As filed with the Securities and Exchange Commission on July 9, 1996
Registration No. ___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SISKON GOLD CORPORATION
(Exact name of the Company as specified in its charter)
CALIFORNIA 68-0254824
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
350 Crown Point Circle, Suite 100
Grass Valley, California 95945
(916) 273-4311
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Timothy A. Callaway
President
SISKON GOLD CORPORATION
350 Crown Point Circle, Suite 100
Grass Valley, CA 95945
(916) 273-4311
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Scott E. Bartel, Esq.
Bartel Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, California 95814
(916) 442-0400
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
Title of each class of OFFERING PRICE PER AGGREGATE OFFERING
securities to be AMOUNT TO BE SHARE PRICE AMOUNT OF
registered REGISTERED REGISTRATION FEE
<S> <C> <C> <C> <C>
Class A Common{(1)}
2,757,139 $1.88 $5,183,421.32 $1,787.39{(1)}
Class A Common Stock
Underlying Warrants{ (2)}
2,000,000 $3.50 $7,000,000.00 $2,413.79{(2)}
2,000,000 $4.00 $8,000,000.00 $2,758.62{(2)}
</TABLE>
$6,959.80
(1) Represents 781,250 shares of Class A Common Stock to be issued upon the
exercise of Series 2 Class B Common Stock and 1,975,889 shares of Class
A Common Stock upon the conversion of convertible notes. Fee calculated
in accordance with Rule 457(c) of the Securities Act of 1933, as amended
("Securities Act"). Estimated for the sole purpose of calculating the
registration fee and based upon the average of the high and low price
per share of the Class A Common Stock of the Company on July 5, 1996, as
reported on the Nasdaq National Market.
(2) Calculated in accordance with Rule 457(g) of the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
6,757,139 Shares
SISKON GOLD CORPORATION
Class A Common Stock
($.001 Par Value)
Of the 6,757,139 shares of Class A Common Stock ("Common Stock") of Siskon
Gold Corporation ("Siskon" or the "Company") being offered hereby (the
"Offering"), 781,250 shares are being offered by the Company upon the
conversion of outstanding Series 2 Class B shares, 4,000,000 shares are being
offered by the Company upon the exercise of outstanding Warrants, and 1,975,889
shares are being offered by the Company upon the conversion of outstanding
convertible notes. The 6,757,139 shares being offered by the Company were
issued in connection with the Company's private placement of Series 2 Class B
Common Stock and convertible notes completed in November 1995 and another
private placement of convertible notes completed in May, 1996.
Siskon's Common Stock is traded in the over-the-counter market and listed
on the Nasdaq National Market under the symbol "SISK". See "Description of
Securities". On July 5, 1996, the average of the high and low price of the
Common Stock was $1.88, as reported on the Nasdaq National Market. The Company
will not receive any proceeds from the conversion of the Series 2 Class B
shares or convertible notes. Expenses of the Offering, estimated to be
$36,959.80, will be paid in full by the Company.
THE CLASS A Common Stock OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 8
THESE ARE SPECULATIVE SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UNDERWRITING DISCOUNTS
PRICE TO SERIES 2 CLASS AND COMMISSIONS PROCEEDS TO
B SHARES, WARRANT AND THE COMPANY{(2)}
NOTE HOLDERS{(1)}
Per share. . . . . . . . . $ 1.75 to $4.00 $ 0 $ 3.50 to $4.00
Total. . . . . . . . . . . $ 15,000,000 $ 0 $ 15,000,000
(1) Represents exercise price to Warrant holders at $3.50 and $4.00 per share.
(2) Represents proceeds to the Company assuming the exercise of Warrants to
purchase up to 2,000,000 shares of Common Stock at a price of $3.50 per
share and 2,000,000 shares of Common Stock at a price of $4.00 per share,
and before other expenses of issuance and distribution estimated to be
$36,959.80. All expenses will be paid by the Company. The Company will
not receive any cash proceeds from the issuance of 1,975,889 shares upon
the conversion of existing convertible notes or for the issuance of
781,250 shares upon the conversion of Series 2 Class B Common Stock.
The date of this Prospectus is July 9, 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-3 under the Securities Act of
1933 (the "Securities Act"), with respect to the Class A Common Stock offered
hereby. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files periodic reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information
concerning the Company may be inspected and copies may be obtained (at
prescribed rates) at the Commission's Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional offices
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10048. This
Prospectus does not contain all information set forth in the Registration
Statement and Exhibits thereto which the Company has filed with the Commission
under the Securities Act and to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or replaces such
statement. Any such statement shall not be deemed to constitute a part of this
Prospectus, except as so modified or replaced. There is incorporated herein by
reference the following documents previously filed with the Commission:
(1) The Company's Annual Report on Form 10-KSB for the year ended December 31,
1995;
(2) The Company's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1996;
(3) The Company's Proxy Statement for the Annual Meeting of Shareholders to be
held on June 21, 1996; and
(4) Form 8-B for the registration of the Company's Class A Common Stock
pursuant to Section 12(g) of the Exchange Act.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering of the Common Stock offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents).
Requests should be directed to: Siskon Gold Corporation, 350 Crown Point
Circle, Suite 100, Grass Valley, California 95945, Attention: Claudia J. Mack,
Secretary; (916) 273-4311.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus.
THE COMPANY AND RECENT EVENTS
Siskon Gold Corporation (the "Company") is engaged in the business of
acquiring, exploring and developing for commercial production precious mineral
properties. The Company's assets include its ownership interests, joint
venture interest and royalty interests in various properties located in the
Western United States. The Company's primary assets are the San Juan property
located in Nevada County, California (the "San Juan Mine") and the Big Horn
property located in Los Angeles County, California (the "Big Horn Mine"). The
Company's address and telephone number is as follows: Siskon Gold Corporation,
350 Crown Point Circle, Suite 100, Grass Valley, California 95945; (916) 273-
4311.
Since receiving permits in June 1993, the Company has been engaged in the
construction of the San Juan Mine and by the end of 1995 construction has been
substantially completed. Construction of tunnels for drainage and access to
the ventilation shaft were completed, the underground plant was constructed and
installed, the main underground haulage ways were constructed and additional
definition drilling was completed. Unanticipated delays resulted from the need
to reinforce most of the underground roads with crushed rock. In addition,
larger dewatering pumps were installed as a result of additional unexpected
ground water flowing into the mine. Additional funds from existing working
capital were expended during the first quarter of 1996 for equipment, a
ventilation shaft, additional definition drilling, sealing off an area of high
water flows, increased bonding and completion of the mine dewatering system.
Recoveries of gold dore from the San Juan Mine amounted to 4,825 ounces during
1995 and 7,482 ounces of gold dore were produced during the first six months of
1996.
In March 1996, the Company entered into a mining services agreement with
the Doe Run Company ("Doe Run"). Pursuant to the agreement, Doe Run is
obligated to provide management personnel, engineering, training and other
technical and systems services for the San Juan Mine. The agreement is for 27
months and provides for base compensation to Doe Run in an amount equal to 100
ounces of gold per month plus an incentive bonus for attainment of specified
development, cost and production goals.
During 1995, Siskon received the permits necessary for operation at the
Big Horn mine site. A mill site was purchased in Adelanto California and a use
permit was received in July. However, the decision to approve the project has
been challenged in court. After reviewing the issues raised in the court
filings the Company decided that it was a more cost effective use of the
Company's resources to request that the approval be withdrawn and agree to
prepare an environmental impact report ("EIR") on the mill site. The Company
is currently evaluating other mill sites that may be more appropriate before
starting the EIR.
Due to unanticipated delays and additional costs incurred in the
development of the San Juan Mine, the Company has been required to fund its
operations during 1995 and the first half of 1996 through debt and equity
financings. Although the Company believes that it has sufficient working
capital to operate the San Juan Mine during 1996, the Company does not
currently have working capital reserves sufficient to address any unforeseen
delays in achieving commercial production. Even though the Company believes
that it has substantially completed construction of the mine, no assurances can
be given that further delays may not be encountered which may require the need
for additional capital.
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<PAGE>
On November 15, 1995 the Company completed a private placement with
Vengold Inc. The Company received $5 million from the private placement which
is comprised of $2 million for 39,062.5 shares of the Company's Series 2 Class
B Common Stock, $3 million principle convertible debt, warrants to purchase 2
million shares of Class A Common Stock at $3.50 expiring on December 31, 1996
(the "1996 Warrants") and warrants to purchase an additional 2 million shares
of Class A shares at $4.00 expiring November 15, 1997 (the "1997 Warrants").
The Series 2 Class B shares convert at the rate of 20 shares of Class A Common
Stock for each Series 2 Class B share into 781,250 Class A shares priced at
$2.56 per share. The Series 2 Class B shares automatically convert to Class A
shares at the earlier of (i) three years; (ii) Vengold's voluntary election to
convert; (iii) upon the payoff or conversion of their convertible debt under
certain specified conditions and (iv) upon the transfer of the shares to a non-
affiliate. The Series 2 Class B shares have the same rights as the Class A
shares except that the Series 2 Class B shareholders have the right to elect
two directors to the Board of Directors. Under the terms of the Vengold
Private Placement a Budget Committee of the Board was formed to approve project
budgets for the expenditure of the $5 million and proceeds from future warrant
exercises. The Committee was comprised of three directors, two of which were
appointed by the Series 2 Class B shareholders. If a budget prepared by the
Committee was rejected by the Board, the Vengold convertible debt was to become
due, at the election of Vengold, eight months after the rejection by the Board.
Vengold agreed it would not acquire any additional Siskon stock, conduct a
proxy contest, join with other major shareholders in such a contest or sell
their shares for 120 days from the date of the private placement and Siskon
agreed to not actively solicit proposals from persons other than Vengold
relating the transfer of control or the sale of major assets for a period of 90
days (subject to certain exceptions). For one year after the 120 day period,
Vengold has a right of first offer on any sale of stock by the Company, the
Company's management and the Seamans. For a period of three years the Company
has a right of first offer on the sale of Siskon stock held by Vengold.
During 1995 the Company borrowed an additional $3 million from the
Seamans, holders of the existing convertible debt and extended the maturity
date of the borrowings to April 1, 1997 and changed the interest rate to 10%
effective October 1, 1995. In connection with the Vengold private placement on
November 15, 1995 the Seamans agreed to convert $1.8 million of the convertible
debt into 707,678 shares of Common Stock at $2.56 per share, agreed to convert
an additional $1.8 million of convertible debt into 517,616 shares of Common
Stock at $3.50 per share if, and when, Vengold exercised its 1996 Warrants,
receive interest at 10% per annum payable in Common Stock at $2.56 per share
for two years and in cash thereafter, and extend the maturity date of the debt
to November 15, 1998. The debt continues to be secured by the Big Horn and San
Juan Mines.
On May 17, 1996 the Board of Directors took the position that the Vengold
proceeds had been fully expended. On May 20, 1996 the two directors appointed
by Vengold resigned and the Board dissolved the Budget Committee. Additionally,
to increase working capital to a more prudent level, the Company borrowed
$500,000 from the Seamans. The loan will be secured by the San Juan and Big
Horn mines and will, subject to approval by Vengold, be senior to the existing
convertible debt. The loan will be due November 15, 1998, bears interest at ten
percent with the principle and interest convertible into Class A Common Stock
at $1.75 per share. The Seamans also have the option to convert an equal amount
of their existing convertible debt into Class A Common Stock at the same price.
If a private placement is completed prior to the due date the Seamans would
have the right to change the conversion price to the same as that under the
private placement.
Total pre-production development costs and related plant and equipment are
budgeted to be $19.8 million, net of estimated gold recoveries of $4.4 million.
At March 31, 1996 such costs totalled $18.9 million. The increase in
development costs from the Company's original estimate of $8.3 million are
primarily attributable to the delay in the construction of the access tunnel
resulting from unforeseen unfavorable rock conditions with a commensurate
extended period of mine support, equipment maintenance and mine administration.
Additional power delivery facilities were constructed and mining equipment was
purchased that were originally anticipated to be incurred after
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<PAGE>
production commenced. Further delays resulted from the need to reinforce
most of the underground roads with crushed rock and to install larger
dewatering pumps as a result of additional ground water flowing into the
mine. The difficulty in obtaining qualified and experienced miners resulted
in greater than expected training costs which, in turn, may require
longer periods of on the job experience before expected levels of
productivity are attained. Also, the majority of the development work for
the underground workings did not occur in the high grade zones.
Since the start of construction of the San Juan Mine, the Company has
improved or replaced eight domestic wells on property adjacent to the project.
The construction of the mine has raised concerns from neighbors of whether the
development of the mine is adversely affecting their wells, although prior
hydrology reports indicate that the dewatering activities at the mine should
not have a significant effect on adjacent wells. These water concerns were
raised at the bi-annual Nevada County Planning Commission ("Commission") permit
review meeting held on December 8, 1995. Further, Nevada County increased the
remedial water supply bonds by $135,000 to $189,000. In light of the concerns
raised, the Company engaged additional hydrologists to study the problem. A
hydrology report was presented to the Commission on June 27, 1996. The results
of the new study indicate that there is a connection between the water pumped
from the mine and some of the failed wells. The study concludes that there
have been no recent well failures and that if any future wells do fail the
Company could improve or replace such wells as it has previously done.
Conclusion of the review of the operating permits by the Commission is
scheduled for August 22, 1996 and the Company is continuing to operate the San
Juan Mine under the original terms and conditions of the operating permit.
Based on current information known to the Company and as a forward looking
statement, the Company believes that it can mitigate future well failures by
improving or replacing such wells, or by providing an alternative water supply,
and that the financial condition of the Company will not be materially impacted
by the mitigation measures. The foregoing assumes that the analysis and
conclusions contained in the independent hydrology reports are, in fact,
correct. No assurance can be given that in the event the operation of the Mine
is determined to adversely affect surrounding neighbors' wells the Commission
will allow the Company to address such concerns through replacement wells,
additional conditions to San Juan's operating permit, or increases in bonds.
The Company estimates that an additional $877,000 will be expended for
development and equipment at the San Juan Mine during the second quarter of
1996.
As of March 31, 1996, the carrying values of the San Juan property
consisted of acquisition costs (including land) of $6,402,494, and deferred
development costs of $13,426,452.
As of March 31, 1996, the carrying values of the Big Horn property
consisted of acquisition costs (including land) of $732,360 and deferred
development costs of $322,871.
ENVIRONMENTAL MATTERS
Mineral exploration and production is subject to environmental regulations
by federal, state and county authorities. In most states, mineral exploration
and production is regulated by conservation laws and other statutes and
regulations relating to exploration procedures, reclamation, safety of mine
operations, employee health and safety, use of explosives, air and water
quality standards, noxious odors, noise, dust and other environmental
protection controls. In addition, some of the Company's properties are
historic gold mines operated by other companies before the enactment of modern
environmental laws. There are three instances in which the Company has been
contacted by governmental agencies with regard to environmental matters.
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<PAGE>
In May 1991, the Company was requested by the California Regional Water
Quality Control Board ("CRWQCB") to prepare an environmental site assessment
report on the Croman Mill Site which contains stockpiled tailings from milling
operations conducted by others. In a series of correspondence, the last of
which was a letter in March 1992, the Company submitted information to CRWQCB
stating that the Company was not the owner of the property during the time in
question and therefore not responsible for any damages and that the CRWQCB
instead request the operator of the mill to prepare the report. The Company
has yet to receive a response to its March 1992 letter. On April 5, 1996 the
Company received a request by the Environmental Protection Agency ("EPA") to
visit the site for the purposes of collecting water and soil samples. A
representative of the Company accompanied state and federal environmental
officials during the site visit, which occurred on April 19, 1996. Several soil
and water samples were taken by officials during the visit. Simultaneously, the
Company also conducted limited sampling of the water and soil at the mill site.
In the event that the test results lead to further testing and analysis which
ultimately results in a clean-up or abatement order issued by a state or
federal environmental agency, then the Company intends to seek indemnification
from the prior operators of the property which may have been primarily
responsible for the condition of the mine tailings located on the mill site.
The Company sold the Croman Mill Site in June, 1996.
In March 1994, the Company received a preliminary notice from the U.S.
Forest Service ("USFS") naming the Company and six other parties as potentially
responsible parties to a hazardous substance release in Siskiyou County,
California. The hazardous release is alleged to be coming from old mill
tailings, storage containers and a mine tunnel. One of the sites may have been
the Siskon Mine which was previously owned by the Company and may have been
operated by a predecessor of the Company, among others. In September, 1995 the
Company provided the USFS with certain requested information regarding the
Company's knowledge of prior owners, operators and operations that were carried
out in or near the area in question. In September 1995, the Company received a
letter from the USFS requesting a field visit to the Siskon Mine. As of May
31, 1996, the USFS has yet to contact the Company, to set a date for the site
visit. The Company is unable to determine whether it will be liable for
environmental remediation or estimate the amount of any liability. In the
event that the Company is issued a clean up or abatement order due to a "pre-
existing" condition, the Company will seek indemnification from the prior
operators of the property which may have been primarily responsible.
On November 14, 1995 the CRWQCB issued a letter to the Company concluding
that the volume of water being discharged from the San Juan Mine was in excess
of the permitted amount and may require an amendment or supplement to the
existing water discharge permit on a permanent or temporary basis.
Subsequently, on January 7, 1996 the Company received an interim dewatering
permit. An area of high water flow into the mine has been sealed off and other
remediation steps have been taken which the Company believes have brought the
discharges of water from the mine into compliance with the original permit. To
meet the long term potential discharge requirements of the Mine the Company
will seek to obtain an amendment to the water discharge permit. Additionally,
at a bi-annual Nevada County Planning Commission hearing to review the
Company's permit to operate the San Juan Mine, issues were raised concerning
the mine's affect on adjacent water wells. The Company has obtained a hydrology
report to present to the Commission. See "Mining Operations - San Juan" .
THE OFFERING
Common Stock offered to Series 2 Class B Shareholders . . . . 781,250
Common Stock offered to Warrant Holders . . . . . . . . . . 4,000,000
Common Stock offered to Convertible Note Holders . . . . . 1,975,889
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Common Stock outstanding before the Offering . . . . . . .10,642,391
Common Stock outstanding after conversion of all
Convertible Notes and Series 2 Class B Stock . . . . . . .13,399,530
Common Stock outstanding after conversion of all
Convertible Notes and Series 2 Class B Stock and
assuming exercise of the outstanding warrant . . . . . . .17,399,530
NASDAQ Symbol....................................................SISK
RISK FACTORS
An investment in the Common Stock described herein entails a number of
very significant risks. Because of these risks, funds should only be invested
by persons able to bear the risk of and withstand the loss of their entire
investment. Prospective investors should also consider the following before
making an investment decision.
LACK OF PROFITABILITY. The Company and its predecessors have incurred
operating losses since their formation and no assurances can be given that the
Company will achieve profitability. For the three month period ended March 31,
1996 and years ended December 31, 1995, 1994 and 1993, the Company incurred
losses of $251,106, $703,571, $840,591 and $9,286,718 (which includes a
cumulative loss effect of $5,544,867 due to a change in accounting policy
whereby exploration costs are expensed), respectively. See the Company's
financial statements attached to its Form 10-KSB for the year ended December
31, 1995, and its Form 10-QSB for the quarter ended March 31, 1996, all of
which are incorporated herein by reference.
NEED FOR ADDITIONAL FINANCING. Due to unstable ground conditions and
water conditions, development of the San Juan Mine has been delayed which has
required the Company to use substantial capital to fund the San Juan Mine and
the Company's operations. In the event that development of the San Juan Mine
is further delayed, or in the event unforeseen costs arise, the Company will
need additional working capital to place the San Juan Mine into production and
to further advance the permitting process on the Big Horn Mine. The Company
does not have on hand sufficient capital to complete the development of the Big
Horn Mine. In the opinion of management, the Company may not have an adequate
working capital reserve against unbudgeted development expenses at the San Juan
Mine. No assurances can be given that the Company will be successful in
establishing an adequate working capital reserve relating to the development of
the San Juan Mine or, if it is successful, that the financing will be on terms
and conditions favorable to the Company. Furthermore, the Convertible Notes,
as amended, issued by the Company and secured by the Company's San Juan Mine
and Big Horn Mine, will mature on November 15, 1998, at which time all
principal and accrued and deferred interest will be due, unless the notes are
further modified or extended or the holders convert the debt into shares of the
Company's Common Stock. Assuming no further modification, total interest and
principal due at the maturity of the Convertible Notes will be $8,302,782. In
the event the debt is not converted and the maturity date is not further
extended, the Company's major mining properties may be subject to foreclosure
if the Company is unable to repay the Convertible Notes in full. See "Risk
Factors - Security Interests in San Juan and Big Horn Mines."
Under California law, the holders of the Convertible Notes may foreclose
by exercising the power of sale given in the deed of trust (a "nonjudicial
foreclosure") or by bringing a judicial action (a "judicial foreclosure") to
foreclose on the San Juan and Big Horn mines and, if allowed, ask the court for
a judgement to collect any amount of the debt that is not paid by the proceeds
from the foreclosure sale.
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GOVERNMENTAL REGULATION. The Company's mining operations are subject to
substantial governmental regulation, including federal, state and local
regulations concerning mine safety and environmental protection. Compliance
with these regulations may cause significant delays in the Company's permit
process or in its operations and may result in substantial capital expenses.
Although no such problems or delays are anticipated, no assurances can be given
that the Company will obtain the necessary permits to place the Big Horn Mine
into production, and if such permits are obtained, that they will be obtained
in a timely manner.
RESERVES. The Company's reserves presented in this Prospectus or
incorporated herein are estimates based on feasibility studies and no assurance
can be given that the indicated amount of gold will be recovered. The amount
of reserves may require revisions based on actual production experience.
Fluctuations in the market price of gold, as well as increased production costs
or reduced recovery rates and adverse ground and water conditions may render
reserves containing relatively lower grades of mineralization uneconomical to
recover and may ultimately result in a restatement of reserves.
ENVIRONMENTAL REGULATION AND LIABILITY. Mineral exploration and
production is subject to environmental regulation by federal, state and county
authorities. In most states, mineral exploration and production are regulated
by conservation laws and other statutes and regulations relating to exploration
procedures, reclamation, safety of mine operations, employee health and safety,
use of explosives, air and water quality standards, noxious odors, noise, dust
and other environmental protection controls. In addition, some of the
Company's properties are historic gold mines operated by other companies before
the enactment of modern environmental laws. For example, one property
previously owned by the Company, known as the Croman Mill Site, located in
Siskiyou County, California, contains stockpiled tailings (material removed
from a milling circuit after separation of the valuable minerals) from previous
milling operations conducted by prior owners who operated the mine. In May
1991, the California Regional Water Quality Control Board requested the Company
to prepare an environmental site assessment report (a report prepared by an
independent geological engineering firm that addresses all site conditions
including hydrology and hydrogeological conditions) on the property. Although
the Company received correspondence from the California Regional Water Quality
Control Board and exchanged correspondence during the time period between May
1991 and March 1992, no further activity from environmental agencies had
occurred until the Company received a request by the Environmental Protection
Agency ("EPA") to visit the site for the purposes of collecting water and soil
samples. A representative of the Company accompanied state and federal
environmental officials during the site visit, which occurred on April 19,
1996. Several soil and water samples were taken by officials during the visit.
Simultaneously, the Company also conducted limited sampling of the water and
soil at the mill site. In the event that the test results lead to further
testing and analysis which ultimately results in a clean-up or abatement order
issued by a state or federal environmental agency, then the Company intends to
seek indemnification from the prior operators of the property which may have
been primarily responsible for the condition of the mine tailings located on
the mill site. While the Company sold the property to a third party in June
1996 and is not currently subject to any such clean-up or abatement orders, no
assurance can be given that such an order may not be issued at some future
date. Another area of potential exposure to environmental liability is the
Company's prior ownership of the Siskon Mine located in Siskiyou County,
California. In February, 1994, the Company was notified by the U.S. Forest
Service that the Company, along with several other companies, may be a
"potentially responsible party" in what appears to be some environmental
contamination on the property. In September 1994, the Company provided the
U.S. Forest Service with certain requested information. In September 1995 the
Company received a letter from the U.S. Forest Service requesting a field visit
to the Siskon Mine. No date has yet been determined for the field visit. In
the event that the Company is issued a clean-up or abatement order on any
property due to a "pre-existing" condition, the Company will seek
indemnification from the prior operators of the property which may have been
primarily responsible for the environmental hazard. See Annual Report on Form
10-KSB for the year ended December 31, 1995.
-9-
<PAGE>
In connection with receiving necessary permits for mining a property, the
Company is required to post bonds to secure the performance of reclamation work
after the Company has determined that it is no longer economically feasible to
mine the property. The total amount of the bonds for the San Juan Mine is
$250,772 which has been paid. The Company has no other major cash requirements
to comply with environmental regulations affecting its properties and believes
that the bonds are sufficient to secure future performance of all reclamation
work on permitted mining properties.
RISKS IN MINING OPERATIONS. The Company's activities will be subject to
all the risks and hazards commonly associated with mining operations,
including, but not limited to, cost overruns due to the under estimation of
exploration, development and mining operation costs, over estimation of
contained gold per ton of ore or bank cubic yards, delays in achieving
production, unforeseen geological formations, cave-ins, flooding, environmental
liabilities and personal injury, any or all of which could prevent the Company
from putting a property into production. Furthermore, extensive growth in
underground mining in the Western United States has led to more intense
competition for experienced miners, and certain established mining companies
are larger and better capitalized than the Company, which may hinder the
Company's ability to attract and retain qualified miners in numbers sufficient
to support the Company's proposed operations and any future expansion of
operations.
VOLATILE MARKET PRICES FOR GOLD. Since its deregulation, the market price
for gold has been highly speculative and volatile. Instability in the price of
gold may affect the profitability of the Company's operations. No assurances
can be given that any gold may be produced at a profit given the volatile
market price for gold. For the period beginning January 1, 1996 to June 30,
1996, the high and low price of gold was $416 and $383 per ounce respectively.
As of June 30, 1996 the market price of gold was $383 per ounce.
VOLATILE MARKET FOR COMMON STOCK. The Company's Common Stock is listed
and traded on the Nasdaq National Market, and has traded in the range of $1.88
to $4.50 during the fiscal year ended December 31, 1995 and $1.75 to $3.75
during the six months ended June 30, 1996. Various factors, including the
price of gold, value of the dollar, and other non-controllable events, will
effect the market for stock in companies engaged in gold mining activity. In
addition to those normal factors, the Company has issued Convertible Notes in
the aggregate principal amount of approximately $8,302,782 as of June 30, 1996
which will be due on November 15, 1998, all or part of which may also be
converted into shares of the Company's Common Stock at $1.75 to 3.50 per share
including all accrued interest. Accordingly, the current market price for a
share of Common Stock may affect the Convertible Note Holders' decision to
convert such notes into Common Stock, and any conversion may also impact the
market. The Company can give no assurances as to whether the debt will be
converted or, if so, what effect any such conversion would have on the market.
See "Risk Factors -Need for Additional Financing." See also "Risk Factors -
Issuance of Additional Shares."
DEPENDENCE ON KEY PERSONNEL AND CONSULTANTS. The Company depends, and
will continue to depend, on the services of Mr. Timothy A. Callaway, the
Company's Chief Executive Officer, Mr. Michael K. Epstein, the Company's Chief
Financial Officer, and Mr. Charles D. Snead, Jr., a director and consultant to
the Company. The loss of the services of Messrs. Callaway, Epstein or Snead
could have a material adverse effect on the business of the Company. The
Company has considered acquiring "key-man" insurance for certain of the above-
named individuals, but at this time has not made a decision.
SECURITY INTERESTS IN SAN JUAN AND BIG HORN MINES. The Company has
granted a security interest in its San Juan and Big Horn Mines, including
fixtures and mining claims, in connection with Convertible Notes which mature
on November 15, 1998. Under the terms of the Convertible Notes, the lenders
may convert such note and interest into shares of Common Stock at between $1.75
and $3.50 per share. As of June 30, 1996 the aggregate stated principal of the
Convertible Notes is approximately $8,302,782, and interest will be paid in
stock through
-10-
November 15, 1997 and in cash thereafter. The Convertible Notes bear interest
from October 1, 1995, at the rate of 10% per annum. If the lenders elect not
to convert such notes into shares of Common Stock and the Company is unable
to pay off or refinance such notes, the San Juan Mine and the Big Horn Mine
may be subject to foreclosure proceedings which would materially and
adversely affect the Company. See "Risk Factors - Need for Additional
Financing."
LACK OF AVAILABLE OR AFFORDABLE INSURANCE. While the Company has general
liability insurance, including directors and officers errors and omissions
insurance, many risks associated with mining operations may not be insurable,
or if insurable, may not be available at affordable premiums. Consequently,
the Company may be exposed to certain risks of liability not covered by
insurance. See "Risk Factors - Risks in Mining Operations."
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of June 30, 1996, certain information
with respect to the beneficial ownership of shares of Siskon Common Stock and
Series 1 and Series 2 Class B Common Stock by all shareholders known by Siskon
to be the beneficial owners of more than five percent of the outstanding shares
of Common Stock or Series 1 and Series 2 Class B Common Stock, all directors
and executive officers of Siskon individually, and all directors and all
executive officers of Siskon as a group. As of June 30, 1996, there were
10,733,517 shares of Common Stock and 638 shares of Series 1 Class B Common
Stock and 39,062.5 shares of Series 1 and Series 2 Class B Common Stock
outstanding.
NO. OF
NAME{(1)} SHARES PERCENT
SISKON CLASS A COMMON STOCK{(1)}
Carl Seaman
12 The Poplars
Roslyn, NY 3,023,240{(2)} 25.72%
Linda Seaman
12 The Poplars
Roslyn, NY 2,087,400{(3)} 18.07%
Vengold Inc.
200 Burrard Street, Suite 1788
Vancouver, British Columbia, Canada 6,040,888{(4)} 36.17%
Timothy A. Callaway, President
Chief Executive Officer and
Chairman of the Board 448,835{(5)} 4.11%
Charles D. Snead, Jr., Director 64,850 *
Michael Epstein, Director
and Chief Financial Officer 78,712{(6)} *
Scott E. Bartel, Director 15,297{(7)} *
Claudia J. Mack, Secretary
and Controller 40,000{(8)} *
-11-
<PAGE>
All Directors and Executive Officers
as a Group (5 Persons) 647,694{(8)} 5.87%
SERIES 1 CLASS B COMMON STOCK{(1)}
Charles D. Snead, Jr., Director 638 100%
SERIES 2 CLASS B COMMON STOCK{(1)}
Vengold Inc. 39,062.5 100%
FOOTNOTES TO TABLE
* Less than one percent.
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock, Series 1 Class B Common Stock or Series 2 Class B Common
Stock shown as beneficially owned by them, subject to community property
laws where applicable.
(2) Carl Seaman and Linda Seaman are husband and wife. Mr. and Mrs. Seaman
own $4,619,385 of the $8,302,782 Siskon Convertible Notes which are due
November 15, 1998. The principal amount, is convertible into Common Stock
at $1.75 to 3.50 per share and the shares include conversion of accrued
interest through August 31, 1996. The amount shown for Mr. Seaman
also includes 200,000 shares underlying Warrants and 73,666 shares of
Class A Common Stock owned by Carl & Associates, a general partnership of
which Mr. Seaman owns an 80% equity interest and the remaining 20%
interest is owned by his children. Mr. Seaman disclaims beneficial
ownership of the 14,733 shares of Common Stock attributed to the 20%
interest in Carl & Associates. The amount shown does not include
(a) 820,624 shares of Common Stock which Linda Seaman has the right
to acquire pursuant to the conversion of the note, and (b) 1,266,776
shares of Common Stock owned by Linda Seaman, the beneficial
ownership of which is disclaimed by Mr. Seaman.
(3) The amount shown for Mrs. Seaman includes 820,624 shares of Common Stock
which she has the right to acquired pursuant to the conversion right
described in footnote (2) including accrued interest through August 31,
1996. The amount shown does not include any of the shares shown as
beneficially owned by Carl Seaman, the beneficial ownership of which is
disclaimed by Mrs. Seaman. See footnote (2) above.
(4) Includes 781,250 shares issuable upon conversion of the Series 1 Class B
Common Stock, 4,000,000 shares issuable upon exercise of warrants and
1,186,435 shares issuable upon conversion of $3,000,000 principle
convertible debt and accrued interest through August 31, 1996 at $2.56
per share.
(5) Includes options to purchase 200,000 shares of Common Stock.
(6) Includes options to purchase 61,500 shares of Common Stock.
(7) Includes options to purchase 3,000 shares of Common Stock.
(8) Includes options to purchase 40,000 shares of Common Stock.
(9) Includes options to purchase 304,500 shares of Common Stock.
-12-
<PAGE>
SUMMARY OF THE OFFERING
The Company is registering 781,250 shares of Common Stock upon conversion
of outstanding Series 2 Class B Common Stock, 4,000,000 shares of Common Stock
upon the exercise of outstanding Warrants, and 1,975,889 shares upon the
conversion of outstanding Convertible Notes. The Common Stock, Warrants and
Convertible Notes were issued in connection with a November 1995 private
placement by the Company and a May 1996 private placement by the Company.
USE OF PROCEEDS
Assuming conversion of the Series B Common Stock, exercise of outstanding
Warrants and conversion of Convertible Notes to purchase all of the 6,757,139
shares, as to which no assurance can be given, the Company expects to receive
$15,000,000 before deducting expenses of approximately $36,959.80 associated
with this Offering. The Company intends to use any amounts received for
general corporate purposes. As of July 5, 1996, the average high and low price
of one share of Common Stock was $1.88.
SELLING STOCKHOLDERS
The Company is also registering the resale of the Class A Common Stock
underlying the Series 2 Class B Common Stock, the Warrants and all Convertible
Notes. The following table assumes that the Warrants will be exercised and the
Series 2 Class B shares and Convertible Notes are converted into shares of the
Company's Class A Common Stock and that the holders (the "Selling
Stockholders") are selling the Class A Common Stock.
The following table identifies the Selling Stockholders, as of July 9,
1996, and indicates (i) the nature of any material relationship that such
Selling Stockholders have had with the Company for the past three years, (ii)
the number of shares of Common Stock held by the Selling Stockholders, (iii)
the amount to be offered for the Selling Stockholders' account, and (iv) the
number of shares and percentage of outstanding shares of Common Stock to be
owned by the Selling Stockholders after the sale of the Common Stock offered by
the Selling Stockholders pursuant to this Offering. The Selling Stockholders
are not obligated to sell their Common Stock offered in the Offering and may
choose not to sell any of their shares or only a part of their shares.
The shares of Common Stock offered by the Selling Stockholders may be
offered for sale from time to time at market prices prevailing at the time of
sale or at negotiated prices, and without payment of any underwriting discounts
or commissions except for usual and customary selling commissions paid to
brokers or dealers. The Company will not receive any proceeds from the sale of
the Common Stock by the Selling Stockholders.
Under the Exchange Act, any person engaged in a distribution of the shares
of Common Stock of the Company offered by this Prospectus may not
simultaneously engage in market making activities with respect to the Common
Stock of the Company during the applicable "cooling off" periods prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, each Selling Stockholder will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder including, without
limitation, Rules 10b-6 and 10b-7, which provisions may limit the timing of
purchases and sales of Common Stock by the Selling Stockholders.
With regard to the shares offered by the Selling Stockholders such shares
may be sold on the over-the-counter market or in private transactions at prices
to be determined at the time of sale. Such shares may be offered through
broker-dealers, acting on the Selling Stockholders' behalf, who may offer the
shares at then current market prices. Any sales may be by block trade. The
Selling Stockholders and any brokers, dealers or others who
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<PAGE>
participate with the Selling Stockholders in the distribution of such shares
of Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions or fees received by such persons and
any profit on the resale of such shares purchased by such persons may be
deemed to be underwriting commissions or discounts under the Securities Act.
Sales may be made by all Selling Stockholders pursuant to the Registration
Statement of which this Prospectus is a part.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES TO BE SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING SOLD AFTER OFFERING
<S> <C> <C> <C> <C> <C>
Name of Beneficial Owner Number Percentage Number Number Percentage
Vengold 6,187,825{(1)(2)} 36.73% 6,187,825 -0- -0-
Carl Seaman 3,137,710{(3)(4)} 26.44% 3,137,710 -0- -0-
Linda Seaman 2,201,869{(3)(4)} 18.87% 2,201,869 -0- -0-
</TABLE>
FOOTNOTES TO TABLE
(1) Includes 4,000,000 shares issuable upon exercise of warrants, 781,250
shares issuable upon conversion of Series 1 Class B Common Stock and
1,333,372 shares issuable upon conversion of Convertible Debt including
accrued interest through November 15, 1997.
(2) Assumes exercise of warrants; however, based on current market conditions
it is unlikely such warrants would be exercised.
(3) Carl Seaman and Linda Seaman are husband and wife. Mr. and Mrs. Seaman
own $4,619,385 of the Siskon Convertible Notes which are due November 15,
1998. The principal amount is convertible into Common Stock at $1.75 to
$3.50 per share and the shares include conversion of accrued interest
through November 15, 1997. The amount shown for Mr. Seaman also
includes 200,000 shares underlying Warrants and 73,666 shares of Class
A Common Stock owned by Carl & Associates, a general partnership of
which Mr. Seaman owns an 80% equity interest and the remaining 20%
interest is owned by his children. Mr. Seaman disclaims beneficial
ownership of the 14,733 shares of Common Stock attributed to the 20%
interest in Carl & Associates. The amount shown does not include
(a) 935,093 shares of Common Stock which Linda Seaman has the right to
acquire pursuant to the conversion of the note, and (b) 1,266,276
shares of Common Stock owned by Linda Seaman, the beneficial
ownership of which is disclaimed by Mr. Seaman.
(4) The amount shown for Mrs. Seaman includes (a) 935,093 shares of Common
Stock which she would have the right to acquire pursuant to the conversion
right described in footnote (2), including accrued interest through
November 15, 1997. The amount shown does not include shares shown as
beneficially owned by Carl Seaman, the beneficial ownership of which is
disclaimed by Mrs. Seaman.
-14-
<PAGE>
DESCRIPTION OF SECURITIES
The following discussion addresses all material aspects of the Company's
securities.
COMMON STOCK
Pursuant to its Amended and Restated Articles of Incorporation, the
Company is authorized to issue up to 50,000,000 shares of Common Stock, $.001
par value, 49,500,000 of which are designated as "Class A" Common Stock and
500,000 of which are designated as "Class B" Common Stock. The Board of
Directors is authorized to provide for the issuance of Class B Common Stock in
series and to determine the rights and privileges of Class B Common Stock,
including the conversion rights and voting rights of any such issuance without
any further vote or action by shareholders. The Company's Common Stock has no
preemptive rights, and are not subject to further call or assessment.
As of June 30, 1996, the number of shares of Class A Common Stock
outstanding is 10,642,391, the number of shares of Series 1 Class B Common
Stock outstanding is 638 and the number of shares of Series 2 Class B Common
Stock outstanding is 39,062.5. There is no preferred stock outstanding.
VOTING RIGHTS; DIVIDENDS
The holders of both Class A and Class B Common Stock will be entitled to
one vote for each share held of record on each matter submitted to a vote of
shareholders. Further, the holders of Common Stock will be entitled to receive
ratable dividends when and as declared by the Board of Directors from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock will be entitled to
share ratably in all assets remaining after payment to holders of any series of
preferred stock or of any other senior securities outstanding at such time. It
is anticipated that the Company will not be declaring dividends in the near
future.
SERIES 1 CLASS B
The Series 1 Class B Common Stock have rights similar to the Class A
Common Stock, including the right to share on a pro rata basis of the Company's
assets remaining after payment to shareholders of any series of preferred stock
or of any other senior securities outstanding at such time. Each share of
Series 1 Class B Common Stock is entitled to one vote and votes with the Class
A Common Stock as a class. Each share of Series 1 Class B Common Stock may be
converted into 100 shares of Class A Common Stock for every $25,000 increment
of equity, debt or project financing raised by the Company and through the
holder's efforts. The Series 1 Class B Common Stock has no pre-emptive rights,
and are not subject to further call or assessment.
SERIES 2 CLASS B
The Series 2 Class B Common Stock also have rights similar to the Class A
Common Stock, including the right to share on a pro rata basis of the Company's
assets remaining after payment to shareholders of any series of preferred stock
or of any other senior securities outstanding at such time. Each share of
Series 2 Class B Common Stock is entitled to one vote and votes with the Class
A Common Stock as a class in all matters other than the election of directors.
The Series 2 Class B Common Stock is entitled, voting as a separate class, to
elect two directors to the Company's board of directors. Each share of Series
2 Class B Common Stock may be converted into 20 shares of Class A Common Stock.
The Series 2 Class B Common Stock has certain preemptive right to purchase, on
a pro rata basis, new securities.
-15-
<PAGE>
CONVERTIBLE NOTE
The Company issued and has outstanding convertible notes in the aggregate
principal amount of $8,302,782, as of May 31, 1996, the principal and accrued
interest of which may be converted by the holders thereof at their option and
at any time into shares of the Company's Common Stock at a conversion ratio
ranging from $1.75 per share to $3.50 per share. The convertible notes bear
interest at the rate of 10%, interest payable in stock through November 15,
1997 and cash thereafter. The notes are due November 15, 1998.
WARRANTS
In the November 1995 private placement, the Company issued Warrants to
purchase 2 million shares of Class A Common Stock at $3.50 per share expiring
on December 31, 1996 and 2 million shares of Class A Common Stock at $4.00 per
share expiring on November 15, 1997. The Company also issued Warrants to
purchase an aggregate of 490,400 shares of Common Stock in connection with the
private placement of Units that was concluded in November 1994.
ARTICLES OF INCORPORATION AND BYLAWS
The following discussion addresses all material aspects of the Company's
Articles of Incorporation and Bylaws.
Certain provisions of the Company's Articles of Incorporation and Bylaws
may have the effect of deterring a change of control of the Company. The
Company's Articles of Incorporation contains provisions requiring the approval
of 80% of the Company's shareholders for certain mergers, sales of all or
substantially all of the Company's assets and certain other corporate action
unless the transaction is approved by seventy-five percent of the disinterested
board members or unless all shareholders receive a price for their shares of
the Company's capital stock which meets certain minimum price criteria. The
Company's Articles also require the approval of 80% of the Company's
shareholders in order to amend this provision.
The Company's Bylaws contain a provision which requires that, before
eligible shareholders may call a special meeting of shareholders regarding the
election of directors to the Company's Board of Directors, notice be given to
the Company a minimum of sixty (60) days and a maximum of ninety (90) days
prior to the date of the meeting. The Company's Articles of Incorporation also
eliminate the ability of shareholders to act by written consent.
The Company's Articles of Incorporation provide for the indemnification of
directors and officers for certain acts to the fullest extent permitted by
California Law. Further, the Company's Bylaws provide authority for the
Company to maintain a liability insurance policy which insures directors or
officers against any liability incurred by them in their capacity as such. The
Company has purchased such insurance for its directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
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<PAGE>
EXPERTS
The financial statements of the Company as of December 31, 1995 and 1994
and for the years then ended incorporated in this Prospectus by reference from
the Company's Form 10-KSB for the year ended December 31, 1995, have been
audited by Coopers & Lybrand L.L.P., independent accountants, as stated in
their report, which is incorporated herein by reference. Such report expresses
an unqualified opinion. Such financial statements of the Company have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
The legality of the shares of Common Stock offered by this Prospectus will
be passed upon for the Company by Bartel Eng Linn & Schroder of Sacramento,
California. Scott E. Bartel, a shareholder of Bartel Eng Linn & Schroder, is a
director of the Company and is the beneficial owner of 8,527 shares of Common
Stock.
-17-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the
Company in connection with the issuance and distribution of the securities
being registered hereunder. No expenses shall be borne by the Selling
Stockholders. All of the amounts shown are estimates, except for the SEC
Registration fee.
SEC registration fee $ 6,959.80
Printing and engraving expenses * $ 1,000.00
Accounting fees and expenses * $ 3,000.00
Legal fees and expenses * $ 25,000.00
Transfer agent and registrar fees * $ -0-
Fees and expenses for qualification
under state securities laws $ -0-
Miscellaneous * $ 1,000.00
TOTAL $ 36,959.80
* estimated
Item 15. Indemnification of Directors and Officers
Sections 204 and 317 of the California General Corporation Law permits
indemnification of directors, officers and employees of corporations under
certain conditions and subject to certain limitations. Article VI of the
Company's Amended and Restated Articles of Incorporation contain provisions for
the indemnification of its directors and officers to the fullest extent
permitted by law.
Pursuant to Section 317 of the California Corporations Code, the Company
is empowered to indemnify any person who was or is a party or is threatened to
be made a party to any proceeding (other than an action by or in the right of
the Company to procure a judgment in its favor) by reason of the fact that such
person is or was an officer, director, employee or other agent of the Company
or its subsidiaries, against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with such proceeding, if
such person acted in good faith and in a manner such person reasonably believed
to be in the best interests of the Company and, in the case of a criminal
proceeding, has no reasonable cause to believe the conduct of such person was
unlawful. In addition, the Company may indemnify, subject to certain
exceptions, any person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action by or in the right of the
Company to procure a judgment in its favor by reason of the fact that such
person is or was an officer, director, employee or other agent of the Company
or its subsidiaries, against expenses actually and reasonably incurred by such
person in connection with the defense or settlement of such action if such
person acted in good faith and in a manner such person believed to be in the
best interest of the Company and its shareholders. The Company may advance
expenses incurred in defending any proceeding prior to final disposition upon
receipt of an undertaking by the agent to repay that amount it shall be
determined that the agent is not entitled to indemnification as authorized by
Section 317. In addition, the Company is permitted to indemnify its agents in
excess of Section 317.
The directors and executive officers of the Company have
entered into indemnification agreements with the Company in which the
Company has agreed to indemnify such agents with respect to claims
arising with respect to any event or occurrence that is related to
the fact that such agent is or was a director or executive officer or that
II-1
<PAGE>
is related to anything done or not done by such agent in any such capacity,
whether or not the basis of the proceeding at the time such persons were
acting in such capacity.
In addition, although the Company does not have director's and officer's
insurance, the Company's bylaws provide the Company authority to maintain a
liability insurance policy which insures directors or officers against any
liability incurred by them in their capacity as such, or arising out of their
status as such. The Company intends to seek such insurance in the future.
Item 16. Exhibits and Financial Statement Schedules
3.1 Amended and Restarted Articles of Incorporation of Siskon Gold
Corporation (1)
3.2 Bylaws of Siskon Gold Corporation (1)
5.1 Opinion of Bartel Eng Linn & Schroder
10.8 Siskon Gold Stock Option Plan (2)
(a) Amendment to the Siskon Gold Stock Option Plan (1)
10.9 Consulting Agreement with Charles D. Snead, Jr. (3)
10.10 Employment Agreement with Timothy A. Callaway (3)
10.16 Placement Agent Agreement (4)
10.17 Unit Purchase Agreement (4)
10.18 Stock, Note and Warrant Purchase Agreement, dated
November 15, 1995 (5)
10.19 Standstill Agreement, dated November 15, 1995 (5)
10.20 Convertible Note with SJ Gold Holdings Inc., dated
November 15, 1995 (5)
10.21 Debt Conversion and Modification Agreement, dated
November 15, 1995 (5)
10.22 Amended and Restated Convertible Note with Carl and Linda
Seaman, dated November 15, 1995 (5)
10.23 Amended and Restated Convertible Note with Jordan Seaman,
dated November 15, 1995 (5)
10.24 Amended and Restated Convertible Note with Dana Manning,
dated November 15, 1995 (5)
10.25 Mine services agreement with the Doe Run Company, dated
March 15, 1996 (7)
16.1 Letter on Changes in Certifying Accountants (6)
23.1 Consent of Coopers & Lybrand L.L.P.
(1) Incorporated by reference to the Company's registration statement S-
3 filed on December 20, 1993 (File No. 33-73066)
(2) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1991
(3) Incorporated by reference to the Company's Form 10-KSB for the year
ended December 31, 1992, as amended on Form 8 on April 30, 1993 and
on Form 10-KSB/A on June 1, 1993 (which conformed the Form 10-K to a
Form 10-KSB)
(4) Incorporated by reference to the Company's Form 10-KSB for the year
ended December 31, 1994
(5) Incorporated by reference to the Company's Form 10-QSB for the
quarterly period ended September 30, 1995 as amended on form 10-
QSB/A No. 1 on November 24, 1995
(6) Incorporated by reference to the Company's Form 8-K for October 20,
1994 and filed on October 26, 1994
(7) Incorporated by reference to the Company's Form 10-KSB for the year
ended December 31, 1995
II-1
<PAGE>
Item 17. Undertakings
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Grass Valley, County of Sierra, State of California,
on the 9th day of July, 1996.
Timothy A. Callaway
Dated July 9, 1996 Timothy A. Callaway, President
CEO, and Chairman of the Board
(Principal Executive Officer)
Michael K. Epstein
Dated July 9, 1996 Michael K. Epstein,
Vice-President Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Timothy A. Callaway Dated JULY 9, 1996
Timothy A. Callaway, Director
Charles D. Snead Dated JULY 9, 1996
Charles D. Snead, Director
Michael K. Epstein Dated JULY 9, 1996
Michael K. Epstein, Director
Scott E. Bartel Dated JULY 9, 1996
Scott E. Bartel, Director
II-5
<PAGE>
EXHIBIT INDEX
5.1 Opinion of Bartel Eng Linn & Schroder
23.1 Consent of Coopers & Lybrand L.L.P.
24.1 Consent of Bartel Eng Linn & Schroder (contained in Exhibit 5.1)
II-6
July 9, 1996
Board of Directors
Siskon Gold Corporation
350 Crown Point Circle, Suite 100
Grass Valley, CA 95945
Re: Class A Common Stock of Siskon Gold Corporation
Gentlemen:
As you know, we act as counsel to Siskon Gold Corporation (the
"Company"), a Delaware corporation, in connection with the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of
6,757,139 shares of the Company's Class A Common Stock (the "Shares"),
781,250 of which are to be issued upon the conversion of outstanding Series
2 Class B Common Stock; 4,000,000 are to be issued upon the exercise of
Warrants, and 1,975,889 of which are to be issued upon the conversion of
Convertible Notes, all as further described in a registration statement on
Form S-3 filed under the Securities Act (the "Registration Statement").
For the purpose of rendering this opinion, we examined originals or
photostatic copies of such documents as we deemed to be relevant. In
conducting our examination, we assumed, without investigation, the
genuineness of all signatures, the correctness of all certificates, the
authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such copies,
and the accuracy and completeness of all records made available to us by
the Company. In addition, in rendering this opinion, we assumed that the
Shares will be offered in the manner and on the terms identified or
referred to in the prospectus, including all amendments thereto.
Our opinion is limited solely to matters set forth herein. Attorneys
practicing in this firm are admitted to practice in the State of California
and we express no opinion as to the laws of any other jurisdiction other
than the laws of the State of California and the laws of the United States.
Based upon and subject to the foregoing, after giving due regard to
such issues of law as we deemed relevant, and assuming that (i) the
Registration Statement becomes and remains effective, and the prospectus
which is part thereof (the "Prospectus"), and the Prospectus delivery
procedures with respect thereto, fulfill all of the requirements of the
Securities Act, throughout all periods relevant to the opinion, and (ii)
all offers and sales of the Shares have been and will be made in compliance
with the securities laws of the states, having jurisdiction thereof, we are
of the opinion that the shares held by the Selling Stockholders are, and
the shares to be issued upon the exercise of warrants and options, upon
receipt of adequate consideration, will be validly issued, fully paid, and
nonassessable.
We hereby consent in writing to the use of our opinion as an exhibit
to the Registration Statement and any amendment thereto. By giving such
consent, we do not thereby admit that we come within the category of
persons where consent is required under Section 7 of the Securities Act or
the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
Bartel Eng Linn & Schroder,
a Law Corporation
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Siskon Gold Corporation on Form S-3 for the registration of 6,757,139
shares of Class A Common Stock of our report dated February 23, 1996, on
our audits of the consolidated financial statements of Siskon Gold
Corporation as of December 31, 1995 and 1994, and for the years ended
December 31, 1995 and 1994, which reported is included in this annual
report on Form 10-KSB. We also consent to the reference to our firm under
the caption "Experts."
COOPERS & LYBRAND L.L.P.
Oakland, California
July 1, 1996
