SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) August 23, 1996
TOUCAN GOLD CORPORATION
(Exact name of registrant as specified in charter)
Delaware 33-28562 75-2661571
(State of incorporation)(Commission File Number)(IRS Employer Identification No)
8201 Preston Road, Suite 600, Dallas, Texas 75225
- ------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 890-8065
----------------------------------------
-----------------------------------------------------
(Former name or former address, if changed since last report)
CORPDAL:54474.4 29976-00001
1
<PAGE>
Item 5. Other Events
On August 23, 1996, Toucan Gold Corporation ("Toucan Gold")
and Toucan Mining Limited ("Toucan Mining") (collectively, "Toucan")
signed a letter of intent (the "Letter of Intent") with HRC Development
Corporation ("HRC") and Eldorado Gold Corporation ("Eldorado")
(collectively, "HRC-Eldorado") with respect to certain properties
(collectively, the "Property") in the Cuiaba Basin in the State of Mato
Grosso, Brazil, to which Mineradora de Bauxita Ltda. ("MBL"), the
wholly-owned subsidiary of Toucan Mining, has been granted certain
priority mining claims by the Brazilian government. Such Letter of
Intent is filed as an exhibit hereto. The Property covers approximately
4,766 square miles of mining claims in the Cuiaba Basin, which
constitutes all of MBL's mining claims. Subject to the completion of a
final agreement (the "Definitive Agreement") and the requirements of
Brazilian law, the parties have agreed to give HRC-Eldorado an option
(the "Option") to earn a 50% interest in 10% of MBL's mining claims or
four (4) blocks of claims aggregating 476 square miles (the "Option
Property") through the expenditure of Canadian ("Cdn") $5 million (the
"Committed Amount") by HRC-Eldorado as set out in the following
paragraph. If such Option is exercised by such expenditure within the
Option Period (as hereinafter defined), subject to the requirements of
Brazilian law, the parties would form a joint venture for the purpose
of mineral exploration of the Property as more fully described below.
Stock of each of HRC and Eldorado is traded on the Vancouver Stock
Exchange and stock of Eldorado is also listed on the Toronto Stock
Exchange.
The Letter of Intent provides that, subject to force majeure,
HRC-Eldorado shall incur the Committed Amount, Cdn $5 million, in
exploration expenditures ("Exploration Expenditures") on the Property
within two years (the "Option Period") of the effective date of the
Definitive Agreement. Exploration Expenditures will include, inter
alia, satellite imagery, aerial photography, preparation of
topographical maps, aeromagnetic surveys, geochemical work on certain
areas of the Property, maintenance costs and basic drilling of the
Property selected by HRC-Eldorado; provided, that only direct expenses
(and not overhead expenses) will be included in the Exploration
Expenditure total. HRC-Eldorado is required to spend at least (i) Cdn
$2,000,000 in Exploration Expenditures during the first year of the
Option Period and (ii) the balance of the Committed Amount, if any,
during the second year of the Option Period. If HRC-Eldorado does not
meet either condition, then Toucan may, at its sole discretion,
terminate the Definitive Agreement without HRC-Eldorado acquiring any
right, title or interest in or to any part of the Property, and
HRC-Eldorado will deliver to Toucan all information and data collected
pursuant to the Exploration Expenditures.
During the term of the Option Period, HRC-Eldorado shall act
as operator, shall have possession of the Property and shall have sole
and exclusive right to regulate access to the Property; provided,
however, that an authorized representative of Toucan shall have access
to the Property with the right to be accompanied by third parties. In
addition, L. Clark Arnold, a Vice President and Director of the
Company, will provide technical advice on behalf of Toucan to the
carrying out of the exploration program. Negotiations
CORPDAL:54474.4 29976-00001
2
<PAGE>
with occupants and/or surface-right owners of the Property shall be the
responsibility of HRC-Eldorado and any such costs will be included in
Exploration Expenditures; however, all dealings with the Brazilian
Department of Mining shall continue to be conducted by Toucan.
On the date on which HRC-Eldorado has fully expended the
Committed Amount as required (the "Option Exercise Date"), HRC-Eldorado
will have the right to select in its discretion the Option Property,
which shall comprise 10% of MBL's mining claims or four (4) blocks of
claims aggregating 476 square miles of the Property. HRC-Eldorado shall
acquire an indirect, undivided 50% right, title and interest in and to
the Option Property. In order to minimize any impact on Toucan's
ability to develop the remaining 90% of the Property, each block of the
Option Property shall be a parcel of Property of defined dimension
having a rectangular perimeter. Upon the Option Exercise Date, the
undivided right, title and interest to the Property, except for the
Option Property, shall remain with Toucan, and the right to exclusive
possession of such Property shall be returned to MBL and Toucan,
unburdened by any rights granted under the Definitive Agreement.
Subject to the requirements of Brazilian law and the
negotiation and execution of the Definitive Agreement, it is
anticipated that the transfer to HRC-Eldorado of its interest in the
Option Property will be effected through the organization of a
Brazilian company ("Brazilco"), which will hold an undivided right,
title and interest to 100% of the Option Property. Brazilco will be a
wholly-owned subsidiary, through an intermediary holding company
("Holdco"), of a public company ("Development Co.") organized under the
laws of Canada or such other jurisdiction as Toucan and HRC-Eldorado
shall agree. Each of Toucan and HRC-Eldorado will initially own 50% of
Development Co., and each shall be entitled to elect (i) two of four
board members of Holdco at all times during which such party holds 25%
or more of the issued and outstanding shares of Development Co. and
(ii) one of four board members of Holdco at all times during which such
party holds 10% or more of the issued and outstanding shares of
Development Co. It is further anticipated that Development Co. will
raise money needed for the development of the Option Property through
the public markets, and Toucan and HRC-Eldorado will have the
opportunity to maintain their respective interests in Development Co.
by participating in special warrants and/or public offerings by
Development Co.
Each of Toucan and HRC have agreed to use their best efforts,
in good faith, to effect the Definitive Agreement.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
CORPDAL:54474.4 29976-00001
3
<PAGE>
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
10 Letter of Intent, dated August 23, 1996, by
and among Toucan Gold Corporation, Toucan
Mining Limited, HRC Development Corporation
and Eldorado Gold Corporation (Schedule A to
the Letter of Intent has been omitted
pursuant to Item 601(b)(2) of Regulation
S-K).
CORPDAL:54474.4 29976-00001
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Toucan Gold Corporation
-------------------------
(Registrant)
Date: August 30, 1996 By: /s/ Robert Jeffcock
----------------------
Robert Jeffcock
Chief Executive Officer
CORPDAL:54474.4 29976-00001
5
<PAGE>
TOUCAN GOLD CORPORATION
EXHIBIT INDEX
Exhibit No. Description
10 Letter of Intent, dated August 23, 1996, by
and among Toucan Gold Corporation, Toucan
Mining Limited, HRC Development
Corporation and Eldorado Gold Corporation.
CORPDAL:54474.4 29976-00001
6
<PAGE>
EXHIBIT 10
CORPDAL:54474.4 29976-00001
7
<PAGE>
DELIVERED BY HAND
August 23, 1996
Toucan Gold Corporation
Toucan Mining Limited
Birkett House, 4th Floor
27 Albemarle Street
London W1Z 4LQ
England
Gentlemen:
Re: Joint Venture
Brazilian Assets - Cuiaba Basin
This letter outlines the essential terms of a proposed agreement to be reached
among Toucan Gold Corporation ("Toucan Gold"), Toucan Mining Limited ("Toucan
Mining") (collectively, "Toucan") and the undersigned, HRC Development
Corporation ("HRC") and Eldorado Gold Corporation ("Eldorado") (collectively
"HRC-Eldorado") in respect of certain properties held by Mineradora de Bauxita
Ltda. ("Mineradora") in the Cuiaba Basin in the State of Mato Grosso, Brazil.
HRC-Eldorado understands that Mineradora is a wholly-owned subsidiary of Toucan
Mining and that Toucan Mining is controlled by Toucan Gold.
Subject to the completion of Definitive Documents (as hereinafter provided for
and defined) and any changes required under Brazilian law to accomplish their
intentions as herein set forth, the Parties will agree as follows:
1. Property: Will be defined as those priority mining claims granted to
Mineradora by the Brazilian government out of 171
exploration claims submitted, with such granted claims
having an area of roughly 4,766 square miles of mining
claims in the Cuiaba Basin in the State of Mato Grosso,
Brazil and to which Mineradora has priority (as more
CORPDAL:54736.1 29976-00001
-1-
<PAGE>
particularly described in Schedule "A", hereto,
the "Property"). For greater certainty, the
claims area in which the Property is located is
geographically and geologically known as the
"Baixada Cuiabana".
2. HRC-Eldorado Earn-in
Requirements
Subject to force majeure, HRC-Eldorado shall incur Cdn. $5
million (the "Committed Amount") in exploration expenditures
("Exploration Expenditures") on the Property within two
years (the "Option Period") of the date on which this letter
is replaced by Definitive Documents. In preparing the
Definitive Documents, Toucan understands that Exploration
Expenditures will be defined as direct expenditures on the
Property without including corporate or group overheads and
that the following will be included, among others specified
in the Definitive Documents:
a. satellite imagery and aerial photography of the whole of
the 4,766 square miles to provide an environmental baseline
(for example to show what damage has already been done by
local miners) and to provide evidence for the preparation
of topographic maps which would define boundaries of the
Property, roads and other physical features thereon;
b. the preparation of topographical maps of the whole 4,766
square miles of the Property at a scale no less detailed
than 1:50,000;
c. the completion of aeromagnetic surveys over the whole 4,766
square miles of the Property;
d. the completion of geochemical work on areas of
the Property selected by HRC-Eldorado in its sole
discretion (but after consultation with Toucan); and
e. the basic drilling of areas of the Property selected by
HRC-Eldorado in its sole discretion (but after consultation
with Toucan) that appear to have good potential for the
identification of areas for development drilling at a later
stage.
Toucan understands that HRC-Eldorado is
prepared to attach an outline of the intended
schedule and amounts of Exploration
Expenditures broken down as indicated in
clauses (a) through (e) above to the joint
venture agreement (the "Work Program").
CORPDAL:54736.1 29976-00001
-2-
<PAGE>
Toucan further understands that HRC-Eldorado
will deliver to Toucan with each monthly report
that is delivered on the 15th day of the month
(pursuant to paragraph 4) following the end of
each quarterly period of the Option Period: (i)
an officer's certificate specifying the
Exploration Expenditures incurred on an
aggregate basis for each of the preceding
quarters; and (ii) one copy of all information
and data generated during such quarterly period
not previously delivered to Toucan.
Toucan also understands that, if the officer's
certificate delivered in respect of the final
quarter of the first year of the Option Period
does not indicate that at least Cdn. $2,000,000
in Exploration Expenditures has been expended
during the first year of the Option Period,
Toucan shall be entitled by notice in writing
delivered to HRC-Eldorado within 15 days after
the receipt of any such officer's certificate
to terminate the joint venture agreement and
all other agreements represented by the
Definitive Documents without HRC-Eldorado
acquiring any right, title and interest in any
part of the Property.
At the end of the Option Period whether or not
the Option Exercise Date is achieved or, if the
joint venture agreement and other agreements
are terminated by Toucan because of a failure
by HRC- Eldorado to spend at least Cdn.
$2,000,000 in the first year of the Option
Period or an aggregate of Cdn. $5,000,000 by
the end of the Option Period, in any case,
HRC-Eldorado will deliver to Toucan all
information and data related to the entire
Property in its possession and control and not
theretofore delivered to Toucan.
3. Operating
Provisions
At all times during the Option Period, HRC-Eldorado shall act as
operator and shall have, inter alia, (a) possession of the Property
and (b) sole and exclusive right to regulate access to the Property;
provided, however, that an authorized representative of Toucan shall
have access to the Property. Furthermore, Toucan shall be entitled to
bring third parties on such visits at its own risk and expense.
Exploration Expenditures shall include maintenance costs, if any for
the Property; however, all dealings and negotiations with the
Brazilian Department of Mines with regard to the Property shall be
exclusively conducted by Toucan. All negotiations with occupants
and/or owners of the surface rights related to the Property shall be
the exclusive responsibility of HRC-Eldorado and included in
Exploration
CORPDAL:54736.1 29976-00001
-3-
<PAGE>
Expenditures; provided, however, Toucan shall
be notified in advance of any such negotiations
and shall have the right to have an authorized
Toucan representative present. L. Clark Arnold
will provide technical advice on behalf of
Toucan to the settlement and carrying out of
the Work Program of Exploration Expenditures to
be attached to the Definitive Documents.
4. Monthly
Reports On the 15th of each calendar month,
HRC-Eldorado shall provide a report to Toucan
summarizing the activities undertaken on or
with respect to the Property and the results
thereof during the preceding calendar month.
5. Option
Property
HRC-Eldorado shall select no more that 4 blocks aggregating 476 square
miles within the Property (collectively, the "Option Property")
and, on the date on which the Committed Amount has been fully
expended (the "Option Exercise Date"), HRC-Eldorado shall be
deemed to acquire an indirect undivided 50% right, title and
interest in and to the Option Property through Brazilco
(hereinafter defined). Toucan is concerned that the selection by
HRC-Eldorado of the Option Property not impact adversely on its
ability to develop the remaining 90% of the Property.
Accordingly, Toucan suggests that a block be defined as a
"parcel" having right angled corners where the distance from east
to west cannot be less than 50% of the distance from north to
south or vice versa.
6. Property Other than
Option Property The undivided right, title and
interest in all Property not comprising Option
Property shall remain with Mineradora and
Toucan and exclusive possession and control of
such Property shall be returned to Mineradora
and Toucan on the Option Exercise Date.
7. Title Transfer On the Option Exercise Date, an undivided right, title and
interest in 100% of the Option Property shall be transferred
to a corporation incorporated under the laws of Brazil
("Brazilco") for the purposes of Definitive Documents. As
soon as it is apparent to HRC-Eldorado that the Option
Exercise Date will be achieved, it shall notify Toucan and,
subject to the provisions of the Definitive Documents, the
Parties shall commence negotiations regarding the
CORPDAL:54736.1 29976-00001
-4-
<PAGE>
incorporation and accomplishment of the title transfer to
be effected to Brazilco and other matters related to
Holdco and Pubco.
8. Holding
Companies
Subject to the provisions of the Definitive Documents, Brazilco shall
be organized as a wholly-owned subsidiary of a corporation
incorporated pursuant to the laws of the British Virgin Islands
("Holdco") and Holdco shall be organized as a wholly-owned
subsidiary of a Canadian public corporation ("Pubco")
incorporated pursuant to the laws of Canada or such other
jurisdiction as the parties may agree.
9. Toucan Nominees
to Holdco Board
The board of directors of Holdco shall initially be comprised of four
(4) members. Each of Toucan and HRC-Eldorado shall be entitled to
have two (2) representatives on the board of directors of Holdco
at all times during which such Party holds twenty-five per cent
(25%) or more of the issued and outstanding shares of Pubco. Each
of Toucan and HRC-Eldorado shall be entitled to have one (1)
representative on the board of directors of Holdco at all times
during which it holds at least ten per cent (10%) but less than
twenty-five per cent (25%) of the issued and outstanding shares
of Pubco.
10. Financing
Toucan understands that the financing to be done by Pubco for the
purpose of developing the Option Property will be raised in the
Canadian public markets on the best available market terms with
Toucan and HRC-Eldorado being entitled to maintain their
respective interest in Pubco by participating in special warrant
and/or public offerings by Pubco.
11. Further
Assurances
Subject to the entry into of mutually acceptable Definitive Documents,
each Party shall do or cause to be done in all such acts and
things and execute and deliver all such deeds, transfers,
assignments and instruments as the other Parties may reasonably
request to give effect to the Definitive Documents and to
transfer the Option Property as contemplated thereby.
CORPDAL:54736.1 29976-00001
-5-
<PAGE>
12. Definitive
Documents
The Parties shall use their respective best efforts, in good faith,
based upon this outline of intended terms to execute and deliver
definitive documents (collectively, "Definitive Documents")
including, without limitation, a formal joint venture agreement.
Any such formal joint venture agreement and other possible
agreements will provide usual provisions on the relationship of
the parties, confidentiality of information, assignments,
reporting to regulatory bodies, restrictions on termination of
such agreements and disposition of any assets held by the
parties. There will also be usual provisions to deal with
insurance, tax elections, force majeure, currency, governing law,
notices and adjacent lands and any other provisions the Parties
may agree are desirable.
The Parties contemplate that Definitive Documents will be concluded within 60
days of execution and delivery of this statement of intent or such further
period as they may mutually agree to.
Please signify your acceptance of this statement of intent by signing as
indicated below and returning a duplicate copy of this letter, as so executed,
to the attention of either of the undersigned.
Yours truly,
HRC DEVELOPMENT ELDORADO GOLD
CORPORATION LTD. CORPORATION
Per: /s/ Richard Barclay Per: /s/ Richard Barclay
-------------------------- -------------------------
(Authorized Signing Officer) (Authorized Signing Officer)
The foregoing statement of intent is accepted and agreed to this 23rd day of
August, 1996.
TOUCAN GOLD CORPORATION TOUCAN MINING LIMITED
Per: /s/ Robert Jeffcock Per: /s/ Robert Jeffcock
---------------------- -------------------------
(Authorized Signing Officer) (Authorized Signing Officer)
CORPDAL:54736.1 29976-00001
-6-
<PAGE>
