UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(g) OF THE SECURITIES
EXCHANGE ACT OF 1934 OF A FOREIGN CORPORATION
LEADER MINING INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Commission File no _______________
Alberta, Canada (N/A)
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 Fifth Avenue, S.W., Suite 530, Calgary, Alberta T2POL6
(Address of principal executive offices) (Zip Code)
(403) 234-7501
Registrant's telephone number, including area code
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class to be so registered: None
Name of each exchange on which each class is to be registered: None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of class
Common Unlimited Shares of Common Stock
A total of 16,826,065 shares of common stock of Registrant were issued and
outstanding as of May 20, 1999. No other classes were issued and outstanding.
Indicated by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
The Registrant has not been required to file reports, but has filed reports
under Section 13(2)(b) as a foreign company.
Indicate by check mark which financial statement item the Registrant has elected
to follow: Item 17 __X__ Item 18 ______
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business......................................5
Item 2. Description of Property.....................................12
Item 3. Legal Proceedings...........................................18
Item 4. Security Ownership of Certain Beneficial Owners
and Management (Control of Registrant)......................20
Item 5. Nature of Trading Market
Market Price of and Dividends on
Registrants Common Equity and
Related Stockholder matters.................................21
Item 6. Exchange Controls and Other Limitations Affecting Security
Holders.....................................................22
Item 7. Taxation....................................................22
Item 8. Selected Financial Information..............................24
Item 9. Management Discussion and Analysis..........................28
of Financial Condition and Results of Operations
Item 10. Directors and Executive Officers ...........................31
Item 11. Compensation of Officers and Directors......................33
Item 12. Options to Purchase Securities from Registration or
Subsidiaries................................................35
Item 13. Interest of Management in Certain Transactions..............36
Item 14. Description of Securities to be registered..................37
Item 15. Defaults upon Senior Securities.............................37
Item 16. Changes in Securities, Changes in Security for Registered
Securities..................................................38
Item 17. Financial Statements........................................38
Item 18. Financial Statements (Not applicable) ......................38
<PAGE>
Item 19. Financial Statements, Exhibits, and Supplementary Data .....39
Exhibit Index......................................49
Signatures.........................................42
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) The Company
Leader Mining International Inc. ("Leader", "Company" or "Registrant") was
incorporated on June 22, 1987 as Durga Resources Ltd. ("Durga"), under the
Business Companys Act (Alberta). By a Certificate of Amalgamation dated
March 31, 1993 Durga amalgamated with Durvada Resources Ltd. and resulted in new
Durga Resources Ltd. By a Certificate of Amendment dated September 24, 1993,
Durga changed its name to Leader Mining Company ("LMC"). By a Certificate of
Amendment dated July 18, 1994. It consolidated its shares (reverse split) in
1994 by one for five shares. LMC changed its name to the Leader Mining
International Inc.
The Registrant was listed on the Alberta Stock Exchange on December 18, 1987.
Leader is extraprovincially registered in the Province of Saskatchewan by a
Certificate of Registration dated November 21, 1996, under The Business
Corporations Act (Saskatchewan) and in the Province of Manitoba by a Certificate
of Registration dated November 20, 1996, under The Business Corporations Act
(Manitoba).
The registered office of the Company in Alberta is at 1600, 407 - 2nd Street
S. W., Calgary, Alberta, T2P 2Y3. The head office and records office of the
Corporation is at 530, 400-5th Avenue S. W., Calgary, Alberta, T2P 0L6.
The Company is a reporting company in the Province of British Columbia and
in the Province of Alberta. The Corporation's shares are listed and posted for
trading on the Alberta Stock Exchange (ASE) under the symbol "LMN" and quoted on
National Quotation Bureau "Pink Sheets."
The Company was formed by Mr. Yashvir (Jasi) Nikhanj, the current President and
a director, to pursue the principal business of exploration, and development of
gold, silver and base metals projects.
From 1987 to 1994, the Company was engaged in mineral exploration for gold,
copper, zinc and diamonds in the Northwest Territories and Saskatchewan, Canada.
The Company was also exploring for gold in the state of Nevada. The Company had
minimal capitalization during such period, and its activities were very limited.
The Company's strategy with respect to its mineral exploration related
activities is to identify geological areas in which the Company may invest or
participate in non-producing or producing mineral prospects or joint ventures
for development, and where the company may acquire prospects for mineral
exploration through staking claims
During the last five (5) fiscal years, the Company conducted
exploration activities on certain mineral prospects as follows:
<PAGE>
Voisey's Bay; Labrador, Canada, 1998
Approximately $55,000 expended for land acquisition and prospecting and ground
geophysics to explore for magnetic segregation nickel deposits.
Ariel Resources Ltd.; Costa Rica, 1998
Approximately $250,000 expended to perform due diligence and
technical feasibility studies to ascertain the viability of corporate
merger.
Nighthawk Lake; Ontario, Canada, 1996-1998
Approximately $275,000 expended for land acquisition and
prospecting; ground geophysics; and diamond drilling to test potential
gold targets.
Bristol; Ontario, Canada, 1996-1997
Approximately $125,000 expended for land acquisition and
prospecting; ground geophysics; and diamond drilling to test potential
gold targets.
Steephill Lake; Saskatchewan Canada, 1997
Approximately $300,000 expended for land acquisition and
prospecting; airborne geophysics; and diamond drilling to test
potential base metal targets in volcanogenic massive sulphide (VMS).
Nettogami Lake; Ontario, Canada, 1996
Approximately $1,278,000 expended on land acquisition and
prospecting, airborne and ground geophysics, and diamond drilling to
test potential sedimentary exhalitive (Sed Ex) base metal targets.
Merendon Mining Corporation; Honduras, 1996
Approximately $750,000 expended for land acquisition, due
diligence, and technical studies to ascertain the attractiveness of
venture participation.
Blower Investments AVV and Condor Resources AVV; Peru, 1996
Approximately $430,000 expended for land acquisition, due
diligence, and technical studies to ascertain the attractiveness of
venture participation.
Rioux Lake; Saskatchewan, Canada, 1994-1995
Approximately $50,000 expended for geological and geochemical
surveys to identify polymetallic base metal potential.
<PAGE>
Candle Lake; Saskatchewan, Canada, 1994
Prospective diamond claims acquired.
The Company hires third-party companies to conduct drilling, testing, and to
provide services and evaluation on a negotiated contract basis, except that a
company, Nikhanj and Associates Geo Consulting, owned by the Company's President
and largest shareholder, Y.S. (Jasi) Nikjanj provides management, geological,
and exploration consulting services to the Company for $10,000 per month.
The Company is not carrying any reserve values of any prospects due to the lack
of any measurable reserves.
(b) Current Business
The focus of the Company is to find, delineate, and exploit mineral deposits in
under explored terrain within jurisdictions that are politically stable and
actively pursue mineral exploration and development. The Company currently has
two major prospects, which are the Knife Lake Project (located in Saskatchewan,
Canada) and the Karmel Diamond Project (located in the Republic of South
Africa).
As of December 31, 1998, the Company has spent $7.3 million (Canadian) exploring
for base and precious metals within the Scimitar Complex of northeastern
Saskatchewan and delineating the Knife Lake copper deposit. Over the next three
years expenditure of an additional $3.3 million (Canadian) is anticipated for
geological reconnaissance ground geophysics, drilling, and development
engineering.
As of March 31, 1999, the Company has spent $0.185 million (Canadian) exploring
the Karmel Diamond Project for diamonds. The Company can earn a 75% working
interest in the project by spending an additional $1.315 million (Canadian) over
the next 3 years.
The Company is always searching for high quality grass roots exploration
opportunities, which can be acquired at low cost. Identification of targets of
opportunity represent the Company's focus for growth, and annual expenditures of
$0.25 million (Canadian) are anticipated for evaluation, acquisition, and
initial testing of new projects.
Corporate overhead is held to a minimum. Expenditure for office rent, office
supplies, travel, and administration are expected to continue at the current
level of $0.7 million (Canadian) per year.
A summary of the Company's proposed expenditures is presented below:
<PAGE>
<TABLE>
<CAPTION>
CORPORATE EXPLORATION BUDGETS
($Canadian x 1000)
<S> <C> <C> <C> <C>
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Fiscal year, March 31 2000 2001 2002 Total
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Knife Lake Project
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Geological Reconnaissance 300 100 50 450
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Geophysics 300 100 50 450
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Drilling 500 800 700 2000
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Engineering 100 300 400
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Sub-Total 1,100 1,100 1,100 3,300
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Karmel Project
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Geological Reconnaissance 70 30 30 130
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Drilling 150 100 50 300
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Sampling 70 300 100 470
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Engineering 25 70 320 415
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Sub-Total 315 500 500 1,315
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Opportunity Targets 250 250 250 750
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Overhand and Administration 700 700 700 2,100
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
Grand Total (CAN $) 2,365 2,550 2,500 7,465
- ------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
</TABLE>
The Company's current business plan is in mineral exploration including foreign
mineral joint ventures, in Canada and South Africa. The Company has determined
that it must build an asset base through grass roots exploration; and
acquisition by exchange of stock for other mineral companies, leases, and
mineral prospects for exploration or development if the opportunity arises. The
Company believes that debt will rarely be desirable to acquire any prospect or
company. The Company may acquire other assets by exchange of stock or cash.
The Company has not established, and does not intend to formally establish,
criteria for the selection or evaluation of mineral prospects or participations.
When a prospect is located which in management's opinion, holds potential for
the Company, an attempt will be made to secure an option, or lease, in the
prospects. Shareholder approval will not be sought for prospect acquisitions.
Therefore, shareholders will be dependent upon the judgment of management in
selecting prospects (see "Management"). If such an interest is acquired, the
Company will then expend funds for preliminary exploration and testing of the
prospect to determine the feasibility of production of such prospect. Based on
the results of such preliminary testing, the Company will decide, without
shareholder approval, whether to acquire or abandon the prospect. A prospect or
interest may be acquired by outright purchase; by earning an interest through
participation with other companies; or by exchange of the shares for leases or
interests in prospects.
The Company may expend funds to rework, explore or test any prospects
its acquires to determine the economic production feasibility of such prospects.
The Company will rely on its own management and outside consultants engaged for
specific work on a limited basis, prospect by prospect, to provide competent
evaluation and recommendations concerning prospects or interests in prospects to
be considered for acquisition or exploration. The Company has agreements with
several third party companies for providing specific limited services related to
prospects, such as mapping, geochemical, sampling, or drilling. Based upon the
results of such exploration and tests, as interpreted by management, the Company
will then determine whether such prospects should be acquired, explored further,
sold or leased to a third party, held for possible later development or
<PAGE>
abandoned; or whether development to production should be attempted by the
Company either by itself or through joint venture or other business arrangements
with other companies or entities.
The Company may agree to assign rights in certain prospects to be explored to
the general or managing partner of a partnership or joint venture, which thereby
becomes the owner of the working interest in the prospect. The Company may also
agree to supervise and manage all activities on the prospect and to obtain,
through subcontractors, all necessary related services and equipment. The
Company actively reviews prospects for putting together exploration or
development joint ventures.
Parents and Subsidiaries
Parent
LEADER MINING INTERNATIONAL, INC.
Subsidiaries
None.
The Company's principal areas of exploration are described herein below under
"Description of Properties."
RISK FACTORS
Risks of Exploration and Development
Resource exploration and development is a speculative business and involves a
high degree of risk. The marketability of natural resources which may be
acquired or discovered by the Company will be affected by numerous factors
beyond its control. These factors include commodity price and currency
volatility, the proximity and capacity of natural resource markets and
processing equipment, and government regulations and changes thereto, including
regulations relating to prices, taxes, royalties, land tenure, importing and
exporting of minerals and environmental protection. In addition, few mineral
exploration properties become commercially viable mines, nor can there be any
assurances that exploration work carried out by the Company will be successful.
The exact effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Company not receiving an adequate
return on invested capital.
Recovery of Reserves
In carrying on its mineral exploration and development activities, the Company
may rely upon calculations as to potential ore reserves and corresponding ore
grades on the Company's prospects which by their nature are not exact. Until ore
is actually mined and processed, ore reserves and ore grades must be considered
as estimates only. The quantity of economic reserves will also vary depending on
mineral prices which have historically been highly cyclical and dependent upon
numerous factors beyond the Company's control including changes in investment
trends and international monetary systems, political events and changes in the
supply and demand for minerals on public and private markets. Any material
changes in reserves, ore grades or stripping ratios will affect the economic
viability of any prospects which might be developed. Further, short term
<PAGE>
operating factors relating to the prospect development, including a need for
orderly development the processing of new or different ore grades may affect
profitability in any particular accounting period. There can be no assurance
that mineral recoveries or other mineral recoveries in small scale laboratory
tests will be duplicated under on site conditions or during production.
Fluctuation of Mineral Prices
The Company's mining operations if any are ever undertaken will be subject to
the normal risks of mining and profits are subject to fluctuations in mineral
prices, in particular the market price of the mineral to be sought in
production. The price of minerals has fluctuated widely in recent years and is
affected by numerous factors beyond the Company's control including
international economic and political trends, expectations of inflation, interest
rates, global or regional consumptive patterns, speculative activities and
increased production due to new mine developments and improved mining and
production methods. The effect of these factors on the price of minerals cannot
be accurately predicted.
Competition
The Company competes with major mining companies and other smaller natural
resources companies in the acquisition, exploration, financing and development
of new properties and projects. Some of these companies are more experienced,
larger and better capitalised than the Company. The Company's competitive
position will depend upon its ability to successfully and economically explore,
acquire and develop new and existing mineral resource properties or projects.
Factors which allow producers to remain competitive in the market over the long
term are the quality and size of the ore body, if any, cost of production, and
proximity to market. Because of the number of companies and variables involved,
no individual or group of producers can be pointed to as being in direct
competition with the Company.
Capitalisation and Commercial Viability
The Company has limited financial resources and there is no assurance that
additional funding would be available to the Company for further exploration or
development of its properties or to fulfil its obligations under any applicable
agreements. Although the Company has been successful in the past in obtaining
financing through the sale of equity securities, there can be no assurance that
the Company will be able to obtain adequate financing in the future or that the
terms of such financing will be favourable. Failure to obtain such additional
financing could result in delay or indefinite postponement of further
exploration and development of the Company's prospects with the possible loss of
exploration or exploitation permits.
The commercial viability of production on a particular prospect will be affected
by factors that are beyond the Company's control, including the particular
attributes of the deposit, the fluctuation in mineral prices, the costs of
constructing and operating a mine, processing facilities, the availability of
economic sources of energy, government regulations including regulations
relating to prices, royalties, restrictions on production, quotas on exportation
of minerals, as well as the costs of protection of the environment and
agricultural lands.
It is impossible to assess with certainty the impact of these factors.
Uninsurable Risks
Mining operations generally involve a high degree of risk. Hazards such as
unusual or unexpected formations, power outages, labour disruptions, flooding,
<PAGE>
explosions, cave-ins, landslides, inability to obtain suitable or adequate
machinery equipment or labour and other risks are involved. The Company may
become subject to liability for pollution, cave-ins or hazards against which it
cannot insure or against which it may elect not to insure. The payment of such
liabilities may have a material, adverse effect on the Company's financial
position.
Compliance with Governmental Regulations
The Company's exploration and mining operations are subject to mining, health,
labour and environmental regulations, changes in which could result in
additional expenses and capital expenditures, availability of capital,
competition, reserve uncertainty, potential conflicts of interest, title risks,
dilution and restrictions and delays in operations, the extent of which cannot
be predicted.
Conflicts of Interest
Certain of the directors and officers of the Company are also directors,
officers and shareholders of certain other companies engaged in natural resource
exploration and development and conflicts of interest may arise.
ITEM 2: DESCRIPTION OF PROPERTIES
The Company owns no properties. It has mineral prospects which consist of mining
claims or contractual exploration agreements which may be evolved to development
if the Company so decides. For all purposes in this description, Registrant is
referred to as "Leader."
Knife Lake Prospect, Saskatchewan, Canada
Location and History
The Knife Lake Prospect is located in northeastern Saskatchewan close to the
Manitoba border. Knife Lake itself is located in the southeastern portion of the
project area at latitude 55 degrees 54' N and longitude 102 degrees 43' W. The
project is operated from a well-equipped bush camp on Knife Lake, 136-km
north-northwest of Flin Flon, Manitoba (approximate population 7,600) and 180 km
northeast of La Ronge, Saskatchewan. The property, whose NTS reference is
63-M-15E, can be found on the Gilbert Lake, 63M15 claim map, available from
Saskatchewan Energy, Mines and Resources in Regina.
Leader holds, or has a right to earn subject to NSR payments, a 100 percent
interest in all of the claims and mining leases comprising the Knife Lake
Project, except for the eleven Consolidated Pine Channel Gold Corp.
claims. On these claims, Leader can earn up to a 90 percent interest.
Leader is the operator in all the option agreements covering all claims in the
project area. It is currently proceeding with, or making preparations for,
exploration it has planned or is required to do under the option agreements. All
the field exploration, on all mineral lands in which Leader has, or is earning,
an interest and which are described in this summary is carried out for Leader by
its own field staff or contractors directly under its control.
The Knife Lake prospect, optioned by Leader from CopperQuest in March, 1996,
initially consisted of mining lease ML 5269. It is 648 ha in size and covers the
known copper showing and soil geochemistry anomaly as well as the projected
<PAGE>
strike extents. During 1996 and 1997, additional claims were staked by the
Company and optioned from consolidated Pine Channel Gold Corporation. Net
Smelter Royalties become payable if and when commercial production occurs from
the claims. Such royalties shall be payable to either CopperQuest or
Consolidated Pine Channel Gold Corporation in accordance with the land
ownership.
Leader Mining, anticipating the potential of this area, developed a strong land
position, conducted numerous geophysical surveys and collected extensive
geological data. The data sets consist of two airborne surveys, a regional
gravity survey, extensive drilling and mapping with accompanying
lithogeochemical sampling. To further evaluate the area, it was necessary to
synthesize Leader's geophysical data and known geology with the aim to identify
areas on the property with the highest potential to host various Volcanogenic
Massive Sulphide (VMS) style sulphide deposits.
At Knife Lake, Leader now owns or controls 109 mining claims and 1 mining lease
with a total land area of approximately 95,144 hectares. The claims are held
directly by Leader or by private individuals and other companies, which have
leased the prospect to Leader. This list of claims is attached as Table 1.
Mineral exploration and production in the Flin Flon Mining area has been active
for 80 years. Only recently has new geological modeling recognized that the
favorable Amisk Volcanics extend to the north from the Flin Flon Domain and
includes the former Hanson, Glennie, Scimitar and Kissenew Domains. These
domains have been explored intermittently by Hudson Bay Mining, Noranda, and
Cominco. With the current geological understanding, these volcanic domains are
highly prospective for VMS style mineralization. Leader's Knife Lake
Volcanogenic Massive Sulphide (VMS) Deposit conforms well within the context of
the newly defined model for the Flin Flon-Glennie Domain. Recent government
mapping has shown the Knife Lake property to lie within the newly recognized
Flin Flon-Glennie Lake Domain, which hosts the Flin Flon/Snow Lake VMS deposits.
The claims have received little mineral exploration and have no production
history, but appear to be an extension of the volcanic terrain which hosts the
base metal mineralization of the prolific Flin Flon mining area. The Amisk
Volcanics in Flin Flon are host to significant amounts of Volcanogenic Massive
Sulphide style, base metal mineralization.
Since 1968, prospecting and mapping in the area of Knife Lake and Scimitar Lake
has resulted in the discovery of several copper occurrences. The largest and
most significant of these occurrences is the Knife Lake copper-gold deposit. The
mineralization is located on the west side of the Knife Lake, less than 100
metres west of the shoreline, in the southern portion of Leader's property.
Infrastructure on the Knife Lake property is limited to the bush camp and winter
road access. Water for mineral processing and other needs is available in
abundance in the project area. The Island Falls hydroelectric power generating
station is located on the Churchill River at Sandy Bay. This station was
constructed to provide power to the town of Flin Flon. However, in the mid
1990's, the Government of Saskatchewan constructed a new high-tension power line
to deliver the power to the uranium mines of the Athabasca Basin in northern
Saskatchewan and all of the station's power output is now devoted to this
purpose. The transmission line comes within 20km of the southwestern corner of
the Knife Lake property.
While the Sandy Bay-Flin Flon has been explored for base and precious metals at
various times over the past 80 years, the earliest records of work in the
immediate area of Knife Lake are dated October 1968. From 1968, through 1972,
<PAGE>
Straus Exploration conducted extensive exploration work, consisting of
horizontal loop, vertical loop and Turam EM ground geophysical surveys, ground
magnetometer surveys, geochemical soil sampling, geological mapping, trenching,
sampling and diamond drilling, over a gossanous copper-gold showing on the
western shore of Knife Lake. Approximately 4.7 square km of grid was
geologically mapped at a scale of 1:6,000 over the copper prospect area. A
slightly smaller area was covered by geochemical and geophysical surveys. D.E.
Pearson, as part of his 1971 mapping project, mapped in detail a portion of the
grid on a scale of 1:7,200. A diamond drill program consisting of 87 holes (2
Winkie and 85 XT sized core), totaling approximately 8,484m, was completed. As a
result of the exploration work, a mining lease was taken out, covering the
copper showing and surrounding geochemical anomaly.
Hudson Bay Exploration and Development, the wholly-owned exploration division of
Hudson Bay Mining and Smelting, conducted a regional airborne EM survey in 1980
and 1982. During 1989 and 1990 Cominco performed line cutting, geological and
geochemical surveys, on property approximately 2 km north of Knife Lake. Results
of these programs are not available.
The Knife Lake copper showing remained inactive until early 1989 when
CopperQuest was formed. CopperQuest commissioned Standing Geophysics Ltd.
(Standing) to re-establish Staus' grid over the copper prospect and to conduct
horizontal-loop EM and proton magnetometer surveys. Standing Geophysics
completed 77.6 line-km of magnetic surveying and 101 line-km of EM surveying in
February 1989. In completing the EM surveying, Standing used different cable
lengths (coil separations) over the copper prospect in an attempt to locate
areas where the copper mineralization may have been thickened due to folding.
Three such areas were located and recommended for diamond drilling. In addition,
three other conductive zones were identified outside of the immediate copper
prospect area. A total of 1,829m of drilling in 24 holes, was recommended but
never carried out.
In March 1996, Leader Mining acquired the mining leases, after entering into an
agreement with CopperQuest. Leader has access to the CopperQuest, and most of
the Straus, exploration data. A summary of Leader's expenditures on the prospect
is presented below:
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Summary of Exploration Expenditures (June 1996 to December 1998)
- ---------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Prospecting and 1,172 man days $342,600
Geological Mapping
- ---------------------------------------- ------------------------------------- -------------------------------------
Line Cutting 313 line km $119,400
- --------------------- ------------------ ------------------------------------- -------------------------------------
Geophysics Airborne 12,689 line km $753,700
- --------------------- ------------------ ------------------------------------- -------------------------------------
Ground 427 line km $243,300
- --------------------- ------------------ ------------------------------------- -------------------------------------
Geochem Soil 2,374 $23,300
- --------------------- ------------------ ------------------------------------- -------------------------------------
Assay 8597 (588 whole rock) $164,200
- ---------------------------------------- ------------------------------------- -------------------------------------
Trenching 180m3 $48,400
- ---------------------------------------- ------------------------------------- -------------------------------------
Drilling 30,866 m $2,960,500
- ---------------------------------------- ------------------------------------- -------------------------------------
Other (staking, logistics, $2,656,200
transportation)
- --------------------------------------------------------------------------------------------------------------------
TOTAL = $7,311,000
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Knife Lake Deposit is interpreted by the Company to be a remobilized
fraction of a larger primary VMS deposit. It is hosted within an altered
pegmatite, high in Na, K, Sr, and Ba which geochemistry has shown is derived
from alkali rich sedimentary rocks. To date, a total of 26,397 metres of diamond
drilling among 308 drill holes have been completed on the Knife Lake Deposit and
a digital geological model has been constructed. The mineralization is outlined
over a distance of 4,300 metres and to a depth of 100 metres. Internal
Geological modeling has generated sufficient indications to cause the Company to
continue exploration work.
GEOLOGICAL DESCRIPTION
Knife Lake lies within the Scimitar Complex, a structural domain within what is
generally known as the Churchill Structural Province of the Canadian Shield. The
Churchill Province is lower Proterozoic (Aphebian) in age. The Scimitar Complex
is highly deformed, multiple-folded terrain dominated by middle to upper
amphibolite facies, hornblende-biotite plagioclase-quartz gneisses of generally
intermediate composition and gneissic felsic intrusives. The lithologies have
been divided into gneissic granodiorites and subordinate metavolcanic and
metasedimentary rocks. Mafic volcanics and meta-gabbros are less common, but
present. The lithologies frequently exhibit pegmatitic textures due to partial
melting of up to 30 percent of the rock, in the case of ampholite metamorphic
grade. Original sedimentary and/or volcanic textures and structures, other than
gross lithologic layering, are rare.
Another prospective area is the boundary between geophysics distinguished rock
units A&B, which hosts the Linda-McCullum copper showing that has similarities
to the "Cypress" type hosted VMS model; a thick succession of mafic to
intermediate volcanics with isolated, linear conductive horizons at the "top" of
the sequence. This horizon has potential in light of the recent ophiolitic
models.
In all, fourteen primary target areas are identified which exhibit typical VMS
geophysical/geological signatures (conductivity with favorable magnetics and
geology). Numerous additional targets exist, located along boundaries and other
favorable geological horizons. At some point these will have to under go further
investigation.
<PAGE>
The copper-gold mineralization occurs in, and adjacent to, an apparently
stratabound, "green pegmatite." This pegmatite lies on the contact between a
pink footwall gneiss, believed to be a metasediment, and a hanging wall package
comprised of tholeiitic amphibolies, believed to be a sequence of meta-volcanics
and meta-volcaniclastic sediments. This sequence terminates both southeast and
northwest of Knife Lake, but is repeated 4 kilometres to the east of Scimitar
Lake, where two other copper showings are known. The "green pegmatite" is a
relatively fine- to medium-grained, milky green, pegmatoidal felsic gneiss
composed of various proportions of green plagioclase, K-feldspar, biotite and
amphibole.
Recent whole rock geochemistry work by Leader's consultants indicates that there
are at least two major groups of rocks present in the Knife Lake copper deposit.
The first group comprises the pink "footwall gneiss" and the "green pegmatite"
(high Na, K, Sr, Ba). These were determined to be alkali-rich sedimentary rocks
and pegmatites, which also contained elevated phosphorous and titanium contents,
suggesting sedimentary rocks derived from alkalic/shoshonitc source material.
The four samples of the "green pegmatite," which hosts the Knife Lake copper
mineralization, have a composition similar to the pink gneiss, indicating that
they are derived from the footwall gneisses.
The second group includes tholeiitc (iron-rich) volcanic derived rocks such as
amphibolites and quartz-feldspar +garnet+biotite schists (high, Fe, low Na, K,
Sr, Ba) which constitute the hanging wall of the deposit. Of the twelve whole
rock samples analyzed, five were determined to be, in part, highly altered
volcanic rocks of rhyolitic, dioritic, and basaltic/gabboric composition. One of
the samples came from a strongly altered chloritic- to cunningtonite-rich zone,
whose strong iron and magnesium enrichment and sodium depletion is typical of
VMS-type, footwall alteration.
The mineralization itself is comprised of pyrrhotite, chalcopyrite, and pyrite,
with minor amounts of sphalerite and rare native copper. No native gold is noted
but, since most of the gold is free milling, the gold must be present as small
grains adjacent to and intermixed with the sulphides. The sulphides occur as
disseminations or net-textured stringers within the pegmatoidal texture or as
large clots occasionally appearing at gangue-mineral grain boundaries. There is
little or no conspicuous wall rock alteration associated with the copper-gold
mineralization. A prominent gossan zone marks the surface expression of the
mineralization "green pegmatite."
Recent diamond drilling just south of the Knife Lake deposit discovered
extensive strong native silver mineralization within east-west and
northwest-southeast trending faults. Mineralization style and setting indicative
of late stage low temperature hydrothermal emplacement, which is superimposed on
the copper mineralization noted at Knife Lake.
KARMEL PROSPECT, ORANGE FREE STATE SOUTH AFRICA
The Karmel prospect is an exploration attempt to find a gem quality
diamond deposit. The area has not been previously explored with modern
exploration techniques. Leader has conducted an aerial magnetic survey and
limited ground testing and drilling to date. In the event gem quality diamonds
are not found in sufficient quantity, the project will be abandoned because
industrial diamonds are uneconomic to produce in a new mine.
The 7,500-ha Karmel property is located about 100 km east of the
agricultural community of Bloemfontein, near the Lesotho border. The terrain is
<PAGE>
rolling farmland (currently an ostrich ranch) with an interspersion of rocky
kops (hillocks). Poplar Resources, Ltd. holds a 100% interest in the Karmel
Project through a wholly owned South African subsidiary, Karmel Diamond Holdings
(Pty.), under a three-year prospecting agreement which entails an annual payment
equivalent to about C$60,000; and an option to enter into a mineral lease
agreement, the mineral rights holders would have a 4% interest in pre-tax mine
operating profits.
Leader has entered into an Option/Joint Venture Agreement whereby
Leader may earn a 75% interest in the Karmel prospect by expending $500,00 (Cdn)
per year for three years in exploration costs. Upon expenditure of the required
amounts by Leader, if warranted, a joint venture between Leader and Karmel in
which Leader will own 75% interest and Karmel a 25% interest, Leader has
expended approximately $185,000 (Cdn) since January 1999 on exploration
expenses.
The project can be described as a complex kimberlite fissure system
with potential to host 8 km of fissure strike length, and a small previously
mined pipe and a potential blow. There are two east-west fissures exposed on the
property: the Southern Fissure where very limited small-scale mining was carried
out by an open cut, and the Dundee Fissure which is exposed 5 km to the east in
a creek bed. The Dundee fissure outcrop has a width of about 2 m and does not
appear to have been test sampled. A small pipe (known as the Carmel Pipe) was
mined by a farmer/landowner circa 1950 to a relatively shallow (yet to be
determined) depth, but typically very little information is available. To
management's knowledge, no geophysical surveying was carried out to trace the
strike extent of the known fissures or to attempt to identify new
fissures/blows/pipes on the property. Low-level, high-sensitivity, airborne
and/or ground magnetic surveying would entail only a nominal costs. Bulk
sampling of the known Southern and Dundee fissures could also be completed
easily with material possibly processed on site with a mobile hand plant.
Drilling off the depth extension of the Karmel pipe could also be an early
endeavor in this project.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently involved in only one contractual dispute, involving
legal proceedings, with a private Saskatchewan company, and the outcome of such
proceeding, if adverse to the Company, would not be material and involves money
damages only less than $25,000.
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (CONTROL
OF REGISTRANT)
(a) Beneficial owners of five percent (5) or greater, of the
Registrant's Common Stock and Warrants: No Preferred Stock is outstanding at the
date of this offering. The following sets forth information with respect to
ownership by holders of more than five percent (5%) of the Company's Common
Stock known by the Company based upon 16,826,065 shares outstanding at May 20,
1999.
<TABLE>
<CAPTION>
- ------------------------ ---------------------------------- ----------------------------------- ----------------------
<S> <C> <C> <C>
Title of Class Name Beneficial of Owner Amount and Nature of Beneficial Percent of Class
Ownership
- ------------------------ ---------------------------------- ----------------------------------- ----------------------
Common Stock Y.S. Jasi Nikhanj 1,500,000 Shares (1) 8.9%
320 Pumphill Cr. S.W. Calgary,
Alta T2V 4M1
- ------------------------ ---------------------------------- ----------------------------------- ----------------------
</TABLE>
(1) Includes 207,000 shares owned by spouse, Aski Nikhanj.
b) The following sets forth information with respect to the Company's
Common Stock beneficially owned by each Officer and Director,
<TABLE>
<CAPTION>
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
<S> <C> <C> <C>
Title of Class Name Beneficial of Owner Amount and Nature of Beneficial Percent of Class
Ownership
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Y.S. Jasi Nikhanj (1) Pres/Dir. 1,500,000 shares (1) 8.9%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Ueli Schurch Dir. 500,000 shares 3.0%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Manish Bindal Dir 80,000 shares (2) 0.4%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Roland Kesselring V.P. 590,000 shares (3) 3.5%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Raymond Lai V.P. 285,000 shares (4) 1.6%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Total amount owned by officers and directors as a group.
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Title of Class Name Beneficial of Owner Amount and Nature of Beneficial Percent of Class
Ownership
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Directors 2,080,000 shares 12.35%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Officers 2,375,000 shares 14.1%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
Common Combined 2,955,000 17.6%
- ---------------------- ----------------------------------- ------------------------------------ ----------------------
</TABLE>
(1) Includes 207,000 shares owned by spouse, Aski Nikhanj.
(2) Includes 50,000 shares owned by spouse SehraBindal.
<PAGE>
(3) Includes 590,000 shares owned by spouse Manuela Kesselring.
(4) Includes 195,000 shares owned by spouse, Amond Lai.
ITEM 5. (a) MARKET PRICE OF AND DIVIDENDS ON REGISTRANTS COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock is listed and traded on the Alberta Stock
Exchange and is quoted in the National Quotation Bureau "Pink Sheets" when
trades are made. The following table sets forth high and low closing prices of
the Company's common stock for the three (3) years ended March 31, 1999, 1998,
1997, and for 1996 on the Alberta Stock Exchange as follows:
Closing
(Canadian $)
High Low
1999
First Quarter 1.19 0.50
1998
First Quarter 5.10 3.40
Second Quarter 4.00 2.95
Third Quarter 3.15 0.54
Fourth Quarter 0.85 0.30
1997
First Quarter 9.45 4.00
Second Quarter 7.45 5.25
Third Quarter 6.20 2.80
Fourth Quarter 3.85 3.30
1996
First Quarter 6.56 0.47
Second Quarter 8.10 4.51
Third Quarter 5.60 3.55
Fourth Quarter 5.25 3.50
The Company has been unable to obtain a reliable history of pink sheet activity.
(b) As of May 20, 1999, the Company had an estimated 900 shareholders of record
of the common stock, including those held in brokerage accounts in "street
name."
(c) No dividends on outstanding common stock have been paid within the last two
fiscal years, and interim periods. The Company does not anticipate or intend
upon paying dividends for the foreseeable future.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There are currently no limitations imposed by Canadian federal or provincial
laws on the rights of non-resident or foreign owners of Canadian securities to
<PAGE>
hold or vote the securities held. There are also no such limitations imposed by
the Company's articles and bylaws with respect to the common shares of the
Company.
Under the Investment Canada Act, the acquisition of certain "businesses" by
"non-Canadians" or "Americans" are subject to review by Investment Canada, a
federal agency, and will not be allowed unless they are found likely to be of
"net benefit" to Canada. An acquisition will be reviewable by Investment Canada
only if the value of the assets of the Canadian business being acquired is CDN
$5 million or more in the case of a "direct" acquisition or CDN $50 million or
more in the case of an "indirect" acquisition. Under the Free Trade Agreement
between Canada and the United States, an acquisition by an American is
reviewable only if it involves the direct acquisition of a Canadian business
with assets of CDN $160 million or more. If the foregoing thresholds are not
reached, the acquisition of a Canadian business by a non-Canadian will not be
subject to review unless it relates to Canada's cultural heritage or national
identity. Even if the transaction is not reviewable, a non-Canadian must still
give notice to Investment Canada of the acquisition of a Canadian business
within 30 days after its completion.
ITEM 7. TAXATION
Certain Canadian Federal Income Tax Considerations
The following summarizes the principal Canadian federal income tax
considerations applicable to the holding and disposition of a common share by a
holder (the "Holder") of one or more common shares who is resident in the United
States of America and holds the common share as capital property. This summary
is based on the current provisions of the Income Tax Act (Canada) (the "Tax
Act"), the regulations thereunder and all amendments to the Tax Act publicly
proposed by the government of Canada to the date hereof. It is assumed that each
such amendment will be enacted as proposed and there is no other relevant change
in any governing law, although no assurance can be given in these respects.
Every Holder is liable to pay a withholding tax on every dividend that is or is
deemed to be paid or credited to him on his common shares. Under the
Canada-United States Income Tax Convention (1980) (the "Treaty"), the rate of
withholding tax is 10% of the gross amount of the dividend where the Holder is a
company that owns at least 10% of the voting stock of the Company and
beneficially owns the dividend, and 15% in any other case. A Protocol amending
the Treaty was ratified by the representatives of the Canadian and United States
governments. Effective in December, 1995 one of the amendments in the Protocol
reduces the 10% withholding rate on dividends to 6% in 1996 and 5% in 1997.
Under the Tax Act, a Holder will not be subject to Canadian tax on any capital
gain realised on an actual or deemed disposition of a common share, including a
deemed disposition at death, provided that he did not hold the common share as
capital property used in carrying on a business in Canada, and that neither he
nor persons with whom he did not deal at arm's length, alone or together, owned
25% or more of the issued shares of any class of the Company at any time in the
five years immediately preceding the disposition.
A Holder who otherwise would be liable for Canadian tax in respect of a capital
gain realised on an actual or deemed disposition of a common share will be
relieved under the Treaty from such liability unless
<PAGE>
(1) the common share formed part of the business property of a
permanent establishment in Canada that the Holder had within the twelve-month
period preceding the disposition; or (1) the common share formed part of the
business property of a permanent establishment in Canada that the Holder had
within the twelve-month period preceding the disposition; or(1) the common share
formed part of the business property of a permanent establishment in Canada that
the Holder had within the twelve-month period preceding the disposition; or(1)
the common share formed part of the business property of a permanent
establishment in Canada that the Holder had within the twelve-month period
preceding the disposition; or(1) the common share formed part of the business
property of a permanent establishment in Canada that the Holder had within the
twelve-month period preceding the disposition; or(1) the common share formed
part of the business property of a permanent establishment in Canada that the
Holder had within the twelve-month period preceding the disposition; or
(2) the Holder
(a) was resident in Canada for 120 months during any 20-year period
preceding the disposition, and
(b) was resident in Canada at any time during the 10 years immediately
preceding the disposition, and
(c) owned the common share when he ceased to be a resident of Canada
ITEM 8. SELECTED FINANCIAL DATA
The selected financial data set forth below are derived from the accompanying
audited financial statements of the Company to September 30, 1997. Financial
statements of the Company included elsewhere herein should be read in
conjunction with those financial statements and the footnotes thereto. The
financial statements have been prepared in accordance with Canadian generally
accepted accounting principles ("GAAP"). For United States GAAP reconciliation,
see attached financial statements and notes. Reference should also be made to
Item 9 Management's Discussion and Analysis of Financial Conditions and Results
of Operations."
<PAGE>
Selected Financial Information - reconciled to US GAAP(in Cdn $)
<TABLE>
<CAPTION>
Income Statement Data: 1998 ($) 1997 ($)
- ---------------------- -------- --------
<S> <C> <C>
Interest 152,132 28,702
Total Revenue 152,132 28,702
------- ------
General & Administrative Expenses 1,358,156 640,625
Exploration Costs Written Off 5,167,641 4,835,171
Amortization 27,082 12,182
Other Expenses 92,420 0
Loss for the Period (6,493,167) (5,459,276)
----------- -----------
Loss per Share (0.47) (0.50)
------ ------
Weighted Average Shares Outstanding 13,911,958 10,924,623
---------- ----------
Balance Sheet Data:
Current Assets 3,011,601 6,729,786
Capital Assets 155,645 68,834
Mineral Properties & Deferred Exploration Costs 219,000 308,000
Total Assets 3,386,246 7,106,620
--------- ---------
Current Liabilities 1,820,664 1,117,428
Due to Related Parties 8,553 231,243
Capital Stock 21,834,820 18,614,083
Deficit (20,277,791) (12,856,134)
Total Equity & Liabilities 3,386,246 7,106,620
--------- ---------
</TABLE>
Loss for the period and deficit as determined in accordance with Canadian GAAP
differ from those determined in accordance with U.S. GAAP, due principally to
the deferral under Canadian GAAP of exploration costs and the exclusion of
compensation expense arising from the issue of options at a discount from their
fair value. Under U.S. GAAP the exploration costs would have been expensed when
incurred, and the compensation expense would have been recorded.
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Information for 5 Years (in Cdn$)
Fiscal Year Ended March 31st
1996 1997 1998 1995 1994
---- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C>
Interest 152,132 28,702 0 0 0
Other 0 0 0 27,445 0
- - - ------ -
Total Revenue 152,132 28,702 0 27,445 0
------- ------ - ------ -
General & Administrative Expenses 1,358,156 640,625 367,437 234,960 0
Exploration Costs Written Off 561,500 1,506,392 0 1,306,276 1,148,222
Amortization 27,082 12182 1,465 0 0
Other Expenses 92,420 0 100,000 0 0
Loss for the Period (1,887,026) (2,130,497) (468,902) (1,148,222)
----------- ----------- --------- -----------
(1,513,791)
Loss per Share (0.14) (0.20) (0.08) (0.47) (0.43)
------ ------ ------ ------ ------
Weighted average shares outstanding 13,911,958 10,924,623 5,961,296 3,213,527 2,670,284
---------- ---------- --------- --------- ---------
Balance Sheet Data:
Current Assets 3,011,601 6,729,786 1,510,715 11,438 50,642
Capital Assets 155,645 68,834 28,326 18,1542 18,940
Mineral Properties & Deferred 8,957,965 4,440,824 1,065,975 185,328 1,506,5680
--------- --------- --------- ------- ----------
Exploration Costs
Total Assets 12,125,211 11,239,444 2,605,016 214,920 1,576,150
---------- ---------- --------- ------- ---------
Current Liabilities 1,820,664 1,117,428 338,189 41,074 330,886
Due to Related Parties 8,553 231,243 207,346 490,013 647,521
Long Term Liabilities 0 0 0 62,500 33,458
Capital Stock 19,265,652 16,973,405 7,011,616 4,104,566 3,533,727
Deficit (8,969,658) (7,082,632) (4,952,135) (2,969,442)
----------- ----------- ----------- -----------
(4,483,233)
Total Equity & Liabilities 12,125,211 11,239,444 2,605,016 214,920 1,576,150
---------- ---------- --------- ------- ---------
</TABLE>
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND CHANGES
IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company has no primary income source at this time. Funding for the Company's
operation is mainly from private placements, options and warrant exercise. The
following chart summarizes all the funding raised in the past 5 years.
RESULTS OF OPERATIONS
The Company has no primary income source at this time. All working capital is
obtained from equity financing such as private placements, options and warrants
exercising. The revenue reported in FY 1998 and FY 1997 is from interest earned
from working capital invested in secured short-term money markets. The major
expenditure for the Company is acquiring mineral properties and conducting
exploration programs on those properties. These exploration expenditures are
capitalized as intangible assets. If no economical mineral resource is found on
a certain property after an extensive exploration program, the capitalized value
is written off as an expense in the income statement. The Company also does not
have any long-term debt. The only liability of the Company is accounts payable
incurred during its on-going exploration operations. The amounts due to related
parties are mainly funds advanced from the Directors and Officers to the Company
when the Company is short in funding. Such debt is non interest bearing and has
no fixed terms of repayment.
CHANGES IN FINANCIAL CONDITION AS AT MARCH 31, 1998
At year-end 1998 the Company's assets increased to $12,125,211 compared to
$11,239,444 at the end of 1997. The increase was a result of increased
expenditures for the acquisition and exploration of the Knife Lake Project in
Canada.
The liabilities of the Company, nearly all of which are current liabilities,
also increased significantly as a result of increased expenditures for prospect
exploration. At year-end 1998, current liabilities were $1,820,664, an increase
of 63% over the 1997 year end liabilities of $1,117,428.
The Company's deficit at year-end 1998 was $8,969,658, an increase of 27% over
the 1997 deficit of $7,082,632. The deficit will continue to increase as a
result of the Company's continuing effort to explore for economical mineral
resources. Consequently, additional funding from equity financing is essential
for the Company to continue its exploration efforts until it has found one or
more economical mineral resources in its mineral properties.
Comparison of Results of Operation for the Fiscal Years Ended March 31, 1998 and
1997
The Company had no operating revenue in either 1998 or 1997 except interest
income from working capital invested in secured short-term money markets.
The Company incurred operating expenses, most of which are Exploration
expenditures, totaling $5,078,641 in 1998 as compared to $4,881,241 in 1997.
Exploration Costs Written Off were $561,500 in 1998 a decrease of $944,892 from
$1,506,392 in 1997. The Company had a decrease in operating losses to $1,887,026
in 1998 from $2,130,497 in 1997.
The other major item in the operating expenses is General and Administrative
costs which increased in 1998 to $1,358,156 from $640,625 in 1997. The increase
is mainly due to additional legal expenses pertaining to several legal
proceedings against the Company, increase in advertising and promotional
expenses, travel expenses and costs pertaining to private placement activities.
The per-share loss amounted to $0.17 in 1998 as compared to $0.20 in 1997.
Comparison of Results of Operations for Fiscal Years Ended March 31, 1997 and
1996
During the fiscal year ended March 31, 1997, the Company realized a net loss on
operations of $2,130,497 ($0.20/share) compared to $468,902 ($0.08/share) for
the fiscal year ended March 31, 1996. The large loss in 1997 was as a result of
a $1,506,392 write off of Exploration Costs incurred in mineral properties
abandoned by the Company.
Exploration expenditure in 1997 was $4,881,241, an increase of $3,815,266 from
$1,065,975 in 1996,as the Company secured enough funding to finance several
exploration projects.
General and Administrative expenses were $640,625 in 1997 compared to $368,902
in 1996. The increase of $271,723 is mainly due to the increase in exploration
activities in 1997 which resulted in more employees being hired and more
traveling and advertising and promotional expenses.
Results of Operations for the Nine Month Period Ended December 31, 1998 as
Compared to the Same Period Ended December 31, 1997
For the nine-month periods ended December 31, 1998 and 1997 the Company had no
operating revenue. The Company had interest income in the period ended December
31, 1998 of $43,497 as compared to $69,146 in 1997.
The Company incurred operating expenses for the nine-month period of $462,621 in
1998 and $607,900 in 1997. The net loss from operations for the nine-month
period was $419,124 in 1998 and $538,754 in 1997. The decrease in losses was due
to a decrease in exploration costs incurred on the Knife Lake prospect.
LIQUIDITY AND CAPITAL RESOURCES
The principal sources of funding for the Company's operation in the
past 5 years have been issuance of securities for cash and as consideration for
certain acquisitions, exercise of director and employee stock options and loans
from directors and officers.
<PAGE>
The following chart summarizes all capital funding raised in the past
five years.
<TABLE>
<CAPTION>
FUNDING SUMMARY
FROM APRIL 1995 TO MARCH 99
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Year Total Shares Issued Share Price Total Amount
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
<S> <C> <C> <C> <C>
1995 Private Placement 1,150,000 $1.65 $1,900,000
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Exercise of Options 543,000 $0.47 $255,750
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1995 Total 1,693,000 $1.27 $2,155,750
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1996 Private Placement 1,000,000 $3.90 $3,900,000
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Flow Through 425,000 $4.70 $1,997,500
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Exercise of Options 628,000 $2.63 $1,652,200
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Exercise of Warrants 950,000 $1.58 $1,502,500
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1996 Total 3,003,000 $3.01 $9,052,200
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1997 Private Placement 1,288,000 $3.90 $5,023,200
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Private Placement 472,000 $4.55 $2,147,600
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Exercise of Options 195,000 $3.90 $760,500
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
Exercise of Warrants 75,000 $4.12 $309,000
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1997 Total 2,030,000 $4.06 $8,240,300
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1998 Private Placement 260,000 $3.40 $884,000
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1998 Total 260,000 $3.40 $884,000
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1999 Private Placement 2,000,000 $0.35 $700,000
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
(up to March) Exercise of Options 687,000 $0.43 $295,410
-------------
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
1999 Total 2,687,000 $0.37 $995,410
- ----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
</TABLE>
The principal uncertainty that could affect the Company's liquidity is
the Capital Markets interest or lack thereof in Mining Industry which is beyond
the control of the Company.
On a short term basis, the Company is planning to raise $1 million in
1999 through private placements and the exercise of options and warrants which
is expected to cover all its 1999 exploration programs in Knife Lake, Canada and
Karmel Project, S. Africa. There is no assurance that funds will be raised.
On a long-term basis, the Company does not have any assured certain
source of additional working capital and the continuation of operations is
subject to its ability to raise more equity money and its success in the
exploration of the Knife Lake and Karmel Projects.
Impact of the Year 2000
The year 2000 issue arises from computer systems using two digit date fields
rather that four to refer to a particular year. This means that a computer
system might not properly recognize "00" as the Year 2000, but instead as the
Year 1900, which could result in operational and financial disruption, and
possibly systems failures. The Company is taking appropriate steps to identify
and remediate the Year 2000 issue before the end of 1999, and does not expect
the costs of these efforts to be material. The Company does not believe that
there will be an adverse effect on its business, operating results or financial
position as a result of the Year 2000 Issue. However, there can be no assurance
that the Year 2000 readiness efforts by the Company's suppliers and business
partners will be successful, therefore it remains uncertain to what extent, if
any, the Company may be affected.
ITEM 10. DIRECTORS AND OFFICERS OF THE COMPANY
The names, residences, terms, and periods of service within the past
five years of each of the directors and executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
Position
Name and Within Period of Service
Residence the Company Term
<S> <C> <C> <C>
Present Occupations and
Yashvir (Jasi) Nikhanj 1,2 President and Director Annual 1987 to date
Calgary, Alberta
Ulrich Schurch1 Director Annual 1996 to date
Switzerland
Manish Bindal 2 Secretary and director Annual 1996 to date
Calgary, Alberta
Raymond Lai1 Vice president Finance Annual 1996 to date
Calgary, Alberta
Roland Kesselring 2 Vice president Annual 1997
Switzerland Corporate Affairs
</TABLE>
1 Member of the audit committee.
2 Member of Nomination and Compensation Committee.
Mr. Nikhanj, age 53, has been President and director of the Registrant since
1987. He obtained a Bachelor of Science in Geology from Ranchi University,
Bikar, India in 1968. He received a MSc in Earth Sciences from Massachusetts
Institute of Technology in 1970 and a MSc in Applied Geology from McGill
University in 1972. He also has been President and principal shareholder of
Nikhanj and Associates Consulting of Calgary, Canada since 1975.
Mr. Schurch, age 37, is a director of the Registrant. He received a Commercial
Diploma as a banker in 1981 in Switzerland. In 1993, he received a "Diplomaster"
betribsokonom BVS" in Switzerland at St. Grallen. From 1992 to 1996, he was Vice
President and a partner at Moscom Finary in Zurich, Switzerland. From 1996 to
1998, he was President and Partner of Schwich Asset Management BmDH, St Gallen,
Switzerland. From 1998 to date he has been with Credit Swisse Zurich as a
Portfolio Manager - Special Mandates.
Mr. Bindal, age 35, is a director and General Counsel to the Company. Mr. Bindal
received a Bachelor of Science in 1984 and a Bachelor of Law in 1987 from
Kurukashetra University in India. From August 1987 to May 1991 Mr. Bindal was
engaged in private practice of law at Chandigarh, India. From May 1991 to
September 1994 Mr. Bindal was a law student in Calgary, Canada. He was employed
as a student-at-law at the firm of Howard Mackie, Nova Corp. and Alberta
Securities Commission from October 1994 to October 1995. He has been in private
law practice since November, 1995. Other than the Registrant, Mr. Bindal has
been a director of Canex Energy, Inc. and Aspen Energy Corp., both oil and gas
companies listed on the Albert Stock Exchange.
Mr. Lai, age 48, is Vice President of Finance and Administration for the
Registrant and has been since 1995. Mr. Lai received his B.Sc. degree in 1971
from the University of Calgary. He became a Certified Management Accountant in
1979. From 1993 to 1995, Mr. Lai was controller of Mission Packaging, Inc. in
Calgary.
Mr. Kesselring, age 36, is V.P Corporate Affairs - Europe since 1996. He
completed Banking School in Switzerland in 1982. He is CEO of Mascon Finance,
Ltd. of Ermatingen, Switzerland and has been since 1995 a Managing Director.
From April 1992 to 1995, he was a Managing Director at the institutional sales
desk of Swiss Bank Corp. Zurich, Switzerland.
The directors of the Company are elected by the shareholders at each annual
general meeting and typically hold office until the next annual general meeting
at which time they may be re-elected or replaced. Casual vacancies on the board
are filled by the remaining directors and the persons filling those vacancies
hold office until the next annual general meeting at which time they may be
re-elected or replaced. The senior officers are appointed by the board and hold
office indefinitely at the pleasure of the board.
Within the five years proceeding the date of this filing document, none of the
directors, officers or promoters of the Company have been a director, officer or
promoter of other reporting companies other than as follows:
Mr. Bindal has been a director of Canex Energy, Inc. and Aspen Energy
Corp., both oil and gas companies listed on the Alberta Stock Exchange,
since 1996.
No director, officer or promoter of the Company has, within the ten years
preceding the date of this filing document, been the subject of any penalties or
sanctions by a court or securities regulatory authority relating to trading in
securities, the promotion, formation or management of a publicly-traded company
or involving theft or fraud, other than as follows:
<PAGE>
In 1996, Mr. Nikhanj entered into a Settlement Agreement and
Understanding with the Alberta Securities Commission because he had not
timely filed insider reports for purchases and sales of shares in
Leader Mining International with the Alberta Securities Commission. The
Settlement resulting in a $5,000 penalty and the Agreement to be
diligent in complying with the responsibility to report trades.
There are no understandings or arrangements pursuant to which any
officers or director was selected or appointed to such position.
(b) Identification of Certain Significant Employees.
There are no employees other than the executive officers disclosed
above who make, or are expected to make, significant contributions to the
business of the Company, the disclosure of which would be material.
(c) Family Relationships. Spouses of Yashvir (Jasi) Nikhanj and Raymond
Lai are currently employed on a part time basis with the Company in
non-executive positions.
ITEM 11. COMPENSATION OF OFFICERS AND DIRECTORS
(a) Cash Compensation.
Compensation paid by the Company for all services provided
during the fiscal year ended December 31, 1998, (1) to each of the Company's
five most highly compensated executive officers whose cash compensation exceeded
$30,000 and (2) to all officers as a group is set forth below under directors.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
<S> <C> <C> <C> <C> <C> <C>
Name and Principal Year Salary ($) Bonus ($) Other Annual Restricted Stock Securities Underlying
Position Compensation ($) Award(s)($) Options/SARs(#)
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Y.S. Jasi Nikhanj 1998 0 0 120,000 (1) 0 250,000 shares
President and Director
----------- -------------- ------------ ----------------------- ------------------ ======================
1997 0 0 120,000 (1) 0 355,000 shares
----------- -------------- ------------ ----------------------- ------------------ ======================
1996 0 0 120,000 (1) 0 0
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Manish Bindal 1998 0 0 37,200 (2) 0 50,000 shares
Secretary and Director
----------- -------------- ------------ ----------------------- ------------------ ======================
1997 0 0 37,200 (2) 0 25,000 shares
----------- -------------- ------------ ----------------------- ------------------ ======================
1996 0 0 37,200 (2) 0 0
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Raymond Lai 1998 60,000 0 0 0 50,000 shares
V.P. Finance &
Administration
----------- -------------- ------------ ----------------------- ------------------ ======================
1997 60,000 0 0 0 25,000 shares
----------- -------------- ------------ ----------------------- ------------------ ======================
1996 36,000 0 0 0 0
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Roland Kesselring 1998 0 0 0 50,000 shares 75,000 shares
V.P. Corporate
Affairs-Europe
----------- -------------- ------------ ----------------------- ------------------ ======================
1997 0 0 0 $175,000 175,000 shares
=========== ============== ============ ======================= ================== ======================
1996 0 0 0 0 0
========================== =========== ============== ============ ======================= ================== ======================
</TABLE>
(1) Paid as consulting fees to Nikhanj and Associates Geoconsulting.
(2) Paid as legal fees for services.
(b) Compensation Pursuant to Plans.
None.
(c) Other Compensation.
None. No stock appreciation rights or warrants exist to management
(d) Compensation of Directors.
Each member of the Board of Directors of the Company receives
$500.00 plus reasonable outside travel expenses for each Board meeting he
attends and for each Committee meeting he attends during the fiscal year.
Directors who are also officers of the Company receive no compensation for
services as a director.
Compensation paid by the Company for all services provided during
the fiscal year ended December 31, 1998, (1) to each of the Company's directors
whose cash compensation exceeded $30,000 and (2) to all directors as a group is
set forth below:
<TABLE>
<CAPTION>
DIRECTOR'S COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors whose Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
======================= --------------------- ------------------ --------------------- ----------------- =========================
<S> <C> <C> <C> <C> <C>
Name Number of Securities
Annual Retainer Meeting Fees Consulting Fees/ Number of Underlying Options/SARs
Fees ($) ($) Other Fees ($) Shares (#) (#)
======================= --------------------- ------------------ --------------------- ----------------- =========================
A. Director 0 0 0 60,000 320,000 shares
Ulrich Schurch
======================= --------------------- ------------------ --------------------- ----------------- =========================
B. Director 0 0 0 0 0
Y.S. Nikhanj
- ----------------------- --------------------- ------------------ --------------------- ----------------- -------------------------
C. Director 0 0 0 0 0
Manish Bindal
- ----------------------- --------------------- ------------------ --------------------- ----------------- -------------------------
</TABLE>
(e) Termination of Employment and Change of Control Arrangements.
None
(f) Stock Option Plan
The Company has adopted a stock option plan covering officers,
consultants, key employees. The plan is administered by the Board of Directors
and is limited to 10% of the total outstanding shares, in the aggregate, except
if approval is granted by the Alberta Stock Exchange (the "Exchange). Option
prices shall not be lower than the market price of the shares on the date of
grant of the option less the maximum discount permitted under the By-Laws and
policies of the Alberta Stock Exchange. The options may be granted by the Board
under provisions which may be established by the Board of Directors from time to
time. The options may not be granted for an exercise period of more than five
years.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT
Stock Options
The Company has, from time to time, granted stock options to purchase common
shares to its directors and employees. The options have been granted on various
terms resulting from negotiation between the Company and such persons and the
exercise price per share was based on the average trading price of the Company's
shares pursuant to the policies of the Alberta Stock Exchange (the "Exchange").
The exercise price for all options currently issued by the Company is equal to
or in excess of the market price of the Company's stock at the date of issuance
less the maximum discount permitted under the by-laws and polices of The Alberta
Stock Exchange (or any stock exchange on which the Shares are then listed). The
options are non-assignable and have been granted as incentives and not in lieu
of any compensation for services. As at May 15, 1999 the Company has granted
outstanding options to its directors and employees to purchase an aggregate of
1,675,000 common shares as follows:
<TABLE>
<CAPTION>
Share Price Amount
- ------------------------------------------ ---------------------- ------------------------- ------------------------
<S> <C> <C> <C>
Outstanding Options 475,000 $0.43 $204,250
- ------------------------------------------ ---------------------- ------------------------- ------------------------
250,000 $0.35 $87,500
- ------------------------------------------ ---------------------- ------------------------- ------------------------
950,000 $0.50 $475,000
- ------------------------------------------ ---------------------- ------------------------- ------------------------
Total Options 1,675,000 $766,750
- ------------------------------------------ ---------------------- ------------------------- ------------------------
- ------------------------------------------ ---------------------- ------------------------- ------------------------
Outstanding Warrants 1,000,000 $0.45 $450,000
- ------------------------------------------ ---------------------- ------------------------- ------------------------
Total Options & Warrants 2,675,000 $1,216,750
- ------------------------------------------ ---------------------- ------------------------- ------------------------
</TABLE>
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The directors, senior officers, holders of greater than 10% of the common shares
of the Company and any associate or affiliate of such persons of the Company
have no other interest in any material transactions in which the Company has
participated in the preceding year or intends to participate in at this time,
except as follows:
a) Y.S. (Jasi) Nikhanj, President and a Director, has a consulting
Agreement through his company, Nikhanj and Associates Geo
Consulting, by which he provides his services as President and
Director to manage the Company and exploration and development of
prospects for the Company for a fee of $10,000 per month. Mr.
Nikhanj is not paid a salary or other compensation as an officer
or Director. In 1998, $13,500 was paid as bonuses.
b) The Company advanced the President $348,225 as a short-term loan.
Interest was charged on the loan at bank prime plus one percent.
These advances were repaid in full during the year.
c) Directors received 117,000 shares during the year in settlement of
performance bonuses (1997 - cash payments $257,250 and 5,000
shares). These bonuses were approved by the Board of Directors.
<PAGE>
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
The Company is authorized to issue an unlimited number of Common
Shares without nominal or par value, and an unlimited number of
Preferred Shares, issuable in series, of which, as at the date hereof,
14,131,565 Common Shares and no Preferred Shares are issued and
outstanding as fully-paid and non-assessable.
Common Shares
The holders of Common Shares are entitled to dividends if, as and when
declared by the directors, to one (1) vote per share at meetings of the
holders of Common Shares of the Company and, upon liquidation, to
receive such assets of the Company as are distributable to the
holders of the Common Shares. All of the Common Shares to be
outstanding upon completion of this offering will be fully-paid and
non-assessable.
Preferred Shares
The Preferred Shares may be issued from time to time in one or more
series. each series consisting of a number of Preferred Shares as
determined by the board of directors of the Company who may also fix
the designation, rights, privileges, restrictions and conditions
attaching to the shares of each series of Preferred Shares. There are
no Preferred Shares issued and outstanding.
The Preferred Shares of each series shall, with respect to payment of
dividends and distribution of assets in the event of liquidation,
dissolution or winding-up of the Company, whether voluntary or
involuntary, or any other distribution of the assets of the Company
among its shareholders for the purpose of winding-up its affairs, rank
on a parity with the Preferred Shares of every other series and shall
be entitled to preference over the Common Shares and the shares of any
other class ranking junior to the Preferred Shares.
<PAGE>
Transfer Agent
The transfer agent for the company shares is Montreal Trust, 600,
530-8th Avenue SW, Calgary, Alberta T2P3S8 (403) 267-6872.
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
There have been no defaults by the Company upon Senior Securities
during the fiscal year 1995 to date of this registration statement.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES
There have been no changes in securities or changes in security for
registered securities to date of this registration statement other than
a one for four consolidation of common shares in 1994.
PART IV
ITEM 17. FINANCIAL STATEMENTS
The following documents are filed as a part of this report:
1) Financial Statements: (See Financial Exhibits Index below
and Financial Exhibits furnished as Pages F-1 through F-20).
2) Financial Statement Schedules: None
ITEM 18. NOT APPLICABLE.
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
a) INDEX TO FINANCIAL STATEMENTS
AND SUPPORTING SCHEDULES
Page
Reports of Independent Public Accountants F-2
I. Financial Statements:
Consolidated Balance Sheets at March 31,
1997, 1998 and Dec. 31, 1998 (unaudited) F-3
Consolidated Statements of Loss & Deficit for
the period ended March 31, 1996, 1997, 1998,
and Dec. 31, 1998 (unaudited) F-4
Statement of Cash Flows for the period ended
March 31, 1996, 1997, 1998, and Dec. 31, 1998
(unaudited) F-5 - F-6
Notes to Consolidated Financial Statements F-7 - F-19
<PAGE>
INDEX
SK EXHIBITS
Page
1.0 None
2.0 None
3.1 Certificate of Incorporation - 48
Articles of Incorporation of Durga
Resources, Ltd 48
3.2 Articles of Amalgamation March 31, 1993 53
3.3 Statutory Declaration March 31, 1993 56
3.4 Articles of Amendment September 24, 1993 58
3.5 Articles of Amendment July 18, 1994 60
3.6 Articles of Amendment July 25, 1994 62
3.7 Certificate of Dissolution September 1, 1996 64
3.8 Certificate of Revival September 17, 1996 66
3.9 Certificate of Amendment July 25 1994 68
3.10 Certificate of Amendment -July 18, 1994
to Leader Mining International, Inc. 70
3.11 Certificate of Amendment September 24, 1993 72
3.12 Certificate of Amendment Amalgamation
March 31, 1993 74
3.13 Articles of Revival September 16, 1996 76
3.14 Bylaws #1 79
3.15 Bylaws #2 97
10.1 Knife Lake Agreement (Copper Quest, Inc.
& Leader Mining) P
10.2 Knife Lake Agreement (Consolidated Pine
Channel Gold Corp. and Leader Mining) P
10.3 Renewal of Mineral Lease ML 5269 P
10.4 Optional/Joint Venture Agreement (Reader Mining
and Karmel
Diamond Holdings, LTD and Poplar Resources, Ltd.) P
19.1 Stock Option Plan 100
(P) Documents which fall under the Hardship Exemption Rule 202 (Reg.
S-T) for filing in paper format with Form SE.
<PAGE>
C) SUPPLEMENTAL INFORMATION
Table 1 Leases in Saskatchewan
Table 2 Schedule of Lease Area South Africa
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DATED: June 24, 1999
LEADER MINING INTERNATIONAL, INC.
By: Y.S. Nikhanj
------------------------------
President
Directors:
/s/ Manish Bindal
---------------------------------
Secretary and Director
/s/ Ulrich Schurch
---------------------------------
Director
/s/ Y.S. Nikhanj
---------------------------------
Director
/s/ Raymond Lai
---------------------------------
Vice President of Finance
/s/ Roland Kesselring
---------------------------------
Vice President of Corporate Affairs
<PAGE>
Leader Mining International Inc.
Consolidated Financial Statements
For the three years ended March 31, 1998, 1997 and 1996
(expressed in Canadian dollars)
F-1
<PAGE>
Auditors' Report
To the Shareholders of Leader Mining International Inc.
We have audited the consolidated balance sheets of Leader Mining International
Inc. as at March 31, 1998 and 1997 and the consolidated statements of loss and
deficit and cash flows for the three years ended March 31, 1998, 1997 and 1996.
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
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at March 31, 1998
and 1997 and the results of its operations and its cash flows for the three
years then ended in accordance with accounting principles generally accepted in
Canada.
/s/ Coopers & Lybrand
Chartered Accountants
Calgary, Alberta, Canada
June 12, 1998, except for note 7(b)
which is of July 7, 1998
F-2
<PAGE>
<TABLE>
<CAPTION>
Leader Mining International, Inc.
Consolidated Balance Sheets
(expressed in Canadian dollars)
December 31, March 31, March 31,
1998 1998 1997
$ $ $
(Unaudited)
<S> <C> <C> <C>
Assets
Current assets
Cash and short-term deposits 388,818 2,724,319 6,250,389
Accounts receivable 10,314 15,214 3,214
Goods and Services Tax receivable 12,982 136,662 196,700
Subscription receivable 136,500
Deposits and prepaid expenses 349,574 135,406 142,983
------------------- ------------------ ------------------
761,688 3,011,601 6,729,786
Capital assets (note 3) 157,816 155,645 68,834
Mineral properties and deferred exploration costs (note 4)
9,548,034 8,957,965 4,440,824
------------------- ------------------ ------------------
10,467,538 12,125,211 11,239,444
------------------- ------------------ ------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 73,094 1,820,664 1,117,428
Due to related parties (note 5) 112,764 8,553 231,243
------------------- ------------------ ------------------
185,858 1,829,217 1,348,671
------------------- ------------------ ------------------
Shareholders' Equity
Capital stock (note 6) 19,670,462 19,265,652 16,973,405
Deficit (9,388,782) (8,969,658) (7,082,632)
------------------- ------------------ ------------------
10,281,680 10,295,994 9,890,773
------------------- ------------------ ------------------
10,467,538 12,125,211 11,239,444
------------------- ------------------ ------------------
</TABLE>
Commitments and contingencies (note 7)
Subsequent events (note 10)
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
Leader Mining International, Inc.
Consolidated Statements of Loss and Deficit
(expressed in Canadian dollars)
Nine months
ended Year ended
------------------ ----------------- ------------- -----------
<S> <C> <C> <C> <C>
December 31, March 31, March 31, March 31,
1998 1998 1997 1996
$ $ $ $
(Unaudited)
Revenue
Interest 43,497 152,132 28,702 -
------------------ ----------------- ----------------- -----------------
Expenses
General and administrative 462,621 1,358,156 640,618 367,437
Exploration costs written off (note 4) - 561,500 1,506,392 -
Provision for site restoration and abandonment
costs - 68,250 - 100,000
Amortization - 27,082 12,189 1,465
Loss on disposal of capital assets - 24,170 - -
------------------ ----------------- ----------------- -----------------
462,621 2,039,158 2,159,199 468,902
------------------ ----------------- ----------------- -----------------
Net loss for the period 419,124 1,887,026 2,130,497 468,902
Deficit - Beginning of period 8,969,658 7,082,632 4,952,135 4,483,233
------------------ ----------------- ----------------- -----------------
Deficit - End of period 9,388,782 8,969,658 7,082,632 4,952,135
------------------ ----------------- ----------------- -----------------
Loss per share 0.03 0.14 0.20 0.08
------------------ ----------------- ----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Leader Mining International, Inc.
Consolidated Statements of Cash Flows
(expressed in Canadian dollars)
Nine months
ended Year ended
------------------ ----------------- -------------- -------------
December 31, March 31, March 31, March 31,
1998 1998 1997 1996
$ $ $ $
(Unaudited)
<S> <C> <C> <C> <C>
Cash provided by (used in)
Operating activities
Net loss for the period (419,124) (1,887,026) (2,130,497) (468,902)
Items not affecting cash -
Exploration costs written off - 561,500 1,506,392 -
Amortization - 27,082 12,189 1,465
Loss on disposal of capital assets - 24,170 - -
Provision for site restoration and
abandonment costs - 68,250 - 100,000
Employee bonuses paid in shares (111,300) 529,500 18,500 15,050
------------------ ----------------- ----------------- -----------------
(530,424) (676,524) (593,416) (352,387)
Change in non-cash working capital balances (note
11) (1,608,158) 690,601 606,032 945,906
------------------ ----------------- ----------------- -----------------
(2,138,582) 14,077 12,616 593,519
------------------ ----------------- ----------------- -----------------
Financing activities
Issuance of common shares, net of issue costs 291,110 1,636,998 10,721,305 1,870,750
Net payments made from (to) related parties 104,211 (222,690) 23,897 (282,667)
Repayment of convertible promissory notes - - - (62,500)
------------------ ----------------- ----------------- -----------------
395,321 1,414,308 10,745,202 1,525,583
------------------ ----------------- ----------------- -----------------
Investing activities
Mineral properties and deferred exploration costs (590,069) (4,816,392) (5,685,757) (867,653)
Purchase of capital assets (2,171) (145,163) (52,697) (24,631)
Proceeds on disposal of capital assets - 7,100 - -
------------------ ----------------- ----------------- -----------------
(592,240) (4,954,455) (5,738,454) (892,284)
------------------ ----------------- ----------------- -----------------
Increase (decrease) in cash (2,335,501) (3,526,070) 5,019,364 1,226,818
Cash and short-term deposits - Beginning of period
2,724,319 6,250,389 1,231,025 4,207
------------------ ----------------- ----------------- -----------------
Cash and short-term deposits - End of period
388,818 2,724,319 6,250,389 1,231,025
------------------ ----------------- ----------------- -----------------
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
Leader Mining International, Inc.
Consolidated Statements of Cash Flows
(expressed in Canadian dollars)
Non-cash financing activities
<S> <C> <C> <C> <C>
Issue of shares for
Finders' fees 262,249 61,250
Property acquisition - - 35,000 -
------------------ ----------------- ----------------- -----------------
- 262,249 96,250 -
------------------ ----------------- ----------------- -----------------
Non-cash investing activities
Exploration expenditures - (262,249) (96,250) -
------------------ ----------------- ----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
1. Nature of operations
The Company is in the process of exploring its mineral properties and has
not yet determined whether these properties contain ore reserves that are
economically recoverable. The recoverability of amounts shown for mineral
properties and deferred exploration costs is dependent upon the existence
of economically recoverable reserves, securing and maintaining title and
beneficial interest in the property, the ability of the Company to obtain
necessary financing to complete the development, and upon future
profitable production or proceeds from disposition of the mineral
properties. The amounts shown as mineral properties and deferred
exploration costs represent net costs to date, less amounts written-off
and do not necessarily represent present or future values.
2. Significant accounting policies
Interim financial statements
The financial information as of and for the nine months ended December 31,
1998 is unaudited, but in the opinion of management, reflects all
adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of such information.
Accounting principles
These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP").
These principles conform, in all material respects applicable to the
Company, with accounting principles generally accepted in the United
States ("US GAAP") except as described in note 12.
Basis of presentation
These consolidated financial statements include the results of the
Company's wholly owned United States inactive subsidiaries, Durvada
Resources Inc. and Durga Resources Inc.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those reported.
Mineral properties and deferred exploration costs
Acquisition and exploration costs relating to mineral properties are
deferred until the properties are brought into production, at which time
they are amortized on a unit of production basis, or until the properties
are abandoned or sold or management determines that a mineral property is
no longer economically viable, at which time the deferred costs are
written-off.
F-7
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
2. Significant accounting policies (cont'd)
Cash
Cash and short-term deposits mature within 90 days of the original date of
acquisition. In order to limit its exposure, the Company deposits its
funds with large financial institutions.
Capital assets
Capital assets are recorded at cost. Amortization is provided on a
declining balance basis based on the estimated useful life of the assets
at the following annual rates:
Computer equipment 30%
Furniture and fixtures 20%
Vehicle 30%
Camp equipment 20%
Field office building 4%
Subscriptions receivable
Subscriptions receivable from employees, officers or directors of the
Company are recorded as assets of the Company when collectibility of the
receivable is reasonably assured. When collectibility is not reasonably
assured, the amount receivable is offset against issued share capital.
Subscriptions receivable from third parties are offset against issued
share capital.
Foreign currency translation
The Company follows the temporal method of translation whereby all
monetary assets and liabilities denominated in a foreign currency are
translated into Canadian dollars at the rate of exchange in effect at the
balance sheet date. Non-monetary assets and exploration expenditures are
translated at the rates prevailing when they are acquired or incurred.
Per share information
Loss per share has been calculated using the weighted average method.
F-8
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
3. Capital assets
December 31,
1998
(Unaudited)
------------------------------------------------------------
<S> <C> <C> <C>
Accumulated
Cost amortization Net
$ $ $
Computer equipment 38,424 13,324 25,100
Vehicle 21,843 11,140 10,703
Furniture and fixtures 31,299 18,471 12,828
Camp equipment 8,600 3,095 5,505
Field office building 108,000 4,320 103,680
------------------- ------------------ -------------------
208,166 50,350 157,816
------------------- ------------------ -------------------
March 31, 1998
----------------------------------------------------------------
Accumulated
Cost amortization Net
$ $ $
Computer equipment 38,424 13,324 25,100
Vehicle 21,843 11,140 10,703
Furniture and fixtures 29,128 18,471 10,657
Camp equipment 8,600 3,095 5,505
Field office building 108,000 4,320 103,680
------------------- ------------------ ------------------
205,995 50,350 155,645
------------------- ------------------ ------------------
March 31, 1997
----------------------------------------------------------------
Accumulated
Cost amortization Net
$ $ $
Computer equipment 7,678 2,569 5,109
Vehicle 21,843 6,552 15,291
Furniture and fixtures 22,713 15,807 6,906
Camp equipment 43,248 1,720 41,528
------------------- ------------------ ------------------
95,482 26,648 68,834
------------------- ------------------ ------------------
</TABLE>
F-9
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
4. Mineral properties and deferred exploration costs
December 31, March 31, March 31,
1998 1998 1997
$ $ $
(Unaudited)
<S> <C> <C> <C>
(a) Balance - Beginning of period 8,957,965 4,440,824 1,065,975
Expenditures capitalized in the period -
Acquisition of mineral properties 25,000 70,000 219,000
Exploration costs 565,069 5,008,641 5,563,007
Tax effect of flow-through shares (note
6(c)) - - (900,766)
------------------- ------------------ ------------------
590,069 5,078,641 4,881,241
Less: Exploration costs written off - (561,500) (1,506,392)
------------------- ------------------ ------------------
590,069 4,517,141 3,374,849
------------------- ------------------ ------------------
Balance - End of period 9,548,034 8,957,965 4,440,824
=================== ================== ==================
</TABLE>
(b) The breakdown of mineral properties and deferred exploration costs by
property is as follows:
<TABLE>
<CAPTION>
December 31,
1998
(Unaudited)
---------------------------------------------------------------
<S> <C> <C> <C>
Deferred
Mineral exploration
properties costs Total
$ $ $
Knife Lake, Saskatchewan 85,000 7,658,585 7,743,585
Nettogami Lake, Ontario 65,000 1,277,978 1,342,978
Cody Township, Ontario 224,354 224,354
Other 94,000 143,117 237,117
------------------ ------------------ -------------------
244,000 9,304,034 9,548,034
------------------ ------------------ -------------------
</TABLE>
F-10
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
4. Mineral properties and deferred exploration costs (cont'd)
March 31, 1998
----------------------------------------------------------------
<S> <C> <C> <C>
Deferred
Mineral exploration
properties costs Total
$ $ $
Knife Lake, Saskatchewan 85,000 7,093,516 7,178,516
Nettogami Lake, Ontario 65,000 1,277,978 1,342,978
Cody Township, Ontario 224,354 224,354
Other 69,000 143,117 212,117
------------------- ------------------ ------------------
219,000 8,738,965 8,957,965
------------------- ------------------ ------------------
March 31, 1997
----------------------------------------------------------------
Deferred
Mineral exploration
properties costs Total
$ $ $
Knife Lake, Saskatchewan 30,000 2,709,763 2,739,763
Nettogami Lake, Ontario 65,000 1,199,546 1,264,546
Nighthawk Lake, Ontario 149,000 52,928 201,928
Other 64,000 170,587 234,587
------------------- ------------------ ------------------
308,000 4,132,824 4,440,824
------------------- ------------------ ------------------
</TABLE>
(c) During fiscal year 1998, the Company wrote off $561,000 (1997 -
$137,930) of exploration costs relating to properties on which no
further exploration activities are planned.
(d) In March, 1998, to consolidate a strategic land position in Voisey
Bay, Labrador, the Company entered into three separate agreements to
acquire interests in certain mineral claims. To acquire these
interests, the Company must make total cash payments of $45,000 and
incur a total of up to $2,750,000 over the next four years.
(e) During fiscal year 1998, the Company capitalized $94,500 (1997 -
$120,000) of geological consulting services.
(f) In February 1997, the Company signed an agreement to acquire a 90%
interest in mineral claims at Pistol Lake, near Knife Lake,
Saskatchewan, for 10,000 shares and $1,500,000 in exploration
expenditures, of which $150,000 must be spent in the first year. The
Company met the $150,000 commitment in fiscal 1997.
(g) During fiscal year 1997, the Company invested $1,092,303 in a gold
exploration company to facilitate the acquisition of mineral
properties in Peru and Honduras and incurred $276,159 of exploration
expenditures in Peru. However, due diligence and exploration results
determined that the properties were not economically viable and the
properties were subsequently abandoned. The exploration costs and
investment were written off in fiscal year 1997 and the Company is
commencing legal action to recover these amounts.
F-11
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
5. Related party transactions
(a) Due to related parties
December 31, March 31, March 31,
1998 1998 1997
$ $ $
(Unaudited)
<S> <C> <C> <C>
(i) The Company's president and his wife 108,266 4,055 226,745
(ii) Other shareholders, directors 4,498 4,498 4,498
------------------- ------------------ ------------------
112,764 8,553 231,243
------------------- ------------------ ------------------
</TABLE>
The shareholders' loans have no fixed terms of repayment, are
non-interest bearing and are unsecured.
(b) Transactions in the year
During fiscal year 1998, the following transactions were conducted
with related parties:
(i) The Company advanced the President $348,225 as a short-term
loan. Interest was charged on the loan at bank prime plus one
percent. These advances were repaid in full during the year.
(ii) A director's law firm was paid $40,422 for legal
services provided during the year (1997 - $41,850).
(iii) A company owned by the president charged $135,000
(1997 - $120,000) for geological consulting services provided
during the year.
(iv) Directors received 117,000 shares during the year in
settlement of performance bonuses (1997 - cash payment $257,250
and 5,000 shares). These bonuses were approved by the Board of
Directors.
During fiscal year 1997, the following transactions occurred:
(i) The President and his wife made additional non-interest
bearing cash advances to the Company, assumed Company debts and
made expenditures on behalf of the Company totalling $282,203.
The expenditures included certain mining options acquired on
behalf of the Company (note 4) for total non-cash consideration
valued at $134,000. These options were transferred to the
Company at cost. In addition, the President secured the services
of a consulting geologist on behalf of the Company for non-cash
consideration valued at $75,000. The Company repaid the
President and his wife a total of $458,306 in 1997.
(ii) The president sold a mobile home, previously used in the
Company's operations, to Durvada Resources Inc. for proceeds of
$34,648, which equalled the balance of the mortgage owed by the
President on the mobile home.
F-12
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
6. Capital stock
(a) Authorized -
The authorized share capital of the Company is comprised of an
unlimited number of common and preferred shares.
(b) Common shares issued
Changes in the Company's outstanding common share capital are
summarized as follows:
<TABLE>
<CAPTION>
Number of Amount
shares $
<S> <C> <C>
Balance - March 31, 1995 4,818,370 4,104,566
------------------ ------------------
Shares issued -
Exercise of options 543,000 255,750
Employee bonuses 17,500 15,050
For settlement of liabilities 3,127,500 911,250
Private placements for cash 1,150,000 1,900,000
------------------ ------------------
4,838,000 3,082,050
------------------ ------------------
9,656,370 7,186,616
Less: Subscriptions receivable (50,000) (175,000)
------------------ ------------------
Balance - March 31, 1996 9,606,370 7,011,616
------------------ ------------------
Shares issued -
Subscriptions received 50,000 175,000
Exercise of options 628,000 1,652,200
Exercise of warrants 1,025,000 1,811,500
Employee bonus 5,000 18,500
Acquisition of mineral claims 100,000 35,000
Finder's fee 47,115 61,250
Flow-through shares (note 6(c)) 425,000 1,997,500
Private placements for cash 1,362,000 5,543,790
------------------ ------------------
3,642,115 11,294,740
------------------ ------------------
13,248,485 18,306,356
Add: Flow-through warrant issue proceeds - 21,250
Less: Subscriptions receivable (35,256) (137,500)
Share issue costs - (315,935)
Tax effect on flow-through shares (note 6(c)) - (900,766)
------------------ ------------------
Balance - March 31, 1997 13,213,229 16,973,405
------------------ ------------------
Shares issued -
Subscriptions received 35,256 137,500
Exercise of options 85,000 331,500
Director and employee bonuses 157,000 529,500
Private placement for cash 500,000 1,889,500
F-13
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31,
1998 is unaudited
(expressed in Candian dollars)
Finders fees 66,080 262,249
------------------ ------------------
843,336 3,150,249
------------------ ------------------
14,056,565 20,123,654
Less: Share issue costs - (858,002)
------------------ ------------------
Balance - March 31, 1998 14,056,565 19,265,652
Shares issued -
Director and employee bonus shares cancelled (157,000) (529,500)
Director and employee bonus shares reissued 157,000 418,200
Exercise of options 677,000 291,110
Legal settlement for Blower & Condor 75,000 225,000
------------------ ------------------
14,808,565 19,670,462
------------------ ------------------
</TABLE>
The weighted average number of shares outstanding for the nine months
ended December 31, 1998 was 14,081,383 (unaudited) and for the year
ended March 31, 1998 was 13,911,958 (1997 - 10,924,623; 1996 -
5,961,296).
(c) Flow-through shares
Pursuant to the issuance of flow-through shares, the Company spent
$1,997,500 on qualifying expenditures in fiscal year 1997, the tax
effects of which were renounced to the investors.
(d) Share options
The Company has a stock option plan for the officers, directors and
employees. Up to 10% of the issued and outstanding shares are
reserved for issuance. The number of stock options outstanding at the
year-end were as follows:
<TABLE>
<CAPTION>
Number of options
------------------- ------------------ -------------------
<S> <C> <C> <C>
December 31, March 31, March 31,
1998 1998 1997
(Unaudited)
Balance - Beginning of period 1,357,000 847,000 965,000
Granted in the period 250,000 810,000 1,150,000
Exercised in the period (677,000) (85,000) (628,000)
Expired / cancelled in the period (90,000) (215,000) (640,000)
------------------- ------------------ -------------------
Balance - End of period 840,000 1,357,000 847,000
------------------- ------------------ -------------------
</TABLE>
F-14
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
6. Capital stock (cont'd)
The options outstanding at December 31, 1998 expire as follows:
<TABLE>
<CAPTION>
Number of
options
(Unaudited)
<S> <C>
Exercise at $0.43 expiring July, 1999 325,000
Exercise at $0.43 expiring October, 2000 265,000
Exercise at $0.35 expiring November, 2001 250,000
-------
840,000
=======
</TABLE>
(e) Share warrants
The number of share warrants issued during the year in conjunction
with the private share placements and outstanding at the year-end
were as follows:
<TABLE>
<CAPTION>
Number of
warrants
-------------------- ------------------ ------------------
<S> <C> <C> <C>
December 31, March 31, March 31,
1998 1998 1997
(Unaudited)
Balance - Beginning of period 130,000 637,500 950,000
Granted in the period 322,000 712,500
Exercised in the period (1,025,000)
Expired in the period (130,000) (829,500)
-------------------- ------------------ ------------------
Balance - End of period - 130,000 637,500
-------------------- ------------------ ------------------
</TABLE>
The 130,000 warrants are exercisable at $5.00 by March 31, 1999.
7. Commitments and contingencies
(a) The Company has signed a lease for office premises at $24,000 per
annum for five years commencing August 1, 1996.
(b) On July 5, 1994, the Nevada Division of Environmental Protection
issued a Finding of Alleged Violation and Order relating to
environmental problems of certain of Durga Resources Inc.'s (a United
States subsidiary corporation which has no assets and is inactive)
Nevada optioned mining claims. On July 14, 1995, the United States
Department of the Interior Bureau of Land Management, issued a Notice
of Noncompliance regarding environmental problems on the same claims.
Exploration activities on these claims ceased in 1995. According to
the Nevada authorities, Durga Resources Inc. is liable for the costs
of mill site restoration. During 1998, the Company developed a
Reclamation Plan for the clean up of the Nevada site. This plan has
been agreed with the Nevada authorities and a provision for the cost
of this clean up has been made in the 1998 financial statements.
F-15
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
7. Commitments and contingencies (cont'd)
Clean-up on the site was completed in June, 1998 and the site has been
inspected by officials from the Nevada Division of Environmental
Protection. In August, 1998 the Notice of Noncompliance was cancelled with
Leader having no further financial obligations.
8. Income taxes
The Company has Canadian resource deductions including undepreciated
capital costs of approximately $10,100,000 which may be carried forward
indefinitely in the prescribed manner to reduce taxable income in future
years, and Canadian non-capital tax losses of approximately $3,035,000.
The non-capital tax losses expire as follows:
<TABLE>
<CAPTION>
Year of Loss Amount Available Until
<S> <C> <C> <C>
1992 137,000 1999
1993 169,000 2000
1994 289,000 2001
1995 164,000 2002
1996 320,000 2003
1997 674,000 2004
1998 1,282,000 2005
$3,035,000
==========
</TABLE>
In addition, the Company has United States net operating losses available
to be carried forward for 15 years commencing in 1989, of approximately
$1,865,000.
The potential income tax benefit associated with the above non-capital
losses have not been recorded in these financial statements.
Differences between income taxes calculated at Canadian statutory rates
and the income tax provision are as follows:
<TABLE>
<CAPTION>
Nine months
ended
December 31,
1998 March 31, March 31,
(Unaudited) 1998 1997
$ $ $
<S> <C> <C> <C>
Income taxes at Canadian statutory rates 188,600 849,000 959,000
Tax effect of losses which have not been
recorded (188,600) (849,000) (959,000)
Balance - End of period - - -
-------------------- ------------------ ------------------
</TABLE>
F-16
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
9. Financial instruments
The Company's financial instruments recognized in the balance sheet
consist of cash and short-term deposits, accounts receivable, goods and
services tax receivable, subscription receivable, accounts payable and
accrued liabilities and amounts due to related parties. The fair values of
all financial instruments approximate their carrying values due to their
short-term maturity.
10.Subsequent events
(a) On April 27, 1998, the Company reached an agreement with Blower
Investment A.V.V. and Condor Resources A.V.V. to settle outstanding
matters regarding a former investment in mineral properties in Peru
through the issue of 75,000 shares of the Company. A liability of
$251,250 has been recorded in the 1998 financial statements with
respect to this settlement.
(b) On May 28, 1998 the Company signed a letter of intent to acquire
all the outstanding shares of Ariel Resources Ltd. ("Ariel"), a
company with mining operations in Costa Rica, in exchange for shares
of the Company. Ariel shares will be converted into Leader shares at
a ratio of 12.42:1. The Company will provide an initial cash
injection to Ariel of US $2.5 million. After completing certain due
diligence, the Company decided not to pursue this opportunity.
11.Changes in non-cash working capital balances
<TABLE>
<CAPTION>
December 31, March 31, March 31, March 31, 1996
1998 1998 1997 $
$ $ $
(Unaudited)
<S> <C> <C> <C> <C>
Operating activities
Accounts receivable 4,900 (12,000) (3,214) 7,231
Goods and Services Tax receivable 123,680 60,038 (170,302) (26,398)
Deposits and prepaid expenses (214,168) 7,577 309 (143,292)
Accounts payable and accrued liabilities (1,354,320) 634,986 779,239 1,108,365
---------------------------------------------------------------------------
(1,439,908) 690,601 606,032 945,906
---------------------------------------------------------------------------
</TABLE>
F-17
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
(expressed in Canadian dollars)
12. Differences between Canadian and U.S. generally accepted accounting
principles
Significant differences between Canadian GAAP and U.S. GAAP which would
have an effect on these consolidated financial statements are as follows:
(a) Adjustment to net loss
<TABLE>
<CAPTION>
Nine months
ended
December 31, March 31, March 31, March 31, 1996
1998 1998 1997 $
$ $ $
(Unaudited)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loss for the year following Canadian GAAP
(419,124) (1,887,026) (2,130,497) (468,902)
Deferred exploration costs (i) (565,069) (4,606,141) (3,328,779) (718,717)
Tax effect of flow-through shares (ii) - - 900,766 -
-------------------------------------------------------------------------
Stock based compensation (iii) (157,070) (928,490) (823,550) (732,100)
-------------------------------------------------------------------------
Loss for the year following U.S. GAAP (1,141,263) (7,421,657) (6,282,826) (1,919,719)
-------------------------------------------------------------------------
Loss per share under U.S. GAAP (0.08) (0.53) (0.58) (0.32)
-------------------------------------------------------------------------
</TABLE>
(i) For U.S. GAAP exploration costs, related to projects are
charged to expense as incurred. As such, the majority of costs
charged to exploration costs written off under Canadian GAAP
would have been charged to earnings in prior periods under U.S.
GAP. Property acquisition costs are capitalized for both
Canadian and U.S. GAAP.
(ii) For U.S. GAAP, the tax effect of flow-through shares is
recorded as income. For Canadian GAAP, the tax effect is
recorded as a reduction of deferred exploration costs.
(iii) For U.S. GAAP, subscriptions receivable are recorded as a
reduction in share capital.
(iv) Under U.S. GAAP, a grant of stock options to acquire shares
at a price below the fair market value of the shares, at the
time of the grant, is compensatory under APB No. 25 and is
accounted for as compensation expense. This has the effect of
increasing capital stock and deficit under U.S. GAAP.
F-18
<PAGE>
Leader Mining International, Inc.
Notes to Consolidated Financial Statements
Information as at and for the period ended December 31, 1998 is unaudited
12. Differences between Canadian and U.S. generally accepted accounting
principles (cont'd)
(b) Adjustments to balance sheet
<TABLE>
<CAPTION>
Nine months
ended March 31, March 31,
December 1998 1997
31, $ $
1998
$
(Unaudited)
--------------------------------------------------------------------------------------
Canadian U.S. GAAP Canadian U.S. GAAP Canadian U.S. GAAP
GAAP GAAP GAAP
<S> <C> <C> <C> <C> <C> <C>
Subscription receivable - - - - 136,500 -
(a)(ii)
Mineral properties & deferred
exploration costs (a)(i) 9,548,034 244,000 8,957,965 219,000 4,440,824 308,000
& (iii)
Capital stock 19,670,462 22,396,700 19,265,652 21,834,820 16,973,405 18,614,083
Deficit (9,388,782) (21,419,054) (8,969,658) (20,277,791) (7,082,632) (12,856,134)
</TABLE>
(c) Shareholders' equity
Under U.S. GAAP, shareholders' equity would be as follows:
<TABLE>
<CAPTION>
Nine months
ended
December 31, March 31, March 31,
1998 (Unaudited) 1998 1997
-----------------------------------------------------------------
<S> <C> <C> <C>
Under Canadian GAAP 10,281,680 10,295,994 9,890,773
US GAAP adjustment to net loss
Current (722,139) (5,534,631) (4,152,329)
Cumulative (8,738,965) (4,132,824) (804,045)
US GAAP adjustment to capital stock (a)(ii)
- - (136,500)
(a)(iv) 157,070 928,490 823,550
-------------------- ------------------ ------------------
Balance - End of period 977,646 1,557,029 5,621,449
==================== ================== ==================
</TABLE>
(d) Income taxes
Under U.S. GAAP, the company would be required to initially recognize
an income tax asset arising from the benefit of losses carried
forward. This asset has been reduced to $nil through the application
of a valuation allowance of $3,035,000.
(e) Recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which standardizes the accounting for derivative
instruments. SFAS 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 1999. The effective date was
subsequently changed to all fiscal quarters of all fiscal years
beginning after June 15, 2000 (unaudited). Adopting this standard
will not have a significant impact on the company's consolidated
financial position, results of operations or cash flows.
F-19
<PAGE>
<TABLE>
<CAPTION>
TABLE 1
Table 1: Leader's Mineral Claims over the Knife Lake - McCullum Lake
Area within the Scimitar Complex.
Disposition Hectares Owner Percent Owned Date Protected to NTS Ref
Number
<S> <C> <C> <C> <C> <C>
S-102637 100 Leader Mining 100% 26-Feb-99 64 D 3
S-102638 250 Leader Mining 100% 26-Feb-99 64 D 3
S-105562 1800 Leader Mining 100% 12-Jun-99 64 D 3
S-105563 86 Leader Mining 100% 6-Oct-99 64 D 3
S-105564 531 Leader Mining 100% 21-Oct-99 64 D 3
S-105565 1030 Leader Mining 100% 22-Oct-99 64 D 3
S-105566 1361 Leader Mining 100% 27-Oct-99 64 D 3
S-105567 2839 Leader Mining 100% 27-Oct-99 64 D 3
CBS-6828 840 Leader Mining 100% 27-Jan-99 63-M-14
CBS-6829 700 Leader Mining 100% 28-Jan-99 63-M-14
CBS-6830 900 Leader Mining 100% 28-Jan-99 63-M-14
CBS-8400 1600 Leader Mining 100% 12-Jun-99 63-M-14 &
63-M-14
CBS-8387 806 Leader Mining 100% 4-Mar-99 63-M-14 & 64-D03
S-105580 4264 Leader Mining 100% 11-Apr-99 63-M-14,
63-M-15,
64-D-02 &
64-D-03
CBS-2128 1100 Leader Mining 100% 10-Feb-99 63-M-15
CBS-3187 437 Copperquest 100% 18-Oct-98 63-M-15
CBS-3188 699 Copperquest 100% 18-Oct-98 63-M-15
CBS-3189 1117 Copperquest 100% 18-Oct-98 63-M-15
CBS-3190 515 Copperquest 100% 18-Oct-98 63-M-15
CBS-3223 100 Copperquest 100% 18-Oct-98 63-M-15
CBS-3224 312 Copperquest 100% 18-Oct-98 63-M-15
CBS-3225 210 Copperquest 100% 1-Aug-98 63-M-15
CBS-3226 225 Copperquest 100% 1-Aug-98 63-M-15
CBS-6822 950 Leader Mining 100% 17-Jan-99 63-M-15
CBS-6823 600 Leader Mining 100% 17-Jan-99 63-M-15
CBS-6831 672 Leader Mining 100% 10-Feb-99 63-M-15
CBS-6832 1185 Leader Mining 100% 10-Feb-99 63-M-15
CBS-6833 408 Leader Mining 100% 10-Feb-99 63-M-15
CBS-6834 900 Leader Mining 100% 31-Jan-99 63-M-15
CBS-6835 1275 Leader Mining 100% 31-Jan-99 63-M-15
CBS-8392 954 Leader Mining 100% 26-Feb-99 63-M-15
CBS-8393 225 Leader Mining 100% 26-Feb-99 63-M-15
CBS-8399 225 Leader Mining 100% 12-Jun-99 63-M-15
<PAGE>
ML-5269 648 Leader Mining 100% 8-Oct-99 63-M-15
S-90909 250 Copperquest 100% 18-Oct-99 63-M-15
S-909010 150 Copperquest 100% 18-Oct-99 63-M-15
S-90911 428 Leader Mining 100% 10-Feb-99 63-M-15
S-92754 790 Leader Mining 100% 20-Feb-99 63-M-15
S-92755 1450 Leader Mining 100% 4-Feb-99 63-M-15
S-95890 1100 Leader Mining 100% 31-Jan-99 63-M-15
S-96198 940 Leader Mining 100% 7-Feb-99 63-M-15
S-99066 40 Con.Pine Channel 100% 23-Jan-99 63-M-15
S-102633 1000 Leader Mining 100% 19-Feb-99 63-M-15
S-102634 1250 Leader Mining 100% 19-Feb-99 63-M-15
S-102635 800 Leader Mining 100% 26-Feb-99 63-M-15
S-102636 150 Leader Mining 100% 24-Feb-99 63-M-15
S-104837 875 Con.Pine Channel 100% 14-Dec-98 63-M-15
S-104995 1575 Con.Pine Channel 100% 20-Feb-99 63-M-15
S-105168 420 Con.Pine Channel 100% 20-Feb-99 63-M-15
S-105169 144 Con.Pine Channel 100% 20-Feb-99 63-M-15
S-105170 200 Con.Pine Channel 100% 20-Feb-99 63-M-15
S-105556 135 Leader Mining 100% 6-Jun-99 63-M-15
S-105557 1625 Leader Mining 100% 6-Jun-99 63-M-15
S-105570 782 Leader Mining 100% 17-Mar-99 63-M-15
S-105571 215 Leader Mining 100% 17-Mar-99 63-M-15
S-105581 538 Leader Mining 100% 28-Oct-99 63-M-15
S-105581 248 Leader Mining 100% 28-Oct-99 63-M-15
S-105613 1560 Leader Mining 100% 9-Mar-00 63-M-15
S-105614 999 Leader Mining 100% 28-Oct-99 63-M-15
S-105615 900 Leader Mining 100% 9-Mar-00 63-M-15
S-105616 280 Leader Mining 100% 20-Mar-00 63-M-15
S-105996 1036 Leader Mining 100% 1-Apr-00 63-M-15
S-105997 335 Leader Mining 100% 1-Apr-00 63-M-15
S-106002 454 Leader Mining 100% 20-Mar-00 63-M-15
CBS-8391 615 Leader Mining 100% 4-Mar-99 63-M-15
S-105555 2515 Leader Mining 100% 10-Mar-99 64-D-02
CBS-6825 100 Leader Mining 100% 10-Mar-99 64-D-02
CBS-6827 1000 Leader Mining 100% 13-Mar-99 64-D-02
CBS-6935 1650 Leader Mining 100% 17-Mar-99 64-D-02
CBS-8388 300 Leader Mining 100% 4-Mar-99 64-D-02
CBS-8390 1500 Leader Mining 100% 4-Mar-99 64-D-02
CBA-8394 225 Leader Mining 100% 26-Feb-99 64-D-02
<PAGE>
CBS-8395 100 Leader Mining 100% Feb 29, 99 64-D-02
CBS-8396 225 Leader Mining 100% 26-Feb-99 64-D-02
CBS-8397 100 Leader Mining 100% Feb 29, 99 64-D-02
CBS-8401 600 Leader Mining 100% 10-Mar-99 64-D-02
CBS-8402 825 Leader Mining 100% 10-Mar-99 64-D-02
CBS-8403 1192 Leader Mining 100% 10-Mar-99 64-D-02
S-99064 76 Co.Pine Channel 100% 23-Jan-99 64-D-02
S-99065 24 Co.Pine Channel 100% 23-Jan-99 64-D-02
S-104835 150 Con.Pine Channel 100% 20-Feb-99 64-D-02
S-104836 270 Con.Pine Channel 100% 20-Feb-99 64-D-02
S-104996 620 Con.Pine Channel 100% 14-Dec-98 64-D-02
S-105175 125 Con.Pine Channel 100% 20-Feb-98 64-D-02
S-105553 3910 Leader Mining 100% 4-Jun-99 64-D-02
S-105554 400 Leader Mining 100% 6-Jun-99 64-D-02
S-105560 900 Leader Mining 100% 12-Jun-99 64-D-02
S-105572 1023 Leader Mining 100% 17-Mar-99 64-D-02
S-105573 3420 Leader Mining 100% 24-Mar-99 64-D-02
S-105574 1025 Leader Mining 100% 27-Mar-99 64-D-02
S-105575 3698 Leader Mining 100% 24-Mar-99 64-D-02
S-105576 233 Leader Mining 100% 27-Mar-99 64-D-02
S-105577 28 Leader Mining 100% 27-Mar-99 64-D-02
S-105578 113 Leader Mining 100% 27-Mar-99 64-D-02
S-105579 2382 Leader Mining 100% 11-Apr-99 64-D-02
CBS-8389 2065 Leader Mining 100% 4-Mar-99 64-D-02 & 64-D-03
S-102640 416 Leader Mining 100% 19-Feb-99 64-D-0- & 63-M-14
CBS-6826 1000 Leader Mining 100% 13-Mar-99 64-D-02
S-102641 225 Leader Mining 100% 26-Feb-99 64-D-03
S-102642 100 Leader Mining 100% 26-Feb-99 64-D-03
S-105580 4264 Leader Mining 100% 11-Apr-99 64-M-14,
64-M-14,
64-M-15,
63-D-02, & 63-D-03
S-10569 2269 Leader Mining 100% 17-Mar-99 63-M-15 & 64-D-02
CBS-6824 700 Leader Mining 100% 10-Mar-99 64-D-02
CBS-3144 413 Leader Mining 100% 14-Jul-99 64-D-02
CBS-8398 300 Leader Mining 100% 12-Jun-99 64-D-01 & 64-D-02
S-105558 825 Leader Mining 100% 6-Jun-99 63-M-15 & 64-D-02
S-105559 225 Leader Mining 100% 6-Jun-99 63-M-15 & 63-M-15
S-105561 300 Leader Mining 100% 12-Jun-99 64-D-03
CBS-8400 1600 Leader Mining 100% 12-Jun-99 63-M-14 & 63-M-15
S-102639 265 Leader Mining 100% 26-Feb-99 64-D-03
Total 95144 ha
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
Table 2: Bothma Farms Comprising the Karmel Diamond Project
Property Description In Extent Title Deed Nr.
<S> <C> <C>
The farm Grootkoip No. 240, Division 300.0289 Hectares T15434/96
Ladybrand.
Subdivision 1 of the farm Blaauwkrantz 256.9596 Hectares T15434/96
No. 796, Division Ladybrand
The Remainder of the farm Klipnek No. 156.5812 Hectares T15434/96
92, Division Ladybrand
The farm Inkerman No. 703, Division 390.8927 Hectares T1733/97
Ladybrand
The farm Alma No. 157, Division 140.6496 Hectares T1733/97
Ladybrand
The Remainder of the farm Balaclave 119.9145 Hectares T14868/93
16, Division Ladybrand
Subdivision 2 of the farm Gilboa 467, 119.9145 Hectares T5592/89
Division Ladybrand
The farm Belmont 932, Division 190.7952 Hectares T14867/93
Ladybrand
The farm Burgerslaagte 664, Division 214.0131 Hectares T5591/1989
Ladybrand
The Farm Dundee No. 58, Division 1350.2484 Hectares T13918/88
Ladybrand
The Remainder of the Farm Padlangs No. 134.7724 Hectares T1617/1997
239, Division Ladybrand
<PAGE>
The Remaining Portion of the Farm 342.6128 Hectares T3025/1989
Bethel 17, Division Ladybrand
An undivided half shares of the farm 390.8927 Hectares T1454/1958
Crimea No. 51, Division Ladybrand
An undivided half shares of the farm 390.8927 Hectares T1453/1958
Crimea No. 51, Division Ladybrand
A Portion Known as Mynplass No. 931 of 334 Morgen 75 Vierkante Roede T1103/1958
the farm Karmel No. 93, Division
Ladybrand
The farm Haarlem No. 704, Division 390.8927 Hectares T677/1959
Ladybrand
A Portion known as Elim No. 906 of the 600 Morgen T1280/1956
farm Bethel No. 17, Division Ladybrand
Subdivision 3 of the farm Gilboa No. 140 Morgen T7818/1964
467, Division Ladybrand
Subdivision 1 of the farm Weltevreden 305.8132 Morgen T2000/1962
No. 145, Division Ladybrand
</TABLE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
ARTICLES OF INCORPORATION OF DURGA RESOURCES,LTD.
<PAGE>
Alberta Corporate Access No
BUSINESS CORPORATIONS ACT
Form 2
CERTIFICATE OF INCORPORATION
DURGA RESOURCES LTD.
Name of Corporation
I HEREBY CERTIFY THAT THE ABOVE-MENTIONED CORPORATION, THE ARTICLES OF
INCORPORATION OF WHICH ARE ATTACHED, WAS INCORPORATED UNDER THE
BUSINESS CORPORATIONS ACT OF THE PROVINCE OF ALBERTA.
-------------------------
Registrar of Corporations
June 22, 1987
Date Of Incorporation
<PAGE>
BUSINESS CORPORATIONS ACT
ARTICLES OF INCORPORATION
(SECTION 6)
ALBERTA Consumer and Corporate Affairs
1. NAME OF CORPORATION
DURGA RESOURCES LTD.
2. THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE;
See attached Schedule "A" and "Bit
3. RESTRICTIONS IF ANY ON SHARE TRANSFERS
NONE
4. NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS
Minimum - 3 Maximum - 15
5. IF THE CORPORATION IS RESTRICTED FROM CARRYING ON A CERTAIN BUSINESS,
SPECIFY THESE RESTRICTIONS:
NONE
6. OTHER PROVISIONS:
The Directors may between annual general meetings, appoint one or more
additional directors of the Corporation to serve until the next annual meeting,
but the number of additional Directors shall not at any time exceed one-third
(1/3) the number of Directors who held office at the expiration of the last
annual meeting of the Corporation.
7. DATE: June 22, 1987
8. INCORPORATOR ADDRESS SIGNATURE
RICHARD A. WILSON 900, 340 - 12th Ave. S.W. ____________________
CALGARY, Alberta T2R 1L5 INCORPORATOR
FOR DEPARTMENTAL USE ONLY INCORPORATION DATE
<PAGE>
SCHEDULE "B"
The Corporation is authorized to issue an unlimited amount of preferred shares
which may be issued in one or more series, and the directors are authorized to
fix the number of shares in each series, and determine the designation, rights,
privileges, restrictions and conditions attached to the shares of each series.
<PAGE>
SCHEDULE "A"
The Corporation is authorized to issue an unlimited amount of common shares, the
holders Of which shall have the following rights:
(a) to be entitled to dividends as and when declared by the Board Of
Directors;
(b) to one vote per share at meetings of Shareholders of the Corporation;
(c) upon liquidation, to receive such assets of the Corporation as are remaining
and distributable to the holders of the common shares.
EXHIBIT 3.2
ARTICLES OF AMALGAMATION
MARCH 31, 1998
<PAGE>
FILED
MAR 31 1993
BUSINESS CORPORATIONS ACT
FORM 9
(SECTION 179) Registrar of Corporations
Province of Alberta
ALBERTA
CONSUMER AND
CORPORATE AFFAIRS ARTICLES OF AMALGAMATION
1. NAME OF AMALGAMATED CORPORA71ON 2. CORPORATE ACCESS NO.
DURGA RESOURCES LTD. 20560582
3. THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS
AUTHORIZED TO ISSUE
The Corporation is authorized to issue an unlimited amount of common
shares, the holders of which shall have the following rights:
a. to be entitled to dividends as and when declared by the Board of Directors;
b. to one vote per share at meetings of Shareholders of the Corporation;
c. upon liquidation, to receive such assets of the Corporation as are remaining
and distributable to the holders of the common shares.
The Corporation is authorized to issue an unlimited amount of
preferred shares which may be issued in one or more series and the
directors arc authorized to fix the number of shares in each series and
determine the designation, rights, privileges, restrictions and
conditions attached to the shares of each series.
4. RESTRICTIONS IF ANY OF SHARE TRANSFERS.
none
5. NUMBER (OR MINIMUM AND MAXIMUM) OF DIRECTORS
minimum 3 - maximum 15
6. RESTRICTIONS IF ANY ON BUSINESS THE CORPORATION MAY CARRY ON.
none
7. OTHER PROVISIONS IF ANY.
The Directors may between annual general meetings, appoint
one or more additional directors of the Corporation to serve until the next
annual meeting, but the number of additional Directors shall not at any time
exceed one-third (1/3) the number of Directors who held office at the expiration
of the last annual meeting of the Corporation.
8. NAME OF AMALGAMATING CORPORATIONS CORPORATE ACCESS NO.
Durga Resources Ltd. 20368311
Durvada Resources Ltd 20373028
9. DATE SIGNATURE TITLE
March 31, 1993 /s/_________________________
Ruthen Kumar (Bass) Sukhdeo director
FOR DEPARTMENTAL USE ONLY FILED
EXHIBIT 3.3
STATUTORY DECLARATION
MARCH 31, 1993
<PAGE>
20560582,
FILED
MAR 31 1993
STATUT0RY DECLARATION Registrar of Corporations
CANADA IN THE MATTER OF THE AMALGAMATION OF DURGA
PROVINCE RESOURCES LTD. AND DURVADA RESOURES LTD. INTO AN
OF ALBERTA AMALGAMATED CORPORATION TO BE KNOWN AS
ALBERTA DURGA RESOURCES LTD.
I, RUTHEN KUMAR (BASS) SUKHDEO OF THE CITY OF CALGARY
IN THE PROVINCE OF ALBERTA, DO SOLEMNLY DECLARE:
1. That I am a director of DURGA RESOURCES LTD. and a proposed
director of the proposed amalgamated corporation (the
"amalgamated corporation") to be formed upon the amalgamation
of DURGA RESOURCES LTD. and its wholly-owned subsidiary DURVADA
RESOURCES LTD. and as such I have personal knowledge of the
matter hereinafter deposed to, except where stated to be on
information and belief;
2. That there are reasonable grounds for believing that:
a. the amalgamated corporation will be able to pay its liabilities
as they come due; and
b. the realizable value of the amalgamated corporation's assets will
not be less than the aggregate of its liabilities and stated
capital of all classes, and
3. That there are reasonable grounds for believing that
a. no creditor will be prejudiced by the amalgamation.
AND I MAKE THIS SOLEMN DECLARATION CONSCIENTIOUSLY BELIEVING IT TO BE TRUE AND
KNOWING THAT IT IS OF THE SAME FORCE AND EFFECT AS IF MADE UNDER OATH BY VIRTUE
OF THE CANADA EVIDENCE ACT.
DECLARED BEFORE ME AT THE
CITY OF CALGARY, IN THE
PROVINCE OF ALBERTA /s/________________________________
THIS 29 DAY OF RUTHEN (BASS) SUKHDEO
MARCH, 1993
/s/_____________________________
A COMMISSIONER FOR OATHS
IN AND FOR THE PROVINCE
OF ALBERTA
FAY LYON
My Commission Expires
August 26, 1995
Sect. 3
C:GEN/DURGASTD
EXHIBIT 3.4
ARTICLES OF AMENDMENT
SEPTEMBER 24, 1993
<PAGE>
BUSINESS CORPORATIONS ACT
(SECTION 27 OR 1 71)
Alberta
REGISTRIES
Corporate Registry ARTICLES OF AMENDMENT
- --------------------------------------------------------------------------------
1. NAME OF CORPORATION. 2. CORPORATE ACCESS NUMBER
DURGA RESOURCES LTD. 20560582
- --------------------------------------------------------------------------------
3. ITEM NO. 1 OF THE ARTICLES OF THE ABOVE NAMED CORPORATION ARE AMENDED
----
IN ACCORDANCE WITH SECTION 167.1A. OF THE BUSINESS CORPORATIONS
ACT.
LEADER MINING CORPORATION
- --------------------------------------------------------------------------------
DATE SIGNATURE
TITLE
09/24/93 /S/_____________________________________
CONTROLLER
EXHIBIT 3.5
ARTICLES OF AMENDMENT
JULY 18, 1994
<PAGE>
BUSINESS CORPORATIONS ACT
(SECTION 27 OR 1 71)
Alberta
REGISTRIES
Corporate Registry ARTICLES OF AMENDMENT
- --------------------------------------------------------------------------------
1. NAME OF CORPORATION. 2. CORPORATE ACCESS NUMBER
LEADER MINING CORPORATION 20560582
- --------------------------------------------------------------------------------
3 ITEM NO. 1 OF THE ARTICLES OF THE ABOVE NAMED CORPORATION ARE AMENDED
----
IN ACCORDANCE WITH SECTION 167.1A. OF THE BUSINESS CORPORATIONS
ACT.
LEADER MINING CORPORATION
- --------------------------------------------------------------------------------
DATE SIGNATURE/TITLE
07/18/1994
/S/_____________________________________
FINANCIAL CONTROLLER
EXHIBIT 3.6
ARTICLES OF AMENDMENT
JULY 25, 1994
<PAGE>
BUSINESS CORPORATIONS ACT
(SECTION 27 OR 171)
Alberta
REGISTRIES ARTICLES OF AMENDMENT
Corporate
Registry________________________________________________________________________
1. NAME OF CORPORATION: 2. CORPORATE ACCESS NUMBER
LEADER MINING CORPORATION 20560582
INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
3. ITEM NO. 3 OF THE ARTICLES OF THE ABOVE NAMED CORPORATION ARE AMENDED IN
-----
ACCORDANCE WITH SECTION - 167(1)(F) OF THE BUSINESS CORPORATIONS
ACT by consolidating the issued and outstanding common shares of
the corporation by changing each of the issued and outstanding
common shares into on fifth common share. ie: one new common share
for each 5 old common shares.
DATE SIGNATURE TITLE
JULY 25, 1994 /S/______________________________ CONTROLLER
FOR DEPARTMENTAL USE ONLY
ITEM #1 change authorized by Darin Pearson
CCA-06 104
(Rev 04/93)
EXHIBIT 3.7
CERTIFICATE OF DISSOLUTION
SEPTEMBER 1, 1996
<PAGE>
CORPORATE ACCESS NUMBER
20560582
Alberta
GOVERNMENT OF ALBERTA
LEADER MINING INTERNATIONAL INC.
500-400 5 AVE SW
CALGARY AB T2P OL6
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
DISSOLUTION
LEADER MINING INTERNATIONAL INC.
WAS DISSOLVED ON 96 SEP 01
/s/__________________________
Registrar of Corporations
EXHIBIT 3.8
CERTIFICATE OF REVIVAL
SEPTEMBER 17, 1996
<PAGE>
CORPORATE ACCESS NUMBER
20560582
Alberta
GOVERNMENT OF ALBERTA
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
REVIVAL
LEADER MINING INTERNATIONAL INC.
REVIVED ON SEPTEMBER 17, 1996.
/s/______________________________
Registrar of Corporations
REG 3066 (96/01)
EXHIBIT 3.9
CERTIFICATE OF AMENDMENT
JULY 25, 1994
<PAGE>
CORPORATE ACCESS NUMBER
20560582
Alberta
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
AMENDMENT
LEADER MINING INTERNATIONAL INC.
AMENDED ITS ARTICLES ON JULY 25,1994.
/s/_________________________
Registrar of Corporations
CCA-06-102 (Rev. 04/94)
EXHIBIT 3.10
CERTIFICATE OF AMENDMENT
JULY 18, 1994
LEADER MINING INTERNATIONAL, INC.
<PAGE>
CORPORATE ACCESS NUMBER
20560582
Alberta
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
AMENDMENT
LEADER MINING CORPORATION
CHANGED ITS NAME TO LEADER MINING INTERNATIONAL INC. ON
JULY 18, 1994.
/s/___________________________
Registrar of Corporations
CCA-06-102 (Rev. 04/94)
EXHIBIT 3.11
CERTIFICATE OF AMENDMENT
SEPTEMBER 24, 1993
<PAGE>
CORPORATE ACCESS NUMBER
20560582
Alberta
BUSINESS CORPORATIONS ACT
CERTIFICATE
OF
AMENDMENT
DURGA RESOURCES LTD.
CHANGED ITS NAME TO LEADER MINING CORPORATION ON
SEPTEMBER 24,1993.
/s/___________________________
Registrar of Corporations
CCA-06-102 (Rev. 11/91)
EXHIBIT 3.12
CERTIFICATE OF AMALGAMATION
MARCH 31, 1993
<PAGE>
20560582
Corporate Access No.
ALBERTA
BUSINESS CORPORATIONS ACT
Form 10
CERTIFICATE OF AMALGAMATION
DURGA RESOURCES LTD.
Name of Corporation
I HEREBY CERTIFY that the above-mentioned Corporation resulted from the
amalgamation of the Corporations as set out in the attached Articles of
Amalgamation.
/s/____________________________
Registrar of Corporations
March 31, 1993
Date of Amalgamation
CCA-06-102 (Rev. 11/91)
EXHIBIT 3.13
ARTICLES OF REVIVAL
SEPTEMBER 15, 1996
<PAGE>
FORM 15
BUSINESS CORPORATIONS ACT
(SECTION 201)
ARTICLES OF REVIVAL
ALBERTA REGISTRIES
1. NAME OF THE CORPORATION 2. ALBERTA CORPORATE ACCESS NO
LEADER MINING INTERNATIONAL INC. 20560582
3. REASON FOR DISSOLUTION
DISSOLVED FOR NOT FILING ANNUAL RETURN FOR 1995.
4. STATE YOUR INTEREST IN THE CORPORATION AND WHY YOU SEEK REVIVAL OF THE
CORPORATION:
CORPORATE SECRETARY AND DIRECTOR
DISSOLUTION NOT INTENDED
5. NAME OF APPLICANT 6. ADDRESS OF APPLICANT
MANISH BINDAL SUITE 530, 400 FIFTH AVENUE SW
CALGARY, ALBERTA
T2P OL6
7. SIGNATURE OF APPLICANT DATE
/S/_____________________________________ SEPTEMBER 16,1996
FOR DEPARTMENTAL.USE ONLY
EXHIBIT 3.14
BYLAWS #1
<PAGE>
BY-LAW NO. 1
A by-law relating generally to the conduct of the business and affairs
DURGA RESOURCES LTD. ( hereinafter called the "Corporation").
IT IS HEREBY ENACTED as a by-law of the Corporation as follows;
DEFINITIONS
1. In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:
(a) "Act" means the Business Corporations Act (Alberta) and the
regulations made thereunder, as from time to time amended, and in the case of
such amendment any reference in the bylaws shall be read as referring to the
amended provisions thereof;
(b) Articles means the Articles of Incorporation of the Corporation
filed with the Registrar as from time to time amended, supplemented or restated;
(c) "board" means the board of directors of the Corporation;
(d) "by-laws" means the by-laws of the Corporation from time to time in
force and effect;
(e) all terms contained in the by-laws which are defined in the Act
shall have the meanings given to such terms in the Act;
(f) words imparting the singular number only shall where the context
requires include the plural and vice versa; words importing the masculine gender
shall where the context requires include the feminine and neuter genders; and
(g) the headings used in the by-laws are inserted for reference
purposes only and are not to be considered or taken into account in construing
the terms or provisions thereof or to be deemed in any way to clarify, modify or
explain the effect of any such terms or provisions;
REGISTERED OFFICE
2. The Corporation shall at all times have a registered office within
Alberta. Subject to subsection (4) of section 19 of the Act, the directors of
the Corporation may at any time:
(a) change the address of the registered office within Alberta;
(b) designate, or revoke or change a designation of, a records office
within Alberta; or
(c) designate, or revoke or change a designation of, a post office box
within Alberta as the address for service by mail of the Corporation.
SEAL
3. The corporate seal of the Corporation shall be such as the directors
may by resolution from time to time adopt.
<PAGE>
DIRECTORS
4. Number. The number of directors shall be the number fixed by the
articles or where the articles specify a variable number, the number shall not
be less than the minimum and not more than the maximum number so specified and
shall be determined from time to time within such limits by resolution of the
board of directors. Subject to subsection (4) of section 100 of the Act, at
least half of the directors shall be resident Albertans.
5. Vacancies. Subject to section 106 of the Act, a quorum of directors
may fill a vacancy among the directors, except a vacancy resulting from an
increase in the number or minimum number of directors or from a failure to elect
the number or minimum number of directors required by the articles. If there is
not a quorum of directors, or if there has been a failure to elect the number or
minimum number of directors required by the articles, the directors then in
office shall forthwith call a special meeting of shareholders to fill the
vacancy and, if they fail to call a meeting or If there are no directors then in
office, the meeting may be called by any shareholder. Subject to subsection (4)
of section 101 of the Act, if the shareholders have adopted an amendment to the
articles to increase the number or minimum number of directors, and have not, at
the meeting at which they adopted the amendment elected an additional number of
directors authorized by the amendment, the directors then in office shall
forthwith call a special meeting of shareholders to fill the vacancy.
A director appointed or elected to fill a vacancy holds office for the
unexpired term of his predecessor.
6. Powers. The directors shall manage the business and affairs of
the Corporation and may exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation and are not by the Act, the
articles, the by-laws, any special resolution of the shareholders of the
Corporation, or by statute expressly directed or required to be done in some
other manner.
7. Duties. Every director and officer of the Corporation in
exercising his powers and discharging his duties shall:
(a) act honestly and in good faith with a view to the best interests of
the Corporation; and
(b) exercise the care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
8. Qualification. The following persons are disqualified from
being a director of the Corporation:
(a) anyone who is less than 18 years of age;
(b) anyone who
(i) is a dependent adult as defined in the Dependent Adults
Act or is the subject of a certificate of incapacity under
that Act,
(ii) is a formal patient as defined in the Mental Health Act,
(iii) is the subject of an order under the Mentally
Incapacitated Persons Act appointing a committee of his person
or estate or both, or
<PAGE>
(iv) has been found to be a person of unsound mind by a court
elsewhere than in Alberta;
(c) a person who is not an individual; and
(d) a person who has the status of bankrupt.
Unless the articles otherwise provide, a director of the Corporation is
not required to hold shares issued by the Corporation.
9. Term of office. A director's term of office (subject to the
provisions, if any, of the Corporation's articles and subject to his election
for an expressly stated term) shall be from the date of the meeting at which he
is elected or appointed until the close of the first annual meeting of
shareholders following his election or appointment or until his successor is
elected or appointed.
10. Election. Subject to section 102 of the Act, shareholders of the
Corporation shall, by ordinary resolution at the first meeting of shareholders
and at each succeeding annual meeting at which an election of directors is
required, elect directors to hold office for a term expiring not later than the
close of the third annual meeting of shareholders following the election. A
director not elected for an expressly stated term ceases to hold office at the
close of the first annual meeting of shareholders following his election but, if
qualified, is eligible for re-election. If directors are not elected at a
meeting of shareholders, the incumbent directors continue in office until their
successors are elected.
If a meeting of shareholders fails to elect the number or the minimum
number of directors required by the articles by reason of the disqualification
or death of any candidate, the directors elected at that meeting may exercise
all the powers of the directors if the number of directors so elected
constitutes a quorum.
11. Consent to Election. A person who is elected or appointed a
director is not a director unless he was present at the meeting when he was
elected or appointed and did not refuse to act as a director or, if he was not
present at the meeting when he was elected or appointed, he consented to act as
a director in writing before his election or appointment or within 10 days after
it or he has acted as a director pursuant to the election or appointment.
12. Removal. Subject to sections 102 and 104 of the Act, the
shareholders of the Corporation may by ordinary resolution at a special meeting
remove any director from office before the expiration of his term of office and
may, by a majority of votes cast at the meeting, elect any person in his stead
for the remainder of his term.
13. Vacation of office. A director of the Corporation ceases to
hold office when:
(a) he dies or resigns;
(b) he is removed from office; or
(c) he becomes disqualified.
A resignation of a director becomes effective at the time a written
resignation is delivered to the Corporation, or at the time specified in the
resignation, whichever is later.
<PAGE>
14. Validity of Acts. An act of a director or officer is valid
notwithstanding an irregularity in his election or appointment or a defect in
his qualification.
MEETINGS OF DIRECTORS
15. Place of Meeting. Unless the articles otherwise provide, meetings of
directors and of any committee of directors may be held at any place. A meeting
of directors may be convened by the Chairman of the Board (if any), the
President or any director at any time and the Secretary shall upon direction of
any of the foregoing convene a meeting of directors.
16. Notice. Notice of the time and place for the holding of any meeting of
directors or any committee of directors shall be sent to each director not less
than two (2) days (exclusive of the day on which the notice is sent but
inclusive of the day for which notice is given) before the date of the meeting;
provided that the meetings of directors or of any committee of directors may be
held at any time without notice if all the directors are present (except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called) or if all the absent directors have waived notice. The notice of a
meeting of directors shall specify any matter referred to in subsection (3) of
section 110 of the Act that is to be dealt with at the meeting, but need not
specify the purpose or the business to be transacted at the meeting.
For the first meeting of directors to be held following the election of
directors at an annual or special meeting of the shareholders or for a meeting
of directors at which a director is appointed to fill a vacancy in the board, no
notice of such meeting need by given to the newly elected or appointed director
or directors in order for the meeting to be duly constituted, provided a quorum
of the directors is present.
17. Waiver of Notice. Notice of any meeting of directors or of any
committee of directors or the time for the giving of any such notice or any
irregularity in any meeting or in the notice thereof may be waived by any
director in writing or by telegram, cable or telex addressed to the Corporation
or in any other manner, and any such waiver may be validly given either before
or after the meeting to which such waiver relates. Attendance of a director at
any meeting of directors or of any committee of directors is a waiver of notice
of the meeting, except when a director attends a meeting for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called.
18. Omission of Notice. The accidental omission to give notice of any
meeting of directors or of any committee of directors to or the non-receipt of
any notice by any person shall not invalidate any resolution passed or any
proceeding taken at such meeting.
19. Telephone Participation. A director may participate in a meeting of
directors or of any committee of directors by means of telephone or other
communication facilities that permit all persons participating in the meeting to
hear each other, and a director participating in a meeting by those means is
deemed for the purposes of the Act to be present at that meeting.
20. Adjournment. Any meeting of directors or of any committee of
directors may be adjourned from time to time by the chairman of the meeting,
with the consent of the meeting, to a fixed time and place. Notice of an
adjourned meeting of directors or committee of directors is not required to be
given if the time and place of the adjourned meeting is announced at the
original meeting. Any adjourned meeting shall be duly constituted if held in
accordance with the terms of the adjournment and a quorum is present thereat.
The directors who formed a quorum at the original meeting are not required to
form the quorum at the adjourned meeting. if there is no quorum present at the
adjourned meeting, the original meeting shall be deemed to have terminated
forthwith after its adjournment. Any business may be brought before or dealt
with at the original meeting in accordance with the notice calling the same.
<PAGE>
21. Quorum and Voting. Subject to the articles, a majority of the
number of directors constitutes a quorum at any meeting of directors and,
notwithstanding any vacancy among the directors, a quorum of directors may
exercise all the powers of the directors. Subject to subsections (3) and (4) of
section 109 of the Act, directors shall not transact business at a meeting of
directors unless a quorum is present and at least half of the directors present
are resident Albertans. Questions arising at any meeting of directors shall be
decided by a majority of votes. In the case of an equality of votes, the
chairman of the meeting in addition to his original vote shall have a second or
casting vote.
22. Resolution in Lieu of Meeting. Subject to the articles, a
resolution in writing, signed by all the directors entitled to vote on that
resolution at a meeting of directors or committee of directors, is as valid as
if it had been passed at a meeting of directors or committee of directors.
COMMITTEES OF DIRECTORS
23. General. The directors may from time to time appoint from their
number a managing director, who must be a resident Albertan, or a committee of
directors, at least half of whom shall be resident Albertans, and may delegate
to the managing director or such committee any of the powers of the directors,
except that no managing director or committee shall have the authority to:
(a) submit to the shareholders any question or matter
requiring the approval of the shareholders;
(b) fill a vacancy among the directors or in the office
of auditor;
(c) issue securities except in the manner and on the
terms authorized by the directors;
(d) declare dividends;
(e) purchase, redeem or otherwise acquire shares issued
by the Corporation, except in the manner and on the terms
authorized by the directors;
(f) pay a commission referred to in section 39 of the Act;
(g) approve a management proxy circular;
(h) approve any annual financial statements to be placed
before the shareholders of the Corporation; or
(i) adopt, amend or repeal by-laws of the Corporation.
24. Audit Committee. Subject to subsection 3 of section 165 of the Act,
the directors shall elect annually from among their number an audit committee to
be composed of not fewer than three directors, a majority of whom are not
officers or employees of the Corporation or any of its affiliates.
Each member of the audit committee shall serve during the pleasure of
the board of directors and, in any event, only so long as he shall be a
director. The directors may fill vacancies in the audit committee by election
from among their number.
The audit committee shall have power to fix its quorum at not less than
a majority of its members and to determine its own rules of procedure subject to
any regulations imposed by the board of directors from time to time and to the
following paragraph.
<PAGE>
The auditor of the Corporation is entitled to receive notice of every
meeting of the audit committee and, at the expense of the Corporation, to attend
and be heard thereat, and, if so requested by a member of the audit committee,
shall attend every meeting of the committee held during the term of office of
the auditor. The auditor of the Corporation or any member of the audit committee
may call a meeting of the committee.
The audit committee shall review the financial statements of the
Corporation prior to approval thereof by the board and shall have such other
powers and duties as may from time to time by resolution be assigned to it by
the board.
REMUNERATION OF DIRECTORS, OFFICERS AND EMPLOYEES
25. Subject to the articles, the directors of the Corporation may fix
the remuneration of the directors of the Corporation and such remuneration shall
be in addition to the salary paid to any officer or employee of the Corporation
who is also a director. The directors may also by resolution award special
remuneration to any director in undertaking any special services on the
Corporation's behalf other than the routine work ordinarily required of a
director of the Corporation. The confirmation of any such resolution by the
shareholders shall not be required. The directors, officers and employees shall
also be entitled to be paid their travelling and other expenses properly
incurred by them in connection with the affairs of the Corporation.
The aggregate remuneration paid to the directors and the aggregate
remuneration paid to the five highest paid officers and shareholders, other than
directors, shall be disclosed to the shareholders at every annual meeting.
SUBMISSION OF CONTRACTS OR TRANSACTION TO
SHAREHOLDERS FOR APPROVAL
26. The directors in their discretion may submit any contract, act or
transaction for approval, ratification or confirmation at any annual meeting of
the shareholders or at any special meeting of the shareholders called for the
purpose of considering the same and any contract, act or transaction that shall
be approved, ratified or confirmed by resolution passed by a majority of the
votes cast at any such meeting (unless any different or additional requirement
is imposed by the Act or by the Corporation's articles or any other by-law)
shall be as valid and as binding upon the Corporation and upon all the
shareholders as though it had been approved, ratified and/or confirmed by every
shareholder of the Corporation.
CONFLICT OF INTEREST
27. A director or officer of the Corporation who is a party to a
material contract or proposed material contract with the Corporation, or is a
director or an officer of or has a material interest in any person who is a
party to a material contract or proposed material contract with the Corporation
shall disclose the nature and extent of his interest at the time and in the
manner provided in the Act. Except as provided in the Act, no such director of
the Corporation shall vote on any resolution to approve such contract. If a
material contract is made between the Corporation and one or more of its
directors or officers, or between the Corporation and another person of which a
director or officer of the Corporation is a director or officer or in which he
has a material interest, (i) the contract is neither void nor voidable by reason
only of that relationship, or by reason only that a director with an interest in
the contract is present at or is counted to determine the presence of a quorum
at a meeting of directors or committee of directors that authorized the
contract, and (ii) a director or officer or former director or Officer of the
Corporation to whom a profit accrues as a result of the making of the contract
<PAGE>
is not liable to account to the Corporation for that profit by reason only of
holding office as a director or officer, if the director or officer disclosed
his interest in accordance with the provisions of the Act and the contract was
approved by the directors or the shareholders and it was reasonable and fair to
the Corporation at the time it was approved.
FOR THE PROTECTION OF DIRECTORS AND OFFICERS
28. No director or officer for the time being of the Corporation shall
be liable for the acts, receipts, neglects or defaults of any other director or
officer or employee or for the joining in any receipt or act for conformity or
for any loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired by the Corporation
or for or on behalf of the Corporation or for the insufficiency or deficiency of
any security in or upon which any of the monies of or belonging to the
Corporation shall be placed out or invested or for any loss or damage arising
from the bankruptcy, insolvency or tortious act of any person, firm or
corporation including any person, firm or corporation with whom or which any
monies, securities or effects shall be lodged or deposited or for any loss,
conversion, misapplication or misappropriation of or any damage resulting from
any dealings with any monies, securities or other assets belonging to the
Corporation or for any other loss, damage or misfortune whatever which may
happen in the execution of the duties of his respective office of trust or in
relation thereto, unless the same shall happen by or through his failure to
exercise the powers and to discharge the duties of his office honestly, in good
faith with a view to the best interests of the Corporation, and in connection
therewith to exercise the care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances, provided that nothing herein
contained shall relieve a director or officer from the duty to act in accordance
with the Act or relieve him from liability under the Act. The directors for the
time being of the Corporation shall not be under any duty or responsibility in
respect of any contract, act or transaction whether or not made, done or entered
into in the name or on behalf of the Corporation, except such as shall have been
submitted to and authorized or approved by the directors. if any director or
officer of the Corporation shall be employed by or shall perform services for
the Corporation otherwise than as a director or officer or shall be a member of
a firm or a shareholder, director or officer of a body corporate which is
employed by or performs services for the Corporation, the fact of his being a
shareholder, director or officer of the Corporation or body corporate or member
of the firm shall not disentitle such director or officer or such firm or body
corporate, as the case may be, from receiving proper remuneration for such
services.
INDEMNITIES TO DIRECTORS AND OTHERS
29.Subject to section 119 of the Act, except in respect of an action by or on
behalf of the Corporation or body corporate to procure a judgment in its favour,
the Corporation shall indemnify a director or officer of the Corporation, a
former director or officer of the Corporation or a person who acts or acted at
the Corporation's request as a director or officer of a body corporate of which
the Corporation is or was a shareholder or creditor, and his heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director or officer of
the Corporation or body corporate, if:
(a) he acted honestly and in good faith with a view to the best interest of the
Corporation; and
(b) in the case of criminal or administrative action or proceeding that is
enforced by monetary penalty, he had reasonable grounds for believing that
his conduct was lawful.
OFFICERS
30. Appointment of Officers. Subject to the articles, the directors
annually or as often as may be required may appoint from among themselves a
Chairman of the Board and shall appoint a President and a Secretary and if
<PAGE>
deemed advisable may appoint one or more Vice-President, a Treasurer and one or
more Assistant Secretaries and/or one or more Assistant Treasurers. None of such
officers except the Chairman of the Board need be a director of the Corporation
although a director may be appointed to any office of the Corporation. Two or
more offices of the Corporation may be held by the same person. In case and
whenever the same person holds the offices of Secretary and Treasurer he may but
need not be known as the Secretary-Treasurer. The directors may from time to
time appoint such other officers, employees and agents as they shall deem
necessary who shall have such authority and shall perform such functions and
duties as may from time to time be prescribed by resolution of the directors.
The directors may from time to time and subject to the provisions of the Act,
vary, add to or limit the duties and powers of any officer.
31. Removal of Officers and Vacation of Office. Subject to the
articles, all officers, employees and agents, in the absence of agreement to the
contrary, shall be subject to removal by resolution of the directors at any
time, with or without cause.
An officer of the Corporation ceases to hold office when he dies,
resigns or is removed from office. A resignation of an officer becomes effective
at the time a written resignation is delivered to the Corporation, or at the
time specified in the resignation, whichever is later.
32. Vacancies. If the office of President, Vice President, Secretary
Assistant Secretary, Treasurer, Assistant Treasurer, or any other office created
by the directors pursuant to paragraph 30 hereof shall be or become vacant by
reason of death, resignation or in any other manner whatsoever, the directors
shall, in the case of the President and Secretary, and may, in the case of any
other officers, appoint an individual to fill such vacancy.
33. Chairman of the Board. The Chairman of the Board if any) shall, if
present, preside as chairman at all meetings of the board and of shareholders.
He shall sign such contracts, documents or instruments in writing as require his
signature and shall have such other powers and shall perform such other duties
as may from time to time be assigned to him by resolution of the directors.
34. President. The President shall be the chief executive officer of
the Corporation (except as may otherwise be specified by the board of directors)
and shall, subject to the direction of the board of directors, exercise general
supervision and control over the business and affairs of the Corporation. In the
absence of the Chairman of the Board (if any), and if the President is also a
director of the Corporation, the President shall, when present, preside as
chairman at all meetings of directors and shareholders. He shall sign such
contracts, documents or instruments in writing as require his signature and
shall have such other powers and shall perform such other duties as may from
time to time be assigned to him by resolution of the directors or as are
incident to his office.
35. Vice-President. The Vice-President or, if more than one, the
Vice-Presidents in order of seniority, shall be vested with all the powers and
shall perform all the duties of the President in the absence or inability or
refusal to act of the President, provided, however, that a Vice-President who is
not a director shall not preside as chairman at any meeting of directors or
shareholders. The Vice-President or, if more than one, the Vice-Presidents shall
sign such contracts, documents or instruments in writing as require his or their
signatures and shall also have such other powers and shall perform such other
duties as may from, time to time be assigned to him or them by resolution of the
directors.
36. Secretary. The Secretary shall give or cause to be given notices
for all meetings of directors, any committee of directors and shareholders when
directed to do so and shall, subject to the provisions of the Act, maintain the
records referred to in subsections (1), (3) and (5) of section 20 of the Act. He
shall sign such contracts, documents or instruments in writing as require his
signature and shall have such other powers and shall perform such other duties
as may from time to time be assigned him by resolution of the directors or as
are incident to his office.
<PAGE>
37. Treasurer. Subject to the provisions of any resolution of the
directors, the Treasurer shall have the care and custody of all the funds and
securities of the Corporation and shall deposit the same in the name of the
Corporation in such bank or banks or with any such other depository or
depositories as the directors may by resolution direct. He shall prepare and
maintain adequate accounting records. He shall sign such contracts, documents or
instruments in writing as require his signature and shall have such other powers
and shall perform such other duties as may from time to time be assigned to him
by resolution of the directors or as are incident to his office. He may be
required to give such bond for the faithful performance of his duties as the
directors in their uncontrolled discretion may require and no director shall be
liable for failure to require any such bond or for the insufficiency of any such
bond or for any loss by reason of the failure of the Corporation to receive any
indemnity thereby provided.
38. Assistant Secretary and Assistant Treasurer. The Assistant
Secretary or, if more than one, the Assistant Secretaries in order of seniority,
and the Assistant Treasurer or, if more than one, the Assistant Treasurers in
order of seniority, shall be vested with all the powers and shall perform all
the duties of the Secretary and Treasurer, respectively, in the absence or
inability or refusal to act of the Secretary or Treasurer as the case may be.
The Assistant Secretary, or if more than one, Assistant Secretaries and the
Assistant Treasurer or, if more than one, the Assistant Treasurers shall sign
such contracts, documents or instruments in writing as require his or their
signatures respectively and shall have such other powers and shall perform such
other duties as may from time to time be assigned to him or them by resolution
of the directors.
39. Managing Director. The directors may from time to time appoint from
their number a Managing Director who must be a resident Albertan and may
delegate to the managing Director any of the powers of the directors subject to
the limits on authority provided by subsection (3) of section 110 of the Act.
The Managing Director shall conform to all lawful orders given to him by the
directors of the Corporation and shall at all reasonable times give to the
directors or any of them all information they may require regarding the affairs
of the Corporation. Any agent or employee appointed by the Managing Director
shall be subject to discharge by the directors.
40. Duties of Officers May Be Delegated. In case of the absence or
inability or refusal to act of any officer of the Corporation or for any other
reason that the directors may deem sufficient, the directors may delegate all or
any of the powers of such officer to any other officer or to any director for
the time being.
SHAREHOLDERS' MEETINGS
41. Annual Meeting. Subject to section 126 of the Act, the annual
meeting Of shareholders shall be held at the registered office of the
Corporation or at a place elsewhere within Alberta or if the Articles so provide
at a place outside of Alberta determined by the directors on such day in each
year and at such time as the directors may determine.
42. Special Meetings. The directors of the Corporation may at any time
call a special meeting of shareholders to be held on such day and at such time
and, subject to section 126 of the Act,at such place within Alberta as the
directors may determine or if the Articles so provide at a place outside
Alberta.
43. Meeting on Requisition of Shareholders. The holders of not less
than five percent (5%) of the issued shares of the Corporation that carry the
right to vote at a meeting sought to be held may requisition the directors to
call a meeting of shareholders for the purposes stated in the requisition. The
requisition shall state the business to be transacted at a meeting and shall be
sent to each director and to the registered office of the Corporation. Subject
to subsection (3) of section 137 of the Act, upon receipt of the requisition,
the directors shall call a meeting of shareholders to transact the business
<PAGE>
stated in the requisition. If the directors do not within twenty-one days after
receiving the requisition call a meeting, any shareholder who signed the
requisition may call the meeting.
44. Notice. A printed, written or typewritten notice stating the day,
hour and place of meeting and if special business is to be transacted thereat,
stating (i) the nature of that business in sufficient detail to permit the
shareholder to form a reasoned judgment on that business and (ii) the text of
any special resolution to be submitted to the meeting, shall be sent to each
shareholder entitled to vote at the meeting, who on the record date for notice
is registered on the records of the Corporation or its transfer agent as a
shareholder, to each director of the Corporation and to the auditor of the
Corporation not less than 21 days and not more than 50 days (exclusive of the
day of mailing and of the day for which notice is given) before the date of
every meeting; provided that a meeting of shareholders may be held for any
purpose on any day and at any time and, subject to section 126 of the Act, at
any place without notice if all the shareholders and all other persons entitled
to attend such meeting are present in person or represented by proxy at the
meeting (except where a shareholder or other person attends the meeting for the
express purpose of objecting to the transaction of any business an the grounds
that the meeting is not lawfully called) or if all the shareholders and all
other persons entitled to attend such meeting and not present in person nor
represented by proxy thereat waive notice of the meeting.
A director of the Corporation is entitled to receive notice of and to
attend and be heard at every meeting of shareholders of the Corporation.
The auditor of the Corporation is entitled to receive notice of every
meeting of shareholders of the Corporation and, at the expense of the
Corporation, to attend and be heard at every meeting on matters relating to his
duties as auditor.
45. Waiver of Notice. Notice of any meeting Of shareholders or the time for
giving of any such notice or any irregularity in any meeting or in the notice
thereof may be waived by any shareholder, the duly appointed proxy of any
shareholder, any director or the auditor of the Corporation in writing or by
telegram, cable or telex addressed to the Corporation in writing or by telegram,
cable or telex addressed to the Corporation or in any other manner, and any such
waiver may be validly given either before or after the meeting to which such
waiver relates. Attendance of a shareholder or any other person entitled to
attend at a meeting of shareholders is a waiver of notice of the meeting, except
when he attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called.
46. Omission of Notice. The accidental omission to give notice of any
meeting of shareholders to or the non-receipt of any notice by any person shall
not invalidate any resolution passed or any proceeding taken at such meeting.
47. Record Dates. Subject to subsection (4) of section 128 of the Act,
the directors may fix in advance a date as the record date for the determination
of shareholders(i) entitled to receive payment of a dividend, (ii) entitled to
participate in a liquidation distribution or (iii) for any other purpose except
the right to receive notice of or to vote at a meeting of shareholders, but such
record date shall not precede by more than 50 days the particular action to be
taken.
Subject to subsection (4) of section 128 of the Act, the directors may
also fix in advance a date as the record date for the determination of
shareholders entitled to receive notice of a meeting of shareholders, but such
record date shall not precede by more than 50 days or by less than 21 days the
date on which the meeting is to be held.
If no record date is fixed,
<PAGE>
(a) the record date for the determination of shareholders
entitled to receive notice of a meeting of shareholders shall
be
(i) at the close of business on the last business day
preceding the day on which the notice is sent; or
(ii) if no notice is sent, the day on which the meeting is
held; and
(b) the record date for the determination of shareholders for
any purpose other than to establish a shareholder's right to
receive notice of a meeting or to vote shall be at the close
of business on the day on which the directors pass the
resolution relating to that purpose.
48. Chairman of the Meeting. In the absence of the Chairman of the
Board (if any), the President and any Vice-President who is a director, the
shareholders present entitled to vote shall elect another director as chairman
of the meeting and if no director is present or if all the directors present
decline to take the chair then the shareholders present shall elect one of their
number to be chairman.
49. Votes. Votes at meetings of shareholders may be given either
personally or by proxy. Every question submitted to any meeting of shareholders
shall be decided on a show of hands except when a ballot is required by the
chairman of the meeting or is demanded by a shareholder or proxyholder entitled
to vote at the meeting. A shareholder or proxyholder may demand a ballot either
before or on the declaration of the result of any vote by show of hands. At
every meeting at which he is entitled to vote, every shareholder present in
person and every proxyholder shall have one (1) vote on a show of hands. Upon a
ballot at which he is entitled to vote every shareholder present in person or by
proxy shall (subject to the provisions, if any, of the articles) have one (1)
vote for every share registered in his name. In the case of an equality of votes
the chairman of the meeting shall not, either on a show of hands or on a ballot,
have a second or casting vote in addition to the vote or votes to which he may
be entitled as a shareholder or proxyholder.
At any meeting, unless a ballot is demanded by a shareholder or
proxyholder entitled to vote at the meeting, either before or after any vote by
a show of hands, a declaration by the chairman of the meeting that a resolution
has been carried unanimously or by a particular majority or lost or not carried
by a particular majority shall be conclusive evidence of the fact without proof
of the number or proportion of votes recorded in favour of or against the
resolution.
If at any meeting a ballot is demanded on the election of a chairman
or on the question of adjournment or termination, the ballot shall be taken
forthwith without adjournment. If a ballot is demanded an any other question or
as to the election of directors, the ballot shall be taken in such manner and
either at once or later at the meeting or after adjournment as the chairman of
the meeting directs. The result of a ballot shall be deemed to be the resolution
of the meeting at which the ballot was de manded. A demand for a ballot may be
withdrawn.
50. Right to Vote. Unless the articles otherwise provide, each
share of the Corporation entitles the holder of it to one vote at a meeting of
shareholders.
Where a body corporate or association is a shareholder of the
Corporation, any individual authorized by resolution of the directors or
governing body of the body corporate or association to represent it at meetings
of shareholders of the Corporation is the person entitled to vote at all such
meetings of shareholders in respect of the shares held by such body corporate or
association.
Where a person holds shares as a personal representative, such person
or his proxy is the person entitled to vote at all meetings of shareholders in
respect of the shares so held by him.
<PAGE>
Where a person mortgages, pledges or hypothecates his shares, such
person or his proxy is the person entitled to vote at all meetings of
shareholders in respect of such shares so long as such person remains the
registered owner of such shares unless, in the instrument creating the mortgage,
pledge or hypothec, he has expressly empowered the person holding the mortgage,
pledge or hypothec to vote in respect of such shares, in which case, subject to
the articles, such holder or his proxy is the person entitled to vote in respect
of the shares.
Where two or more persons hold shares jointly, one of those holders
present at a meeting of shareholders may in the absence of the others vote the
shares, but if two or more of those persons who are present, in person or by
proxy, vote, they shall vote as one on the shares jointly held by them.
51. Proxies. Every shareholder, including a shareholder that is a body
corporate, entitled to vote at a meeting of shareholders may by means of a proxy
appoint a proxyholder and one or more alternate proxyholders, who are not
required to be shareholders, to attend and act at the meeting in the manner and
to the extent authorized by the proxy and with the authority conferred by the
proxy.
An instrument appointing a proxyholder shall be in written or printed
form and shall be executed by the shareholder or by his attorney authorized in
writing and is valid only at the meeting in respect of which it is given or any
adjournment of that meeting.
An instrument appointing a proxyholder may be in the following form or
in any other form which complies with the requirements of the Act;
The undersigned shareholder of____________________ hereby
appoints___________________________ of ___________________ I whom failing
_________________________ of ___________________, as the nominate of the
undersigned to attend And act for and on behalf of the undersigned at the
meeting of the shareholders of the said Corporation to be held on the ___ day
of_______ , 19_____and at any adjournment thereof in the same manner, to the
same extent and with the same power as if the undersigned were personally
present at the said meeting or such adjournment thereof.
Dated the _____ day of __________, 19___
- ----------------------------------
Signature of Shareholder
The directors may specify in a notice calling a meeting of
shareholders a time not exceeding 48 hours, excluding Saturdays and holidays,
preceding the meeting or an adjournment of the meeting before which time proxies
to be used at the meeting must be deposited with the Corporation or its agent.
The chairman of the meeting of shareholders may in his absolute
discretion accept telegraphic, telex, cable or written communication as to the
authority of anyone claiming to vote on behalf of and to represent a shareholder
notwithstanding that no instrument of proxy conferring such authority has been
deposited with the Corporation, and any votes given in accordance with such
telegraphic, telex, cable or written communication accepted by the chairman of
the meeting shall be valid and shall be counted.
52. Telephone Participation. A shareholder or any other person
entitled to attend a meeting of shareholders may participate in the meeting by
means of telephone or other communication facilities that permit all persons
participating in the meeting to hear each other and a person participating in
such a meeting by those means is deemed for the purposes of the Act to be
present at the meeting.
<PAGE>
53. Adjournment. The chairman of the meeting may with the consent of
the meeting adjourn any meeting of shareholders from time to time to a fixed
time and place and if the meeting is adjourned by one or more adjournments for
an aggregate of less than thirty (30) days it is not necessary to give notice of
the adjourned meeting other than by announcement at the time of an adjournment.
If a meeting of shareholders is adjourned by one or more adjournments for an
aggregate of thirty (30) days or more, notice of the adjourned meeting shall be
given as for an original meeting but, unless the meeting is adjourned by one or
more adjournments for an aggregate of more than ninety (90) days, subsection (1)
of section 143 of the Act does not apply.
Any adjourned meeting shall be duly constituted if held in accordance
with the terms of the adjournment and a quorum is present thereat. The persons
who formed a quorum at the original meeting are not required to form the quorum
at the adjourned meeting. If there is no quorum present at the adjourned
meeting, the original meeting shall be deemed to have terminated forthwith after
its adjournment. Any business may be brought before or dealt with at any
adjourned meeting which might have been brought before or dealt with at the
original meeting in accordance with the notice calling the same.
54. Quorum. Two (2) persons present and each holding or representing by
proxy at least one (1) issued share of the Corporation shall be a quorum of any
meeting of shareholders for the election of a chairman of the meeting Of
shareholders and for the adjournment of the meeting to a fixed time and place
but not for the transaction of any other business; for all other purposes two
(2) persons present and holding or representing by proxy one twentieth of the
shares entitled to vote at the meeting shall be a quorum. If a quorum is present
at the opening of a meeting of shareholders, the shareholders present may
proceed with the business of the meeting, notwithstanding that a quorum is not
present throughout the meeting.
Notwithstanding the foregoing, if the Corporation has only one
shareholder, or only one holder of any class or series of shares, the
shareholder present in person or by proxy constitutes a meeting and a quorum for
such meeting.
55. Resolution in Lieu of Meeting. A resolution in writing signed by
all the shareholders entitled to vote on that resolution is as valid as if it
had been passed at a meeting of the shareholders.
SHARES AND TRANSFERS
56. Issuance. Subject to the articles and to section 28 of the Act,
shares in the Corporation may be issued at the times and to the persons and for
the consideration that the directors determine; provided that a share shall not
be issued until the consideration for the share is fully paid in money or in
property or past service that is not less in value than the fair equivalent of
the money that the Corporation would have received if the share had been issued
for money.
57. Security Certificates. A security holder is entitled at his option
to a security certificate that complies with the Act or a non-transferable
written acknowledgement of his right to obtain a security certificate from the
Corporation in respect of the securities of the Corporation held by him.
Security certificates shall (subject to compliance with section 45 of the Act)
be in such form as the directors may from time to time by resolution approve and
such certificates shall be signed manually by at least one director or officer
of the Corporation or by or on behalf of the registrar, transfer agent or branch
transfer agent of the Corporation, or by a trustee who certifies it in
accordance with a trust indenture, and any additional signatures required on a
security certificate may be printed or otherwise mechanically reproduced
thereon. If a security certificate contains a printed or mechanically reproduced
signature of a person, the Corporation may issue the security certificate,
notwithstanding that the person has ceased to be a director or an officer of the
Corporation, and the security certificate is as valid as if he were a director
or an officer at the date of its issue.
<PAGE>
58. Agent. The directors may from time to time by resolution appoint
or remove (i) one or more trust companies registered under the Trust Companies
Act (Alberta) or the Trust Companies Act (Canada) as its agent or agents to
maintain a central securities register or registers or (ii) an agent or agents
to maintain a branch securities register or registers for the Corporation.
59. Dealings with Registered Holder. Subject to the Act, the
Corporation may treat the registered owner of a security as the person
exclusively entitled to vote, to receive notices, to receive any interest,
dividends or other payments in respect of security, and otherwise to exercise
all the rights and powers of an owner of the security.
60. Surrender of Security Certificates. Subject to the Act, no
transfer of a security issued by the Corporation shall be registered unless or
until the security certificate representing the security to be transferred has
been presented for registration or, if no security certificate has been issued
by the Corporation in respect of such security, unless or until a duly executed
transfer in respect thereof has been presented for registration.
61. Defaced, Destroyed, Stolen or Lost Security Certificates. In case
of the defacement, destruction, theft or loss of a security certificate, the
fact of such defacement, destruction, theft or loss shall be reported by the
owner to the Corporation or to an agent of the Corporation (if any) on behalf of
the Corporation, with a statement verified by oath or statutory declaration as
to the defacement, destruction, theft or loss and the circumstances concerning
the same and with a request for the issuance of a new security certificate to
replace the one so defaced, destroyed, stolen or lost. Upon the giving to the
Corporation (or if there be an agent, hereinafter in this paragraph referred to
as the "Corporation's agent," then to the Corporation and Corporation's agent)
of a bond of a surety company (or security approved by the directors) in such
form as is approved by the directors or by the Chairman of the Board (if any),
the President, a Vice President, the Secretary or the Treasurer of the
Corporation, indemnifying the Corporation (and the Corporation's agent if any)
against all loss, damage or expense, which the Corporation and/or the
Corporation's agent may suffer or be liable for by reason of the issuance of a
new security certificate to such shareholder, and provided the Corporation or
the Corporation's agent does not have notice that the security has been acquired
by a bona fide purchaser and before a purchaser described in section 64 of the
Act has received a new, reissued or re-registered security, a new security
certificate may be issued in replacement of the one defaced, destroyed, stolen
or lost, if such issuance is ordered and authorized by any one of the Chairman
of the Board (if any), the President, a Vice President, the Secretary or the
Treasurer of the Corporation or by resolution of the directors.
DIVIDENDS
62. The directors may from time to time by resolution declare and the
Corporation may pay dividends on its issued shares, subject to the provisions
(if any) of the Corporation's articles.
The directors shall not declare and the Corporation shall not pay a
dividend if there are reasonable grounds for believing that:
(a) the Corporation is, or would after the payment be, unable to
pay its liabilities as they become due; or
(b) the realizable value of the Corporation's assets would thereby be
less than the aggregate of its liabilities and stated capital of all
classes.
The Corporation may pay a dividend by issuing fully paid shares of the
Corporation and, subject to section 40 of the Act, the Corporation may pay a
dividend in money or property.
<PAGE>
63. In case several persons are registered as the joint holders of any
securities of the Corporation, any one of such persons may give effectual
receipts for all dividends and payments on account of dividends, principal,
interest and/or redemption payments in respect of such securities.
VOTING SECURITIES IN OTHER BODIES CORPORATE
64.All securities of any other body corporate carrying voting rights
held from time to time by the Corporation may be voted at all meetings of
shareholders, bondholders, debenture holders or holders of such securities, as
the case may be, of such other body corporate and in such manner and by such
person or persons as the directors of the Corporation shall from time to time
determine and authorize by resolution. The duly authorized signing officers of
the Corporation may also from time to time execute and deliver for and on behalf
of the Corporation proxies and arrange for the issuance of voting certificates
or other evidence of the right to vote in such names as they may determine
without the necessity of a resolution or other action by the directors.
NOTICES, ETC.
65. Service. Any notice or document required by the Act, the
articles or the by-laws to be sent to any shareholder or director of the
Corporation may be delivered personally to or sent by mail addressed to:
(a) the shareholder at his latest address as shown in the records
of the Corporation or its transfer agent; and
(b) the director at his latest address as shown in the records of the
Corporation or in the last notice filed under section 101 or 108 of
the Act.
With respect to every notice or document sent by mail it shall be
sufficient to prove that the envelope or wrapper containing the notice or
document was properly addressed and put into a post office box or into a post
office letter box.
66. If the Corporation sends a notice or document to a shareholder and
the notice or document is returned on three consecutive occasions because the
shareholder cannot be found, the Corporation is not required to send any further
notices or documents to the shareholder until he informs the Corporation in
writing of his new address.
67. Shares Registered in More than one Name. All notices or documents
shall, with respect to any shares in the capital of the Corporation registered
in more than one name, be sent to whichever of such persons is named first in
the records of the Corporation and any notice or document so sent shall be
sufficient notice of delivery of such document to all the holders of such
shares.
68. Persons Becoming Entitled by Operation of Law. Every person who by
operation of law, transfer or by any other means whatsoever shall become
entitled to any shares in the capital of the Corporation shall be bound by every
notice or document in respect of such shares which prior to his name and address
being entered on the records of the Corporation in respect of such shares shall
have been duly sent to the person or persons from whom he derives his title to
such shares.
69. Deceased Shareholder. Any notice or document sent to any
shareholder in accordance with paragraph 65 shall, notwithstanding that such
shareholder be then deceased and whether or not the Corporation has notice of
his decease, be deemed to have been duly sent in respect of the shares held by
such shareholder (whether held solely or with other persons) until some other
person be entered in his stead in the records of the Corporation as the holder
<PAGE>
or one of the holders thereof and shall be deemed to have been duly sent to his
heirs, executors, administrators and legal representatives and all persons (if
any) interested with him in such shares.
70. Signatures to Notices. The signature of any director or officer of
the Corporation to any notice may be written, stamped, typewritten or printed or
partly written, stamped, type written or printed.
71. Computation of Time. Where a given number of days' notice or
notice extending over any period is required to be given under any provisions of
the articles or by-laws of the Corporation, the day the notice is sent shall,
unless it is otherwise provided, be counted in such number of days or other
period and such notice shall be deemed to have been sent on the day of personal
delivery or mailing.
72. Proof of Service. A certificate of any officer of the Corporation
in office at the time of the making of the certificate or of an agent of the
Corporation as to facts in relation to the sending of any notice or document to
any shareholder, director, officer or auditor or publication of any notice or
document shall be conclusive evidence thereof and shall be binding on every
shareholder, director, officer or auditor of the Corporation, as the case may
be.
CHEQUES, DRAFTS, NOTES, ETC.
73. All cheques, drafts or orders for the payment of money and all
notes, acceptances and bills of exchange shall be signed by such officer or
officers or other person or persons, whether or not officers of the Corporation,
and in such manner as the directors may from time to time designate by
resolution.
CUSTODY OF SECURITIES
74. All securities (including warrants) owned by the Corporation shall
be lodged (in the name of the Corporation) with a chartered bank or a trust
company or in a safety deposit box or, if so authorized by resolution of the
directors, with such other depositories or in such other manner as may be
determined from time to time by the directors.
All securities (including warrants) belonging to the Corporation may
be issued and held in the name of a nominee or nominees of the Corporation (and
if issued or held in the names of more than one nominee shall be held in the
names of the nominees jointly with right of survivorship) and shall be endorsed
in blank with endorsement guaranteed in order to enable transfer thereof to be
completed and registration thereof to be effected.
EXECUTION OF CONTRACTS, ETC.
75. Contracts, documents or instruments in writing requiring the
signature of the Corporation may be signed by the President and Secretary or any
two directors together and all contracts, documents or instruments in writing so
signed shall be binding upon the Corporation without any further authorization
or formality. The directors are authorized from time to time by resolution to
appoint any officer or officers or any other person or persons on behalf of the
Corporation either to sign contracts, documents or instruments in writing
generally or to sign specific contracts, documents or instruments in writing.
The corporate seal of the Corporation may, when required, be affixed
by the President and Secretary or any two directors together to contracts,
documents or instruments in writing signed by them as aforesaid or by an officer
or officers, person or persons appointed as aforesaid by resolution of the board
of directors.
The term "contract, documents or instruments in writing" as used in
this by-law shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, immovable or movable,
<PAGE>
agreements, releases, receipts and discharges for the payment of money or other
obligations, conveyances, transfers and assignments of securities and all paper
writings.
In particular, without limiting the generality of the foregoing, the
President and Secretary or any two directors together are authorized to sell,
assign, transfer, exchange, convert or convey all securities owned by or
registered in the name of the Corporation and to sign and execute (under the
seal of the Corporation or otherwise) all assignments, transfers, conveyances,
powers of attorney and other instruments that may be necessary for the purpose
of selling, assigning, transferring, exchanging, converting or conveying any
such securities.
The signature or signatures of any officer or director of the
Corporation and/or of any other officer or officers, person or persons appointed
as aforesaid by resolution of the directors may, if specifically authorized by
resolution of the directors, be printed, engraved, lithographed or otherwise
mechanically reproduced upon all contracts, documents or instruments in writing
or bonds, debentures or other securities of the Corporation executed or issued
by or on behalf of the Corporation and all contracts, documents or instruments
in writing or securities of the Corporation on which the signature or signatures
of any of the foregoing officers, directors or persons shall be so reproduced,
by authorization by resolution of the directors shall be deemed to have been
manually signed by such officers, directors or persons whose signature or
signatures is or are so reproduced and shall be as valid to all intents and
purposes as if they had been signed manually and notwithstanding that the
officers, directors or persons whose signature or signatures is or are so
reproduced may have ceased to hold off ice at the date of the delivery or issue
of such contracts, documents or instruments in writing or securities of the
Corporation.
FISCAL PERIOD
76. The fiscal period of the Corporation shall terminate on such day
in each year as the board of directors may from time to time by resolution
determine.
ENACTED this 5th day of August, 1987.
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RICHARD A. WILSON LYNDA S. McNIE
- -------------------------------
PAMELA LEGG
EXHIBIT 3.15
BYLAWS #2
<PAGE>
DURGA RESOURCES LTD.
BY-LAW NO. 2
A by-law respecting the borrowing of money, the giving of guarantees
and the giving of security by DURGA RESOURCES LTD. (hereinafter called the
"Corporation").
IT IS HEREBY ENACTED as a by-law of the Corporation as follows:
The directors of the Corporation may from time to time:
(a) borrow money on the credit of the Corporation;
(b) issue, reissue, Bell or pledge debt obligations of the
Corporation, including without limitation, bonds, debentures, notes or other
evidences of indebtedness or guarantee of the Corporation, whether secured or
unsecured;
(c) to the extent permitted by the Business Corporations Act.
(Alberta), give a guarantee on behalf of the Corporation to secure performance
of an obligation of any individual, partnership, association, body corporate,
trustee, executor, administrator or legal representative;
(d) mortgage hypothecate, pledge or otherwise create an interest in or
charge on all or any property of the Corporation, owned or subsequently
acquired, to secure payment of a debt or performance of any other obligation of
the Corporation;
(e) delegate, to one or more directors, a committee of directors or
one or more officers of the Corporation as may be designated by the directors,
all or any of the powers conferred by the foregoing clauses of this by-law to
such extent and in such manner as the directors shall determine at the time of
each such delegation.
In the event any provision of any other by-law of the Corporation now
in force is inconsistent with or in conflict with any provision of this by-law,
the provisions of this by-law shall prevail to the extent necessary to remove
the inconsistency or conflict.
This by-law shall remain in force and be binding upon the Corporation
as regards any party acting on the faith thereof until a copy, certified by the
Secretary of the Corporation, of a by-law repealing or replacing this by-law
shall have been received by such party and duly acknowledged in writing.
ENACTED this 5th day of August, 1987.
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RICHARD K. WILSON LYNDA S. McNIE
- ---------------------------
PAMELA LEGG
EXHIBIT 19.1
STOCK OPTION PLAN
<PAGE>
LEADER MINING INTERNATIONAL, INC.
STOCK OPTION PLAN
ARTICLE I
Purpose of Plan
1.1 The purpose of the Plan is to assist directors, officers, consultants and
key employees of the Corporation and its Subsidiaries to participate in
the growth and development of the Corporation and its Subsidiaries by
providing such persons with the opportunity, through share options, to
acquire an increased proprietary interest in the Corporation.
ARTICLE II
Defined Terms
Where used herein, the following terms shall have the following meanings,
respectively:
2.1 "Board" means the board of directors of the Corporation;
2.2 "Business Day" means any day, other than a Saturday or a Sunday, on
which The Alberta Stock Exchange (or on such stock exchange on which
such Shares are listed and posted for trading) open for trading;
2.3 "Corporation" means Leader Mining International Inc., and includes any
successor corporation thereto;
2.4 "Eligible Person" means any director, officer, consultant or full
time employee of the Corporation or any Subsidiary;
2.5 "Market Price" at any date in respect of Shares shall be the closing
price of such Shares on The Alberta Stock Exchange (or on such stock
exchange on which such Shares are listed and posted for trading) on the
last Business Day preceding the date on which the Option is approved.
In the event that such Shares did not trade on such Business Day, the
Market Price shall be the average of the bid and ask prices in respect
of such Shares at the close trading on such date;
2.6 "Option" means an option to purchase Shares granted under the Plan;
2.7 "Option Price" means the price per share at which Shares may be
purchased under the Option, as the same may be adjusted from time to
time in accordance with Article VIII hereof;
2.8 "Optionee" means a person to whom an Option has been granted;
2.9 "Plan" means the Stock Option Plan, as embodie herein, as the same may
be amended or varied from time to time;
2.10 "Shares" means the common shares of the Corporation, or, in the event
of an adjustment contemplated by Article VIII hereof, such other shares
<PAGE>
or securities to which an Optionee may be entitled upon the exercise of
an Option as a result of such adjustment; and
2.11 "Subsidiary" means any corporation that is a subsidiary of the
Corporation
ARTICLE III
Administration of the Plan
- --------------------------
3.1 The Plan shall be administered by the Board of Directors.
3.2 The Board shall have the power, where consistent with the general purpose
and intent of the Plan and subject to the specific provisions of the
Plan:
(a) to establish policies and to adopt rules and regulations for
carrying out the purposes, provisions and administration of the
Plan;
(b) to interpret and construe the Plan and to determine all questions
arising out of the Plan and any Option granted pursuant to the
Plan, and any such interpretation, construction or termination made
by the Committee shall be final, binding and conclusive for all
purposes;
(c) to determine to which Eligible Persons, Options are granted and to
grant Options;
(d) to determine the number of Shares covered by each Option;
(e) to determine the Option Price;
(f) to determine the time or times when Options will be granted and
exercisable;
(g) to determine if the Shares that are subject to an Options will be
subject to any restrictions upon the exercise of such Option; and
(h) to prescribe the form the instruments relating to the grant, exercise
and other terms of Options.
ARTICLE IV
Shares Subject to Plan
4.1 Options may be granted in respect of authorized and unissued Shares,
provided that the aggregate number of Shares of all classes reserved for
issuance under this Plan, subject to adjustment or increase of such
number pursuant to the provisions of Article VIII hereof, together with
any Shares reserved for issuance under any options for services or
employee stock purchase or stock option plans or any other plans, shall
not exceed 10% of the issued and outstanding Shares at the date of the
grant of the Option, or such greater number of Shares as may be
determined by the Board and approved by The Alberta Stock Exchange (or
any stock exchange on which the Shares are then listed) and any other
relevant regulatory authority. Shares in respect of which Options are not
exercised shall be available for subsequent Options under the Plan. No
fractional shares may be purchased or issued under the Plan.
<PAGE>
ARTICLE V
Eligibility, Grant and Terms of Options
5.1 Options may be granted to directors, officers, full-time employees and
consultants of the Corporation or of any Subsidiary of the Corporation.
5.2 The Option Price on Shares that are the subject of any Option shall in no
circumstances be lower than the Market Price of the Shares at the date of
the grant of the Option, less the maximum discount permitted under the
by-laws and polices of The Alberta Stock Exchange (or any stock exchange
on which the Shares are then listed). In the event that the maximum
discounts permitted under the by-laws and policies of The Alberta Stock
Exchange (or any stock exchange on which the Shares are then listed)
should differ at any relevant time, the lower of the two figures shall
govern for the purposes of this section 5.2.
5.3 In no event may the term of an Option exceed five years from the date of
the grant of the Option.
5.4 The total number of Shares to be optioned to any Optionee under this Plan
together with any Shares reserved for issuance under options for services
and employee stock purchase plans or any other plans to such Optionee
shall not exceed 5% of the issued and outstanding Shares at the date of
the grant of the Option.
5.5 An Option is personal to the Optionee and is non-assignable.
ARTICLE VI
Termination of Employment; Death
- --------------------------------
6.1 Subject to section 6.2 hereof and to any express resolution passed by the
Committee with respect to an Option, and all rights to purchase Shares
pursuant thereto, shall expire and terminate on the earlier of the expiry
date fixed for such option or ninety (90) days from the date of ceasing
to be a director, consultant or full-time employee of the Corporation or
of any Subsidiary of the Corporation (unless The Alberta Stock Exchange
consents in writing to a longer period) and shall be limited to the
number of shares purchasable by that person immediately prior to such
termination and that person shall have no right to purchase any other
shares. In no event shall an option or any part thereof be exercisable
after the date fixed in the option for its expiration.
6.2 Options shall not be affected by any change of employment of the Optionee
or by the Optionee ceasing to be a director where the Optionee continues
to be employed on a full-time basis by, or continues to be a director of,
the Corporation or any Subsidiary of the Corporation.
6.3 If, before the expiry of an Option in accordance with the terms thereof,
the employment of the Optionee by the Corporation or by any Subsidiary of
the Corporation shall terminate for any reason whatsoever other than
termination by the Corporation for cause, but including termination by
reason of the death of the Optionee, such Option may, subject to the
terms thereof and any other terms of the Plan, be exercised, if the
Optionee is deceased, by the legal personal representative(s) of the
estate of the Optionee during the first three months following the death
<PAGE>
of the Optionee, or if he is alive, by the Optionee, at any time within
three months of the date of termination of the employment of the Optionee
(but in either case prior to the expiry of the Option in accordance with
the terms thereof), but only to the extent that the Optionee was entitled
to exercise such Option at the date of the termination of his employment.
ARTICLE VII
Exercise of Options
7.1 Subject to the provisions of the Plan, an Option may be exercised from
time to time by delivery to the Corporation at its registered office of a
written notice of exercise addressed to the Secretary of the Corporation
specifying the number of Shares with respect to which the Option is being
exercised and accompanied by payment in full of the Option Price of the
Shares to be purchased. Certificates for such Shares shall be issued and
delivered to the Optionee within a reasonable time following the receipt
of such notice and payment.
7.2 Notwithstanding any of the provisions contained in the Plan or in any
Option, the Corporation's obligation to issue Shares to an Optionee
pursuant to the exercise of an Option shall be subject to:
(a) completion of such registration or other qualification of such Shares
or obtaining approval of such governmental authority as the
Corporation shall determine to be necessary or advisable in
connection with the authorization, issuance or sale thereof;
(b) the admission of such Shares to listing on any stock exchange on
which the Shares may then be listed; and
(c) the receipt from the Optionee of such representations, agreements and
undertakings, including as to future dealings in such Shares, as the
Corporation or its counsel determines to be necessary or advisable in
order to safeguard against the violation of the securities laws of
any jurisdiction.
In this connection the Corporation shall, to the extent necessary, take
all reasonable steps to obtain such approvals, registrations and
qualifications as may be necessary for the issuance of such Shares in
compliance with applicable securities laws and for the listing of such
Shares on any stock exchange on which the Shares are then listed.
ARTICLE VIII
Certain Adjustments
8.1 Appropriate adjustments in the number of Shares subject to the Plan, and as
regards Options granted or to be granted, in the number of Shares optioned and
in the Option Price, shall be made by the Board to give effect to adjustments in
the number of Shares of the Corporation resulting from subdivisions,
consolidations or reclassifications of the Shares of the Corporation, the
payment of stock dividends by the Corporation (other than dividends in the
ordinary course) or other relevant changes in the capital stock of the
Corporation.
<PAGE>
ARTICLE IX
Amendment or Discontinuance of Plan
- -----------------------------------
9.1 The Board may amend or discontinue the Plan at any time; provided, however,
that no such amendment may increase the maximum number of Shares that may be
optioned under the Plan, change the manner of determining the minimum Option
Price or, without the consent of the Optionee, alter or impair any Option
previously granted to an Optionee under the Plan.
ARTICLE X
Miscellaneous Provisions
- ------------------------
10.1 The holder of an Option shall not have any rights as a shareholder of the
Corporation with respect to any of the Shares covered by such Option
until such holder shall have exercised such Option in accordance with the
terms of the Plan (including tendering payment in full of the Option
Price of the Shares in respect of which the Option is being exercised)
and the Corporation shall issue such Shares to the Optionee in accordance
with the terms of the Plan in those circumstances.
10.2 Nothing in the Plan or any Option shall confer upon any Optionee any
right to continue in the employ of the Corporation or any Subsidiary of
the Corporation or affect in any way the right of the Corporation or any
such Subsidiary to terminate his employment at any time; nor shall
anything in the Plan or any Option be deemed or construed to constitute
an agreement, or an expression of intent, on the part of the Corporation
or any such Subsidiary to extend the employment of any Optionee beyond
the time that he would normally be retired pursuant to the provisions of
any present or future retirement plan of the Corporation or any
Subsidiary or any present or future retirement policy of the Corporation
or any Subsidiary, or beyond the time at which he would otherwise be
retired pursuant to the provisions of any contract of employment with the
Corporation or any Subsidiary.
10.3 References herein to any gender include all genders.
ARTICLE XI
Shareholder and Regulatory Approval
- -----------------------------------
11.1 The Plan shall be subject to the approval of the shareholders of the
Corporation to be given by a resolution passed at a meeting of the
shareholders of the Corporation, and to acceptance by The Alberta Stock
Exchange (or any stock exchange on which the Shares are then listed). Any
Options granted prior to such approval and acceptance shall be
conditional upon such approval and acceptance being given and no such
Options may be exercised unless and until such approval and acceptance is
given.
