................
23.(ii) Consent of William R. Wilson............................................
23.(iii) Consent of Behre Dolbear & Company......................................
27 Financial Data Schedule.................................................
99 Business Plan Dated July 1995...........................................
</TABLE>
<PAGE> 1
Exhibit 3.(i)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 10 1985
WM. SWACAYAME SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
EPIC ENTERPRISES LTD.
The undersigned incorporators, desiring to form a corporation (hereinafter
referred to as the "Corporation"), pursuant to the provisions of the Nevada
General Corporation Act as amended (hereinafter referred to as the "Act"),
execute the following Articles of Incorporation.
ARTICLE I The name of the corporation is EPIC ENTERPRISES LTD.
ARTICLE II The purpose for which the Corporation is formed is to engage in
any lawful act or activity for which a corporation may be organized under the
Act, as amended, other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated under the laws of the
State of Nevada and the United States of America.
ARTICLE III The period during which the Corporation shall continue is
perpetual.
ARTICLE IV The name and post office address of the Corporation's Resident
Agent for Service of Process is: All-State Registered Agents - 892 East William
Street, Carson City, Nevada 89701. The Principal Office of the Corporation in
the State of Nevada is: 892 East William Street, Carson City, Nevada 89701.
ARTICLE V The total number of shares which the Corporation is to have the
authority to issue is 2,500. The number of authorized shares which the
Corporation designates as Without Par Value is 2,500 and each such share shall
be one of class known as COMMON.
ARTICLE VI The Corporation will not commence business until the
consideration of the value of at least $750.00, including incorporation and
registered agent costs, has been received for the Issuance of Shares.
ARTICLE VII The initial Board of Directors of the Corporation is composed
of 3 members. The number of Directors may be from time to time fixed by the
By-Laws of the Corporation at any number. In the absence of a By-Law fixing the
number of Directors, the number shall be 7. The names and post office
addresses of the Initial Board of Directors are:
Albert B. Carson 892 East William Street, Carson City, Nevada 89701
Kurt Shrager 892 East William Street, Carson City, Nevada 89701
John Gulden 892 East William Street, Carson City, Nevada 89701
ARTICLE VIII The Directors shall have the power to make, amend or alter the
By-Laws of the Corporation from time to time in the manner they deem proper and
in the best interests of the Corporation. The Directors shall also have the
power to amend, alter or repeal any provision of these Articles of
Incorporation and to add to these Articles in any manner now or hereinafter
prescribed by the statutes and law of the State of Nevada and the rights of all
shareholders are subject to this reservation.
ARTICLE IX The names and post office addresses of this Corporation's
Incorporators are:
Albert B. Carson 892 East William Street, Carson City, Nevada 89701
Kurt Shrager 892 East William Street, Carson City, Nevada 89701
John Gulden 892 East William Street, Carson City, Nevada 89701
WE HEREBY VERIFY subject to penalties of perjury that the facts contained
herein are true and IN WITNESS WHEREOF we have hereunto set our hands this 23
day of MAY 1985.
Albert B. Carson X /s/ ALBERT B. CARSON
------------------------------------------------------
Kurt Shrager X /s/ KURT SHRAGER
------------------------------------------------------
John Gulden X /s/ JOHN GULDEN
------------------------------------------------------
[SEAL] [SEAL] OFFICIAL SEAL
MARION CURTIS
STATE OF CALIFORNIA NOTARY PUBLIC - CALIFORNIA
COUNTY OF LOS ANGELES PRINCIPAL OFFICE IN
LOS ANGELES COUNTY
MY COMMISSION EXPIRES SEPTEMBER 7, 1988
I, Marion Curtis, a notary public, hereby certify that on the 23 day of MAY
1985 personally appeared before one Albert B. Carson, Kurt Shrager and John
Gulden who being by me first duly sworn, severally declared that they are the
person who signed the foregoing instrument as Incorporators, and that the
statements therein contained are true.
/s/ MARION CURTIS
---------------------------------------
Marion Curtis
<PAGE> 1
Exhibit 3.(ii)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
SEP 11 1987
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/ Frankie Sue Del Papa
------------------------
No. 3947-85
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
EPIC ENTERPRISES, LTD.
We the undersigned as President and Secretary of Epic Enterprises,
Ltd., do hereby certify:
That the Board of Directors of said corporation at a meeting
duly convened and held on the 19th day of August, 1987, adopted a
resolution to amend the original Articles as follows:
Article I shall be amended to read as follows:
"The name of the corporation EPIC ENTERPRISES, LTD., shall be changed
to the corporate name of NEVADA MANHATTAN MINING INCORPORATED."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 10 million shares, one
cent par value; that the said change and amendment has been consented to and
approved by a majority vote of the stockholders holding at least a majority of
each class of stock outstanding and entitled to vote thereon.
/s/ CHRIS MICHAELS
-----------------------------------
CHRIS MICHAELS, President
/s/ DREW LAMBO
-----------------------------------
DREW LAMBO, Secretary
<PAGE> 2
STATE OF NEVADA
DEPARTMENT OF STATE
--------------------
CERTIFICATE OF CORPORATE STATUS
I, FRANKIE SUE DEL PAPA, the duly elected, qualified and acting
Secretary of State of the State of Nevada, do hereby certify that I am, by the
laws of said State, the custodian of the records relating to corporations
organized under the laws thereof; the revocation or suspension of their
corporate charters, and their right to transact and carry on their corporate
business; and am the proper officer to execute this certificate.
I further certify that, at the date of this certificate,
EPIC ENTERPRISES LTD.
is a corporation duly organized and existing under and by virtue of the laws of
the State of Nevada, having fully complied therewith; is entitled to exercise
therein all the corporate powers and functions recited in its charter or
articles of incorporation, and is in good standing in this State as a
subsisting corporation.
IN WITNESS WHEREOF, I have hereunto set
my hand and affixed the Great
Seal of the State at my
office in Carson City,
Nevada, this 5TH day of
MARCH, A.D., 1987
/s/ FRANKIE SUE DEL PAPA
-----------------------------------
Secretary of State
By [SIG]
-----------------------------------
Deputy
<PAGE> 1
Exhibit 3.(iii)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 26, 1987
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/ Frankie Sue Del Papa
------------------------
No. 3947-85
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
NEVADA MANHATTAN MINING INCORPORATED
We the undersigned as President and Secretary of Nevada Manhattan
Mining Incorporated, do hereby certify:
That the Board of Directors of said corporation at a meeting
duly convened and held on the 6th day of October, 1987, adopted a
resolution to amend the original Articles as follows:
Article V shall be amended to read as follows:
"The total number of shares which the Corporation is to have the
authority to issue is 50,000,000. The number of authorized shares
which the Corporation designates as one cent per share par value is
50,000,000 and each such share shall be one of class known as COMMON."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 10,000,000 shares, one
cent per share par value; that the said change and amendment has been consented
to and approved by a majority vote of the stockholders holding at least a
majority of each class of stock outstanding and entitled to vote thereon.
/s/ CHRIS MICHAELS
-----------------------------------
CHRIS MICHAELS, President
/s/ DREW LAMBO
-----------------------------------
DREW LAMBO, Secretary
<PAGE> 2
STATE OF NEVADA )
) SS:
COUNTY OF CLARK )
On this 22nd day of October, 1987, personally appeared before me a
Notary Public, Chris Michaels who acknowledged that he executed the above
instrument.
SEAL
SUSAN L. ALCORN
Notary Public-State of Nevada
Clark County
My Appointment Expires July 5, 1988
/s/ SUSAN L. ALCORN
----------------------------------
NOTARY PUBLIC
STATE OF NEVADA )
) SS:
COUNTY OF CLARK )
On this 22nd day of October, 1987, personally appeared before me a
Notary Public, Drew Lambo who acknowledged that he executed the above
instrument.
SEAL
SUSAN L. ALCORN
Notary Public-State of Nevada
Clark County
My Appointment Expires July 5, 1988
/s/ SUSAN L. ALCORN
----------------------------------
NOTARY PUBLIC
<PAGE> 1
Exhibit 3.(iv)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 31 1995
No. 3947-85
/s/ Dean Heller
---------------
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
NEVADA MANHATTAN MINING, INCORPORATED
Christopher D. Michaels and Jeffrey Kramer hereby certify that:
A: They are the President and Secretary, respectively, of Nevada
Manhattan Mining Incorporated, a Nevada corporation.
B. Article V of the Articles of Incorporation of this corporation
is amended to read in its entirety as follows:
"ARTICLE V
This corporation is authorized to issue two classes of stock to be
designated, respectively, 'Common Stock' and 'Preferred Stock.' The
total number of shares which the corporation is authorized to issue is
50,000,000 shares, of which 49,750,000 shares shall be Common Stock,
par value of $.01 per share, and 250,000 shares shall be Preferred
Stock, par value of $1.00 per share.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the
limitations and restrictions stated herein, to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed
upon wholly unissued series of Preferred Stock, and the number of
shares constituting any such series and the designation thereof, or
any of them; and to increase or decease the number of shares
constituting any such series and the designation thereof, or any of
them; and to increase or decrease the number of shares of any series
subsequent to the issue of shares of that series, but not below the
number of shares of such series then outstanding. In case the number
of shares of any series should be so decreased, the shares
constituting such decease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of
shares of such series."
<PAGE> 2
C. The foregoing amendment of the Articles of Incorporation has
been duly approved by the Board of Directors.
D. The foregoing amendment of the Articles of Incorporation has
been duly approved by the required vote of shareholders in accordance with
Section NRS 78.390 of the Corporations Code. The total number of outstanding
shares of Common Stock of the corporation is 4,658,481. The number of shares
required for such approval was more than fifty percent (50%) of the Common
Stock. The number of shares voting in favor of the amendment equaled or
exceeded the vote required.
The undersigned further declare under penalty of perjury under the
laws of the State of Nevada that the matters set forth in this certificate are
true and correct of their own knowledge.
Dated: August 23, 1995
/s/ CHRISTOPHER D. MICHAELS
-----------------------------------
Christopher D. Michaels,
President
/s/ JEFFREY S. KRAMER
-----------------------------------
Jeffrey S. Kramer,
Sr. Vice President
<PAGE> 3
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
================================================================================
<TABLE>
<S> <C>
State of CALIFORNIA
---------------------------
County of LOS ANGELES
--------------------------
On August 30, 1995 before me, R.M. Knippenberg,
--------------- -----------------------------------------------------
DATE NAME, TITLE OF OFFICER-E.G. "JANE DOE, NOTARY PUBLIC"
personally appeared CHRISTOPHER D. MICHAELS / JEFFREY S. KRAMER
-------------------------------------------
NAME(S) OF SIGNER(S)
[X] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument
and acknowledged to me that he/she/they
executed the same in his/her/their authorized
capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s),
or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
R.M. Knippenberg
-------------------------------------------
SIGNATURE OF NOTARY
================================ OPTIONAL =======================================
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL AMEND ART. OF INCORP.
[X] CORPORATE OFFICER PREFERRED STOCK
--------------------------------
PRESIDENT / SR. VICE PRES. TITLE OR TYPE OF DOCUMENT
-----------------------------------
TITLE(S)
[ ] PARTNER(S) [ ] LIMITED
[ ] GENERAL --------------------------------
NUMBER OF PAGES
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR 8-23-95
[ ] OTHER: --------------------------------
----------------------------- DATE OF DOCUMENT
-----------------------------------
-----------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES) NONE
NEVADA MANHATTAN MINING --------------------------------
----------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
</TABLE>
================================================================================
<PAGE> 1
Exhibit 3.(v)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 25 1995
No. 3947-85
Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF DETERMINATION
OF
PREFERENCES OF SERIES A PREFERRED STOCK
OF
NEVADA MANHATTAN MINING INCORPORATED
a Nevada Corporation
Christopher. D. Michaels and Jeffrey Kramer hereby certify that:
A. They are the duly elected and acting President and Secretary,
respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation.
B. Pursuant to authority given by said corporation's Articles of
Incorporation, the Board of Directors of said corporation has duly adopted the
following recitals and resolutions:
WHEREAS: The Articles of Incorporation of this corporation
provide for a class of shares known as Preferred Stock, issuable from
time to time in one or more series; and
WHEREAS: The Board of Directors of this corporation is
authorized to determine or alter the rights, preferences, privileges
and restrictions granted to or imposed upon any wholly unissued series
of Preferred Stock, to fix the number of shares constituting any such
series, and to determine the designation thereof, or any of them; and
WHEREAS: This corporation has not issued a series of
Preferred Stock, and the Board of Directors of this corporation
desires, pursuant to its authority as aforesaid, to determine and fix
the rights, preferences, privileges and restrictions relating to a
series of said Preferred Stock and the number of shares constituting
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED: That the Board of Directors
hereby fixes and determines the designation of, the number of shares
constituting, and the rights, preferences, privileges and restrictions
relating to, said series of Preferred Stock as follows:
-1-
<PAGE> 2
(1) Designation of Preferred Shares. The corporation
shall have a series of Preferred Stock which shall be designated "Series A
Preferred Stock" (the "Series A Preferred Stock") . (The Series A Preferred
Stock is hereinafter sometimes referred to as the "Preferred Stock.")
(2) Number of Preferred Shares. The number of shares
constituting the Series A Preferred Stock shall be 250,000.
(3) Dividends. The Holders of the Series A Preferred-
Stock shall be entitled to receive dividends at the rate of eight percent (8%)
per annum of the original issue price per share of Series A Preferred Stock,
out of any funds legally available therefor, payable on each January 1, April
1, July 1 and October 1 after the issuance of the Series A Preferred and so
long as any shares of Series A Preferred Stock shall be outstanding. Such
dividends shall be cumulative, so that if the full dividends in respect of any
previous dividend period shall not have been paid on the Series A Preferred
Stock at the time outstanding, whether or not earned, whether or not funds of
the corporation are legally available therefor and whether or not declared by
the Board, the deficiency shall be fully paid or declared and set apart for
such shares (without interest) before any dividend or other distribution shall
be paid on or declared or set apart for any other class or series of Common
Stock or Preferred Stock of the corporation, whether now or hereafter
authorized, and before any redemption, retirement, purchase or other
acquisition of any other class or series of Common Stock or Preferred Stock of
the corporation, whether now or hereafter authorized. The Company may pay the
dividend on the Series A Preferred Stock in cash, or through the issuance of
additional shares of Series A Preferred Stock having an issue price equal to
the amount of the dividend, or through a combination of the foregoing.
(4) Liquidation Preference.
a. Preference on Series A Preferred Stock. In the
event of any liquidation, dissolution or winding up of the
corporation, either voluntarily or involuntarily, the holders of
shares of Series A Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of shares of any other class
or series of Common Stock or Preferred Stock of the corporation, an
amount equal to Ten Dollars ($10.00) per share plus a further amount
equal to any dividends declared but unpaid on such shares, as either
such amount may be adjusted from time to time to give effect to stock
splits, stock dividends and similar transactions affecting the Series
A Preferred Stock.
All of the preferential amounts to be paid to the holders of
shares of Series A Preferred Stock under this
-2-
<PAGE> 3
Section shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of shares of Common
Stock in connection with such liquidation, dissolution or winding up.
After the payment or the setting apart for payment to the holders of
the Series A Preferred Stock of the preferential amount so payable to
them, the holders of shares of Common Stock shall be entitled to
receive all remaining assets of the corporation.
If, upon such liquidation, dissolution or winding up of the
corporation, the assets of the corporation available for distribution
are insufficient to provide for the payment of the full preferential
amount for each share of Series A Preferred Stock outstanding, such
assets as are available shall be distributed ratably among the holders
of shares of Series A Preferred Stock.
b. Consolidation or Merger. A consolidation or merger
of the corporation with or into any other corporation or corporations,
or a sale of all or substantially all of the assets of the
corporation, or a series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed
of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section (4).
c. Noncash Distributions. If any of the assets of the
corporation are to be distributed other than in cash under this
Section (4), then the Board of Directors of the corporation shall
promptly engage independent competent appraisers to determine the
value of the assets to be distributed to the holders of shares of
Series A Preferred Stock or Common Stock. The corporation shall, upon
receipt of such appraiser's valuation, give prompt written notice to
each holder of shares of Series A Preferred Stock and Common Stock of
the appraiser's valuation.
d. Consent for Certain Repurchase. Each holder of an
outstanding share of Series A Preferred Stock shall be deemed to have
consented, for purposes of Chapter 5 of the California General
Corporation Law, to distributions made by the corporation in
connection with the repurchase of shares of Common Stock issued to or
held by employees or consultants upon termination of their employment
or services pursuant to agreements providing for the right of said
repurchase between the corporation and such persons.
(5) Conversion. The holders of the shares of Series A Preferred
Stock shall have the following conversion rights (the "Conversion Rights").
-3-
<PAGE> 4
a. Right to Convert. Each share of Series A Preferred
Stock initially shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share and on
or before 5:00 p.m. California time on December 31, 1997, at the
office of the corporation or any transfer agent for the Series A
Preferred Stock into ten (10) fully paid and nonassessable shares of
Common Stock of the corporation (the "Conversion Ratio"). After
December 31, 1997, the shares of Series A Preferred Stock shall not be
convertible into shares of Common Stock or any other, securities of
the corporation.
b. Adjustments to Conversion Ratio.
(i) Stock Dividends and Subdivisions. If, after
the date of the first issuance of shares of Series A Preferred Stock,
the corporation shall issue additional shares of Common Stock, by
reason of the declaration or payment of any dividend on the Common
Stock payable in Common Stock or by reason of a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) without a corresponding subdivision or
dividend with respect to the Series A Preferred Stock, the Conversion
Ratio of the Series A Preferred Stock in effect immediately prior to
such declaration or subdivision shall, concurrently with the
effectiveness of such declaration or subdivision, be proportionately
increased.
(ii) Adjustments for Combinations or Consolidation
of Common Stock. In the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise,
into a lesser number of shares of Common Stock without a corresponding
combination or consolidation with respect to the Series A Preferred
Stock, the Conversion Ratio of the Series A Preferred Stock in effect
immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately decreased.
(iii) Adjustment for Merger, Reorganization, etc.
In the case of any merger of the corporation with or into another
corporation or the transfer of all or substantially all of the assets
of the corporation to another corporation in which the shareholders of
the corporation are to receive cash, securities or other consideration
for their shares, each share of Series A Preferred Stock shall
thereafter be convertible into the number of shares of stock or other
securities or property to which a holder of the number of shares of
Common Stock of the corporation deliverable upon conversion of the
shares of Series A Preferred Stock would have been entitled upon such
merger or conveyance; and, in any such case, appropriate adjustment
(as determined by the Board
-4-
<PAGE> 5
of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter
of the holders of shares of Series A Preferred Stock, to the end that
the provisions set forth herein (including all provisions with respect
to changes in and other adjustments of the Conversion Ratio) shall
thereafter be applicable as nearly as reasonably may be, in relation
to any shares of stock or other property thereafter deliverable upon
the conversion of Series A Preferred Stock.
c. Automatic Conversion.
(i) Public Offering. Each share of Series A
Preferred Stock automatically shall be converted into shares of Common
Stock at the then effective Conversion Ratio on the earlier of (A)
5:00 p.m. California time on December 31, 1997 and (B) the closing of
a public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and
sale of Common Stock for the account of the corporation to the public
providing gross proceeds to the corporation of not less than Five
Million Dollars ($5,000,000).
(ii) Procedure. In the event of such automatic
conversion, the person(s) entitled to receive shares of Common Stock
issuable upon such automatic conversion of the shares of Series A
Preferred Stock shall not be deemed to have converted such shares of
Series A Preferred Stock until immediately prior to the event giving
rise to such conversion. Upon the occurrence of such event, the
outstanding shares of Series A Preferred Stock shall be converted
automatically and without further action by the holders of said shares
and whether or not the certificates representing said shares are
surrendered to the corporation or its transfer agent; provided that
the corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon conversion of any
shares of Series A Preferred Stock unless certificates evidencing such
shares of Series A Preferred Stock are either delivered to the
corporation or any transfer agent as hereinafter provided, or the
holder notifies the corporation that said certificates have been lost,
stolen or destroyed and executes an agreement satisfactory to the
corporation to indemnify the corporation for any loss incurred by it
in connection therewith. Upon the occurrence of the automatic
conversion of any shares of Series A Preferred Stock, the holders of
the shares of Series A Preferred Stock shall surrender the
certificates representing said shares at the office of the corporation
or of any transfer agent for Series A Preferred Stock. Thereupon,
there shall be issued and delivered to such holder, promptly at such
office and in such holder's name as shown on such surrendered
certificate or certificates, a certificate or certificates for the
number of shares of Common Stock into which the shares of Series A
-5-
<PAGE> 6
Preferred Stock surrendered were convertible on the date on which the
event effecting the automatic conversion occurred.
d. Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of any shares of Series A
Preferred Stock and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Any conversion of shares
of Series A Preferred Stock pursuant to this Section (5) by any holder
shall be done on an aggregate basis taking into account all shares of
Series A Preferred Stock held by such holder (i.e.,. such holder shall
have no more than one fractional share of Series A Preferred Stock
upon such conversion). Before any holder of shares of Series A
Preferred Stock shall be entitled to convert the same into full shares
of Common Stock, other than by reason of the automatic conversion
provided in Section (5) (c) above, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the corporation or of any transfer agent for Series A Preferred Stock,
and shall give written notice to the corporation at such office that
the holder elects to convert the same, and shall state therein the
holder's name or the name or names of the nominees in which the holder
wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of shares of Series A
Preferred Stock, or to his nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which he
shall be entitled as aforesaid. Except as set forth in this Section
(5) such conversion shall be deemed to have been made immediately
prior to the close of business on the day of such surrender of the
shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date. Upon
conversion of only a portion of the number of shares of Series A
Preferred Stock represented by a certificate so surrendered for
conversion, the corporation shall issue and deliver to, or upon the
written order of, the holder of the certificate so surrendered for
conversion, at the expense of the corporation, a new certificate
covering the number of shares of Series A Preferred Stock
representing the unconverted portion of the certificate so
surrendered.
e. Transfer Costs. The corporation shall pay any and
all documentary stamp and other transactional taxes attributable to
the issuance or delivery of shares of Common Stock of the corporation
upon conversion of any shares of Series A Preferred Stock.
f. No Impairment. The corporation will not, without the
approval of the requisite number of shares of Series A
-6-
<PAGE> 7
Preferred Stock by amendment of its Articles of Incorporation or this
Certificate of Determination or through any reorganization, transfer
of assets, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder
by the corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section (5) and in the
taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of shares of Series A
Preferred Stock against impairment.
g. Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Ratio for any
shares of Series A Preferred Stock pursuant to this Section (5) the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and shall furnish to
each holder of shares of Series A Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The
corporation shall, upon the written request at any time of any holder
of shares of Series A Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Ratio at the time
in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received
upon the conversion of the shares of Series A Preferred Stock held by
such holder.
h. Common Reserved. The corporation shall reserve and
keep available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be
sufficient to effect conversion of all of the outstanding shares of
the Series A Preferred Stock.
i. Registration. If any shares of Common Stock to be
reserved for the purpose of conversion of shares of Series A Preferred
Stock require registration or listing with, or approval of, any
governmental authority, stock exchange or other regulatory body under
any federal or state law or regulation or otherwise, before such
shares may be validly issued or delivered upon conversion, the
corporation will, in good faith and as expeditiously as possible, at
its expense, endeavor to secure such registration, listing or
approval, as the case may be.
j. Status of Shares. All shares of Common Stock which
may be issued upon conversion of the shares of Series A Preferred
Stock will upon issuance by the corporation be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
-7-
<PAGE> 8
k. Cancellation of the Shares. Upon conversion of any
shares of Series A Preferred Stock into Common Stock, said converted
shares of Series A Preferred Stock shall resume the status of
authorized and unissued shares of Series A Preferred Stock of the
corporation.
l. Notices of Record Date. In the event of any taking
by the corporation of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the corporation shall mail
to each holder of shares of Series A Preferred Stock, at least twenty
(20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
m. Notices. Any notice required by the provisions of
this Section (5) to be given to the holders of shares of Series A
Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record
at his address appearing on the books of the corporation.
(6) Voting Rights. Except as otherwise required by law or by the
Articles of Incorporation of the corporation, the shares of Series A Preferred
Stock and Common Stock shall be voted together as a single class at any annual
or special meeting of shareholders of the corporation, or, may act by written
consent in the same manner as the corporation's Common Stock, upon the
following basis: each share of Series A Preferred Stock issued and outstanding
shall have that number of votes equal to the number of shares of Common Stock
into which each share of Series A Preferred Stock is then convertible, except
that fractional shares shall not be permitted, and any fractional voting rights
resulting from this formula (after aggregating all shares of Common Stock into
which shares of Series A Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
(7) Protective Provisions. So long as any shares of Series A
Preferred Stock shall be outstanding the corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least fifty percent (50%) of the outstanding shares of Series A
Preferred Stock:
a. Change of Rights. Alter or change the rights,
preferences, or privileges of the Series A Preferred Stock so
-8-
<PAGE> 9
as materially and adversely to affect the Series A Preferred Stock; or
b. Authorized Number. Increase the authorized number of
shares of Series A Preferred Stock; or
c. Create New Class. Create any new class or series of
shares having preferences over, or being on a parity with, Series A
Preferred Stock then outstanding.
RESOLVED FURTHER: That the Chairman of the Board, the
President or any Vice President, and the Secretary, Chief Financial
Officer, the Treasurer, or any Assistant Secretary or Assistant
Treasurer of this corporation are each authorized to execute, verify
and file a certificate of determination of preferences in accordance
with Nevada law.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as
of October 20, 1995.
/s/ CHRISTOPHER D. MICHAELS
-----------------------------------
Christopher D. Michaels,
President
/s/ JEFFREY KRAMER
-----------------------------------
Jeffrey Kramer,
Secretary
The undersigned, Christopher D. Michaels and Jeffrey Kramer, the
President and Secretary, respectively, of Nevada Manhattan Mining Incorporated,
a Nevada corporation, declare under penalty of perjury that the matters set out
in the foregoing Certificate of Determination of Preferences of Series A
Preferred Stock are true of their own knowledge.
EXECUTED at Los Angeles, California, on October 20, 1995.
/s/ CHRISTOPHER D. MICHAELS
-----------------------------------
Christopher D. Michaels
/s/ JEFFREY KRAMER
-----------------------------------
Jeffrey Kramer
-9-
<PAGE> 10
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
================================================================================
<TABLE>
<S> <C>
State of CALIFORNIA
---------------------------
County of LOS ANGELES
--------------------------
On Oct. 20, 1995 before me, R.M. Knippenberg,
------------- -----------------------------------------------------
DATE NAME, TITLE OF OFFICER-E.G. "JANE DOE, NOTARY PUBLIC"
personally appeared CHRISTOPHER D. MICHAELS and JEFFREY S. KRAMER
---------------------------------------------
NAME(S) OF SIGNER(S)
[X] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s)
[SEAL] is/are subscribed to the within instrument
R.M. Knippenberg and acknowledged to me that he/she/they
Comm #1059760 executed the same in his/her/their authorized
NOTARY PUBLIC CALIFORNIA capacity(ies), and that by his/her/their
LOS ANGELES COUNTY signature(s) on the instrument the person(s),
Comm Exp. May 25, 1999 or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
R.M. Knippenberg
-------------------------------------------
SIGNATURE OF NOTARY
================================ OPTIONAL =======================================
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL CERT. OF DETERMINATION OF
[X] CORPORATE OFFICER PREF. of SERIES A PREF. STOCK
--------------------------------
PRESIDENT & SR. VICE PRESIDENT TITLE OR TYPE OF DOCUMENT
-----------------------------------
TITLE(S)
[ ] PARTNER(S) [ ] LIMITED TEN (10)
[ ] GENERAL --------------------------------
NUMBER OF PAGES
[ ] ATTORNEY-IN-FACT
[ ] TRUSTEE(S)
[ ] GUARDIAN/CONSERVATOR Oct. 20, 1995
[ ] OTHER: --------------------------------
----------------------------- DATE OF DOCUMENT
-----------------------------------
-----------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES) NONE
NV. MANHATTAN MINING --------------------------------
----------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
</TABLE>
================================================================================
<PAGE> 1
Exhibit 3.(vi)
BY-LAWS
OF
EPIC ENTERPRISES LTD.
- -------------------------------------------------------------------------------
ARTICLE I-OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be
established and maintained at the office of the resident agent.
SECTION 2. OTHER OFFICES. The corporation may have other offices,
either within or without the State of Nevada, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II-MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such business as may be stated in the notice of
the meeting, shall be held at such place, either within or without the State of
Nevada, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event
the Board of Directors fails to so determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the corporation in Nevada on: The first Monday which occurs after the
annual anniversary of the date upon which the corporation's Articles of
Incorporation were certified by the Secretary of State of Nevada.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held an the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose
other than the election of Directors may be held at such time and place, within
or without the State of Nevada, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in accordance
with the terms and provisions of the Articles of Incorporation and these
By-Laws shall be entitled to one vote, in person or by proxy, from each share
of stock entitled to vote held by such stockholder, but no proxy shall be voted
after three years from its date unless such proxy provides for a longer
period. Upon the demand of any stockholder, the vote for directors and upon
any question before the meeting shall be by ballot. All elections for
Directors shall be decided by plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by the Articles of
Incorporation or the laws of the State of Nevada.
SECTION 4. STOCKHOLDER LIST. The Officer who has charge of the stock
ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a completely alphabetically addressed list of the
stockholders entitled to
<PAGE> 2
vote at the ensuing election, with the number of shares held by each. Said list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held. The list shall be
available for inspection at the meeting.
SECTION 5. QUORUM. Except as otherwise required by law, by the
Articles of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a meeting. A majority in interest of the
stockholders entitled to vote thereat, present in person or by proxy, shall have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 6. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute or by the Articles of
Incorporation, may be called by the President and shall be called by the
President or Secretary at the request in writing of a majority of the Directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than 10 nor
more than 50 days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED. No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the stockholders entitled to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. Except as otherwise provided by the
Articles of Incorporation, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provisions of the statutes or the Articles of Incorporation or of
these By-Laws, the meeting and vote of stockholders may be dispensed with, if
all the stockholders who would have been entitled to vote upon the action if
such meeting were held, shall consent in writing to such corporate action being
taken.
ARTICLE III-DIRECTORS
SECTION 1. NUMBER AND TERM. The number of Directors shall be not more
than 7. The Directors shall be elected at the annual meeting of stockholders and
each Director shall be elected to serve until his successor shall be elected and
shall qualify. The number of Directors may not be less than 3 except that where
all the shares of the corporation are owned beneficially and of record by either
one or two stockholders, the number of Directors may be less than 3 but not less
than the number of stockholders.
2
<PAGE> 3
SECTION 2. RESIGNATIONS. Any Director, member of a committee or other
Officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified,
at the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any Director, member of a
committee or other Officer becomes vacant, the remaining Directors in office,
though less than a quorum, by a majority vote may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until
his successor shall be duly chosen.
SECTION 4. REMOVAL. Any Director or Directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE IN NUMBER. The number of Directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority
of the Directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional Directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. COMPENSATION. Directors shall not receive any stated
salary for their services as Directors or as members of committees, but by
resolution of the Board a fixed fee and expenses of attendance my be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity as an
Officer, Agent, or otherwise, and receiving compensation therefor.
SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board, or of such committee as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
ARTICLE IV-OFFICERS
SECTION 1. OFFICERS. The Officers of the corporation shall consist a a
President, a Treasurer, and a Secretary, and shall be elected by the Board of
Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman of the
Board, one or more Vice Presidents, and such Assistant Secretaries and Assistant
Treasurers as it may deem proper. None of the Officers of the corporation need
be Directors. The Officers shall be elected at the first meeting of the Board
of Directors after each annual meeting. More than two offices may be held by
the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such Officers and Agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
3
<PAGE> 4
SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if one be elected, shall preside at all meetings of the
Board of Directors and he shall have and perform such other duties as from
time to time may be assigned to him by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the Chief Executive
Officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the Office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation. Except
as the Board of Directors shall authorize the execution thereof in some manner,
he shall execute bonds, mortgages, and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assist- and
Treasurer.
SECTION 5. VICE-PRESIDENT. Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the Directors.
SECTION 6. TREASURER. The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the Board shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and Directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect to do so, any such notice may be given by any person thereunto directed
by the President, or by the Directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation's stockholders and Directors in
a book to be kept for that prupose, and shall affix the seal to all instruments
requiring it, when authorized by the Directors or the President, and attest the
same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Directors.
ARTICLE V-STOCK
SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the Chairman or Vice-Chairman of the Board of Directors,
or the President or a Vice-President, and the Treasurer or Assistant Treasurer,
or the Secretary or Assistant Secretary of the corporation, certifying the
number of shares owned by
4
<PAGE> 5
him in the corporation. If the corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof, and the qualifications, limitations, or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in the General Corporation Law of Nevada, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preference and/or rights. Where a certificate is countersigned (1) by a
Transfer Agent other than the corporation or its employee, or (2) by a
registrar other than the corporation or its employee, the signatures of such
persons may be facsimiles.
SECTION 2. LOST CERTIFICATES. New certificates of stock my be issued
in the place of any certificate therefore issued by the corporation, alleged to
have been lost or destroyed, and the Directors may, in their discretion,
require the owner of the lost or destroyed certificate or his legal
representatives, to give the corporation a bond, in such sum as they my direct,
not exceeding double the value of the stock, to indemnify the corporation
against it on account of the alleged loss of any new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificates shall be surrendered to the corporation by the
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other persons as the Directors may designate, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than 50 nor less than 10
days before the day of such meeting, nor more than 50 days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of
Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Directors from time to time in their
discretion deem proper working
5
<PAGE> 6
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Directors shall deem conducive to the
interests of the corporation.
SECTION 6. SEAL. The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL NEVADA." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by an Officer or Officers, or Agent or
Agents of the corporation, and in such manner as shall be determined from time
to time by resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly stated, and any notice so required shall be deemed, to be sufficient
if given by depositing the same in the United States Postal System, postage
prepaid, addressed to the person entitled thereto at his address as it appears
on the records of the corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not
be entitled to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Articles of Incorporation
of the corporation or these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed proper notice.
ARTICLE VI-AMENDMENTS
These By-Laws may be altered and repealed and By-Laws may be made at
any annual meeting of the stockholders or at any special meeting thereof if
notice thereof is contained in the notice of such special meeting by the
affirmative vote of a majority of the stock issued and outstanding or entitled
to vote thereat, or by the regular meeting of the Board of Directors, or at any
special meeting of the Board of Directors, if notice thereof is contained in
the notice of such special meetings.
(SEAL)
6
<PAGE> 1
Exhibit 4.(i)
BY-LAWS
OF
EPIC ENTERPRISES LTD.
- --------------------------------------------------------------------------------
ARTICLE I-OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be
established and maintained at the office of the resident agent.
SECTION 2. OTHER OFFICES. The corporation may have other offices,
either within or without the State of Nevada, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II-MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for
the election of directors and for such business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Nevada, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event
the Board of Directors fails to so determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the corporation in Nevada on: The first Monday which occurs after the
annual anniversary of the date upon which the corporation's Article of
Incorporation were certified by the Secretary of State of Nevada.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any
purpose other than the election of Directors may be held at such time and
place, within or without the State of Nevada, as shall be stated in the notice
of the meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in
accordance with the terms and provisions of the Articles of Incorporation and
these By-Laws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such stockholder, but no proxy shall be
voted after three years from its date unless such proxy provides for a longer
period. Upon the demand of any stockholder, the vote for directors and upon
any question before the meeting shall be by ballot. All elections for
Directors shall be decided by majority vote except as otherwise provided by the
Articles of Incorporation or the laws of the State of Nevada.
SECTION 4. STOCKHOLDER LIST. The Officer who has charge of the
stock ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a completely alphabetically addressed list of the
stockholders entitled to
<PAGE> 2
SECTION 2. RESIGNATIONS. Any Director, member of a committee or
other Officer my resign at any time. Such resignation shall be made in
writing, and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any Director, member of a
committee or other Officer becomes vacant, the remaining Directors in office,
though less than a quorum, by a majority vote may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. Any Director or Directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE IN NUMBER. The number of Directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority
of the Directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional Directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. COMPENSATION. Directors shall not receive any stated
salary for their services as Directors or as members of committees, but by
resolution of the Board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other capacity as an
Officer, Agent, or otherwise, and receiving compensation therefor.
SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board, or of such committee as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
ARTICLE IV-OFFICERS
SECTION 1. OFFICERS. The Officers of the corporation shall consist a
a President, a Treasurer, and a Secretary, and shall be elected by the Board of
Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman of the
Board, one or more Vice-Presidents, and such Assistant Secretaries and
Assistant Treasurers as it may deem proper. None of the Officers of the
corporation need be Directors. The Officers shall be elected at the first
meeting of the Board of Directors after each annual meeting. More than two
offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such Officers and Agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
2
<PAGE> 3
SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if one be elected, shall preside at all meetings of the
Board of Directors and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the Chief Executive
Officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the Office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation. Except
as the Board of Directors shall authorize the execution thereof in some manner,
he shall execute bonds, mortgages, and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal. shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assist- and
Treasurer.
SECTION 5. VICE-PRESIDENT. Each Vice-President shall have such
powers and shall perform such duties as shall be assigned to him by the
Directors.
SECTION 6. TREASURER. The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request
it, an account of all his transactions as Treasurer and of the financial
condition of the corporation. If required by the Board of Directors, he shall
give the corporation a bond for the faithful discharge of his duties in such
amount and with such surety as the Board shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and Directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect to do so, any such notice may be given by any person thereunto directed
by the President, or by the Directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation's stockholders and Directors in
a book to be kept for that purpose, and shall affix the seal to all instruments
requiring it, when authorized by the Directors or the President, and attest the
same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Directors.
ARTICLE V-STOCK
SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the Chairman or Vice-Chairman of the Board of Directors,
or the President or a Vice-President, and the Treasurer or Assistant Treasurer,
or the Secretary or Assistant Secretary of the corporation, certifying the
number of shares owned by
3
<PAGE> 4
him in the corporation. If the corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof, and the qualifications, limitations, or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in the General Corporation Law of Nevada, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preference and/or rights. Where a certificate is countersigned (1) by a
Transfer Agent other than the corporation or its employee, or (2) by a
registrar other than the corporation or its employee, the signatures of such
persons may be facsimiles.
SECTION 2. LOST CERTIFICATES. New certificates of stock may be
issued in the place of any certificate therefore issued by the corporation,
alleged to have been lost or destroyed, and the Directors may, in their
discretion, require the owner of the lost or destroyed certificate or his legal
representatives, to give the corporation a bond, in such sum as they may
direct, not exceeding double the value of the stock, to indemnify the
corporation against it on account of the alleged loss of any new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the
corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by
the delivery thereof to the person in charge of the stock and transfer books
and ledgers, or to such other persons as the Directors may designate, by whom
they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than 50 nor less than 10
days before the day of such meeting, nor more than 50 days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors nay fix a new record
date for the adjourned meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of
Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Directors from time to time in their
discretion deem proper working
4
<PAGE> 1
EXHIBIT 4.(ii)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 25 1995
NO. 3947-85
/s/ DEAN HELLER
-------------------------------
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF DETERMINATION
OF
PREFERENCES OF SERIES A PREFERRED STOCK
OF
NEVADA MANHATTAN MINING INCORPORATED
a Nevada Corporation
Christopher D. Michaels and Jeffrey Kramer hereby certify that:
A. They are the duly elected and acting President and Secretary,
respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation.
B. Pursuant to authority given by said corporation's Articles of
Incorporation, the Board of Directors of said corporation has duly adopted the
following recitals and resolutions:
WHEREAS: The Articles of Incorporation of this
corporation provide for a class of shares known as Preferred Stock,
issuable from time to time in one or more series; and
WHEREAS: The Board of Directors of this corporation is
authorized to determine or alter the rights, preferences, privileges
and restrictions granted to or imposed upon any wholly unissued series
of Preferred Stock, to fix the number of shares constituting any such
series, and to determine the designation thereof, or any of them; and
WHEREAS: This corporation has not issued a series of
Preferred Stock, and the Board of Directors of this corporation
desires, pursuant to its authority as aforesaid, to determine and fix
the rights, preferences, privileges and restrictions relating to a
series of said Preferred Stock and the number of shares constituting
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED: That the Board of Directors
hereby fixes and determines the designation of, the number of shares
constituting, and the rights, preferences, privileges and restrictions
relating to, said series of Preferred Stock as follows:
-1-
<PAGE> 2
(1) Designation of Preferred Shares. The corporation shall
have a series of Preferred Stock which shall be designated "Series A Preferred
Stock" (the "Series A Preferred Stock"). (The Series A Preferred Stock is
hereinafter sometimes referred to as the "Preferred Stock.")
(2) Number of Preferred Shares. The number of shares
constituting the Series A Preferred Stock shall be 250,000.
(3) Dividends. The Holders of the Series A Preferred
Stock shall be entitled to receive dividends at the rate of eight percent (8%)
per annum of the original issue price per share of Series A Preferred Stock,
out of any funds legally available therefor, payable on each January 1, April
1, July 1 and October 1 after the issuance of the Series A Preferred and so
long as any shares of Series A Preferred Stock shall be outstanding. Such
dividends shall be cumulative, so that if the full dividends in respect of any
previous dividend period shall not have been paid on the Series A Preferred
Stock at the time outstanding, whether or not earned, whether or not funds of
the corporation are legally available therefor and whether or not declared by
the Board, the deficiency shall be fully paid or declared and set apart for
such shares (without interest) before any dividend or other distribution shall
be paid on or declared or set apart for any other class or series of Common
Stock or Preferred Stock of the corporation, whether now or hereafter
authorized, and before any redemption, retirement, purchase or other
acquisition of any other class or series of Common Stock or Preferred Stock of
the corporation, whether now or hereafter authorized. The Company may pay the
dividend on the Series A Preferred Stock in cash, or through the issuance of
additional shares of Series A Preferred Stock having an issue price equal to
the amount of the dividend, or through a combination of the foregoing.
(4) Liquidation Preference.
a. Preference on Series A Preferred Stock. In
the event of any liquidation, dissolution or winding up of the
corporation, either voluntarily or involuntarily, the holders of
shares of Series A Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of shares of any other class
or series of Common Stock or Preferred Stock of the corporation, an
amount equal to Ten Dollars ($10.00) per share plus a further amount
equal to any dividends declared but unpaid on such shares, as either
such amount may be adjusted from time to time to give effect to stock
splits, stock dividends and similar transactions affecting the Series
A Preferred Stock.
All of the preferential amounts to be paid to the holders of
shares of Series A Preferred Stock under this
-2-
<PAGE> 3
Section shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of shares of Common
Stock in connection with such liquidation, dissolution or winding up.
After the payment or the setting apart for payment to the holders of
the Series A Preferred Stock of the preferential amount so payable to
them, the holders of shares of Common Stock shall be entitled to
receive all remaining assets of the corporation.
If, upon such liquidation, dissolution or winding up of the
corporation, the assets of the corporation available for distribution
are insufficient to provide for the payment of the full preferential
amount for each share of Series A Preferred Stock outstanding, such
assets as are available shall be distributed ratably among the holders
of shares of Series A Preferred Stock.
b. Consolidation or Merger. A consolidation or merger
of the corporation with or into any other corporation or corporations,
or a sale of all or substantially all of the assets of the
corporation, or a series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed
of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section (4).
c. Noncash Distributions. If any of the assets of the
corporation are to be distributed other than in cash under this
Section (4), then the Board of Directors of the corporation shall
promptly engage independent competent appraisers to determine the
value of the assets to be distributed to the holders of shares of
Series A Preferred Stock or Common Stock. The corporation shall, upon
receipt of such appraiser's valuation, give prompt written notice to
each holder of shares of Series A Preferred Stock and Common Stock of
the appraiser's valuation.
d. Consent for Certain Repurchase. Each holder of an
outstanding share of Series A Preferred Stock shall be deemed to have
consented, for purposes of Chapter 5 of the California General
Corporation Law, to distributions made by the corporation in
connection with the repurchase of shares of Common Stock issued to or
held by employees or consultants upon termination of their employment
or services pursuant to agreements providing for the right of said
repurchase between the corporation and such persons.
(5) Conversion. The holders of the shares of Series A Preferred
Stock shall have the following conversion rights (the "Conversion Rights").
-3-
<PAGE> 4
a. Right to Convert. Each share of Series A Preferred
Stock initially shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share and on
or before 5:00 p.m. California time on December 31, 1997, at the
office of the corporation or any transfer agent for the Series A
Preferred Stock into ten (10) fully paid and nonassessable shares of
Common Stock of the corporation (the "Conversion Ratio"). After
December 31, 1997, the shares of Series A Preferred Stock shall not be
convertible into shares of Common Stock or any other securities of the
corporation.
b. Adjustments to Conversion Ratio.
(i) Stock Dividends and Subdivisions. If, after the date
of the first issuance of shares of Series A Preferred Stock, the
corporation shall issue additional shares of Common Stock, by reason
of the declaration or payment of any dividend on the Common Stock
payable in Common Stock or by reason of a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) without a corresponding subdivision or
dividend with respect to the Series A Preferred Stock, the Conversion
Ratio of the Series A Preferred Stock in effect immediately prior to
such declaration or subdivision shall, concurrently with the
effectiveness of such declaration or subdivision, be proportionately
increased.
(ii) Adjustments for Combinations or Consolidation of
Common Stock. In the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise,
into a lesser number of shares of Common Stock without a corresponding
combination or consolidation with respect to the Series A Preferred
Stock, the Conversion Ratio of the Series A Preferred Stock in effect
immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately decreased.
(iii) Adjustment for Merger, Reorganization, etc. In the
case of any merger of the corporation with or into another corporation
or the transfer of all or substantially all of the assets of the
corporation to another corporation in which the shareholders of the
corporation are to receive cash, securities or other consideration for
their shares, each share of Series A Preferred Stock shall thereafter
be convertible into the number of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock
of the corporation deliverable upon conversion of the shares of Series
A Preferred Stock would have been entitled upon such merger or
conveyance; and, in any such case, appropriate adjustment (as
determined by the Board
-4-
<PAGE> 5
of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter
of the holders of shares of Series A Preferred Stock, to the end that
the provisions set forth herein (including all provisions with respect
to changes in and other adjustments of the Conversion Ratio) shall
thereafter be applicable as nearly as reasonably may be, in relation
to any shares of stock or other property thereafter deliverable upon
the conversion of Series A Preferred Stock.
c. Automatic Conversion.
(i) Public Offering. Each share of Series A Preferred
Stock automatically shall be converted into shares of Common Stock at
the then effective Conversion Ratio on the earlier of (A) 5:00 p.m.
California time on December 31, 1997 and (B) the closing of a public
offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the corporation to the public
providing gross proceeds to the corporation of not less than Five
Million Dollars ($5,000,000).
(ii) Procedure. In the event of such automatic
conversion, the person(s) entitled to receive shares of Common Stock
issuable upon such automatic conversion of the shares of Series A
Preferred Stock shall not be deemed to have converted such shares of
Series A Preferred Stock until immediately prior to the event
giving rise to such conversion. Upon the occurrence of such event,
the outstanding shares of Series A Preferred Stock shall be converted
automatically and without further action by the holders of said shares
and whether or not the certificates representing said shares are
surrendered to the corporation or its transfer agent; provided that
the corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon conversion of any
shares of Series A Preferred Stock unless certificates evidencing such
shares of Series A Preferred Stock are either delivered to the
corporation or any transfer agent as hereinafter provided, or the
holder notifies the corporation that said certificates have been lost,
stolen or destroyed and executes an agreement satisfactory to the
corporation to indemnify the corporation for any loss incurred by it
in connection therewith. Upon the occurrence of the automatic
conversion of any shares of Series A Preferred Stock, the holders of
the shares of Series A Preferred Stock shall surrender the
certificates representing said shares at the office of the corporation
or of any transfer agent for Series A Preferred Stock. Thereupon,
there shall be issued and delivered to such holder, promptly at such
office and in such holder's name as shown on such surrendered
certificate or certificates, a certificate or certificates for the
number of shares of Common Stock into which the shares of Series A
-5-
<PAGE> 6
Preferred Stock surrendered were convertible on the date on which the
event effecting the automatic conversion occurred.
d. Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of any shares of Series A
Preferred Stock and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share. Any conversion of shares
of Series A Preferred Stock pursuant to this Section (5) by any holder
shall be done on an aggregate basis taking into account all shares of
Series A Preferred Stock held by such holder (i.e., such holder shall
have no more than one fractional share of Series A Preferred Stock
upon such conversion). Before any holder of shares of Series A
Preferred Stock shall be entitled to convert the same into full shares
of Common Stock, other than by reason of the automatic conversion
provided in Section (5) (c) above, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of
the corporation or of any transfer agent for Series A Preferred Stock,
and shall give written notice to the corporation at such office that
the holder elects to convert the same, and shall state therein the
holder's name or the name or names of the nominees in which the holder
wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of shares of Series A
Preferred stock, or to his nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which he
shall be entitled as aforesaid. Except as set forth in this Section
(5) such conversion shall be deemed to have been made immediately
prior to the close of business on the day of such surrender of the
shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date. Upon
conversion of only a portion of the number of shares of Series A
Preferred Stock represented by a certificate so surrendered for
conversion, the corporation shall issue and deliver to, or upon the
written order of, the holder of the certificate so surrendered for
conversion, at the expense of the corporation, a new certificate
covering the number of shares of Series A Preferred Stock
representing the unconverted portion of the certificate so
surrendered.
e. Transfer Costs. The corporation shall pay any and
all documentary stamp and other transactional taxes attributable to
the issuance or delivery of shares of Common Stock of the corporation
upon conversion of any shares of Series A Preferred Stock.
f. No Impairment. The corporation will not, without the
approval of the requisite number of shares of Series A
-6-
<PAGE> 7
Preferred Stock by amendment of its Articles of Incorporation or this
Certificate of Determination or through any reorganization, transfer
of assets, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder
by the corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section (5) and in the
taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of shares of Series A,
Preferred Stock against impairment.
g. Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Ratio for any
shares of Series A Preferred Stock pursuant to this Section (5) the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and shall furnish to
each holder of shares of Series A Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The
corporation shall, upon the written request at any time of any holder
of shares of Series A Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Ratio at the time
in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received
upon the conversion of the shares of Series A Preferred Stock held by
such holder.
h. Common Reserved. The corporation shall reserve and
keep available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be
sufficient to effect conversion of all of the outstanding shares of
the Series A Preferred Stock.
i. Registration. If any shares of Common Stock to be
reserved for the purpose of conversion of shares of Series A Preferred
Stock require registration or listing with, or approval of, any
governmental authority, stock exchange or other regulatory body under
any federal or state law or regulation or otherwise, before such
shares may be validly issued or delivered upon conversion, the
corporation will, in good faith and as expeditiously as possible, at
its expense, endeavor to secure such registration, listing or
approval, as the case may be.
j. Status of Shares. All shares of Common Stock which
may be issued upon conversion of the shares of Series A Preferred
Stock will upon issuance by the corporation be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
-7-
<PAGE> 8
k. Cancellation of the Shares. Upon conversion of any
shares of Series A Preferred Stock into Common Stock, said converted
shares of Series A Preferred Stock shall resume the status of
authorized and unissued shares of Series A Preferred Stock of the
corporation.
l. Notices of Record Date. In the event of any taking
by the corporation of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the corporation shall mail to
each holder of shares of Series A Preferred Stock, at least twenty
(20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
m. Notices. Any notice required by the provisions of
this Section (5) to be given to the holders of shares of Series A
Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record
at his address appearing on the books of the corporation.
(6) Voting Rights. Except as otherwise required by law or by the
Articles of Incorporation of the corporation, the shares of Series A Preferred
Stock and Common Stock shall be voted together as a single class at any annual
or special meeting of shareholders of the corporation, or, may act by written
consent in the same manner as the corporation's Common Stock, upon the
following basis: each share of Series A Preferred Stock issued and outstanding
shall have that number of votes equal to the number of shares of Common Stock
into which each share of Series A Preferred Stock is then convertible, except
that fractional shares shall not be permitted, and any fractional voting rights
resulting from this formula (after aggregating all shares of Common Stock into
which shares of Series A Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half being
rounded upward).
(7) Protective Provisions. So long as any shares of Series A
Preferred Stock shall be outstanding the corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least fifty percent (50%) of the outstanding shares of Series A
Preferred Stock:
a. Change of Rights. Alter or change the rights,
preferences, or privileges of the Series A Preferred Stock so
-8-
<PAGE> 9
as materially and adversely to affect the Series A Preferred Stock; or
b. Authorized Number. Increase the authorized number of
shares of Series A Preferred Stock; or
c. Create New Class. Create any new class or series of
shares having preferences over, or being on a parity with, Series A
Preferred Stock then outstanding.
RESOLVED FURTHER: That the Chairman of the Board, the
President or any Vice President, and the Secretary, Chief Financial
Officer, the Treasurer, or any Assistant Secretary or Assistant
Treasurer of this corporation are each authorized to execute, verify
and file a certificate of determination of preferences in accordance
with Nevada law.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as
of October 20, 1995.
/s/ CHRISTOPHER D. MICHAELS
-------------------------------------
Christopher D. Michaels
President
/s/ JEFFREY KRAMER
-------------------------------------
Jeffrey Kramer
Secretary
The undersigned, Christopher D. Michaels and Jeffrey Kramer, the
President and Secretary, respectively, of Nevada Manhattan Mining Incorporated,
a Nevada corporation, declare under penalty of perjury that the matters set out
in the foregoing Certificate of Determination of Preferences of Series A
Preferred Stock are true of their own knowledge.
EXECUTED at Los Angeles, California, on October 20, 1995.
/s/ CHRISTOPHER D. MICHAELS
-------------------------------------
Christopher D. Michaels
/s/ JEFFREY KRAMER
-------------------------------------
Jeffrey Kramer
-9-
<PAGE> 1
EXHIBIT 5
[LETTERHEAD
REINSTEIN, PANTELL & CALKINS]
December 4, 1996 FILE NO ___________
NEVADA MANHATTAN MINING INCORPORATED
5038 North Parkway Calabasas
Suite 100
Calabasas, California 91302
Re: Proposed sale of Common Stock in Nevada Manhattan Mining
Incorporated; Our File No. NE6042M.01
Gentlemen:
We have acted as Special Counsel to Nevada Manhattan Mining Incorporated (the
"Company") in connection with the Company's proposed offer and sale of Common
Stock to be registered pursuant to Form SB-2 dated November 29, 1996, and the
exhibits thereto attached. Capitalized terms not otherwise defined herein have
the same meaning as set forth in the Prospectus which is appended to Form SB-2.
In rendering the opinion hereinafter expressed, we have examined such
documents, instruments, and matters of law as we have deemed appropriate
including the following documents (collectively referred to herein as the
"Related Documents"):
1. Form SB-2;
2. The Prospectus;
3. The exhibits accompanying Form SB-2; and
4. Such other documents including the Company's articles of
incorporation, bylaws, minutes of directors meetings and other documents
pertinent to the opinion herein expressed.
In conducting our examination, we have assumed: (i) the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such copies;
(ii) the accuracy of the representations and warranties of factual matters made
by the Company in any certificates delivered to us for our examination in the
Related Documents; and (iii) other than the Related Documents, there are no
documents between the Company and other parties which would limit, expand,
<PAGE> 2
REINSTEIN, PANTELL & CALKINS
ATTORNEYS AT LAW
or otherwise modify the respective rights and obligations of the Company other
than those set forth in the Related Documents or which would have an effect on
the opinion herein rendered.
As to questions of fact material to certain matters set forth in this opinion
except as otherwise provided herein, we have relied solely upon a certificate
of the Company duly executed by a person authorized to execute such
certificates.
Based on and subject to the foregoing and the limitations set forth herein and
based on our examination of such questions of law as we have deemed appropriate
under the circumstances, we are of the opinion that the Common Stock when sold
pursuant to the terms and conditions outlined in the Prospectus will be legally
issued, fully paid, and non-assessable.
We are qualified to practice law in the state of California and we do not
purport to express any opinion herein concerning any law other than the laws of
the state of California and the federal law of the United States of America.
This opinion is limited to the matters expressly set forth herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein.
This opinion is as of the date shown above. We have not undertaken and hereby
disclaim any obligation to advise you of any change in any matter after the
date hereof which is otherwise stated in this opinion.
Very truly yours,
REINSTEIN, PANTELL & CALKINS
<PAGE> 1
Exhibit 10.(i)
MINING AGREEMENT
----------------------------------
THIS MINING AGREEMENT, made and effected this 4th day of April,
1987 is by and between: -----
Anthony C. Selig (owner/seller) &
where applicable;
Dixie Exploration Corporation
a Nevada Corporation, and
Anthony C. Selig and Associates,
2805 S. Red Rock Street
Las Vegas, Nevada 89180-5359,
party of the first part, herein after referred to as 'Seller', and
TWA ASSOCIATES
T. W. Anderson (Agent & Individually)
540 Lake Terrace Drive
Boulder City, Nevada 89005
party of the second part, herein after referred to as 'Buyer', and
EPIC ENTERPRISES, LTD.
a Nevada Corporation
Christopher D. Michaels, President
1771 E. Flamingo Avenue, Suite 200
Las Vegas, Nevada 89109
party of the third part, herein after referred to as 'Assignee'.
WITNESSETH:
For and in consideration of the premises and the covenants and
agreements of the respective parties hereto, herein set forth, it is mutually
covenanted and agreed by and between the parties hereto as follows:
1. DEFINITIONS. It is hereby agreed that certain words and phrases
used throughout this agreement shall be defined and construed as follows:
A. 'MINING CLAIMS', as used herein, means only those mining
claims, or portions or fractions thereof, as named and listed in Exhibit #1
attached hereto and incorporated herein by reference as though fully set forth,
that Seller owns or Seller has under lease/option in the Manhattan Mining
District, Nye County, Nevada, (Township BN, Range 44E, Sections 20, 21, 22, 27,
28, 29,) together with all unmined ore, timber, dips, spurs, and angles
situated thereon or therein, water rights, or appurtenances
- 1 -
<PAGE> 2
thereto, except those dumps, tailings and materials which are excluded per
Exhibit #1 and further delineated by the map named Exhibit #6 attached hereto
and incorporated herein by reference as though fully set forth, of the Earl,
Bath, and Consolidated shafts area.
B. 'ADVANCED PAYMENT', as used herein means the amount required
to be paid by Buyer to Seller on a date or dates specified herein, in
anticipation of production payment to guarantee a specific monthly and specific
yearly return to Seller. Advance payment shall be payable in the specified
amount where no production payment has accrued during the preceding calendar
month; where production payment during the preceding calendar month equals or
exceeds the advanced payment, no advance payment shall be due or payable.
C. 'PRODUCTION PAYMENT', as use herein, means the compensation or
portion of proceeds becoming payable, by the Buyer to the Seller, or to be
credited against advanced payments, arising from mining operations upon the
said mining claims.
D. 'MINING OPERATIONS', as used herein, includes any and every
type of operation upon said mining claims, whereby materials are extracted or
taken or mined therefrom, whether by mining or milling, or by any other method
or means or any nature, kind or type.
E. 'PRODUCTION', as used herein, means the mining and reduction
of products into a marketable form or condition, and, if any product is mined
in such condition that it can be marketed without further beneficiation, and is
so marketed without further beneficiation, such shall be deemed to be
production.
F. 'PRODUCTS', as used herein, means, but is not limited to, any
and all cinnabar, antimony, gold, silver, minerals, metals, values, sands,
gravels, rare earths, rare metals, ores, chrome ores, aggregates, and any and
all other materials of every kind and nature removed for purposes of sale,
trade or transfer by the Buyer from, on, in or under the mining claims.
G. 'PROCESSING', as used herein, means. but is not limited to,
mining, milling, collecting, saving, separating, sizing, jigging, reducing,
smelting, or otherwise beneficiating any products to such an extent as may be
necessary to prepare the same in final condition for marketing.
H. 'NET SMELTER RETURNS', as used herein, and upon which
production payments are to be paid by the Buyer, means the net amount of money,
in whatever form received, including any and all bonuses, premiums and rewards,
directly and indirectly received from the sale, trade or transfer by Buyer of
any products removed by the said Buyer from the mining claims, or any part
thereof exclusive of haulage and smelting costs; however, for the purpose of
-2-
<PAGE> 3
computing production payments payable to Seller hereunder, such gross amount of
money shall be computed on the basis of the London Gold Exchange pm (afternoon)
fixed price on the day of sale or on the actual selling price for such
products, whichever shall be the higher. No part of the cost or expense of
mining or milling ore shall be deducted before production payments are
computed.
I. 'CAPITAL IMPROVEMENTS AND EQUIPMENT COSTS', as used herein, is
the amount Buyer expends from time to time to explore, develope and mine the
subject mine claims. Such expenditures by Buyer shall be allocated or written
down over their useful life in accordance with usually accepted accounting
practices for mining companies.
J. 'ROYALTY PAYMENTS'. All payments herein provided shall be in
U.S. Dollars, or gold or silver bullion where Buyer and Seller agree, upon
thirty (30) days written notice.
2. 'GRANT OF POSSESSION'. The Seller, for and in consideration
or the, covenants, conditions and agreements hereinafter reserved and set
forth, and by the Buyer to be kept and preformed, has sold, and demised, and by
these presents does hereby sell, and demise, unto the said Buyer, his and its
executors, administrators, successors in title, and authorized assigns, all of
the right, title , and interest of the mining claims described herein, the
improvements thereon, water rights, and the appurtenances, for the purpose of
exploring, sampling, mining, processing and any uses incidental thereto.
3. 'TERM'. The effective date of this MINING AGREEMENT is 4th
day of APRIL, 1987 and shall, unless earlier terminated as provided herein,
continue in full force and effect, subject to the terms and conditions herein
contained until February 15, 1996.
4. 'INDEMNITY; HOLD HARMLESS'. Seller shall immediatedly record
in the office of the county recorder of the county in which the mining claims
are located a notice in compliance with the requirements of Section 108.234 of
the Nevada Revised Statutues. Seller hereby agrees to indemnify and hold
harmless Buyer from any and all liability or responsibility from any mining
operations of Seller or his representatives, agents, contractors, emloyees,
successors in title, or assignees upon the mine and/or mill tailings or dumps
as described in Exhibit #1, attached hereto and incorporated herein.
Buyer hereby agrees to indemnify and hold harmless Seller from and any
all liabliity or responsibility from any mining operations of Buyer or his
representatives, agents, contractors, employees, successors in title, or
assingees upon the said mining claims as descirbed in Exhibit #1, and
incorporated herein.
5. 'NOTICES TO MINE INSPECTOR'. Buyer covenants with
-3-
<PAGE> 4
the Seller to mail to the State Inspector of Mines. at Carson City, Nevada,
with a like copy of such to Seller, prior to the commencement of mining
operations, and not later than June 1 in each year during the term hereof, a
written, detailed report, in compliance with Section 512.160, Nevada Revised
Statutes.
6. 'COMPLIANCE WITH LABOR LAWS'. Buyer shall promptly pay when
due all wages for work done and shall comply with all laws; federal, state and
local pertaining to mining and milling operations, including, but not limited
to, the carrying and maintaining of State Industrial Insurance System (SIIS)
insurance on all employees, casual or otherwise, and to provide written proof
of such coverage to the Seller within thirty (30) days of the date hereof.
Seller warrants to Buyer that he has no outstanding or pending labor claims or
labor liens against the herein named property for any work performed by Seller
to this date, and agrees to indemnify Buyer for same.
7. 'POSSESSION: INSPECTION'. During the term of this agreement,
and so long as Buyer performs all of the terms and conditions required herein,
Buyer shall have the right to exclusive possession and quiet enjoyment of the
said mining claims and appurtenances, subject however, to the permission hereby
granted to the Seller, his agents or representatives, to have access to said
mining claims at any and all reasonable times for the purpose of inspecting or
examining the same, such entry and inspection to be made and conducted at the
sole risk of the Seller and so as not to interfere with Buyer's operations or
production. Seller shall give Buyer seven (7) days written notice of such
intent to inspect.
B. 'PLACE OF PAYMENT'. Buyer shall pay to the Seller a payment
of nine percent (9%) of the net smelter returns on all products mined, milled
or extracted from said mining claims including all ores or other materials, all
such payments to apply towards the Purchase Price balance. Upon proper
completion of a vertical mine shaft on the property to a depth of 650 feet, the
herein specified net smelter return payment percentage shall decrease from nine
percent (9%) to seven percent (7%).
The Purchase Price for Seller's equity in the herein said mining
claims and appurtenances thereto is Two Million Two Hundred Thousand dollars
($2,200,000.00). All minimum monthly payments, minimum semi-annual payments,
and production payments shall apply towards the Purchase Price. There shall be
no penalty for prepayment.
Buyer shall pay to Seller the sum of Two Thousand Five Hundred dollars
($2,500.00) beginning on April 4, 1987, and shall pay the same for each and
every consecutive month thereafter on the FOURTH (4th) thereof, for the term of
this Mining Agreement, such payments to credited to the Purchase Price, however
if the payment of the production payment
-4-
<PAGE> 5
as provided for herein, shall exceed the minimum month payment of $2,500.00,
then the production payment shall suffice as payment for that particular month.
Additionally, the Buyer shall pay to Seller the following semi-annual
payments which shall be credited to the Purchase Price, however said semi-annual
payments shall not be offset by the regular minimum monthly payments previously
paid or becoming due on the FOURTH (4th) of each month. Buyer shall be allowed a
credit towards the following semi-annual payments for production payments
previously paid where and for the amount of such production payment that exceeds
the minimum monthly payment due:
<TABLE>
<S> <C> <C> <C>
August 15, 1987 $ 27,500.00
February 15, 1988 $ 25,000.00
August 15, 1988 $ 50,000.00
February 15, 1989 $ 50,000.00
August 15, 1989 $ 75,000.00
February 15, 1990 $ 75,000.00
August 15, 1990 $ 100,000.00
February 15, 1991 $ 100,000.00
August 15, 1991 $ 125,000.00
February 15, 1992 $ 125,000.00
August 15, 1992 $ 147,500.00
February 15, 1993 $ 147,500.00
August 15, 1993 $ 147,500.00
February 15, 1994 $ 147,500.00
August 15, 1994 $ 147,500.00
February 15, 1995 $ 147,500.00
August 15, 1995 $ 147,500.00
February 15, 1996 $ 147,500.00
</TABLE>
Said Purchase Price shall include all appurtenances and improvements
as hererinabove described. Upon payment of the Purchase Price, each party
shall be requireed to comply with all applicable State laws with regard to the
conveyance thereof and the Seller shall convey and transfer said mining claims
to Buyer by a good and sufficient Quitclaim Deed.
All payments required to be made hereunder shall be paid to the Seller
at the address as provided herein, unless and until the Seller shall give
written notice of a change of address by certified mail, return receipt
requested, mailed at least
-5-
<PAGE> 6
thirty (30) days prior to the effective date of the change of address. If an
escrow is established as hereinafter provided all payments shall be paid to the
Escrow Agent for the benefit of the Seller.
If Buyer defaults as herein provided for in his preformance of any of
the convenants or terms herein provided or of the payments to by made on a
monthly basis, semi-annual basis, or production royalty basis, then in such
event all sums previously paid by Buyer to Seller shall be retained by Seller.
In the event of termination of this Mining Agreement as a result of
breach or default by Buyer, Buyer shall not be entitled to compensation for any
additional improvements or additions attached on the property, and said
improvements or additions attached on the property shall be the sole property of
Seller. All operations, improvements and additions of Buyer shall be done at
his sole expense and Buyer further agrees that any improvement, including
buildings fixtures, or equipment attached on the property shall be fully paid
for and in no way shall encumber the property or the Seller.
9. 'RECORDS OF PRODUCTION'. It is understood and agreed between
the parties hereto that copies of original settlement invoices on all products
processed and sold from said mining claims shall be filed quarterly by the
Buyer with the Seller on or before the 15th day after each quarter relating to
all processed products from the said mining claims for the preceding calendar
quarter, accompainied in each case by check in payment of the production
royalties accrued as a result of said production. Buyer shall implement and
install standard industry procedures for sampling the head ore and tailings
discharge.
10. 'FORCE MAJEURE'. None of the parties hereto shall be liable
to the other for failure to perform the work required to be performed hereunder
for such period of time as failure of performance is caused by strikes,
weather, acts of God or national war emergency. This provision shall not,
however, relieve the Buyer of his obligation to make payments as required
hereunder.
11. 'ASSESSMENT WORK AND TAXES'. Buyer shall pay all taxes and
perform all annual assessment work required by law in order to hold the mining
claims for each assessment year, during the entire term of this Agreement or
any extentions thereof, and shall record in the office of the county recorder
of the county in which said minimg claims are situated, proper proof, in
affidavit form, of the completion of the same, both the performance of work and
the recording to be completed by the Buyer at his sole expense at least forty
five (45) days prior to the date required by law for such recordation annually.
It is provided, however, that, if this agreement is terminated or abandoned on
or before the first day of July in any such
-6-
<PAGE> 7
assessment year, the Buyer shall be under no obligation to perform the
assessment work for such assessment year or thereafter. If this agreement is
terminated or abandoned after the first day of July in any assessment year,
Seller shall have the right to enter upon said mining claims at any time or
times during the remainder of the assessment year for the purpose of performing
or completing the above required assessment work for said assessment year.
12. 'PROGRESS REPORTS'. Buyer shall furnish to the Seller at
least quarterly, a written progress report reciting in detail any engineering
data, assay reports, drill reports and logs and other information pertinent to
the exploration and development of said mining claims.
13. 'IMPROVEMENTS'. At the termination of this agreement by lapse
of time, forfeiture or otherewise, the Buyer agrees to deliver up to said
Seller the said mining claims, allowing for the mining and develpement thereon
by the Buyer. In the event of the abandonmnet, termination or cancellation of
the interest of the Buyer herein, as hereinafter set forth, it is understood
and agreed that all improvements, including rail in place, made in or about the
said property by the Buyer and affixed to the realty and constituting a part
thereof, together with copies of operational maps, assays, and reports, shall
become the property of the Seller at no additional expense; but all property of
a personal nature including machinery, tools, and equipment, or those things
not affixed in place can be removed, upon 72 hours notice in writing by Buyer
to Seller of Buyer's intent to enter upon said property including from
underground, provided such removal is done in a safe and workmanlike manner by
the Buyer within one hundred twenty (120) days (weather permitting) from the
date of such abandonment, cancellation or termination, failing which the same
shall revert to the Seller permanently at no additional expense. Any and all
water rights, applications or certificates or appropriation which are acquired
by the Buyer, from this date forward in connection with the mining operations
contemplated herein shall be expressly subject to this provision.
14. 'TERMINATION'. In the event that the Buyer shall fail to make
any payment or payments as herein provided or shall fail to perform each and
every covenant, term and condition as herein provide, the Seller may, after
thirty (30) days notice in writing given to Buyer within which to cure said
default or breach, and provided said default or breach has not been corrected
during said 30-day period, declare said Mining Agreement forfeited, cancelled
and terminated, and enter and repossess all of the subject property herein
described, with or without process of law.
In the event of a breach or default herein occuring, other than the
payment of the minimum monthly, semi-annual, or production payments, and after
notice said breach or default,
-7-
<PAGE> 8
that cannot be remedied by the payment of monies, Buyer shall immediately
commence proceedings to cure such breach or default by appropriate performance
and prosecute the same to completion without undue delay.
15. 'NON-PARTNERSHIP'. This agreement shall not constitute or be
construed to constitute a partnership, mining partnership, joint venture or
joint operation. The full control and determination as to manner, extent and
character of mining operations, subject only to the restrictions herein
provided, shall be determined by Buyer without interference from Seller.
16. 'BANKRUPTCY; INSOLVENCY'. It is agreed that the filing of a
Chapter 7 petition in bankruptcy by the Buyer, or the adjudication that the
Buyer is bankrupt, or an assignment for the benefit of creditors, or the levy
of an execution against the interest of Buyer in said mining claims to enforce
or satisfy any judgement against Buyer not stayed within thirty (30) days by an
appeal bond shall permit the Seller to cancel this agreement, and Buyer shall
forfeit all his rights to the possession of the mining claims, and neither this
agreement nor any of Buyer's rights hereunder shall ever be an asset of the
estate of the Buyer in the event that he is bankrupt of files a petition in
bankruptcy under the bankruptcy laws of the United States, or makes an
assignment for the benefit of creditors. It is further agreed that the filing
of a Chapter 11 shall be cured within a ninety (90) days of filing thereof.
17. 'TIME OF ESSENCE; INUREMENT'. Time is of the essence of this
agreement, and the same shall be binding upon and inure to the benefit of all
of the heirs, administrators, executors, successors and assign of the parities
hereto.
No waiver by Seller of any breach by Buyer, or any extension of the
due date of any payment hereunder granted at Seller's option in writing, or the
acceptance by Seller of a payment after its due date, shall in any manner
operate as a waiver of any subsequent breach or default of Buyer thereafter
occurring; and any uncured breach or default shall not affect the right of
Seller to accelerate the balance of the purchase price or declare a forfeiture
hereunder and pursue any other remedy afforded to him by the terms of this
contract, or at law, by reason on any subsequent act or omission of Buyer.
18. 'NOTICES'. Any notice required or permitted to by given
hereunder shall be deemed properly given upon delivering the same personally to
the party to be notified, or upon mailing such notice, by registered or
certified mail, return receipt requested, postage prepaid, to the party to be
notified, at the address herein above set forth on the first page of this
Mining Agreement, or such other address as the party to be notified may have
designated thirty (30) days prior thereto by written notice to the other. The
date on which the receiving party signs the
-8-
<PAGE> 9
mailing certificate shall constitute the date of delivery, however, not to
exceed forty eight (48) hours from the date of mailing.
19. 'INTERPRETATION; CONSTRUCTION'. The paragraph captions or
headings in this agreement are inserted for convenience only, and shall not be
considered a part of this agreement, or used in its interpretation. Such
captions in no way define, limit or describe the scope or intent of this mining
purchase agreement, and are for reference only. Whenever used, the singular
number shall include the plural, and the plural the singular and the use on any
gender shall include all other genders. This agreement shall be governed by
laws of the State of Nevada and by laws of the United States of America
applicable to the location and possession of, and title to, the said mining
claims.
In the event litigation is instituted as a result of this agreement,
then the prevailing party thereof shall be also entitled to all court costs,
travel expenses, and attorneys fees incurred therein. It is understood and
agreed by the parties hereto that if any part, term or provision of this
contract is by the courts held to be illegal or in conflict with any law of the
State of Nevada, or the United States, the validity of the remaining
portions or provisions shall not be affected, and the rights and obligations of
the parties shall be construed and enforced as if the contract did not contain
the particular part, term or provisions held to be invalid.
20. 'RECORDS; CONFIDENTIALITY'. All Seller's records and reports,
drill logs, testings, and maps shall be made available to Buyer to copy, use,
refer to, and study upon request for same as said records are available and all
such information and material shall be treated as strictly confidential and
made available to no one else by Buyer.
21. 'BUYER'S OPERATIONS'. All Buyer's operation shall be
conducted so as to fully comply with the laws of the State of Nevada in every
respect and with all present or future rules, regulations and requirements
promulgated by Federal, State or Local authorities. Buyer shall furnish to
Seller copies of all licenses and permits as may be required of him and Seller
agrees to assist Buyer, where possible, to obtain any such permits or licenses,
however, Buyer shall not be held liable for any agencies' failure to issue any
licenses or permits. Buyer agrees to erect, where necessary, and maintain a
fence in order to secure any areas where toxic or hazardous materials may be
used or stored.
Buyer agrees not to move nor alter any of the present fixtures,
buildings, or equipment without the express written consent of Seller which
consent shall not be unreasonably withheld. It is agreed that Buyer has
examined the property and knows the extent,
-9-
<PAGE> 10
and limitations thereof and purchases everything pertaining hereto in an "as
is" condition and understands Seller extends no limited or implied warranty of
any kind whatsoever and Seller expressly makes no representations regarding any
mineral or ore values upon, in, or under said mining claims herein named.
22. 'BUYER'S MANAGEMENT DUTIES'. Buyer shall promptly pay for any
and all labor performed and materials and supplies furnished in connection with
the subject property, and in the event liens of any kind or description are
filed against the mine claims described herein, to forthwith post a bond, or
otherwise keep said property free and clear from any and all encumbrances.
Failure to so do is sufficient cause for Seller to terminated this agreement.
23. 'BUYER'S INSURANCE REQUIREMENTS'. During the life of this
agreement and until full payment of the Purchase Price hereunder, Buyer shall
secure, maintain and pay the premiums for insurance covering the buildings, and
other insurable improvements of the property, together with that personal
property and replacements thereof, such insurance to include coverage against
general and personal liability and property damage, and which coverage shall
expressly and name as additional insured Anthony C. Selig and Dixie Exploration
Corporation from any and all liability while Buyer is in possession or under
contract and said coverage shall not be for less than Five Hundred Thousand
($500,000.00) dollars. Such insurance shall be written by sound and reputable
insurance companies.
All premiums for such insurance shall be paid by Buyer when due, and
prior to delinquency. The policies shall be deposited with Buyer and copies
thereof shall be deposited with Seller. Such policies shall provide that in the
event of delinquency, Seller shall be notified thereof and Seller shall have
the right to pay any delinquencies and be reimbursed therefore as further
provided herein. If Buyer fails to pay any installment of tax or assessment
against the property, any premium for insurance, or fails to make any filings
as required by law when due, Seller may make such filings and may either pay
Such sum together with interest and penalties thereon, if any, and cost of
reinstatement, including attorneys' fees, if any, and add the amount thereof to
the principal due from Buyer, and charge interest at the prevailing rate from
the date of payment; demand repayment of such amounts and sue for the same if
not promptly received from Buyer; or treat the failure of Buyer to make such
payments or filings as a breach or default of this contract and pursue any
remedy available to Seller on breach or default thereof.
24. 'RIGHT TO USE OF SURFACE'. Seller agrees that Buyer shall
have the right to alter any of the surface of said mining claims to the extent
that may be necessary to mine, process, and carry
-10-
<PAGE> 11
away said ores or other metals, as provided in this agreement, and shall have
the right to remove any trees or shrubs or other plants, except those protected
by law, that may be in the way of mining the said ores or other metals by
stripping or tunneling; and Buyer shall have the right to construct a road or
roads over said premises for the purpose of delivering said ores and minerals,
mining equipment, and other times pertaining to the mining operation onto or
from the roads presently existing in the area.
25. 'WARRANTIES AND REPRESENTATIONS'. Seller hereby sells all
said mining claims and warrants that they have been duly located and that
Seller has the right to possession of said mining claims and the right to sell
his interest therein and that the assessment work for the unpatented claims
named herein have been properly performed and filed accordingly and all taxes
of patented claims have been paid to date. Seller warrants that he has not
encumbered the herein named claims.
Buyer, with or without Seller, shall have full right to take any
action necessary, including judicial proceedings, to cure any defect in
Seller's title to the mining claims named herein and the ground covered thereby
and Seller and Buyer agree to cooperate and assist each other in every way in
actions taken and to execute all documents and to take such other action as may
be reasonably necessary to assist each other. Buyer may recover from
semi-annual payments thereafter to become due to Seller all reasonable costs
and expenses, including attorney's fees, incurred by Buyer in curing any
defects in Seller's title.
If the United States or any third person attacks the validity of any
of the mining claims herein described, Buyer, with or without Seller, may
choose to defend their validity, and in such event, Buyer may recover form all
semi-annual payments thereafter to become due to Seller all reasonable costs
and expenses including attorney's fees incurred by Buyer in defending the
validity of such claims. Seller agrees to promptly give Buyer notice of any
such problems to which it has knowledge and assist Buyer, and Buyer shall
assist Seller, in every way as may be necessary to defend the validity of said
claims.
26. 'ASSIGNMENT; ASSIGNS'. All assignments are void without prior
written consent of Seller, such consent not to be unreasonably withheld. Any
such request for assignment by Buyer shall be by written notice. Notice of
Seller's decision shall be received by Buyer within ten (10) days of receipt of
Buyer's request and in the event of no written response or decision from Seller
within ten (10) day, Buyer may assume consent has been given by Seller to
Buyer.
Buyer herein agrees to incorporate in and make a part of any
agreement, contract, lease, or understanding wherein any rights, or interests
herein are assigned or transferred in any
-11-
<PAGE> 12
way to another or others, that in the event of Buyer's default or termination,
that said assignees may take all action necessary to remedy or cure Buyer's
breaches or defaults.
In the event of termination of Buyer's rights contained herein,
Assignee agrees that in the event it assigns any rights, title, and interest to
said mining claims to anyone else, any contract thereto will contain a clause
that acknowledges that the rights that the sub-assignee has are only those
that belong to the Assignee pursuant to the instant contract.
Buyer shall make no representations or warranties inconsistent with
the Underlying Agreements hereto and shall cause any and all authorized
assignees to ratify and acknowledge this Mining Agreement with its Underlying
Agreements.
27. 'UNDERLYING AGREEMENTS - ARGUS RESOURCES, INC.' Buyer agrees
to fully assume that certain 'Lease and Option to Purchase Agreement' by and
between Argus Resources, Inc. and Anthony C. Selig, (& Dixie Exploration
Corporation and Anthony C. Selig & Associates) dated November 15, 1982,
attached hereto as Exhibit #2, with its Exhibits; #1, #2, and 'A', and
incorporated herein by reference as though fully set forth.
Any payments paid by Buyer to Argus per the payment schedules of
Exhibit #2 shall in no way or manner apply toward or act as an offset of the
Purchase Price of this Mining Agreement or against any payments due hereunder.
Buyer shall pay the payments due under Exhibit #2 directly to Argus Resources,
Inc. and Buyer shall furnish immediatley evidence to Seller of every such
payment made to Argus.
Any agreements or understandings, written or oral, by and between
Buyer/Assignee and Argus Resources, Inc. that effects the rights of Seller as
regards the 'Lease and Option to Purchase Agreement' (Exhibit #2) shall be
provided to Seller.
28. 'RELEASE; TWA ASSOCIATES MANHATTAN PROPERTIES AGREEMENT'. In
full and total consideration of the Promissory Note dated December 09, 1985
(Exhibit #8 of the TWA Associates Manhattan Properties Agreement of June 4 and
December 9, 1985) in the amount of $22,822.25, with interest thereon, TWA
Associates and T. W. Anderson hereby agree to forever relinquish, release,
transfer and convey all thier rights, title and interest to Anthony C. Selig
and Dixie Exploration Corporation in that certain equipment per that Bill of
Sale dated October 06, 1986, said equipment stored in Manhattan, Nevada and
more exactly listed below:
(1) Adams Motor Grader
(1) 5 x 6 glasslined pfaudler tank
(1) app. 10 x 50 House/Office trailer
(1) 2" Galigher vac seal pump
(1) lot first aid stretchers
-12-
<PAGE> 13
(1) mini pulverizer for sampling
TWA Associates & T. W. Anderson and Anthony C. Selig (& Dixie
Exploration Corporation and Anthony C. Selig & Associates) hereby fully and
completely release one and each other in every way of every term, covenant, and
condition of the Manhattan Properties Agreement, dated June 04, 1985 and
December 09, 1985, together with all its Addendums, Amendments, and Exhibits
#1 - #9 by and between themselves. TWA Associates, T. W. Anderson and Seller
agree that this Mining Agreement shall replace and supercede any and all prior
agreements, whether written or oral, concerning the Manhattan mining properties
and that no further considerations of any kind or manner pertinent thereto are
due each other. TWA Associates, T. W. Anderson, and Anthony C. Selig and
Dixie Exploration shall separately execute an Equipment and Property release,
as described above, for the purposes of recordation with the State of Nevada
and County of Nye.
In the event that Seller is sued because of any acts or ommissions by
Buyer or Assignee, prior to or after execution of this Mining Agreement, then
Buyer/Assignee shall be fully liable to Seller for any and all costs incurred
by Seller and his representatives in defense of any such actions or
litigations, including but not limited to attorneys fees, court costs, and
travel costs.
29. 'UNDERLYING AGREEMENTS - MIDCONTINENT MINING LEASE'.
Simultaneous with the execution of this Mining Agreement, TWA
Associates and T. W. Anderson does assign, transfer, and convey all their
rights, title and interest in that certain Mining Lease dated December 07, 1985
by and between TWA Associates & T. W. Anderson and Mid-Continent Mining &
Exploration, Inc., said Mining Agreement attached hereto as Exhibit #4 and
incorporated herein by reference as though fully set forth, to Anthony C. Selig.
It is understood that assignment of said Mid-Continent Mining Agreement, in
total, to Selig does hereby, forthwith and henceforth terminate any contractual
obligations between TWA Associates and T. W. Anderson and Mid-Continent Mining &
Exploration, Inc. and that no further considerations of any kind or nature are
due each other nor are any other considerations due from Selig to TWA Associates
and T. W. Anderson in regard for such assignment.
Mid-Continent Mining & Exploration, Inc. does hereby acknowledge and
accept such assignment of said contract to Anthony C. Selig by written evidence
of acceptance attached hereto as Exhibit #5, and incorporated herein by
reference as though fully set forth.
30. 'ASSIGNMENT/ASSUMPTION - EPIC ENTERPRISES, LTD'.
Simultaneous with the execution of this Mining Agreement, TWA
Associates and T. W. Anderson, their assignees,
-13-
<PAGE> 14
representatives, associates, successors, and heirs do, for good and valuable
consideration hereby acknowledged, do assign, transfer, convey, and relinquish
forever all their rights, title, and interest in this Mining Agreement to
Assignee, Epic Enterprises, Ltd.; and TWA Associates and T. W. Anderson
expressly releases, in every manner and form whatsoever, and does hold harmless
Anthony C. Selig, Dixie Exploration Corporation, Selig's associates and
representatives, and Epic Enterprises, Ltd., its associates and representatives,
with regard to the assignment, conveyance, and transfer of this Mining
Agreement, in total, to Epic Enterprises, Ltd.
Epic Enterprises, Ltd., its representative, associates, successors,
heirs, and authorized assignees does hereby agree to assume in total, perform.
follow, observe, obey, and abide by each and every term, condition, convenant,
agreement, and payment schedule as herein outlined in this Mining Agreement as
well as assume Seller's contractual obligations to Argus Resources, Inc. as set
forth in that certain 'Lease and Option to Purchase Agreement' (Exhibit #2).
This Mining Agreement sets forth the entire understanding between the
parties hereto. This Mining Agreement shall inure to the benefit of and shall
be binding upon the respective, heirs, executors, legal representatives,
administrators, successors in interest and authorized assigns of the parties
hereto. Any modifications or admendments must be executed in writing and signed
by the applicable respective parties hereto.
31. 'OTHER DOCUMENTS'. All parties hereto agree to execute and
deliver to the appropriate party hereto any and all instruments, agreements,
permits, documents, or other writings made necessary by the instant agreement.
33. EXHIBITS:
I. Exhibit #1: List of Mining Claims included in this Mining
Agreement, with exclusions.
II. Exhibit #2: 'Lease and Option to Purchase' by and between
Argus Resources, Inc. and Anthony C. Selig (& Dixie Exploration Corporation &
Anthony C. Selig & Associates), dated November 15, 1982.
III. Exhibit #3: 'Mining Lease' by and between TWA Associates &
T. W. Anderson and Mid-Continent Mining & Exploration, Inc., dated December 07,
1985.
VI. Exhibit #4: Mid-Continent Mining & Exploration, Inc.
Acknowledgement of Assignment.
V. Exhibit #5: Map delineating Earl, Bath, and Consolidated mine
shafts and mine dump areas.
-14-
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Mining
Agreement this 4th day of April , 1987, in triplicate.
----- ---------
SELLER: BUYER:
/s/ ANTHONY C. SELIG /s/ T. W. ANDERSON
- ---------------------------------- ----------------------------------
Anthony C. Selig, Individually T. W. Anderson, Individually
DIXIE EXPLORATION CORPORATION TWA ASSOCIATES
by /s/ ANTHONY C. SELIG by /s/ T. W. ANDERSON
-------------------------------- --------------------------------
Anthony C. Selig, President T. W. Anderson, Agent
ANTHONY C. SELIG & ASSOCIATES ASSIGNEE:
EPIC ENTERPRISES, LTD.
by /s/ ANTHONY C. SELIG
--------------------------------
Anthony C. Selig, Trustee
by /s/ DREW LAMBO
--------------------------------
Drew Lambo, Board Director
Senior Vice President
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On this 4th day of April , 1987, personally appeared before me,
----- ----------
a notary public, Anthony C. Selig, who acknowledged and before me executed the
foregoing Mining Agreement, on behalf of himself, as President of Dixie
Exploration Corporation, and as Trustee of Anthony C. Selig and Associates.
/s/ MICHAEL THEODORODIS [SEAL] Michael Theodorodis
- ---------------------------------- OFFICIAL SEAL
Notary Public NOTARY PUBLIC-NEVADA
CLARK COUNTY
STATE OF NEVADA ) My Appt. Expires Apr. 19, 1987
) ss.
COUNTY OF CLARK )
On this 4th day of April , 1987, personally appeared before me,
----- ----------
a notary public, T. W. Anderson, who on behalf of himself (and as Agent for TWA
Associates) acknowledged
- 15 -
<PAGE> 16
and before me executed the foregoing Mining Agreement.
/s/ LELAND E. LUTFY [SEAL] LELAND E. LUTFY
- ---------------------------------- Notary Public-State of Nevada
Notary Public CLARK COUNTY
My Appointment Expires Nov. 12, 1989
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On this 4th day of April , 1987, personally appeared before me,
------- ----------
a Notary Public, Drew Lambo who acknowledged and before me executed the
foregoing Mining Agreement as Senior Vice President of Epic Enterprises, Ltd.
/s/ LELAND E. LUTFY [SEAL] LELAND E. LUTFY
- ---------------------------------- Notary Public-State of Nevada
Notary Public CLARK COUNTY
My Appointment Expires Nov. 12, 1989
- 16 -
<PAGE> 1
Exhibit 10.(ii)
AMENDMENT AND AGREEMENT
-----------------------
For TEN DOLLARS ($10.00) and other valuable consideration, the receipt
of which is hereby acknowledged, Anthony C. Selig, Dixie Exploration
Corporation, and Anthony C. Selig and Associates (hereinafter referred to as
"Selig"); and Nevada Manhattan Mining Incorporated, (formerly Epic Enterprises,
Ltd.), (hereinafter referred to as "Nevada"), agree to modify, in part, the
Mining Agreement dated April 4, 1987, by and between Anthony C. Selig, Dixie
Exploration Corporation, a Nevada corporation, Anthony C. Selig and Associates,
and TWA Associates, and, Epic Enterprises, Ltd., and attachments thereto
including without limitation Exhibit "2", as amended, and attachments and
exhibits thereto; a two page AGREEMENT, dated April 4, 1987, by and between
Anthony C. Selig, et al., and Epic Enterprises, Ltd., relative to the so called
WC mining claims; and the "Amendment and Agreement", dated October 16, 1987, by
and between Selig, Argus Resources, Inc., and Nevada, and acknowledge and agree
to the additional agreements between the parties hereto as set forth herein.
It is understood and agreed between the parties hereto that the instant
Amendment and Agreement is not meant to, nor does it abrogate, any other rights,
duties, obligations or interests of the parties hereto in the aforesaid
documents not specifically enunciated in the instant Amendment and Agreement.
1. There is presently pending the U. S. District Court for the District
of Nevada, Case No.: CV-LV 86-491, HDM, entitled Tannis Atkinson, et. al.,
Plaintiffs, vs. Anthony Selig, et. al.,
1
<PAGE> 2
Defendants. Selig is in no way desirous of settling this lawsuit or any other
matters with the Plaintiffs, their associates or assigns; however, Nevada is
desirous of having this lawsuit settled in order to effectuate the consummation
of its Mining Agreement with Selig. Accordingly, Nevada promises to
successfully negotiate a settlement of the said lawsuit so that no liability is
fixed against the said Defendants, and to get the said Plaintiffs to execute a
Stipulation for dismissal of the lawsuit with Prejudice and to get the
Plaintiffs and the partners of Manhattan Mines, Ltd., Manhattan Mines, Ltd.,
II, and their successors and assigns to execute a General Release in favor of
said Defendants and Selig which forever releases Selig and the Defendants from
any and all acts of Selig and the Defendants whether related to the lawsuit or
anything else; the Release and Stipulation shall also contain a statement that
the Defendants and Selig do not admit any liability as a result of the said
lawsuit or any other previous dealings with the Plaintiffs and the partners of
Manhattan Mines, Ltd., Manhattan Mines Ltd., II, and their successors and
assigns. This Agreement does not constitute an admission of fault or liability
by the Defendants as related to said lawsuit.
2. It is agreed that on condition that the Plaintiffs in the
aforesaid lawsuit execute a dismissal with prejudice of the aforesaid lawsuit on
the basis of an agreement with Nevada, inconsideration of such dismissal and
release, Selig agrees to reduce the purchase price of certain mining claims as
set forth
2
<PAGE> 3
in the Mining Agreement dated April 4, 1987, aforesaid contained in Paragraph 8
thereof from a purchase price of $2,100,000.00 reduced to $600,000.00 pursuant
to the schedule set forth hereinafter. There shall be no penalty for
prepayment.
3. The schedule of semi-annual payments due from Nevada or its
successors or assigns to Selig pursuant to the April 4, 1987, AGREEMENT is
amended as follows:
<TABLE>
<CAPTION>
DATE PAYMENT
---- -------
<S> <C>
2/15/88 $25,000.00
8/15/88 $50,000.00
2/15/89 $50,000.00
8/15/89 $50,000.00
2/15/90 $50,000.00
8/15/90 $50,000.00
2/15/91 $50,000.00
8/15/91 $75,000.00
</TABLE>
4. All negotiations, between the parties are merged in this
Amendment and Agreement, and the documents specified herein, and there are no
understandings or agreements between the parties hereto with respect to the
transactions contemplated herein, other than those incorporated herein. This
Amendment may not be modified, except by an instrument in writing duly executed
by the applicable respective parties.
5. This Amendment and the other documents, referenced herein is
intended by the parties as a final expression of their agreement and as a
complete and exclusive statement of their terms.
6. The parties hereto agree that this document shall be executed
in duplicate originals and that until the above referenced Dismissal and
Release Agreements are executed by all
3
<PAGE> 4
parties, no copies of this document shall be made, the originals
of this document shall be kept in the offices of JOSEPH AND DANIEL FOLEY
ASSOCIATES and LELAND E. LUTFY, and the terms of this Agreement shall not be
divulged to any third parties by any of the parties hereto, their attorneys,
representatives, or employees.
DATED this 9th day of December, 1987.
/s/ ANTHONY C. SELIG
------------------------------------
ANTHONY C. SELIG, Individually
SUBSCRIBED and SWORN to before me
this 9th day of December, 1987.
[SEAL]
Notary Public-State of Nevada
COUNTY OF CLARK
DARLENE POPE
My Appointment Expires
July 30, 1991
/s/ DARLENE POPE
- ------------------------------------------
NOTARY PUBLIC in and for said
COUNTY and STATE
/s/ ANTHONY C. SELIG
------------------------------------
DIXIE EXPLORATION CORPORATION,
a Nevada Corporation (President)
SUBSCRIBED and SWORN to before me
this 9th day of December, 1987.
[SEAL]
Notary Public-State of Nevada
COUNTY OF CLARK
DARLENE POPE
My Appointment Expires
July 30, 1991
/s/ DARLENE POPE
- ------------------------------------------
NOTARY PUBLIC in and for said
COUNTY and STATE
4
<PAGE> 5
/s/ ANTHONY C. SELIG
---------------------------
ANTHONY C. SELIG AND
ASSOCIATES
SUBSCRIBED and SWORN to before me
this 9th day of December, 1987.
/s/ DARLENE POPE
- ---------------------------------
NOTARY PUBLIC in and for said
COUNTY and STATE
/s/ DREW LAMBO
---------------------------
NEVADA MANHATTAN MINING
INCORPORATED
DREW LAMBO VP
SUBSCRIBED and SWORN to before me
this 9th day of December, 1987.
/s/ DARLENE POPE
- -------------------------------
NOTARY PUBLIC in and for said
COUNTY and STATE
5
<PAGE> 1
Exhibit 10. (iii)
MANHATTAN MINING PROPERTY AGREEMENT
This Agreement is entered into this second day of March, 1989, by and between
Argus Resources, Inc., a Nevada corporation, Argus Mines, Inc., a Nevada
corporation, hereinafter referred to collectively as "Argus," and Nevada
Manhattan Mining, Incorporated (formerly Epic Enterprises Ltd.), a Nevada
corporation, hereinafter referred to as "Manhattan."
WHEREAS, "Argus" is the owner in fee simple of certain mining claims
which have been located within the Manhattan Mining District and as further
specified in the "Lease and Option to Purchase Agreement" executed November 15,
1982, as shown in Exhibit 2 of the "Mining Agreement" dated April 4, 1987, and
as amended on February 1, 1983; and
WHEREAS, "Argus" has leased said mining claims with an option to
purchase to Anthony C. Selig, Anthony C. Selig as Trustee of Anthony C. Selig
and Associates, and Dixie Exploration Corporation, hereinafter referred to
collectively as "Selig"; and
WHEREAS, "Selig" has sub-leased the property and assigned the option to
purchase to "Manhattan;" and
WHEREAS, additional disputes have arisen between the parties pursuant
to the terms of the lease agreement; and
WHEREAS, the parties are desirous of resolving said disputes;
NOW THEREFORE, in mutual consideration of the promises of the parties
and other valuable consideration, receipt of which is hereby acknowledged,
"Argus" and "Manhattan" hereby agree as follows:
1. "Manhattan" shall pay to "Argus" the sum of $25,000.00 concurrent with
the execution of this Agreement.
2. "Manhattan" shall pay to "Argus" the additional sum of $165,000.00 at
nine percent (9%) interest per annum in equal monthly installments of $7,500.00
or more per month until the entire remaining balance is paid in full; all
payments are due on or before the fifteenth day of each month beginning with
the payment due on April 15, 1989.
3. Payment date is the date by which payment must be received by "Argus."
There shall be a five (5) day grace period before any payment is considered to
be late and in default per Paragraph 4, below.
4. Providing there is no default in the payment of any installment due,
there will be no late fee; however, in the event of a default in the payment of
any installment due, a $375.00 late fee shall be charged for each and any
payment that is late from the date of this Agreement until the remaining
balance is paid in full.
5. "Manhattan" hereby warrants that its total number of outstanding shares
of stock is less than 15.6 million shares and further warrants that there are
no more than 50 million shares presently authorized.
6. "Manhattan" further warrants that of the about 15.6 million shares that
are presently outstanding, no more than 1.5 million of said shares are free
trading.
7. "Manhattan" shall further cause the issuance of one (1) million shares
of restricted stock of "Manhattan" within ten (10) calendar days of the
execution of this Agreement to be issued to Argus
<PAGE> 2
working days after "Manhattan's" merger is completed.
8. Upon receipt of all sums of money set forth in Paragraph 1, above,
together with the stock described in Paragraph 7, above, and the written
agreement set forth in Paragraph 14, below, "Argus" shall cause an undivided
Forty percent (40%) interest in the claims presently shown in the above
referenced "Lease and Option to Purchase Agreement" executed on November 15,
1982, as amended on February 1, 1983, and any and all claims listed in the
"Mining Agreement" of April 4, 1987 to which "Argus" has any rights or interest
to be deeded to "Manhattan."
9. "Manhattan" agrees to accept title of the property by Corporation
Quit Claim deed subject to any exceptions to marketable title which exist as of
the interim binder issued by First American Title Company of Nevada dated
February 19, 1988; "Manhattan" further acknowledges that it is accepting title
to the said property in an "as is" condition except as set forth in Paragraph
10, below.
10. "Argus" warrants that "Argus" will deliver marketable title when
the property is conveyed to "Manhattan" of all the claims listed in the "Lease
and Option to Purchase Agreement" executed on November 15, 1982, as amended on
February 1, 1983, and all other claims to which it has any rights or interest as
described herein.
11. "Argus" and "Manhattan" further acknowledge that "Manhattan" may
wish to purchase title insurance at "Manhattan's" expense upon a portion of said
claims in order to insure their interest in the title to said claims.
12. "Manhattan" shall convey to "Argus" a security interest through a
Note and Deed of Trust in said mining claims conveyed to "Manhattan" by "Argus"
to secure payment of the remaining balance due to the sums set forth above by
"Manhattan" to "Argus" and said Deed of Trust and shall be recorded immediately
following the recordation of the Corporation Quit Claim deed transferring the
property by "Argus" to "Manhattan." The trustee for this Deed of Trust shall
be First American Title Company of Nevada.
13. "Argus" further acknowledges that "Manhattan" has certain
financial obligations to "Selig" and others pursuant to the terms of the
"Mining Agreement" dated April 4, 1987, which Argus ratified; "Argus" grants
to "Manhattan" the authority to collaterally assign its interest in fee title
to "Selig" to secure any payments due and owing to him.
14. "Manhattan" further agrees that it will cause "Selig" or any
assignee to release in writing any interest he has pursuant to the terms of the
existing "Lease and Option to Purchase Agreement" dated November 15, 1982, and
any amendments thereto.
15. Within forty eight (48) months from the date of this Agreement,
"Manhattan" shall invest and/or cause to be invested by an operator a minimum
of $1,000,000.00 in the exploration and development of the property described
herein by reference upon the following minimum investment schedule:
A. $100,000 within the first twelve (12) month period including
a geo-magnetic survey upon said property; "Manhattan" further covenants that
all surveys and assays shall be conducted by licensed and certified surveyors
and assayers.
B. $250,000 within the second twelve (12) month period.
C. $250,000 within the third twelve (12) month period.
D. The balance, a maximum of $400,000 within the fourth twelve
(12) month period.
16. "Manhattan" is responsible for all annual assessment work and
property taxes on the mining claims, and this expense may be included in the
investment required in Paragraph 15, above. Further, said minimum investment
schedule shall be governed by Paragraph 20, below.
17. "Manhattan" shall be the operator of the above described and
referenced property for a period of
<PAGE> 3
not less than four (4) years from the date of this Agreement providing said
property is operated and put in production as those terms are used in the
industry, pursuant to specific programs and guidelines to be jointly agreed
upon by "Argus" and "Manhattan."
18. "Manhattan" shall be responsible for causing the payment of all
installments on the note, initial drilling, exploration and development costs
until this project is in production or, alternatively, until it ceases to be
the operator. Once in production, normal operating costs will be deducted from
gross receipts before division of revenues by the parties.
19. "Argus" shall be entitled to receive sixty percent (60%) of the
operating income from the property and "Manhattan" shall be entitled to receive
forty percent (40%) of the operating income from the property. In the event of a
joint venture with a mining company/operator, both "Argus" and "Manhattan"
agree that if a reduction in their percentage ownership interests is necessary,
both parties will reduce their holdings proportionately. Both parties agree to
negotiate such a situation in good faith and in a timely manner. If both parties
cannot agree, they shall pick a mutually agreeable third party, or arbitrator,
to negotiate same within thirty (30) days thereafter.
20. The parties further acknowledge that in the event of a default by
"Manhattan" in the payments due to "Argus" under the terms of this Agreement,
"Argus" shall immediately instruct the trustee to institute foreclosure
proceedings against "Manhattan" per Nevada statutes.
21. Upon execution of this Agreement, "Argus" and "Manhattan" hereby
mutually release all of their officers, directors, shareholders and assigns
from any and all claims against the other, whether known or unknown; it is the
express intention and understanding of "Argus" and "Manhattan" to resolve all
past disputes between them pursuant to the terms of the Agreement set forth
herein and for the consideration set forth herein.
22. "Manhattan" agrees that at such time as it may obtain rights and
title to any or all of the mining claims which it is purchasing from "Selig"
pursuant to the "Mining Agreement" dated April 4, 1987, it shall deed a sixty
percent (60%) undivided interest in said claims to "Argus" by Corporation Quit
Claim Deed.
23. "Argus" and "Manhattan" expressly agree that the total of monies
due and payable to "Argus" by "Manhattan" under the terms of this Agreement
are all of the monies owed to "Argus."
24. The parties expressly declare that time is of the essence for all
payments due and owing from "Manhattan" to "Argus" under the terms of this
Agreement.
25. This Agreement shall be interpreted and construed under and by
virtue of the laws of the State of Nevada.
26. Any modification to this Agreement shall only be made by a writing
executed by "Argus" and "Manhattan."
27. The contents of this Agreement may not be disclosed to any third
party until such time as "Manhattan" has complied with Paragraph 14, above.
28. In the event suit is necessary to enforce any provisions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys fees.
29. Any notices sent pursuant to the terms of this Agreement shall be
sent to "Argus" at 1500 East Tropicana Avenue, Suite 110, Las Vegas, Nevada
89119, with a copy to GIBBONS, BERMAN & WOLFSON, 501 South Rancho Drive, Suite
G-46, Las Vegas, Nevada 89106.
30. Any notices sent pursuant to the terms of this Agreement shall be
sent to "Manhattan" at 24007
<PAGE> 4
30. Any notices sent pursuant to the terms of this Agreement shall be
sent to "Manhattan" at 24007 Ventura Boulevard, Suite 260, Calabasas,
California, 91302, with a copy to JIMERSON & DAVIS, 701 East Bridger Avenue,
Suite 600, Las Vegas, Nevada, 89101.
31. The signatories to this Agreement acknowledge that they have the
full coporate authority to execute this Agreement on behalf of "Argus" and
"Manhattan" and further agree to submit certified copies of resolutions of the
respective boards of directors approving the terms of this Agreement within
three (3) days of the date of execution of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the year
and date set forth above.
ARGUS RESOURCES, INC.
/s/ BARRY BROWN
---------------
Barry Brown
President
ARGUS MINES, INC.
/s/ HANS KRUSE
--------------
Hans Kruse
President
NEVADA MANHATTAN MINING INCORPORATED
/s/ DREW LAMBO
--------------
Drew Lambo
Vice-President
<PAGE> 1
Exhibit 10.(iv)
| DOCUMENTARY TRANSFER TAX $192.50/xx
|
| X COMPUTED ON FULL VALUE OF PROPERTY CONVEYED.
| ---
|
| OR COMPUTED ON FULL VALUE LESS LIENS AND
| ENCUMBRANCES REMAINING AT TIME OF TRANSFER.
| ---
| UNDER PENALTY OF PERJURY.
|
|
| /s/ BARRY SCHREIBER
| ----------------------------------------------------------
| SIGNATURE OF DECLARANT OR AGENT DETERMINING TAX. FIRM NAME
--------------------------------------------------------------
CORPORATION QUIT CLAIM DEED
Argus Mines, Inc., a subsidiary of Argus Resources, Inc., both being
duly organized corporations, and existing under and by virtue of the laws of
the State of Nevada, and having its principal place of business in the City of
Las Vegas, County of Clark and State of Nevada.
FOR AND IN CONSIDERATION OF THE SUM OF Ten Dollars ($10.00) and other
good and valuable consideration, the receipt whereof is hereby acknowledged, has
remised, released and forever quitclaimed, and by these presents does remise,
release and forever quitclaim unto Nevada Manhattan Mining, Incorporated, a
Nevada corporation, whose principal place of business in Nevada is 1120-A
Telegraph Street, Reno, Nevada, a Forty Percent (40%) undivided interest in that
Real Property, described as follows, to-wit:
PATENTED CLAIMS
Claim Name Mineral Survey Number Patent Number
White Cap #1 2579 46176
White Cap 2579 46176
Pine Nut #2 4073 552989
Muleskinner 2882 123980
Morning Glory 4073 552989
Union 2625 46616
Union #1 2625 46616
Ivanhoe 2773 46617
Uno 2695 98424
Annie Laurie 2874 441202
Snow Drift 2764 459615
Earl 2544 375993
Eva 3667 537035
Flying Cloud 3667 537035
Snowman 3667 537035
Union #2 2552 114749
Union #3 2553 32959
Union #4 2554 46332
Union #5 2555 94281
Dexter #7 2602 46212
White Cap Extension 4335 734331
White Cap Extension #1 4335 734331
Woopee Fraction 2694 46320
Katie #1 2651 46321
Keystone 2692 555879
Red Roy (Red Boy) 2693 676958
Silver Pick #1 2528 674983
BOOK 677 PAGE 20
<PAGE> 2
UNPATENTED CLAIMS
Nye County
Claim Name Location Date Book Page BLM Serial No.
- ---------- ------------- ---- ---- --- ----------
Mable A 7-5-79 246 251 NMC 93107
Lillie Frac 7-5-79 246 253 NMC 93108
Little Johnnie Frac 7-6-79 246 252 NMC 93109
Pandora Frac 7-7-79 246 255 NMC 93110
Turtle Dove Frac 7-12-79 246 250 NMC 93111
Granny Frac 9-4-70 136 468 NMC 93113
Yellow Horse Frac 9-4-70 136 469 NMC 93114
Little Joe #1 6-10-68 113 183 NMC 93115
Little Joe #2 6-10-68 113 184 NMC 93116
Little Joe #3 6-10-68 113 185 NMC 93117
Little Joe #4 6-10-68 113 186 NMC 93118
Little Joe #5 6-10-68 113 187 NMC 93119
Little Joe #6 6-10-68 113 188 NMC 93120
Little Joe #7 6-10-68 113 189 NMC 93121
Little Joe #8 6-12-68 113 190 NMC 93122
Little Frac #21 7-16-68 113 205 NMC 93135
Granny Lode Frac 11-10-87 602 228 NMC pending
Any interest Argus may have in the following lode mining claims:
JMD
Union Fraction
Ivanhoe Fraction
Wolftone Millsite
AM Ex
AM Ex #1
AM Ex #2
AM Ex #3
Baseball
Bell
Bell #1
Bluebird
Big Mogul
Friday
Gold Coin Fraction
Gold Point Fraction
Hill Top
Hill Top Extension
Last Chance
Little Joe Fraction #9
Granny
/
/
/
/
/
/
/
BOOK 677 PAGE 21
<PAGE> 3
To Have and to Hold the said grantee its heirs and assigns forever.
IN WITNESS WHEREOF, The said party of the first part has caused its corporate
name and seal to be affixed by its President and Secretary thereunto, duly
authorized this first day of March, Nineteen hundred and eighty nine.
ARGUS MINES,INC.
By: /s/ HANS KRUSE
---------------------------
Hans Kruse
President
By: /s/ HANS KRUSE
---------------------------
Hans Kruse
Secretary
State of Nevada )
) ss.
County of Clark )
On March 8, 1989, before me, the undersigned, a Notary Public in and for said
State, personally appeared Hans Kruse known to me to be the corporate
President and the corporate Secretary of Argus Mines, Inc., the corporation
that executed the within Instrument, known to me to be the person who executed
the within Instrument, on behalf of the corporation herein named, and
acknowledged to me that such corporation executed the same. Proved to me on
the basis of satisfactory evidence to be the person who executed the within
instrument.
/s/ EDDIE LaRUE
-----------------------------------
Notary Public In and for said State
This document consists of 3 pages.
Eddie LaRue
[SEAL] Notary Public-State of Nevada
Clark County
My Appointment Expires March 15, 1989
OFFICIAL RECORDS
NYE, CO. NEV.
RECORD REQUESTED BY
ARGUS RESOURCES
'89 MAR-9 P3:15
230734
NAOMA LYDON
RECORDER
FEE 7.00 DEP BB BOOK 677 PAGE 22
<PAGE> 4
Nevada Manhattan Mining, Incorporated
By: /s/ CHRIS MICHAELS
--------------------------------
Chris Michaels
President
By: /s/ JEFFREY KRAMER
-------------------------------
Vice President
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
State of California On this the 8th day of March 1989, before me,
--------------
County of Los Angeles ss. Christina C. Crompvoetz-------------------------------
-------------- -------------------------------------------------------------------
the undesigned Notary Public, personally appeared
Christopher D. Michaels & Jeffrey S. Kramer,
------------------------------------------------------------------
[ ] personally known to me
[SEAL] [x] proved to me on the basis of satisfactory evidence
to be the person(s) who executed the within instrument as
President & Vice-President or on behalf of the corporation therein
--------------------------
named, and acknowledged to me that the corporation executed it.
WITNESS my hand and official seal.
/s/ Christina C. Crompvoetz
------------------------------------------------------------------
Notary's Signature
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
BOOK 677 PAGE 26
<PAGE> 5
EXHIBIT A
<TABLE>
<CAPTION>
PATENTED CLAIMS
Claim Name Mineral Survey Number Patent Number
- ---------- --------------------- -------------
<S> <C> <C>
White Cap #1 2579 46176
White Cap 2579 46176
Pine Nut #2 4073 552989
Muleskinner 2882 123980
Morning Glory 4073 552989
Union 2625 46616
Union #1 2625 46616
Ivanhoe 2773 46617
Uno 2695 98424
Annie Laurie 2874 441202
Snow Drift 2764 459615
Earl 2544 375993
Eva 3667 537035
Flying Cloud 3667 537035
Snowman 3667 537035
Union #2 2552 114749
Union #3 2553 32959
Union #4 2554 46332
Union #5 2555 94281
Dexter #7 2602 46212
White Cap Extension 4335 734331
White Cap Extension #1 4335 734331
Whoopee Fraction 2694 46320
Katie #1 2651 46321
Keystone 2692 555879
Red Roy (Red Boy) 2693 676958
Silver Pick #1 2528 674983
</TABLE>
Page 1 of 2 pages
BOOK 677 PAGE 27
<PAGE> 6
UNPATENTED CLAIMS
Nys County
<TABLE>
<CAPTION>
Claim Name Location Date Book Page BLM Serial No.
---------- ------------- ---- ---- --- ----------
<S> <C> <C> <C> <C> <C>
Mable A 7-5-79 246 251 NMC 93107
Lillie Frac 7-5-79 246 253 NMC 93108
Little Johnnie Frac 7-6-79 246 252 NMC 93109
Pandora Frac 7-7-79 246 255 NMC 93110
Turtle Dove Frac 7-12-79 246 250 NMC 93111
Granny Frac 9-4-70 136 468 NMC 93113
Yellow Horse Frac 9-4-70 136 469 NMC 93114
Little Joe #1 6-10-68 113 183 NMC 93115
Little Joe #2 6-10-68 113 184 NMC 93116
Little Joe #3 6-10-68 113 185 NMC 93117
Little Joe #4 6-10-68 113 186 NMC 93118
Little Joe #5 6-10-68 113 187 NMC 93119
Little Joe #6 6-10-68 113 188 NMC 93120
Little Joe #7 6-10-68 113 189 NMC 93121
Little Joe #8 6-12-68 113 190 NMC 93122
Little Joe #21 7-16-68 113 205 NMC 93135
Granny Lode Frac 11-10-87 602 228 NMC pending
</TABLE>
Any interest Argus may have in the following lode mining claims:
JMD
Union Fraction
Ivanhoe Fraction
Wolftone Millsite
AM Ex
AM Ex #1
AM Ex #2
AM Ex #3
Baseball
Bell
Bell #1
Bluebird
Big Mogul
Friday
Gold Coin Fraction
Gold Point Fraction
Hill Top
Hill Top Extension
Last Chance
Little Joe Fraction #9
Granny
Page 2 of 2 Pages
BOOK 667 PAGE 28
<PAGE> 1
Exhibit 10.(v)
OFFICIAL RECORDS
RECORDING REQUESTED BY NYE. CO. NEV.
RECORD REQUESTED BY
Argus Resources
WHEN RECORDED MAIL TO '89 MAR-9 P3:15
230735
NAME Argus Resources, Inc. NAOMA LYDON
STREET 1500 East Tropicana RECORDER
ADDRESS FEE 10.00 DEP BB
CITY Suite 110 ------- ----
STATE
ZIP Las Vegas, NV 89119
- -----------------------------------(SPACE ABOVE THIS LINE FOR RECORDER'S USE)---
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DEED OF TRUST, made this Eighth day of March , 1989
----------------- ----------------- --
BETWEEN Nevada Manhattan Mining, Incorporated, a Nevada corporation
-----------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
, herein called Trustor.
- ------------------------------------------------------
whose address is 24007 Ventura Boulevard, Suite 260, Calabasas, CA 91302
--------------------------------------------------------------
(Number and Street) (City) (State) (Zip Code)
First American Title Company of Nevada, a Nevada corporation
, herein called Trustee, and
- -------------------------------------------------
Argus Resources, Inc., a Nevada corporation
- -----------------------------------------------------------------------------
, herein called Beneficiary.
- -------------------------------------------------
Trustor irrevocably grants, transfers and assigns to Trustee, in trust,
with power of sale, all that real property in the
Manhattan Mining District, County of Nye, State of Nevada, described as:
- ------------------------- ---
See Exhibit A attached hereto, and by this reference made
a part hereof
TOGETHER with all the rights, privileges, title and interest which Trustor now
has or may hereafter acquire in or to said property, including, without
limitation, the rents, issues and profits thereof, and with the appurtenances
and all buildings and improvements now or hereafter placed thereon, it being
understood and agreed that all classes of property, attached or unattached, used
in connection therewith shall be deemed fixtures and subject to the property
above described;
SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon
Beneficiary hereinbelow to collect and apply such rents, issues and profits;
(For the purposes of this instrument all of the foregoing described real
property, property rights and interests shall be referred to as "the property.")
BOOK 677 PAGE 23
<PAGE> 2
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:
(1) To keep the property in good condition and repair; not to remove,
substantially alter or demolish any building thereon; to complete or restore
promptly and in good and workmanlike manner any building which may be
constructed, damaged or destroyed thereon and to pay when due all claims for
labor performed and materials furnished therefor; to comply with all laws
affecting the property or requiring any alterations or improvements to be made
thereon; not to commit or permit waste thereof; not to commit, suffer or permit
any act upon the property in violation of law; to cultivate, irrigate,
fertilize, fumigate, prune and do all other acts which from the character or
use of the property may be reasonably necessary, the specific enumerations
herein not excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire, and if
required by Beneficiary, other insurance satisfactory to and with loss payable
to Beneficiary. The amount collected under any fire or other insurance policy
may be applied by Beneficiary upon any indebtedness secured hereby and in such
order as Beneficiary may determine, or at option of Beneficiary the entire
amount so collected or any part thereof may be released to Trustor. Such
application or release shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice.
(3) To appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee;
and to the extent permitted by law, to pay all costs and expenses, including
the cost of evidence of title and attorney's fees, in any such action or
proceeding in which Beneficiary or Trustee may appear, and in any suit brought
by Beneficiary to foreclose this Deed of Trust or enforce the rights of
Beneficiary or Trustee hereunder.
(4) To pay: at least ten days before delinquency all taxes and
assessments affecting the property, including assessments on appurtenant water
stock; when due, all encumbrances, charges and liens, with interest, on the
property or any part thereof, which appear to be prior or superior hereto; and
all costs, fees and expenses of this Trust to the extent permitted by law.
(5) Should Trustor fail to make any payment or to do any act as herein
provided, then Beneficiary or Trustee, but without obligation to do so, and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may: make or do the same in such manner and to such extent
as either may deem necessary to protect the security hereof. Beneficiary or
Trustee being authorized to enter upon the property for such purposes; appear
in and defend any action or proceeding purporting to affect the security hereof
or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or
compromise any encumbrance, charge or lien which in the judgment of either
appears to be prior or superior hereto; and, in exercising any such powers, pay
necessary expenses, employ counsel and pay his reasonable fees.
(6) To pay immediately and without demand all sums expended by
Beneficiary or Trustee pursuant to the terms of this Deed of Trust, with
interest from date of expenditure at the rate set forth in the aforesaid
promissory note.
(7) That any award of damages in connection with any condemnation for
public use of or injury to said property or any part thereof is hereby assigned
and shall be paid to Beneficiary who may apply or release such moneys received
by him in the same manner and with the same effect as above provided for
disposition of proceeds of fire or other insurance.
(8) That by accepting payment of any sum secured hereby after its due
date, Beneficiary does not waive his right either to require prompt payment
when due of all other sums so secured or to declare default for failure to pay.
(9) That at any time, or from time to time, without liability therefor
and without notice, upon written request of Beneficiary and presentation of
this Deed of Trust
[COPY CUTS OFF AND IS NOT READABLE]
BOOK 677 PAGE 24
<PAGE> 3
(10) That upon written request of Beneficiary stating that all sums
secured hereby have been paid, and
[ILLEGIBLE]
Trustee for cancellation and retention and upon repayment of its fees, Trustee
shall reconvey, without warranty, the property then held hereunder. The
recitals in such reconveyance of any matters or facts shall be conclusive proof
of the truthfulness thereof. The grantee in such reconveyance may be described
as "the person or persons legally entitled thereto."
(11) That as additional security, Trustor hereby gives to and confers
upon Beneficiary the right, power and authority, during the continuance of these
Trusts, to collect the rents, issues and profits of the property, reserving unto
Trustor the right, prior to any default by Trustor in payment of any
indebtedness secured hereby or in performance of any agreement hereunder, to
collect and retain such rents, issues and profits as they become due and
payable. Upon any such default, Beneficiary may at any time without notice,
either in person, by agent, or by a receiver to be appointed by a court, and
without regard to the adequacy of any security for the indebtedness hereby
secured, enter upon and take possession of the property or any part thereof, in
his own name sue for or otherwise collect such rents, issues and profits,
including those past due and unpaid, and apply the same, less costs and expenses
of operation and collection, including reasonable attorney's fees, upon any
indebtedness secured hereby, and in such order as Beneficiary may determine.
The entering upon and taking possession of the property, the collection of such
rents, issues and profits and the application thereof as aforesaid, shall not
cure or waive any default or notice of default hereunder or invalidate any act
done pursuant to such notice.
(12) That upon default by Trustor in payment of any indebtedness secured
hereby or in performance of any agreement hereunder, Beneficiary may declare all
sums secured hereby immediately due and payable by delivery to Trustee of
written declaration of default and demand for sale and of written notice of
default and of election to cause to be sold the property, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit with Trustee
this Deed of Trust, said promissory note and all documents evidencing
expenditures secured hereby.
After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having been given
as then required by law, Trustee, without demand on Trustor, shall sell said
property at the time and place fixed by it in said notice of sale, either as a
whole or in separate parcels, and in such order as it may determine, at public
auction to the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone sale of all or any portion of
said property by public announcement at such time and place of sale, and from
time to time thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying the property so sold, but without any covenant or
warranty, express or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof. Any person, including
Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such
sale.
After deducting all costs, fees and expenses of Trustee and of this
Trust to the extent permitted by law, including the cost of evidence of title in
connection with such sale, Trustee shall apply the proceeds of sale to payment
of: all sums expended under the terms hereof, not then repaid, with accrued
interest at the rate set forth in the aforesaid promissory note; all other sums
then secured hereby; and the remainder, if any, to the person or persons legally
entitled thereto.
Immediately after such sale, Trustor shall surrender possession of the
property to the purchaser, in the event possession has not previously been
surrendered by Trustor, and upon failure to vacate the property, Trustor shall
pay to the purchaser the reasonable rental value of the property, and/or at
purchaser's option, may be dispossessed in accordance with the law applicable
to tenant's holding over.
(13) That Trustor, or if the property shall have been transferred, the
then record owner, together with Beneficiary, may from time to time, by
instrument in writing, substitute a successor or successors to any Trustee named
herein or acting hereunder, which instrument, executed and acknowledged by each
and recorded in the office of the recorder of the county or counties where the
property is situated, shall be conclusive proof of proper substitution of such
successor Trustee or Trustees, who shall, without conveyance from the Trustee
predecessor, succeed to all its title, estate, rights, powers and duties. Said
instrument must contain the name of the original Trustor, Trustee and
Beneficiary hereunder, the book and page where this Deed is recorded, the name
and address of the new Trustee, and such other matters as may be required by
law. If notice of default shall have been recorded, this power of substitution
cannot be exercised until after the costs, fees and expenses of the then acting
Trustee shall have been paid to such Trustee, who shall endorse receipt thereof
upon such instrument of substitution. The procedure herein provided for
substitution of Trustees shall be exclusive of all other provisions for
substitution, statutory or otherwise, to the extent permitted by law.
(14) That this Deed of Trust applies to, inures to the benefit of, and
binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term Beneficiary shall mean the owner
and holder, including pledgees, of the promissory note secured hereby, whether
or not named as Beneficiary herein. In this Deed of Trust, whenever the context
so requires, the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural, and all obligations of each Trustor
hereunder are joint and several.
(15) That Trustee accepts this Trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee
is not obligated to notify any party hereto of pending sale under any other Deed
of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.
(16) Without affecting the liability of Trustee or of any other party
now or hereafter bound by the terms hereof for any obligation secured hereby,
Beneficiary may, from time to time and with or without notice as he shall
determine, release any person now or hereafter liable for the performance of
such obligation, extend the time for payment or performance, accept additional
security, and alter, substitute or release any security.
(17) Trustee or Beneficiary may enter upon and inspect the premises at
any reasonable time.
(18) No remedy hereby given to Beneficiary or Trustee is exclusive of
any other remedy hereunder or under any present or future law. No delay on the
part of Trustee or Beneficiary in enforcing their respective rights or remedies
hereunder shall constitute a waiver thereof.
(19) Trustor waives the right to assert at any time any statute of
limitations as a bar to any action brought to enforce any obligation hereby
secured.
(20) Should Trustor, without Beneficiary's written consent, voluntarily
sell, transfer or convey his interest in the property or any part thereof, or if
by operation of law, it be sold, transferred or conveyed, then Beneficiary may,
at its option, declare all sums secured hereby immediately due and payable.
Consent to one such transaction shall not be deemed to be a waiver of the right
to require such consent to future or successive transactions.
(21) The invalidity or unenforceability of any provision herein shall
not affect the validity and enforceability of any other provision.
EACH UNDERSIGNED TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND OF
ANY NOTICE OF SALE HEREUNDER SHALL BE MAILED TO HIM AT THE ADDRESS HEREINABOVE
SET FORTH.
BOOK 677 PAGE 25
<PAGE> 4
----------------- DO NOT RECORD ----------------
REQUEST FOR FULL RECONVEYANCE
To be used only when note has been paid.
To _____________________________ Trustee Dated ____________________________
The undersigned is the legal owner and holder of all indebtedness
secured by the within Deed of Trust. All sums secured by said Deed of Trust
have been fully paid and satisfied, and you are hereby requested and directed,
on payment to you of any sums owing to you under the terms of said Deed of
Trust, to cancel all evidences of indebtedness secured by said Deed of Trust
delivered to you herewith, together with said Deed of Trust, and to reconvey,
without warranty, to the parties designated by the terms of said Deed of Trust,
the estate now held by you thereunder.
MAIL RECONVEYANCE TO:
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
Do not lose or destroy this Deed or Trust OR THE NOTE which it secures.
Both must be delivered to the Trustee for cancellation
before reconveyance will be made.
<PAGE> 1
Exhibit 10.(vi)
JOINT VENTURE AGREEMENT
Argus Resources, Inc., a Nevada corporation (hereinafter "Argus") and
Nevada Manhattan Mining Incorporated, a Nevada corporation (hereinafter
"Nevada"), propose that a joint venture be made between Argus, Nevada and
Marlowe Harvey (hereinafter "Harvey"), with respect to the Manhattan Property
under the following general terms and conditions:
1. The note made by Nevada in favor of Anthony C. Selig
(hereinafter "Selig"), with an approximate remaining balance of $532,000.00,
plus interest accruing at 10% per annum, purchased or being purchased by
Harvey, shall entitle Harvey to a 51% interest in the Manhattan Property, and
Argus and Nevada shall retain a 49% interest in the property. The Manhattan
Property contains all of the rights and interests of Argus and Nevada in the
Manhattan Mining District, Nye County, Nevada. Argus shall pay the note and
deed of trust in favor of Alfred Colella affecting this property on or before
its due date. Title to the 13 claims to which Colella holds a first position
per his deed of trust shall be subject to this lien.
2. Argus and Nevada shall pay, pro rata, their portion of the
note payment due on January 15, 1993, in the approximate amount of $49,000.00
plus interest as follows: Nevada shall pay $24,500.00 plus accrued interest on
or before August 15, 1993, and Argus shall pay approximately $24,500.00 plus
accrued interest on or before November 15, 1993. Further, Argus and Nevada
shall pay, pro rata
<PAGE> 2
their portion of the note payment due on January 1994 as follows Argus and
Nevada shall pay the approximate amount of $49,000.00 on or before January 20,
1994. Also Argus and Nevada shall pay their pro rata share of each and every
succeeding payment until said note in favor of Selig is paid in full. Each
party shall pay, pro-rata, its share of property taxes when due.
3. Argus and Nevada shall pay their pro rata share of the planned
$200,000.00 development program for the Manhattan Property not to exceed the
following amounts: Nevada shall pay $49,000.00 on or before June 15, 1993, and
Argus shall pay $49,000.00 on or before September 1, 1993. There will be a
four member property management committee consisting of one member from Argus,
one member from Nevada and two members from Harvey. Harvey will be designated
as the operator of the Manhattan Property. The committee will be consulted on
all suggested property related work, expenses or distribution of revenues
(including any offers to buy or joint venture the property or sale of product).
Invoices will be submitted to the committee for verification.
4. Any payment on the note or development program more than
fifteen (15) days late during the first twelve (12) months of this joint
venture shall be deemed as non-participation by the non-paying party(ies). The
respective non-paying party(ies) shall thereupon quit claim its (their)
pro-rata share of the foregoing interest in the property to the other
party(ies).
<PAGE> 3
5. After the initial twelve (12) month period, in the event of
non-payment or partial payment, the non-paying or partially-paying party's
interests shall be reduced pro-rata.
6. This joint venture agreement is subject to the review and
approval of Selig, as evidenced by his signature appended hereto.
7. The shareholders of Argus voted at their annual meeting on
March 26, 1993, to enter into a joint venture agreement with Harvey under the
terms and conditions approximately in conformance with the draft of this
document dated March 12, 1993, and gave the board of directors full power to
sign and enter into a joint venture agreement with Harvey.
8. Upon ratification of this agreement by Argus and Nevada, Argus
shall petition the U.S. Bankruptcy Court to withdraw its Chapter 11
Reorganization filing based upon its agreement with Nevada and the ratification
of the joint venture with Harvey.
9. Argus and Nevada shall deed the interests of Argus and Nevada
secured by Selig's note and deed of trust, referenced in Section 1, above, to
Selig immediately after acceptance by all parties and the ratification of a
joint venture agreement.
10. This agreement shall be interpreted and construed under and by
virtue of the laws of the State of Nevada.
<PAGE> 4
11. Any modification to this agreement shall be executed in
writing by all parties to this agreement.
12. In the event suit is necessary to enforce any provision of
this agreement, the prevailing party shall be entitled to reasonable court
costs and attorney fees.
13. Each of the parties to this agreement acknowledges that they
had an opportunity to review this agreement with their own independent counsel
prior to the execution and that this agreement has been executed freely and
voluntarily and without any duress or undue influence.
ARGUS RESOURCES, INC.
By: /s/ ALFRED S. COLELLA June 9, 1993
---------------------------------------------- ------------------
Alfred S. Colella, President & Chairman DATE
NEVADA MANHATTAN MINING INCORPORATED
By: /s/ CHRISTOPHER MICHAELS June 01, 1993
---------------------------------------------- ------------------
Christopher Michaels, President & Chairman DATE
MARLOWE HARVEY, AN INDIVIDUAL
By: /s/ MARLOWE HARVEY June 13, 1993
---------------------------------------------- ------------------
Marlowe Harvey DATE
ANTHONY C. SELIG, AN INDIVIDUAL
By:
---------------------------------------------- ------------------
Anthony C. Selig DATE
<PAGE> 5
[DIXIE EXPLORATION CORP. LETTERHEAD]
May 4, 1993
Argus Resources Corp.
4620 Polaris Ave.
Suite A
Las Vegas, NV. 89103
Nevada Manhattan
5038 N Parkway
Calabasas, CA. 91302
Marlowe Harvey
101-9482 Williams St.
Chillawall, BC Canada V20-SG1
To Whom It May Concern:
By initiating and approving the joint venture between and among Argus
REsources, Nevada Manhattan, and Marlowe Harvey, I, Anthony C. Selig, and/or
Dixie Exploration Crop., do not become or promise to become a partner or joint
venture or investor with any of the aforementioned companies or parties.
Sincerely,
/s/ ANTHONY C. SELIG
-------------------------------
Anthony C. Selig
ACS:ss
OFFICIAL RECORDS
NYE CO. NEV.
RECORD REQUESTED BY
Nevada Manhattan Mining
'95 DEC 28 P2:26
0 386629
NAOMA LYDON
RECORDER
FEE 11.00 DEP tp
------- ----
<PAGE> 1
Exhibit 10.(vii)
[LETTERHEAD] NEVADA MANHATTAN MINING, INC.
----------------------------------
Mining # Development # Exploration
August 10, 1995
Anthony C. Selig
Dixie Exploration Corporation
3430 Westwind Road
Las Vegas, Nevada 89102
Re: Agreement, Manhattan Property
Dear Tony:
This Agreement will confirm our understanding with respect to the "Property"
more particularly described as the patented and unpatented mining claims
attached as exhibit A, with any and all rights title and related (mineral,
other) interests located in the Manhattan Mining District, Nye County, Nevada,
(Township 8N, Range 44E, Sections 20, 21, 22, 27, 28, 29).
The parties to this Agreement are Anthony C. Selig, Dixie Exploration
Corporation (hereinafter "Selig") and Nevada Manhattan Mining, Inc.
(hereinafter "Nevada"). The parties agree to the following general terms and
conditions as they may, or may not relate to prior agreements between the
parties including the agreement dated April 4, 1987 between Selig and Nevada,
the agreement dated August 22, 1989 between Selig, Nevada and Argus Resources
(hereinafter "Argus"), and the agreement dated April 16, 1993 between Nevada
(24.5% interest), Argus (24.5% interest) and Marlowe Harvey (hereinafter
"Harvey", 51% interest and project operator).
Whereas, Selig entered into a Purchase Agreement with Harvey dated March 22,
1993 for the "Property", the terms of which are subject to non-disclosure
language and cannot be divulged.
Whereas Harvey allowed Nevada and Argus to participate per the terms and
conditions of the April 16, 1993 Agreement which also designated Harvey as the
Operator of the Property. Selig was aware of this agreement.
Whereas, Nevada has defaulted Harvey under Nevada Law as it relates to the
April 16, 1993 Agreement.
Whereas, Selig has provided Harvey notice of default and subsequent termination
(August 7, 1995) pursuant to the terms and conditions of the Purchase
Agreement, dated March 22, 1993 between Selig and Harvey.
<PAGE> 2
Mr. Harvey failed to respond, in any fashion, to the above referenced default
notices and has been terminated. Said actions also jeopardized the interests
of Nevada and Argus which may carry damages not related to this Agreement.
With these facts confirmed, Selig and Nevada desire to enter into this
Agreement under the same general terms and conditions as the previous
Agreements between the parties.
Therefore:
Selig hereby agrees to sell to Nevada any and all rights title and interest in
the "Property" (patented and unpatented claims, exhibit A) for the remaining
balance on the "Note And Deed Of Trust" in favor of Selig with an approximate
remaining balance of $232,000 plus accrued interest for the patented claims and
an additional $75,000 for the unpatented claims with the terms to be negotiated
in good faith.
Selig hereby agrees to allow Nevada to pay any and all applicable BLM fees on
the unpatented claims due and payable during 1995 by August 17, 1995 in order
to maintain the "good standing" of the unpatented claims and the Property.
Nevada hereby agrees to pay the approximate sum of $232,000 plus accrued
interest to Selig remaining on the Note And Deed Of Trust in favor of Selig
bearing an interest of 10% per annum. Payments of $100,000 per year will made
to Selig on the Note And Deed Of Trust commencing January 1996 in accordance
with the previous agreements.
Nevada agrees to allow Argus to participate under the same general terms and
conditions as their participation under the April 16, 1993 Agreement if they so
elect. Argus will have sixty days to notify Nevada of their election to
participate from the date of this Agreement.
This constitutes the entire agreement between the parties and it is understood
that if necessary, the parties will prepare and execute a more detailed
agreement with similar provisions as the previous agreements between the
parties.
Sincerely,
/s/ JEFFREY KRAMER
Jeffrey Kramer
Sr. Vice President
Agreed:
/s/ ANTHONY C. SELIG
- ------------------------------------
Anthony C. Selig Date
Dixie Exploration Corporation
/s/ ANTHONY C. SELIG Pres.
OFFICIAL RECORDS
NYE CO. NEV.
RECORD REQUESTED BY
Nevada Manhattan Mining
'95 DEC 28 P2:26
0 386630
NAOMA LYDON
RECORDER
FEE 8.00 DEP tp
------ ----
<PAGE> 1
Exhibit 10.(viii)
JOINT VENTURE AGREEMENT
Nevada Manhattan Mining Incorporated, a Nevada Corporation (hereinafter
"Nevada"), and Marlowe Harvey/ Maran Holdings Inc., a Vancouver B.C. company
(hereinafter "Harvey"); and Argus Resources, a Nevada Corporation (hereinafter
"Argus"), propose that the joint venture agreement executed by and on behalf of
the aforementioned parties in June 1993 with respect to the Manhattan Property
(hereinafter "Property" or "Manhattan Property" attached as exhibit A) be
modified under the following general terms and conditions:
1. The promissory note executed by Nevada and Argus in favor of
Anthony C. Selig (hereinafter "Selig"), with an approximate remaining balance of
$222,000 plus interest accruing at 10% per annum, purchased or being purchased
by Harvey, shall entitle Harvey to a 50% interest in the Manhattan Property.
Argus (24.5%) and Nevada (24.5%) shall retain a 49% interest in the Manhattan
property with the remaining 1% held by the Nevada Management (Jeffrey
Kramer/Christopher Michaels) in effect creating a fifty-fifty (50%-50%) joint
venture between Harvey (50%) and Nevada/Argus (50%). Payment in the amount of
$47,000 for the 1% conveyed by this agreement to Nevada Management (Jeffrey
Kramer/Christopher Michaels) from Marlowe Harvey/Calais Resources will be paid
out of Argus' portion of the net proceeds from gold production from the
Manhattan Property and secured by common stock in Nevada at fair market value
with a payment schedule to be negotiated in good faith.
2. Harvey/Maran currently owns 52% of Argus' stock and therefore
controls Argus and represents 12.74% interest in the Manhattan Property. Nevada
desires to purchase, and Harvey/Maran desires to sell this 52% ownership of
Argus to Nevada. Payment in the amount of $147,000 will be made to Harvey in
the future from a percentage of Argus' net proceeds from gold production from
the Manhattan Property. A payment schedule will be negotiated in good faith
between Harvey and Nevada. Said $147,000 payment will be secured by 1,235,429
shares of common stock in Nevada at fair market Value with "piggy back"
registration rights and will be tendered by Nevada
1
<PAGE> 2
to Harvey in two years should the $147,000 debt not be retired (pro-rated should
a portion of the debt be retired). (Any sale of registered common stock in
Nevada, whether for debt, equity, security, etc., will be subject to underwriter
approval as per applicable U.S. securities laws.) Further, Nevada shall issue
1,186,981 shares of common stock to Maran with the same registration rights.
Nevada warrants that it currently has outstanding 4,658,480 shares of common
stock as of the date of this Agreement and the 1,186,981 shares in Nevada
represent the amount of equity ownership in the Manhattan Property which Maran
controls minus the $147,000 payment described above which represents the balance
of the Property interest. Harvey/Maran will tender their 52% ownership of Argus
stock to Nevada within ten days of the execution of this Agreement and Nevada
will tender the 1,186,981 shares at the same time. Should Harvey/Maran be
unable to deliver full title to their 52% interest in the Manhattan Property
("Exhibit A"), all shares and payments to Harvey/Maran for their 52% will be
adjusted on a pro-rata basis.
3. Nevada and Argus shall pay, pro-rata, their portion (in total
50%) of all property payments and Harvey shall pay the other 50% of all property
payments ($100,000 per annum) under the note and deed of trust in favor of Selig
on or before the due date each year (January 20) until said note in favor of
Selig is paid in full. Each party shall pay, pro-rata, its share of property
taxes and/or BLM management or other applicable fees thirty days prior to due
date.
In the event of any joint venture partners non-payment of any property
payment, the other parties to the Agreement will have the first right to make
such payment and acquire the interest of the non-paying party after sixty (60)
days is granted to the non-paying party to cure the default.
4. Nevada and Harvey shall jointly operate the property with
Harvey being designated as the operator of the current exploration program
including any related development from this plan, and Nevada designated as the
operator for the current development and production plan. As the current
property operator, Harvey warrants that no debts, liens or encumbrances exist on
the property with the exception of any monies due to Ednuk Mining, or its
subcontracted parties which are currently outstanding(1). Both Harvey and
Nevada will consult and gain the approval of the other party with respect to
their ongoing programs prior to work commencement. Such approval will not be
unreasonably withheld and
(1) This also includes a xxxxx cost and xxxxx cost of the January's drill
program of approximately $2,000 of which Harvey is contesting payable to
Justice Drilling.
2
<PAGE> 3
should there be a deadlock on any issue, the decision of a mutually acceptable
third party will prevail. All pro-rata work program payments will be made by
Nevada, Argus and Harvey. Any pro-rata work program payments not made by
Nevada, Argus or Harvey for approved work, will be recouped by the party
advancing the funds in first position prior to any distribution of net proceeds
(including any offers to buy or joint venture the property). Appropriate
accountings (ie. invoices and/or statements) will be submitted for
verification.
5. Subsequent to Nevada's acquisition of 52% of Argus stock owned by
Harvey/Maran, Nevada will attempt to acquire the remaining interest in Argus to
consolidate Argus and Nevada. Argus shall pay, in first position, the note and
deed of trust in favor of Alfred Colella affecting Argus's interest in this
property through a percentage of Argus' portion of the net proceeds of gold
production from the subject property targeted for commencement in 1996 with a
payment schedule to be negotiated in good faith. Argus, it's current officers
and directors, will be required to disclose any outstanding debts prior to the
closing which were incurred during the current tenure of the existing
management, including but not limited to Alfred Colella's note and deed of
trust effecting Argus' portion of 13 claims to which Colella holds a first
position, and the outstanding balance owed to Mark Gibbons Esq., Argus' resident
agent as well as any other debt(s) that would encumber Argus' position in the
joint venture. Nevada will designate a percentage of Argus' portion of any net
proceeds due out of production due to Argus (24.5%) to first pay Alfred Colella
(?), Mark Gibbons (?), Marlowe Harvey ($147,000) and any other approved
debtor. Colella will suspend any foreclosure and/or legal action for a period
of two years and upon satisfaction of his note(s) and deed(s) of trust, will
deliver back to Argus any rights title or interest he may have in said notes
and deeds of trust. The Nevada acquisition of Argus will be subject to the
approval by a majority of Argus shareholders.
6. This joint venture agreement is subject to the review and approval
of Selig and upon Selig's ratification of this agreement, Selig agrees to
withdraw a default notice issued to Harvey on or about August 7, 1995 with
respect to all properties covered in this Agreement. Selig has expressed his
desire to correspond exclusively with Nevada with respect to any subsequent
events related to this joint venture.
3
<PAGE> 4
7. This agreement shall be construed and interpreted under and by
virtue of the laws of the state of Nevada in conjunction with the Standard
Mining Venture Agreement (Form 5).
8. Any modification to this agreement shall be executed in writing by
the officers and/or directors of the companies which are party to this
agreement.
9. In the event legal action is necessary to enforce any provision of
this agreement, the prevailing party shall be entitled to reasonable court
costs and attorney fees.
10. Each of the above mentioned parties to this agreement acknowledges
that they had the opportunity to review this agreement with their own
independent counsel prior to the execution and that this agreement has been
executed freely and voluntarily and without any duress or undue influence.
Each signatory warrants that they have the full legal authority and capacity to
execute this Agreement.
By: /s/ CHRISTOPHER MICHAELS 10/30/95
-----------------------------------------------------------------------------
Christopher Michaels, President, Nevada Manhattan, Date
By: /s/ MARLOWE HARVEY 10/23/95
-----------------------------------------------------------------------------
Marlowe Harvey as an individual and for Maran Date
Holdings and Argus Resources
By:
-----------------------------------------------------------------------------
Alfred Colella Date
By:
-----------------------------------------------------------------------------
Mark Gibbons Date
As witness only:
By:
-----------------------------------------------------------------------------
Anthony Selig Date
[STAMP]
4
<PAGE> 5
Exhibit A
<TABLE>
<CAPTION>
Unpatented (29) Claims
<S> <C>
Mable A #93107
Lillie Fraction #93108
Little Johnnie Fraction #03109
Pandora Fraction #93110
Turtle Dove Fraction #93111
Combination #93112
Granny Fraction #93113
Yellow Horse Fraction #93114
Little Joe 1-18 #93115-93132
Little Joe Fraction 19-21 #93133-93135 (formally SM 2-7)
</TABLE>
<TABLE>
<CAPTION>
Patented (28) Claims Mineral Survey Number Patent Number
<S> <C> <C>
Snow Drift #2674 #459615
Annie Laurie #2874 #441202
Uno #2695 #98424
Dexter 7 #2602 #46212
Dexter 8 (?) (?)
Eva #3667 #537035
Flying Cloud #3667 #537035
Snowman #3667 #537035
Union 2 #2552 #114749
Union 3 #2553 #32959
Union 4 #2554 #46332
Union 5 #2555 #94281
Silver Pick #2528 #674983
Earl #2544 #375993
Whoopie Fraction #2694 #46320
Katie 1 #2651 #46321
Pine Nut 2 #4073 #552989
Keystone #2692 #555879
Red Roy (Red Boy) #2693 #676958
White Cap #2579 #46176
White Cap 1 #2579 #46176
Morning Glory #4073 #552989
White Cap Ext. 1 #4335 #734331
White Cap Ext. 2 #4335 #734331
Muleskinner #2882 #123980
Ivanhoe #2773 #46617
Union #2625 #46616
Union 1 #2625 #46616
</TABLE>
Any additional claims which will become necessary to the joint venture project,
controlled by Nevada, Argus or Harvey will be subject to good faith
negotiations, however this does not imply any contractual obligation by either
party
5
<PAGE> 6
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
State of California
---------------------
County of Los Angeles
---------------------
On Oct. 20, 1995 before me, /s/ R. M. KNIPPENBERG
--------------- ------------------------------------------
DATE NAME, TITLE OF OFFICER -
E.G. "JANE DOE, NOTARY PUBLIC"
personally appeared Christopher D. Michaels
----------------------------------------------------
NAME(S) OF SIGNER(S)
[X] personally known to me - OR - [ ] proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their
[SEAL] signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ R.M. KNIPPENBERG
------------------------------------------------------
SIGNATURE OF NOTARY
- ----------------------------------- OPTIONAL -----------------------------------
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[ ] INDIVIDUAL
[X] CORPORATE OFFICER JOINT VENTURE AGR.
President W/ M. HARVEY
------------------------------ ------------------------------------
TITLE(S) TITLE OR TYPE OF DOCUMENT
[ ] PARTNERS [ ] LIMITED
[ ] GENERAL FIVE (5)
[ ] ATTORNEY-IN-FACT ------------------------------------
[ ] TRUSTEE(S) NUMBER OF PAGES
[ ] GUARDIAN/CONSERVATOR
[ ] OTHER: 10/20/95
------------------------ ------------------------------------
------------------------------ DATE OF DOCUMENT
------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
NV. MANHATTAN MINING N/A
- ---------------------------------- ------------------------------------
- ---------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
6
<PAGE> 7
Anthony C. Selig
PO Box 80263
Las Vegas, Nevada 89180
(702)871-6984 Fax: (702)871-6975
November 14, 1995
Jeffrey Kramer
Nevada Manhattan Mining
5038 N. Parkway Calabasas
Calabasas, CA 91302
Dear Mr. Kramer:
With respect to your joint venture agreement, more specifically paragraph
number six, executed on or about 10/23/95, between Nevada Manhattan and Marlowe
Harvey, I will allow Nevada Manhattan to proceed with the current development
plan on the claims outlined in exhibit A of said agreement.
Nevada Manhattan hereby has my authorization to proceed under the terms of said
agreement subject to the note and deed of trust and any monies owed under said
note and deed of trust.
Sincerely,
/s/ ANTHONY C. SELIG
- ------------------------------
Anthony C. Selig
7
<PAGE> 1
Exhibit 10.(ix)
CONTRACT
BETWEEN
NEVADA MANHATTAN MINING, INC.
AND
HARRISON WESTERN CONSTRUCTION CORPORATION
DATED
6/12/96
-----------------------------
<PAGE> 2
INDEX
- --------------------------------------------------------------------------------
ARTICLE ONE DEFINITIONS
1.1 Contract Documents
1.2 Other Contractor
1.3 Owner's Representative
1.4 Owner's Representative's Decision
1.5 Subcontractor
1.6 Work
ARTICLE TWO TIME OF COMPLETION
ARTICLE THREE SCOPE OF WORK
3.1 Scope
3.2 Generalization of Description
3.3 Site Location
3.4 Variations, Additions or Deletions
ARTICLE FOUR AGREEMENTS OF CONTRACTOR
4.1 Observance of Laws
4.2 Contractor's Understanding
4.3 Oral Modifications
4.4 Contractor's Organization
4.5 Progress Charts
4.6 Employees
4.7 Job Assignments and Classification
4.8 Personnel Policies
4.9 Project Manager
4.10 Performance
4.11 Defective Work
4.12 Inspection of Work
4.13 Equipment Requirements
4.14 Building Maintenance
4.15 Work Correlation
4.16 Permits
4.17 Qualification
4.18 Liens
4.19 Contractor's Responsibility
ARTICLE FOUR AGREEMENTS OF CONTRACTOR
4.20 Hand Tools
4.21 Protection of Work and Property
<PAGE> 3
4.22 Subcontracts
4.23 Subcontractor's Compliance
4.24 Wage Rates
4.25 Use of Premises
4.26 Temporary Buildings
4.27 Temporary Roads
4.28 Construction Facilities
4.29 Cleaning Up
4.30 Purchasing Services
ARTICLE FIVE AGREEMENTS OF OWNERS
5.1 Observance of Laws
5.2 Permits
5.3 Owner's Representative
5.4 Timely Approvals
ARTICLE SIX REIMBURSEMENT OF COSTS
6.1 Reimbursable Costs
6.2 Non-Reimbursable Costs
6.3 Advance of Funds
6.4 Availability of Records
ARTICLE SEVEN PAYMENT
7.1 Contractor's Fee
ARTICLE EIGHT INSURANCE
8.1 Workmen's Compensation
8.2 Commercial General Liability
8.3 Business Auto Policy
8.4 Umbrella Liability
8.5 Insurance Coverage
8.6 Additional Insured
8.7 Insurance Certificates
8.8 Bond
8.9 Subcontractors' Insurance
ARTICLE NINE TAXES
<PAGE> 4
ARTICLE TEN GENERAL
10.1 Notices
10.2 Ownership of Data
10.3 Drawings and Specifications
10.4 Continuance of Work
10.5 Assignment
10.6 Waiver
10.7 Captions
10.8 The Owner's Right To Do Work
10.9 Use of Completed Portions
10.10 Law Governing
10.11 Third Party Beneficiary
10.12 Force Majeure
10.13 Warranty
ARTICLE ELEVEN TERMINATION - SUSPENSION
ARTICLE TWELVE COMPLETION OF WORK
ARTICLE THIRTEEN ARBITRATION
ARTICLE FOURTEEN EQUAL EMPLOYMENT OPPORTUNITY
ARTICLE FIFTEEN WITHDRAWAL OF WORK
APPENDICES LABOR COSTS
EQUIPMENT RENTAL RATES
<PAGE> 5
THIS CONTRACT, made as of this 6th day of June 1996, by and
between Nevada Manhattan Mining, Inc., a Nevada corporation (being and
hereinafter called "Owner") and Harrison Western Construction Corporation, a
Colorado corporation (being and hereinafter called "Contractor").
WITNESSETH:
That, in consideration of the mutual agreements hereinafter contained,
Owner and Contractor agree as follows:
ARTICLE ONE
DEFINITIONS
The terms defined in this ARTICLE ONE, wherever used in this Contract,
shall, unless the context shall otherwise require, have the respective meanings
hereinafter specified in this ARTICLE ONE.
1.1 The "Contract Documents" consist of:
a. This Contract and appropriate appendices.
The Contract supersedes all previous negotiations and constitutes the
entire agreement between the parties.
1.2 "Other Contractor" shall mean an individual, partnership, or
corporation having a direct contract with the Owner for work involved in the
Owner's general project, but outside the scope of this Contract, and shall
include any Subcontractor of any Other Contractor.
1.3 "Owner's Representative" means the person from time to time
designated, by written notice to Contractor, by Owner as Owner's
Representative.
1.4 "Owner's Representative's Decision" or any like terms appearing in the
Contract
-1-
<PAGE> 6
shall at all times be the decision of a reasonable and prudent man.
1.5 "Subcontractor" shall mean an individual, partnership, or corporation
having a direct contract with the contractor for the performance of any part of
the Work to be performed under this Contract.
1.6 "Work" includes all labor, superintendency, materials, supplies,
equipment, and all other items necessary to perform this Contract, and the
furnishing of all material or equipment required for either temporary or
permanent use in connection with such performance.
1.7 "Contractor's Representative" means the person from time to time
designated, by written notice to Owner, by Contractor as Contractor's
Representative.
ARTICLE TWO
TIME OF COMPLETION
2.1 Work shall be commenced on a date mutually agreed to by the parties.
Contractor agrees that it will use its best efforts to complete the Work in a
timely, cost efficient manner.
ARTICLE THREE
SCOPE OF THE WORK
3.1 SCOPE OF WORK -- The Work to be performed hereunder shall include
- Rehabilitation of an existing decline.
- Rehabilitation of underground workings of the Manhattan
Consolidated Mine.
- Extension of a decline and related drifting to the WC-49 area
and White Caps Shaft.
-2-
<PAGE> 7
- Mining of ore from Manhattan Consolidated workings, WC-49 area
and other locations designated by the Owner. Delivery of ore
to locations designated by Owner.
- From time to time the Owner may elect to add other Works
subject to a written change order.
Under mutual agreement, the Work scope may be expanded to include:
- Rehabilitation of the White Caps Shaft.
- Mining White Caps Mine.
- Conversion of contract form to unit price for mining.
3.2 GENERALIZATION OF DESCRIPTION -- The itemization appearing in the
foregoing does not purport to be a complete description of the features and
details of the required construction work and all such items are subject to
change and development as hereinafter provided.
3.3 SITE LOCATION -- The site of the Work is Manhattan, Nevada.
3.4 VARIATIONS, ADDITIONS, OR DELETIONS -- Owner may at any time and from
time to time by written notice to Contractor make variations, additions, or
deletions to the definitive scope of the Work to be performed under this
ARTICLE THREE.
ARTICLE FOUR
AGREEMENTS OF CONTRACTOR
In addition to and without restricting the agreements and undertakings of
Contractor set forth elsewhere in this Contract:
4.1 OBSERVANCE OF LAWS -- Contractor agrees that it will observe and abide
by all applicable laws, rules, regulations, and ordinances of the United States
and the State of Nevada and of any subdivision of and of any Federal or State
governmental agency in
-3-
<PAGE> 8
the performance of the Work. Contractor will ensure that its Subcontractors
and their employees observe all such laws, rules, regulations, and ordinances.
4.2 CONTRACTOR'S UNDERSTANDING -- Contractor has by careful examination,
informed itself as to (a) the amount, nature, and location of the Work, (b) the
nature of the water and the ground conditions at the site of the Work, (c) the
conditions of adjoining properties, roads, and structures, (d) the character,
quality, and quantity of materials to be encountered, (e) the character of the
equipment and facilities needed preliminary to and during the prosecution of
the Work, (f) the availability of labor for the Work (g) the availability of
facilities for housing and feeding employees, (h) the availability of
transportation to the sites of the Work, and (i) other general and local
conditions which can in any way affect the Work.
4.3 ORAL MODIFICATIONS -- Any oral agreements or conversation by
Contractor with any officer, agent, or employee of Owner, either before or
after the execution of this Contract, shall not affect or modify any of the
terms or obligations contained herein.
4.4 CONTRACTOR'S ORGANIZATION -- Contractor represents and warrants that
it has available to it the key organization, financial means and experience
required for, and that it is skilled in, the performance of the Work hereunder.
4.5 PROGRESS CHARTS -- Contractor shall furnish to the Owner a progress
schedule. The Contractor also shall prepare a progress chart made in the form
of a plan, at suitable scale, which shall indicate the salient features of the
Work, with symbols to indicate the progress. All Work under this Contract
shall be done in such order and by such method as shall produce the maximum
economy, safety, and speed, and as shall be approved by the Owner's
Representative.
Further, the Contractor shall submit such other reports as Owner may
reasonably request bearing on the performance of the Work and the cost of any
changes in the Work or Extra Work.
-4-
<PAGE> 9
4.6 EMPLOYEES -- Excepting as in this Contract otherwise expressly
provided, Contractor agrees that it will employ in its own name and furnish and
supply at the time and in the manner hereinafter set forth, all labor,
supervision, superintendency, and like services required in connection with the
construction of the shafts and entries.
Contractor shall at all times enforce strict discipline and good order
among its employees, and shall not employ on the Work any unfit person or
anyone not skilled in the Work assigned to him. Whenever the Owner's
Representative shall notify the Contractor, in writing, that any man on the
Work is, in his opinion, incompetent, unfaithful, disorderly, or otherwise
unsatisfactory, such man shall be discharged from the Work and shall not again
be employed in it, except with the consent of the Owner's Representative.
Neither party to this Contract shall employ or hire any employee or former
employee of the other party or Other Contractors without the consent of the
other party and neither party will proselytize any employees of the other party
during the life of this Contract. The Contractor shall comply with all
provisions of the Workmens' Compensation Act and other laws of the State of
Nevada relating to or affecting the employment of labor.
4.7 JOB ASSIGNMENTS AND CLASSIFICATION -- Contractor shall furnish a
complete list of the employees, exclusive of manual employees, which it
contemplates will work entirely or part time on the Work for written approval
of Owner, which written approval shall not be unreasonably withheld. Such list
shall be revised from time to time as conditions may require, such revisions to
be subject to Owner's written approval. Contractor shall not be entitled to
reimbursement for wages and salaries paid to employees disapproved by Owner,
nor shall Contractor be entitled to reimbursement for the portion of wages and
salaries which are in excess of those approved by Owner. The foregoing list,
as revised from time to time, shall include the names of the individual
employees, their respective wage rates and job classifications. Any changes or
-5-
<PAGE> 10
additions to the aforementioned list, including job reclassifications, shall be
subject to the approval of Owner in writing.
A Salary Range Schedule will be submitted for the approval of the
Owner, defining classifications of hourly rated employees and respective hourly
rates and fringe benefits. Changes in said Salary Range Schedule or any part
thereof, shall be subject to Owner's prior written approval.
4.8 PERSONNEL POLICIES -- Contractor will promptly submit to Owner a
statement outlining its personnel policies with respect to manual and
supervisory employees, including without being limited to, recruiting,
reimbursement for travel, hours of work, term of employment, and rates of
employees' pay. Contractor agrees that it will not charge wages in excess of
the rates prescribed in such schedules or change other provisions of its
personnel policy without first submitting such changes to Owner sufficiently in
advance to allow for consideration, discussion, and approval by Owner.
4.9 PROJECT MANAGER -- Contractor designates Robert Martin as Project
Manager for Contractor's operations who shall be responsible for carrying out
Contractor's obligations hereunder and upon or to whom all requests and notices
from Owner to Contractor may be served or delivered as provided in ARTICLE TEN
hereof. Contractor may designate such assistants to the Project Manager as may
be suitable. Whenever Contractor shall employ workers at the site of the Work,
such Project Manager, or his designee, shall at all times be available at the
site of the work. The Project Manager so designated by Contractor shall not be
changed except with the written consent of Owner, unless the Project Manager
shall prove to be unsatisfactory to the Contractor or shall cease to be in its
employ.
4.10 PERFORMANCE -- Contractor agrees that it will perform all Work in a
good workmanlike manner to the end that the Work may be completed properly and
as expeditiously as possible, that the Work shall be done in the manner
required by plans
-6-
<PAGE> 11
and specifications approved by Owner and the same shall be subject at all times
to the inspection and written approval of Owner's Representative.
4.11 DEFECTIVE WORK -- At Owner's request, in writing, any time within one
(1) year following Owner's acceptance of each major segment of the Work,
Contractor agrees to repair, replace, or correct any defective workmanship
performed or furnished by Contractor, as the case may be, under this Contract,
relative to such segment. For any such repair, replacement or correction work,
Contractor shall be paid its costs of such work determined in accordance with
the reimbursement of costs provisions of this Contract. If and to the extent
that any defects or deficiencies in contract work, or in equipment, machinery,
or materials, are due to the willful or negligent acts or omissions of
Contractor or any of its subcontractors, the remedial work shall be performed
at Contractor's expense, without reimbursement by Owner.
4.12 INSPECTION OF WORK -- The Owner's Representative shall at all times
have access to the work wherever it is in preparation or progress, and the
Contractor shall provide facilities for such access and for inspection. All
Work and materials done or furnished by the Contractor hereunder shall be of
the kind and quality described in said Specifications and shall be first-class
throughout. Full opportunity shall be given the Owner's Representative to make
such inspection as he may desire at the site of the Work, and/or in the case of
materials manufactured by or for the Contractor at the works of the
manufacturer thereof. The decision of the Owner's Representative that any
materials or workmanship are not of the proper quality or do not comply with
the Drawings and Specifications and with the provisions hereof shall be final
and conclusive upon the Contractor and the Contractor shall promptly remove any
such material or Work and replace it with material and Work of the proper
quality, or correct any such defects in such other manner as the Owner's
Representative may direct. Any failure on the part of the Owner's
Representative or the Owner to inspect any material or
-7-
<PAGE> 12
workmanship at any time or to reject the same shall not be deemed to be an
acceptance of any defective material or workmanship, and shall not prevent
subsequent inspection and rejection thereof. The Contractor further agrees
that in case any defects appear in the Work within one year after the date of
final completion and acceptance, which defects in the opinion of the Owner's
Representative are due to or caused by defective material or workmanship or by
failure of the Contractor to perform the Work in accordance with the Drawings
and Specifications of this Contract, the Contractor will replace the defective
Work with Work of the proper quality or otherwise remedy such defects as the
Owner's Representative may direct. For the correction of any such defective
work performed or furnished by Contractor, Contractor shall be paid its cost of
such Work determined in accordance with the reimbursement provisions of this
Contract, without fee or profit, for or account of such Work. Defects in any
Work performed by a Subcontractor will be corrected by such Subcontractor
pursuant to the terms and conditions of its subcontract. In the event of a
failure by a Subcontractor to correct the defective Work for which it is
responsible, Contractor will correct such defective Work under the terms and
conditions of this Contract and take such legal action against the
Subcontractor for the benefit of Owner as Owner shall reasonably determine.
4.13 EQUIPMENT REQUIREMENTS -- Contractor shall prior to performing any
Work hereunder, advise Owner of the types and numbers of various pieces of
construction equipment needed to complete the Work and the rental rates
therefor (Attachment Equipment Rental Rates). Contractor will furnish the
equipment needed; however, no equipment is to be purchased or rented by
Contractor without Owner's prior knowledge and written approval, and such
purchase or rental shall be made in accordance with Section 4.30 hereof.
-8-
<PAGE> 13
4.14 BUILDING MAINTENANCE -- Contractor will maintain and keep in good
repair all buildings that may be supplied to it by Owner, and upon demand of
Owner will return the same to Owner in as good condition as when received,
ordinary wear and tear and loss, damage, or destruction for which Contractor is
not responsible under Section 4.19 hereof excepted. Contractor shall maintain,
staff, and operate all Contractor shops and offices necessary in connection with
the Work.
4.15 WORK CORRELATION -- Contractor recognizes that the Work to be performed
by it may be done on the Project in part at the same time as the performance of
other work by Other Contractors, or by Subcontractors, or by Owner, and
Contractor agrees that it will cooperate with such Other Contractors and
Subcontractors and Owner in the correlation of all such Work and in the maximum
elimination of all interference among those concerned.
4.16 PERMITS -- Contractor shall procure all necessary permits, licenses,
consents, and authority which normally may be required of a Contractor from
public or private interests in connection with and necessary for the performance
of the Work, and shall cooperate with Owner in procuring any such permits,
licenses, consents, and authority required by Owner.
4.17 QUALIFICATION -- Contractor agrees to take all necessary steps to
qualify itself or maintain its qualification to do business in the State of
Nevada.
4.18 LIENS -- The Contract retainage of ten percent (10%) of the average of
the last twelve (12) monthly invoices shall not become due until the Contractor,
if required, shall have delivered to the Owner a complete release of all liens
arising from the performance of the Work under this Contract, or receipts in
full in lieu thereof and, if required in either case, an affidavit that so far
as the Contractor has knowledge or information the release and receipts include
and cover all bills for labor or material for which a lien could be filed;
- 9 -
<PAGE> 14
but the Contractor may, if any Subcontractor shall refuse to furnish a release
or receipt in full, furnish a bond satisfactory to the owner to indemnify the
Owner against any lien.
The Contractor shall promptly pay all just claims for labor, material
or other costs in and about the performance of the Work, and the Contractor
expressly covenants and agrees that no lien shall be filed either by the
Contractor or by any Subcontractor, workman, or materialman against the
property of the Owner for any Work done or materials furnished in or for the
performance of the Work. The Contractor further agrees that if,
notwithstanding the foregoing covenant, any liens should be filed by any
Subcontractor, workman, or materialman against the property of the Owner or any
part thereof or in case any attachment, mesne, or otherwise should be levied by
any such Subcontractor, workman, or materialman against any moneys then due or
to become due to the Contractor from the Owner under this Contract, the
Contractor will promptly discharge by bond or otherwise such lien or attachment
and will indemnify and protect the Owner against any loss or expense in
connection therewith, including in such expense counsel fees which the Owner
may reasonably incur for its protection. And as further protection to the
Owner, the Contractor agrees that in case the Owner shall at any time have
reason to believe that the Contractor has not paid or is not paying all proper
claims for labor, service, and material done or furnished in or about the
performance of the Work, which claims might under any law or statute form the
basis of a lien against the property of the Owner, the Owner may at its option
withhold all or any part of any moneys then or thereafter due the Contractor
hereunder until it shall have been furnished with a certificate from the proper
public officials that there are not any such liens undischarged of record and
reasonably convincing proof that there are no unsettled claims which may become
liens. In case the Contractor shall fail to pay such claims within thirty (30)
days after payment of the same shall be due, the Owner at its option may pay
out of the moneys so retained the amount of such claims and the
- 10 -
<PAGE> 15
amount so paid shall be considered as payment on account of moneys due or to
become due the Contractor hereunder.
4.19 CONTRACTOR'S RESPONSIBILITY -- The Contractor shall be an independent
Contractor and not an agent or representative of the Owner. The Contractor
shall assume all responsibility for the Work under its control and supervision
and take all reasonable precautions to prevent injuries to persons and property
on or adjacent to the Work. The mention of any specific duty or liability of
the Contractor in any part of this Contract shall not be construed as a
limitation or restriction upon any general liability or duty imposed on the
Contractor by this Contract or by Law. The Contractor shall be solely
responsible for the safety of the Work under its control and supervision and of
all equipment and materials to be used in connection therewith until final
completion thereof and shall promptly repair any damage thereto, however
caused, with the cost of such damage to be borne by Owner. Contractor hereby
agrees to indemnify and hold harmless the Owner against and from all losses,
damages, injuries, and deaths (including losses or damage to property of the
Owner occupied, used by or in the care, custody, or control of the Contractor
or in proximity to the site of said Work and including injuries or deaths
sustained by any employee, workman, servant, or agent of Contractor or any of
its Subcontractors), and all claims and liabilities therefore, arising out of
said Work caused in whole or in part by any act or omission, negligent or
otherwise, of Contractor or any of its Subcontractors or of any employee,
workman, servant, or agent of Contractor or any of its Subcontractors, to the
extent that such losses, damages, injuries, or deaths are covered by insurance
policies obtained by Contractor or its Subcontractors pursuant to ARTICLE EIGHT
hereof or otherwise provided in this Contract.
4.20 HAND TOOLS -- Contractor shall, in accordance with Section 4.30,
purchase all hand tools to be used in the performance of the Work. Contractor
agrees to exercise
- 11 -
<PAGE> 16
due care in the maintenance and control of the hand tools with the objective of
delivering the Owner at the completion of the Work, all such hand tools,
reasonable loss through normal wear and tear and normal hazards excepted.
Contractor's control procedure for hand tools shall be subject to
Owner's approval. Owner, at its discretion, may, by written notice to
Contractor modify this procedure with respect to the furnishing of tools to the
extent of furnishing all or part of the hand tools to be furnished by
Contractor.
4.21 PROTECTION OF WORK AND PROPERTY -- The Contractor shall perform the
Work in such a manner as to maintain adequate protection from damage from all
causes whatsoever. It shall protect the Owner's property from damage or loss
arising in connection with this Contract. It shall adequately protect adjacent
property and roads as provided by laws and this Contract. It shall provide and
maintain all passageways, guard fences, lights, watchmen, and other facilities
for protection required by public authority or local conditions. The
Contractor shall take all reasonable precautions in the performance of the Work
to protect the health and safety of its employees, the employees of Other
Contractors and Subcontractors, and of members of the public, and to minimize
the danger from all hazards to life and property, and shall comply with the
health, safety, inspection, and fire protection laws and regulations of the
United Sates and the State of Nevada and all political subdivisions having
jurisdiction in the premises, and all regulations and requirements thereto
prescribed by Owner. In any emergency affecting the safety of life or risk of
loss or of damage to the Work or adjoining property, the Contractor, without
special instruction or authorization, shall act to prevent such threatened loss
or damage or injury. Any compensation claimed by the Contractor on account of
such emergency work shall be determined by agreement between the Owner and the
Contractor.
- 12 -
<PAGE> 17
4.22 SUBCONTRACTS -- The Contractor shall as soon as practicable notify the
Owner in writing of the name of any subcontractors it proposes to employ. The
Contractor shall not employ any Subcontractors except with the prior written
approval of the Owner as to the identity and competency of the Subcontractor
and the form of the proposed subcontract, it being understood that each
Subcontractor shall be obligated to comply with each provision hereof in the
performance of Work thereunder in the same manner as the Contractor itself
would have been. Each such Subcontract shall contain provisions not
inconsistent with the provisions of this Contract. The Contractor shall be
responsible for the proper performance of subcontracted work.
4.23 SUBCONTRACTOR'S COMPLIANCE -- Contractor shall provide and pay, and
require his Subcontractors if any, to provide and pay, and to secure payment
of:
a. Compensation for occupational diseases and for injuries
sustained by or death resulting to employees of Contractor and
its Subcontractors, as required by law.
b. Contributions and payments with respect to employees of
Contractor and its Subcontractors to unemployment compensation
funds when and as required by applicable unemployment
compensation laws.
Contractor shall furnish to Owner's Representative satisfactory
evidence that Contractor and its Subcontractors have complied fully with all of
the requirements of law and shall save harmless owner from and against any and
all actions, claims, damages, and costs resulting from their failure fully to
comply with all such laws.
4.24 WAGE RATES -- Wage rates shall not be in excess of those normally in
effect in this area and the Owner reserves the right to prior approval of wage
rates and employment conditions (Appendix - Labor Costs).
4.25 USE OF PREMISES -- The Contractor shall confine its equipment, the
storage of materials and the operations of workmen to limits indicated by law,
ordinance or permits or directions of the Owner and of the Owner's
Representative, and shall not unreasonably encumber the premises with its
material and equipment. The Contractor
-13-
<PAGE> 18
shall confine its employees' parking to those areas that may be designated from
time to time by the Owner's Representative.
The Contractor shall enforce the Owner's instructions regarding signs,
advertisements, fires, and smoking.
4.26 TEMPORARY BUILDINGS -- The Contractor shall provide such temporary
buildings as may be needed for the execution of the Work. The location of all
such buildings shall be subject to the approval of the Owner's Representative.
4.27 TEMPORARY ROADS -- Prior to constructing any lay-down areas, shop
facilities, parking areas or temporary work roads into and at the site of the
Work, Contractor shall prepare and submit to Owner's Representative for
approval a plan for the location of such facilities. Contractor shall secure,
also, Owner's Representative's approval for any additional temporary facilities
that subsequently may have to be construed from time to time. If any facility
is constructed without Owner's Representative's written approval, Owner's
Representative may require its movement or removal at the Contractor's expense.
Approvals of Owner's Representative to such plan and such additional temporary
work roads shall not be unreasonably withheld.
The Contractor assumes all responsibility for the maintenance of
property and roads surrounding or adjoining the Work.
4.28 CONSTRUCTION FACILITIES -- The Contractor shall provide all light,
heat, power, water, including potable water, office space, outdoor and indoor
storage areas, sanitary facilities, equipment lay-down areas, and other
temporary facilities as it may require in connection with the Work.
4.29 CLEANING UP -- The Contractor shall at all times keep the premises
free from accumulation of waste material or rubbish caused by its employees or
its operations, and at the completion of the Work shall remove from and about
the site all rubbish produced in the Work and all the Contractor's tools,
equipment, buildings, and surplus
-14-
<PAGE> 19
materials. Waste and rubbish shall not be disposed of in the rock stockpiles
produced by disposal of excavated material.
4.30 PURCHASING SERVICES -- Contractor shall perform such purchasing
services as may be requested by Owner in connection with the Work, subject to
the following conditions:
a. All orders, contracts, subcontracts and obligations placed by
Contractor for the Work shall be in Contractor's name.
Contractor will prepare and furnish to Owner's Representative
copies of all requisitions, purchase orders, and contracts,
including design and engineering specifications, for purchase
of materials, supplies, machinery, and equipment to be
obtained by Owner or Contractor. Contractor will obtain
proposals or bids, analyze and evaluate proposals or bids and
will make recommendations to Owner's Representative concerning
purchase orders, subcontracts and contracts to be placed by
Contractor or Owner, as Owner may determine. Contractor will
work closely with Owner's Representative to ensure that all
items to be purchased or procured is on a basis which is in
the best interest of the Owner, taking into consideration
cost, use, quality, specification requirements, delivery, and
purchasing policies of Owner. Contractor will submit major
purchase requisitions to the Owner's Representative for prior
written approval of Owner before purchasing.
b. Contractor will take all reasonable precautions to make
payment on behalf of Owner for all materials in such fashion
which will enable it to take advantage of all cash discounts
of the suppliers of the materials.
c. For the benefit of Owner, Contractor shall obtain from
equipment and material vendors warranties of performance and
against defects in materials and workmanship to the extent
that such warranties are reasonably obtainable, and liability
of Contractor therefore shall be limited to such warranties so
obtained.
ARTICLE FIVE
AGREEMENTS OF OWNER
In addition to and without restricting the agreements and undertakings
of Owner set forth elsewhere in this Contract:
5.1 OBSERVANCE OF LAWS -- Owner agrees that it will observe and abide by
all applicable laws, rules, regulations, and ordinances of the United States
and the State of Nevada and of any subdivision of each of them in the
performance of the Work.
-15-
<PAGE> 20
5.2 PERMITS -- Owner shall procure, and contractor will assist in
obtaining, all necessary permits, licenses, consents and/or authority which may
be required of Owner from public or private interests in connection with and
necessary for the performance of the Work.
5.3 OWNER'S REPRESENTATIVE -- Owner will promptly designate the Owner's
Representative and will give Contractor written notice of such appointment and
of any changes therein from time to time. The Owner's Representative shall be
the authorized representative of Owner in connection with performance of the
Work. Contractor is authorized and directed to accept, rely upon and act upon
any requests, information, advice, notices, and written approvals given by the
Owner's Representative as if given by Owner itself; provided, however, that
Contractor shall not rely upon or act upon any thereof which shall have the
effect of waiving any of the provisions of, or requiring any change in this
Contract or in the plans and Specifications approved by Owner, unless the same
are given in writing. The Owner's Representative shall have general
supervision and direction of the Work so far as may be necessary to insure that
it shall be performed in accordance with this Contract. The Owner's
Representative shall decide all matters relating to the acceptability, the
execution and progress of the Work but such direction by the Owner's
Representative shall not relieve the Contractor of its full responsibility
under this Contract except as is otherwise set forth in this Contract. The
Owner's Representative may delegate a portion of these responsibilities upon
written notice to the Contractor.
5.4 TIMELY APPROVALS -- All approvals and authorizations to be given by
Owner under and pursuant to the provisions hereof will be given in a timely
manner.
-16-
<PAGE> 21
ARTICLE SIX
REIMBURSEMENT OF COSTS
6.1 REIMBURSABLE COSTS -- Owner agrees that it will reimburse Contractor
for the following costs and expenses incurred in connection with the Work.
a. Salaries and wages of manual labor, workmen's compensation
insurance premiums, employer's share of social security
contributions, employer's share of unemployment compensation
insurance contributions and other payroll taxes, and other
charges against payroll in accordance with Appendix - Labor
Cost.
b. Salaries and wages of Contractor's field office staff incurred
in the performance of the Work at the Manhattan, Nevada site,
including, but not limited to, salaries and wages of
supervisory employees, plus all other payroll costs and
expenses in accordance with Appendix - Labor Cost.
c. Cost of travel, subsistence, and other expenses directly
chargeable to the Work, including living and traveling
expenses of all officers or employees in visiting the mine
site, and attending conferences. Reasonable moving, living,
and traveling allowances of field supervisory and inspection
staff in accordance with Contractor's standard practices, as
approved by the Owner's Representative; provided, however,
that reimbursement shall not be made to Contractor for costs
which are reimbursed to Contractor by its other clients.
d. Cost of all materials, machinery, hand tools, equipment, and
supplies required in connection with the performance of the
Work and the cost of purchase or rental of construction
equipment in accordance with Section 4.13 hereof.
e. All subcontracts made for the performance of the Work to the
extent that such subcontracts have been approved in writing by
Owner in accordance with Section 4.22 hereof.
f. Long distance telephone calls and fax expenses associated with
the Work.
g. Cost of reproduction and computer services and the usage of
electronic composing and related equipment in accordance with
schedules approved by Owner in advance setting forth rates not
to exceed current commercial rates, except for reproduction
work in the field for which Contractor shall be reimbursed at
actual costs.
h. The cost of outside consultants providing the use thereof and
the rates were first approved in writing by Owner, and
incidental purchased labor and services.
i. Such other items of direct cost reasonably and necessarily
incurred by Contractor in the prosecution of the Work,
including, but not limited to, the cost of incidental
purchases, premiums on Owner-authorized insurance, labor, and
services, to the extent such costs were paid or incurred
pursuant to written approval of Owner.
-17-
<PAGE> 22
j. Such other items of indirect cost reasonably and necessarily
incurred in the field in the performance of the Work as may be
approved in writing by Owner, including, but not limited to,
office supplies, furniture, and equipment, rent, light, heat,
water, and local telephone services and accounting expenses.
k. Such other items of indirect cost, if any, incurred in the
performance of the Work not provided for elsewhere in this
Contract as are specifically approved in writing by Owner.
6.2 NON-REIMBURSABLE COSTS -- It is understood that the reimbursable costs
specified in Section 6.1 hereof, except for those items of indirect cost
covered by paragraphs j and k of said Section 6.1, consist of direct
out-of-pocket expenses and costs incurred by Contractor in the performance of
the Work hereunder and shall not include indirect costs and expenses
attributable to the Work in the home office of Contractor. Without limiting
the generality of the foregoing, reimbursable costs shall not include:
a. The cost of any item which, by the terms of the Contract, is
expressly stated to be a non-reimbursable cost.
b. Salaries of home office personnel unless assigned to the Work
on a temporary basis.
c. Interest on Contractor's capital.
d. Depreciation or amortization of any kind by Contractor at
locations other than the mine site.
e. License fees ordinarily obtained by Contractor necessary to
permit the engineering portion of the performance of the Work.
f. Allowances for Contractor's profit.
g. Royalties paid by Contractor for the use of any patented
inventions in connection with the Work unless the use thereof
shall have first been specified or approved by Owner.
6.3 ADVANCE OF FUNDS -- On or before the 20th day of each calendar month
during the performance of the Work hereunder, Contractor will furnish Owner
with its estimate of the expenditures to be incurred by Contractor in the next
succeeding calendar month, whereupon Owner shall by the end of the month during
which such
-18-
<PAGE> 23
estimate is forwarded, advance to Contractor the amount stated therein,
adjusted as hereinafter set forth. The estimate so established shall be
reviewed and approved by Owner. Not later than the 20th day of each calendar
month after the effective date of this Contract, Contractor shall prepare and
submit to Owner invoices for that portion of the Work performed by Contractor
during the preceding month.
Should the total amount, including all amounts reimbursable under
ARTICLE SIX hereof set forth in such invoices be greater than the estimated
amount advanced to Contractor for such month, Owner shall pay to Contractor the
difference promptly after the receipt of such invoices. Should such total
amount set forth on such invoices (with the exception above provided) be less
than the estimated amount advanced to Contractor for such month, the difference
shall be deducted from the next estimate to be forwarded to Owner. The
invoices submitted by Contractor to Owner pursuant to this provision shall be
certified and accompanied by such information as Owner may reasonably request.
6.4 AVAILABILITY OF RECORDS -- Contractor shall keep and maintain adequate
records of all reimbursable costs to be paid under this ARTICLE SIX, which
records shall be available in Contractor's home office and its office at the
site of the Work for inspection and audit by Owner and Owner's firm of auditors
at all reasonable times. In addition thereto, they shall have the right to
inspect and audit any of the books, records, or original data of Contractor
used by it in determining such reimbursable costs and also shall have access to
the Work and may conduct spot checks in the field to determine the accuracy of
such records and data.
-19-
<PAGE> 24
ARTICLE SEVEN
PAYMENT
7.1 CONTRACTOR'S FEE -- Owner agrees that it will pay, and Contractor
agrees that it will accept, as its sole compensation for the performance of the
Work, as defined herein, other than reimbursement of costs as provided in
article six hereof, a Fixed Monthly Fee in the amount of Fifteen Thousand
Dollars ($15,000). Should the work proceed for a period in excess of twelve
(12) months, the fee will become a subject for further negotiations.
ARTICLE EIGHT
INSURANCE
Contractor shall provide and maintain at all times during the
performance of this Contract, the following insurance policies:
8.1 WORKERS COMPENSATION. Through the State Industrial Insurance System
for the State of Nevada -- with statutory limits. Employers liability will be
maintained in the amount of $1,000,000.
8.2 COMMERCIAL GENERAL LIABILITY. Limits shall be:
<TABLE>
<S> <C>
General Aggregate $2,000,000
Products/Comp Ops AGG. $2,000,000
Personal & Advertising Injury $1,000,000
Each Occurrence $1,000,000
</TABLE>
Commercial general liability shall include personal injury including bodily
injury and death, property damage, products completed, operations and
contractual liability hereunder (including but not limited to all work
performance and operation of automobiles, trucks and other vehicles) including
explosion, collapse and underground hazards.
-20-
<PAGE> 25
8.3 BUSINESS AUTO POLICY. $1,000,000 combined single limit bodily injury
and property damage including owned, hired and non-owned vehicles.
8.4 UMBRELLA LIABILITY. $5,000,000 each occurrence, $5,000,000 aggregate.
8.5 INSURANCE COVERAGE. Insurance shall be maintained in full force and
effect in a company or companies satisfactory to the Owner, at Contractor's
expense, and until performance in full hereof has been accomplished and final
payment has been issued in evidence thereof. Such insurance shall be subject
to the requirement that the Owner must be notified by thirty (30) days' written
notice before cancellation of any such policy. Certificates of insurance as
required must be filed with the Owner within thirty days of the date hereof.
8.6 ADDITIONAL INSURED. The owner and any other party required by the
Owner to be indemnified under the Contract document shall be named as an
additional insured on the contractor's policy. All such insurance shall be
policies held by the Owner or any other additional insured.
8.7 INSURANCE CERTIFICATES -- Prior to commencement of Work, Contractor
shall furnish to Owner certified copies of the securing and maintenance in
force and payment of premiums on all coverage which it is obligated to furnish
under the provisions hereof. Contractor may, at its own cost and expense,
secure and maintain such additional insurance coverage as it shall regard as
adequate for its purposes. If Contractor purchases such additional insurance,
then Owner shall be included as a named insured. All insurance certificates to
be provided by Contractor must be satisfactory to Owner as to insurance
carriers covering the risks and must bear a cancellation clause providing at
least thirty (30) days advance written notice to Owner. Contractor shall have
all policies endorsed to include interest of Owner.
Upon receiving approval from Owner that insurances to be secured by
Contractor are satisfactory as to type and amount, all such costs of insurance,
including all deductibles and premiums, shall be reimbursable under ARTICLE SIX
hereof.
-21-
<PAGE> 26
8.8 BOND -- The Contractor and the Owner agree not to procure a bond in
excess of the Contractor's License Bond.
8.9 SUBCONTRACTORS' INSURANCE -- Contractor shall require each of its
Subcontractors to procure and maintain during the time any Work is being
performed, the following insurance coverages:
a. WORKERS COMPENSATION. Through the State Industrial Insurance
System for the State of Nevada -- with statutory limits.
Employers liability will be maintained in the amount of
$1,000,000.
b. COMMERCIAL GENERAL LIABILITY. Limits shall be:
<TABLE>
<S> <C>
General Aggregate $1,000,000
Products/Comp Ops AGG. $1,000,000
Personal & Advertising Injury $1,000,000
Each Occurrence $1,000,000
</TABLE>
Commercial general liability shall include personal injury
including bodily injury and death, property damage, products
completed, operations and contractual liability hereunder
(including but not limited to all work performance and
operation of automobiles, trucks and other vehicles) including
explosion, collapse and underground hazards.
c. BUSINESS AUTO POLICY. $1,000,000 combined single limit bodily
injury and property damage including owned, hired and
non-owned vehicles.
-22-
<PAGE> 27
ARTICLE NINE
TAXES
9.2 All Federal, State and local taxes, except income taxes, shall be
reimbursable under ARTICLE SIX, except as hereinafter provided. The Contractor
will review all purchases and pay Nevada Sales and Use Tax only on those items
not otherwise exempt under the provisions of the Nevada Sales and Use Tax Law.
The Contractor will supply Owner with sufficient detail of purchases made to
enable Owner to ascertain the correct application of the statutory Sales and
Use Tax exemptions. Owner will reimburse the Contractor for any Nevada Sales
and Use Tax properly assessed and paid by the Contractor for material purchase
for the Work.
ARTICLE TEN
GENERAL
10.1 NOTICES -- Any notice required or permitted to be given pursuant
hereto shall be given in writing and delivered personally or by registered or
certified mail to the parties at the following respective addresses set forth
below or at such other addresses as the parties may from time to time designate
in writing:
If to Owner: Chris Michaels
Nevada Manhattan Mining Co.
5038 N. Parkway, Suite 100
Calabasas, California 91302
cc: William R. Wilson
410 - 17th Street, Suite 1375
Denver, Colorado 80203
If to Contractor: Robert J. Martin
Harrison Western Construction Corporation
1208 Quail Street
Lakewood, Colorado 80215
10.2 OWNERSHIP OF DATA -- All plans, drawings, specifications and the like
relating to the Work (hereinafter called "data") furnished by or for Contractor
and any inventions of Contractor conceived and first actually reduced to
practice as a part of the Work,
-23-
<PAGE> 28
including patent rights thereon, shall be and remain the property of Owner.
Upon completion, or upon any prior termination of the Contract, Contractor
shall deliver to Owner a complete corrected set of original or duplicate
tracings of the work as completed and such additional copies of drawings made
therefrom as Owner may request. Provided, however, that Contractor may retain
copies of all essential specifications, drawings, blueprints and engineering
data necessary to constitute a record of the work done by Contractor and shall
have the right, subject to the non-disclosure provisions of this Section 10.2,
to freely use such data in connection with its business activities.
In the event Owner shall request or otherwise advise Contractor to
incorporate in the Work any invention of Owner the subject matter of which is
covered by a valid patent under the laws of the United States, Canada or any
other country, Contractor shall not utilize the subject matter of said
invention without the written consent of Owner for any purpose other than
performance of work under this Contract until such time as such patent shall
have expired. In the event Owner shall desire Contractor to utilize any
invention of Owner which is covered by a pending patent application, the
parties agree to arrive at a mutually satisfactory agreement relative to
disclosure of such invention to Contractor prior to any such disclosure. Owner
agrees to defend and save Contractor harmless from and against any and all
claims of infringement of proprietary rights of others, including patents,
arising out of Contractor's use, in connection with the performance of this
Contract, of technical information obtained from or through Owner in connection
with the performance of this Contract.
Contractor agrees that it will not divulge to third parties, without
the written consent of Owner, any information obtained from or through Owner or
any other Contractor of Owner in connection with the performance of this
Contract unless,
-24-
<PAGE> 29
a. the information is known to Contractor prior to obtaining same
from Owner,
b. the information is, at the time of disclosure by Contractor,
then in the public domain, or
c. the information is obtained by Contractor from a third party
who did not receive the same, directly or indirectly, from
Owner. Contractor further agrees that it will not, without
the prior written consent of Owner, disclose to any third
party any information developed or obtained by Contractor in
the performance of this Contract, except to the extent that
said information falls within one of the categories described
in a, b, or c above. This restriction as to disclosure of
information set forth above shall terminate at the expiration
of three (3) years from the date hereof.
For purposes of this paragraph, Contractor shall have met its
obligation if it notifies its employees, concerned with the Work, of the
aforesaid non-disclosure obligation and requests such employees to prevent
unauthorized publication or disclosure of said technical information and to
this end ensures that each Contractor's employee, concerned with the Work,
signs a Contractor's 'Secrecy Agreement' in which the employee protects the
Owner and Contractor against non-disclosure of technical information.
Owner shall advise Contractor of the form of title block to be used on
all drawings and give such other reasonable directions regarding the
preparation of drawings as Owner may determine from time to time.
10.3 DRAWINGS AND SPECIFICATIONS -- All design drawings and specifications
will be in accordance with generally accepted procedures and practices common
to this type of work and in compliance with all applicable Federal, State, and
local regulations and guidelines. The Contractor shall be responsible for the
professional and technical accuracy and the coordination of all designs,
drawings, specifications, and other work or materials furnished by the
Contractor under this Contract. The Contractor shall without additional cost
or fee to the Owner correct or revise any errors or deficiencies in
Contractor's drawings or specifications.
-25-
<PAGE> 30
10.4 CONTINUANCE OF WORK -- Notwithstanding any disagreement or disputes
between the parties hereto as to any provisions hereof, there shall be no
interruption of the Work during the continuance of any dispute or disagreement.
10.5 ASSIGNMENT -- The Contractor shall not assign this Contract or sublet
the Work or any part thereof without the prior written consent of the Owner,
and any such assignment or sub-letting with such consent shall not relieve the
Contractor from its responsibility for the performance of the Work in
accordance with the terms hereof or from its responsibility for the performance
of any other obligations hereunder. The Contractor shall not assign any moneys
due or to become due to it hereunder without the previous written consent of
the Owner.
10.6 WAIVER -- No waiver, indulgence, or consent to depart from, or
violation of, any provisions of this Contract, by either party shall be
construed as continuing, nor shall it affect or constitute a waiver of any
other rights, privilege, duty or obligations of either party hereto.
10.7 CAPTIONS -- The captions of the ARTICLES of this Contract are for ease
of reference only and are to be disregarded in considering the meaning and
intent hereof.
10.8 THE OWNER'S RIGHT TO DO WORK -- If the Contractor shall neglect to
prosecute the Work properly or fail to perform any provision of the Contract,
the Owner, after thirty (30) days' written notice to the Contractor may,
without prejudice to any other remedy the Owner may have, make good such
deficiencies.
10.9 USE OF COMPLETED PORTIONS -- The Owner shall have the right to take
possession of and use any completed or partially completed portions of the
Work, notwithstanding that the time for completing the entire Work or such
portions may not have expired; such taking of possession and use shall be
deemed an acceptance of any Work not completed in accordance with this
Contract.
10.10 LAW GOVERNING -- This Contract shall be interpreted, construed
and enforced in accordance with the laws of the State of Nevada.
-26-
<PAGE> 31
10.11 THIRD PARTY BENEFICIARY -- Nothing in this Contract, express or
implied, is intended or shall be construed to confer upon, or to give to, any
person other than the parties hereto, any right, remedy or claim under or by
reason of this Contract or any covenant, condition or agreement hereof. The
covenants, conditions and agreements in this Contract contained shall inure to
the benefit of, and shall be for the sole and exclusive benefit of, the parties
hereto and their respective successors and assigns, to the exclusion of the
rights of any third party beneficiaries.
10.12 FORCE MAJEURE -- Any delays in or failure of performance by either
party under this Contract shall not constitute default hereunder or give rise
to any claim for damages which may be caused by circumstances reasonably beyond
the control of the party concerned, including, but not limited to, decrees or
orders of Government, acts of God, strikes, or other concerted actions of
workmen, fires, floods, explosions, riots, war, rebellion and sabotage.
10.13 WARRANTY -- Contractor warrants all of the materials entering into the
Project covered by the Specifications are to be first-class and new, unless
otherwise specified, and shall conform to the Specifications.
ARTICLE ELEVEN
TERMINATION - SUSPENSION
11.1 Owner shall have the right at any time to terminate this Contract and
at its sole discretion stop the Work hereunder for any reason whatsoever. Such
right shall be exercised by giving the Contractor thirty (30) days' written
notice of its intention to terminate, setting forth the date of such
termination and the extent of the services to be performed by Contractor prior
to such termination. In such case, Contractor shall be entitled forthwith upon
the completion of such services as it may be required to perform under this
Contract and such notices of termination to be paid in full for all legitimate
-27-
<PAGE> 32
claims arising under this Contract including: (i) Fee payable pursuant to
ARTICLE SEVEN hereof, less any part of said Fee previously paid pursuant to
ARTICLE SEVEN; (ii) any costs reimbursable under ARTICLE SIX hereof not
previously paid by Owner; (iii) all reasonable costs incurred by Contractor in
connection with the stoppage of the Work, if not for cause; and (iv) less any
amounts advanced by Owner to Contractor pursuant to ARTICLE SIX and not
previously credited against Contractor's invoices as therein provided.
ARTICLE TWELVE
COMPLETION OF WORK
12.1 Contractor shall use its best efforts to complete the Work
expeditiously on or before the dates referred to in Section 2.1. When, in the
opinion of Contractor, the Work under this Contract, or any individual unit
thereof, has been completed, Contractor shall give the Owner's Representative
notice in writing that said Work, or individual unit thereof, is ready for
inspecting (and/or testing where applicable) preparatory to acceptance by
Owner. Thereupon, the Owner's Representative shall within a reasonable time
inspect the Work, or individual unit thereof, and at the Owner's
Representative's option arrange for appropriate mechanical and operational
tests to demonstrate that Contractor has performed satisfactorily its Work
under this Contract. Upon successful completion of inspection and tests, the
Owner's Representative shall promptly give notice to Contractor in writing of
his acceptance of the Work, or individual unit thereof, as the case may be, or
shall notify Contractor of Work to be done by Contractor prior to acceptance.
Upon satisfactory performance by Contractor of work mentioned in said notice
and successful completion of inspection and tests of such Work, the Work, or
individual unit thereof, shall be deemed accepted by Owner and such acceptance
shall be confirmed in writing.
-28-
<PAGE> 33
ARTICLE THIRTEEN
ARBITRATION
13.1 All disputes under this Contract, whether as to its validity,
interpretation, or performance, shall be subject to arbitration, and shall be
submitted to arbitration at the request of either party to the dispute. The
Contractor shall not cause a delay of the Work during an arbitration
proceedings, except by agreement with the Owner. The arbitration proceedings
shall be conducted pursuant to the applicable law of the State of Nevada and
shall be commenced as follows:
a. Either party may institute such arbitration by notice in
writing to the other specifying the question or questions to
be submitted to arbitration and naming a disinterested and
qualified person to act as arbitrator.
b. Within thirty (30) days after receipt of such written notice,
the other party shall name a second disinterested and
qualified person to act as arbitrator and shall give notice in
writing thereof to the party instituting the arbitration.
c. The first two arbitrators so named shall forthwith select a
third disinterested and qualified arbitrator and shall give
written notice to both parties informing them of the selection
so made and fixing a date within a reasonable time at Los
Angeles for the hearing of the question or questions submitted
to arbitration.
d. In case the party first notified of the institution of the
arbitration shall neglect or refuse to name an arbitrator
within the time hereinabove specified or in case the first two
arbitrators chosen by any method shall fail to agree upon a
third arbitrator within thirty (30) days after the appointment
of the second arbitrator, then such second or third arbitrator
or both, as the case may be, shall upon the application of
either party be appointed by a Judge of the United States
District Court, located in Nevada.
e. The decision of the arbitrators shall be made in writing with
reasonable promptness after completing the hearing or hearings
thereon and a decision signed by a majority of the arbitrators
shall be final and binding upon both parties.
f. The expense of any such arbitration, including reasonable
compensation for the arbitrators, shall be borne and paid
equally by the parties or as the arbitrators otherwise direct.
-29-
<PAGE> 34
ARTICLE FOURTEEN
EQUAL EMPLOYMENT OPPORTUNITY
14.1 The Contractor agrees that it will conform to all statutes and laws,
both State, Federal and local, and any regulations thereunder, to provide equal
employment opportunity for all individuals without regard to race, creed,
color, national origin, religion, sex or age.
ARTICLE FIFTEEN
WITHDRAWAL OF WORK
15.1 Owner reserves for its own convenience the right to withdraw from the
Work to be performed by Contractor any portion or portions thereof from time
to time, and to do or perform such portion or portions of the Work for its own
account, or to contract for the doing or performance of said Work by others.
IN WITNESS WHEREOF, the Owner and the Contractor, respectively, have
caused this Contract to be duly executed in duplicate by them and on their
behalf as of the day and year first above written.
-30-
<PAGE> 35
OWNER:
NEVADA MANHATTAN MINING, INC.
By C.D. MICHAELS
----------------------------------
Attest JEFFREY S. KRAMER
------------------------------
CONTRACTOR:
HARRISON WESTERN CONSTRUCTION
CORPORATION
By ROBERT J. MARTIN
----------------------------------
Attest JEFFREY S. KRAMER
------------------------------
-31-
<PAGE> 36
APPENDIX
LABOR COSTS
SALARY RANGE SCHEDULE
HOURLY EMPLOYEES
<TABLE>
<CAPTION>
Classification Base Rate Health & Welfare
______________________________________________________________________________________
<S> <C> <C>
Shift Leader/Foreman $20.00 $1.35
Miner $18.00 $1.35
Mechanic $18.00 $1.35
Surface Laborer $12.00 $1.35
Payroll Burdens
FICA & Medicaid 7.65%
Federal Unemployment 0.08%
State Unemployment 3.00%
Workers Compensation 20.84%
</TABLE>
<TABLE>
<CAPTION>
SALARIED EMPLOYEES
<S> <C> <C>
Project Superintendent $5,200/month $200/month
Personnel utilized on an occasional basis will be charged at the following rates,
which rates include burdens, fringes and salary:
Project Manager (R. Martin) $60/hour
Staff Engineer (D. Provost, S. Johnson) $48/hour
Drafter (B. Hromyk) $40/hour
Clerical/Secretarial (C. Thomas, K. Sims) $25/hour
</TABLE>
-32-
<PAGE> 37
APPENDIX
EQUIPMENT RENTAL RATES
1. Company-Owned Equipment (bore rental maintenance, parts, fuel, lube
and consumables NIC)
<TABLE>
<S> <C>
Air Drills (jacklegs, stopers, sinkers) $100/month/each
2-cy LHD $2,400/month
1 cy LHD $1,800/month
10-ton underground truck $4,700/month
Slusher $500/month
1050 cfm diesel compressor $3,600/month
13-hp pump $500/month
20-hp vent fan $540/month
Air pump $180/month
Cat 955 loader $4,800/month
Shop van (parts van) $250/month
1-ton flat bed $600/month
Pick-up truck $500/month
Welder-diesel $230/month
</TABLE>
Additional company-owned equipment will be charged at 85% of the
unadjusted monthly rate contained in the current edition of the Rental
Rate Blue Book published by DataQuest.
2. Thirty party equipment will be at invoice cost including delivery
charges and taxes.
-33-
<PAGE> 38
[PRELIMINARY BUDGET SET NEW]
<PAGE> 39
NEVADA MANHATTAN MINING, INC.
PH. 818-591-4400
5038 N. PARKWAY CALABASAS #100
CALABASAS, CA 91302
<TABLE>
<CAPTION>
EXPLANATION AMOUNT
- ----------- ------
<S> <C> <C>
MINE PRODUCTION 90-3856-1222
CHECK
AMOUNT
$100,000.00
[LOGO]
</TABLE>
PAY AMOUNT OF
ONE HUNDRED THOUSAND DOLLARS
<TABLE>
<CAPTION>
WITH US STATE CHECK
DATE TO THE ORDER OF GROSS INC. TAX FICA INC. TAX SDI NUMBER
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
6-11-96 HARRISON WESTERN 17657
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION
--------------------------------------------------------------------
</TABLE>
CHARTER PACIFIC BANK
AGOURA, CA 91301
<PAGE> 1
EXHIBIT 10.(x)
MAXWELLS ENERGY AND METALS TECHNOLOGY LTD.
PRINCIPLES OF AGREEMENT
Whereas this Principles of Agreement (POA) is made and entered into on this
19th day of August, 1996, by and between:
1. MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. (hereinafter referred to as
"Maxwells"), a corporation organized under the laws of the Bahamas and having
representative offices at 1901 Avenue of the Stars, Suite 1925, Los Angeles,
CA 90067. Maxwells is represented in this transaction by William Chan (Chan);
and,
2. NEVADA MANHATTAN MINING INCORPORATED (hereinafter referred to as
"Nevada"), a corporation organized under the laws of the state of Nevada, and
having offices at 5038 North Parkway Calabasas, Suite 100, Calabasas, CA 91302.
Nevada is represented in the POA by Christopher Michaels (CDM) and Jeffrey
Kramer JK).
Maxwells and Nevada are hereinafter referred to the "Parties" to this
POA.
WITNESSETH
I. Contractual Transactions
Whereas Maxwells controls a potential gold and other metals/minerals mining
property, known as Kalimantan Timur, in Kalimantan, Indonesia. Kalimantan
Timur (hereinafter referred to as the "Property") consists of 5 contiguous
properties, each comprising 2000 hectares of land for a total of 10,000
hectares. The geography and location of the Property are attached in Exhibit
I. The Property is located in a potential gold mineralization zone, as
indicated by the Government Reports which are shown in Exhibit I. The island of
Kalimantan in Indonesia has become a significant gold exploration area and gold
producing target for international companies. Exhibit II (Asian World Stock
Report dated December 1995) explains the geology and potential of the gold
mineralization zone as well as other major discoveries made. The Property is
situated within this mineralized zone; and
1
<PAGE> 2
Whereas Nevada operates gold mining properties in the state of Nevada and has
the desire and interest to acquire, explore, and develop the Kalimantan Timur
Property (hereinafter referred to as the "Transaction"
II. Consideration for the Transaction
Whereas Maxwells will merge 51% control and interest of the Property in Nevada
for the following terms, conditions and considerations:
1. Nevada will issue shares of Nevada's Common Stock to Maxwells
on the following basis:
Four Hundred Thousand (400,000) shares of Common Stock will be
issued to Maxwells upon the signing of this POA.
2. A total of 4 million shares of Common Stock will be issued to
Maxwells upon the following events occurring:
(a) These shares will be immediately released to Maxwells
upon Nevada receiving independent valuation of a
minimum of Twelve Million Dollars (US$12,000,000)
worth of value in mineralization or other natural
resources on the subject property in Kalimantan.
Valuation of the Property will be appraised by an
independent expert appraiser to be mutually chosen by
the Parties. These shares can also be released to
Maxwells in the event that an Investment Banker (to
be mutually chosen by the Parties) values the
Property at Twelve Million Dollars (US$12,000,000)
and/or provides financing to Nevada based upon the
US$12 million valuation of the Property or upon the
intrinsic appreciation of Nevada's stock (post
trading shares) following the public announcement of
acquiring interest in the Property. For example,
Nevada's present trading price is approximately US$3
per share. If after 90 days of the announcement
Nevada's shares have appreciated to US$10 per share,
the net intrinsic value of expectation is US$7 per
share. With seven million (7,000,000) shares
currently outstanding, the intrinsic value of the
Company then becomes US$49 million, and the financing
of the Company will have been accomplished.
2
<PAGE> 3
(b) If the four million (4,000,000) shares have not been
issued; Nevada must commence its exploration program
within 6 months from the funding of the program but
not later than 12 months from the execution of this
POA. However, if Nevada fails to commence its
exploration program in 12 months and no appraisal has
been completed on the Property and the additional
financing is not done, then the 51% control and
interest in the Property immediately reverts back to
Maxwells at no cost to Maxwells. However, if the
shares appreciate to US$10 or above for a period of
more than 30 days, then Maxwells is entitled to One
Million (1,000,000) shares regardless of whether any
financing commitments have been secured by Nevada or
any appraisals have been done.
(c) Immediate Registration with the Securities and
Exchange Commission (SEC) will be performed by Nevada
on One Million (1,000,000) of the above shares upon
the release of the shares to Maxwells, only if Items
2(a) and 2(b) are operative.
3. Special Consideration:
(a) If and when the Property yields a valuation of more
than two (2) million ounces of gold, the Percentage
ownership of Maxwells will become non-dilutive.
Otherwise, additional shares are to be issued for any
discoveries above 2 million ounces on a prorata basis
as in Item 2(a).
4. Maxwells reserves the right to substitute or add another gold
mining property and/or natural resources property or like
potential value if the valuation of the Property is less than
US$12 million or if the stock of Nevada does not appreciate
above $3 per share after the announcement of the acquisition.
5. Voting Trust: Maxwells will vote its shares in favor of
management as long as CDM and JK are executives of Nevada,
except when any of Maxwell's shares are registered for sale.
It is agreed that a mutual consent by both parties hereto is
needed in
3
<PAGE> 4
order to issue any capital stock in excess of Two Hundred and
Fifty Thousand Dollars ($250,000), with the exception of
raising capital for day-to-day operations.
6. Registration of Options in the Registration Statement with the
Securities and Exchange Commission (SEC): A two million share
option for Maxwells will be registered in the current
Registration at a price of Three Dollars ($3.00) per share for
a period of 18 months from the date herein. It is the intent
of Nevada to seek an immediate Registration with the SEC.
7. Nevada will immediately form a 100% owned domestic subsidiary
corporation in the State of Nevada to receive all of its gold
mining assets in America. Nevada will also form a 100% owned
Offshore subsidiary corporation to hold its interest in the
Kalimantan Timur Property and others as appropriate (refer
to Item 3) which, will be merged into the domestic subsidiary
or remain a sub-subsidiary at a practical time or at any time
the domestic subsidiary is spun out as an independent Public
Company.
Nevada will spin off the shares of the domestic subsidiary,
inclusive of the international subsidiary, in a corporate
reorganization plan for the benefit of all the shareholders of
Nevada at a ratio of 1:1, including all of the share
transactions of Maxwells at the appropriate time so that
certain encumbrances and risk factors are minimized.
8. Default: a Cease and Desist order from the Securities and
Exchange Commission (SEC) would be constituted as a default
and the Kalimantan Timur Property asset will revert back to
Maxwells at no cost.
9. All exploration, operating, and budgetary costs to effectuate
the development of the Kalimantan Timur gold property will be
100% undertaken by Nevada. Upon signing this POA, Nevada will
make a US$20,000 closing payment (which can be paid in monthly
increments of US$5000) to Maxwells or an affiliate. This
US$20,000
4
<PAGE> 5
closing fee will be used to pay the local Indonesian partner
who has been incurring operating fees for maintaining the
Property. Receipts of payments to the Indonesian partner will
be provided to Nevada. Maxwells also advises Nevada that an
additional payment of US$80,000 (for taxes) remains to be paid
for acquisition of the Property.
10. It is understood that this agreement and all compensation
agreed hereto by both parties above holds true throughout any
and all Nevada subsidiaries and spin-off public companies that
may arise through any corporate structure reorganization.
11. Maxwells will use its best efforts and good faith to fully
cooperate with Nevada to succeed in Indonesia.
12. Nevada recognizes that it must reach an Agreement with
Dealmakers International/Garrett Krause for the following
services and consideration: Investment Banking Services,
Corporate and Public Relations, and a Compensation Package.
This Agreement with Dealmakers International needs to be
concluded within a 24 hour period otherwise this POA becomes
null and void.
5
<PAGE> 6
The execution of this POA is legal and binding on all Parties.
SIGNATORIES
Nevada Manhattan Mining Incorporated Maxwells Energy and
Metals Technology Ltd.
/s/ CHRISTOPHER MICHAELS /s/ WILLIAM CHAN
- ------------------------------ ------------------------------
Name: Christopher Michaels Name: William Chan
Title: CEO/President Title: President
/s/ JEFFREY KRAMER
- ------------------------------
Name: Jeffrey Kramer
Title: Senior Vice President
6
<PAGE> 7
MEMORANDUM OF UNDERSTANDING
GOLD MINING PROJECT
This Memorandum of Understanding (MOU) made and entered into on this 16th day
of July 1996 by and between:
MR. ABUBAKAR SIDDIQ, an Indonesian citizen having his address at Jl.
Bandung, Indonesia c/o Andy Nitidisastro, Indonesia, and
MR. ANDY T. NITIDISASTRO, an Indonesian citizen having his address at Jl.
Bukit Pakar Timur No. 9, Bandung, Indonesia, and
MAXWELLS ENERGY AND METALS TECHNOLOGY LTD., a Bahamas Corporation having its
representative offices at 1901 Avenue of the Stars, Suite 1925, Los Angeles,
California, 90067 USA.
MR. ABUBAKAR SIDDIQ, MR. ANDY T. NITIDISASTRO, AND MAXWELLS ENERGY AND METALS
TECHNOLOGY LTD. are hereinafter referred to collectively as "THE PARTIES".
WITNESSETH
Whereas, the Government of Indonesia acting through its Ministry of Mines and
Energy wishes to expand on its enhanced gold exploration during the next Sixth
Development Plan (hereinafter referred to as "PROJECT"), and encourages
participation on such development.
Whereas, THE PARTIES desire to form a consortium by certain arrangement to
obtain a license from the Government to explore GOLD MINING for both domestic
needs and exports.
Now, therefore, THE PARTIES, hereto agree as follows:
1. PURPOSES
THE PARTIES agree to carry out the following purposes:
1.1 To obtain and implement the PROJECT on the conditions and
terms set forth in the Consortium Agreement which will be
prepared in detail in due time when the development scheme and
conditions are granted.
1
<PAGE> 8
1.2 To submit an application to the Ministry of Mines and Energy
for the PROJECT hereinafter referred to as "APPLICATION") for
the license(s) to engineer, to manufacture, to OEM
technology/transfer, install, finance, and exploring gold as
well as mining.
1.3 The Consortium is willing and able to support and complete the
manufacturing and mining operation.
2. EXCLUSIVITY
Except as otherwise provided for in this MOU, THE PARTIES warrant that they
shall cooperate solely and exclusively with each other in connection with this
Gold Mining PROJECT and that none of them shall enter into any agreement with
any other firm or group of firms with respect to any matters related to the
PROJECT without the prior written consent of the other Party and to keep this
information at the highest confidentiality manner.
THE PARTIES also warrant that such exclusivity will be respected by those
persons or firms which they may exercise control or with their affiliate in any
manner.
3. SHAREHOLDING
THE PARTIES hereby agree to shareholding of each PARTY as follows:
MR. ABUBAKAR SIDDIQ 15%
MR. ANDY T. NITIDISASTRO 10%
MR. BASTARI MIRAI 5%
MAXWELLS ENERGY AND METALS 70%
TECHNOLOGY LTD.
under the conditions that the capital required by the Consortium is
provided by MAXWELLS ENERGY AND METALS TECHNOLOGY LTD.
4. SPONSORING
MR. ABUBAKAR SIDDIQ and others shall act as the main sponsor of the Consortium
to obtain the license(s) and/or reaffirm any license(s) which are in existence.
2
<PAGE> 9
5. INITIAL RESPONSIBILITIES
THE PARTIES agree that their responsibilities shall be as follows:
5.1 Local partners will be primarily responsible for the
organization of all appropriate political lobbying, in order
to secure the license(s) and/or reaffirm any license(s) which
are in existence, as well as responsible for the procurement
of the Technology and coordinate all engineering presentation
and procurement etc. and the Consortium liaison with the
Government of Indonesia. They have submitted a prospective
????????? property in Kalimantan known as Kalimantan Timur
(KT) consisting of 10,000 HA. KT is one of many other
prospects which are known to the local partners.
5.2 MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. will be responsible
to provide and/or secure financing for the PROJECT, provide for
all international technology transfers and provide a strategic
operator(s) to gain the license(s) from the Government.
6. CONSORTIUM AGREEMENT
When the Consortium is awarded these license(s) or reaffirmation(s). THE
PARTIES will immediately execute the Detailed Consortium Agreement on the basis
of this MOU or at a mutually agreeable time.
7. JURISDICTION
7.1 Any dispute or controversies which may arise out of this MOU
shall be amicably settled by THE PARTIES, but in failure
thereof, such disputes or controversies shall be referred to
the arbitration by the Rules of International Chamber of
Commerce in Indonesia.
7.2 This MOU as to its interpretation and application shall be
governed by the Laws of Indonesia.
8. OTHER MATTERS
Other matters not stipulated in this MOU shall be further discussed and decided
later on through mutual discussion between THE PARTIES on the basis of this
MOU.
3
<PAGE> 10
In witness whereof THE PARTIES hereto have caused this MOU to be legal, binding
and enforceable as well as executed in duplicate by their representatives
herein who are so duly authorized, on the date and year first above written,
each retaining one (1) copy thereof.
Bandung, 16th day of July 1996.
---- -----
For: MR. ABUBAKAR SIDDIQ For: MR. ANDY T.
NJTIDISASTRO
/s/ ABUBAKAR SIDDIQ
---------------------------
For: MAXWELLS ENERGY For: MR. BASTARIMIRAI
AND METALS TECHNOLOGY
/s/ W.H.B. CHAN
---------------------------
Name: WHB Chan
Title: President Director
4
<PAGE> 11
In witness whereof THE PARTIES hereto have caused this MOU to be legal, binding
and enforceable as well as executed in duplicate by their representatives
herein who are so duly authorized, on the date and year first above written,
each retaining one (1) copy thereof.
Bandung, 16th day of July 1996.
---- -----
For: MR. ABUBAKAR SIDDIQ For: MR. ANDY T.
NJTIDISASTRO
/s/ ABUBAKAR SIDDIQ /s/ Andy T. Njtidisastro
--------------------------- -----------------------------
For: MAXWELLS ENERGY For: MR. BASTARIMIRAI
AND METALS TECHNOLOGY
/s/ W.H.B. CHAN /s/ BASTARIMIRAI
--------------------------- -----------------------------
Name: WHB Chan
Title: President Director
<PAGE> 12
EXHIBIT I
<PAGE> 13
[INDONESIA - Geographical Map]
[INDONESIA - Distribution of Mineralized Tertiary Magmatic Arcs]
<PAGE> 14
EXHIBIT II
<PAGE> 15
===============================================================================
[LOGO] ASIAN WORLD
STOCK REPORT
MONEY MAKING IDEAS FOR INVESTING IN ASIA THROUGH NORTH AMERICAN EQUITIES
===============================================================================
DECEMBER, 1995 VOL. I NO. 3 (C)BRIAN FAGAN
- -------------------------------------------------------------------------------
IN THIS ISSUE
SIX BASIC CONSIDERATIONS FOR EVALUATING JUNIOR EXPLORATION COMPANIES
A simple set of basic fundamentals that will identify companies with real value,
excellent upside potential, trading at reasonable prices.
INDONESIA
The country, its geology and its mining law. What you see in the window is what
you can expect to find in the store.
THE AREA PLAY
Centerspread map of Indonesia. See who is there early. The list of companies
is growing daily.
THOUGHTS & TRAVELS
An investment conference you will enjoy and profit from. Current buy
recommendations.
NON-MINING
TML FOODS INC. (TML - ASE) A new buy recommendation and non-mining section in
Asian World Stock Report.
BRE-X MINERALS LTD.
Those that were looking, saw the potential. You can learn a lot by taking this
chronological tour of the company's rise to prominence.
WISHING YOU ALL THE VERY BEST FOR THE HOLIDAYS!
Brian Fagan
- -------------------------------------------------------------------------------
INDONESIA
BRE-X MINERALS LTD.
THE FIRST CANADIAN-ASIAN WORLD GOLD MINING STOCK AREA PLAY
INDONESIA'S enormous mineral wealth--coupled with a major world class gold
discovery by Calgary, Alberta based BRE-X Minerals Ltd.--has set the stage for
"the first ever, Canadian-Asian World, Gold Mining Stock Area Play."
I felt it was coming and am very pleased it came so soon and in such a
significant fashion. People sometimes ask why I spend so much time researching
mining stocks trading under ten and sometimes even under one dollar a share.
The answer is that many of these stocks have the potential to double and triple
in price, and once in a while one goes into orbit, as in the case of BRE-X. The
story in this issue is not ancient history. It is happening right now. Many of
you are or will be a lot richer because of it.
BRE-X stock, trading at $3.00 in March 1995, rose to an all time high of $57.50
on November 2nd and closed December 6th at $53.00. This spectacular increase in
value resulted from the company's discovery of an estimated 6-10 million ounces
of gold, on one of its mineral exploration properties in Indonesia. The
potential total gold reserve continues to expand.
Major mineral discoveries like this one are the "shots heard round the world."
They create enormous, instant, real value for the discovering company. And,
because multiple mineral deposits often occur in proximity to each other,
increased speculative value is also added to all companies owning or acquiring
mineral rights in the discovery area. When exploration was the domain of the
individual prospector what developed was a gold rush; now, in the age of
companies, we call it an area play.
Indonesia is about to experience an area play that will undoubtedly result in
many more new discoveries. Financial institutions familiar with the rewards and
risks of the business are actively seeking participation. With the availability
of equity funding, junior exploration companies are acquiring known but
undeveloped properties, as well as initiating grass-roots exploration programs
in virgin areas. Many other Asian World countries are going to experience the
same type of gold rush by North American companies, that is going on in
Indonesia today. There will be no shortage of investment opportunities as this
exciting phenomenon unfolds.
<PAGE> 16
- -------------------------- ASIAN WORLD STOCK REPORT ---------------------------
--------------------------------------------
INDONESIA
THE COUNTRY -- THE GEOLOGY
THE MINING LAW
--------------------------------------------
HOW to develop confidence and an acceptable comfort level in Indonesian mining
investments is the purpose of this article. From my seat I can see that
numerous companies will soon be offering their stock to investors as a way to
participate in what is sure to be a major North American mining stock play.
Picking the companies most likely to succeed requires an understanding of the
country, an assessment of the geologic terrain the company is exploring, and its
ability to acquire secure title to its mineral interest. The potential for an
enormous win has already been demonstrated.
INDONESIA is located right on the equator, the land of the "trade winds." The
climate is tropical with a easterly monsoon of less rain (May to September) and
a westerly monsoon (December to March) that is considered the wet season.
Humidity is high, with temperatures ranging from about 22 degrees to 30 degrees
C. Consisting of 13,677 islands of which 3,000 are inhabited, the worlds
largest archipelago stretches east to west some 5,000 kilometers, roughly the
width of the United States. Supporting a population of 200 million, primarily
Muslim, with 50% under the age of 20, it is the fifth most populous country in
the world. Its capital Jakarta, located on the island of Java, is a vast,
modern city with a population of 15 million.
Formerly known as the Dutch East Indies and the Spice Islands, the region was
controlled by the Dutch from the early 1600's until the Japanese occupation of
1942 - 1945. As the War in the Pacific ended, Indonesia declared its
Independence in 1945, but then had to fight a four year War of Independence with
the Dutch before it was recognized by the United Nations in 1949. After fifteen
more years of internal conflict, present day leader President Suharto took
control in 1965. Under his leadership, the country has experienced 30 years of
political stability, spectacular economic growth, and social reform. Indonesia
is now considered an excellent location for foreign investment and international
business.
GEOLOGY A review of the known deposits and styles of mineralization is the
logical place to start. Don't get nervous; there is an order in nature that
everyone can comprehend. One geologic term you need understand is "magmatic
arcs." They are what Indonesia is made of. Look at the map on the next page.
Do you notice all the lines with triangles on them labeled trenches? They are
breaks in the earth's crust where molten rock is pouring out onto the ocean sea
floor. Eventually enough lava pours out so that it piles up and breaks through
the ocean surface forming a land mass. Over eons of time, these land masses
move off the trench, then the whole process repeats itself. Arc after arc join
up: that is why the shape of trenches reflect that of the land masses. Only
certain arcs are mineralized, each in its unique style. There are 15 magmatic
arcs in Indonesia extending over 15,000 kilometers, but nearly all the gold and
copper production comes from the arcs on the map. That is a very simplistic
explanation of magmatic arcs and how Indonesian-bound exploration companies know
which terrain is the most productive. Armed with this knowledge and the map on
page 9 you can examine the various mineral deposits found throughout the entire
Indonesian archipelago. What you see in the window is what you can expect to
find in the store.
SUMATRA The Sunda-Banda Arc passes along the southwest margin of Sumatra
through Java, Bali, Lombok, Sumbawa, Flores, to Wetar. The larger mineral
deposits on Sumatra are of the epithermal gold-silver vein type. Epithermal
mineral deposits are those formed when super-heated waters cause metals to be
dissolved from the rocks that they travel through; then as the waters rise from
unknown depths to the surface the metals are re-deposited in a wide range of
geologic structures, environments, and rock types. The gold-silver vein
deposits in the Lebong district contain some 3.0 million ounces of gold. The
exhausted Lebong Donok mine, with an average grade of 14 g/t gold and 79 g/t
silver, had the highest grades recorded for Indonesian gold production. Less
significant gold-copper vein deposits ranging from 150,000 to 450,000 ounce gold
occur on the island.
JAVA The extension of the arc and the gold-silver deposits continue east across
Java. In the Cikotok region the Gunung Pongkor deposit has a resource of 3.3
million ounces gold and 31.3 million ounces silver. Grades are 17 g/t gold and
162 g/t silver in veins extending 1 kilometer with widths from 2 to 10 meters.
SUMBAWA Further east on the Island of Sumbawa the style of mineralization
changes from epithermal vein type to porphyry copper-gold. This style of
mineralization is characterized by large tonnage low grade deposits in which the
copper minerals occur as discrete grains and veinlets disseminated throughout a
large volume of rock. This is home for the Batu Hijau deposit of Newmont where
a reserve of 600 million tonnes contains 12 million ounces of gold and 10
billion pounds of copper at grades of 0.8% copper and 0.7 g/t gold.
WETAR The eastern-most known deposit in the Sudan - Banda Arc is Billiton's
Lerokis-Kali Kuning gold-silver deposit. The resource here occurs in epithermal
barite bodies up to 37 meters thick and contains about 5 million tonnes grading
4 g/t gold and 122 g/t silver.
KALIMANTAN Kalimantan in the center of the map is the focus of today's area
play in Indonesia and home of the recent BRE-X, Busang discovery. Looking at
the other known deposits along the Central Kalimantan Arc, it is obvious why
BRE-X would chose this location to search for new gold. The Kelian mine, 200
kilometers southwest with 97 million tonnes grading 1.85 g/t gold (5.8 million
ounces) in two main orebodies and 4 satellite zones, is Indonesia's largest
primary gold deposit. Mt. Muro, 100 kilometers further south, hosts 10 million
tons grading 3.8 g/t gold (1.2 million ounces) and 95 g/t silver (30 million
ounces) in 10 zones.
<PAGE> 17
[INDONESIA - Geographic Map]
[INDONESIA - Distribution of Mineralized Tertiary Magmatic Arcs]
<PAGE> 18
- -------------------------- ASIAN WORLD STOCK REPORT ---------------------------
[INDONESIA MAP--2 PAGE SPREAD]
INDONESIA - LOCATION OF SIGNIFICANT MINERAL DEPOSITS PROPERTY LOCATIONS
--------------------------------------------
INDONESIA - THE AREA PLAY
--------------------------------------------
Speculation in the stocks of junior mineral exploration companies with
Indonesian properties is accelerating on the Vancouver, Alberta and Toronto
stock exchanges. Within the last few weeks, I have witnessed the price of
several stocks double and triple on no more than a news announcement, stating
that they were negotiating to acquire a property in Indonesia. To be sure,
these are fortunate circumstances for the holders of these stocks and some
nimble day traders, but offer little opportunity for value orientated
investors. Keeping up with them on a daily basis is well beyond the scope and
purpose of Asian World Stock Report. On the other hand, I believe that
monitoring the results of Indonesian exploration programs will allow me to
identify those companies with the potential for a significant discovery and
make you aware of them early. The BRE-X story shows that there is plenty of
time to buy into a real discovery.
Short term trading in Indonesian area play stocks is a completely different
endeavor than investing. With the ten percent high risk portion of my trading
capital I am, and expect that you too are also, trying to buy and sell these
moving targets at the right price and time. This type of trading is exciting
and is what makes the junior mining stock market tick. Being up to date on the
spec-side also increases your exposure to developing stories.
Today, there are really two Indonesian area plays. The hot one is centered
around the BRE-X, Busang deposit on Kalimantan. In the early stages of an area
play, proximity is everything. The closer the company's property is to the new
discovery - the more speculative price premium it will enjoy. As the play
matures, more tangible factors will start to determine price. Eventually each
property will have to stand on its own merit. We are in the very early stage
of the Kalimantan play.
The other play encompasses all the rest of the country.
<PAGE> 19
- -------------------------- ASIAN WORLD STOCK REPORT ---------------------------
[INDONESIA MAP--2 PAGE SPREAD]
INDONESIA - LOCATION OF SIGNIFICANT MINERAL DEPOSITS PROPERTY LOCATIONS
--------------------------------------------
Quite remarkable, considering that the distance east to west across Indonesia
is roughly the same as Canada or the United States. This area play is happening
because, almost without exception, all of the property acquisitions recently
made by North American companies are near significant mineral deposits where
the potential for new discoveries is considered excellent. Think about the
size of the United States when someone says they have a property in Indonesia:
Kalimantan is Denver, Irian Jaya is Los Angeles, and Sumatra is New York.
Property locations for each listed company are shown on the above map.
Indonesia is going to be generous to those investors that understand it. I
suggest you get started by obtaining an information package from these
far-sighted companies who got in early. (AWSR: NOT RATED)
???ch Mountain Minerals Inc. BRE-X Minerals Ltd.
??? Kalimantan #2 Kaliman, Sumatra, Sangihe, I.J.
??M - Alberta Stock Exchange BXM - Alberta Stock Exchange
Contact: Douglas J. Rowe Contact: T. Stephen McAnulty
??? 262-1838 Tel. (403) 247-0707
Brett Resources Inc. Consolidated Valley Ventures Ltd.
#3 Sumatra #4 Kalimantan
BRN - Vancouver Stock Exchange CVL - Vancouver Stock Exchange
Contact: Larry Nagy, L.L. Duffett Contact: Barbara Dunfield
Tel. (604) 684-8725 Tel. (604) 685-6851
First Dynasty Mines Ltd. Gothic Resources Inc.
#5 Irian Jaya #6 Kalimantan
FDM - (TSE) - FDYMF (Nasdaq) GCR - (VSE) (ME) Stock Exchanges
Contact: Leslie Young Contact: Tanya Gunther
Tel. (303) 740-1209 Tel. (604) 683-6556
Indochina Goldfields, Ltd. International Skyline Gold Corp.
#7 Kalimantan, Java #8 Irian Jaya
Private - (TSE) listing planned ISC - (VSE) (TSE) Stock Exchanges
Contact: R. Edward Flood Contact: Clifford A. Grandison
Tel. (415) 693-3356 Tel. (604) 683-6865
Pacific Amber Resources Ltd. Pacific Wildcat Resources Corp.
#9 Kalimantan #10 Sumatra, Sulawesi
PCR - Vancouver Stock Exchange PAW - Vancouver Stock Exchange
Contact: Hiro Ogata Contact: Gordon Fitzpatrick
Tel. (604) 688-6681 Tel. (604) 688-9780
Scorpion Minerals Inc. South Pacific Resources Ltd.
#11 Kalimantan, Sumatra #12 Kalimantan
(TSE) listing pending SHF - Alberta Stock Exchange
Contact: Michael A. Farrugia Contact: Robert F. Chase
Tel. (416) 777-6671 Tel. (604) 687-????
<PAGE> 20
- --------------------------ASIAN WORLD STOCK REPORT----------------------------
There are other known smaller prospects along the arc in the 2 to 3 g/t gold, 50
to 80 g/t silver range. These will surely be tested for additional reserves in
the months ahead. When you realize that the Busang deposit of BRE-X is well on
its way to being the largest primary gold deposit in all of Indonesia, you can
appreciate the attention this area is getting.
SULAWESI The Sulawesi-East Mindanao Arc on the north arm of the island of
Sulawesi is the host for a variety of deposit types. The numerous large to
medium sized low grade porphyry copper-gold deposits in the Tombulilato area and
Newmont's Mesel, epithermal (carlin type) gold deposit at Motomboto are of
particular interest. One deposit in the Tombulilato area contains a total
resource of 295 million tonnes grading 0.6% copper and 0.46 g/t gold in eight
separate bodies. Mesel, with early 1996 production planned, has reserves of 2
million ounces contained in 12 million tonnes grading 5 g/t gold. It is
interesting that as the Sulawesi-East Mindanao Arc continues north, it host the
East Mindanao gold district in the Philippines which is experiencing an area
play of its own by Canadian companies.
IRIAN JAYA The most prospective area of Indonesia for finding world class
porphyry and skarn copper-gold deposits is in the Medial Irian Jaya Arc which
runs through the central spine of the highlands of Irian Jaya. This is the
"land of the giants." Within the 1+ billion tonne ore reserve in the
Grasberg/Ertsberg district, the arc contains over 75% of the country's copper
and more than 60% of its gold. The gold reserve at Grasberg alone exceeds 80
million ounces, making it the single largest in the world.
That completes the geologic tour of Indonesia. The arc continues east into
Papua New Guinea where it hosts two additional giant deposits, but that is a new
story I will share with you in a future issue.
LAW If the company you have invested in loses title to its property -- you lose
your money! Therefore, knowing how it holds its mineral interest in a foreign
country is important. Indonesia will pass a new mining act within the next 6
months. It is anticipated that it will be favorable to foreign mining
companies. Under the prevailing law, foreign companies can acquire mineral
rights in three ways. Titles held under a Contract of Work (COW) or through a
joint venture with P.T. Aneka Tambang, one of the State mining agencies, have
the backing of the government and have never been challenged. However, title
held under what is known as a KP are another matter. A foreigner cannot hold
title to a local mining claim (KP) or the surface rights to it. KP's are worked
through joint ventures, but the title to the property remains in the name of the
local partner or his company. I expect that the majority of junior mineral
exploration companies rushing to Indonesia are going to acquire their mineral
interest under KP's. With the right local partner this should work out
satisfactorily. However, if you have a substantial amount of money at risk, it
is a consideration worth your attention. ************
- -------------------------------------------------------------------------------
BRE-X MINERALS LTD.
THOSE LOOKING SAW THE POTENTIAL
- -------------------------------------------------------------------------------
BRE-X, after an increase in share price from $3.00 to a high of $57.50 in less
than 8 months is now a household word in the market place, but the BRE-X,
Indonesian story starts way back in May of 1993. I want to tell the story as it
unfolds through published company news releases and media reports which were
available for us to see. It illustrates many of the points I've made about
investing in junior mineral exploration stocks and will help you recognize the
next golden opportunity early.
At year end 1992 there is nothing to distinguish BRE-X from the other 2,000 like
companies trading on the Vancouver, Calgary, and Toronto stock exchanges. BRE-X
starts the year trading at ten cents a share, briefly going up to thirty five as
the company searches for diamonds in the Canadian, Northwest Territory's, Lac de
[??????] area play and closes out the year at fifteen. It also issues three
news releases in 1992; one of them discloses that a related company Bresea
Resources offered 50% of the then issued capital of 6,400,000 shares [???].
Companies in which the insiders hold large positions rarely disappear.
07 May 93 $0.51 BRE-X makes its first news release concerning its
involvement in Indonesia with the acquisition of an 80% interest in the Busang
property located on the island of Kalimantan. The property [????] three prime
targets. There is a potential geologic resource on the most advanced of 1
million ounces of gold, inferred by 19 previous drill holes. Today, such a news
release would attract immediate attention, but in early 1993 Indonesia was an
unknown entity.
19 Jul. 93 $0.36 BRE-X repeats the May 7th release [and?] announces the
completion of a financing the start [up??] physical work on the Busang property,
and the acquisition of an additional Indonesian property located on the island
of Sangihe in North Sulawesi. I like companies with more than one property
under development.
03 Aug. 95 $0.40 BRE-X releases an update on [????] projects. The
exploration program for diamonds in the Northwest Territories of Canada comes to
a halt.
16 Aug. 93 $0.47 BRE-X reports the results of the drill holes on the Sangihe
Island property. Two miss; a third gives enough encouragement to plan a second
drilling program.
08 Sep. 93 $0.45 BRE-X announces the acquisition of a third Indonesian
property. This time it is on the island of Sumatra. The company says various
major mining companies and investment dealers in Canada are beginning to take an
interest in its activities. This is probably the first time that independent
information about the company is available. The stock will not trade below
$0.50 again, but it will remain below $2.00 for almost another year.
<PAGE> 21
[INDONESIA - Location of Significant Mineral Deposits]
[Size and content of in-situ gold resources
Indonesian gold and copper-gold deposits]
<PAGE> 22
- --------------------------ASIAN WORLD STOCK REPORT----------------------------
07 Oct. 93 $0.74 BRE-X reports that drilling has started on both the Busang
and Sangihe properties. Two additional Indonesian properties are also acquired.
12 Dec. 93 $1.20 BRE-X reports the results from the first 4 drill holes on
the Busang property. Drill holes 1 and 2 intersect weak, but continuous gold
mineralization over 84 and 140 meters respectively. Hole 3 has 80 meters
grading from 1.91 to 6.58 g/t gold. Hole 4 is terminated at 22.8 meters for
technical reasons, but returns excellent grade mineralization. These initial
results are enough to attract the attention of at least one major company, and
I'm sure, more than a few savvy investors.
25 Jan. 94 $1.75 BRE-X receives a written offer from a major mining company
to acquire an equity interest in the company and a joint venture interest in
the property. It is always a good sign when the major companies take an
interest in a developing property.
14 Feb. 94 $1.75 BRE-X turns down the offer on the table and says it can do
better. Evidently management has a lot of faith in the results to date and the
project's potential.
24 Mar. 94 $1.45 Dr. Paul Kavanagh, who had previously been president of
Newmont Mining of Canada and senior vice president exploration of American
Barrick Resources joins the board of directors of BRE-X. When someone with the
reputation of Dr. Kavanagh joins a junior company, take notice. Always look
for the good people.
13 Apr. 94 $1.55 Six more drill holes reported. One hole starting at
surface returns 85 feet averaging 12 g/t gold.
03 May 94 $1.85 Lowen, Ondaatje, McCutcheon, a well respected investment
dealer, finances BRE-X. They raise a total of $4,500,000 by selling 300,000
units (one share plus a half warrant at $1.75). Management place an additional
300,000 units at the same price. With this much cash investors can count on
continued drilling.
28 Jun. 94 $2.20 BRE-X reports that two holes drilled in a new area return
encouraging results (2 to 4 g/t gold over 5 meters) and announce that a 25
drill hole program is in progress on the main zone. The results from the two
holes in the new zone are in fact really encouraging. This is the type of
information you need to check out with a professional for interpretation.
Dorothy Atkinson, Ph.D. and senior mining analyst at Pacific International
Securities in Vancouver, BC is paying attention to all this and issues a
"strong buy recommendation" for BRE-X at $2.40 on August 30/94.
24 Sep. 94 $2.25 BRE-X reports that of 31 holes drilled, 22 have hit
significant mineralization and publishes the results. Management states that
they are estimating a resource of 3 to 6 million ounces of gold on the
property. This is a huge increase from the original expectation of 1 million
ounces. Six million ounces would make it the biggest gold mine in Indonesia.
[GRAPH HERE]
01 Nov. 94 $3.00 Special Report. Michael Schaefer, Editor of Global Gold
Stock Report, Casper, WY, rates BRE-X as his strongest buy recommendation for a
long term holding.
28 Nov. 94 $2.75 The Financial Post, a major financial newspaper in Canada,
runs its first article on BRE-X. John Feldehof, P.Geol., who found the Busang
property for BRE-X, becomes the company's exploration manager. More good
people.
30 Dec. 94 $2.85 BRE-X announces the results from the latest 9 drill
holes. Five of them have ore grade intersections.
19 Jan. 94 $2.80 BRE-X announces the results of six more holes and states
its working capital position of $3,500,000. The holes are the highest grade
reported to date and for the first time a drill hole location map is made
available for the asking. Anyone looking at this map could see a significant
deposit developing. J. Taylor, Editor of Gold & Gold Stocks was looking and
issues a buy recommendation as the stock drifts down below the $2.50 level.
22 Feb. 95 $2.45 BRE-X announces an independent resource calculation of 1
million ounces for the Central Zone; three more high grade drill hole
intersections, the start of a new drill program, and a working capital of
$2,700,000.
06 Mar. 95 $2.20 BRE-X reports three more high grade drill holes. J. Taylor
reiterates his buy signal and Doug Casey, editor of Crisis Investing, recommends
the stock to all his subscribers at the perfect moment; the stock has just
started to rise again, but is still below $2.50. This is a good example of why
you need multiple sources of information. No analyst, financial advisor or
letter writer can possibly see all the opportunities. This time it is Doug
Casey, J. Taylor, Michael Shaefer, and Dorothy Atkinson.
12 Apr. 95 $2.80 BRE-X reports results from the first drill hole on the new
Southeast Zone. It returns an impressive 196 meters at 3.03 g/t gold. The
stock heads north.
10 May 95 $4.00 The first negative news in a long time. BRE-X reports that
the next two holes on the new Southeast Zone intersect a weakly mineralized
section of the deposit and publish the results. Actually the results are not
that bad, just not as good as the market is expecting. The stock stalls in the
$4.00 range.
15 May 95 $4.05 Financing. Lowen, Ondaatje, McCutcheon Limited, Nesbitt
Burns Inc., Scotia McLeod Inc., and McLean McCarthy Limited place 1,350,000
shares at $3.75. BRE-X
<PAGE> 23
management place 650,000 at the same price. Total proceeds $7,500,000.
National brokerage houses, like the ones above, do not finance junior companies
without doing a lot of due diligence. This stamp of approval is a signal that
what BRE-X has been saying all along, has a lot of merit to it. Dorothy
Atkinson is paying attention to these events and puts out a new buy
recommendation on May 24th. Michael Schafer, Global Gold Stock Report,
reiterates his buy recommendation.
20 Jun. 95 $6.00 BRE-X reports an updated reserve figure for the Central
Zone of 2.3 million ounces. (1.3 indicated and 1.0 inferred). The Northern
Miner publishes its first feature article on BRE-X. Levesque Beaubien and
Company, Atkinson, and Casey like these numbers, relative to the stock price,
and issue buy recommendations, respectively on June 20th, July 4th and July
9th. Casey says the stock will be over $20.00 by year end.
12 Jul. 95 $7.75 BRE-X reports significant results from three additional
holes on the newly discovered Southeast Zone. Two of these holes are located
1.25 kilometers from the other. This is an enormous stepout, opening up the
possibility for doubling the reserves on the Busang property. Analyst Dorothy
Atkinson, Michael Fowler of Levesque Beaubien and Company, and Scotia McLeod
Inc. put out buy recommendations.
19 Jul. 95 $12.25 The Calgary Herald, the cities major newspaper publishes
its first article on BRE-X.
20 Jul. 95 $12.00 Dorothy Atkinson puts out a new buy recommendation with a
target price of $20.00 which she expects to raise as development continues.
24 Jul. 95 $12.00 Northern Miner article.
28 Jul. 95 $14.25 Financial Post article.
01 Aug. 95 $13.75 Michael Schaefer, editor of Global Gold Stock Report,
recommends the purchase of BRE-X. He says its hard to recommend BRE-X at
today's price after having previously recommended it at $1.20 and $3.00, but
now believes there is a chance of seeing a $40.00 price tag by year end.
14 Aug. 95 $13.25 There are now four drill rigs working on the Busang
property. The company reports on three new drill holes from the Central Zone.
All three holes look good.
15 Aug. 95 $14.00 Financial Post article.
18 Aug. 95 $15.50 The Globe and Mail, a major Canadian financial newspaper
publishes its first article on BRE-X.
25 Aug. 95 $14.00 Michael Fowler, gold analyst at Levesque Beaubien, issues a
strong speculative buy recommendation with a target price in excess of $21.00.
05 Sep. 95 $14.25 Egizio Bianchini, gold analyst at Nesbitt Burns Inc.,
initiates coverage of BRE-X with a target price of $21.00.
02 Oct. 95 $18.25 BRE-X reports results from seven more drill holes on the
developing Southeast Zone. Five holes are impressive; two miss. By this time
it is possible to put a pencil to BRE-X and come up with an estimated value.
However, all the variables used in the value equation remain only estimates or
guesstimates. Still, it is possible to establish parameters for upside and
downside based on further results. The analysts are betting on the upside.
03 Oct. 95 $18.75 Financial Post article.
04 Oct. 95 $18.00 Michael Fowler comes out with a value price of $40.00.
06 Oct. 95 $18.25 Scotia McLeod comes out with a value estimate of $31.00.
09 Oct. 95 $18.25 Northern Miner article.
12 Oct. 95 $24.25 Levesque Beaubien comes out with a value estimate of $40.61.
17 Oct. 95 $29.75 BRE-X reports Kilborn Engineering's resource calculation
covering an area 200m x 900m in the Central Zone. At a cutoff grade of 0.5
g/t, it contains a total of 2,750,000 ounces gold (measured 780,000, indicated
1,800,000, inferred 170,000).
17 Oct. 94 $29.25 BRE-X reports the results from three holes, two represent
substantial step outs on the Southeast Zone Holes 61 and 62 contain
respectively, 301 meters at 4.42 g/t gold and 137 meters at 5.71 g/t gold, plus
several shorter and lower grade intersections. These holes mean the
mineralization has now been intersected over a strike length of 2.75
kilometers. Although there are gaps in the pattern of drilling, the market
beings to visualize a multi-million ounce deposit.
FROM THIS DATE ON WE ARE TALKING ABOUT VERY SERIOUS MONEY. ANALYSTS ARE NOW
FACED WITH A PROBLEM BECAUSE THE FUTURE VALUE OF BRE-X DEPENDS ON WHAT
ADDITIONAL DRILL HOLES WILL REVEAL; NO ONE CAN SEE UNDERGROUND. THEREFORE, IT
MUST BE POINTED OUT THAT, ALL SUBSEQUENT ANALYST'S PROJECTIONS AND OPINIONS ARE
OF THE "WE CAN EXPECT THIS -- IF THIS HAPPENS AND THAT -- IF THAT HAPPENS"
VARIETY.
17 Oct. 95 $29.25 Scotia McLeod, one year target $62.00.
17 Oct. 95 $29.25 Levesque Beaubien, target under review, but above $40.00.
17 Oct. 95 $29.25 Midland Walwyn, does not have a rating on the stock, but
believes the current share price is reflecting a 10 - 12
million ounce gold resource.
17 Oct. 95 $29.75 Nesbitt Burns, one year target $50.00.
20 Oct. 95 $42.00 First Marathon, still considers BRE-X a speculative buy.
No target price.
24 Oct. 95 $43.00 Levesque Beaubien Geoffrion, six month target $63.00.
20 Nov. 95 $51.25 BRE-X reports results from 8 additional drill holes on the
Southeast Zone. Two miss; six return excellent results. Investors now need
professional advice from those who are capable of, and are spending a great
deal of time, evaluating the Busang deposit. In addition, they should be
self-examining all available information. When you own a $50.00 stock that can
go to $100.00 plus or give up 20% of its value, that is the time your multiple
sources of information are invaluable. Analysts closest to the situation are
calling today's results - outstanding. I admire analysts who don't hedge;
Levesque Beaubien and Nessbit Burns state their opinions immediately.
20 Nov. 95 $51.25 Levesque Beaubien, says results above expectations, target
price of $63.75 plus will be raised.
- -------------------------------------------------------------------------------
Asian World Stock Report/December 1995 11
<PAGE> 24
- --------------------------- Asian World Stock Report --------------------------
20 Nov. 95 $50.00 Nesbitt Burns, says the current limits of the drilling
demonstrate the potential for 30 million ounces and raises
its target price to $70.00.
24 Nov. 95 $50.00 Eagle & Partners, Toronto, puts out a four page report that
makes a strong case for a 15 million ounce deposit with
considerable upside potential. The stock is considered a
buy for risk tolerant investors; the 12 month target price
is $75.00.
27 Nov. 95 $50.00 First Marathon Securities returns from a property
examination and re-recommends the stock as a speculative
buy, stating that volatility should provides opportunities
to accumulate positions.
06 Dec. 95 Time to pause in the BRE-X story as I send this month's issue to
the printer. The stock closed today at $53.00. The latest news release was on
23 Nov. 95 which reported the results from one additional drill hole on the
most westerly step out line to date on the Southeast Zone. Each time the drill
moves west and encounters mineralization, the size of the deposit increases.
The latest hole returned an intersection of 319 meters (1,046 feet) at 2.45 g/t
gold. I was attending a gold conference in San Francisco at the time, where
analyst close to the situation, were busy calculating the importance of this,
the third such long, comme??? grade intersection in this area. As speaker
after speaker sang the praises of BRE-X from the podium it was very clear how
important this Indonesian discovery was ?? the company, the industry in general
and?? mining/exploration sector of the stock market.
I purposely wrote the BRE-X story in an information format so that you can see
how these situations actually evolve, rather than as an advisory service.
However, the obvious question on everyone's mind is whether to buy or sell the
stock now. To answer that question you need to know how BRE-X is valued in the
market. There are numerous formulas and scenarios. The common consensus is
that for every 10 million ounces of gold reserve that is inferred by the
drilling, the market is assigning $25.00 to the stock price. Since those
closest to the situation are talking a +30 million ounce deposit, the already
long the stock have good reason to stay on boat for the upside potential.
If you're in a position to buy a $50.00 stock, you should first get all the
information available from those close to it, mentioned in this article. Start
off by contacting the company: BRE-X Minerals Ltd., Mr. T. Stephen McAnulty,
Vice President, P.O. Box 84026, Market Mall P.O., Calgary, Alberta, Canada, T3A
5C4 Tel. (403) 247-0707 Fax (403) 247-0329.
- --------------------------------------------------------------------------------
ASIAN WORLD STOCK REPORT/COMPANY CLASSIFICATION AND STOCK RECOMMENDATION As
indicated category is given for all companies mentioned in Asian World Stock
Report. (R) / Rated - The Company has been extensive researched and analyzed; an
opinion and/or recommendation is given. Reader contact with the Company is
recommended. (NR) / Not Rated - Although no specific recommendation is given,
the Company has been extensively researched and found to be of such interest
that I encourage readers to contact the Company for full corporate information.
(EC) / Editorial Comment - The Company has not been extensively researched and
analyzed. It is mentioned because it is in some way similar or related to the
subject being discussed. Interested readers may contact the Company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Asian World Stock Report is written and published monthly by Brian Fagan.
Readers are advised that this analysis report is issued solely for information
purposes. Neither the information presented nor any statement or expression of
opinion, or any other matter herein, directly or indirectly constitutes
representation by the publisher nor a solicitation of the purchase or sale of
any securities. The information contained herein, is based on sources which
w?? believe to be reliable but is not guaranteed by us as being accurate and
does not purport to be a complete statement or summary of the available data.
The owner, publisher, editor and their associates are not responsible for
errors and omissions. They may from time to time have a position in the
securities mentioned here and may increase or decrease such positions without
notice. Any opinions expressed are subject to change without notice. Asian
World Stock Report encourages readers and investors to supplement the
information in these reports with independent research and other professional
advice. It is a violation of the United States copyright laws to duplicate or
reprint this publication in whole or in part in any quantity without
permission. Parts of the newsletter may be extracted or reproduced in context
for inclusion or review in other publications only if credit is given, along
with the name and address of the publisher.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASIAN WORLD STOCK REPORT * Post Office Box 450 * Grayland, WA 98547
SUBSCRIPTION APPLICATION FORM [ ] Yes! Please enter my subscription to
Call or Fax now and save $50.00 Asian World Stock Report
Telephone/Fax (360) 267-5107 12 issues US$99.00 (normally US$149.00)
[ ] Check Enclosed [ ] Please Bill Me
RECEIVE 12 ISSUES FOR ONLY US$99.00. [ ] Master Card [ ] Visa Card
This special offer is risk-free.
You must be completely satisfied or Name ______________________________
receive a pro-rated refund at any Company ______________________________
time during your subscription. Suite/Dept. ______________________________
[ ] Master Card [ ] Visa Card Street ______________________________
Card Number ___________________ City _______________St./Prov.______
Expiration Date ___________________ Country _____________Postal Code______
Signature ___________________ Telephone _______________Fax____________
- --------------------------------------------------------------------------------
<PAGE> 25
DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA
DIREKTORAT JENDERAL PERTAMBANGAN UMUM
KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM
Nomor: 511.K/2013/DDJP/1988
TENTANG
PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI
(DU. 752 / KALTIM )
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Membaca : Surat permohonan Sdr. H. ABUBAKAR SIDIK
tanggal 18 Pebruari 1987
Menimbang : bahwa permohonan yang bersangkutan telah memenuhi
syarat-syarat sebagaimana ditentukan dalam peraturan
perundang-undangan yang berlaku.
Mengingat : 1. Undang-undang No. 11 Tahun 1967.
2. Peraturan Pemerintah No. 32 Tahun 1969.
3. Peraturan Pemerintah No. 27 Tahun 1980.
4. Keputusan Presiden R.I. No. 68/M Tahun 1984.
5. Keputusan Menteri Pertambangan dan Energi No. 2027
K/201/M.PE/1985.
6. Keputusan Direktur Jenderal Pertambangan Umum No. 667
K/201/040000/1986.
Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan
tanggal 28 Maret 1988 Nomor 999/22/DPT 1988.
M E M U T U S K A N
Menatapkan :
PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3
(tiga) tahun berturut-turut:
Kepada : Sdr. H. ABUBAKAR SIDIK
Alamat : J1. Kelapa Kopyor Timur I BD2/20, Kelapa
Gading Permai, atas sesuatu wilayah tertanda
DU. 754 / Kaltim Jakarta.
terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur
seluas : 2.000 (Dua ribu) hektar dengan penjelasan
batas wilayah seperti tercantum dalam lampiran
I yang ditanda tangani oleh Direktur
Direktorat Teknik Pertambangan dan Peta
Wilayah Kuasa Pertambangan dalam lampiran II
untuk mengadakan eksplorasi mencari bahan
galian "Emas, perak dan mineral pengikutnya"
dengan memenuhi kewajiban-kewajiban tersebut
dalam lampiran III Keputusan ini serta
ketentuan peraturan perundang-undangan yang
berlaku.
KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa
berlakunya belum habis, apabila Pemegang Kuasa Pertambangan
tidak memenuhi kewajiban-kewajiban yang tercantum di dalam
lampiran Keputusan ini dan ketentuan peraturan perundang-
undangan yang berlaku.
KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan
kerjasama dengan
<PAGE> 26
pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu
harus memperoleh izin tertulis dari Menteri Pertambangan dan
Energi cq. Direktur Jenderal Pertambangan Umum.
KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan
ketentuan apabila dikemudian hari terdapat kekeliruan akan
diadakan pembetulan seperlunya.
Ditetapkan di : J A K A R T A
Pada tanggal : 6 Juli 1988
--------------------------------------
DIREKTUR JENDERAL PERTAMBANGAN UMUM
[OFFICIAL SEAL]
Drs.: SOETARYO SIGIT
--------------------
NIP. 100000166
TEMBUSAN:
- --------
1. Menteri Pertambangan dan Energi di Jakarta (dengan peta).
2. Menteri Kehutanan di Jakarta (dengan peta).
3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan
peta).
5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat
Sumberdaya Mineral, Jl. Diponegoro No. 57 di Bandung (dengan peta).
6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan
peta).
7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam
Negeri di Jakarta (tanpa peta).
8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen
Kehutanan Jl. Ir. H. Juanda No. 9 Bogor (dengan peta).
9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (dengan peta).
10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (tanpa peta).
11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta).
12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta
(dengan peta).
13. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan
peta).
15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
(dengan peta).
16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta).
<PAGE> 27
Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 511.K 2013/DDJP/1988
Tanggal : 6 Juli 1988
PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN
EKSPLORASI D.U. 752 / Kaltim.
- Sebelah Utara dan : masing-masing garis sejajar terletak
Sebelah Selatan pada 500 meter disebelah Utara dan
4.500 meter disebelah Selatan titik
P (X=115 degree 15' B.T.; Y=0 degree 45' L.U).
- Sebelah Timur dan : masing-masing garis rembang terletak
Sebelah Barat pada 4.000 meter dan 8.000 meter di-
sebelah Barat titik tersebut diatas.
Direktorat Teknik Pertambangan
Direktur,
[STAMP]
[SIG]
Tr. Mangara Simanjuntak.
------------------------
NIP. 100000373.
<PAGE> 28
PROP. KALIMANTAN TIMUR
[MAP]
<PAGE> 29
Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 511.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI
I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal
(domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota
Propinsi Kalimantan Timur di Samarinda.
II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini
harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan
Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
dan/atau Kantor Penghubung kantor Wilayah Departemen
Pertambangan dan Energi di Samarinda.
III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah
dan pihak ketiga, diatur menurut ketentuan-ketentuan yang
berlaku.
IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar luran
Tetap dan luran Eksplorasi menurut ketentuan yang berlaku dan
harus dilunasi sebelum berakhirnya Kuasa Pertambangan.
V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan
kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan
sebelum melaksanakan kegiatan dalam wilayah tersebut harus
terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang
berlaku.
VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan
3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan
Umum (1 expl) dan tembusannya disampaikan kepada Direktur
Direktorat Teknik Pertambangan (3 expl), Kepala Kantor
Wilayah Departemen Pertambangan dan Energi di Banjarbaru
(1 expl), Gubernur dan Bupati Kepala Daerah setempat
(masing-masing 1 expl.);
b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal
ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan
harus sudah menyampaikan laporan mengenai pematokan
batas-batas wilayah Kuasa Pertambangan tersebut.
VII. Dalam Bidang Pengawasan.
a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati
peraturan yang berlaku mengenai Pengawasan dan Lingkungan
dibidang pertambangan umum;
b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan
oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk
oleh Direktur Jenderal Pertambangan umum;
c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta
kepaga petugas tersebut diatas untuk memperlihatkan
surat-surat pengenal dan surat-surat tugasnya.
VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan
Eksploitasi harus diajukan sebelum berakhirnya masa izin ini
dengan disertai bukti-bukti kewajiban yang telah depenuhi.
b. Atas kelalaian tersebut pada huruf a, mengakibatkan:
1. Kuasa Pertambangan berakhir menurut hukum dan segala
usaha pertambangan harus dihentikan dan
2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak
tanggal berakhirnya Keputusan ini, pemegang Kuasa
Pertambangan harus mengangkat keluar segala sesuatu yang
menjadi miliknya, kecuali benda-benda/bangunan-bangunan
yang dipergunakan untuk kepentingan umum.
IX.
[OFFICIAL SEAL]
DIREKTUR JENDERAL PERTAMBANGAN UMUM
/s/ SOETARYO SIGIT
Drs: SOETARYO SIGIT
<PAGE> 30
DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA
DIREKTORAT JENDERAL PERTAMBANGAN UMUM
KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM
NOMOR: 512.K/2013/DDJP/1988
TENTANG
PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI
(DU. 753 / KALTIM )
DIREKTUR JENDERAL PERTAMBANGAN UMUM
MEMBACA : Surat permohonan Sdr. H. ABUBAKAR SIDIK
tanggal 18 Pebruari 1987
MENIMBANG : bahwa permohonan yang bersangkutan telah memenuhi
syarat-syarat sepagaimana ditentukan dalam peraturan
perundang-undangan yang berlaku.
MENGINGAT : 1. Undang-undang No. 11 Tahun 1967.
2. Peraturan Pemerintah No. 32 Tahun 1969.
3. Peraturan Pemerintah No. 27 Tahun 1980.
4. Keputusan Presiden R.I. No. 68/M Tahun 1984.
5. Keputusan Menteri Pertambangan dan Energi No. 2027
K/201/M.PE/1985.
6. Keputusan Direktur Jenderal Pertambangan Umum No. 667
K/201/040000/1986.
MEMPERHATIKAN : Surat Direktur Direktorat Teknik Pertambangan
tanggal 28 Maret 1988 Nomor 1000/22/DPT/1988.
MEMUTUSKAN
MENETAPKAN :
PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu
3 (tiga) tahun berturut-turut:
Kepada : Sdr. H. ABUBAKAR SIDIK
Alamat : Jl. Kelapa Kopyor Timur I BD2/20, Kelapa
Gading Permai, atas sesuatu wilayah tertanda
DU. 753 / Kaltim Jakarta.
terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur
seluas : 2.000 (Dua ribu) hektar dengan penjelasan
batas wilayah seperti tercantum dalam lampiran
I yang ditanda tangani oleh Direktur
Direktorat Teknik Pertambangan dan Peta
Wilayah Kuasa Pertambangan dalam lampiran II
untuk mengadakan eksplorasi mencari bahan
galian : "Emas, perak dan mineral pengikutnya"
dengan memenuhi kewajiban-kewajiban tersebut
dalam lampiran III Keputusan ini serta
ketentuan peraturan perundang-undangan yang
berlaku.
KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa
berlakunya belum habis, apabila Pemegang Kuasa Pertambangan
tidak memenuhi kewajiban-kewajiban yang tercantum di dalam
lampiran Keputusan ini dan ketentuan peraturan perundang
undangan yang berlaku.
KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan
keriasama dengan
<PAGE> 31
pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu
harus memperoleh izin tertulis dari Menteri Pertambangan dan
Energi cq. Direktur Jenderal Pertambangan Umum.
KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan
ketentuan apabila dikemudian hari terdapat kekeliruan akan
diadakan pembetulan seperlunya.
Ditetapkan di : JAKARTA
Pada tanggal : 6 Juli 1988
-------------------------------------------
DIREKTUR JENDERAL PERTAMBANGAN UMUM
[SEAL] [SIG]
Drs: SOETARYO SIGIT
-------------------
NIP. 100000166
TEMBUSAN :
- --------
1. Menteri Pertambangan dan Energi di Jakarta
(dengan peta).
2. Menteri Kehutanan di Jakarta (dengan peta).
3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat
Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta).
6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan
peta).
7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen
Dalam Negeri di Jakarta (tanpa peta).
8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen
Kehutanan JI. Ir. H. Juanda No. 9 Bogor (dengan peta).
9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (dengan peta).
10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (tanpa peta).
11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta).
12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta
(dengan peta).
13.
14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan
peta).
15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
(dengan peta).
16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta).
<PAGE> 32
Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 512.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN
EKSPLORASI D.U. 753 / Kaltim.
- Sebelah Utara dan : masing-masing garis sejajar terletak
Sebelah Selatan pada 500 meter disebelah Utara dan
4.500 meter disebelah Selatan titik
P (X=115 degrees 15' B.T; Y=0 degree 45' L.U).
- Sebelah Timur dan : masing-masing garis rembang terletak
Sebelah Barat melalui dan 4.000 meter disebelah
Barat titik tersebut diatas.
Direktorat Teknik Pertambangan
Direktur,
[SEAL]
[SIG]
Tr. Mangara Simanjuntak.
------------------------
NIP. 100000373.
<PAGE> 33
PROP. KALIMANTAN TIMUR
[MAP]
<PAGE> 34
Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 512.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI
I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal
(domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota
Propinsi Kalimantan Timur di Samarinda.
II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini
harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan
Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
dan/atau Kantor Penghubung kantor Wilayah Departemen
Pertambangan dan Energi di Samarinda.
III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah
dan pihak ketiga, diatur menurut ketentuan-ketentuan yang
berlaku.
IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar luran
Tetap dan luran Eksplorasi menurut ketentuan yang berlaku dan
harus dilunasi sebelum berakhirnya Kuasa Pertambangan.
V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan
kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan
sebelum melaksanakan kegiatan dalam wilayah tersebut harus
terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang
berlaku.
VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan
3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan
Umum (1 expl) dan tembusannya disampaikan kepada Direktur
Direktorat Teknik Pertambangan (3 expl), Kepala Kantor
Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1
expl), Gubernur dan Bupati Kepala Daerah setempat
(masing-masing 1 expl.);
b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal
ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan
harus sudah menyampaikan laporan mengenai pematokan
batas-batas wilayah Kuasa Pertambangan tersebut.
VII. Dalam Bidang Pengawasan.
a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati
peraturan yang berlaku mengenai Pengawasan dan Lingkungan
dibidang pertambangan umum;
b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan
oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk
oleh Direktur Jenderal Pertambangan umum;
c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta
kepaga petugas tersebut diatas untuk memperlihatkan
surat-surat pengenal dan surat-surat tugasnya.
VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan
Eksploitasi harus diajukan sebelum berakhirnya masa izin ini
dengan disertai bukti-bukti kewajiban yang telah dipenuhi.
b. Atas kelalaian tersebut pada huruf a, mengakibatkan :
1. Kuasa Pertambangan berakhir menurut hukum dan segala
usaha pertambangan harus dihenti-kan dan
2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak
tanggal berakhirnya Keputusan ini, pemegang Kuasa
Pertambangan harus memgangkat keluar segala sesuatu yang
menjadi miliknya, kecuali benda-benda/bangunan-bangunan
yang dipergunakan untuk kepentingan umum.
IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[OFFICIAL SEAL]
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Drs. SOETARYO SIGIT
<PAGE> 35
DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA
DIREKTORAT JENDERAL PERTAMBANGAN UMUM
KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM
NOMOR: 513.K/2013/DDJP/1988
TENTANG
PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI
(DU. 754 / KALTIM )
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Membaca : Surat permohonan Sdr. H ABUBAKAR SIDIK
tanggal 18 Pebruari 1987.
Menimbang : bahwa permohonan yang bersangkutan telah memenuhi
syarat-syarat sepagaimana ditentukan dalam peraturan
perundang-undangan yang berlaku.
Mengingat : 1. Undang-undang No. 11 Tahun 1967.
2. Peraturan Pemerintah No. 32 Tahun 1969.
3. Peraturan Pemerintah No. 27 Tahun 1980.
4. Keputusan Presiden R.I. No. 68/M Tahun 1984.
5. Keputusan Menteri Pertambangan dan Energi No. 2027
K/201/M.PE/1985.
6. Keputusan Direktur Jenderal Pertambangan Umum No. 667
K/201/040000/1986.
Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan
tanggal 28 Maret 1988 Nomor 999/22/DPT/1988.
MEMUTUSKAN
Menetapkan :
PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3
(tiga) tahun berturut-turut:
Kepada : Sdr. H. ABUBAKAR SIDIK
Alamat : J1. Kelapa Kopyor Timur I BD2/20, Kelapa
Gading Permai, atas sesuatu wilayah tertanda
DU. 754 / Kaltim Jakarta.
terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur
seluas : 2.000 (Dua ribu) hektar
dengan penjelasan batas wilayah seperti
tercantum dalam lampiran I yang ditanda
tangani oleh Direktur Direktorat Teknik
Pertambangan dan Peta Wilayah Kuasa
Pertambangan dalam lampiran II untuk
mengadakan eksplorasi mencari bahan galian
"Emas, perak dan mineral pengikutnya"
dengan memenuhi kewajiban-kewajiban tersebut
dalam lampiran III Keputusan ini serta
ketentuan peraturan perundang-undangan yang
berlaku.
KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa
berlakunya belum habis, apabila Pemegang Kuasa Pertambangan
tidak memenuhi kewajiban-kewajiban yang tercantum di dalam
lampiran Keputusan ini dan ketentuan peraturan
perundang-undangan yang berlaku.
KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan
kerjasama dengan
<PAGE> 36
pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu
harus memperoleh izin tertulis dari Menteri Pertambangan dan
Energi cq. Direktur Jenderal Pertambangan Umum.
KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan
ketentuan apabila dikemudian hari terdapat kekeliruan akan
diadakan pembetulan seperlunya.
Ditetapkan di : J A K A R T A
Pada tanggal : 6 Juli 1988
-------------------------------------------
DIREKTUR JENDERAL PERTAMBANGAN UMUM
[SEAL] [SIG]
Drs: SOETARYO SIGIT
-------------------
NIP. 100000166
TEMBUSAN :
- --------
1. Menteri Pertambangan dan Energi di Jakarta
(dengan peta).
2. Menteri Kehutanan di Jakarta (dengan peta).
3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat
Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta).
6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan
peta).
7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen
Dalam Negeri di Jakarta (tanpa peta).
8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen
Kehutanan JI. lr. H. Juanda No. 9 Bogor (dengan peta).
9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (dengan peta).
10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (tanpa peta).
11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta).
12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta
(dengan peta).
13. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan
peta).
15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
(dengan peta).
16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta).
<PAGE> 37
Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 513.K 2013/DDJP/1988
Tanggal : 6 Juli 1988
PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN
EKSPLORASI D.U. 754 / Kaltim.
- Sebelah Utara dan : masing-masing garis sejajar terletak
Sebelah Selatan pada 5.500 meter dan 500 meter
disebelah Utara titik P (X=115 degree 15' B.T;
Y=0 degree 45' L.U).
- Sebelah Timur dan : masing-masing garis rembang terletak
Sebelah Barat pada 4.000 meter disebelah Timur dan
melalui titik tersebut diatas.
Direktorat Teknik Pertambangan
Direktur,
[STAMP]
[SIG]
Tr. Mangara Simanjuntak.
------------------------
NIP. 100000373.
<PAGE> 38
PROP. KALIMANTAN TIMUR
[MAP]
<PAGE> 39
Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 513.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI
I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal
(domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota
Propinsi Kalimantan Timur di Samarinda.
II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini
harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan
Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
dan/atau Kantor Penghubung kantor Wilayah Departemen
Pertambangan dan Energi di Samarinda.
III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah
dan pihak ketiga, diatur menurut ketentuan-ketentuan yang
berlaku.
IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar Iuran
Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan
harus dilunasi sebelum berakhirnya Kuasa Pertambangan.
V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan
kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan
sebelum melaksanakan kegiatan dalam wilayah tersebut harus
terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang
berlaku.
VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan
3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan
Umum (1 expl) dan tembusannya disampaikan kepada Direktur
Direktorat Teknik Pertambangan (3 expl), Kepala Kantor
Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1
expl), Gubernur dan Bupati Kepala Daerah setempat
(masing-masing 1 expl.);
b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal
ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan
harus sudah menyampaikan laporan mengenai pematokan
batas-batas wilayah Kuasa Pertambangan tersebut.
VII. Dalam Bidang Pengawasan.
a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati
peraturan yang berlaku mengenai Pengawasan dan Lingkungan
dibidang pertambangan umum;
b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan
oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk
oleh Direktur Jenderal Pertambangan umum;
c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta
kepaga petugas tersebut diatas untuk memperlihatkan
surat-surat pengenal dan surat-surat tugasnya.
VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan
Eksploitasi harus diajukan sebelum berakhirnya masa izin ini
dengan disertai bukti-bukti kewajiban yang telah depenuhi.
b. Atas kelalaian tersebut pada huruf a, mengakibatkan :
1. Kuasa Pertambangan berakhir menurut hukum dan segala
usaha pertambangan harus dihenti-kan dan
2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak
tanggal berakhirnya Keputusan ini, pemegang Kuasa
Pertambangan harus mengangkat keluar segala sesuatu yang
menjadi miliknya, kecuali benda-benda/bangunan-bangunan
yang dipergunakan untuk kepentingan umum.
IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[OFFICIAL SEAL]
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Drs: SOETARYO SIGIT
<PAGE> 40
DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA
DIREKTORAT JENDERAL PERTAMBANGAN UMUM
KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM
Nomor: 514.K/2013/DDJP/1988
TENTANG
PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI
(DU. 949 / KALTIM )
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Membaca : Surat permohonan Sdr. H. ABUBAKAR SIDIK
tanggal 27 Maret 1987
Menimbang : bahwa permohonan yang bersangkutan telah memenuhi
syarat-syarat sepagaimana ditentukan dalam peraturan
perundang-undangan yang berlaku.
Mengingat : 1. Undang-undang No. 11 Tahun 1967.
2. Peraturan Pemerintah No. 32 Tahun 1969.
3. Peraturan Pemerintah No. 27 Tahun 1980.
4. Keputusan Presiden R.I. No. 68/M Tahun 1984.
5. Keputusan Menteri Pertambangan dan Energi No. 2027
K/201/M.PE/1985.
6. Keputusan Direktur Jenderal Pertambangan Umum No. 667
K/201/040000/1986.
Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan
tanggal 5 April 1988 Nomor 1074/22/DPT 1988.
M E M U T U S K A N
Menatapkan :
PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3
(tiga) tahun berturut-turut:
Kepada : Sdr. H. ABUBAKAR SIDIK
Alamat : Jl. Laksamana Madya Martadinata 10, Samarinda
atas sesuatu wilayah tertanda DU. 949 /
Kaltim.
terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur
seluas : 2.000 (Dua ribu) hektar
dengan penjelasan batas wilayah seperti
tercantum dalam lampiran I yang ditanda
tangani oleh Direktur Direktorat Teknik
Pertambangan dan Peta Wilayah Kuasa
Pertambangan dalam lampiran II untuk
mengadakan eksplorasi mencari bahan galian
"Emas, perak dan mineral pengikutnya"
dengan memenuhi kewajiban-kewajiban tersebut
dalam lampiran III Keputusan ini serta
ketentuan peraturan perundang-undangan yang
berlaku.
KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa
berlakunya belum habis, apabila Pemegang Kuasa Pertambangan
tidak memenuhi kewajiban-kewajiban yang tercantum di dalam
lampiran Keputusan ini dan ketentuan peraturan perundang-
undangan yang berlaku.
KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan
kerjasama dengan
<PAGE> 41
pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu
harus memperoleh izin tertulis dari Menteri Pertambangan dan
Energi cq. Direktur Jenderal Pertambangan Umum.
KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan
ketentuan apabila dikemudian hari terdapat kekeliruan akan
diadakan pembetulan seperlunya.
Ditetapkan di : JAKARTA
Pada tanggal : 6 Juli 1988
-------------------------------------------
DIREKTUR JENDERAL PERTAMBANGAN UMUM
[SEAL] [SIG]
Drs: SOETARYO SIGIT
-------------------
NIP. 100000166
TEMBUSAN :
- --------
1. Menteri Pertambangan dan Energi di Jakarta
(dengan peta).
2. Menteri Kehutanan di Jakarta (dengan peta).
3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat
Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta).
6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan
peta).
7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen
Dalam Negeri di Jakarta (tanpa peta).
8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen
Kehutanan JI. lr. H. Juanda No. 9 Bogor (dengan peta).
9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (dengan peta).
10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (tanpa peta).
11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta).
12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta
(dengan peta).
13. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan
peta).
15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
(dengan peta).
16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta).
<PAGE> 42
Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 514.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN
EKSPLORASI D.U. 949 / Kaltim.
- Sebelah Utara dan : masing-masing garis sejajar terletak
Sebelah Selatan pada 5.500 meter dan 500 meter disebelah
Utara titik P (X=115 degree 15' B.T;
Y=0 degree 45' L.U).
- Sebelah Timur dan : masing-masing garis rembang terletak
Sebelah Barat melalui dan 4.000 meter disebelah
Barat titik tersebut diatas.
Direktorat Teknik Pertambangan
Direktur,
[STAMP]
[SIG]
Tr. Mangara Simanjuntak.
------------------------
NIP. 100000373.
<PAGE> 43
PROP. KALIMANTAN TIMUR
[MAP]
<PAGE> 44
Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 514.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI
I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal
(domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota
Propinsi Kalimantan Timur di Samarinda.
II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini
harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan
Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
dan/atau Kantor Penghubung kantor Wilayah Departemen
Pertambangan dan Energi di Samarinda.
III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah
dan pihak ketiga, diatur menurut ketentuan-ketentuan yang
berlaku.
IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar luran
Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan
harus dilunasi sebelum berakhirnya Kuasa Pertambangan.
V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan
kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan
sebelum melaksanakan kegiatan dalam wilayah tersebut harus
terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang
berlaku.
VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan
3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan
Umum (1 expl) dan tembusannya disampaikan kepada Direktur
Direktorat Teknik Pertambangan (3 expl), Kepala Kantor
Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1
expl), Gubernur dan Bupati Kepala Daerah setempat
(masing-masing 1 expl.);
b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal
ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan
harus sudah menyampaikan laporan mengenai pematokan
batas-batas wilayah Kuasa Pertambangan tersebut.
VII. Dalam Bidang Pengawasan.
a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati
peraturan yang berlaku mengenai Pengawasan dan Lingkungan
dibidang pertambangan umum;
b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan
oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk
oleh Direktur Jenderal Pertambangan umum;
c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta
kepaga petugas tersebut diatas untuk memperlihatkan
surat-surat pengenal dan surat-surat tugasnya.
VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan
Eksploitasi harus diajukan sebelum berakhirnya masa izin ini
dengan disertai bukti-bukti kewajiban yang telah depenuhi.
b. Atas kelalaian tersebut pada huruf a, mengakibatkan :
1. Kuasa Pertambangan berakhir menurut hukum dan segala
usaha pertambangan harus dihenti-kan dan
2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak
tanggal berakhirnya Keputusan ini, pemegang Kuasa
Pertambangan harus memgangkat keluar segala sesuatu yang
menjadi miliknya, kecuali benda-benda/bangunan-bangunan
yang dipergunakan untuk kepentingan umum.
IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[OFFICIAL SEAL]
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Drs. SOETARYO SIGIT
<PAGE> 45
DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA
DIREKTORAT JENDERAL PERTAMBANGAN UMUM
KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM
Nomor: 515.K/2013/DDJP/1988
TENTANG
PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI
(DU. 950 / KALTIM )
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Membaca : Surat permohonan Sdr. H ABUBAKAR SIDIK
tanggal 27 Maret 1987
Menimbang : bahwa permohonan yang bersangkutan telah memenuhi
syarat-syarat sepagaimana ditentukan dalam peraturan
perundang-undangan yang berlaku.
Mengingat : 1. Undang-undang No. 11 Tahun 1967.
2. Peraturan Pemerintah No. 32 Tahun 1969.
3. Peraturan Pemerintah No. 27 Tahun 1980.
4. Keputusan Presiden R.I. No. 68/M Tahun 1984.
5. Keputusan Menteri Pertambangan dan Energi No. 2027
K/201/M.PE/1985.
6. Keputusan Direktur Jenderal Pertambangan Umum No. 667
K/201/040000/1986.
Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan
tanggal 5 April 1988 Nomor 1074/22/DPT 1988.
M E M U T U S K A N
Menatapkan :
PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3
(tiga) tahun berturut-turut:
Kepada : Sdr. H. ABUBAKAR SIDIK
Alamat : Jl. Laksamana Madya Martadinata 10, Samarinda
atas sesuatu wilayah tertanda DU. 950 /
Kaltim.
terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur
seluas : 2.000 (Dua ribu) hektar dengan penjelasan
batas wilayah seperti tercantum dalam lampiran
I yang ditanda tangani oleh Direktyr
Direktorat Teknik Pertambangan dan Peta
Wilayah Kuasa Pertambangan dalam lampiran II
untuk mengadakan eksplorasi mencari bahan
galian "Emas, perak dan mineral pengikutnya"
dengan memenuhi kewajiban-kewajiban tersebut
dalam lampiran III Keputusan ini serta
ketentuan peraturan perundang-undangan yang
berlaku.
KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa
berlakunya belum habis, apabila Pemegang Kuasa Pertambangan
tidak memenuhi kewajiban-kewajiban yang tercantum di dalam
lampiran Keputusan ini dan ketentuan peraturan perundang
undangan yang berlaku.
KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan
kerjasama dengan
<PAGE> 46
Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 515.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN
EKSPLORASI D.U. 950 / Kaltim.
- Sebelah Utara dan : masing-masing garis sejajar terletak
Sebelah Selatan pada 5.500 meter dan 500 meter dise-
belah Utara titik P (X=115 degree 15' B.T;
Y=0 degree 45' L.U).
- Sebelah Timur dan : masing-masing garis rembang terletak
Sebelah Barat pada 4.000 meter dan 8.000 meter di-
sebelah Barat titik tersebut diatas.
Direktorat Teknik Pertambangan
Direktur,
[STAMP]
[SIG]
Tr. Mangara Simanjuntak.
------------------------
NIP. 100000373.
<PAGE> 47
pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu
harus memperoleh izin tertulis dari Menteri Pertambangan dan
Energi cq. Direktur Jenderal Pertambangan Umum.
KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan
ketentuan apabila dikemudian hari terdapat kekeliruan akan
diadakan pembetulan seperlunya.
Ditetapkan di : JAKARTA
Pada tanggal : 6 Juli 1988
-------------------------------------------
DIREKTUR JENDERAL PERTAMBANGAN UMUM
[SEAL] [SIG]
Drs: SOETARYO SIGIT
-------------------
NIP. 100000166
TEMBUSAN :
- --------
1. Menteri Pertambangan dan Energi di Jakarta
(dengan peta).
2. Menteri Kehutanan di Jakarta (dengan peta).
3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta
(dengan peta).
5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat
Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta).
6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan
peta).
7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen
Dalam Negeri di Jakarta (tanpa peta).
8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen
Kehutanan JI. Ir. H. Juanda No. 9 Bogor (dengan peta).
9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (dengan peta).
10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan
Energi di Jakarta (tanpa peta).
11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta).
12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta
(dengan peta).
13. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan
peta).
15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
(dengan peta).
16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta).
<PAGE> 48
PROP. KALIMANTAN TIMUR
[MAP]
<PAGE> 49
Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum
Nomor : 515.K/2013/DDJP/1988
Tanggal : 6 Juli 1988
KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI
I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal
(domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota
Propinsi Kalimantan Timur di Samarinda.
II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini
harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan
Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru
dan/atau Kantor Penghubung kantor Wilayah Departemen
Pertambangan dan Energi di Samarinda.
III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah
dan pihak ketiga, diatur menurut ketentuan-ketentuan yang
berlaku.
IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar Iuran
Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan
harus dilunasi sebelum berakhirnya Kuasa Pertambangan.
V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan
kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan
sebelum melaksanakan kegiatan dalam wilayah tersebut harus
terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang
berlaku.
VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan
3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan
Umum (1 expl) dan tembusannya disampaikan kepada Direktur
Direktorat Teknik Pertambangan (3 expl), Kepala Kantor
Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1
expl), Gubernur dan Bupati Kepala Daerah setempat
(masing-masing 1 expl.);
b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal
ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan
harus sudah menyampaikan laporan mengenai pematokan
batas-batas wilayah Kuasa Pertambangan tersebut.
VII. Dalam Bidang Pengawasan.
a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati
peraturan yang berlaku mengenai Pengawasan dan Lingkungan
dibidang pertambangan umum;
b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan
oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk
oleh Direktur Jenderal Pertambangan umum;
c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta
kepaga petugas tersebut diatas untuk memperlihatkan
surat-surat pengenal dan surat-surat tugasnya.
VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan
Eksploitasi harus diajukan sebelum berakhirnya masa izin ini
dengan disertai bukti-bukti kewajiban yang telah depenuhi.
b. Atas kelalaian tersebut pada huruf a, mengakibatkan:
1. Kuasa Pertambangan berakhir menurut hukum dan segala
usaha pertambangan harus dihentikan dan
2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak
tanggal berakhirnya Keputusan ini, pemegang Kuasa
Pertambangan harus mengangkat keluar segala sesuatu yang
menjadi miliknya, kecuali benda-benda/bangunan-bangunan
yang dipergunakan untuk kepentingan umum.
IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
[OFFICIAL SEAL]
DIREKTUR JENDERAL PERTAMBANGAN UMUM
Drs. SOETARYO SIGIT
<PAGE> 1
EXHIBIT 10.(xi)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of January 1, 1995 ("Effective
Date"), by and between NEVADA MANHATTAN MINING INCORPORATED, a Nevada
corporation doing business in California (the "Company"), and CHRISTOPHER D.
MICHAELS, an individual residing in California (the "Employee").
1. EMPLOYMENT
The Company hereby employs Employee to render services subject to the
terms, conditions and provisions of this Agreement. Employee shall serve in
the position of and have the title "President". Employee shall render such
services principally at such places in Calabasas, California and other
applicable locations in the State of California deemed appropriate by the Board
of Directors of the Company (the "Board"); Employee shall not be required to
perform substantial services outside of the State of California without his
consent.
2. ACCEPTANCE OF EMPLOYMENT
Employee hereby accepts employment by the Company and agrees to render
services as President of the Company subject to the terms, conditions and
provisions of this Agreement.
3. TERM
Notwithstanding the date on which this Agreement is actually executed
by the Company and Employee or the date on which Employee is actually appointed
President, the term of this Agreement shall begin as of the Effective Date, and
shall continue until December 31, 1997 (the "End Date"), unless further
extended or sooner terminated as herein provided.
4. DUTIES
4.1 DUTIES AND AUTHORITY. Employee shall perform such duties and
have such authority as President of the Company as provided by the Articles of
Incorporation and Bylaws of the Company and as may be determined from time to
time by the Board consistent therewith and with such position and title.
Employee shall report to the Board.
4.2 EMPLOYMENT. Employee shall devote substantially all of his
business time and effort during normal business hours to the Company. For
purposes of this Agreement, "business time" shall mean, on the average, forty
(40) hours per week.
4.3 INSURANCE. Employee hereby grants the Company permission to
buy "key man" life insurance on Employee's life.
1
<PAGE> 2
5. COMPENSATION
5.1 SALARY; STOCK OPTION; EXPENSE REIMBURSEMENT; BENEFITS. In
consideration for the services to be rendered by Employee and in complete
discharge of the Company's salary obligations hereunder, the Company shall pay
or grant to Employee, as the case may be, and Employee shall accept from the
Company the following (subject to all withholding requirements which may be
imposed by applicable federal, state or local authorities):
5.1.1 an annual salary equal to the existing annual
salary now payable by the Company to Employee, payable in accordance with the
Company's regular payroll schedule. On each anniversary of the Effective Date,
the Board will review Employee's annual salary and decide on a potential salary
increase, or, in the event of a significant decrease in cash flow of the
Company, salary decrease, for the year following such anniversary; provided
that in no event shall Employee's annual salary under this Section 5.1.1 be
reduced for any year by an amount equal to more than twenty percent (20%) of
such salary for the immediately preceding year;
5.1.2 the right to purchase Nine Hundred Thousand
(900,000) shares of common stock in the Company (the "Shares") exercisable, in
whole or in part, at any time during the term of this Agreement, as same may be
modified or extended. The purchase price for the Shares shall be as follows:
the first Three Hundred Thousand (300,000) Shares may be purchased at the price
of One Dollar ($1.00) per Share; the next Three Hundred Thousand (300,000)
Shares may be purchased at the price of One and 50/100 Dollars ($1.50) per
Share; and the remaining Three Hundred Thousand (300,000) Shares may be
purchased at the price of Two Dollars ($2.00) per Share. The options granted
pursuant to this Section 5.1.2 shall be exercised, if at all, by written notice
(the "Notice") given by Employee to the Company in the manner provided herein.
The Notice shall state the number of Shares with respect to which the option is
being exercised. The Notice shall specify a date which is not less than five
(5) nor more than fifteen (15) days after the date of the Notice, on which date
payment shall be made for the Shares being purchased. Employee shall pay the
purchase price for the Shares either in cash or by the issuance of one or more
promissory notes executed by Employee in favor of the Company payable over a
period not to exceed five (5) years from the date of the Notice, with interest
payable on the principal balance at the "applicable federal rate" (i.e., the
lowest rate necessary to avoid the imputation of interest under applicable
provisions of the Internal Revenue Code of 1986, as amended). Upon receipt of
full payment for the Shares or Employee's promissory note(s), the Company shall
deliver to Employee a certificate representing the number of Shares so
purchased. The Company shall pay a cash bonus to Employee in an amount
sufficient to pay or reimburse Employee for the amount of any income tax
payable with respect to the issuance of the foregoing stock option or any
exercise thereof; provided, however, that nothing in this Agreement shall
obligate the Company to pay or reimburse Employee for all or any portion of any
tax liability arising from Employee's sale, exchange or other disposition of
any of the Shares. The options granted pursuant to this Section 5.1.2 are
non-qualified options and are not intended to qualify as incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended. Upon the termination of Employee's employment with the Company,
whether or not such employment is pursuant to this Agreement or an extension or
modification of this Agreement, all unexercised options shall
2
<PAGE> 3
be immediately forfeited; provided, however, if Employee's employment is
terminated by the Company other than for cause, Employee or his legal
representative may exercise the option to purchase the Shares as provided
herein for a period of ninety (90) days following the date of such termination.
5.1.2.1 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION;
STOCK SPLITS AND SIMILAR EVENTS. Subject to any required action by the Board
and the Company's shareholders and Section 26 hereof, the number of Shares
covered by the option granted under Section 5.1.2 and the exercise price of
such option shall be proportionately adjusted for any increase or decrease in
the number of shares of common stock of the Company issued and outstanding
between the effective date hereof and on the date of exercise of the option.
5.1.2.2 MERGERS AND ACQUISITIONS. Subject to any
required action by the Board and the Company's shareholders, in the event of a
merger or consolidation, the option granted under Section 5.1.2 shall pertain
and apply to the securities to which a holder of the number of Shares subject
to the unexercised portion of such option would have been entitled.
5.1.3 reimbursement on a monthly basis for all reasonable
expenses incurred by Employee in connection with the performance of his duties
under this Agreement, provided that such expenses are documented and approved
by the Company in each instance, which approval shall not be unreasonably
withheld;
5.1.4 such fringe benefits (including but not limited to
paid vacations and participation in medical insurance plans and employee
benefit plans) as now are, or hereafter may become, generally available to all
executive officers of the Company; and
5.1.5 such other benefits (if any) as may be authorized
from time to time by the Board.
5.2 BONUSES. Subject to the provisions and limitations of this
Section 5.2, Employee shall be entitled to receive, in addition to the
compensation and benefits set forth in Section 5.1 hereof, a merit bonus
("Merit Bonus") in the amount calculated under the formula and subject to the
conditions and restrictions set forth in this Section. The amount of the Merit
Bonus, if any, payable to Employee shall be calculated within fifteen (15) days
after the preparation of the Company's financial statements for each fiscal
year ending during the term of this Agreement and shall be paid to Employee
within ten (10) days after the date of calculation of the amount of the Merit
Bonus.
3
<PAGE> 4
5.2.1 AMOUNT OF BONUS. The amount of the Merit Bonus shall be
determined on the basis of the Company's operating cash flow for each fiscal
year ending during the term of this Agreement. The amount of the Merit Bonus
shall be determined as follows:
<TABLE>
<CAPTION>
Amount of Cash Flow Amount of Merit Bonus
<S> <C>
$1,000,000, or more, and less than $2,000,000 25% of base salary
$2,000,000, or more, and less than $3,000,000 50% of base salary
$3,000,000 or more 75% of base salary
</TABLE>
For purposes of calculating the amount of the Merit Bonus, the term "base
salary" shall be the annual salary under Section 5.1.1 hereof for the fiscal
year with respect to which the Merit Bonus is payable.
5.2.2 PRORATION. In the event of the termination of this Agreement
other than by the Company for cause or by Employee without cause, the Company
shall pay to Employee a Merit Bonus with respect to the portion of the fiscal
year in which such termination occurs during which this Agreement was in
effect. The amount of the Merit Bonus so payable shall be determined as
follows:
A. At the end of the fiscal year during which this
Agreement is terminated, the Company shall calculate (i) its cash flow for such
fiscal year and (ii) the amount of the Merit Bonus that would have been payable
under Section 5.2.1 had the Agreement continued in effect during the entire
fiscal year. For purposes of calculating such Merit Bonus, the base salary
shall be deemed to be the base salary that would have been paid had the
Agreement continued in effect during the entire fiscal year.
B. The amount of the Merit Bonus payable under this
Section shall be equal to the product obtained by multiplying the amount
determined under Section 5.2.2.A by a fraction, the numerator of which is the
whole number of weeks during such fiscal year prior to the termination of this
Agreement, and the denominator of which is fifty-two (52).
5.2.3 PROCEDURE. The Company shall calculate its cash flow in
accordance with generally accepted accounting principles consistently applied.
The Company shall not take any action which would adversely affect the
calculation or amount of the Merit Bonus.
6. COVENANT
Employee shall not, at any time during the term of this Agreement
engage, directly or indirectly, as a principal, partner, director or officer
of, in any business competitive with the Company's Business (as that term is
hereinafter defined); provided, however, notwithstanding the foregoing,
Employee may hold up to five percent (5%) equity interest in an entity engaged
in a business competitive with the Company's Business without violating the
restrictions of this
4
<PAGE> 5
Section merely by reason of such ownership. For purposes of this Agreement,
the term "Company's Business" shall mean gold and other mineral mining,
exploration and development as carried on by the Company during the term of
this Agreement.
7. TERMINATION OF EMPLOYMENT
7.1 TERMINATION. Employee's employment under this Agreement may be
terminated as follows:
7.1.1 PERMANENT DISABILITY OF EMPLOYEE. In the event of
Employee's Permanent Disability, the Company may terminate Employee's
employment under this Agreement by giving Employee written notice of the
Board's resolution to do so. For purposes of this Agreement, "Permanent
Disability" shall mean Employee's inability to substantially perform his usual
and customary duties for the Company as a result of any physical or mental
impairment, as medically determined by Employee's personal physician, which
inability lasts for a continuous period of not less than four (4) consecutive
months. Notwithstanding the Company's termination of Employee's employment
pursuant to this Section 7.1.1, after such termination: (a) the Company shall
be obligated to pay to Employee through and including the End Date (determined
without regard to the Company's termination of Employee's employment pursuant
to this Section 7.1.1), the salary otherwise payable to Employee pursuant to
Section 5.1.1 hereof, except that the Company shall not reduce such salary
for any reason, (b) through and including the End Date (determined without
regard to the Company's termination of Employee's employment pursuant to this
Section 7.1.1), the Company and Employee shall be subject to and bound by all
of the terms and provisions of this Agreement excepting only Sections 4, 5.1.4,
5.1.5, 5.2, and 8, the parties' obligations and rights under which shall
terminate simultaneously with such termination of employment.
7.1.2 TERMINATION FOR CAUSE. In the event "Cause" exists,
the Company may terminate Employee's employment under this Agreement by giving
Employee written notice of the Board's resolution to do so. For purposes of
this Agreement, the Company shall be deemed to have "Cause" in the event that
Employee (i) is convicted of or admits in writing to committing theft, fraud,
or embezzlement against the Company, or (ii) substantially fails to reasonably
perform his material duties required to be performed under Section 4.1 of this
Agreement for a reason or reasons other than Employee's death or disability;
provided, however, that prior to the Company's termination of Employee's
employment pursuant to this subparagraph 7.1.2(ii), the Company shall have
first given Employee written notice of such failure, describing in detail the
nature thereof and all material related facts, and Employee shall have not
substantially cured such failure within sixty (60) days following Employee's
receipt of such written notice, and if not cured within such sixty-day period,
the Company shall have given Employee a second written notice of such material
breach and Employee shall have failed to substantially cure such failure within
thirty (30) days following Employee's receipt of such second written notice;
provided, however, that if it is not practicable to cure such failure, or if
such failure is not reasonably susceptible of being cured, within such
sixty-day or thirty-day period, as the case may be, then such time period shall
be extended to the extent required. If Employee shall have cured such failure
prior to the expiration of such sixty-day period, thirty-day period or extended
period, as the case may be, then the Company shall not be entitled to
5
<PAGE> 6
terminate Employee's employment hereunder on the basis thereof. Termination of
Employee's employment pursuant to this Section 7.1.2 shall constitute a
termination of this Agreement.
7.2 TERMINATION BY EMPLOYEE. Employee may terminate his
employment hereunder and this Agreement at any time, with or without cause, by
giving the Company ninety (90) days' prior written notice of Employee's intent
to do so. At the end of such 90-day period the Company's obligations to
Employee and Employee's obligations to the Company under this Agreement shall
cease, except (i) as otherwise expressly provided elsewhere herein and (ii)
with respect to amounts owed by the Company to Employee as of such ninetieth
(90th) day.
7.3 TERMINATION UPON EMPLOYEE'S DEATH. This Agreement shall
automatically terminate upon Employee's death and as of the date of such death
the Company's obligations to Employee and Employee's obligations to the Company
under this Agreement shall cease, except (i) as otherwise expressly provided
elsewhere herein and (ii) with respect to amounts owed by the Company to
Employee as of date.
8. SEVERANCE COMPENSATION
8.1 CASH COMPENSATION. In the event that, during the term of this
Agreement, there is a Change in Control, as that term is defined in Section 9
hereof, and upon or within the twelve (12) months immediately subsequent to
such Change in Control, (i) Employee's employment is terminated by the Company
other than for Cause as that term is defined in Section 7.1.2 hereof, or (ii)
Employee's compensation, duties, status, title, and/or reporting
responsibilities are substantially modified and Employee terminates his
employment pursuant to Section 7.2 hereof, then, the Company shall pay to
Employee in cash within ten (10) days of such termination of employment, as
severance compensation, an amount equal to the product determined by
multiplying Employee's highest monthly salary, as established pursuant to
Section 5.1.1 hereof during the term of this Agreement, by thirty-six (36).
8.2 OPTIONS. Employee is hereby granted an option to acquire, at
any time on or within sixty (60) days after the occurrence of a Change in
Control, as that term is defined in Section 9 hereof, up to that number of
shares as equals, immediately prior to giving effect to the exercise of such
option, twenty-five percent (25%) of the number of then outstanding shares of
stock of the Company at a purchase price of five cents ($0.05) per share. The
Company shall pay a cash bonus to Employee in an amount sufficient to pay or
reimburse Employee for the amount of any income tax payable with respect to the
issuance of the foregoing stock option or any exercise thereof; provided,
however, that nothing in this Agreement shall obligate the Company to pay or
reimburse Employee for all or any portion of any tax liability arising from
Employee's sale, exchange or other disposition of any of the shares purchased
upon exercise of said option.
9. CHANGE IN CONTROL
A change in control of the Company shall be deemed to occur upon the
happening of any of the following:
6
<PAGE> 7
9.1 The Company sells substantially all of its assets to a single
purchaser or to a group of associated purchasers in a single transaction or
series of related transactions;
9.2 Shares of the Company's outstanding capital stock constituting
more than twenty percent (20%) of the voting power of the Company's outstanding
capital stock are sold, exchanged, or otherwise disposed of in one transaction
or in a series of related transactions; or
9.3 The Company is a party to a merger or consolidation in which
the Company is not the surviving entity or the Company's shareholders receive
shares of capital stock of the new or continuing corporation constituting less
than eighty percent (80%) of the voting power of the new or continuing
corporation.
The Change in Control shall be deemed to occur as of the date of the closing of
the applicable transaction described above.
10. EFFECT OF TERMINATION
Unless otherwise specifically provided in this Agreement, in the event
of the termination of this Agreement, the Company and the Employee shall be
released and discharged of any from all obligations under this Agreement except
for the obligations of the Company (i) to pay to Employee monies due and owing
to Employee (a) with respect to services performed prior to the date of
termination of this Agreement and (b) pursuant to Sections 7 and 8 hereof, and
(ii) to issue Shares to Employee upon the exercise of the options granted in
Sections 5.1.2 and 8.2.
11. ASSIGNMENT
11.1 BY EMPLOYEE. Employee may assign his rights and delegate his
duties hereunder to a corporation or other business entity in which Employee
owns at least eighty percent (80%) of all voting and equity interests in such
corporation or business entity with the prior consent of the Company, which
consent shall not be unreasonably withheld. It shall be reasonable for the
Company to require, as a condition to its consent, for Employee to guarantee
the assignee corporation's or entity's performance of all of its duties under
this Agreement.
11.2 BY THE COMPANY. The Company may assign this Agreement and
grant its rights hereunder in whole or in part to any affiliate, subsidiary or
parent of the Company, to its successor or successors, or to a corporation with
which it may be merged, consolidated, or combined, or to a corporation which
may acquire all or a major portion of the Company's assets; provided that no
such assignment shall be effective unless and until any such assignee shall
expressly assume all of the Company's obligations hereunder.
12. SUCCESSORS
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors, assigns and legal
representatives.
7
<PAGE> 8
13. CONFIDENTIALITY
Employee shall not, either during the term of this Agreement or for a
period of one (1) year thereafter, except in the course of his performance of
services under this Agreement, use or divulge, publish or disclose to any
person, firm or corporation whomsoever any confidential information of the
Company or any of its subsidiaries or affiliates which he has heretofore
received or obtained or hereafter receives or obtains during the term of this
Agreement, in relation to (i) the earnings, profits, costs, expenses or other
financial aspects of the Company or any of its subsidiaries or affiliates, (ii)
the clients, customer lists, or marketing practices of the Company or any of
its subsidiaries or affiliates, or (iii) any other confidential information of
the Company or of any of its subsidiaries or affiliates. The term
"confidential information" shall mean all that information which here or
hereafter is not generally known and which is confidential or proprietary to
the Company, any of its subsidiaries or affiliates. Immediately upon
termination of his employment hereunder Employee shall return to the Company
all records, files, documents and other materials (in whatever form or media)
and all copies thereof, which contain any confidential information of the
Company.
14. INJUNCTIVE RELIEF
Employee hereby acknowledges and agrees that it would be difficult to
fully compensate the Company for damages for a breach or threatened breach of
any of the provisions of Sections 4.2, 6 or 13 hereof. Accordingly, Employee
specifically agrees that the Company shall be entitled to temporary and
permanent injunctive relief to enforce the provisions of Sections 4.2, 6 and 13
hereof and that such relief may be granted without the necessity of proving
actual damages. The foregoing provision with respect to injunctive relief
shall not, however, prohibit the Company from pursuing any other rights or
remedies available to the Company for such breach or threatened breach,
including, but not limited to, the recovery of damages from Employee or any
third parties.
15. NOTICES
Any notice given pursuant to this Agreement may be served personally
on the party to be notified or may be mailed, with postage thereon fully
prepaid, by certified or registered mail with return receipt requested,
addressed as follows:
If to the Company, to: Nevada Manhattan Mining Incorporated
5038 N. Parkway Calabasas, Suite 100
Calabasas, California 91302
Attn: Senior Vice President
If to the Employee, to: Christopher D. Michaels
______________________________
______________________________
8
<PAGE> 9
or at such other address as such party may from time to time designate in
writing. Any notice shall be deemed delivered when given, if personally
served, and five (5) business days after mailing, if mailed.
16. WAIVERS
All rights and remedies of the parties hereto are separate and
cumulative, and no one of them, whether exercised or not, shall be deemed to
limit or exclude any other rights or remedies which the parties hereto may
have. Neither party hereto shall be deemed to waive any rights or remedies
under this Agreement unless such waiver is in writing and signed by such party.
No delay or omission on the part of either party hereto in exercising any right
or remedy shall operate as a waiver of such right or remedy or any other right
or remedy. A waiver of any right or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on any future
occasion.
17. SEVERABILITY
If any provision or portion thereof of this Agreement is held to be
unenforceable or invalid, the remaining provisions and portions thereof shall
nevertheless be given and continue in full force and effect.
18. SECTION HEADINGS
Section headings contained in this Agreement are for convenience only
and are not a part of this Agreement and do not in any way limit or modify the
provisions of this Agreement.
19. SURVIVAL OF CERTAIN PROVISIONS
Notwithstanding anything to the contrary contained herein, in the
event of any termination of this Agreement, and not in limitation of the rights
of the parties as provided elsewhere herein, it is expressly agreed that the
Company shall retain all of its rights under Sections 6, 13 and 14 hereof, and
Employee shall retain all of his rights under Sections 5.1.2, 5.2.2, 7.1.1, 8
and 10 hereof.
20. AUTHORIZED REPRESENTATIVE OF COMPANY
Although Employee is an officer of the Company, any and all actions
and decisions to be taken or made by the Company under this Agreement or with
respect to the employment relationship described in this Agreement, and any and
all consents, approvals and agreements permitted or required to be given or
made on the part of the Company under this Agreement, shall be made and
accomplished by the Company only through the actions taken, in writing, of its
Senior Vice President or such other person or persons as the Board may from
time to time designate.
9
<PAGE> 10
21. ARBITRATION
Any controversy or claim between the Company and Employee involving
the construction or application of any of the terms, provisions or conditions
of this Agreement shall be settled by arbitration conducted in the County of
Los Angeles in accordance with, and by an arbitrator appointed pursuant to, the
Rules of the American Arbitration Association in effect at the time, and
judgment upon the award rendered pursuant thereto may be entered in any court
having jurisdiction hereof, and all rights or remedies of the parties hereto to
the contrary are hereby expressly waived. Prior arbitration pursuant to the
provisions of this Section 21 and an award pursuant thereto shall be a
condition precedent to the bringing of any action, suit or proceeding by any
party subject to this Agreement. The cost of conducting the arbitration
proceeding, including each party's attorneys' fees, shall be borne by the
losing party or in such proportions as the arbitrator decides.
22. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto, and supersedes any prior written or oral agreements between them
respecting the subject matter contained herein. There are no representations,
agreements, arrangements, or understandings, either oral or written, between or
among any of the parties relating to the subject matter of this Agreement which
are not fully expressed herein.
23. AMENDMENT
This Agreement may be amended only in writing duly executed by all of
the parties hereto.
24. GOVERNING LAW
All questions with respect to the construction of this Agreement and
the rights and liabilities of the parties with respect thereto shall be
governed by the laws of the State of California.
25. INTERPRETATION
Each of the parties to this Agreement has been represented by
independent legal counsel. Therefore, the nominal rule of construction that an
agreement shall be interpreted against the drafting party shall not apply. All
pronouns and any variation thereof shall be deemed to refer to the masculine,
feminine, or neuter and to the singular or plural, as the identity of the
person or persons may require for proper interpretation of this Agreement.
26. SHARE REFERENCES
All references in Section 5.1.2 of this Agreement to a number of
shares of common stock of the Company, the price per share at which any shares
of common stock of the Company are to be purchased, or the exercise price of
any options or other rights to acquire any shares of common stock of the
Company assume that the Company has completed the 1-
10
<PAGE> 11
for-10 reverse stock split presently contemplated by the Company. In the event
that the Company does not effect such reverse stock split or the reverse stock
split is effected at a ratio other than 1-for-10, all such references to a
number of shares of common stock, the purchase price per share and the exercise
price per share shall be appropriately adjusted.
IN WITNESS WHEREOF, the parties have entered into this Employment
Agreement as of the day and year first above written.
"COMPANY": "EMPLOYEE":
__________ ___________
NEVADA MANHATTAN MINING
INCORPORATED, a Nevada corporation
By: /s/ JEFFREY KRAMER /s/ CHRISTOPHER D. MICHAELS
--------------------------------- ---------------------------------
Jeffrey Kramer, Senior Vice President Christopher D. Michaels
11
<PAGE> 1
EXHIBIT 10. (xii)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of January 1, 1995 ("Effective
Date"), by and between NEVADA MANHATTAN MINING INCORPORATED, a Nevada
corporation doing business in California (the "Company"), and JEFFREY KRAMER,
an individual residing in California (the "Employee").
1. EMPLOYMENT
The Company hereby employs Employee to render services subject to the
terms, conditions and provisions of this Agreement. Employee shall serve in
the position of and have the title "Senior Vice-President". Employee shall
render such services principally at such places in Calabasas, California and
other applicable locations in the State of California deemed appropriate by the
Board of Directors of the Company (the "Board"); Employee shall not be required
to perform substantial services outside of the State of California without his
consent.
2. ACCEPTANCE OF EMPLOYMENT
Employee hereby accepts employment by the Company and agrees to render
services as Senior Vice-President of the Company subject to the terms,
conditions and provisions of this Agreement.
3. TERM
Notwithstanding the date on which this Agreement is actually executed
by the Company and Employee or the date on which Employee is actually appointed
Senior Vice President, the term of this Agreement shall begin as of the
Effective Date, and shall continue until December 31, 1997 (the "End Date"),
unless further extended or sooner terminated as herein provided.
4. DUTIES
4.1 DUTIES AND AUTHORITY. Employee shall perform such duties and
have such authority as Senior Vice-President of the Company as provided by the
Articles of Incorporation and Bylaws of the Company and as may be determined
from time to time by the Board consistent therewith and with such position and
title. Employee shall report to the President.
4.2 EMPLOYMENT. Employee shall devote substantially all of his
business time and effort during normal business hours to the Company. For
purposes of this Agreement, "business time" shall mean, on the average, forty
(40) hours per week.
1
<PAGE> 2
4.3 INSURANCE. Employee hereby grants the Company permission to
buy "key man" life insurance on Employee's life.
5. COMPENSATION
5.1 SALARY; STOCK OPTION; EXPENSE REIMBURSEMENT; BENEFITS. In
consideration for the services to be rendered by Employee and in complete
discharge of the Company's salary obligations hereunder, the Company shall pay
or grant to Employee, as the case may be, and Employee shall accept from the
Company the following (subject to all withholding requirements which may be
imposed by applicable federal, state or local authorities):
5.1.1 an annual salary equal to the existing annual salary
now payable by the Company to Employee, payable in accordance with the
Company's regular payroll schedule. On each anniversary of the Effective Date,
the Board will review Employee's annual salary and decide on a potential salary
increase, or, in the event of a significant decrease in cash flow of the
Company, salary decrease, for the year following such anniversary; provided
that in no event shall Employee's annual salary under this Section 5.1.1 be
reduced for any year by an amount equal to more than twenty percent (20%) of
such salary for the immediately preceding year;
5.1.2 the right to purchase Nine Hundred Thousand (900,000)
shares of common stock in the Company (the "Shares") exercisable, in whole or
in part, at any time during the term of this Agreement, as same may be modified
or extended. The purchase price for the Shares shall be as follows: the first
Three Hundred Thousand (300,000) Shares may be purchased at the price of One
Dollar ($1.00) per Share; the next Three Hundred Thousand (300,000) Shares may
be purchased at the price of One and 50/100 Dollars ($1.50) per Share; and the
remaining Three Hundred Thousand (300,000) Shares may be purchased at the price
of Two Dollars ($2.00) per Share. The options granted pursuant to this Section
5.1.2 shall be exercised, if at all, by written notice (the "Notice") given by
Employee to the Company in the manner provided herein. The Notice shall state
the number of Shares with respect to which the option is being exercised. The
Notice shall specify a date which is not less than five (5) nor more than
fifteen (15) days after the date of the Notice, on which date payment shall be
made for the Shares being purchased. Employee shall pay the purchase price for
the Shares either in cash or by the issuance of one or more promissory notes
executed by Employee in favor of the Company payable over a period not to
exceed five (5) years from the date of the Notice, with interest payable on the
principal balance at the "applicable federal rate" (i.e., the lowest rate
necessary to avoid the imputation of interest under applicable provisions of
the Internal Revenue Code of 1986, as amended). Upon receipt of full payment
for the Shares or Employee's promissory note(s), the Company shall deliver to
Employee a certificate representing the number of Shares so purchased. The
Company shall pay a cash bonus to Employee in an amount sufficient to pay or
reimburse Employee for the amount of any income tax payable with respect to the
issuance of the foregoing stock option or any exercise thereof; provided,
however, that nothing in this Agreement shall obligate the Company to pay or
reimburse Employee for all or any portion of any tax liability arising from
Employee's sale, exchange or other disposition of any of the Shares. The
options granted pursuant to this Section 5.1.2 are non-qualified options and
are not intended to qualify as incentive stock options within the meaning of
Section 422 of the
2
<PAGE> 3
Internal Revenue Code of 1986, as amended. Upon the termination of Employee's
employment with the Company, whether or not such employment is pursuant to this
Agreement or an extension or modification of this Agreement, all unexercised
options shall be immediately forfeited; provided, however, if Employee's
employment is terminated by the Company other than for cause, Employee or his
legal representative may exercise the option to purchase the Shares as provided
herein for a period of ninety (90) days following the date of such termination.
5.1.2.1 Adjustments Upon Changes in Capitalization,
Stock Splits and Similar Events. Subject to any required action by the Board
and the Company's shareholders and Section 26 hereof, the number of Shares
covered by the option granted under Section 5.1.2 and the exercise price of
such option shall be proportionately adjusted for any increase or decrease in
the number of shares of common stock of the Company issued and outstanding
between the effective date hereof and on the date of exercise of the option.
5.1.2.2 Mergers and Acquisitions. Subject to any
required action by the Board and the Company's shareholders, in the event of a
merger or consolidation, the option granted under Section 5.1.2 shall pertain
and apply to the securities to which a holder of the number of Shares subject
to the unexercised portion of such option would have been entitled.
5.1.3 reimbursement on a monthly basis for all reasonable
expenses incurred by Employee in connection with the performance of his duties
under this Agreement, provided that such expenses are documented and approved
by the Company in each instance, which approval shall not be unreasonably
withheld;
5.1.4 such fringe benefits (including but not limited to
paid vacations and participation in medical insurance plans and employee
benefit plans) as now are, or hereafter may become, generally available to all
executive officers of the Company; and
5.1.5 such other benefits (if any) as may be authorized
from time to time by the Board.
5.2 Bonuses. Subject to the provisions and limitations of this
Section 5.2, Employee shall be entitled to receive, in addition to the
compensation and benefits set forth in Section 5.1 hereof, a merit bonus
("Merit Bonus") in the amount calculated under the formula and subject to the
conditions and restrictions set forth in this Section. The amount of the Merit
Bonus, if any, payable to Employee shall be calculated within fifteen (15) days
after the preparation of the Company's financial statements for each fiscal
year ending during the term of this Agreement and shall be paid to Employee
within ten (10) days after the date of calculation of the amount of the Merit
Bonus.
3
<PAGE> 4
5.2.1 AMOUNT OF BONUS. The amount of the Merit Bonus shall be
determined on the basis of the Company's operating cash flow for each fiscal
year ending during the term of this Agreement. The amount of the Merit Bonus
shall be determined as follows:
<TABLE>
<CAPTION>
Amount of Cash Flow Amount of Merit Bonus
<S> <C>
$1,000,000, or more, and less than $2,000,000 25% of base salary
$2,000,000, or more, and less than $3,000,000 50% of base salary
$3,000,000 or more 75% of base salary
</TABLE>
For purposes of calculating the amount of the Merit Bonus, the term "base
salary" shall be the annual salary under Section 5.1.1 hereof for the fiscal
year with respect to which the Merit Bonus is payable.
5.2.2 PRORATION. In the event of the termination of this Agreement
other than by the Company for cause or by Employee without cause, the Company
shall pay to Employee a Merit Bonus with respect to the portion of the fiscal
year in which such termination occurs during which this Agreement was in
effect. The amount of the Merit Bonus so payable shall be determined as
follows:
A. At the end of the fiscal year during which this
Agreement is terminated, the Company shall calculate (i) its cash flow for such
fiscal year and (ii) the amount of the Merit Bonus that would have been payable
under Section 5.2.1 had the Agreement continued in effect during the entire
fiscal year. For purposes of calculating such Merit Bonus, the base salary
shall be deemed to be the base salary that would have been paid had the
Agreement continued in effect during the entire fiscal year.
B. The amount of the Merit Bonus payable under this
Section shall be equal to the product obtained by multiplying the amount
determined under Section 5.2.2.A by a fraction, the numerator of which is the
whole number of weeks during such fiscal year prior to the termination of this
Agreement, and the denominator of which is fifty-two (52).
5.2.3 PROCEDURE. The Company shall calculate its cash flow in
accordance with generally accepted accounting principles consistently applied.
The Company shall not take any action which would adversely affect the
calculation or amount of the Merit Bonus.
6. COVENANT
Employee shall not, at any time during the term of this Agreement
engage, directly or indirectly, as a principal, partner, director or officer
of, in any business competitive with the Company's Business (as that term is
hereinafter defined); provided, however, notwithstanding the foregoing,
Employee may hold up to five percent (5%) equity interest in an entity engaged
in a business competitive with the Company's Business without violating the
restrictions of this
4
<PAGE> 5
Section merely by reason of such ownership. For purposes of this Agreement,
the term "Company's Business" shall mean gold and other mineral mining,
exploration and development as carried on by the Company during the term of
this Agreement.
7. TERMINATION OF EMPLOYMENT
7.1 TERMINATION. Employee's employment under this Agreement may be
terminated as follows:
7.1.1 PERMANENT DISABILITY OF EMPLOYEE. In the event of
Employee's Permanent Disability, the Company may terminate Employee's
employment under this Agreement by giving Employee written notice of the
Board's resolution to do so. For purposes of this Agreement, "Permanent
Disability" shall mean Employee's inability to substantially perform his usual
and customary duties for the Company as a result of any physical or mental
impairment, as medically determined by Employee's personal physician, which
inability lasts for a continuous period of not less than four (4) consecutive
months. Notwithstanding the Company's termination of Employee's employment
pursuant to this Section 7.1.1, after such termination: (a) the Company shall
be obligated to pay to Employee through and including the End Date (determined
without regard to the Company's termination of Employee's employment pursuant
to this Section 7.1.1), the salary otherwise payable to Employee pursuant to
Section 5.1.1 hereof, except that the Company shall not reduce such salary for
any reason, (b) through and including the End Date (determined without regard
to the Company's termination of Employee's employment pursuant to this Section
7.1.1), the Company and Employee shall be subject to and bound by all of the
terms and provisions of this Agreement excepting only Sections 4, 5.1.4, 5.1.5,
5.2, and 8, the parties' obligations and rights under which shall terminate
simultaneously with such termination of employment.
7.1.2 TERMINATION FOR CAUSE. In the event "Cause" exists,
the Company may terminate Employee's employment under this Agreement by giving
Employee written notice of the Board's resolution to do so. For purposes of
this Agreement, the Company shall be deemed to have "Cause" in the event that
Employee (i) is convicted of or admits in writing to committing theft, fraud,
or embezzlement against the Company, or (ii) substantially fails to reasonably
perform his material duties required to be performed under Section 4.1 of this
Agreement for a reason or reasons other than Employee's death or disability;
provided, however, that prior to the Company's termination of Employee's
employment pursuant to this subparagraph 7.1.2(ii), the Company shall have
first given Employee written notice of such failure, describing in detail the
nature thereof and all material related facts, and Employee shall have not
substantially cured such failure within sixty (60) days following Employee's
receipt of such written notice, and if not cured within such sixty-day period,
the Company shall have given Employee a second written notice of such material
breach and Employee shall have failed to substantially cure such failure within
thirty (30) days following Employee's receipt of such second written notice;
provided, however, that if it is not practicable to cure such failure, or if
such failure is not reasonably susceptible of being cured, within such
sixty-day or thirty-day period, as the case may be, then such time period shall
be extended to the extent required. If Employee shall have cured such failure
prior to the expiration of such sixty-day period, thirty day period or extended
period, as the case may be, then the Company shall not be entitled to
5
<PAGE> 6
terminate Employee's employment hereunder on the basis thereof. Termination of
Employee's employment pursuant to this Section 7.1.2 shall constitute a
termination of this Agreement.
7.2 TERMINATION BY EMPLOYEE. Employee may terminate his employment
hereunder and this Agreement at any time, with or without cause, by giving the
Company ninety (90) days' prior written notice of Employee's intent to do so.
At the end of such 90-day period the Company's obligations to Employee and
Employee's obligations to the Company under this Agreement shall cease, except
(i) as otherwise expressly provided elsewhere herein and (ii) with respect to
amounts owed by the Company to Employee as of such ninetieth (90th) day.
7.3 TERMINATION UPON EMPLOYEE'S DEATH. This Agreement shall
automatically terminate upon Employee's death and as of the date of such death
the Company's obligations to Employee and Employee's obligations to the Company
under this Agreement shall cease, except (i) as otherwise expressly provided
elsewhere herein and (ii) with respect to amounts owed by the Company to
Employee as of date.
8. SEVERANCE COMPENSATION
8.1 CASH COMPENSATION. In the event that, during the term of this
Agreement, there is a Change in Control, as that term is defined in Section 9
hereof, and upon or within the twelve (12) months immediately subsequent to
such Change in Control, (i) Employee's employment is terminated by the Company
other than for Cause as that term is defined in Section 7.1.2 hereof, or (ii)
Employee's compensation, duties, status, title, and/or reporting
responsibilities are substantially modified and Employee terminates his
employment pursuant to Section 7.2 hereof, then, the Company shall pay to
Employee in cash within ten (10) days of such termination of employment, as
severance compensation, an amount equal to the product determined by
multiplying Employee's highest monthly salary, as established pursuant to
Section 5.1.1 hereof during the term of this Agreement, by thirty-six (36).
8.2 OPTIONS. Employee is hereby granted an option to acquire, at
any time on or within sixty (60) days after the occurrence of a Change in
Control, as that term is defined in Section 9 hereof, up to that number of
shares as equals, immediately prior to giving effect to the exercise of such
option, twenty-five percent (25%) of the number of then outstanding shares of
stock of the Company at a purchase price of five cents ($0.05) per share. The
Company shall pay a cash bonus to Employee in an amount sufficient to pay or
reimburse Employee for the amount of any income tax payable with respect to the
issuance of the foregoing stock option or any exercise thereof; provided,
however, that nothing in this Agreement shall obligate the Company to pay or
reimburse Employee for all or any portion of any tax liability arising from
Employee's sale, exchange or other disposition of any of the shares purchased
upon exercise of said option.
9. CHANGE IN CONTROL
A change in control of the Company shall be deemed to occur upon the
happening of any of the following:
6
<PAGE> 7
9.1 The Company sells substantially all of its assets to a single
purchaser or to a group of associated purchasers in a single transaction or
series of related transactions;
9.2 Shares of the Company's outstanding capital stock constituting
more than twenty percent (20%) of the voting power of the Company's outstanding
capital stock are sold, exchanged, or otherwise disposed of in one transaction
or in a series of related transactions; or
9.3 The Company is a party to a merger or consolidation in which
the Company is not the surviving entity or the Company's shareholders receive
shares of capital stock of the new or continuing corporation constituting less
than eighty percent (80%) of the voting power of the new or continuing
corporation.
The Change in Control shall be deemed to occur as of the date of the closing of
the applicable transaction described above.
10. EFFECT OF TERMINATION
Unless otherwise specifically provided in this Agreement, in the event
of the termination of this Agreement, the Company and the Employee shall be
released and discharged of any from all obligations under this Agreement except
for the obligations of the Company (i) to pay to Employee monies due and owing
to Employee (a) with respect to services performed prior to the date of
termination of this Agreement and (b) pursuant to Sections 7 and 8 hereof, and
(ii) to issue Shares to Employee upon the exercise of the options granted in
Sections 5.1.2 and 8.2.
11. ASSIGNMENT
11.1 BY EMPLOYEE. Employee may assign his rights and delegate his
duties hereunder to a corporation or other business entity in which Employee
owns at least eighty percent (80%) of all voting and equity interests in such
corporation or business entity with the prior consent of the Company, which
consent shall not be unreasonably withheld. It shall be reasonable for the
Company to require, as a condition to its consent, for Employee to guarantee
the assignee corporation's or entity's performance of all of its duties under
this Agreement.
11.2 BY THE COMPANY. The Company may assign this Agreement and
grant its rights hereunder in whole or in part to any affiliate, subsidiary or
parent of the Company, to its successor or successors, or to a corporation with
which it may be merged, consolidated, or combined, or to a corporation which
may acquire all or a major portion of the Company's assets; provided that no
such assignment shall be effective unless and until any such assignee shall
expressly assume all of the Company's obligations hereunder.
12. SUCCESSORS
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors, assigns and legal
representatives.
7
<PAGE> 8
13. CONFIDENTIALITY
Employee shall not, either during the term of this Agreement or for a
period of one (1) year thereafter, except in the course of his performance of
services under this Agreement, use or divulge, publish or disclose to any
person, firm or corporation whomsoever any confidential information of the
Company or any of its subsidiaries or affiliates which he has heretofore
received or obtained or hereafter receives or obtains during the term of this
Agreement, in relation to (i) the earnings, profits, costs, expenses or other
financial aspects of the Company or any of its subsidiaries or affiliates, (ii)
the clients, customer lists, or marketing practices of the Company or any of
its subsidiaries or affiliates, or (iii) any other confidential information of
the Company or of any of its subsidiaries or affiliates. The term
"confidential information" shall mean all that information which here or
hereafter is not generally known and which is confidential or proprietary to
the Company, any of its subsidiaries or affiliates. Immediately upon
termination of his employment hereunder Employee shall return to the Company
all records, files, documents and other materials (in whatever form or media)
and all copies thereof, which contain any confidential information of the
Company.
14. INJUNCTIVE RELIEF
Employee hereby acknowledges and agrees that it would be difficult to
fully compensate the Company for damages for a breach or threatened breach of
any of the provisions of Sections 4.2, 6 or 13 hereof. Accordingly, Employee
specifically agrees that the Company shall be entitled to temporary and
permanent injunctive relief to enforce the provisions of Sections 4.2, 6 and 13
hereof and that such relief may be granted without the necessity of proving
actual damages. The foregoing provision with respect to injunctive relief
shall not, however, prohibit the Company from pursuing any other rights or
remedies available to the Company for such breach or threatened breach,
including, but not limited to, the recovery of damages from Employee or any
third parties.
15. NOTICES
Any notice given pursuant to this Agreement may be served personally on
the party to be notified or may be mailed, with postage thereon fully prepaid,
by certified or registered mail with return receipt requested, addressed as
follows:
If to the Company, to: Nevada Manhattan Mining Incorporated
5038 N. Parkway Calabasas, Suite 100
Calabasas, California 91302
Attn: President
If to the Employee, to: Jeffrey Kramer
______________________________
______________________________
8
<PAGE> 9
or at such other address as such party may from time to time designate in
writing. Any notice shall be deemed delivered when given, if personally
served, and five (5) business days after mailing, if mailed.
16. WAIVERS
All rights and remedies of the parties hereto are separate and
cumulative, and no one of them, whether exercised or not, shall be deemed to
limit or exclude any other rights or remedies which the parties hereto may
have. Neither party hereto shall be deemed to waive any rights or remedies
under this Agreement unless such waiver is in writing and signed by such party.
No delay or omission on the part of either party hereto in exercising any right
or remedy shall operate as a waiver of such right or remedy or any other right
or remedy. A waiver of any right or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on any future
occasion.
17. SEVERABILITY
If any provision or portion thereof of this Agreement is held to be
unenforceable or invalid, the remaining provisions and portions thereof shall
nevertheless be given and continue in full force and effect.
18. SECTION HEADINGS
Section headings contained in this Agreement are for convenience only
and are not a part of this Agreement and do not in any way limit or modify the
provisions of this Agreement.
19. SURVIVAL OF CERTAIN PROVISIONS
Notwithstanding anything to the contrary contained herein, in the
event of any termination of this Agreement, and not in limitation of the rights
of the parties as provided elsewhere herein, it is expressly agreed that the
Company shall retain all of its rights under Sections 6, 13 and 14 hereof, and
Employee shall retain all of his rights under Sections 5.1.2, 5.2.2, 7.1.1, 8
and 10 hereof.
20. AUTHORIZED REPRESENTATIVE OF COMPANY
Although Employee is an officer of the Company, any and all actions
and decisions to be taken or made by the Company under this Agreement or with
respect to the employment relationship described in this Agreement, and any and
all consents, approvals and agreements permitted or required to be given or
made on the part of the Company under this Agreement, shall be made and
accomplished by the Company only through the actions taken, in writing, of its
President or such other person or persons as the Board may from time to time
designate.
9
<PAGE> 10
21. ARBITRATION
Any controversy or claim between the Company and Employee involving
the construction or application of any of the terms, provisions or conditions
of this Agreement shall be settled by arbitration conducted in the County of
Los Angeles in accordance with, and by an arbitrator appointed pursuant to, the
Rules of the American Arbitration Association in effect at the time, and
judgment upon the award rendered pursuant thereto may be entered in any court
having jurisdiction hereof, and all rights or remedies of the parties hereto to
the contrary are hereby expressly waived. Prior arbitration pursuant to the
provisions of this Section 21 and an award pursuant thereto shall be a
condition precedent to the bringing of any action, suit or proceeding by any
party subject to this Agreement. The cost of conducting the arbitration
proceeding, including each party's attorneys' fees, shall be borne by the
losing party or in such proportions as the arbitrator decides.
22. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto, and supersedes any prior written or oral agreements between them
respecting the subject matter contained herein. There are no representations,
agreements, arrangements, or understandings, either oral or written, between or
among any of the parties relating to the subject matter of this Agreement which
are not fully expressed herein.
23. AMENDMENT
This Agreement may be amended only in writing duly executed by all of
the parties hereto.
24. GOVERNING LAW
All questions with respect to the construction of this Agreement and
the rights and liabilities of the parties with respect thereto shall be
governed by the laws of the State of California.
25. INTERPRETATION
Each of the parties to this Agreement has been represented by
independent legal counsel. Therefore, the nominal rule of construction that an
agreement shall be interpreted against the drafting party shall not apply. All
pronouns and any variation thereof shall be deemed to refer to the masculine,
feminine, or neuter and to the singular or plural, as the identity of the
person or persons may require for proper interpretation of this Agreement.
26. SHARE REFERENCES
All references in Section 5.1.2 of this Agreement to a number of
shares of common stock of the Company, the price per share at which any shares
of common stock of the Company are to be purchased, or the exercise price of
any options or other rights to acquire any shares of common stock of the
Company assume that the Company has completed the 1-
10
<PAGE> 11
for-10 reverse stock split presently contemplated by the Company. In the event
that the Company does not effect such reverse stock split or the reverse stock
split is effected at a ratio other than 1-for-10, all such references to a
number of shares of common stock, the purchase price per share and the exercise
price per share shall be appropriately adjusted.
IN WITNESS WHEREOF, the parties have entered into this Employment
Agreement as of the day and year first above written.
"COMPANY": "EMPLOYEE":
__________ ___________
NEVADA MANHATTAN MINING
INCORPORATED, a Nevada corporation
By: /s/ CHRISTOPHER D. MICHAELS /s/ JEFFREY KRAMER
------------------------------ -------------------------------
Christopher D. Michaels, President Jeffrey Kramer
11
<PAGE> 1
EXHIBIT 10.(xiii)
GOLD KING CONSOLIDATED, Inc.
-----------------------------
GOLD KING PETROLEUM CORPORATION
GOLD KING MINES CORPORATION
410 17th Street Suite 1375 Denver, Colorado 80202
Phone (303)820-2840 Telefax (303)595-9717
April 1, 1995
Jeffrey S. Kramer
Senior Vice President
Nevada Manhattan Mining, Inc.
6038 N. Parkway Calabasas, Suite 1 00
Calabasas, California 91302
Dear Jeff:
Gold King Mines Corporation ("GKMC") proposes to provide the
consulting services of William R. Wilson to Nevada Manhattan Mining, Inc.
("NMMI") under the following terms:
1) All of William R. Wilson's consulting hours will be paid at a
rate $400.00 per day, billed at the end of each month and payable upon
receipt of an invoice unless mutually agreed upon between GKMC and
NMMI.
2) All expenses related to the consulting services will be
reimbursed at cost with no markups, billed and payable with the
corresponding consulting fee invoice.
3) It is understood that GKMC and William R. Wilson are
independent contractors and not employees of NMMI.
4) The term of this agreement is from April 1, 1995 to December
31, 1995 and can be extended for one year periods upon mutual
agreement between GKCI and NMMI.
If you are in general agreement with the terms of this proposal please so
indicate below.
Very truly yours,
/s/ WILLIAM R. OLSON
- ------------------------------------
William R. Olson
President
Gold King Min" Corporation
<PAGE> 2
Jeffrey S. Kramer
Page 2
April 1, 1995
/s/ JEFFREY S. KRAMER
- -------------------------------
Jeffrey S. Kramer
Sr. Vice President
Nevada Manhattan Mining, Inc.
4/4/95
____________________
Date
<PAGE> 1
EXHIBIT 10(xiv)
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT is entered into effective October 7, 1996, by and
between Nevada Manhattan Mining Inc., a Nevada corporation (hereinafter
"Company"), and Behre Dolbear & Company., Inc., a Delaware Corporation
(hereinafter "Consultant).
1. THE SERVICES: Consultant shall perform for Company the
consulting services (hereinafter the "Services") described in Section A of the
attached Schedule, which Schedule by this reference is incorporated herein.
2. PERFORMANCE SCHEDULE: The Services shall be performed during
the period mentioned in Section B of the Schedule. Company, however, may
terminate this Agreement at any time without cause upon giving Consultant
notice of termination. If Company terminates this Agreement, Company shall pay
Consultant for all work performed and costs incurred by Consultant as a
consequence of such termination.
3. COMPENSATION AND AUDIT: For performance of the Services,
Company shall pay Consultant compensation in accordance with Section C of this
Schedule. Consultant shall maintain records relating to the costs and expenses
for which Consultant seeks reimbursement hereunder including the time spent in
performing the Services. Consultant shall retain such records for a period of
6 months after the termination of this Agreement and Company may, upon request,
audit such records or any other documentation pertaining to the Services;
provided, however, Consultant may exclude its trade secrets from any such audit.
Consultant shall ensure that any firm acting on its behalf in connection with
the Services maintains and retains comparable records for the same period as
required of the Consultant, and permits Company to conduct audits of such
records.
4. INDEPENDENT CONTRACT: In performing the Services, Consultant
shall operate as and have the status of an independent contractor and shall not
act as or be an agent or employee of Company. As an independent contractor,
Consultant will be solely responsible for determining the means, manner, and
method for performing the Services. Company shall have no right to control or
to exercise any supervision over Consultant as to how the Services will be
accomplished.
5. COMPANY'S REPRESENTATIVE: Consultant shall make itself
available at all reasonable times and places to consult with Company in
connection with the Services. Consultant shall report to and consult with
Company through a representative designated by Company (hereinafter "Company's
Representative"). The name of the Company's Representative is set forth in
Section E of the Schedule.
6. WARRANTY: Consultant warrants that its activities will follow
accepted engineering standards.
With respect to Consultant's report and the use thereof by Company,
Company agrees to indemnify, and hold harmless Consultant and its stockholders,
controlling persons, directors, officers,
1
<PAGE> 2
employees, Associates and other independent contractors and agents against any
and all losses, claims, damages, liabilities or actions to which they or any of
them may become subject under the Securities Act of 1933, the Securities
Exchange Act of 1934, or any other statute or common law, and to reimburse them
on a current basis for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions.
Notwithstanding the above, Company will not be liable to Behre Dolbear
if it shall be determined by a court that:
A. Behre Dolbear did not follow accepted engineering standards,
or
B. With regards to securities law claims:
(1) The Behre Dolbear report contains an untrue statement
of a material fact or omits to state a material fact
that is necessary in order to make the statements
therein, in light of the circumstances under which
they were made, not misleading; and
(2) Such statement or omission was not made or omitted in
reliance upon information furnished to the Behre
Dolbear People by Company for use in connection with
the preparation of the Behre Dolbear report.
Any information furnished by Company is a representation or
warranty by Company and Company is responsible for the accuracy and
completeness of such information.
7. INSURANCE: All of the Consultant's activities hereunder shall
be at its own risk, and Consultant shall not be entitled to Workers'
Compensation or other insurance protection provided by Company, nor shall
Consultant be entitled to the benefit of any other plans or programs intended
for Company's employees.
8. INDEMNITY: Consultant shall defend, indemnify and save
Company, its joint venturers, if any, and its affiliated entities and the
directors, officers, employees, and agents of Company, its joint venturers, or
its affiliated entities, harmless from and against any and all losses, claims.
demands. liabilities, suits of actions (including all reasonable expenses and
attorneys' fees) arising out of injuries to or the death of any person or
persons, including the employees of each party hereto and the employees of
those performing on their behalf, or arising out of loss of or damage to the
property of any person or persons, including the property of Company, caused by
or resulting from the acts or omissions of the Consultant or any one performing
on its behalf, except that Consultant assumes no liability for the sole
negligent acts or omissions of Company or another indemnified party.
9. CONFIDENTIALITY: All knowledge and information acquired or
developed by or on behalf of Consultant hereunder shall be and remain the
confidential and proprietary information of Company. All such information
shall be turned over to Company at the termination of this Agreement.
Consultant shall ensure that it and those performing on its behalf maintain
strict security over all knowledge and information acquired or developed by it
during the performance of this
2
<PAGE> 3
Agreement and shall not divulge any such knowledge or information directly or
indirectly to any person, other than the authorized representatives of Company,
without the Company's prior written consent.
10. SUBCONTRACTS AND ASSIGNMENTS: Consultant's rights and
obligations hereunder are deemed to be personal and may not be transferred or
assigned, and any attempted assignment shall be void and of no effect.
Consultant shall not subcontract for any part of the Services or obligations
hereunder without the prior written consent of Company. This Agreement may be
assigned by Company, and notice of such assignment shall be given to
Consultant. This Agreement shall be binding upon and inure to the benefit of
Company, its successors and assigns.
11. WAIVER: No change in, addition to, or waiver of any of the
provisions of this Agreement shall be binding upon either party unless in
writing signed by an authorized representative of each party. No waiver by
either party of any breach by the other party of any of the provisions of this
Agreement shall be construed as a waiver of any subsequent breach, whether of
the same or of a different provision in this Agreement.
12. NOTICE: Any notice required or permitted hereunder shall be
deemed to have been properly given when (1) delivered personally to the party
for whom it is intended, (2) seventy-two (72) hours after deposit in the U.S.
Mail (certified and return receipt requested) of an original or confirming
copy, (3) twenty-four (24) hours after entrustment to a professional overnight
courier service, or (4) upon receipt of transmission by facsimile, with all
necessary postage or charges fully prepaid, addressed to the party for whom it
is intended, at the addresses set forth in Section D of the Schedule.
13. SURVIVAL: Notwithstanding the termination of this Agreement,
any duty or obligation which has been incurred and which has not been fully
observed, performed, or discharged, and any right, unconditional or
conditional, which has been created and has not been fully enjoyed, enforced,
or observed, performed, or satisfied (including but not limited to the duties,
obligation, and rights with respect to confidentiality) shall survive such
expiration or termination until such duty or obligation has been fully
observed, or discharged and such right has been enforced, enjoyed, or
satisfied.
14. SEVERABILITY: In the event that any of the provisions, or
portions or applications thereof, of this Agreement are held to be
unenforceable or invalid by any court of competent jurisdiction, Consultant and
Company shall negotiate an equitable adjustment in the provisions of this
Agreement with a view toward effecting the purpose of this Agreement and the
validity and enforceability of the remaining provisions, or portions or
applications thereof, shall not be affected thereby.
15. LIMIT OF LIABILITY: Notwithstanding any other provision of the
Agreement, Consultant's aggregate limit of liability under this Agreement and
Company's exclusive remedy for any eventuality shall not exceed the dollar
value of consultant's billings for services, and neither
3
<PAGE> 4
party shall be responsible or held liable to the other for indirect or
consequential damages, including but not limited to loss of profit, loss of
investment, loss of product or business interruption. The warranties,
obligations, liabilities and remedies of the parties, as provided herein, are
exclusive and in lieu of any others available at law, in equity or otherwise.
16. GOVERNING LAW: The provisions of this Agreement will be construed
in accordance with the laws of the State of Colorado. The parties agree that
any action concerning this Agreement must be brought in a court of competent
jurisdiction in the City and County of Denver, State of Colorado, and they do
hereby submit to the jurisdiction of such court regardless of their residence
or where this Agreement may be executed.
17. ENTIRE AGREEMENT: This Agreement including the Schedule
attached hereto sets forth the full and complete understanding of the parties
hereto as of the date hereof relating to the subject matter hereof and
supersedes any and all other agreements or representations, oral or written,
made or dated prior thereto and may be amended only by a written statement
signed by both parties.
In witness whereof, the parties hereto have entered into the Agreement
effective as of the date first above written.
COMPANY:
By: /s/ JEFFREY S. KRAMER
--------------------------------
Jeffrey S. Kramer
Senior Vice President
CONTRACTOR:
Behre Dolbear & Company, Inc.
By: /s/ TA M. LI
---------------------------------
Ta M. Li
Vice President, Corporate Development
Federal Tax ID #13-2848972
4
<PAGE> 5
SCHEDULE
SECTION A - SCOPE OF SERVICES
1. The Services to be performed by Consultant under this
Agreement shall be generally as described in this Paragraph 1
below. The primary location for Consultant's performance of
consulting Services shall be Denver, Colorado with supplemental
consulting Services to be performed elsewhere as necessary and
as approved in advance in writing by Company,
2. Scope of Services
The Consultant will be responsible for providing independent
technical advisory services related to the development of the
Abubakar Gold Project, Kalimantan, Indonesia. Initially,
that assignment constitutes advisory and validation services
for geologic exploration program at the subject concession.
Advisory services would also include related technical input
for other aspects of potential project development.
SECTION B - TERM OF THE AGREEMENT
Unless sooner terminated by Company, the term of this Agreement shall
commence as of October 7, 1996 and shall continue for an initial
period of six months or upon satisfactory completion of the Services
prior to such date.
SECTION C - COMPENSATION
1. Consultant's fees are charged on a time basis at the maximum
hourly rate of US$137.50, to a maximum of $1,100.00 per day.
a. A minimum of two (2) days per month will be paid by
the Company to the Consultant for the six month
duration of this contract. Unused days will accrue
until the end of the six month period, as which time,
if not used will be forfeited by the Company.
2. In addition to payments for Services, Company will reimburse
Consultant for the following expenses incurred in the
performance of the Services under this Agreement:
(a) Travel undertaken in the performance of Services
hereunder;
(b) Reasonable and necessary expenses incurred by
Consultant for food and lodging associated with (a)
above;
5
<PAGE> 6
(c) Telegram, cable, and telex charges. In lieu of
itemizing telephone charges, and to offset costs of
computers, a flat 2.5% of labor fees will be assessed
as usage charges;
(d) Prints, reproductions, copies and facsimiles;
(e) Postage, courier express, air express, and air
freight charges;
(f) Use of personal automobiles or vehicles at the rate
established by Consultant;
(g) Royalties on computer software;
(h) Professional liability insurance. A fee of 1.5% of
labor fees will be assessed to offset this cost;
(i) Clerical fees at $35 per hour; and
(j) Other costs and expenses incurred in the performance
of Services hereunder,
3. Invoices will be sent to Company monthly and are due upon
receipt. Invoices not paid within 30 days of the date of
invoice are subject to a late fee of 1.5% per month.
4. If charges and reimbursable expenses are not paid when due and
collection proceedings are required, Company agrees to pay all
of Consultant's costs and collection including the actual
legal fees incurred by Consultant.
SECTION D - NOTICES
Notices to Company shall be sent to:
Jeffrey S. Kramer, Sr. Vice President
Nevada Manhattan Mining, Inc.
5038 N. Parkway Calabasas, Suite 100
Calabasas, CA 91302
(818) 591-4400, (818) 591-4411 (fax)
With a copy concurrently to:
William R. Wilson
Nevada Manhattan Mining, Inc.
410 17th Street, Suite 1375
Denver, Colorado 80202
(303) 820-2840, (303) 595-9717
6
<PAGE> 7
Notices to Consultant shall be sent to:
Ta M. Li
Behre Dolbear Co., Inc.
1601 Blake Street, Suite 301
Denver, CO 80202
(303) 620-0020, (303) 620-0024 (fax)
SECTION E - COMPANY'S REPRESENTATIVE
Company's Representative is William R. Wilson or such party as may be
designated in writing by the Company.
7
<PAGE> 1
EXHIBIT 10.(xv)
March 25, 1996
Dr. David Weissberg, et al
29 Blair Drive
Huntington, NY 11743
Dear David:
As per our conversation of March 22, 1996 summarizing our stock
transaction, I reiterate and state our agreement as follows:
1) That the bulk of the money, after having been deposited in our
normal account, will be put in a (currently active) separate bank account for
the specific use of mining the property. Our contractor is Harrison-Western of
Colorado.
2) That the Nevada Manhattan Mining Series "A" Preferred Shares
being issued, as per the Certificate of Determination which defines the shares,
are immediately convertible at the shareholder's discretion to Nevada Manhattan
Mining Common Shares at a ratio of 10 shares of Common Stock for 1 share of
Preferred Stock. Subject to the customary underwriter's approval, these
underlying Common Shares will be included in our forthcoming Registration
Statement (SB-2). It is understood that Nevada Manhattan Mining will instruct
the underwriter to register these shares and that the underwriter's consent
will not be unreasonably withheld.
3) That mining operations on the Manhattan Property are
reasonably slated to begin in the next sixty (60) days.
4) That, based on all current information we have at our
disposal, and knowing we have no direct control over the mill, we feel it is
reasonable for the mill to begin operations within the next sixty (60) days and
be fully operational within one hundred and twenty (120) days.
<PAGE> 2
We give your "investment group" the first right of refusal to purchase any
additional shares under this Nevada Manhattan Mining Private Placement program
the price of four (4) Preferred Shares per ten (10) dollar investment.
The shares will be distributed as per your instructions in the following
manner:
<TABLE>
<CAPTION>
INVESTMENT NAME PREFERRED STOCK
<S> <C> <C> <C> <C>
1. $20,000 Richard Fleischer 6,000 Shares
(Automotive Mgt. Group)
2. $5,000 Rosemarie Monticelli 1,500 Shares
3. $10,000 Lou Saslow 3,000 Shares
4. $25,000 Richard Radoccia 7,500 Shares
5. $15,000 Chris Olson 5,000 Shares
6. $160,000 David Weissberg Total = 63,500 Shares
To be issued as follows:
Kelly Potter 500
Kaitlin Potter 500
Tom Potter 500
Chris Potter 500
Andrew Weissberg 1000
William Weissberg 1000
David Weissberg 59,500
------
Sub-Total 63,500
____________ ____________
$235,000 TOTALS 86,500
</TABLE>
Sincerely,
C. D. Michaels
President
<PAGE> 1
EXHIBIT 10.(xvi)
NEVADA MANHATTAN MINING, INC.
Mining - Development - Exploration
May 13,1996
Dr. David Weissberg, et al
29 Blair Drive
Huntington, NY 11743
Re: Amendment to Agreement Letter Dated March 25, 1996
Dear David:
As per our conversation of May 8, 1996 summarizing our mutual
agreement to amend the Agreement Letter dated March 25, 1996, relevant to your
investment group's Preferred Stock purchase and your subsequent purchase, I
reiterate and state for the record the following:
You and the members of your investment group have agreed to the
issuance of Nevada Manhattan Mining Common Stock in exchange for the issuance
of the previously agreed upon Preferred Stock in the Company. The Preferred
Stock would have been convertible ten (10) shares of Common Stock for each
share of Preferred Stock and carrying an 8% dividend rate. We will presently
issue the Common Stock (at the convertible rate) and will issue the agreed upon
dividends of 8% at the time dividends are issued to the Preferred stockholders
to compensate your group for any loss of dividends. Your dividends will be
based on your original number of Preferred shares. We anticipate Preferred
dividends to be issued December of 1996.
Your signature below will evidence your confirmation of the attached
breakdown of the conversion from Preferred Stock to Common Stock based on the
relevant funds which we have received to date.
Please call if you have questions or comments.
Sincerely, Approved and acknowledged,
/s/ CHRISTOPHER D. MICHAELS /s/ DAVID WEISSBERG
- ---------------------------------- ------------------------------
Christopher D. Michaels David Weissberg
President
5038 N. PARKWAY CALABASAS, SUITE 100 - CALABASAS, CA. 91302
1818) 591-4400 - FAX (818) 591-4411
________________________________________________________________________________
LOS ANGELES, CALIFORNIA - MANHATTAN, NEVADA
<PAGE> 2
WEISSBERG INVESTMENT GROUP / NMM PREFERRED STOCK TO COMMON STOCK
<TABLE>
<CAPTION>
NAME PREFERRED COMMON INVESTED INVEST $ DIVIDEND
<S> <C> <C> <C> <C>
Richard Fleischer 6,000 60,000 $20,000.00
Rosemarie Monticelli 1,500 15,000 $5,000.00
Lou Saslow 3,000 30,000 $10,000.00
Richard Radoccia 7,500 75,000 $25,000.00
Christopher Olson 5,000 50,000 $15,000.00
David Weissberg 59,500 595,000 $149,921.10
Kelly Potter 500 5,000
Kaitlin Potter 500 5,000 $1,259.86
Tom Potter 500 5,000 $1,259.86
Chris Potter 500 5,000 $1,259.86
Andrew Weissberg 1,000 10,000 $2,519.73
William Weissberg 1,000 10,000 $2,519.73
Total $235,000.00 $235,000.00
David Weissberg 9,000 90,000 $22,500.00
Steven Weinberg 1,000 10,000 $2,500.00
Total $25,000.00 $25,000.00
Sandra Murer 600 6,000 1,500.00
Julie Potter 1,000 10,000 $2,500.00
Jane Zimmet 2,000 20,000 $5,000.00
Total $9,000.00 $9,000.00
TOTAL 100,100 1,001,000 $269,000.00
</TABLE>
<PAGE> 1
EXHIBIT 10.(xvii)
[LOGO]
NEVADA MANHATTAN MINING, INC.
-----------------------------
Mining - Development - Exploration
September 25, 1996
Mr. John Holsten
P.O. Box 456
Drexel Hill, PA 19026-0456
Dear Mr. Holsten:
This letter will confirm our understanding with respect to your loan
of $200,000 for a period of ninety (90) days to Nevada Manhattan Mining. The
loan will bear an interest rate of twelve (12%) percent per annum and be
secured by three hundred thousand (300,000) Common Shares in the Company.
Should the Company default on said loan, the amount of shares will be increased
to a total of six hundred thousand (600,000) Common Shares in the Company with
piggy-back registration rights. The commencement date of the loan will be
acknowledged upon receipt of good funds.
Additionally, upon consummation of the terms above, you will be issued
a subscription for warrants to purchase Common Stock in the Company in the
amount of one hundred thousand (100,000) shares at a price of One Dollar and
50/100 ($1.50) per share for a period of eighteen (18) months from date of
issue.
Should the above terms be acceptable, please acknowledge where
provided below.
Sincerely Acknowledged and Accepted,
John W Holster 10/3/96
______________________________
Jeffrey S. Kramer John Holsten Date
Sr. Vice President
cc: Alan Hans
First Colonial Securities
5038 N. Parkway Calabasas, Suite 100, Calabasas, California
Office: (818) 591-4400 - fax: (818) 591-4411
_______________________________________________________________________________
Los Angeles, California a Manhattan. Nevada
<PAGE> 1
RHONE FINANCE SA EXHIBIT 10.(xviii)
PRIVATE & CONFIDENTIAL
- ----------------------
Mr. Jeffrey Kramer
Nevada Manhattan Mining, Inc.
5038 N. Parkway Calabasas
Calabasas, CA 91302
U.S.A.
Geneva, 26th November 1996
Dear Jeffrey,
We were very pleased to meet with Chris Michaels and yourself during your recent
visit to Geneva. We have reviewed the information package on Nevada Manhattan
Mining, Inc.'s projects in Nevada and Kalimantan respectively and are pleased
to present you with our proposal for funding these projects as discussed during
your recent visit.
Rhone Finance is pleased to enter into a financial advisory agreement with your
Company in the form of the draft passed to you during your visit with us. By
virtue of our relationships in the international investment banking community
and our experiences in the mining finance sector, Rhone Finance is well
equipped to substantially assist Nevada Manhattan Mining, Inc. by introducing
the Company to sophisticated institutional investors and to secure appropriate
sponsorship both retail and institutional.
The principal constituent parts of the proposed financial advisory agreement
are:
1) A monthly retainer against time billed for advisory financial services
provided as per the agreement. We propose a fee of US$7,500 per month be
paid initially with a review after three months against actual time
accruing and adjustment thereto by mutual agreement if required. All
disbursements and out of pocket expenses will be invoiced and settled on
a monthly basis.
2) A fee linked to any successful funding completed on your behalf, payable
by way of a percentage against funds raised. The fee will be negotiated
on a transaction by transaction basis and may be paid part in cash and
part in shares. This will be dealt with by appending a schedule to the
financial advisory agreement indicating the specific terms.
3) The issuance of a certain number of share purchase warrants to Rhone
Finance to be determined at the conclusion of the due diligence exercise
at a price to be negotiated by the parties.
4) Reimbursement of out of pocket expenses.
5) All disbursements and out of pocket expenses will be invoiced with
receipts where applicable and settled on a monthly basis.
<PAGE> 2
2
6) The financial advisory agreement should be for an initial term of one
year subject to three months notice by either party.
7) Both parties shall keep matters confidential arising out of the
agreement and undertake not to make any public announcements without the
prior consent of the other party in writing.
Through our client Rare Earth Resources "REZ", we will arrange with their
investment bankers for them to take down a private placement of shares in
Nevada, substantially in the form of the draft offering document you left with
us. The amount will be amended so as to provide funding for your Nevada
project with an additional allocation toward working capital requirements.
Separate arrangements will be made whereby REZ will commit to provide all
funding requirements for one or more of your projects in Kalimantan in return
for a major interest in the claims. The amount of funding to be allocated to
these projects and the REZ interest will be mutually determined when we have
made a full assessment of the projects.
The foregoing will be subject to our completing a comprehensive due diligence
programme which will include an on site visit by our consulting geologists and
mining engineers of the Nevada mining property and the Company's corporate
offices. It is assumed that full details of your projects in Kalimantan are
available for review in Nevada, whereafter a determination will be made as to
whether a visit to the Kalimantan properties is required. The due diligence
programme will be conducted in parallel with discussions with REZ's investment
bankers. Our objective with Management's co-operation, will be to complete the
due diligence programme by year end and subject to the outcome thereof, to
close off the first phase of the financing in the first quarter of 1997.
We are sending this proposal by fax and by mail. Please signify your
acceptance of the terms of this proposal by signing and returning a copy of
this letter by fax and by mail to the undersigned by the end of the week
whereafter, the financial advisory agreement can be exchanged, and the due
diligence programme will commence.
We look forward to a successful and rewarding relationship.
Yours sincerely,
/s/ ROGER A. LEOPARD
Roger A. Leopard
We hereby confirm our agreement to the terms and conditions described in
this letter.
Date: December 3, 1996 /s/ JEFFREY KRAMER
------------------------ ------------------------
Mr. Jeffrey Kramer
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF SMALL BUSINESS ISSUER
Applicant is the 70% owner of subsidiary company known as "Equitorial
Resources." This entity was recently formed under the laws of the British
Virgin Islands and will conduct business in Brazil and Central America and
engage in the acquisition and development of timber and other resources. To
date, this subsidiary has not been capitalized.
Applicant has also recently formed a second British Virgin Islands
company known as "Kalimantan Resources" which is wholly-owned by Applicant. The
purpose of this subsidiary will be to engage in the mining activities
contemplated by the Principles of Agreement dated August 19, 1996 with Maxwells
Energy and Metals Technology, Inc. To date, this subsidiary has not been
capitalized.
<PAGE> 1
EXHIBIT 23.(i)
The Board of Directors
Nevada Manhattan Mining, Incorporated
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus and the Registration
Statement on Form SB-2.
Jackson & Rhodes P.C.
Jackson & Rhodes P.C.
Dallas, Texas
December 5, 1996
<PAGE> 1
EXHIBIT 23.(ii)
[[LOGO]
GOLD KING CONSOLIDATED, Inc.
----------------------------
GOLD KING PETROLEUM CORPORATION
GOLD KING MINES CORPORATION
410 17th Street Suite 1375 Denver, Colorado 80202
Phone (303) 820-2840 Telefax (303) 595-9717
November 19, 1996
Nevada Manhattan Mining, Inc.
C/o Reinstein, Pantell & Calkins
10940 Wilshire Boulevard
Suite 1550
Los Angeles, California 90024-3942
Attention : Lloyd S. Pantell
RE: Registration Pursuant to Form BD
Dear Sirs:
This letter is intended to confirm that the undersigned has reviewed the draft
prospectus to be filed in connection with the Company's Form BD registration
statement and hereby consents to the use of this organization's name as
disclosed in said draft.
This letter shall also serve to confirm that the undersigned has received
appropriate authorization to execute this letter, to provide the representation
herein contained, and to authorize you to provide this letter to the Securities
and Exchange Commission as evidence of same.
Very truly yours,
/s/ WILLIAM R. WILSON
- -------------------------
William R. Wilson
President
Gold King Mines Corporation
<PAGE> 1
EXHIBIT 23 (iii)
BEHRE DOLBEAR & COMPANY, INC.
Minerals Industry Consultants
================================================================================
275 Madison Avenue TEL: (212)684-4150
New York, New York 10016 FAX: (212)684-4438
November 15, 1996
Nevada Manhattan Mining Inc.
c/o Reinstein, Pantell & Calkins
10940 Wilshire Boulevard
Suite 1550
Los Angeles, CA 90024-3942
RE: REGISTRATION PURSUANT TO FORM BD
Dear Mr. Pantell:
This letter is intended to confirm that the undersigned has reviewed the draft
prospectus to be filed in connection with the Company's form BD registration
statement and with the added comments, hereby consents to the use of this
organization's name as disclosed in said draft.
This letter shall also serve to confirm that the undersigned has received
appropriate authorization from his organization to execute this letter, to
provide the representation herein contained, and to authorize you to provide
this letter to the Securities and Exchange Commission as evidence of same.
Sincerely yours,
/s/ TA M. LI
-------------------------------------
Ta M. Li
Vice President, Corporate Development
cc: William R. Wilson
- -------------------------------------------------------------------------------
Denver New York Toronto Guadalajara Santiago Sydney
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 38,428
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,248
<PP&E> 5,571,694
<DEPRECIATION> (60,567)
<TOTAL-ASSETS> 5,558,375
<CURRENT-LIABILITIES> 402,068
<BONDS> 117,022
0
135,735
<COMMON> 83,539
<OTHER-SE> 4,820,011
<TOTAL-LIABILITY-AND-EQUITY> 5,558,375
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 447,602
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (447,602)
<INCOME-TAX> 0
<INCOME-CONTINUING> (447,602)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (447,602)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
<PAGE> 1
EXHIBIT 99
NEVADA MANHATTAN MINING, INC.
MANHATTAN MINE PROJECT REVIEW &
BUSINESS PLAN
By William R. Wilson
July 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION 1
HISTORY AND OWNERSHIP OF PROPERTY 2
REGIONAL AND PROJECT GEOLOGY 2
MINERAL RESOURCE 3
DEVELOPMENT & MINING 4
PROCESSING 5
ENVIRONMENTAL SETTING AND PERMITS 6
PROJECT REVIEW 7
RECOMMENDED BUSINESS PLAN 8
SUMMARY 10
APPENDIX A - MAPS (POCKET) 11
APPENDIX B - FINANCIAL INFORMATION 12
APPENDIX C - MILL INFORMATION 13
</TABLE>
<PAGE> 3
NEVADA MANHATTAN MINING, INC.
MANHATTAN MINE PROJECT REVIEW &
BUSINESS PLAN
By: William R. Wilson(1)
INTRODUCTION
William R. Wilson was engaged by Nevada Manhattan Mining, Inc. ("Nevada
Manhattan") in May 1995 to prepare a project review and business plan for their
mining properties in the Manhattan Mining District 45 miles northeast of
Tonopah, Nevada, in which Nevada Manhattan has a 24.5% ownership. The purpose of
the project review was to prepare a valuation of Nevada Manhattan's ownership.
The purpose of the business plan was to present various options that would
provide short-term cash flow for Nevada Manhattan and its joint venture partners
in the properties through initial production. The business plan also presents a
method to expand potential ore deposits in existing mine workings and establish
access to deeper targets.
Two alternative mining plans are examined that utilize the 1,200 foot
long decline ("Decline") constructed by Nevada Manhattan and its joint venture
partners in 1994. The first plan considers mining ore from the Consolidated
Manhattan Mine accessed from the Decline; drifting to the area near the high
grade WC 49 Drill Hole, drilled by Freeport in 1985 and mining ore in that area;
extending the existing decline ("Decline") to the existing but caved White Caps
shaft, rehabilitating the White Caps shaft to the 1,300' Level and mining high
grade ore in all the levels connected to White Caps Shaft below the 565' Level.
The second plan considers all of the same elements except stopping at the 565'
Level; mining the remaining high grade ore in the 565' Level without
rehabilitating the White Caps shaft below the 565' Level. The second alternative
mining plan is recommended as this plan still allows continued exploration in
the lower levels leading to additional ore development and requires less
capital.
Two milling alternatives were examined. The first alternative considered
was being to purchase a used crushing plant and process plant and recover only
free gold in a gravity circuit. The second alternative is to wait until New
Concept Mining, Inc. completes the construction of the mill, scheduled to be
completed in late 1995 and mill the ore in that new mill. The second alternative
was the preferred option because of the mill's accessibility in a short period
of time.
(1) Wilson has a professional degree in metallurgical engineering from
the Colorado School of Mines and an MBA from the University of Southern
California. His more than thirty years of experience includes ten years in
senior positions with engineering, construction and consulting firms and ten
years as president of several mining companies operating in the United States
and internationally. He is a part chairman of the Colorado Mining Association
and currently is president of Gold King Mines Corporation, a subsidiary of
Taylor Rand Incorporated, a publicly traded resource company based in Toronto,
Ontario, Canada.
<PAGE> 4
The work in this report was conducted primarily by William R. Wilson,
President, Gold King Mines Corporation. He was assisted by Jeff Kramer, Senior
Vice President, Nevada Manhattan and his staff; Marlowe Harvey, the project
operator and president of Calais Resources and Argus Resources, Inc.; Robert
Martin, Vice President, Construction of Harrison Western, a well known
underground mining contracting company; Bill Foster, President and Dale Moore,
Mill Superintendent of New Concept Mining, Inc., the owners of the new mill at
Manhattan; and Bill Carlson, Manager, Process Design of Lynteck, Inc. a process
metallurgical contracting company.
HISTORY AND OWNERSHIP OF PROPERTY
The historic mining in the Manhattan district extends from 1866 to
present with the major activity in the late 1860's, between 1906 and 1921, and
from the 1960's until present. Placer and lode mining took place principally
in the Reliance, the White Caps Mine, the Union Amalgamated Mine, the Manhattan
Consolidated mine, the Earle Mine, the Big Four Mine and the April Fool Mine.
The United States Geological Survey reports historic production through 1959 of
280,000 ounces of lode gold and 206,000 ounces of placer gold mined in the
district. since that time the more significant production was from the Echo
Bay and Nevada Goldfields mines (bordering the subject property) totaling in
excess of 500,000 ounces of gold.
Several companies and individuals have owned part or all of the various
mines currently shared in ownership by Nevada Manhattan (24.5%) with Argus
Resources Inc. (24.5%) and Marlowe Harvey (51%). Included in the property are
28 patented and 83 unpatented claims totaling approximately 1,800 acres.
REGIONAL AND PROJECT GEOLOGY
The bedrock in the Manhattan district contains the Gold Hill Formation
including quartzite, limestone and schist, phyllite and slate of the Cambrian
age and chert, slate, quartzite and limestone of the Palmetto Formation of
Ordovician age. The Gold Hill formation over thrusts the Palmetto Formation
with gold production normally found in the hanging wall of the thrust fault, in
limestones and quartzose schist of the Gold Hill Formation. Mineralization
generally occurs as assemblages of pyrite, stibnite, realgar, orpiment,
cinnabar and free gold associated with calcite, quartz, fluorite, sericite,
leverrierite and sparse adularia. The most productive ore bodies have been in
quartzose schist in networks of small quartz-adularia veins containing pyrite
and free gold. Mineralization is generally theorized to be the result of
epidermal deposition in the limestone and related to secondary replacement in
the volcanic activity associated with the south margin of the Manhattan caldera.
The Manhattan property lies in several shallow gullies at 7,500 to
7,800 feet elevation. Further, mineralization appears to be structurally
controlled by a series of parallel east-northeast trending faults, dipping from
50 to 75 degrees southwest and with some cross or perpendicular faults.
Geophysical studies indicate the structure contains magnetic highs and
resistivity lows and geochemical studies indicate outcrops and mineralization
associated with arsenic and mercury. Mineralization is consistent with the
district and is
2
<PAGE> 5
often in highly altered areas and in limestone with gold and silver found in
quartz, quartz-carbonate including pyrite, arsenophyrite, stibnite and
cinnabar. Veins tend to range in size from stringers of less than six inches
to larger veins of seven feet. The deeper ores lie in the Consolidated
Manhattan and White Caps mines while shallow ores in the area frequently
contain disseminated, lower grade gold in larger ore bodies.
MINERAL RESOURCE
Several studies have been made to help quantify and delineate ore
targets in the remaining portions of existing mines, the areas between the old
mines and the un-mined areas to the south of the Consolidated Manhattan and
White Caps mines. A summary of geologic investigations conducted by Nevada
Manhattan and its joint venture partners of mineralized areas along the fault
zone through the center of the property includes general surface sampling,
underground sampling, production records, drilling (surface and underground),
geochemical sampling and geophysics. Historic mining records and accounts add
to the total picture but often lack completeness or substantiation in more
recent times. As is often the case in epithermal, veined systems all
information points toward more ore grade material, often of higher grade, and
the potential for bonanza-type ore bodies. Satisfying the standards for
reserve definition imposed by the Securities and Exchange Commission and other
technical societies such as the Society for Mining, Metallurgy, and
Exploration, Inc. is always difficult in this setting, i.e., small high grade
vein systems with little widely disseminated mineralization. Therefore, this
report does not include discussions relating to reserves in any category.
The work in this report identified areas in and adjacent to the Decline
constructed by Nevada Manhattan and its joint venture partners in 1994. The
areas considered for mining include the Adit Level of the Consolidated
Manhattan Mine, the area around the high grade intercept in Drill Hole WC49
(reported by Freeport to be twenty-five feet of 0.698 ounces per ton of gold)
and the mined levels in the White Caps Mine from the 565' Level to the 1,300'
Level. From the identification of mining targets, ore blocks were estimated on
underground sampling, historic production, drill hole assays and level maps for
the White Caps Mine (See Maps VII and VIII). These areas were then quantified
using simple geometry, tonnage calculations and average grade. The average
grade selected was based on the same information as the estimated ore blocks
and was further defined by an average of 0.25 ounces per ton as a minable
underground grade and a minimum cut off grade of 0.10 ounces per ton.
The resulting estimated ore blocks were used in an economic model. The
model further identified the capital required to initiate mining in the various
areas, mill the ore at the New Concept Mining, Inc.'s mill, and an estimated
cash flow and a NPV (net present value) analysis at 10% and 15% discount rates
of the cash flow for the two alternate plans. The resulting analysis was
intended to be used by Nevada Manhattan and its joint venture partners to
determine the advisability of proceeding immediately with development and
mining. The work included is not intended to be a reserve calculation of any
type and no reference is made to proven, probable or possible reserves.
However, initial investigations indicate commercial grade mineralization.
Details of the calculations are shown in Appendix B, Schedules 1, 2 and
3 and can
3
<PAGE> 6
be summarized as follows:
1. Mining on Adit Level of Manhattan Consolidated Mine (access from
Decline). The total estimated ore block for this area is 4,293 tons.
Using a 20 per cent dilution factor and average grade of 0.25 ounces per
ton at a 0.10 ounces per ton cutoff, this block is estimated to contain
859 minable ounces. Additional tonnage may be quantified as a result of
additional sampling and development in this area.
2. Drifting from an approximate depth on the Decline in the area of the
high grade, intercept the WC49 drill hole. The total estimated ore
block in this area is 1,555 tons. Using the same factors with an
average grade of 0.50 ounces per ton, this block contains 1,555 minable
ounces. Additional tonnage may be quantified as a result of additional
sampling and development in this area.
3. Rehabilitating the White Caps shaft below the 565' Level and mining
in the old workings on the 565', 670', 800', 910', 1,100', 1,200',
1,300' Levels. The total estimated ore block in the White Caps is
18,306 tons. Using the same factors but with a 0.75 ounce per ton
average grade for the 1,300' Level, these blocks contain 7,420 minable
ounces. Again, additional tonnage may be quantified as a result of
additional sampling and development in this area.
The total minable ounces in all the calculated blocks are 9,833 ounces
of gold. Typically silver grades are about equal or less than the gold grade
so no silver grades were calculated. The total estimated ore blocks total
26,487 tons is not an even number because areas of ore in the blocks were
estimated by cubic footage and then converted to tons using a factor of 162
pounds per cubic foot for converting to tonnage.
The higher grade ore shoots associated with the East Fault, the Morning
Glory Fault, the White Caps Faults appear to be continuous and extend at least
to the 1,300' Level. Grades, if anything, appear to increase with depth with a
reported ore shoot on the 1,300' Level of 2.73 ounces of gold per ton
(Reference - Map VIII). Because of limited drilling information below 450
feet, any confirmation of ore reserves in specific categories is not possible.
Structural control may, however, continue below the 1,300' Level. The project
operator intends to complete a surface geochemical survey coordinated with
magnetic and resistivity geophysics. The project operator will then drill
several targets to the south of the White Caps shaft as predicted by the recent
geo-chemical survey and geophysical examinations. Upon completion of this
work, a more accurate estimate of ore reserves should be possible.
Several geological studies of the White Caps area have predicted
bonanza-type ore bodies in the area but little has been quantified for a
resource or reserves of this magnitude. See the section PROJECT REVIEW for
more discussion of this subject.
DEVELOPMENT & MINING
The Manhattan District has experienced surface mining for placer
gravels, shallow underground mining using shafts and drifts to bedrock for
placer gravels, open pit mining for lower grade ores and underground mining in
open stopes for higher grade ores.
4
<PAGE> 7
Two alternate mining plans are considered in this report. The first
plan includes: extending the Decline to the 565' Level of the White Caps Mine;
mining remaining higher grade ore in the Consolidated Manhattan Mine; mining
higher grade ore in a small but high grade area around the WC49 Drill intercept
at approximately 300 foot depth and sixty feet from the existing Decline;
rehabilitating the White Caps Shaft from the 565' Level to the 1,300' Level; and
mining higher grade ore in the old workings of the White Caps Mine between the
565' Level and the 1,300' Level.
The second plan includes all aspects of the first plan but the
rehabilitation of the White Caps Shaft will not proceed until an extensive
evaluation of the ore grades in the old workings of the White Caps mine is
evaluated by detailed underground sampling. In both plans the rehabilitation
of the White Caps shaft will be dependent on the condition of the shaft upon
reaching the White Caps shaft on the Decline and evaluating the condition of
the shaft. The safety of working in the White Caps shaft and the costs of the
rehabilitation this shaft, depending on its condition, will be key elements in
determining the acceptability of either plan. A raised bore for ventilation
and access will also be considered. In other words, until the shaft can be
accessed from the Decline, additional ore evaluated and the condition of the
White Caps shaft and workings can be evaluated, much of the work and costs
related to the two plans is preliminary in nature.
Within the old workings of the Consolidated Manhattan Mine and the
White Caps mine, the mining will be accomplished using a modified cut and fill
or open stope method by drilling and blasting. The extension of the Decline
down to the 565' Level of the White Caps Mine will also be drilled and blasted.
Rehabilitation of the White Caps Shaft will be required to reach the
lower levels of the mine and will consist of re-timbering and rock bolting
where necessary. Depending on conditions encountered when the Decline is
connected to the White Caps mine shaft, a ventilation and escape shaft may be
required. Because of the uncertainty of the need for this shaft, no provision
has been made in this report for the cost is its installation. It is further
assumed that any ventilation and access will utilize the extended Decline. A
charge of $1 per ton was added to the Harrison Western estimate to provide for
pumping and ventilation using the Decline.
Equipment includes underground Jumbo drills, jackleg drills, scoop
trams, haul trams, fans and pumps. It is intended to use Harrison Western as a
mining contractor for both development and mining. A summary of their
estimated costs is included in the cash flow analyses. An allowance has been
provided for the pumping and treatment of mine water.
PROCESSING
A preliminary investigation was made to ascertain the feasibility of
"high grading" the old mine workings and then processing the free gold in a
used portable gravity processing plant. This option would also require
permitting because of the tailings produced from the gravity plant and possible
discharge from process water.
A used crushing plant priced at $36,000 was located. The unit included
a 10 X 16 jaw crusher, a 16 inch roll crusher and a double deck screen that
would size ore to -10
5
<PAGE> 8
mesh. A used ball mill for crushing to -200 mesh costing $8,000 needed to be
purchased.
A used gravity processing plant was located that included 4 X 8 Double
Deck Derrick Screens and thirty-eight MDL spirals were located for a price of
$200,000. It was felt that a cash payment of $125,000 would satisfy the seller.
The estimated cost of purchasing, shipping and installing this portable
plant was $200,000. Other items such a power line or portable generator,
electrical connections and controls, piping, conveyors, engineering and
installation represent 50 per cent of the total installed cost and therefore,
the portable facility was estimated to cost $400,000. The experience of the
writer is that a hurried schedule almost always is extended beyond original
estimates and milling equipment not specifically designed for the operation
requires modification and recovery suffers. Considering these factors and the
time to acquire and assemble to be at least sixty days or longer, and to secure
a permit to be six months, the alternative of securing this portable equipment
is not recommended.
New Concept Mining, Inc. provided a proposed flow sheet and equipment
list. (See Appendix C). The processing circuit includes crushing, grinding,
gravity separation, cyanide leach, flotation and thickening. A finalized
balanced flow sheet was not provided but a review of the proposed circuit and
equipment indicates the mill should provide approximately 200 to 250 tons per
day of production and the predicted 85 to 90 per cent recovery. Nevada
Manhattan has an agreement to utilize up to 30 per cent of the milling capacity
or approximately sixty tons per day.
The ore to be mined contains free gold and gold associated with pyrite
and arsenopyrite. The gold in the sulphides was assumed to be less than 10% as
suggested by Dale Moore, Mill Superintendent for New Concept Mining. He also
estimated ore recovery to be as high as 90 per cent. For purposes of this
report a mill recovery of 81 per cent was used to account for the loss of gold
in the sulphides. The mill flow sheet planned by New Concept Mining, Inc. will
not include a flotation circuit until the mill has operated up to one year.
(90% recovery times 90% gold from non-sulphide ore = 81% overall recovery.)
Mr. Moore estimated ore milling costs will be $15 per milled ton after a
two to three-month start up period when costs were expected to be $20 per
milled ton. Because the mill may take up to six months to construct, this
report assumes ore will be mined for six months, stockpiled and then milled.
This causes a six-month delay in cash flow from gold mined. The report also
assumes that the mill will produce Dore' cones that will be shipped to a
refinery to be further refined to gold and silver at a $2.00 per gold ounce
refinery charge. Since it is expected that less than one ounce of silver will
be produced for each ounce of gold, no credits for silver are shown in the
financial analyses.
ENVIRONMENTAL SETTING AND PERMITS
For purposes of this report, it was assumed all necessary permits are
held or will be obtained by Nevada Manhattan. New Concept Mining, Inc. has
applied for permits required for the milling operations including approval of
an operational plan by the BLM. Nevada Manhattan will pump water internally in
the underground mine but will not discharge water to the surface. No
reclamation is required for the ore mined other than restoration of the
6
<PAGE> 9
Decline portal area if the Decline is closed.
Should Nevada Manhattan sometime in the future decide to discharge mine
water to the surface a Point Source Discharge Permit will be required. Such a
permit would take from six months to two years to secure. In the interim
period it is recommended that Nevada Manhattan periodically (monthly) sample
any running water on its property and sample underground water at several
locations to establish a baseline for future operations.
PROJECT REVIEW
The auditing firm of Jackson & Rhodes has requested Nevada Manhattan to
provide a valuation in conjunction of capitalized acquisition and development
costs of the Manhattan property for the purposes of confirming the value
carried on the Company's balance sheet. Without a detailed ore reserve
available, an alternate method used by Gold king Mines Corporation in the past
is to place a value on the various tangible assets of a company and the
intangible assets that potentially can enhance the value of a company.
For Nevada Manhattan the following assets should be considered:
Acquisition Costs - Typically acquisition of a mining property of this
type, size and potential in Nevada in the last five years has ranged in
value between $2.5 million and $5 million. Nevada Manhattan has a
capitalized acquisition and development cost of $3.2 million on its
balance sheet. For the purposes of this report a conservative value for
capitalized acquisition and development costs is $1,600,000.
Manhattan Decline - The cost of construction of the Decline was a total
of $465,000. This has added significant value to the Consolidated
Manhattan Mine and potentially to the White Caps Mine and other
potential mineralization. Full value should be assigned to this asset
for those reasons. Nevada Manhattan's share of that cost is 24.5% or
$114,000.
Other Exploration and Development Costs - Total costs of exploration and
development by Nevada Manhattan including drilling, surface sampling,
geophysical work, assays and other development costs incurred by the
Nevada Manhattan attributable to future ore reserves are $830,000 less
the cost of the decline or a total of $710,000. Considering the
specific plans of the project operator to complete his exploration
program and the plan to achieve near-term production outlined in this
report, these costs form a basis of value for the Nevada Manhattan. The
full value of the accrued cost should be included in this valuation as
the cost can lead to future potential production and additional reserves
in the future.
Access to Milling Capacity - Nevada Manhattan controls 30 per cent of
the milling capacity in the New Concept Mining, Inc.'s mill
approximately one mile from the Manhattan Decline portal. This mill,
now under construction, will be rated at approximately 200 to 250 tons
per day. Mills of this capacity and type are currently worth a minimum
of $2,000,000. For Nevada Manhattan to permit and build their own mill
including tailings disposal would cost at a minimum of $3,000,000. As
the New Concept mill is under construction and the required permits are
anticipated to
7
<PAGE> 10
be in place by January 1, 1996, a value of Nevada Manhattan's interest
in the mill can be established. A thirty per cent interest has a value
of $900,000 but as the mill is not in place, a value of $450,000 is
assigned to these mill rights.
Minable Ore Blocks - As stated in the section on MINERAL RESOURCE,
estimated ore blocks total 9,800 ounces of which 7,900 ounces may be
recovered. As the recovery of these ounces is predicated on
implementation of the proposed business plan, a conservative approach is
to place a value of $15 per ounces on this projected production. This
total value is therefore $118,500 of which $30,000 can be assigned to
Nevada Manhattan.
Other Mineral Value - The Hughes and Cameron report indicate a resource
of 250,000 ounces in the lower levels of the White Caps mine. This was
further substantiated by drilling in the 1960's on the 1,200 foot level.
At $10 per ounce this has a value of $2,500,000 of which $600,000 can be
assigned to Nevada Manhattan.
The $15 and $10 values are frequently assigned to un-mined reserves and
resources. In this case, the $15 value was assigned to the minable ore
blocks. However, in the future, Nevada Manhattan may recover much
higher value than the value assigned in this valuation.
Infrastructure - The Manhattan property is approximately 45 miles from
Tonapah, Nevada and approximately one mile from Manhattan, Nevada. As
Tonapah has facilities for most mine supply requirements and available
employees and community infrastructure, the Manhattan property requires
minimal local infrastructure in the form of an office and a maintenance
shop. Therefore, a value of $100,000 can be placed on infrastructure
related to the Manhattan property and approximately $25,000 for Nevada
Manhattan's portion.
Based on the above assets valuation, the total value of Nevada
Manhattan's portion of the Manhattan Property is $3,529,000.
RECOMMENDED BUSINESS PLAN
As described in the section, DEVELOPMENT AND MINING, two alternative
plans are considered in this report.
Plan 1
Work Item 1. Extend Decline to White Caps 565' Level
Work Item 2: Rehabilitate and mine old workings in Consolidated
Manhattan Mine
Work Item 3: Drift and Mine new area near WC49
Work Item 4: Rehabilitate White Caps Shaft
Work Item 5: In White Caps Mine, mine 565' Level, 670' Level,
800' Level, 910' Level, 1,120' Level, 1,200' Level
and 1,300' Level
The major advantage to this plan is that access would be improved
considerably to
8
<PAGE> 11
the lower levels of the White caps mine, very possibly into high grade ore and
also provide access to the high grade ore anticipated as a result of the
proposed deep drilling contemplated by the project operator.
A cash analysis of this plan was prepared and is shown in Appendix B,
Schedule 4A & 4B. The project schedule would involve a period of 24 months and
include a capital cost of $1,463,290 and an operating cost of $1,719,699 with
production of 7,960 ounces of gold resulting in revenues of $3,088,430. This
plan results in a positive cash flow of $92,804. The expenditure of the $1.4
million in capital provides the access required for any deep ore bodies and the
gold production offsets a large portion of the capital cost. The cash flow may
be improved by encountering lower shaft rehabilitation costs in the White Caps
shaft and possibly higher than projected ore grade in the old White Caps
workings. Additionally, the possibility exists to increase the total tonnage of
ore through the planned sampling program.
Plan 2
Work Item 1. Extend Decline to White Caps 565' Level
Work Item 2. Rehabilitate and mine old workings in Consolidated
Manhattan Mine
Work Item 3. Drift and Mine new area near WC49
Work Item 4. In White Caps Mine, mine the 565' Level only
Work Item 5. Underground sampling in the 670' through 1,300' Levels
The major advantage to this plan is the reduced cash cost and the
opportunity to sample underground in the White Caps mine without rehabilitating
the White Caps shaft. The disadvantages of this plans are that mining access to
the lower portions of the White Cap Mine may not be completed and it is still
not known whether access can be obtained to each of the levels below the 565'
Level. This plan is a compromise plan that can be modified as the project
proceeds.
A cash analysis of this plan was prepared and is shown in Appendix B,
Schedule 5. The project schedule would involve a period of 12 months and
include a capital cost of $605,840 and an operating cost of $1,046,063 and
production of 4,568 ounces of gold resulting in revenues of $1,772,539. This
plan results in a positive cash flow of $425,326. As exploration continues in
the lower White Caps mine, additional ventilation will be required and was
included as an allowance in the capital cost. The underground sampling may
prove successful to the point that the lower levels can be opened. Further
study will be required at that point. The major advantages of this plan are
less capital is required, access to the lower levels of the White Caps Mine are
at least possibly accessed and positive cash flow is generated. Additionally,
the possibility exists to increase the total tonnage of ore through the planned
sampling program.
A third plan would be to mine only the Consolidated Manhattan Mine and
the WC49 Area. A cursory review of Schedule 5, would indicate that the capital
costs of this would be approximately $300,000 producing 2,400 ounces of gold
with some cash flow generated. Some additional ore may be located under this
plan.
The fourth plan will be to wait until the on-going drilling is
completed and New
9
<PAGE> 12
Concept Mining, Inc.'s mill is completed. This alternative is the lower risk
but provides nothing to the prospects of Nevada Manhattan. No cash flow is
possible for Nevada Manhattan.
SUMMARY
The mining industry and investment community recognizes that in
essentially all start up mining operations, negative cash flow can be
expected. Recognizing that the two principal plans presented in this report
are subject to the preliminary nature of the financial analyses prepared, both
plans do provide positive cash flow. The recommended Plan 2 provides the
opportunity to access the White Caps mine, explore for additional ore, generate
positive cash flow and with less capital than Plan 1.
The value of Nevada Manhattan's 24.5% interest in the Manhattan property
as determined in this report, based on the geology, work to date on the mine,
ownership and factors related to future mining and revenue was determined to be
$3,529,000. No proven and probable ore reserves were calculated but an
estimated ore block related to the business plan presented indicated it may be
possible to mine and recover as much as 7,960 ounces of gold should Nevada
Manhattan proceed with the first business plan developed in this report.
Further, some consideration was given to the resource reported by Hughes and
Cameron of a total resource in the White Caps of approximately 250,000 ounces of
gold.
The two principal plans presented, one providing for full production in
the Consolidated Manhattan Mine, the Drill Hole WC49 area and all of the lower
workings of the White Caps mine and the second being partial mining down to and
including the White Caps 565 Level each has advantages and disadvantages.
Plan 1 requires a larger capital cost ($1.46 million capital and a $93,000 cash
flow from 7,960 ounces of gold) over 24 months. Plan 2 requires less capital
with less gold produced ($606,000 of capital and a cash flow of $425,000 with
4,500 ounces of gold) over 12 months.
Assuming availability of capital funds, Plan 2 is the recommended plan
based on risk. If funding is limited, a modified form of Plan 2 could be
adopted by Nevada Manhattan.
10
<PAGE> 13
APPENDIX A
MAPS
(POCKET)
I CLAIM AND DRILL HOLE LOCATION MAP
II GEOLOGY MAP - WHITE CAPS MINE
III UNDERGROUND GEOLOGY AND SAMPLE LOCATION MAP - MANHATTAN CONSOLIDATED
MINE
IV DECLINE/WC 49 INTERSECTION MAP - MANHATTAN CONSOLIDATED MINE
V DECLINE LOCATION MAP
VI DECLINE LOCATION MAP - CROSS SECTION
VII WHITE CAPS MINE LEVEL MAP - SURFACE, 210' LEVEL, 310' LEVEL, 565' LEVEL,
800' LEVEL, 1,200' LEVEL, 1,300' LEVEL
VIII WHITE CAPS MINE LEVEL MAP - GEOLOGIC FEATURES - SURFACE, 310 LEVEL, 565
LEVEL, 800 LEVEL, 900 LEVEL, 1,100 LEVEL, 1,200 LEVEL, 1,300 LEVEL
IX MANHATTAN MINE - PROSPECTIVE LEVEL PLAN
11
<PAGE> 14
APPENDIX B
FINANCIAL INFORMATION
SCHEDULE 1
CUBIC FEET OF ESTIMATED ORE BLOCKS
SCHEDULE 2
ESTIMATED ORE BLOCKS, TONNAGE AND OUNCES OF GOLD
SCHEDULE 3
MINING SCHEDULE - SEQUENCE OF ESTIMATED ORE BLOCKS BY MONTH
SCHEDULE 4A
CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF
WC SHAFT - 1ST 12 MONTHS
SCHEDULE 4B
CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF
WC SHAFT - 2ND 12 MONTHS
SCHEDULE 5
CASH FLOW ANALYSIS - MINE ESTIMATED ORE BLOCKS DOWN TO AND INCLUDING
565 LEVEL
12
<PAGE> 15
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 1 - CUBIC FEET OF ESTIMATED ORE BLOCKS
<TABLE>
<CAPTION>
AREA BLOCK VOLUME TONS
CUBIC FT.
<S> <C> <C> <C> <C>
MANHATTAN CONSOLIDATED MINE 1
SLABBED OUT ADIT/DRIFT 700 FT. X 50 SQ. FT. 35,000 2,835
3 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458
BLOCK TOTAL 53,000 4,293
WC49 - 300 LEVEL 2
8 NEW STOPES 8 X 100 FT. X 6 FT. X 10 FT. 48,000 3,888
WHITE CAPS MINE 565 LEVEL 3
EAST FAULT AREA STOPE 160 FT. X 50 FT. X 10 FT. 80,000 6,480
4 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458
BLOCK TOTAL 98,000 7,938
WHITE CAPS MINE 670 LEVEL 4
EAST FAULT AREA STOPE 100 FT. X 40 FT. X 10 FT. 40,000 3,240
1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486
BLOCK TOTAL 46,000 3,726
WHITE CAPS MINE 800 LEVEL 5
3 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458
WHITE CAPS MINE 910 LEVEL 6
EAST FAULT AREA STOPE 80 FT. X 20 FT. X 10 FT. 16,000 1,296
1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486
BLOCK TOTAL 22,000 1,782
WHITE CAPS MINE 1,120 LEVEL 7
4 NEW STOPES 4 X 100 FT. X 6 FT. X 10 FT. 24,000 1,944
WHITE CAPS MINE 1,200 LEVEL 8
2 NEW STOPES 2 X 100 FT. X 6 FT. X 10 FT. 12,000 972
WHITE CAPS MINE 1,300 LEVEL 9
1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486
TOTAL 327,000 26,487
</TABLE>
<PAGE> 16
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 2 - ESTIMATED ORE BLOCKS, TONNAGE AND OUNCES OF GOLD
<TABLE>
<CAPTION>
AREA BLOCK TONS IN PLACE GRADE CUTOFF MINABLE OUNCES
% % @ 20% DILUTION
<S> <C> <C> <C> <C> <C>
MANHATTAN CONSOLIDATED MINE 1 4,293 0.25 0.10 859
WC49 - 300 LEVEL 2 3,888 0.50 0.10 1,555
WHITE CAPS MINE 565 LEVEL 3 7,938 0.50 0.10 3,175
WHITE CAPS MINE 670 LEVEL 4 3,726 0.50 0.10 1,490
WHITE CAPS MINE 800 LEVEL 5 1,458 0.50 0.10 583
WHITE CAPS MINE 910 LEVEL 6 1,782 0.50 0.10 713
WHITE CAPS MINE 1,120 LEVEL 7 1,944 0.50 0.10 778
WHITE CAPS MINE 1,200 LEVEL 8 972 0.50 0.10 389
WHITE CAPS MINE 1,300 LEVEL (1) 9 486 0.75 0.10 292
26,487 9,833
</TABLE>
(1) GRADE INCREASE TO 0.75 OPT GOLD BASED ON REPORTED ASSAYS ON THIS
LEVEL IN EXCESS OF 2 OPT.
<PAGE> 17
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 3 - MINING SCHEDULE - SEQUENCE OF ESTIMATED ORE BLOCKS BY MONTH
<TABLE>
<CAPTION>
MONTH PRODUCTION CUMLATIVE PRODUCTION BLOCK TONS - START TONS - END
TONS TONS
<S> <C> <C> <C> <C> <C>
1 800 800 1 4,293 3,493
2 800 1,600 1 3,493 2,693
3 1,600 3,200 1 2,693 1,093
4 1,600 4,800 1 1,093 0
2 3,888 3,381
5 1,600 6,400 2 3,381 1,781
6 1,600 8,000 2 1,781 181
7 1,600 9,600 2 181 0
3 7,938 6,519
8 1,600 11,200 3 6,519 4,919
9 1,600 12,800 3 4,919 3,319
10 1,600 14,400 3 3,319 1,719
11 1,600 16,000 3 1,719 119
12 1,600 17,600 3 119 0
4 3,726 2,245
13 1,600 19,200 4 2,245 645
14 1,600 20,800 4 645 0
5 1,458 503
15 1,600 22,400 5 503 0
6 1,782 685
16 1,600 24,000 6 685 0
7 1,944 1,029
17 1,600 25,600 7 1,029 0
8 972 401
18 887 26,487 8 401 0
9 486 0
</TABLE>
NMMI/D
7/12/95
<PAGE> 18
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
<TABLE>
<CAPTION>
SCHEDULE 4A - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT - lST 12 MONTHS
$390/oz Gold
MONTH 1 2 3 4 5 6 7
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000 $44,000 $44,000 $44,000
Other contract work
Underground sampling (140 days @$400/d) $4,000 $4,000 $2,000 $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $3,000 $3,000 $1,500 $1,500 $1,500 $1,500 $1,500
Engineering & Consulting $15,000
Working Capital $50,000 $50,000 $50,000
Contigency @ 10% Excl. Working Capital $12,740 $3,400 $3,550 $3,550 $4,750 $4,750 $4,750
-----------------------------------------------------------------------------
TOTAL CAPITAL REQUIRED $190,140 $87,400 $89,050 $39,050 $52,250 $52,250 $52,250
===================================================================================================================================
PRODUCTION
Area/block CM/1 CM/1 CM/1 CM/1 WC49/2 WC49/2 WC49/2
WC49/2 WC565/3
Ore Production-tons/mo 800 800 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.40 0.40 0.40
Ounces of gold mined 160.00 160.00 320.00 480.00 640.00 640.00 640.00
Tons of ore milled 0 0 0 0 400 400 1000
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00 0.20 0.20 0.20
Ounces of gold milled (1) 0.00 0.00 0.00 0.00 80.00 80.00 200.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------------------
Gold Production - Troy Oz 0 0 0 0 65 65 162
Average Gold Sales Price $/Troy Oz $0 $0 $0 $0 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 $2 $2
-----------------------------------------------------------------------------
NET SMELTER RECEIPTS $0 $0 $0 $0 $25,142 $25,142 $62,856
ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------
INCOME AFTER ROYALTY $0 $0 $0 $0 $25,142 $25,142 $62,856
=============================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1 $1 $1
Processing & tailings $0 $0 $0 $0 $20 $20 $15
G & A @ 10% $4 $4 $4 $4 $6 $6 $6
-----------------------------------------------------------------------------
Total Cost $/Ton $48 $48 $48 $48 $70 $70 $65
OPERATING COSTS $36,960 $36,960 $73,920 $73,920 $84,800 $84,800 $93,070
=============================================================================
DEDUCTIBLE EXPENSES Depreciation Base $211,400 $211,400 $211,400 $211,400 $720,900 $720,900 $720,900
*Depreciation $7,558 $7,558 $7,558 $7,558 $8,591 $8,591 $8,591
Deductible Exploration $4,900 $4,900 $2,450 $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $525 $525 $525 $525 $525
Local taxes 1% $0 $0 $0 $0 $251 $251 $629
-----------------------------------------------------------------------------
Deductible Expenses Before Depletion $13,508 $13,508 $10,533 $10,533 $11,817 $11,817 $12,194
=============================================================================
Taxable Income Before Depletion ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408)
Maximum allowed depletion - 50% rule $0 $0 $0 $0 $0 $0 $0
Depletion at 15% $0 $0 $0 $0 $0 $0 $0
Depletion allowed $0 $0 $0 $0 $0 $0 $0
*Includes all startup costs
=============================================================================
TAXES
Taxable Income After Depletion ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408)
Loss Carried Forward Credit $50,468 $50,468 $84,453 $84,453 $71,475 $71,475 $42,408
Loss Carried Forward Credit Applied $0 $0 $0 $0 $0 $0 $0
Federal Income Tax (2) 0.34 $0 $0 $0 $0 $0 $0 $0
State Income Tax (2) 0.05 $0 $0 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------
Net Income After Tax ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408)
Loss Carried Forward $0 $0 $0 $0 $0 $0 $0
Dep., Depl., & Amort. $8,608 $8,608 $8,083 $8,083 $9,116 $9,116 $9,116
Deductible Exploration $4,900 $4,900 $2,450 $2,450 $2,450 $2,450 $2,450
Capital expenditures ($190,140) ($87,400) ($89,050) ($39,050) ($52,250) ($52,250) ($52,250)
Reclamation $0 $0 $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------
NET CASH FLOW ($227,100) ($124,360) ($162,970) ($112,970) ($112,159) ($112,159) ($83,093)
CUMULATIVE CASH FLOW ($227,100) ($351,460) ($514,430) ($627,400) ($739,559) ($851,718) ($934,811)
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
12-MONTH
MONTH 8 9 10 11 12 TOTAL
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 $9,000 $10,500 $73,500
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 $25,000 $25,000 $200,000
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000 $110,000
Subtotal - Mine Contractor $44,400 $44,000 $44,000 $44,000 $45,500 $549,900
Other contract work
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000 $28,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500 $21,000
Engineering & Consulting $15,000
Working Capital $150,000
Contigency @ 10% Excl. Working Capital $4,750 $4,750 $4,750 $4,750 $4,900 $461,390
-------------------------------------------------------------------
TOTAL CAPITAL REQUIRED $52,250 $52,250 $52,250 $52,250 $53,900 $825,290
=========================================================================================================================
PRODUCTION
Area/block WC565/3 WC565/3 WC565/3 WC565/3 WC565/3
WC670/4
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600 17,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00 6,240
Tons of ore milled 1600 1600 1600 1600 1600 9,800
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.30 0.30 0.40 0.40 0.40
Ounces of gold milled (1) 480.00 480.00 640.00 640.00 640.00 3,240
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-------------------------------------------------------------------
Gold Production - Troy Oz 389 389 518 518 518 2,624
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 $2
-------------------------------------------------------------------
NET SMELTER RECEIPTS $150,854 $150,854 $201,139 $201,139 $201,139 $1,018,267
ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 $0
-------------------------------------------------------------------
INCOME AFTER ROYALTY $150,854 $150,854 $201,139 $201,139 $201,139 $1,018,267
===================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-------------------------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65 $65
OPERATING COSTS $103,840 $103,840 $104,000 $104,000 $104,000 $1,004,110
===================================================================
DEDUCTIBLE EXPENSES Depreciation Base $720,900 $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591 $8,591 $98,956
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 $34,300
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525 $7,350
Local taxes 1% $1,509 $1,509 $2,011 $2,011 $2,011 $10,183
-------------------------------------------------------------------
Deductible Expenses Before Depletion $13,074 $13,074 $13,577 $13,577 $13,577 $150,789
===================================================================
Taxable Income Before Depletion $33,940 $33,940 $83,562 $83,562 $83,562 ($136,631)
Maximum allowed depletion - 50% rule $15,970 $16,970 $41,781 $41,781 $41,781 $159,283
Depletion at 15% $22,628 $22,628 $30,171 $30,171 $30,171 $135,769
Depletion allowed $15,970 $16,970 $30,171 $30,171 $30,171 $124,453
*Includes all startup costs
===================================================================
TAXES
Taxable Income After Depletion $16,970 $16,970 $53,391 $53,391 $53,391 ($261,084)
Loss Carried Forward Credit $0 $0 $0 $0 $0 $455,198
Loss Carried Forward Credit Applied ($16,970) ($16,970) ($53,391) ($53,391) ($53,391) ($194,114)
Federal Income Tax (2) 0.34 $0 $0 $0 $0 $0 $0
State Income Tax (2) 0.05 $849 $849 $2,670 $2,670 $2,670 $9,706
-------------------------------------------------------------------
Net Income After Tax $16,122 $16,122 $50,722 $50,722 $50,722 ($270,790)
Loss Carried Forward $16,970 $16,970 $53,391 $53,391 $53,391 $194,114
Dep., Depl., & Amort. $26,086 $26,086 $39,287 $39,287 $39,287 $230,759
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 $34,300
Capital expenditures ($52,250) ($52,250) ($52,250) ($52,250) ($53,900) ($825,290)
Reclamation $0 $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0 $0
-------------------------------------------------------------------
NET CASH FLOW $9,377 $9,377 $93,599 $93,599 $91,949 ($636,907)
CUMULATIVE CASH FLOW ($925,433) ($916,056) ($822,456) ($728,857) ($636,907)
========================================================================
Total Net Cash Flow of The Project (24 mo.) $92,804
Net Present Value of The Project @ 15% (24 mo.) ($145,359)
Net Present Value of The Project @ 10% (24 mo.) ($78,637)
</TABLE>
(1) Milled ounces vary slightly from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 million or $630,000.
<PAGE> 19
<TABLE>
<CAPTION>
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4B - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT 2ND 12 MONTHS
MONTH 13 14 15 !6
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level $29,000 $31,000 $31,000
Rehab WC Shaft to 910 Level $25,000
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $39,000 $41,000 $41,000 $35,000
Other contract work
Underground sampling (140 days @$400/d) $4,000 $2,000 $2,000 $4,000
Assays (140 days x 20/d x $15) $3,000 $1,500 $1,500 $3,000
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,600 $4,450 $4,450 $4,200
---------------------------------------------------
TOTAL CAPITAL REQUIRED $50,600 $48,950 $48,950 $46,200
====================================================================================================================
PRODUCTION
Area/block WC670/4 WC670/4 WC800/5 WC910/6
WC800/5 WC910/6 WC1,120/7
Ore Production-tons/mo 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00
Tons of ore milled 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81
---------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
---------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) 0.00% $0 $0 $0 $0
---------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139
===================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6
---------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65
OPERATING COSTS $104,000 $104,000 $104,000 $104,000
===================================================
DEDUCTIBLE EXPENSES Depreciation Base $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591
Deductible Exploration $4,900 $2,450 $2,450 $4,900
Amort. Non-deduct. Exp. & Dev. $1,050 $525 $525 $1,050
Local taxes 1% $2,011 $2,011 $2,011 $2,011
---------------------------------------------------
Deductible Expenses Before Depletion $16,552 $13,577 $13,577 $16,552
===================================================
Taxable Income Before Depletion $80,587 $83,562 $83,562 $80,587
Maximum allowed depletion - 50% rule $40,294 $41,781 $41,781 $40,294
Depletion at 15% $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
===================================================
TAXES
Taxable Income After Depletion $50,416 $53,391 $53,391 $50,416
Loss Carried Forward Credit $0 $0 $0 $0
Loss Carried Forward Credit Applied ($50,416) ($53,391) ($53,391) ($50,416)
Federal Income Tax (2) 0.34 $0 $0 $0 $0
State Income Tax (2) 0.05 $2,521 $2,670 $2,670 $2,521
---------------------------------------------------
Net Income After Tax $47,895 $50,722 $50,722 $47,895
Loss Carried Foreward $50,416 $53,391 $53,391 $50,416
Dep.,Depl.,& Amort. $39,812 $39,287 $39,287 $39,812
Deductible Exploration $4,900 $2,450 $2,450 $4,900
Capital expenditures ($50,600) ($48,950) ($48,950) ($46,200)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
---------------------------------------------------
NET CASH FLOW $92,423 $96,899 $96,899 $96,823
CUMULATIVE CASH FLOW ($544,484) ($447,585) ($350,685) ($253,862)
===============================================================
<CAPTION>
17 18 19 20 21
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level $25,000 $27,000
Rehab WC Shaft to 1,300 Level $53,000 $55,000 $55,000
Contractor supervision, overhead & profit $10,000 $10,000 $5,000 $5,000 $5,000
Subtotal - Mine Contractor $35,000 $37,000 $58,000 $60,000 $60,000
Other contract work
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $3,850 $4,050 $6,150 $6,350 $6,350
---------------------------------------------------------------
TOTAL CAPITAL REQUIRED $42,350 $44,550 $67,650 $69,850 $69,850
====================================================================================================================
PRODUCTION
Area/block WC1,120/7 WC1,200/8
WC1,200/8 WC1,300/9
Ore Production-tons/mo 1,600 887
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.44 0.40 0.40 0.40
Ounces of gold mined 640.00 390.28 0.00 0.00 0.00
Tons of ore milled 1600 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
---------------------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
---------------------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
---------------------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 $201,139
===============================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
---------------------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65 $65
OPERATING COSTS $104,000 $70,489 $28,800 $28,800 $28,800
===============================================================
DEDUCTIBLE EXPENSES Depreciation Base $1,095,900 $1,095,900 $1,095,900 $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $19,589 $19,589 $19,589
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525
Local taxes $2,011 $2,011 $2,011 $2,011 $2,011
---------------------------------------------------------------
Deductible Expenses Before Depletion $24,576 $24,576 $24,576 $24,576 $24,576
===============================================================
Taxable Income Before Depletion $72,564 $106,075 $147,764 $147,764 $147,764
Maximum allowed depletion - 50% rule $36,282 $53,037 $73,882 $73,882 $73,882
Depletion at 15% $30,171 $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
===============================================================
TAXES
Taxable Income After Depletion $42,393 $75,904 $117,593 $117,593 $117,593
Loss Carried Forward Credit $0 $0 $0 $0 $0
Loss Carried Forward Credit Applied ($42,393) ($11,077) $0 $0 $0
Federal Income Tax (2) $0 $22,041 $39,982 $39,982 $39,982
State Income Tax (2) $2,120 $3,795 $5,880 $5,880 $5,880
---------------------------------------------------------------
Net Income After Tax $40,273 $50,067 $71,732 $71,732 $71,732
Loss Carried Foreward $42,393 $11,077 $0 $0 $0
Dep.,Depl.,& Amort. $50,285 $50,285 $50,285 $50,285 $50,285
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Capital expenditures ($42,350) ($44,550) ($67,650) ($69,850) ($69,850)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
---------------------------------------------------------------
NET CASH FLOW $93,051 $69,330 $56,817 $54,617 $54,617
CUMULATIVE CASH FLOW ($160,811) ($91,482) ($34,665) $19,952 $74,568
===============================================================
<CAPTION>
12 MONTH GRAND
22 23 24 TOTAL TOTAL
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $73,500
Install headframe & hoist at 565 Level $200,000
Rehab WC Shaft to 800 Level $91,000 $91,000
Rehab WC Shaft to 910 Level $77,000 $77,000
Rehab WC Shaft to 1,300 Level $55,000 $55,000 $273,000 $273,000
Contractor supervision, overhead & profit $5,000 $5,000 $5,000 $90,000 $200,000
Subtotal - Mine Contractor $60,000 $60,000 $5,000 $531,000 $1,080,900
Other contract work
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $28,000 $56,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $21,000 $42,000
ENGINEERING & CONSULTING $15,000
WORKING CAPITAL $150,000
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,350 $6,350 $850 $58,000 $119,390
---------------------------------------------------------------
TOTAL CAPITAL REQUIRED $69,850 $69,850 $9,350 $638,000 $1,463,290
====================================================================================================================
PRODUCTION
Area/block
Ore Production-tons/mo 8,887 26,487
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.00 0.00
Ounces of gold mined 0.00 0.00 0.00 3,590 9,830
Tons of ore milled 1600 550 0 16,550 26,350
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.34 0.00
Ounces of gold milled (1) 640.00 187.00 0.00 6,587 9,827
Recovery (81%) 0.81 0.81 0.81
---------------------------------------------------------------
Gold Production - Troy Oz. 518 151 0 5,335 7,960
Average Gold Sales Price $/Troy Oz $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2
---------------------------------------------------------------
NET SMELTER RECEIPTS $201,139 $58,770 $0 $2,070,162 $3,088,430
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
---------------------------------------------------------------
INCOME AFTER ROYALTY $201,139 $58,770 $0 $2,070,162 $3,088,430
===============================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43
Mine water treatment & pumping $1 $1 $1
Processing & tailings $15 $15 $15
G & A @ 10% $6 $6 $6
---------------------------------------------------------------
Total Cost $/Ton $65 $65 $65
OPERATING COSTS $28,800 $9,900 $0 $715,589 $1,719,699
===============================================================
DEDUCTIBLE EXPENSES Depreciation Base $1,095,900 $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $19,589 $191,077 $290,033
Deductible Exploration $2,450 $2,450 $2,450 $34,300 $68,600
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $7,350 $14,700
Local taxes $2,011 $588 $0 $20,702 $30,884
---------------------------------------------------------------
Deductible Expenses Before Depletion $24,576 $23,152 $22,564 $253,428 $404,217
===============================================================
Taxable Income Before Depletion $147,764 $25,718 ($22,564) $1,101,145 $964,514
Maximum allowed depletion = 50% rule $73,882 $12,859 $0 $561,855 $721,138
Depletion at 15% $30,171 $8,816 $0 $310,524 $446,293
$0 $0
Depletion allowed $30,171 $8,816 $0 $310,524 $434,977
*Includes all mine development costs
===============================================================
TAXES
Taxable Income After Depletion $117,593 $16,903 ($22,564) $790,621 $529,537
Loss Carried Forward Credit $0 $0 $0 $0 $455,198
Loss Carried Forward Credit Applied $0 $0 $0 ($261,085) $455,198
Federal Income Tax (2) $39,982 $5,747 $0 $187,714 $187,714
State Income Tax (2) $5,880 $845 ($1,128) $39,531 $49,237
---------------------------------------------------------------
Net Income After Tax $71,732 $10,311 ($21,436) $563,376 $292,586
Loss Carried Foreward $0 $0 $0 $261,085 $455,198
Dep.,Depl.,& Amort. $50,285 $28,930 $20,114 $508,951 $739,710
Deductible Exploration $2,450 $2,450 $2,450 $34,300 $68,600
Capital expenditures ($69,850) ($69,850) ($9,350) ($638,000) ($1,463,290)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
---------------------------------------------------------------
NET CASH FLOW $54,617 ($28,159) ($8,222) $729,711 $92,804
CUMULATIVE CASH FLOW $129,185 $101,025 $92,804
===============================================================
</TABLE>
(1) Milled ounces vary slighty from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 mllion or $630,000.
<PAGE> 20
NEVADA MANHATTAN MINING COMPANY,INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4D - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS -
COMPLETE REHAB OF WC SHAFT
<TABLE>
<CAPTION>
$390/oz Gold
MONTH 1 2 3 4
===================================================================================================================
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000
Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $4,000 $4,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $3,000 $3,000 $1,500 $1,500
ENGINEERING & CONSULTING $15,000
WORKING CAPITAL $50,000 $50,000 $50,000
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $12,740 $3,400 $3,550 $3,550
----------------------------------------------------
TOTAL CAPITAL REQUIRED $190,140 $87,400 $89,050 $39,050
===================================================================================================================
PRODUCTION
Area/block CM/1 CM/1 CM/1 CM/1
WC49/2
Ore Production-tons/mo 800 800 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30
Ounces of gold mined 160.00 160.00 320.00 480.00
Tons of ore milled 0 0 0 0
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00
Ounces of gold milled (1) 0.00 0.00 0.00 0.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz. 0 0 0 0
Average Gold Sales Price $/Troy Oz $0 $0 $0 $0
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $0 $0 $0 $0
ROYALTY ( % of NSR) 0.00% $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $0 $0 $0 $0
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $0 $0 $0 $0
G & A @ 10% $4 $4 $4 $4
----------------------------------------------------
Total Cost $/Ton $48 $48 $48 $48
OPERATING COSTS $36,960 $36,960 $73,920 $73,920
====================================================
DEDUCTIBLE EXPENSES Depreciation base $211,400 $211,400 $211,400 $211,400
*Depreciation $7,558 $7,558 $7,558 $7,558
Deductible Exploration $4,900 $4,900 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $525 $525
Local taxes 1% $0 $0 $0 $0
----------------------------------------------------
Deductible Expenses Before Depletion $13,508 $13,508 $10,533 $10,533
====================================================
Taxable Income Before Depletion ($50,468) ($50,468) ($84,453) ($84,453)
Maximum allowed depletion - 50% rule $0 $0 $0 $0
Depletion at 15% $0 $0 $0 $0
Depletion allowed $0 $0 $0 $0
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion ($50,468) ($50,468) ($84,453) ($84,453)
Loss Carried Forward Credit $50,468 $50,468 $84,453 $84,453
Loss Carried Forward Credit Applied $0 $0 $0 $0
Federal Income Tax (2) 0.34 $0 $0 $0 $0
State Income Tax (2) 0.05 $0 $0 $0 $0
----------------------------------------------------
Net Income After Tax ($50,468) ($50,468) ($84,453) ($84,453)
Loss Carried Foreward $0 $0 $0 $0
Dep.,Depl.,& Amort. $8,608 $8,608 $8,083 $8,083
Deductible Exploration $4,900 $4,900 $2,450 $2,450
Capital expenditures ($190,140) ($87,400) ($89,050) ($39,050)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW ($227,100) ($124,360) ($162,970) ($112,970)
CUMULATIVE CASH FLOW ($227,100) ($351,460) ($514,430) ($627,400)
=================================================================
Total Net Cash Flow of The Project $92,804
Net Present Value of the Project @ 15% ($145,359)
Net Present Value of the Project @ 10% ($78,637)
</TABLE>
<TABLE>
<CAPTION>
5 6 7 8 9
===================================================================================================================
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 $9,000 $9,000
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 $25,000 $25,000
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $44,000 $44,000 $44,000 $44,000 $44,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,750 $4,750 $4,750 $4,750 $4,750
-----------------------------------------------------------------
TOTAL CAPITAL REQUIRED $52,250 $52,250 $52,250 $52,250 $52,250
===================================================================================================================
PRODUCTION
Area/block WC49/2 WC49/2 WC49/2 WC565/3 WC565/3
WC565/3
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00
Tons of ore milled 400 400 1000 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.30
Ounces of gold milled (1) 80.00 80.00 200.00 480.00 480.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------
Gold Production - Troy Oz. 65 65 162 389 389
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
-----------------------------------------------------------------
NET SMELTER RECEIPTS $25,142 $25,142 $62,856 $150,854 $150,854
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
-----------------------------------------------------------------
INCOME AFTER ROYALTY $25,142 $25,142 $62,856 $150,854 $150,854
=================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $20 $20 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-----------------------------------------------------------------
Total Cost $/Ton $70 $70 $65 $65 $65
OPERATING COSTS $84,800 $84,800 $93,070 $103,840 $103,840
=================================================================
DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591 $8,591
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525
Local taxes $251 $251 $629 $1,509 $1,509
-----------------------------------------------------------------
Deductible Expenses Before Depletion $11,817 $11,817 $12,194 $13,074 $13,074
=================================================================
Taxable Income Before Depletion ($71,475) ($71,475) ($42,408) $33,940 $33,940
Maximum allowed depletion - 50% rule $0 $0 $0 $16,970 $16,970
Depletion at 15% $0 $0 $0 $22,628 $22,628
Depletion allowed $0 $0 $0 $16,970 $16,970
*Includes all mine development costs
=================================================================
TAXES
Taxable Income After Depletion ($71,475) ($71,475) ($42,408) $16,970 $16,970
Loss Carried Forward Credit $71,475 $71,475 $42,408 $0 $0
Loss Carried Forward Credit Applied $0 $0 $0 ($16,970) ($16,970)
Federal Income Tax (2) $0 $0 $0 $0 $0
State Income Tax (2) $0 $0 $0 $849 $849
-----------------------------------------------------------------
Net Income After Tax ($71,475) ($71,475) ($42,408) $16,122 $16,122
Loss Carried Foreward $0 $0 $0 $16,970 $16,970
Dep.,Depl.,& Amort. $9,116 $9,116 $9,116 $26,086 $26,086
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Capital expenditures ($52,250) ($52,250) ($52,250) ($52,250) ($52,250)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
-----------------------------------------------------------------
NET CASH FLOW ($112,159) ($112,159) ($83,093) $9,377 $9,377
CUMULATIVE CASH FLOW ($739,559) ($851,718) ($934,811) ($925,433) ($916,056)
=================================================================
</TABLE>
<TABLE>
<CAPTION>
10 11 12 13 14
===================================================================================================================
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $10,500
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000
Rehab WC Shaft to 800 Level $29,000 $31,000
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $44,000 $44,000 $45,500 $39,000 $41,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $4,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $3,000 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,750 $4,750 $4,900 $4,600 $4,450
-----------------------------------------------------------------
TOTAL CAPITAL REQUIRED $52,250 $52,250 $53,900 $50,600 $48,950
===================================================================================================================
PRODUCTION
Area/block WC565/3 WC565/3 WC565/3 WC670/4 WC670/4
WC670/4 WC800/5
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00
Tons of ore milled 1600 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
-----------------------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
-----------------------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 $201,139
=================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-----------------------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65 $65
OPERATING COSTS $104,000 $104,000 $104,000 $104,000 $104,000
=================================================================
DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591 $8,591
Deductible Exploration $2,450 $2,450 $2,450 $4,900 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $1,050 $525
Local taxes $2,011 $2,011 $2,011 $2,011 $2,011
-----------------------------------------------------------------
Deductible Expenses Before Depletion $13,577 $13,577 $13,577 $16,552 $13,577
=================================================================
Taxable Income Before Depletion $83,562 $83,562 $83,562 $80,587 $83,562
Maximum allowed depletion - 50% rule $41,781 $41,781 $41,781 $40,294 $41,781
Depletion at 15% $30,171 $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
=================================================================
TAXES
Taxable Income After Depletion $53,391 $53,391 $53,391 $50,416 $53,391
Loss Carried Forward Credit $0 $0 $0 $0 $0
Loss Carried Forward Credit Applied ($53,391) ($53,391) ($53,391) ($50,416) ($53,391)
Federal Income Tax (2) $0 $0 $0 $0 $0
State Income Tax (2) $2,670 $2,670 $2,670 $2,521 $2,670
-----------------------------------------------------------------
Net Income After Tax $50,722 $50,722 $50,722 $47,895 $50,722
Loss Carried Foreward $53,391 $53,391 $53,391 $50,416 $53,391
Dep.,Depl.,& Amort. $39,287 $39,287 $39,287 $39,812 $39,287
Deductible Exploration $2,450 $2,450 $2,450 $4,900 $2,450
Capital expenditures ($52,250) ($52,250) ($53,900) ($50,600) ($48,950)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
-----------------------------------------------------------------
NET CASH FLOW $93,599 $93,599 $91,949 $92,423 $96,899
CUMULATIVE CASH FLOW ($822,456) ($728,857) ($636,907) ($544,484) ($447,585)
=================================================================
</TABLE>
<PAGE> 21
NEVADA MANHATTAN MINING COMPANY,INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4D - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS -
COMPLETE REHAB OF WC SHAFT (Continued)
<TABLE>
<CAPTION>
15 16 17 18
=======================================================================================================
<S> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level $31,000
Rehab WC Shaft to 910 Level $25,000 $25,000 $27,000
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $41,000 $35,000 $35,000 $37,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $4,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $3,000 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,450 $4,200 $3,850 $4,050
----------------------------------------------------
TOTAL CAPITAL REQUIRED $48,950 $46,200 $42,350 $44,550
======================================================================================================
PRODUCTION
Area/block WC800/5 WC910/6 WC1,120/7 WC1,200/8
WC910/6 WC1,120/7 WC1,200/8 WC1,300/9
Ore Production-tons/mo 1,600 1,600 1,600 887
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.44
Ounces of gold mined 640.00 640.00 640.00 390.28
Tons of ore milled 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6
----------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65
OPERATING COSTS $104,000 $104,000 $104,000 $70,489
====================================================
DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $1,095,900 $1,095,900
*Depreciation $8,591 $8,591 $19,589 $19,589
Deductible Exploration $2,450 $4,900 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $1,050 $525 $525
Local taxes $2,011 $2,011 $2,011 $2,011
----------------------------------------------------
Deductible Expenses Before Depletion $13,577 $16,552 $24,576 $24,576
====================================================
Taxable Income Before Depletion $83,562 $80,587 $72,564 $106,075
Maximum allowed depletion - 50% rule $41,781 $40,294 $36,282 $53,037
Depletion at 15% $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion $53,391 $50,416 $42,393 $75,904
Loss Carried Forward Credit $0 $0 $0 $0
Loss Carried Forward Credit Applied ($53,391) ($50,416) ($42,393) ($11,077)
Federal Income Tax (2) $0 $0 $0 $22,041
State Income Tax (2) $2,670 $2,521 $2,120 $3,795
----------------------------------------------------
Net Income After Tax $50,722 $47,895 $40,273 $50,067
Loss Carried Foreward $53,391 $50,416 $42,393 $11,077
Dep.,Depl.,& Amort. $39,287 $39,812 $50,285 $50,285
Deductible Exploration $2,450 $4,900 $2,450 $2,450
Capital expenditures ($48,950) ($46,200) ($42,350) ($44,550)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW $96,899 $96,823 $93,051 $69,330
CUMULATIVE CASH FLOW ($350,685) ($253,862) ($160,811) ($91,482)
====================================================
</TABLE>
<TABLE>
<CAPTION>
19 20 21 22
======================================================================================================
<S> <C> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level $53,000 $55,000 $55,000 $55,000
Contractor supervision, overhead & profit $5,000 $5,000 $5,000 $5,000
Subtotal - Mine Contractor $58,000 $60,000 $60,000 $60,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,150 $6,350 $6,350 $6,350
----------------------------------------------------
TOTAL CAPITAL REQUIRED $67,650 $69,850 $69,850 $69,850
======================================================================================================
PRODUCTION
Area/block
Ore Production-tons/mo
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold mined 0.00 0.00 0.00 0.00
Tons of ore milled 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6
----------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65
OPERATING COSTS $28,800 $28,800 $28,800 $28,800
====================================================
DEDUCTIBLE EXPENSES Depreciation base $1,095,900 $1,095,900 $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $19,589 $19,589
Deductible Exploration $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525
Local taxes $2,011 $2,011 $2,011 $2,011
----------------------------------------------------
Deductible Expenses Before Depletion $24,576 $24,576 $24,576 $24,576
====================================================
Taxable Income Before Depletion $147,764 $147,764 $147,764 $147,764
Maximum allowed depletion - 50% rule $73,882 $73,882 $73,882 $73,882
Depletion at 15% $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion $117,593 $117,593 $117,593 $117,593
Loss Carried Forward Credit $0 $0 $0 $0
Loss Carried Forward Credit Applied $0 $0 $0 $0
Federal Income Tax (2) $39,982 $39,982 $39,982 $39,982
State Income Tax (2) $5,880 $5,880 $5,880 $5,880
----------------------------------------------------
Net Income After Tax $71,732 $71,732 $71,732 $71,732
Loss Carried Foreward $0 $0 $0 $0
Dep.,Depl.,& Amort. $50,285 $50,285 $50,285 $50,285
Deductible Exploration $2,450 $2,450 $2,450 $2,450
Capital expenditures ($67,650) ($69,850) ($69,850) ($69,850)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW $56,817 $54,617 $54,617 $54,617
CUMULATIVE CASH FLOW ($34,665) $19,952 $74,568 $129,185
====================================================
</TABLE>
<TABLE>
<CAPTION>
23 24 TOTAL
=========================================================================================
<S> <C> <C> <C>
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $73,500
Install headframe & hoist at 565 Level $200,000
Rehab WC Shaft to 800 Level $91,000
Rehab WC Shaft to 910 Level $77,000
Rehab WC Shaft to 1,300 Level $55,000 $273,000
Contractor supervision, overhead & profit $5,000 $5,000 $200,000
Subtotal - Mine Contractor $60,000 $5,000 $1,080,900
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $56,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $42,000
ENGINEERING & CONSULTING $15,000
WORKING CAPITAL $150,000
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,350 $850 $119,390
---------------------------------------
TOTAL CAPITAL REQUIRED $69,850 $9,350 $1,463,290
=========================================================================================
PRODUCTION
Area/block
Ore Production-tons/mo 26,487
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.00
Ounces of gold mined 0.00 0.00 9,830
Tons of ore milled 550 0 26,350
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.34 0.00
Ounces of gold milled (1) 187.00 0.00 9,827
Recovery (81%) 0.81 0.81
---------------------------------------
Gold Production - Troy Oz. 151 0 7,960
Average Gold Sales Price $/Troy Oz $390 $390
Ref. Chgs $/Troy Oz Au $2 $2
---------------------------------------
NET SMELTER RECEIPTS $58,770 $0 $3,088,430
ROYALTY ( % of NSR) $0 $0 $0
---------------------------------------
INCOME AFTER ROYALTY $58,770 $0 $3,088,430
=======================================
OPERATING COSTS - $/TON
Mining $43 $43
Mine water treatment & pumping $1 $1
Processing & tailings $15 $15
G & A @ 10% $6 $6
---------------------------------------
Total Cost $/Ton $65 $65
OPERATING COSTS $9,900 $0 $1,719,699
=======================================
DEDUCTIBLE EXPENSES Depreciation base $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $290,033
Deductible Exploration $2,450 $2,450 $68,600
Amort. Non-deduct. Exp. & Dev. $525 $525 $14,700
Local taxes $588 $0 $30,884
---------------------------------------
Deductible Expenses Before Depletion $23,152 $22,564 $404,217
=======================================
Taxable Income Before Depletion $25,718 ($22,564) $964,514
Maximum allowed depletion - 50% rule $12,859 $0 $721,138
Depletion at 15% $8,816 $0 $446,293
Depletion allowed $8,816 $0 $434,977
*Includes all mine development costs
=======================================
TAXES
Taxable Income After Depletion $16,903 ($22,564) $529,537
Loss Carried Forward Credit $0 $0 $455,198
Loss Carried Forward Credit Applied $0 $0 $455,198
Federal Income Tax (2) $5,747 $0 $187,714
State Income Tax (2) $845 ($1,128) $49,237
---------------------------------------
Net Income After Tax $10,311 ($21,436) $292,586
Loss Carried Foreward $0 $0 $455,198
Dep., Depl.,& Amort. $28,930 $20,114 $739,710
Deductible Exploration $2,450 $2,450 $68,600
Capital Expenditures ($69,850) ($9,350) ($1,463,290)
Reclamation $0 $0 $0
Salvage $0 $0 $0
---------------------------------------
NET CASH FLOW ($28,159) ($8,222) $92,804
CUMULATIVE CASH FLOW $101,025 $92,804
=======================================
</TABLE>
(1) Milled ounces vary slightly from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 million or $630,000.
<PAGE> 22
<TABLE>
<CAPTION>
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 5 - CASH FLOW ANALYSIS -
MINE ESTIMATED ORE BLOCKS
DOWN TO AND INCLUDING 565 LEVEL
$390/oz Gold
MONTH 1 2 3 4
===================================================================================================================
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Provide add. ventilation for White Caps levels
Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000
Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000
Other contract work
Underground sampling (140 days @$400/d) $4,000 $4,000 $4,000 $2,000
Assays (140 days x 20/d x $15) $3,000 $3,000 $3,000 $1,500
Engineering & Consulting $15,000
Working Capital $50,000 $50,000 $50,000
Contigency @ 10% Excl. Working Capital $12,740 $3,400 $3,900 $3,550
----------------------------------------------------
TOTAL CAPITAL REQUIRED $190,140 $87,400 $92,900 $39,050
===================================================================================================================
PRODUCTION
Area/block CM/1 CM/1 CM/1 CM/1
WC49/2
Ore Production-tons/mo 800 800 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30
Ounces of gold mined 160.00 160.00 320.00 480.00
Tons of ore milled 0 0 0 0
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00
Ounces of gold milled (1) 0.00 0.00 0.00 0.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz 0 0 0 0
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $0 $0 $0 $0
ROYALTY (% of NSR) 0.00% $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $0 $0 $0 $0
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $0 $0 $0 $0
G & A @ 10% $4 $4 $4 $4
----------------------------------------------------
Total Cost $/Ton $48 $48 $48 $48
ANNUAL OPERATING COSTS $36,960 $36,960 $73,920 $73,920
====================================================
DEDUCTIBLE EXPENSES Depreciation Base $211,400 $211,400 $211,400 $211,400
*Depreciation $7,558 $7,558 $7,558 $7,558
Deductible Exploration $4,900 $4,900 $4,900 $2,450
Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $1,050 $525
Local taxes 1% $0 $0 $0 $0
----------------------------------------------------
Deductible Expenses Before Depletion $13,508 $13,508 $13,508 $10,533
====================================================
Taxable Income Before Depletion ($50,468) ($50,468) ($87,428) ($84,453)
Maximum allowed depletion - percentage $0 $0 $0 $0
Depletion at 15% $0 $0 $0 $0
Depletion allowed $0 $0 $0 $0
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion ($50,468) ($50,468) ($87,428) ($84,453)
Loss Carried Forward Credit $50,468 $50,468 $87,428 $84,453
Loss Carried Forward Credit Applied $0 $0 $0 $0
Federal Income Tax (2) 0.34 $0 $0 $0 $0
State Income Tax (2) 0.05 $0 $0 $0 $0
----------------------------------------------------
Net Income After Tax ($50,468) ($50,468) ($87,428) ($84,453)
Loss Carried Forward $0 $0 $0 $0
Dep., Depl., & Amort. $8,608 $8,608 $8,608 $8,083
Deductible Exploration $4,900 $4,900 $4,900 $2,450
Capital expenditures ($190,140) ($87,400) ($92,900) ($39,050)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW ($227,100) ($124,360) ($166,820) ($112,970)
CUMULATIVE CASH FLOW ($227,100) ($351,460) ($518,280) ($631,250)
=================================================================
Total Net Cash Flow of The Project $425,326
Net Present Value of The Project @ 15% $299,526
Net Present Value of The Project @ 10% $339,152
</TABLE>
<TABLE>
<CAPTION>
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 5 - CASH FLOW ANALYSIS -
MINE ESTIMATED ORE BLOCKS
DOWN TO AND INCLUDING 565 LEVEL
5 6 7 8 9
===================================================================================================================
<S> <C> <C> <C> <C> <C>
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan
Provide add. ventilation for White Caps levels $25,000
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $35,000 $10,000 $10,000 $10,000 $10,000
Other contract work
Underground sampling (140 days @$400/d) $2,000 $6,000 $6,000 $6,000 $6,000
Assays (140 days x 20/d x $15) $1,500 $4,500 $4,500 $4,500 $4,500
Engineering & Consulting
Working Capital
Contigency @ 10% Excl. Working Capital $3,850 $2,050 $2,050 $2,050 $2,050
-----------------------------------------------------------------
TOTAL CAPITAL REQUIRED $42,350 $22,550 $22,550 $22,550 $22,550
===================================================================================================================
PRODUCTION
Area/block WC49/2 WC49/2 WC49/2 WC565/3 WC565/3
WC565/3
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00
Tons of ore milled 400 400 1000 1600 2400
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.30
Ounces of gold milled (1) 80.00 80.00 200.00 480.00 720.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------
Gold Production - Troy Oz 65 65 162 389 583
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
-----------------------------------------------------------------
NET SMELTER RECEIPTS $25,142 $25,142 $62,856 $150,854 $226,282
ROYALTY (% of NSR) $0 $0 $0 $0 $0
-----------------------------------------------------------------
INCOME AFTER ROYALTY $25,142 $25,142 $62,856 $150,854 $226,282
=================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $20 $20 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-----------------------------------------------------------------
Total Cost $/Ton $70 $70 $65 $65 $65
ANNUAL OPERATING COSTS $84,800 $84,800 $93,070 $103,840 $118,200
=================================================================
DEDUCTIBLE EXPENSES Depreciation Base $316,400 $316,400 $316,400 $316,400 $316,400
*Depreciation $5,656 $5,656 $5,656 $5,656 $5,656
Deductible Exploration $2,450 $7,350 $7,350 $7,350 $7,350
Amort. Non-deduct. Exp. & Dev. $525 $1,575 $1,575 $1,575 $1,575
Local taxes $251 $251 $629 $1,509 $2,263
-----------------------------------------------------------------
Deductible Expenses Before Depletion $8,882 $14,832 $15,209 $16,089 $16,843
=================================================================
Taxable Income Before Depletion ($68,540) ($74,490) ($45,423) $30,925 $91,238
Maximum allowed depletion - percentage $0 $0 $0 $15,463 $45,619
Depletion at 15% $0 $0 $0 $22,628 $33,942
Depletion allowed $0 $0 $0 $15,463 $45,619
*Includes all mine development costs
=================================================================
TAXES
Taxable Income After Depletion ($68,540) ($74,490) ($45,423) $15,463 $45,619
Loss Carried Forward Credit $68,540 $74,490 $45,324 $0 $0
Loss Carried Forward Credit Applied $0 $0 $0 ($15,463) ($45,619)
Federal Income Tax (2) $0 $0 $0 $0 $0
State Income Tax (2) $0 $0 $0 $773 $2,281
-----------------------------------------------------------------
Net Income After Tax ($68,540) ($74,490) ($45,423) $14,689 $43,338
Loss Carried Forward $0 $0 $0 $15,463 $45,619
Dep., Depl., & Amort. $6,181 $7,231 $7,231 $22,693 $52,850
Deductible Exploration $2,450 $7,350 $7,350 $7,350 $7,350
Capital expenditures ($42,350) ($22,550) ($22,550) ($22,550) ($22,550)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
-----------------------------------------------------------------
NET CASH FLOW ($102,259) ($82,459) ($53,393) $37,645 $126,607
CUMULATIVE CASH FLOW ($733,509) ($815,968) ($869,361) ($831,715) ($705,108)
=================================================================
</TABLE>
<TABLE>
<CAPTION>
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 5 - CASH FLOW ANALYSIS -
MINE ESTIMATED ORE BLOCKS
DOWN TO AND INCLUDING 565 LEVEL
10 11 12 TOTAL
======================================================================================================
<S> <C> <C> <C> <C>
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Provide add. ventilation for White Caps levels $25,000
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $110,000
Subtotal - Mine Contractor $10,000 $10,000 $10,000 $301,400
Other contract work
Underground sampling (140 days @$400/d) $6,000 $6,000 $4,000 $56,000
Assays (140 days x 20/d x $15) $4,500 $4,500 $3,000 $42,000
Engineering & Consulting $15,000
Working Capital $150,000
Contigency @ 10% Excl. Working Capital $2,050 $2,050 $1,700 $41,440
----------------------------------------------------
TOTAL CAPITAL REQUIRED $22,550 $22,550 $18,700 $605,840
======================================================================================================
PRODUCTION
Area/block WC565/3 WC565/3 WC565/3
Ore Production-tons/mo 1,600 1,600 119 16,119
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 47.60 5,648
Tons of ore milled 3000 3600 3600 16,000
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40
Ounces of gold milled (1) 1200.00 1440.00 1440.00 5,640
Recovery (81%) 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz 972 1,166 1,166 4,568
Average Gold Sales Price $/Troy Oz $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $377,136 $452,563 $452,563 $1,772,539
ROYALTY (% of NSR) $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $377,136 $452,563 $452,563 $1,772,539
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43
Mine water treatment & pumping $1 $1 $1
Processing & tailings $15 $15 $15
G & A @ 10% $6 $6 $6
----------------------------------------------------
Total Cost $/Ton $65 $65 $65
ANNUAL OPERATING COSTS $129,200 $140,000 $70,393 $1,046,063
====================================================
DEDUCTIBLE EXPENSES Depreciation Base $316,400 $316,400 $316,400
*Depreciation $5,656 $5,656 $5,656 $75,475
Deductible Exploration $7,350 $7,350 $4,900 $41,650
Amort. Non-deduct. Exp. & Dev. $1,575 $1,575 $1,050 $8,925
Local taxes $3,771 $4,526 $4,526 $17,725
----------------------------------------------------
Deductible Expenses Before Depletion $18,352 $19,106 $16,131 $176,501
====================================================
Taxable Income Before Depletion $229,584 $293,457 $366,039 $549,975
Maximum allowed depletion - percentage $114,792 $146,728 $183,019 $505,622
Depletion at 15% $56,570 $67,884 $67,884 $248,910
Depletion allowed $56,570 $67,884 $67,884 $253,421
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion $173,014 $225,572 $298,154 $296,554
Loss Carried Forward Credit $0 $0 $0 $461,169
Loss Carried Forward Credit Applied ($173,014) ($225,572) ($1,501) $461,169
Federal Income Tax (2) $0 $0 $100,862 $100,862
State Income Tax (2) $8,651 $11,279 $14,908 $37,891
----------------------------------------------------
Net Income After Tax $164,363 $214,294 $182,385 $157,801
Loss Carried Forward $173,014 $225,572 $1,501 $461,169
Dep., Depl., & Amort. $63,801 $75,115 $74,590 $343,596
Deductible Exploration $7,350 $7,350 $4,900 $68,600
Capital expenditures ($22,550) ($22,550) ($18,700) ($605,840)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW $385,978 $499,781 $244,676 $425,326
CUMULATIVE CASH FLOW ($319,131) $180,651 $425,326
====================================================
</TABLE>
(1) Milled ounces vary slightly from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 million or $630,000.
<PAGE> 23
APPENDIX C
MILL INFORMATION
June 21, 1995 letter from Dale Moore to Mr. Wilson regarding the proposed flow
sheet for the New Concept Mining, Inc. mill.
Undated equipment list for the New Concept Mining, Inc. mill.
13
<PAGE> 24
June 21, 1995
Dear Mr. Wilson
The Primary Crushing will be done at the mine site with a Portable
Crusher, which consists of a 18"x 34" Jaw Crusher and a 24" Roll Crusher. The
secondary crushing will be done at the Mill with a 3' short head Crusher.
The Grinding Circuit will consist of 2 Ball Mills, one a 7'x9' Marcy
for the Primary grind and a 4'x8' Marcy for the Regrind Mill. The underflow
from the 8" Cyclones will go to a 2'x4' 2 cell Jig. The overflow will go to a
30' thickner. The Slurry will be thickened to 45 to 50% solids before it is
pumped to the leach tanks. The first leach tank will be a Pachuca Tank. The
Mids from the Jig will go to the tables (5-5'x7' Diester) product from the
tables will go to the refinery.
Tails from the leach circuit will go to the Floatation Cells (8 48"
Denvers) product from the floats will go to a 12' thickner, then to a 2 Leaf
Filter.
It is impossible to design a balanced flow sheet when the equipment has
not been purchased and the "Wheels" keep changing their minds as to what they
want. The equipment list that I am sending to you is a bare minimum that will
be needed and what I recommended that be purchased.
The Strip Circuit and EW Cells are in storage in Las Vegas. All S.S.
Steel and Custom made.
I inspected this Circuit on June 16, 1995 and it is in very good
condition and it is complete with EW Cells and Rectifiers.
The water well will produce 50 gpm Fresh water usage in the Mill, will
be approx. 20 gpm.
The information that I am sending you is not exactly what you
requested, but it is all that I have at this time and I hope it will be of some
use to you.
Sincerely,
/s/ DALE MOORE
------------------------------------
Dale Moore
<PAGE> 25
EQUIPMENT
1. PORTABLE CRUSHING PLANT (AT THE MINE SITE)
18" X 34" JAW CRUSHER
24" ROLL CRUSHER
CONVEYORS
(MILL SITE)
1. 3 FOOT SHORT HEAD
KUE-KEN 100 H.P.
2. 100 TON FINE ORE STORAGE BIN
3. 18" X 6' BELT FEEDER
4. 24" X 34' FINE ORE CONVEYOR
5. BELT SCALES
6. 7' X 9' MARCY BALL MILL (INSTALLED IN MILL) ALREADY
7. 4" X 3" SLURRY PUMP & SUMP BOX
8. 4-8" CYCLONES & BOXES
9. 2' X 4' DECO JIG
10. 2" X 3" SLURRY PUMP
11. 30' THICKNER TANK
12. 6" O.D.s PUMP
13. 4- 12' X 18' LEACH TANKS WITH ADAPTER MECH ALREADY INSTALLED
14. 4' X 8' MARCY REGRIND MILL W/100 H.P. MOTOR & GEAR BOX
15. 5- 5' X 7' DIESTER TABLES
16. 2 X 3 SLURRY PUMP
17. AIR COMPRESSOR
18. NACN MIXING TANK (12,000 GAL)
19. LIME MIXING TANK (3,000 GAL)
20. LIME SLAKING MILL (2' X 2' BALL MILL) ?
21. NACN PUMP (POSITIVE DISPLACENT) 1" X 1 1/2"
22. REFINERY FURNACE (125 CRUCIBLE)
23. 2- RECTIFIERS (50 AMP) 110-220
24. STRIPPING PLANT SS STEEL, STRIP TANK, EW CELL
CUSTOM MADE IN LAS VEGAS (USED) AVAILABLE
25. PUMPS FOR STRIPPING PLANT
1.5" X 1" SOLUTION PUMP
1" X 1" SOLUTION PUMP FEED TO E.W. CELLS
26. SECURITY SYSTEM FOR REFINERY
27. MISC. PIPING & PUMPS
28. PULP DENSITY SCALES
29. 25' CLARIFIER FOR ATG WASTE WATER TREATMENT SYSTEM
30. A.T.G. WASTE WATER SYSTEM
31. 3" GALIGER SUMP PUMP
32. 12 DENVER FLOAT CELLS (48")
33. 15' THICKNER TANK W/MECH
34. 2' LEAF FILTER W/BLOWER
<PAGE> 26
LAB EQUIPMENT
1. RO-TAP AND SCREENS
2. CHIPMUNK LAB CRUSHER 3" X 6"
3. ROLL CRUSHER (6" X 8")
4. PULVERIZER
5. METTLER BALANCE
6. CAHN MICRO-BALANCE
7. HOT PLATES
8. LAB TABLES
9. VENT HOODS
10. CUPPLING FURNACE
11. CRUCIBLE FURNACE
12. MISC GLASS WARE
