U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
NEVADA STAR RESOURCE CORP.
(Name of Small Business Issuer in its charter)
State of Washington 98-0155690
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10735 Stone Avenue North
Seattle, WA 98133
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(Address of principal executive offices) (Zip Code)
(Issuer's telephone number, including area code) (206) 367-2525
Securities to be registered under Section 12(b) of the Act:
Name of each exchange on
which each class is to be
Title of each class to be so registered: registered:
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None None
Securities registered under Section 12(g) of the Act:
Common Stock
----------------------------------------
(Title of class)
<PAGE>
NEVADA STAR RESOURCE CORP.
FORM 10 SB/A
DESCRIPTION SUBMISSION PAGE
PART I
ITEM 1 DESCRIPTION OF BUSINESS
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
ITEM 3 DESCRIPTION OF PROPERTY
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
ITEM 6 EXECUTIVE COMPENSATION
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 8 DESCRIPTION OF SECURITIES
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
ITEM 2 LEGAL PROCEEDINGS
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
PART F/S
PART III
ITEM 1 INDEX TO EXHIBITS
ITEM 2 DESCRIPTION OF EXHIBITS
SIGNATURES
EXHIBIT EX-3.(i)
EXHIBIT EX-3.(ii)
EXHIBIT EX-3.(iii)
EXHIBIT EX-21
EXHIBIT EX-27
Correspondence
Shareholders
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Nevada Star Resource Corp.. (together with its subsidiaries, "NSR" or
the "Company"), is engaged in the business of acquiring, exploring and
developing mineral properties, primarily those containing copper,
gold, silver and associated base and precious metals. All of the
Company's properties are currently in the exploration stage, which is
in the stage of determining feasibility for development. No reserves
have been identified on any of the NSR properties.
The Company was incorporated under the laws of the Company Act of
British Columbia, Canada on April 29, 1987. In 1992 the Company made
an offer to acquire certain mineral exploration properties locted in
Sonora, Mexico. Those properties were controlled by a Pacific Rainier,
Inc. a privately held company controlled by Monty D. Moore. At the
time of the offer Mr. Moore was not an affiliate of Nevada Star
Resources. The acquisition price, which was eventually paid through
the issuance of shares of the Company to Pacific Rainier, Inc. The
terms of the transaction were approved by the Vancouver Stock
Exchange. The deemed value of the shares to be issued to Pacific
Rainier, Inc. was higher than the current market price for the shares.
After the completion of the acquisition of the properties from Pacific
Rainier. Inc., Mr. Moore invested monies in the Company to enable the
Company to continue its exploration activities. Mr. Moore became the
President and a Director of the Company in 1993. Since that time Mr.
Moore has made in excess of $700,000 of interest-free advances to the
Company to fund its operations.
On June 17, 1998 the Company was continued into the Yukon under
Section 190 of the Yukon Business Corporation Act. The Company
conducts its operations through its wholly-owned subsidiaries, Nevada
Star Resource Corp. (U.S.), a Nevada corporation and Nevada Star
Resource de Mexico, S.A. de C.V., a wholly-owned subsidiary of Nevada
Star Resource Corp. (U.S.). The Company's executive offices are
located at 10735 Stone Avenue North, Seattle, WA 98133, Tel. (206)
367-2525. Unless otherwise noted, all dollar amounts are quoted in
Canadian Dollars.
Employees
---------
The Company has no paid employees. NSR relies primarily upon the use
of consultants to accomplish its exploration activities. None of the
Company's executive officers are employed by the Company. Management
services are provided on an "as-needed" basis without compensation,
generally less than five hours per week. The Company has no oral or
writen contracts for services with any member of management.
One director, Stuart Havenstrite provides approximately 40 hours of
geologic consulting services per week to the Company. Director Rick
Havenstrite, P.E. was employed full-time on the Milford, Utah property
<PAGE>
to perform mining engineering services. In March, 1999, Mr.
Havenstrite was reduced to 1/2 time and compensation. His employment
was terminated on May 15, 1999 because the project was completed. The
Company expects that it will re-employ Mr. Havenstrite at such time
as his services are again required. Other consultants are retained on
the basis of ability and experience. There is no preliminary agreement
or understanding existing or under contemplation by the Company (or
any person acting on its behalf) concerning any aspect of the
Company's operations pursuant to which any person would be hired,
compensated or paid a finder's fee.
Competition
-----------
There is aggressive competition within the minerals industry to
discover and acquire properties considered to have commercial
potential. The Company competes for the opportunity to participate in
promising exploration projects with other entities, many of which have
greater resources than the Company. In addition, the Company competes
with others in efforts to obtain financing to explore and develop
mineral properties.
Properties
----------
The Company presently operates from office space provided on a rent
free basis by the Company's president, Monty D. Moore. In the event
that this space becomes unavailable in the future the Company will
seek to lease office space from an unaffiliated party at prevailing
competitive rates.
Government Regulation and Environmental Concerns.
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The Company is committed to complying and, to its knowledge, is in
compliance with all governmental and environmental regulations.
Permits from a variety of regulatory authorities are required for many
aspects of mine operation and reclamation. The Company cannot predict
the extent to which future legislation and regulation could cause
additional expense, capital expenditures, restrictions, and delays in
the development of the Company's U.S. properties, including those with
respect to unpatented mining claims.
The Company's activities are not only subject to extensive federal,
state and local regulations controlling the mining of and exploration
for mineral properties, but also the possible effects of such
activities upon the environment. Future legislation and regulations
could cause additional expense, capital expenditures, restrictions and
delays in the development of the Company's properties, the extent of
which cannot be predicted. Also, as discussed above, permits from a
variety of regulatory authorities are required for many aspects of
mine operation and reclamation. In the context of environmental
permitting, including the approval of reclamation plans, the Company
must comply with know standards, existing laws and regulations that
may entail greater or lesser costs and delays depending on the nature
<PAGE>
of the activity to be permitted and how stringently the regulations
are implemented by the permitting authority. The Company is not
presently aware of any specific material environmental constraint
affecting its properties that would preclude the economic development
or operation of any specific property.
If the Company becomes more active on its U.S. properties, it is
reasonable to expect that compliance with environmental regulations
will increase costs to the Company. Such compliance may include
feasibility studies on the surface impact of the Company's proposed
operations; costs associated with minimizing surface impact; water
treatment and protection; reclamation activities, including
rehabilitation of various sites; on-going efforts at alleviating the
mining impact on wildlife; and permits or bonds as may be required to
ensure the Company's compliance with applicable regulations. It is
possible that the costs and delays associated with such compliance
could become so prohibitive that the Company may decide to not proceed
with exploration, development, or mining operations on any of its
mineral properties.
Offshore Regulation.
--------------------
The Company is aware of comparable environmental regulation in
offshore counties where it operates. The Company is committed to full
compliance with the regulations and has engaged legal counsel in
Mexico who will, in part, assist the Company to assure compliance.
The Company is prepared to engage additional professionals, if
necessary, to ensure regulatory compliance but in the near term
expects its activities to require minimal regulatory oversight. If
the Company expends the scope of its activities in the future it is
reasonable to expect expenditures on compliance to rise. Based upon
the experience of other companies with which the Company is familiar,
management believes the costs of environmental regulation offshore
will be somewhat lower than costs typical in the United States.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Plan of Operation
-----------------
NSR's plan of operation for the next twelve months will consist of
property maintenance and exploration work on its properties in the
Milford District in Beaver County, Utah and its Alaska Nickel-
Platinum-Copper property. The Company is currently negotiating joint-
venture or lease-option agreements with unaffiliated third parties on
its La Cienega, Yaqui Placer and Gold Hill properties.
The Company anticipates that it will utilize the services of
independent consultants to accomplish its maintenance and exploration
work and therefore does not anticipate that there will be a
significant increase in the number of employees.
<PAGE>
In order to meet its cash requirements for the nest twelve months NSR
will be required to raise additional funds. The Company expects to
accomplish this through the sale of additional equity.
Although the Company intends to aggressively seek to acquire
additional exploration properties of merit, at the present time the
Company has no specific current plans, arrangements, agreements or
undertakings to acquire any additional exploration properties.
Year 2000 Issues
----------------
Throughout the information technology industry, the use of two-digit
fields was common practice in the design of hardware, systems software
proprietary applications and system interfaces. The Year 2000 problem
is pervasive and complex. The issue is whether computer systems will
properly recognize date sensitive information when the year changes to
2000. Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.
The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures and has assessed
Year 2000 risks. This assessment has included the identification of
necessary changes to computer hardware and software applications that
will attempt to ensure availability and integrity of the Company's
information systems and the reliability of its financial and
operational systems.
The Company has reviewed its financial, information and operational
systems in order to identify those products, services or systems that
are not Year 2000 compliant. As a result of this review, the Company
has determined that only nominal modification or replacement of
certain information systems may be required to ensure that the
Company will be Year 2000 compliant. These modifications and
replacements are being, and will continue to be, made in conjunction
with the Company's overall systems upgrading. The total cost of these
Year 2000 compliance activities is not anticipated to be material to
the Company's financial position or its results of operations
Based on available information, the Company does not believe any
material exposure to significant business interruption exists as a
result of Year 2000 compliance issues. These costs and the timing in
which the Company plans to complete its Year 2000 modifications are
based on management's best estimates. However, there can be no
assurance that the Company will timely identify and remediate all
significant Year 2000 problems, that remedial efforts will involve
significant time and expense, or that such problems will not have a
material adverse effect on the Company's business, results of
operations or financial position. The Company does not anticipate any
impact in the event of electrical supply problems because self-reliant
power generation is available on site for the daily operations of the
Company.
<PAGE>
The Company also faces risk to the extent that its vendors, service
providers and others with whom the Company transacts business may not
comply with Year 2000 requirements. In October, 1999, the Company
intends to initiated formal communications with significant borrowers,
vendors and service providers to determine the extent to which the
Company is vulnerable to these third parties failure to remediate
their own Year 2000 issues. In the event any such third parties are
not Year 2000 compliant, the Company's results of operations could be
materially adversely affected.
ITEM 3. DESCRIPTION OF PROPERTY.
MILFORD DISTRICT
Property Location and Accessibility
The Milford District property consists of 55 patented mining claims,
232 unpatented mining claims, five Utah State leases, and 93 acres of
fee land, aggregating approximately 8,200 acres. The Company has two
exploration targets in the district, the Cortex and OK properties.
The property lies within approximately10 miles northwest of the town
of Milford in Beaver County, Utah. Milford has a population of 1,200
and is a major division point on the Union Pacific Railroad. Milford
has typical facilities for a town of its size. NSR owns a railroad
spur right of way 9 miles east of the property where sulfuric acid can
be received and trucked to the property, where copper cathodes can be
loaded and shipped to market. Electric power adequate to service the
processing facility is available 5 miles from the property.
The property can be accessed from Milford by traveling 4 miles west-
northwest on Utah State Highway 21, then 6 miles north-northwest on a
graveled county-maintained road. Access is excellent year round.
The property lies at an elevation of 5,000 to 6,200 ft. in moderately
rugged hills surrounded by alluvial pediment. Climate is typical of
the Great Basin: temperatures range from 0 degrees F to 100
degrees F, with average highs in the summer of 80 degrees F; lows in
the summer of 50 degrees F; average highs in winter of 40 degrees F;
and average lows in winter of 25 degrees F. Precipitation averages 10
inches annually with approximately 50% coming as snow.
History
-------
The Milford district was organized in 1872 but had only small and
intermittent production prior to 1962. Most of the early production
was from the Old Hickory tungsten mine and the Montreal iron mine.
The pre-1962 production had a total value of less than $3 million.
Early in the 1960's a group of former US Steel geologists recognized
that copper in this district was intimately associated with magnetite.
An extensive ground magnetic survey of the district showed several
strong magnetic anomalies, most of them buried beneath alluvium.
<PAGE>
Subsequent drilling demonstrated that most of the anomalies were
associated with significant copper deposits.
Several companies partially mined the deposits delineated by the
drilling. These deposits included the Bawana deposit, located on
ground presently controlled by other parties, and the Hidden Treasure
and Maria deposits, now optioned to Nevada Star. A flotation plant
was constructed to process the ores and later and acid leach circuit
was added. The copper concentrate and cement copper produced from the
leaching process was sold to copper smelters for final processing.
According to NSR, the OK property was mined and, according to
published figures, produced 900,000 tons of copper ore grading 1.25%
copper from 1967 until 1974. The ore was processed at the Essex mill,
located 3 miles west-northwest of Milford. The mill was a combination
flotation and acid vat leach facility sized at 850 tons per day, built
to process OK intrusion-hosted ores as well as skarn ores from the
Cortex property. Production from the entire district is reported as
22,300 tons of copper contained in 2,010,000 tons of ore grading 1.59%
Cu..
The property lay idle until the early 1990s, when Cortex acquired the
Hidden Treasure Mine and deposit, Maria mine and deposit, Copper Ranch
deposit, and surrounding ground. Cortex conducted confirmation
drilling on the Copper Ranch deposit and did extensive sampling and
metallurgical test work on the Maria deposit. The copper appears to
be acid leachable in the Maria ores. Cortex agreed in late 1997 to
sell the property to Nevada Star rather than develop it itself.
The OK properties lay idle until the early 1990's when Centurion
acquired the OK Mine and surrounding ground and conducted confirmation
drilling on the OK mine. The program also drilled eastward along
trend defining additional copper mineralization in the vicinity of the
Mary I mine about one mile to the east. Centurion decided in late
1997 to option the property to NSR rather than develop it.
Geology
-------
Much of the geologic work and geologic interpretations done in the
district were conducted by Peter Joraleman in the 1970's and reported
in COPPER RESOURCES OF THE ROCKY DISTRICT, BEAVER COUNTY, UTAH, 1980,
prepared for the Toledo Mining company. Much of the discussion given
below is from his report and augmented by more recent data compiled by
NSR and MDA.
The Milford district lies within an east-trending belt of altered
granite to diorite intrusives. Mineralization is dated at Cretaceous
through late Tertiary. Regional controls on mineralization are
thought to be deep-seated crustal structures. The area is on the
eastern leading edge of a Late Mesozoic to Early Tertiary Sevier
thrust system with the mountains comprising the hanging wall of the
eastern Mineral Mountains complex. The Mineral Mountains complex
<PAGE>
consists of thick Palezoic through mid-Mesozoic carbonate and clastic
rocks. Geology of the Milford district is structurally complex, as it
has been subjected to compression and later extension from the
Mesozoic Period through the Tertiary Period.
Oligocene volcanic rocks consisting of andesite flows and pyroclastic
rocks were extruded over much of the area, and these rocks were then
intruded by a series of Oligocene rocks related to the Mineral
Mountain batholith.
The Southern corner of the project is underlain by a fine to medium-
grained grondiorite stock composed of plagioclase, quartz, and biotite
with minor orthoclase, hornblende, and magnetite. there are also
small outcrops of quartz monzonite of the Rocky Mountain Stock.
To the north and northeast of the OK mine, there are several altered
porphyritic dikes which contain abundant magnetite and chalcopyrite
within a zone of disseminated and vein-controlled mineralization. Two
small outcrops of quartz monzonite occur west of the OK within the
volcanic rocks.
Mineralization
--------------
Mineral Deposit Descriptions
Copper deposits in the Milford district occur as four distinct
types:
TYPE 1 copper deposits occur in pipe-shaped deposits entirely
contained in silicified quartz monzonite or granodiorite; the best
example of this is the OK deposit. Nearby on trend is the Mary I
deposit which is similar though less silicified. Chalcopyrite and
bornite occur with minor molybedenite. About 75% of the sulfide
minerals have been oxidized to tenorite, chrysocolla, malachite and
azurite. Gold and silver are present, but are not of economic
significance when acid leaching is used to recover the copper.
This type 1 deposit is known to occur only on the OK property. The
OK deposit has been explored with nearly 200 holes drilled by
several operators from 1964 until 1997. The OK deposit is
approximately 1,200 ft. long, averages 100 ft. wide, and has been
delineated by drilling to a depth of up to 500 ft. Preliminary pit
designs by NSR take the pit to a depth of 400 ft.
The Mary I deposit has been explored with approximately 50 drill
holes. The deposit, as presently defined, is 600 ft. long, 150 ft.
wide and has been delineated by drilling to a depth of 150 ft..
These deposits have been delineated on approximately 100 ft.
spacing or closer though the deposit is not completely drilled out.
<PAGE>
TYPE 2 copper deposits occur in bodies of garnet-magnetite skarn
adjacent to quartz monzonite. These deposits form elongated
tabular zones of irregular orientation. Deposits of this type
include the Hidden Treasure, Maria, and Copper Ranch deposits.
These deposits are not as continuous as Type I and require closer
drill hole spacing.
TYPE 3 deposits consist of remobilized copper occurring in
sediments and associated with calcite. Currently the Sunrise
deposit is the only known example of this type. The Sunrise
deposit is not related to skarn mineralization, and is low in
magnetite. The Sunrise deposit occurs partly on Cortex property
and partly on claims controlled by others.
TYPE 4 deposits, which are of no apparent economic importance, are
iron deposits consisting of magnetic skarn with no associated
copper.
Feasibility Study
-----------------
In 1998 NSR commissioned a feasibility study to evaluate the Company's
properties in the Milford District. Three independent engineering
companies evaluated the property. The Company spent approximately
$800,000 on the studies including data confirmation, ore reserve
calculation, pit design, metallurgical test work, engineering studies
and capital cost estimation. The feasibility study concludes that
"open pit mining, acid leaching and solvent extraction-electrowinning
can produce LME grade A cathode copper at the property and provide
positive economic returns at sale prices above $0.75 per pound copper.
The Company plans to continue property maintenance and exploration
during 1999, but will not commence plant construction or mine
development until the price of copper improves and the status of the
resource can be upgraded from mineralization to reserves.
Terms of Acquisition
--------------------
By an agreement dated November 7, 1997 between the Company and
Centurion Mines Corporation (the "Vendor"), the Company will purchase
copper properties in four townships in Beaver County, Utah.
Consideration will be the issuance of 2 million common shares of the
Company over five years. The vendor also retains a 12% net profits
interest to apply to all copper production coming from any claims.
Deferred exploration and development expenditures of $597,003 have
been incurred to date by the Company on the property.
By an agreement dated November 4, 1997 between the Company and Cortex
Mining & Exploration Co. Inc. (the "CME"), the Company will purchase
mining claims in Beaver County, Utah. Consideration will be 2 million
common shares of the Company issued in two tranches: one million
shares upon closing and another one million upon the Company's
successful completion of a favourable feasibility study or upon
<PAGE>
commencement of commercial production. The CME also retains a 2% net
smelter return royalty which will not exceed 3 million dollars (U.S.)
in aggregate. The Company will also grant to Cortex one million
warrants for the Company's common shares, price at $1.00 U.S. per
share.
A finder's fee of 225,000 shares at a deemed price of $0.65 CDN. is
payable.
EAGLE (RIO YAQUI) PROPERTY
Property Location and Availbility
---------------------------------
The Yaqui placer gold property is located in southeastern Sonora
State, Mexico, about 160 kilometers east-southeast of Hermosillo, the
state capital and the main supply and trading centre in the State.
The property consists of the Eagle, Eagle I, Eagle II and Yaqui I
claims comprising 392 hectares (Has) or approximately 944 acres.
Nevada Star Resource Corp. (Nevada) obtained an option through an
agreement dated October 29, 1992 as amended March 16, 1993 between
Nevada and Monty D. Moore whereby Nevada obtained an option to acquire
a 100% interest, subject to a 2% net smelter return royalty, in
certain placer gold concessions situated in Mexico known as the Eagle
Property. Consideration is $95,000 (U.S.) as reimbursement of the
vendor's costs and issuance of 200,000 shares of Nevada in four equal
stages, of which 50,000 shares were issued upon Vancouver Stock
Exchange acceptance for filing on March 30, 1993. Further issuance's
are based on completion of phased work programs and filing of
acceptable engineering reports recommending additional work on the
property. This Phase One report details work in the form of three
testing programs, carried out on the property during June 1992 and
October 1993.
The Eagle property on the Yaqui River, is located in a very extensive
gold-bearing gravel district comprising the deposits from ancient and
recent Yaqui River systems. Widespread areas of hand mining
operations by generations of Gambusinos is evidence of the potential
profitability of the gravels. Practically no well engineered modern
mining methods or equipment have been used and the deposits are still
largely intact. The property is cut by and nearly half surrounded by,
the Yaqui River in its southward course from the Sierra Madre
Mountains to the Gulf of California. Hydroelectric power dams lie
along the Yaqui River and a major transmission line passes near the
property. A branch substation which taps the major line is located on
the property.
Access to the claims is by good, paved, two land highway (No. 16) from
Hermosillo to the Yaqui River and then by desert road two kilometers
to the property.
<PAGE>
Physiographically the property is in the Sierras and Llanurus
Province, the strip of basin and range structure which separates the
Sierra Madre Mountains from the main Sonora Desert to the west.
Because of the location of the property at the intersection of a main
highway and a major river, the Eagle property has been provided with
excellent access and hydroelectric power available for hookup in the
immediate area where mining, if proven feasible, will probably
commence.
Previous Work
-------------
In the general area of the Eagle property there is much evidence of
ancient mining, including old abandoned Spanish communities and mine
structures as, for example at El Aguaje. Mining activity dates back
more than two hundred years and most of this activity has been by
labor-intensive methods. Extensive areas of hand mining by Gambusinos
can be seen, evidenced by thousands of hand-dug shafts and the
associated waste piles, throughout the district and on the property.
Gambusinos are still actively working the placer gravels of the Yaqui
River system by the traditional hand methods
Geology
-------
Regional Setting
Evidence of three periods of Yaqui River development are represented
in the general. The earliest, assumed to be of early Tertiary age, is
represented by gold-bearing, well-indurated conglomerate gravels which
are conspicuously displayed to the north and east of the property.
The second Yaqui River development, possible of middle to late
Tertiary age, is the source of most of the terrace deposits in the
broad river valley system. Development of this broad river valley
with its extensive gravel deposits, was the product of a very long
period. Several of these remnant terraces exist upstream from the
Eagle property .
The third Yaqui River development is represented by the present river,
which has cut below the base of the earlier valleys and lies in a much
narrower valley. The modern valley winds along the earlier (middle or
late Tertiary valley) in a general way, but in places leaves it for
several kilometers to cut a new channel through bedrock before re-
entering the old valley.
Property Setting
The large area of alluvial gravels that comprises the Eagle property
is situated on the eastern side of the earlier (middle to late
Teriary) Yaqui valley, immediately west of a point where the present
Yaqui valley leaves the old valley and cuts its way through a bedrock
canyon for several kilometers on its southward course. These
<PAGE>
departures of the modern river from the old valley were probable
caused by major northeast-southwest faulting at the time of the modern
river development.
The Eagle property gravels and the terrace deposit gravels 10 to 20 km
north are all well rounded and are made up primarily of granitic and
volcanic rocks, quartzites and quartz boulders, cobbles and gravel.
The gravels and the accompanying flattened gold are products of a
collection process that is regional in size and has been through at
least two periods of valley development during geologic time, hence,
the widespread presence of gold values throughout all the gravels in
the Yaqui River system.
Whereas the terrace deposits ten to twenty kilometers upstream are
completely non-bedded, heterogeneous mixtures of silts, sands,
gravels, cobbles and boulders that were deposited from a flooding
river, the deposits on the Eagle property have a crude bedding. This
indicates that although the main gravel beds are not significantly
different than the terrace deposits to the north, there has been some
reworking of the gravels on the property.
It seems likely that the reason such a hugh reserve of gravel has been
preserved on the Eagle property is that when the faulting occurred
that forced the river to cut a new canyon in bedrock, the property
area was the downthrown side of the fault.
Terms of Acquisition
--------------------
By a Letter of Agreement dated October 29, 1992 (as amended) the
Company may earn a 100% interest (subject to a 2% net smelter returns
royalty) in the rights to extract gold from mining claims known as
Eagle, Eagle I, Eagle II, and Yaqui located in the Soyopa and Onaves
mining districts, State of Sonora, Mexico. Consideration consists of:
- a cash payment of $95,500 U.S. for reimbursement of the vendor's
out-of-pocket costs, payable on the earliest occurrence of the
following events: (1) the Company completing a $1,000,000
financing, (2) the first positive cash flow being generated from
the project, or (3) no later than July 31, 1997. (Paid)
- the issuance of 200,000 shares of the Company's capital stock as
follows: 50,000 shares upon the acceptance of the Agreement by
regulatory authorities (issued in fiscal 1994) and 50,000 shares
each at the time of filing of the next three engineers' reports
recommending work programs of minimum $25,000 U.S. each on the
project. The first work program was completed in fiscal 1995 and
50,000 shares were issued.
<PAGE>
LA CIENEGA
Property Location And Access
----------------------------
The camp at la Cienega is located about 90 miles south of the
Arizona border in the State of Sonora, Mexico. The nearest accessible
border town, Nogales, Arizona, is about two and one half hours by well
graded and paved roads.
Trincheras, the nearest town, is about 50 kilometers away over a
well graded dirt road. The nearest railroad and telephone are also
here. The largest nearby city is Caborca about 75 kilometers
northwest. It has a population of approximately 50,000 people.
The area is Sonoran desert and the rainfall averages less than 10
inches per year. Day time summer temperatures are well over 110 degrees
F and this heat is a major cause of decreased efficiency.
The area is without electrical service, potable water, sewage
disposal, telephones, grocery or fuel stores. The nearest supply
center of any size is Caborca about one hour away.
The camp is a collection of trailers that has been set up near an
old ranch building. An old arrastrar and several concrete tanks and
wells are central to the camp site. A dug well about 30 feet deep
with 5 feet of water has been set up with a gasoline pump near the
well. After several attempts at priming, the pump will deliver about
300 gallons to the concrete pond before sucking air. Several hours
are required for recovery. the well needs cleaning and deepening.
Terms of Acquisition
--------------------
By an agreement dated February 28, 1994 between the Company and
Pacific Rainier de Mexico ("PRM"), the Company can earn a 90% interest
in mining claims known as the Rainier 1 through Rainier 6 located in
the Golden Triangle District, State of Sonora, Mexico. Consideration
will be repayment of substantiated costs of $913,099 U.S. expended by
PRM on the property, and the issuance of 1,400,000 shares of the
Company when a mine is developed and commences production provided
that an independent valuation report confirms a net present value (net
of all costs and previous consideration) for the 90% interest of at
least $1,190,000 CDN. This is a non-arm's length transaction. The
out-of-pocket costs of $913,099 U.S. were settled by the issuance of a
two-year convertible debenture bearing interest at 6% and convertible
at $0.85 CDN. per share in the first year and at $0.98 CDN. per share
in the second year. Exchange in the conversion is fixed at $1.40 CDN.
for $1.00 U.S. The debenture was converted into 1,596,215 shares at
$0.85 CDN. per share.
A letter of intent was signed February 16, 1994 with K.L.S. Enviro
Resources Inc. (formerly K.L.S. Gold Mining Company ("KLS")) to form a
joint venture with the Company to explore and develop the Rainier (La
Cienega) Property and the Eagle (Rio Yaqui) claims. KLS was to have
<PAGE>
earned a 55% interest in the properties by spending a minimum of
$1,000,000 U.S. on exploration of the properties over the next 2 1/2
years.
In 1995, the agreement with KLS was renegotiated. Under the terms of
the new agreement, KLS will earn a 50% interest in the Rainier (La
Cienega) Property. The Eagle (Rio Yaqui) claims have been excluded
from this new agreement. To earn this interest, KLS must pay to PRM
$90,000 U.S. in holding costs, one-half in cash and one-half in KLS
stock. In addition, KLS must pay $120,000 U.S. of the total $150,000
U.S. advance royalty owing on the Ryan Lode project should the pre-
feasibility study prove positive. The Company will be required to pay
the remaining $30,000 U.S. at this time. Upon payment of the $120,000
U.S. for the Ryan Lode Project and payment of the $90,000 U.S. to PRM,
KLS will have earned its 50% interest in the Rainier (La Cienega)
Property claims.
The Company paid the costs of the pre-feasibility study on the Ryan
Lode Project of $117,218 CDN.
KLS did not complete their portion of the agreement to this point,
consequently they lost their interest in the Rainier (La Cienega)
property.
Deferred exploration and development expenditures of $ 327,656 have
been incurred to date by the Company on the property.
The Company owns 100% right, title and interest in and to Mineral
Concession #199518 La Esperanza within the Rainier II claim, Sonora
State of Mexico. The property was acquired on June 6, 1994 by issuing
100,000 shares of the Company (deemed value $80,000), payment of
$9,809 U.S. cash and the retention by Edward Ingham of a 2% net
smelter return.
The Company owns 100% right, title and interest in and to Mineral
Concession #199397 La Japonesa within the Rainier I claim, Sonora
State of Mexico. The property was acquired on June 6, 1994 by issuing
100,000 shares of the Company (deemed value $80,000), payment of
$8,649 U.S. cash and the retention by Donald Randolph of a 2% net
smelter return.
GOLD HILL
Nevada Star Resources has recently optioned the Gold Hill property in
Nye County, Nevada. The property is located six miles north of the
Round Mountain Gold Mine, about 48 miles northeast of Tonapah, Nevada.
Claims acquired from Mr. Manly include 53 unpatented claims and in
addition, NSR claimed, and is in the process of filing, an additional
54 unpatented claims. The option agreement has been reviewed, there
has been a preliminary title search, and a subcontractor to Mine
Development Associates (MDA) helped stake the claim.
<PAGE>
Nevada Star Resources (NSR) requested that Mine Development
Associates (MDA) conduct a resource and reserve evaluation on the Gold
Hill Project, Nye County, Nevada for Nevada Star's due diligent and to
define a work program. The property is located about six miles north
of Round Mountain, Nevada. The Round Mountain Mine is presently
producing 420,000 ounces of gold per year and has a reserve or eight
million ounces.
The Gold Hill property consists of 104 unpatented claims (3 placer and
101 lode) of which 53 were optioned from Mr. Buzz Manley of Beatty,
Nevada in April, 1995. Fifty-four claims were staked by NSR but are
presently held under a different name. Since that time NSR has been
accumulating data, reviewing the data and geology, and has performed a
resource and reserve analysis on the Gold Hill gold deposit. The
object of the work was to define the needs of the project for the next
phase of work.
Production in the 1930's showed a sharp increase in the Round Mountain
district, principally reflecting production from the Gold Hill Mine.
There was also some sporadic production between 1950 and 1964. Total
production at Gold Hill was $987,000 at $35 per ounce or about 28,000
ounces. Others report production of over 34,000 ounces of gold and
200,00 ounces of silver. Grades are estimated to have been about 0.3
oz Au/ton. All of this production came from the Gold Hill vein and to
a lesser extent associated veins.
Gold Hill had been controlled for the last decade by the Round
Mountain Gold Company, a joint venture of Echo Bay Mining, Homestake
and Case Pomeroy. They have conducted extensive exploration including
surface mapping, geochemistry (rock, soil vegetation), geophysics
(resistivity, gravity, and IP), and a structural evaluation. Their
work culminated in drilling, metallurgical test work, and a resource
and reserve evaluation. In 1988, they defined a mineral inventory of
3.1 million tons grading 0.05 oz Au/ton at 0.025 oz Au/ton cutoff..
The mineralization is not economic to develop at current gold prices.
The host rocks at Gold Hill are densely welded rhyolite tuff of the
Mount Jefferson Caldera. The Mount Jefferson tuff lies over the
Moores Creek tuff which in turn lies over the Round Mountain tuff, the
host of the Round Mountain mine. These Tertiary volcanic rocks
overlie a volcanic mega-breccia that in turn overlies Paleozoic
mestasediments. The Mount Jefferson Tuff has been broken down by
previous workers (principally L. McMasters of Homestake) into the
upper gray tuff and maroon upper tuff. There also exist quartz latite
dikes, a crystal tuff which may be a part of the Mount Jefferson tuff,
lithic tuffs, waterlain tuff and Tertiary conglomerates. Though these
units were mapped by McMasters, they were not evident in the log RVC
or Core. MDA feels that if the resource is to be well-defined, these
unites must be distinguished and separated for recognition of the
structure in the areas. The youngest rock in the area is the
Quaternary-Tertiary pediments. These units are generally composed of
cobbles of the younger maroon tuff and are always completely barren.
<PAGE>
The alteration in the area ranges from non-existent to propylitic to
argillic to advanced argillic to silicified. It appears that the gold
mineralization is related to both quartz veining in argillized rock
and silicification. The principal feature in the area is the Gold
Hill vein and its sub-parallel veins. These all strike N75 degrees W
and dip variably but steeply. In general, the veins dip southerly near
the surface but dip back to the north at depth. These veins are banded
quartz, but can also be composed of crushed quartz and rhyolite.
These veins branch and coalesce and where two period of veining
intersect, higher-grade pods generally exist. The two period of
quartz mineralization are younger, grayer, dense and banded
chalcedonic quartz which contains gold of generally higher grades.
The Silver vein, part of the later mineralization, is lower-grade,
dips steeply to the north at the surface and intersects the Gold Hill
vein at about 300 to 400 ft in depth. Where these veins intersect
they produce high-grades of gold and silver. The entire zone is up to
400 ft wide and is 1,500 ft long, extending from beyond the range
front fault on the west (where it remains open) to near Toquima shaft
on the east. The mineralization extends to the west of the range
front fault where one hole hit about 80 ft of about 0.11 Au/ton.
Structurally, the area is difficult to define due to the lack of
distinct lithologic units. Aside from the prominent N75 degrees W
mineralized structure there are north-trending basin and range faults
that drop the stratigraphy to the west. The general dip of the units
is difficult to determine but McMaster (oral comm., 1995) claims that
they dip westerly. Mineralization which is apparently
stratigraphically-controlled suggests a southwest dip. Previous
workers have recognized two styles of mineralization; near vertical
structurally-controlled mineralization, including veining, and
shallow-dipping strata-bound mineralization.
The principal mineralization is the Gold Hill and associated veins.
These were exploited starting in the 1930's. The vein width averages
several feet and had sharp contacts with the wall rock. In other
areas, the material can best be described as a stockwork or sheeted
zone filled with quartz veinlets. It is difficult to further define
the mineralization with the available information, though it is
believed to also be disseminated at least in part. In several
locations low-temperature banded silica was encountered which may
represent at-surface deposits. These are generally barren of precious
metal mineralization. The mineralization is found in both advance
argillic rock as well as silicified material.
Terms of Acquisition
--------------------
By an amended agreement dated September 26, 1997 between the Company
and Everett L. Manley (the "Vendor"), the Company has an option to
purchase 53 mining claims in the Round Mountain Mining District, Nye
County, Nevada located four miles north of Round Mountain in
consideration of $1,010,000 U.S. over 10 1/2 years. As at May 31,
1998, the Company has paid $130,000 U.S. to the Vendors.
<PAGE>
By an agreement dated December 4, 1997 between the Company and Hagel
Augen. Hagel Augen will earn a 75% working interest in the Gold Hill
Property. Hagel Augen is committed to the following payments and
investments on the property:
- a cash payment of $10,000 U.S. (paid) upon execution of the
agreement.
- a cash payment of $43,000 U.S. (paid) within 90 days of execution
of the agreement.
- a cash investment of $447,000 U.S. in the property which includes
year 1998 property maintenance payments on or before December 31,
1998.
- a cash investment of $500,000 U.S. in the property which includes
year 1999 property maintenance payments on or before December 31,
1999.
- a cash investment of $500,000 U.S. in the property which includes
year 2000 property maintenance payments on or before December 31,
2000.
- a cash investment of $500,000 U.S. in the property which includes
year 2001 property maintenance payments on or before December 31,
2001.
- a cash investment of $500,000 U.S. in the property which includes
year 2002 property maintenance payments on or before December 31,
2002.
- a cash investment of $500,000 U.S. in the property which includes
year 2003 property maintenance payments on or before December 31,
2003.
ALASKA NICKEL-PLATINUM-COPPER PROPERTY
Nevada Star has recently acquired approximately 8,000 acres of mining
claims in the Nicolai nickel-platinum-copper belt in the southern
Alaska Range of Alaska.
Location
--------
The property is located on the south side of the central Alaska Range,
Alaska, approximately 165 km south-southeast of Fairbanks, and
approximately 260 km northeast of Anchorage .
The Eureka Creek Project area lies in the geological entity known as
the Wrangellia Terrain, which typically forms glaciated mountainous
regions that extend to the southeast into the Wrangell Mountains and
beyond. Elevations in the project area vary between ~851 m in
piedmont along the southern edge, to ~2722 m along the glaciated
northern edge.
<PAGE>
Access
------
The Richardson and Denali highways allow access to the perimeter of
the project area. Old, unmaintained trails do occur in the project
area, but are only accessible once the glacial runoff subsides in late
summer, whereupon the rivers are passable. Fixed-wing aircraft can
access the area via two local gravel airstrips (Maclaren River and
Broxson Gulch), whereas float-equipped aircraft could land on a few of
the larger lakes (e.g., Fish Lake, Sevenmile Lake). Helicopters offer
the best means of accessing remote parts of the project area.
Snowmobiles (winter) and ATVs (summer) can also be used to access the
least-rugged areas. The nearest community is the hamlet of Paxson,
which is situated at the junction of the Denali and Richardson
highways. Project field activity is conducted from Paxson Lodge, and
a camp, with cabins and a gravel airstrip, at the entrance to the East
Fork of Broxson Gulch.
Physiography
------------
The project area is on the interior edge of the Pacific Mountain
System. The area is subject to elevation-controlled climate, where
central Alaska Range mountains and alpine valleys are typically
glaciated, windy and frequently cloudy; in contrast to piedmont
valleys on the south-side of the Alaska Range which have a more
subdued topography and contain some vegetation. Extended summer
daylight hours occur from approximately the beginning of June to the
end of August. Approximate mean high and low temperatures are 27
degrees C and 13 degrees C in July, and -20 degrees C and -30 degrees
C in January. Average precipitation varies between 10 cm in April to
50 cm in August.
The elevated part of the project area, north of Eureka Creek, contains
mountainous ridges (highest is ~2722 m) that separate active glaciated
valleys and cirques. Sediment-laden rivers drain from the glaciers
into the piedmont valleys, and eventually into the Delta River.
Conifers are sparse and confined to the banks of larger rivers (e.g.,
Delta River). Smaller vegetation (e.g., alders, heath, grasses, moss
and lichen) is more abundant, but is also restricted to wetter
piedmont valleys. Apart from bedrock, the landsurface is covered by
glacial moraine or glacio-fluvial deposits. In addition to minor
overbank or floodplain soil, there are only very thin, incipient soils
in vegetated lowland areas.
Property Geology
----------------
The geology in the Eureka Creek Property consists of unmetamorphosed
to metamorphosed sedimentary, intrusive and volcanic rocks of
Phanerozoic age, that are variably folded and faulted. Two
tectonostratigraphic terranes lie within the Eureka Creek Property;
the Maclaren terrane to the north of Broxson Gulch thrust fault, and
the Wrangellia terrane to the south. Rocks within the Maclaren
terrane are all part of the Maclaren Glacier metarnorphic belt. Rocks
<PAGE>
within the Wrangellia terrane are divided into the Slana River
subterranean north of Eureka Creek thrust fault, and the Tangle
subterranean to the south of the thrust fault.
Exploration Program
-------------------
It has been recommended that the next phase of exploration for the
Eureka Creek Project should focus on the Tangle Lakes area, and start
with a helicopter-airborne magnetic-EM (electromagnetic) survey over
the area of greatest interest west and east of Tangle Lakes. An
airborne survey reveals an area extending from the east shore of
Landmark Gap Lake and from Rusty Lake northward; and north-south
flight lines at 200 m separation, with 1 or 2 east-west cross-lines.
This rectangular survey area could be extended to the north, west and
south. The airborne magnetic-EM survey will be carried out as soon as
conditions permit, with follow-up ground exploration. Ultimately, if
geophysical anomalies and drill targets can be defined early in the
field season, then a drilling program will be carried out.
Property Lease
--------------
The Company has completed negotiations with M.A.N. Resources, Inc.,
("MAN") a private company controlled by Monty D. Moore and Robert
Angrisano to lease the Alaska property.
The parties intend to enter into a lease agreement whereby MAN will to
explore and develop the claims and to expend $75,000 in exploration
and development costs to earn a 75% working interest within a 24 month
period from the date of signing. The Company shall retain a 25%
working interest in the subject claims.
To maintain its 25% working interest, the Company is obligated to pay
to MAN its prorated shared of costs in excess of the initial $75,000
incurred by MAN. In the event the Company elects not to contribute
its share of expenses, its interest will be reduced to 1% NSR from the
sale of any and all minerals, metals, or valuable commodities
recovered from the mining claims.
MAN shall have the right and the Company shall have the obligation to
transfer all interests in the claims including retained NSR interest
to MAN upon the conveyance by MAN to the Company of 85,000 shares of
MAN capital stock, if conveyance is made within 24 months of the date
of signing.
MAN holds extensive mining claims adjacent to and in close proximity
to those held by the company. The Company's management feels
confident that MAN will vigorously explore and develop these
properties and the signing of this memorandum will benefit the
Company's shareholders.
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Security Ownership of certain beneficial owners
-----------------------------------------------
The following table sets forth information regarding any person known
to the Company to be the beneficial owner of more than five percent of
any class of the Company's voting securities.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Common Monty D. Moore (1) 4,857,878 17.04%
10735 Stone Ave.
Seattle, WA 98133
Common Grand Central Silver Mines, Inc. (2) 2,000,000 7.01 %
862 South 500 West St.
Salt Lake City, Utah 84110
Common Robert Angrisano 2,145,000 7.52%
2533 - 226th Pl. NE
Redmond, WA 98053
</TABLE>
Includes 713,550 shares owned by Pacific Rainier, Inc. a privately
held mineral exploration company controlled by Mr. Moore.
No officer, director or principal shareholder of the Company is
affiliated with Grand Central Silver Mines, Inc.
Security ownership of management
--------------------------------
The following table sets forth certain information as of February 23,
1999 regarding the number and percentage of shares of common Stock of
the Company or any of its parents or subsidiaries beneficially owned
(as such term is defined in Rule 13d-3 under the Exchange Act) by each
director, each of the named executive officers and directors and
officers as a group
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C> <C>
Common Monty D. Moore 4,857,878 (1) 17.04%
Common Richard W. Graeme 100,000 0.35%
Common Stuart Havenstrite ` 532,234 1.87%
Common Richard S. Havenstrite 110,000 (2) 0.38%
Common Robert Angrisano 2,145,000 7.52%
Common Kevin Weaver 13,500 0.05%
Common Total of all officers 7,758,612 27.2%
and directors (9 individuals):
</TABLE>
<PAGE>
(1) Includes 713,550 shares owned by Pacific Rainier, Inc., a
privately held mining exploration company controlled by Mr.
Moore.
(2) Does not include options expiring March 2, 2001 to acquire
100,000 shares of common stock at a price of $0.30 per share.
(c) Changes in Control
There are no arrangements known to the Registrant the operation of
which may at a subsequent time result in the change of control of the
Registrant.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
<TABLE>
<CAPTION>
Name Age Office with the Company Appointed to Office
------------------------- --- ----------------------- -------------------
<S> <C> <C> <C>
Monty D. Moore 62 Director and President 1993
Richard W. Graeme 56 Director
Stuart Havenstrite 66 Director
Richard S. Havenstrite 40 Director 1998
Robert Angrisano 44 Director 1999
Barry Nimetz 60 Director 1995
Kevin Weaver Director
Beverly J. Bullock 49 Secretary
</TABLE>
Monty D. Moore has been the President and a Director of the Company
since 1993. Since 1971 Mr. Moore has been the owner and President of
Pacific Rainier Roofing, Inc., Seattle, Washington. Mr. Moore is a
member of the Northwest Mining Association.
Richard W. Graeme, a Director of the Company, is graduated from the
University of Arizona with a Bachelor of Science Degree with a major
in Geological Engineering. From 1996 to the present Mr. Graeme has
been the Vice-president of Operations for Golden Queen Mining Company,
Mojave, California. Mr. Graeme's responsibilities have included
permitting and bringing the Soledad Mountain project into production.
From 1993 to 1996 Mr. Graeme was employed as an Engineer by Mine
Development Associates, Reno Nevada. Mr. Graeme is a member of the
American Institute of Mining, Metallurgical and Petroleum Engineers
("AIME").
<PAGE>
Stuart Havenstrite, a Director of the Company, has been the owner and
sole employee of HMS Company, a geological and management company
located in Sandy, Utah. Mr. Havenstrite is graduated from Stanford
University with a B.S. Degree in Geology. Mr. Havenmstrite is a member
of AIME. Mr. Havenstrite is the father of Rick Havenstrite.
Rick Havenstrite, a Director of the Company, has been the Manager of
the Company's OK copper project since joining the Company in 1997.
From 1996 until joining the Company Mr. Havenstrite was the Vice-
President of Operations for Centurion Mines Corporation and the
manager of the OK copper project. From 1992-1996 Mr. Havenstrite was
employed by Arimetco, Inc. as the General Manager of the Yerington
Project. Mr. Havenstrite was responsible for permitting, geology,
engineering, construction and operation of this 15 million ton per
year low grade SX/EW copper project. Mr. Havenstrite, a member of AIME
is graduated from the University of Nevada, Reno with a B.A. Degree in
Mine Engineering.
Barry Nimetz, a Director of the Company since 1995, has been employed
by Industry Canada since 1982. Mr. Nimetz is currently Senior Project
manager. His primary duties in such position are the negotiation of
international investment agreements
Kevin Weaver, a Director of the Company since 1995, is a land
developer and since 1992 has been the President of Songhees Retirement
Park and Seicam Management, Victoria, Canada..
Robert Angrisano, a Director of the Company, is graduated from
Portland State University with a degree in business. Mr. Angrisano has
been employed by Microsoft Corp. since 1993. Mr. Angrisano is
currently the Director of Technology for Microsoft.
Beverly J. Bullock, the Corporate Secretary, has been the owner of
VanWest Administrative Services, Ltd., Surrey, B.C. since 1991.
VanWest provides administrative consulting services to private and
public companies.
ITEM 6. EXECUTIVE COMPENSATION.
The Chief Executive Officer of the Company receives no compensation
for his services rendered to the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Monty Moore, a shareholder, officer and director has made advances to
the Company which were outstanding in whole or in part at the year
ended August 31, 1998 in the amount of $CDN 718,606. There is no
written agreement between the Company and Mr. Moore with regard to the
repayment of the monies advanced. The monies have been advanced on an
interest free basis. The monies are expected to be repaid at the point
at which the Company has adequate revenues to make such payments
without restricting the operations of the Company. In the alternative,
<PAGE>
upon approval of Mr. Moore and the Board of Directors, the advances
may be converted to equity. On May 17, 1999 the Company converted
$232,037 of advances to equity at a price of $.18 per share, issuing a
total of 1,289,098 shares of common stock. The terms of the
transaction were approved by the Vancouver Stock Exchange.
There have been no other ransactions or series of transactions, or
proposed transactions during the last two years to which the
registrant is a party in which any director, nominee for election as a
director, executive officer or beneficial owner of five percent or
more of the registrants common stock, or any member of the immediate
family of the foregoing had or is to have a direct or indirect
material interest exceeding $60,000.
The Company's Articles do not prohibit transactions in which the
Company's promoters, management, affiliates or associates directly or
indirectly have an interest. Therefore, there is (always) a "present
potential" that the Company may acquire or merge with a business or
company in which the Company's promoters, management, affiliates or
associates directly or indirectly have an interest, there is however,
no present or contemplated intent that such an event may occur. In the
event that such a transaction was proposed, under the rules of the
Vancouver Stock Exchange, any such transaction would be deemed a
"Major Transaction and would be subject to prior shareholder approval
and the approval of the Vancouver Stock Exchange. In structuring any
such transaction, the directors would be bound by their fiduciary duty
to act in the best interest of the Company's shareholders. In the
event that management's fiduciary duties were compromised any
available remedy under applicable law would likely be prohibitively
expensive and time consuming.
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
------------
The Company is authorized to issue an unlimited number of shares of
its no par value Common Stock. There are presently 28,378,230 shares
issued and outstanding held by approximately 90 shareholders of
record. The terms and price of any private placement of the Company's
shares (including the issuance of stock options) is subject to
approval of the Vancouver Stock Exchange. Any such private placement
would be subject to a maximum discount of 25% from the current market
price with a minimum price of $0.15 per share regardless of the
current market price.
All shares of Common Stock are equal to each other with respect to
voting, liquidation, dividend and other rights. Owners of shares of
Common Stock are entitled to one vote for each share of Common Stock
owned at any Shareholders' meeting. Holders of shares of Common Stock
are entitled to receive such dividends as may be declared by the Board
of Directors out of funds legally available therefor; and upon
liquidation, are entitled to participate pro rata in a distribution of
<PAGE>
assets available for such a distribution to Shareholders. There are
no conversion, preemptive, or other subscription rights or privileges
with respect to any shares. The Common Stock of the Company does not
cumulative voting rights which means that the holders of more than
fifty percent (50%) of the shares voting in an election of directors
may elect all of the directors if they choose to do so. In such
event, the holders of the remaining shares aggregating less than fifty
percent (50%) would not be able to elect any directors.
The Company has never paid any dividends and does not anticipate the
payment of dividends in the foreseeable future.
Stock Options
-------------
At the end of the last fiscal quarter (May 31, 1999), the following
stock options were outstanding:
Expiry Date Exercise Price Number of Shares
--------------------- ---------------------- ----------------
July 20, 2000 0.30 31,075
March 2, 2001 0.30 2,490,895
Subsequent to the end of the nine month period ended May 31, 1999, the
Company issued 74,245 shares at 0.30 per share for the exercise of
options.
Share Purchase Warrants
-----------------------
At the end of the last fiscal quarter, the following share purchase
warrants were outstanding
Expiry Date Exercise Price Number of Shares
--------------------- ---------------------- ----------------
June 4, 2000 $1.00 per share 1,000,000
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS.
The Common Stock of the Company is traded on the Vancouver Stock
exchange under the symbol "NEV". The following table shows the high
and low sales prices for the Common Stock during each quarter since
January 1, 1997. The sales prices are set forth in Canadian dollars.
At August 24, 1999 the U.S. dollar equivalent as quoted in the Wall
Street Journal was $.6683.
Calendar Year High Closing Low Closing
--------------------- ---------------------- --------------------
1997:
First Quarter .64 .37
Second Quarter .52 .30
Third Quarter .60 .23
Fourth Quarter .66 .45
1998:
First Quarter .70 .26
Second Quarter .52 .27
Third Quarter .43 .20
Fourth Quarter .30 .11
1999 At February 17 .15 .15
As of December 31, 1998 there were approximately 90 shareholders of
record of the Company's common stock.
The Company intends to seek a U.S. broker-dealer to make a market in
the Company's common stock. There are no proposals, arrangements or
understandings with any person with regard to the development of a
trading market in any of the Company's securities. To date there have
been no preliminary discussions or understandings with any broker-
dealer and the Company (or anyone acting on its behalf) regarding the
participation of any such market maker in the future trading market
(if any) for the company's securities. The Company may, but to date
has not, retained the services of an independent consultant to assist
the Company in obtaining market makers. There have been no preliminary
discussions or understandings with any consultants regarding providing
such services for the Company.
ITEM 2. LEGAL PROCEEDINGS.
Neither the Registrant not its property is a party to or the subject
of any pending legal proceeding or any contemplated proceeding of a
governmental authority.
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Registrant's two most recent fiscal years and any later
interim periods neither the principal accountant nor a significant
subsidiary's independent accountant on whom the principal accountant
expressed reliance in its report, resigned (or declined to stand for
re-election) or was dismissed.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In May, 1999 the Company issued a total of 2,553,316 shares at a
deemed private of $0.18 per share to settle outstanding debt. All of
the shares are restricted from resale in the United States. With
regard to resales in Canada a total of 305,885 shares will be subject
to a hold period expiring on December 31, 1999 and a total of 958,333
shares will be subject to a hold period expiring on March 15, 2000. A
total of 1,289,098 shares are not subject to a hold period as 12
months have elapsed from the date on which the payment of the debt
became due.
In October, 1998 704,727 shares were sold to an unaffiliated third
party at a deemed price of $0.55 per share pursuant to a shares for
debt transaction.
In April, 1998 the Company offered and sold 578,328 units at a price
of CDN $0.55 per unit to eleven U.S. residents. Each unit consisted of
one share of Common Stock and one non-transferable share purchase
warrant. Each warrant is exercisable for a two year period to purchase
one share of common stock at a price of CDN $0.55 per share if
exercised during the first year and at a price of CDN $0.70 per share
if exercised during the second year.
In February, 1997 the Company offered and sold 550,000 units at a
price of CDN $0.50 per unit to six U. S. residents. Each unit
consisted of one share of Common Stock and one non-transferable share
purchase warrant. Each warrant is exercisable for a two year period to
purchase one share of common stock at a price of CDN $0.50 per share
if exercised during the first year and at a price of CDN $0.575 per
share if exercised during the second year.
In May, 1996 the Company offered and sold 224,000 units at a price of
CDN $0.50 per unit to three U. S. residents. Each unit consisted of
one share of Common Stock and one non-transferable share purchase
warrant. Each warrant is exercisable for a two year period to purchase
one share of common stock at a price of CDN $0.50 per share if
exercised during the first year and at a price of CDN $0.58per share
if exercised during the second year. The President of the Company
purchased 182,600 of the 224,000 shares sold to U.S. residents.
Each of the above offerings was made pursuant to exemptions from
registration under the Securities Act of 1933, as amended, pursuant to
Sections 3(b) and 4(2) and Regulation D promulgated thereunder. Each
of the certificates issued in connection with the above offerings
contained restrictive language on its face and each certificate had a
restrictive legend in substantially the following form:
<PAGE>
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to an
exemption from registration under the Act, the availability of which
is to be established by opinion of counsel satisfactory to the Company
to the effect that in the opinion of such counsel such registration in
not required
None of the shares were offered by means of advertising or general
solicitation. No commissions were paid directly or indirectly to any
person in connection with the offer or sale of any of the securities
to U.S. residents.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 68 of the Company's Articles provides that:
"The board may cause the Company to provide indemnity by way of
insurance or otherwise to any director, officer, employee or other
person who has taken or is about to undertake any liability on
behalf of the Company or any corporation controlled by it and to
secure such director, officer, employee or other person against loss
by mortgage and charge upon the whole or any part of the real and
personal property of the Company and any action taken by the board
under this paragraph will not require approval or confirmation by
the members."
Section 69 of the Company's Articles provides that:
"No director, officer or employee for the time being of the Company
will be liable for the acts, receipts, neglects or defaults of any
other director, officer or employee, or for joining in any receipt
or act for the sake of conformity, or for any loss, damage or
expense happening to the Company through the insufficiency of
deficiency of title to any property acquired by order of the board
for or on behalf of the Company, or for the insufficiency or
deficiency of any security in or upon which any of the monies of or
belonging to the Company are placed out or invested or for any loss
or damages arising from the bankruptcy, insolvency or wrongful act
of any person, firm or corporation with whom or which any monies,
securities or effects are lodged or deposited or for any other loss,
damage or misfortune whatsoever which may happen in the execution of
the duties of his respective office or trust or in relation thereto
unless the same happens by or through his own wilful neglect or
default."
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the small business issuer pursuant
to the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
<PAGE>
PART F/S
FINANCIAL STATEMENTS
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Financial Statements
August 31, 1998 and 1997
(Canadian Dollars)
INDEX Page
Auditors' Report to the Shareholders
Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations and Deficit
Consolidated Statements of Changes in Financial Position
Consolidated Statements of Investments In and Expenditures
on Resource Properties
Notes to Consolidated Financial Statements
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheets of Nevada Star
Resource Corp. as at August 31, 1998 and 1997 and the consolidated
statements of operations and deficit, changes in financial position
and investments in and expenditures on resource properties for the
years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in Canada which do not differ in any material respects from
auditing standards generally accepted in the United States.
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 August 31, 1998 and 1997 and the results of its
operations, the changes in its financial position and the investments
in and expenditures on resource properties for the years then ended in
accordance with generally accepted accounting principles in Canada.
Accounting principles generally accepted in Canada differ in certain
significant respects from accounting principles in the United States
and are discussed in note 10 to the consolidated financial statements.
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, British Columbia
December 15, 1998, except for note 10(a), (b), (c) and (d)
which are as of July 9, 1999
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Balance Sheets
August 31
(Canadian Dollars)
1998 1997
----------- ------------
Assets
Current
Cash $ 217,524 $ 89,467
Accounts receivable 4,105 1,827
Prepaid expenses 0 313
----------- -----------
221,629 91,607
Investments in and Expenditures on Resource
Properties (notes 3 and 4) 5,946,032 3,310,715
Capital Assets (note 5) 5,573 7,190
----------- -----------
$ 6,173,234 $ 3,409,512
=========== ===========
Liabilities
Current
Accounts payable $ 18,148 $ 11,658
Loan payable (note 9(a)) 387,600 0
Subscription payable 381,129 0
Due to shareholder (note 7) 718,606 400,077
----------- -----------
1,505,483 411,735
----------- -----------
Shareholders' Equity
Capital Stock (note 6) 9,704,111 6,367,317
Deficit (5,036,360) (3,369,540)
----------- -----------
4,667,751 2,997,777
----------- -----------
$ 6,173,234 $ 3,409,512
=========== ===========
Approved on behalf of the Board:
---------------------------------- ------------------------------
Director Director
Monty Moore Richard W. Graeme
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Statements of Operations and Deficit
Years Ended August 31
(Canadian Dollars)
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
General and Administrative Expenses
Consulting $ 55,155 $ 55,398 $ 62,169
Property management 47,055 0 0
Professional fees 31,852 21,235 15,343
Office and miscellaneous 21,597 15,374 25,299
Transfer agent fees 13,771 5,250 5,300
Shareholder relations 11,489 15,385 90,021
Listing and filing fees 10,937 9,003 10,515
Property examinations 8,737 3,423 117,218
Travel 7,668 19,944 21,755
Telephone 5,511 8,060 20,164
Bank charges and interest 1,165 983 929
Directors' meeting fees 860 1,743 1,542
Rent 0 23,979 30,623
Management fees 0 12,000 36,500
Debenture interest 0 0 48,443
Finder's fee 0 0 32,850
Amortization 1,617 2,117 3,176
----------- ----------- -----------
217,414 193,894 521,847
Other Items
Loss on abandonment of mineral
properties 1,459,495 439,455 60,293
Loss (gain) on translation of
foreign currencies (7,471) 18,588 6,127
Interest income (2,618) (1,276) (8,145)
----------- ----------- -----------
Net Loss for Year 1,666,820 650,661 580,122
Deficit, Beginning of Year 3,369,540 2,718,879 2,138,757
----------- ----------- -----------
Deficit, End of Year $ 5,036,360 $ 3,369,540 $ 2,718,879
=========== =========== ===========
Loss Per Share $ 0.09 $ 0.04 $ 0.04
=========== =========== ===========
Weighted Average Number of
Common Shares Outstanding 19,291,567 16,410,919 13,090,425
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Statements of Changes in Financial Position
Years Ended August 31
(Canadian Dollars)
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash Provided By (Used In) Operating
ActivitiesNet loss $(1,666,820) $ (650,661) $ (580,122)
Items not involving cash
Amortization 1,617 2,117 3,176
Loss on abandonment of mineral
properties 1,459,495 439,455 60,293
----------- ----------- -----------
(205,708) (209,089) (516,653)
----------- ----------- -----------
Changes in Non-Cash Working Capital
Accounts receivable (2,278) 1,681 503
Prepaid expenses 313 1,750 5,300
Accounts payable 6,490 (37,291) (47,533)
Subscriptions payable 381,129 0 0
Loan payable 387,600 0 0
Advances from shareholders 318,529 167,176 60,391
----------- ----------- -----------
1,091,783 133,316 18,661
----------- ----------- -----------
886,075 (75,773) (497,992)
----------- ----------- -----------
Investing Activities
Acquisition of mineral properties (2,182,744) (765,933) (140,038)
Deferred exploration and develop-
ment costs (1,912,068) (278,258) (490,617)
----------- ----------- -----------
(4,094,812) (1,044,191) (630,655)
----------- ----------- -----------
Financing Activities
Convertible debenture 0 0 (1,278,340)
Issuance of shares
- for cash 1,240,544 610,740 1,144,314
- for mineral properties 2,096,250 0 11,500
- for debt settlement 0 228,928 1,356,783
----------- ----------- -----------
3,336,794 839,668 1,234,257
----------- ----------- -----------
Increase (Decrease) in Cash 128,057 (280,296) 105,610
Cash, Beginning of Year 89,467 369,763 264,153
----------- ----------- -----------
Cash, End of Year $ 217,524 $ 89,467 $ 369,763
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Statements of Investments In and Expenditures on
Resource Properties
Years Ended August 31
(Canadian Dollars)<TABLE>
<CAPTION>
Rainier OK/
Forty-Seven Eagle (La Cienega) La Virgen Gold Hill BeaverLake
Creek Project (Rio Yaqui) Property, Property, Property, Property,
Alaska Claims, Mexico Mexico Mexico Nevada Utah Total
------------- -------------- ------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1996 $ 439,211 $ 197,033 $ 1,656,666 $ 106,124 $ 305,951 $ 0 $ 2,704,985
----------- ------------ ----------- ---------- ---------- ---------- -----------
Expenditures for 1997
Acquisition costs 0 0 0 698,933 67,000 0 765,933
Labour 0 614 3,959 54,745 3,564 0 62,882
Financing 0 0 0 25,313 0 0 25,313
Property tax 0 351 45,592 7,011 0 0 52,954
Travel 0 0 731 27,955 6,782 0 35,468
Accommodation and meals 0 0 1,832 10,196 3,057 0 15,085
Recording fee 0 0 0 0 49,711 0 49,711
Consulting 0 0 0 7,500 3,345 0 10,845
Supplies 0 0 626 3,070 983 0 4,679
Assays 0 0 0 15,771 0 0 15,771
Miscellaneous 0 0 904 2,857 572 0 4,333
Storage 0 0 0 0 1,967 0 1,967
Loss on abandonment
of property (439,211) 0 0 0 0 0 (439,211)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(439,211) 965 53,644 853,351 136,981 0 605,730
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, August 31, 1997 0 197,998 1,710,310 959,475 442,932 0 3,310,715
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenditures for 1998
Acquisition costs 0 0 0 0 4,739 2,178,006 2,182,745
Labour 0 0 414 70,147 0 169,135 239,696
Financing 0 0 0 0 0 0 0
Property tax 0 374 100,011 56,059 0 0 156,443
Travel 0 461 6,008 17,424 0 130,059 153,952
Accommodation and meals 0 165 3,237 3,060 0 56,199 62,661
Recording fee 0 0 0 5,851 0 22,280 28,131
Consulting 0 0 57,153 74,270 0 136,615 268,038
Supplies 0 0 9,465 749 0 102,642 112,857
Assays 0 0 0 18,439 0 256,505 274,944
Miscellaneous 0 38 5,827 9,584 (745) 8,601 23,305
Storage 0 0 0 0 0 43 43
Drilling 0 0 0 244,437 0 236,056 480,493
Legal 0 0 0 0 0 111,504 111,504
Loss on abandonment of
property 0 0 0 (1,459,495) 0 0 (1,459,495)
---------- ---------- ---------- ---------- ---------- ---------- ----------
0 1,038 182,115 (959,475) 3,994 3,407,645 2,635,317
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, August 31, 1998 $ 0 $ 199,036 $1,892,425 $ 0 $ 446,926 $3,407,645 $5,946,032
========== ========== ========== ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
1. NATURE OF OPERATIONS
The Company was incorporated under the laws of British Columbia
and was continued into the Yukon Territory of Canada in 1998.
The principal business activity is the exploration and
development of natural resource properties.
These consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Nevada Star
Resource Corp. (U.S.), a Nevada corporation, and Nevada Star
Resource de Mexico, S.A. de C.V., a wholly-owned subsidiary of
Nevada Star Resource Corp. (U.S.). All significant intercompany
balances and transactions have been eliminated.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Investments in and expenditures on resource properties
Acquisition costs of mineral properties, rights and options
together with direct exploration and development expenditures
thereon are deferred in the accounts on a property-by-
property basis. The expenditures related to a property from
which there is production, together with the costs of
production equipment, will be depleted and depreciated using
the unit-of-production method based upon the estimated proven
reserves. When there is little prospect of further work on a
property being carried out by the Company or when minerals
cannot be economically removed due to the current market
price of the minerals, the costs of the property are charged
to operations.
(b) Amortization
Amortization of capital assets is calculated on a declining
balance basis at the following annual rates:
Office equipment - 20%
Computer equipment - 30%
(c) Financial instruments
The Company's financial instruments consist of cash, accounts
receivable, accounts payable, loan payable, subscription
payable and due to shareholder. It is management's opinion
that the Company is not exposed to significant interest,
currency or credit risks arising from these financial
instruments. The fair value of these financial instruments
approximate their carrying value, unless otherwise noted.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(d) Loss per share
Loss per share computations are based on the weighted average
number of common shares outstanding during the year.
(e) Foreign Currency Translation
Amounts recorded in foreign currency are translated into
Canadian dollars as follows
(i) Monetary assets and liabilities at the rate of
exchange in effect as at the balance sheet date;
(ii) Non-monetary assets at the exchange rates prevailing
at the time of the acquisition of the assets; and,
(iii) Revenues and expenses (excluding amortization which is
translated at the same rate as the related asset), at
the average rate of exchange for the year.
Gains and losses arising from this translation of foreign
currency are included in net loss.
3. REALIZATION OF ASSETS
The Company's investments in and expenditures on resource
properties comprise significantly all of the Company's assets.
Realization of the Company's investments in and expenditures on
these properties is dependent on the attainment of successful
commercial production or from the proceeds of their disposal.
4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES
(a) Forty-Seven Creek Project, Alaska
By a Letter of Agreement dated October 2, 1991, the Company
has the right to earn a 50% interest in sixty-three (63)
mineral claims located in the Kuskokwim District, State of
Alaska, for consideration of
- $10,000 U.S. (paid) on acceptance of the Agreement by
regulatory authorities;
- 200,000 shares of the capital stock of the Company to be
issued as to 50,000 shares on acceptance of the Agreement
by regulatory authorities (issued at a deemed price of
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(a) Forty-Seven Creek Project, Alaska, Continued
$0.23 per share), and 50,000 shares at the end of each of the
three phases of recommended work programs. At August 31,
1997, three work phases were completed and all shares were
issued.
In addition, a finder's fee was payable on the acquisition
totalling 25,000 shares of the Company's capital stock.
10,000 shares were issued in fiscal 1994 at a deemed price of
$0.23 per share on acceptance of the Agreement by regulatory
authorities and 5,000 shares were to be issued at the end of
each of the three phases of recommended work programs. The
issuance of the 15,000 shares resulting from the completion
of three work phases has not been done due to a dispute over
work performed by the Finder.
The expenditures on this property have been charged to
operations in the 1997 fiscal year as there is no intention
to perform any further work on this property.
(b) Eagle (Rio Yaqui) Claims, Sonora, Mexico
By a Letter of Agreement dated October 29, 1992 (as amended)
the Company may earn a 100% interest (subject to a 2% net
smelter returns royalty) in the rights to extract gold from
mining claims known as Eagle, Eagle I, Eagle II, and Yaqui
located in the Soyopa and Onaves mining districts, State of
Sonora, Mexico. Consideration consists of
- a cash payment of $95,500 U.S. for reimbursement of the
vendor's out-of-pocket costs (paid).
- the issuance of 200,000 shares of the Company's capital
stock as follows: 50,000 shares upon the acceptance of the
Agreement by regulatory authorities (issued in fiscal 1994)
and 50,000 shares each at the time of filing of the next
three engineers reports recommending work programs of
minimum $25,000 U.S. each on the project. The first work
program was completed in fiscal 1995 and 50,000 shares were
issued.
Deferred exploration and development expenditures of $48,110
have been incurred to date by the Company on the property.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(c) Rainier (La Cienega) Property, Sonora, Mexico
By an agreement dated February 28, 1994 between the Company
and Pacific Rainier de Mexico ("PRM"), the Company can earn a
90% interest in mining claims known as the Rainier 1 through
Rainier 6 located in the Golden Triangle District, State of
Sonora, Mexico. Consideration will be repayment of
substantiated costs of $913,099 U.S. expended to date by PRM
on the property, and the issuance of 1,400,000 shares of the
Company when a mine is developed and commences production
provided that an independent valuation report confirms a net
present value (net of all costs and previous consideration)
for the 90% interest of at least $1,190,000 Cdn. This is a
non-arm's length transaction. The out-of-pocket costs of
$913,099 U.S. were settled by the issuance of a two-year
convertible debenture bearing interest at 6% and convertible
at $0.85 Cdn. per share in the first year and at $0.98 Cdn.
per share in the second year. Exchange in the conversion is
fixed at $1.40 Cdn. for $1.00 U.S. The debenture was
converted into 1,596,215 shares at $0.85 Cdn. per share in
fiscal 1996.
By an amended agreement with KLS in 1995, KLS will earn a 50%
interest in the Rainier (La Cienega) Property. To earn this
interest, KLS must pay to PRM $90,000 U.S. in holding costs,
one-half in cash and one-half in KLS stock. In addition, KLS
must pay $120,000 U.S. of the total $150,000 U.S. advance
royalty owing on the Ryan Lode project should the pre-
feasibility study prove positive. The Company will be
required to pay the remaining $30,000 U.S. at this time.
Upon payment of the $120,000 U.S. for the Ryan Lode Project
and payment of the $90,000 U.S. to PRM, KLS will have earned
its 50% interest in the Rainier (La Cienega) Property claims.
KLS did not complete their portion of the agreement to this
point, consequently they lost their interest in the Rainier
(La Cienega) property.
Deferred exploration and development expenditures of $427,319
Cdn. have been incurred to date by the Company on the
property.
The Company owns 100% right, title and interest in and to
Mineral Concession #199518 La Esperanza within the Rainier II
claim, Sonora State of Mexico. The property was acquired on
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(c) Rainier (La Cienega) Property, Sonora, Mexico, Continued
June 6, 1994 by issuing 100,000 shares of the Company (deemed
value $80,000), payment of $9,809 U.S. cash and the retention
by Edward Ingham of a 2% net smelter return.
The Company owns 100% right, title and interest in and to
Mineral Concession #199397 La Japonesa within the Rainier I
claim, Sonora State of Mexico. The property was acquired on
June 6, 1994 by issuing 100,000 shares of the Company (deemed
value $80,000), payment of $8,649 U.S. cash and the retention
by Donald Randolph of a 2% net smelter return.
(d) La Virgen, Michoacan, Mexico
On June 12, 1996, the Company signed an option to acquire a
copper oxide property consisting of 1,500 acres of Mexican
mining claims controlled by Minera Virgo SA de C.V. under a
renewable 25 year mining exploration license granted to
Minera Virgo in December, 1990.
The agreement provides for a total of $3 million U.S. to be
paid to Minera Virgo over a 3.5 year period and a 3% net
smelter royalty on production of the first 50 million pounds
of copper as follows:
Payment (U.S.) Due date
-------------- -----------------
$ 25,000 Paid
250,000 Paid
225,000 Paid
500,000 February 19, 1998
1,000,000 February 19, 1999
1,000,000 February 19, 2000
----------
$3,000,000
==========
The royalty escalates as additional copper is discovered and
produced and is capped at 7% after 300 million pounds of
copper have been produced.
During 1996, the Company paid Minera Virgo $25,000 U.S. for
an exclusive 75 day option on the property, during which time
the Company conducted its due diligence review. Subsequent
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(d) La Virgen, Michoacan, Mexico, Continued
In the event the Company arranged plant financing, estimated
at $5 million U.S. and the plant was 75% complete as
confirmed by an independent engineer, all of the unissued
common shares and share purchase warrants were to be issued
to the finder.
Since the property acquisition payment due on February 19,
1998 was not paid, the Company is in default and loses all
rights to the claims, consequently all expenditures on this
property have been charged to operations in the 1998 fiscal
year.
(e) Gold Hill Property, Nevada
By an amended agreement dated September 26, 1997 between the
Company and Everett L. Manley (the "Vendor"), the Company has
an option to purchase 53 mining claims in the Round Mountain
Mining District, Nye County, Nevada located four miles north
of Round Mountain in consideration of $1,010,000 U.S. over
10 1/2 years in annual payments on October 1, $25,000 in each
of 1997, 1998, 1999, $50,000 in each of 2000 and 2001, $100,000
in each of 2002 and 2003, $140,000 in 2004 and $200,000 in
each of 2005 and 2006.. As at August 31, 1998, the Company
had paid $130,000 U.S. to the Vendors.
By an amended agreement dated June 2, 1998 between the
Company and Hagel Augen, the latter will earn a 100% working
interest in the Gold Hill Property. Hagel Augen is committed
to the following payments and investments on the property:
- a cash payment of $53,000 U.S. (paid) upon execution of the
agreement.
- a cash investment of $147,000 U.S. in the property which
includes 1998 property maintenance payments on or before
December 31, 1998.
- a cash investment of $400,000 U.S. in the property which
includes 1999 property maintenance payments on or before
December 31, 1999.
- a cash investment of $500,000 U.S. in the property which
includes year 2000 property maintenance payments on or
before December 31, 2000.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(e) Gold Hill Property, Nevada, Continued
- a cash investment of $500,000 U.S. in the property which
includes year 2001 property maintenance payments on or
before December 31, 2001.
- a cash investment of $500,000 U.S. in the property which
includes year 2002 property maintenance payments on or
before December 31, 2002.
- a cash investment of $500,000 U.S. in the property which
includes year 2003 property maintenance payments on or
before December 31, 2003.
Deferred exploration and development expenditures of $306,766
have been incurred to date by the Company on the property.
(f) OK Copper Mine, Utah
By an agreement dated November 7, 1997 between the Company
and Centurion Mines Corporation (the "Vendor"), the Company
purchased copper properties in four townships in Beaver
County, Utah. Consideration is the issuance of 2 million
common shares of the Company (issued). The vendor also
retains a 12% net profits interest to apply to all copper
production coming from any claims. Deferred exploration and
development expenditures of $1,229,639 have been incurred to
date by the Company on the property.
A finder's fee of 150,000 shares at a price of $0.65 Cdn. was
paid in fiscal 1998.
(g) Beaver Lake, Utah
By an agreement dated November 4, 1997 between the Company
and Cortex Mining & Exploration Co. Inc. (the "Vendor"), the
Company purchased mining claims in Beaver County, Utah.
Consideration is 2 million common shares of the Company
issued in two tranches: one million shares upon closing
(issued) and another one million upon the Company's
successful completion of a favourable feasibility study or
upon commencement of commercial production. The Vendor also
retains a 2% net smelter return royalty which will not exceed
3 million dollars (U.S.) in aggregate. The Company also
granted Cortex one million warrants for the Company's common
shares exercisable at $1.00 per share.
A finder's fee of 75,000 shares at a price of $0.65 Cdn. each
was paid in fiscal 1998.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
5. CAPITAL ASSETS
1998
------------------------------
Accumulated
Cost Depreciation Net
------- ------------ -------
Office equipment $15,021 $10,701 $ 4,320
Computer equipment 6,234 4,981 1,253
------- ------- -------
$21,255 $15,682 $ 5,573
======= ======= =======
1997
------------------------------
Accumulated
Cost Depreciation Net
------- ------------ -------
Office equipment $15,021 $ 9,621 $ 5,400
Computer equipment 6,234 4,444 1,790
------- ------- -------
$21,255 $14,065 $ 7,190
======= ======= =======
6. CAPITAL STOCK
(a) Authorized
100,000,000 Common shares without par value
(b) Issued
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
Number Number
of Shares Amount of Shares Amount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance, Beginning of Year 17,421,685 $6,367,317 15,647,182 $5,527,649
Issued during year
For cash, private placements 1,013,418 557,380 1,135,417 565,000
For cash on exercise of share
purchase options 1,293,823 509,530 80,000 32,240
For cash on exercise of share
purchase warrants 507,812 189,299 42,188 13,500
For resource property
acquisition (note 4(f)(g)) 3,000,000 1,950,000 0 0
For finder's fee 225,000 146,250 100,000 58,000
For settlement of debt 0 0 416,898 170,928
Listing costs 0 (15,665) 0 0
---------- ---------- ---------- ----------
6,040,053 3,336,794 1,774,503 839,668
---------- ---------- ---------- ----------
Balance, End of Year 23,461,738 $9,704,111 17,421,685 $6,367,317
========== ========== ========== ==========
</TABLE>
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
6. CAPITAL STOCK, CONTINUED
(c) At August 31, the following share purchase options were
outstanding
Number of Shares
Exercise --------------------
Expiry Date Price 1998 1997
------------------- --------------- --------- ---------
March 6, 1998 $0.40 0 620,030
June 3, 1998 $0.58 0 514,108
December 21, 1998 $0.22 150,000 150,000
March 12, 1999 $0.55 215,040 240,040
November 20, 1999 $0.64 430,855 0
July 20, 2000 $0.49 1,550,279 0
(d) At August 31, the following share purchase warrants were
outstanding
Number of Shares
Exercise --------------------
Expiry Date Price 1998 1997
------------------- --------------- --------- ---------
November 10, 1997 $ 0.37 year 2 0 507,812
April 16, 1998 $ 0.58 year 2 0 1,000,000
September 16, 1998 $ 0.55 year 2 135,417 135,417
June 4, 1998 $ 1.50 year 1 0 100,000
February 15, 1999 $ 0.70 year 1 1,013,418 0
February 19, 1999 $ 0.575 year 2 1,000,000 1,000,000
June 4, 2000 $ 1.00 year 1 1,000,000 0
7. RELATED PARTY TRANSACTIONS
Related party transactions consist of the following
(a) Management fees of $Nil (1997 - $12,000; 1996 - $36,500) paid
to directors, officers and shareholders. Directors' fees of
$2,600 were paid in 1998.
(b) Office and miscellaneous expense includes $Nil (1997 -
$6,000; 1996 - $18,000) paid to a director for secretarial
services.
(c) Consulting fees of $32,500 (1997 - $30,000; 1996 - $30,000)
paid to an officer.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
7. RELATED PARTY TRANSACTIONS, CONTINUED
(d) An option to acquire a 100% interest in the Eagle (Rio Yaqui)
Claims (note 4(b)) and an agreement to acquire a 90% interest
in the Rainier claims in Mexico (note 4(c)) are both from a
director and officer.
(e) Investment in and expenditures on resource properties
includes $77,735 (1997 - $30,538; 1996 - $45,795) paid in the
year to directors and/or Companies controlled by directors
for geological consulting services and labour.
(f) A shareholder and director has made advances to the Company
which were outstanding in whole or in part at the year-end in
the amount of $718,606 (1997 - $400,077, 1996 - $238,320).
These advances are non-interest bearing.
8. INCOME TAX LOSSES
The Company has operating losses which may be carried forward to
apply against future years' income for Canadian income tax
purposes. The tax effect has not been recorded in the financial
statements. These losses expire as follows:
Available to 1998 1997
------------ ---------- ----------
1998 $ 0 $ 161,000
1999 245,000 245,000
2000 184,000 184,000
2001 211,000 211,000
2002 338,000 338,000
2003 321,000 321,000
2004 214,000 214,000
2005 204,000 0
---------- ----------
$1,717,000 $1,674,000
========== ==========
9. SUBSEQUENT EVENTS
Subsequent to August 31, 1998:
(a) the Company issued 704,727 shares at a price of $0.55 per
share for settlement of a loan payable of $387,600.
(b) 1,165,214 share purchase options were exercised at a price of
$0.49 per share for proceeds of $570,955.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)
(a) Exploration expenditures
Under Canadian GAAP acquisition costs and exploration
expenditures are capitalized (note 2(a)).
Under US GAAP, exploration expenditures are expensed as
incurred until commercial feasibility thereof is established.
Commercial feasibility is established in compliance with
Industry Guide 7. After an area of interest has been
assessed as commercially feasible, expenditures specific to
the area of interest for further development are capitalized.
In deciding when an area of interest is likely to be
commercially feasible, management may consider, among other
factors, the results of prefeasibility studies, detailed
analysis of drilling results, the supply and cost of required
labour and equipment, and whether necessary mining and
environmental permits can be obtained.
Under US GAAP, mining projects and properties are reviewed
for impairment whenever events or changes in circumstances
indicate that the carrying amount of these assets may not be
recoverable. If estimated future cash flows expected to
result from the use of the mining project or property and its
eventual disposition are less than the carrying amount of the
mining project or property, an impairment is recognized based
upon the estimated fair value of the mining project or
property. Fair value generally is based on the present value
of estimated future net cash flows for each mining project or
property, calculated using estimated mineable reserves and
mineral resources based on engineering reports, projected
rates of production over the estimated mine life, recovery
rates, capital requirements, remediation costs and future
prices considering the Company's hedging and marketing plans.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP), CONTINUED
(a) Exploration expenditures, Continued
The effect on the statements of operations, shareholders'
equity and loss per share figures are set out below:
<TABLE>
<CAPTION>
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Canadian Dollars
Statement of Operations for the
Year Ended August 31
Reconciliation of net loss from
Canadian GAAP to US GAAP
Net loss per Canadian GAAP $(1,666,820) $ (650,661) $ (580,122)
Acquisition of mineral properties (2,182,744) (765,933) (140,038)
Deferred exploration and
development costs (1,912,068) (278,258) (490,617)
----------- ----------- -----------
Net loss per U.S. GAAP $(5,761,632) $(1,694,852) $(1,210,777)
=========== =========== ===========
Balance Sheet as at August 31
Shareholders' equity per
Canadian GAAP $ 4,667,751 $ 2,997,777 $ 2,808,770
Adjustment to US GAAP
Acquisition cost and exploration
costs on resource properties (5,946,032) (3,310,715) (2,704,985)
----------- ----------- -----------
Shareholders' equity (deficit)
per U.S. GAAP $(1,278,281) $ (312,938) $ 103,785
=========== =========== ===========
Loss per share in accordance
with U.S. GAAP $ (0.30) $ (0.10) $ (0.09)
=========== =========== ===========
</TABLE>
(b) Statement of changes in financial position
The Statement of Changes in Financial Position have been
prepared in accordance with Canadian GAAP.
Under Canadian GAAP, cash and equivalents is defined as cash
net of short-term borrowings. Under U.S. GAAP, short-term
borrowings are considered a financing activity.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP), CONTINUED
(b) Statement of changes in financial position, Continued
Under U.S. GAAP, financing and investing activities that do
not result in cash flow would be excluded from the Statement
of Changes in Financial Position and disclosed separately.
The following items that are included in the Statement of
Changes in Financial Portion would be disclosed separately
under U.S. GAAP.
<TABLE>
<CAPTION>
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Acquisition of mineral $(2,096,250) $ 0 $ (11,500)
Shares issued for mineral interest 2,096,250 0 11,500
----------- ----------- -----------
$ 0 $ 0 $ 0
=========== =========== ===========
</TABLE>
(c) Recent accounting pronouncements
(i) Earnings per share
In February 1997, the Financial Accounting Standards
Board issued SFAS 128, "Earnings Per Share:, and SFAS
129, "Disclosure of Information about Capital
Structure". SFAS 128, which is effective for fiscal
years ending after December 15, 1997, including
interim periods, requires the presentation of basic
and diluted earnings per share ("EPS"). The Company's
adoption of SFAS 128 for U.S. GAAP purposes results in
no difference in net loss disclosure.
(ii) Income tax
Under Canadian GAAP, the future tax benefit related to
the non-capital loss carry forwards have not been
recorded in the accounts. Under U.S. GAAP, companies
must follow the requirements of Statement of Financial
Accounting Standards No. 109 (SFAS 109) which requires
the use of the asset/liability method for measurement
of tax liabilities, wherein deferred tax assets are
recognized as well as deferred tax liabilities.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements, Continued
Years Ended August 31, 1998 and 1997
(Canadian Dollars)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP), CONTINUED
(c) Recent accounting pronouncements, Continued
The Company has significant non-capital loss
carryforwards (note 8). SFAS 109 would require the
recognition of a long-term tax asset for the future
benefit expected from the application of these
carryforwards to future profitable years. If it is
expected that the entire amount of non-capital loss
carryforwards will not be utilized, then a valuation
allowance is applied to the asset to reasonably state
the asset at its expected value. Under SFAS 109,
disclosure of the amount of the valuation allowance is
required. As at August 31, 1998, the valuation
allowance is equal to 100% of the deferred tax asset.
(iii) Other items
SFAS 130, "Reporting Comprehensive Income" and SFAS
131, "Disclosures About Segments of an Enterprise and
Related Information" were also issued in 1997. These
standards became effective in 1998, expand or modify
disclosures and, accordingly, have no effect on the
Company's consolidated financial position, results of
operations or cash flows.
(d) Stock based compensation
From time to time the Company grants incentive stock options
to officers, directors and consultants. For Canadian
accounting purposes there is no compensation recognition when
the option is granted or exercised.
For U.S.GAAP purposes the Company applies APB Opinion No. 25
and related interpretations in accounting for its stock
option plans and, accordingly, no compensation cost has been
recognized because stock options granted under the plans were
at exercise prices which approximate market value at date of
grant. Compensation expense will be recorded when options
are granted to management at discounts to market.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Financial Statements
May 31, 1999
(Unaudited - Prepared by Management)
INDEX Page
Consolidated Financial Statements
Consolidated Balance Sheet
Consolidated Statement of Operations and Deficit
Consolidated Statement of Changes in Financial Position
Consolidated Statement of Investment In and Expenditures
on Resource Properties
Notes to Consolidated Financial Statements
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Balance Sheet
May 31
(Unaudited - Prepared by Management)
1999 1998
----------- -----------
Assets
Current
Cash and temporary investments $ 27,434 $ 317,243
Accounts receivable 7,271 3,289
Prepaid expenses 0 312
----------- -----------
34,705 320,844
Investment in and Expenditures on Resource
Properties (note 2) 6,812,502 4,474,102
Capital Assets 4,646 5,574
----------- -----------
$ 6,851,853 $ 4,800,520
=========== ===========
Liabilities
Current
Accounts payable $ 107,366 $ 4,324
Subscription payable 22,273 0
Due to shareholders 537,934 553,456
Due to Quadrant 0 328,900
----------- -----------
667,573 886,680
----------- -----------
Shareholders' Equity
Capital Stock (note 3) 11,315,505 7,376,985
Deficit (5,131,225) (3,463,145)
----------- -----------
6,184,280 3,913,840
----------- -----------
$ 6,851,853 $ 4,800,520
=========== ===========
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Statement of Operations and Deficit
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
1999 1998
----------- -----------
Administration Costs
Consulting $ 25,201 $ 42,619
Professional fees 22,290 15,785
Office and miscellaneous 12,257 20,519
Shareholder relations 10,305 6,519
Listing and filing fees 7,527 9,586
Property examination 3,976 8,737
Directors' meeting fees 1,797 860
Capital tax 990 0
Telephone 825 3,909
Bank charges and interest 697 866
Travel 573 6,957
Transfer agent 0 9,724
Amortization 928 1,617
----------- -----------
87,366 127,698
Interest Income (239) (2,278)
Foreign Currencies Exchange Loss 7,738 (31,817)
----------- -----------
Net Loss for Period 94,865 93,603
Deficit, Beginning of Period 5,036,360 3,369,542
----------- -----------
Deficit, End of Period $ 5,131,225 $ 3,463,145
=========== ===========
Loss Per Share $ 0.004 $ 0.005
=========== ===========
Weighted Average Number of Shares
Outstanding 24,830,526 17,870,201
=========== ===========
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Statement of Changes in Financial Position
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
1999 1998
----------- -----------
Cash Used in Operating Activities
Net loss $ (94,865) $ (93,603)
Item not involving cash
Amortization 928 1,617
----------- -----------
(93,937) (91,986)
----------- -----------
Changes in Non-Cash Working Capital
Accounts receivable (3,166) (1,463)
Accounts payable 89,218 (7,334)
Subscription payable (358,856) 0
Advances from Quadrant 0 328,900
Loan payable (387,600) 0
Advances from shareholders (180,672) 153,378
----------- -----------
(841,076) 473,481
----------- -----------
(935,013) 381,495
----------- -----------
Investing Activities
Acquisition of mineral properties (53,563) (17,686)
Deferred exploration and development
costs (812,908) (1,145,701)
----------- -----------
(866,471) (1,163,387)
----------- -----------
Financing Activity
Issuance of shares
- for cash 763,910 1,009,668
- for debt 847,484 0
----------- -----------
1,611,394 1,009,668
----------- -----------
Decrease in Cash (190,090) 227,776
Cash and Temporary Investments, Beginning
of Period 217,524 89,467
----------- -----------
Cash and Temporary Investments,
End of Period $ 27,434 $ 317,243
=========== ===========
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Consolidated Statement of Investments In and Expenditures on Resource
Properties
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
1999 1998
----------- -----------
Balance, Beginning of Period $ 5,946,032 $ 3,310,715
----------- -----------
Expenditures for the Period
Equipment 264,538 0
Drilling 196,784 367,672
Labour 128,523 183,748
Materials and supplies 91,659 43,580
Acquisition costs 53,563 17,686
Assays 50,792 123,932
Geological consulting 48,603 185,861
Recording fees 17,298 37,512
Miscellaneous 4,815 18,461
Travel 4,756 53,626
Legal 3,931 51,416
Storage 1,095 683
Accommodation and meals 113 9,056
Property taxes 0 95,814
Reimburse staking costs 0 (25,660)
----------- -----------
866,470 1,163,387
----------- -----------
Balance, End of Period $ 6,812,502 $ 4,474,102
=========== ===========
See notes to consolidated financial statements.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
The Company is incorporated under the laws of British Columbia
and was continued into the Yukon Territory of Canada in 1998.
The principal business activity is the exploration and
development of natural resource properties.
These unaudited consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Nevada
Star Resource Corp. (U.S.), a Nevada corporation and Nevada Star
Resource de Mexico, S.A. de C.V., a wholly-owned subsidiary of
Nevada Star Resource Corp. (U.S.). All significant intercompany
balances and transactions have been eliminated.
These unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles in Canada for interim financial information. These
financial statements are condensed and do not include all
disclosures required for annual financial statements. The
accounting policies followed by the Company and other information
are contained in the notes to the Company's audited consolidated
financial statements for the year ended August 31, 1998 which
were issued to the shareholders.
In the opinion of the Company's management, these financial
statements reflect all adjustments necessary to present fairly
the Company's consolidated financial position at May 31, 1999 and
1998 and the consolidated results of operations and changes in
financial position for the nine months then ended. The results
of operations for the nine months ended May 31, 1999 are not
necessarily indicative of the results to be expected for the
entire fiscal year.
2. INVESTMENT IN AND EXPENDITURES ON RESOURCE PROPERTIES
(a) Eagle (Rio Yaqui) Claims, Sonora, Mexico
By a Letter of Agreement dated October 29, 1992 (as amended)
the Company may earn a 100% interest (subject to a 2% net
smelter returns royalty) in the rights to extract gold from
mining claims known as Eagle, Eagle I, Eagle II, and Yaqui
located in the Soyopa and Onaves mining districts, State of
Sonora, Mexico. Consideration consists of
- a cash payment of $95,500 U.S. for reimbursement of the
vendor's out-of-pocket costs (paid)
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
2. INVESTMENT IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(a) Eagle (Rio Yaqui) Claims, Sonora, Mexico, Continued
- the issuance of 200,000 shares of the Company's capital
stock as follows: 50,000 shares upon the acceptance of the
Agreement by regulatory authorities (issued in fiscal 1994)
and 50,000 shares each at the time of filing of the next
three engineers reports recommending work programs of
minimum $25,000 U.S. each on the project. The first work
program was completed in fiscal 1995 and 50,000 shares were
issued.
Deferred exploration and development expenditures of $48,110
have been incurred to date by the Company on the property.
(b) Rainier (La Cienega) Property, Sonora, Mexico
By an agreement dated May 31, 1994 between the Company and
Pacific Rainier de Mexico ("PRM"), the Company can earn a 90%
interest in mining claims known as the Rainier 1 through
Rainier 6 located in the Golden Triangle District, State of
Sonora, Mexico. Consideration will be repayment of
substantiated costs of $913,099 U.S. expended to date by PRM
on the property, and the issuance of 1,400,000 shares of the
Company when a mine is developed and commences production
provided that an independent valuation report confirms a net
present value (net of all costs and previous consideration)
for the 90% interest of at least $1,190,000 Cdn. This is a
non-arm's length transaction. The out-of-pocket costs of
$913,099 U.S. were settled by the issuance of a two-year
convertible debenture bearing interest at 6% and convertible
at $0.85 Cdn. per share in the first year and at $0.98 Cdn.
per share in the second year. Exchange in the conversion is
fixed at $1.40 Cdn. for $1.00 U.S. The debenture was
converted into 1,596,215 shares at $0.85 Cdn. per share in
fiscal 1996.
By an amended agreement with KLS in 1995, KLS will earn a 50%
interest in the Rainier (La Cienega) Property. To earn this
interest, KLS must pay to PRM $90,000 U.S. in holding costs,
one-half in cash and one-half in KLS stock. In addition, KLS
must pay $120,000 U.S. of the total $150,000 U.S. advance
royalty owing on the Ryan Lode project should the pre-
feasibility study prove positive. The Company will be
required to pay the remaining $30,000 U.S. at this time.
Upon payment of the $120,000 U.S. for the Ryan Lode Project
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
2. INVESTMENT IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(b) Rainier (La Cienega) Property, Sonora, Mexico, Continued
and payment of the $90,000 U.S. to PRM, KLS will have earned
its 50% interest in the Rainier (La Cienega) Property claims.
KLS did not complete their portion of the agreement to this
point, consequently they lost their interest in the Rainier
(La Cienega) property.
Deferred exploration and development expenditures of $439,915
Cdn. have been incurred to date by the Company on the
property.
The Company owns 100% right, title and interest in and to
Mineral Concession #199518 La Esperanza within the Rainier II
claim, Sonora State of Mexico. The property was acquired on
June 6, 1994 by issuing 100,000 shares of the Company (deemed
value $80,000), payment of $9,809 U.S. cash and the retention
by Edward Ingham of a 2% net smelter return.
The Company owns 100% right, title and interest in and to
Mineral Concession #199397 La Japonesa within the Rainier I
claim, Sonora State of Mexico. The property was acquired on
June 6, 1994 by issuing 100,000 shares of the Company (deemed
value $80,000), payment of $8,649 U.S. cash and the retention
by Donald Randolph of a 2% net smelter return.
(c) Gold Hill Property, Nevada
By an amended agreement dated September 26, 1997 between the
Company and Everett L. Manley (the "Vendor"), the Company has
an option to purchase 53 mining claims in the Round Mountain
Mining District, Nye County, Nevada located four miles north
of Round Mountain in consideration of $1,010,000 U.S. over
10 1/2 years in annual payments on October 1, $25,000 in each
of 1997, 1998, 1999, $50,000 in each of 2000 and 2001, $100,000
in each of 2002 and 2003, $140,000 in 2004 and $200,000 in
each of 2005 and 2006. As at May 31, 1999, the Company has
paid $130,000 U.S. to the Vendors.
By an amended agreement dated June 2, 1998 between the
Company and Hagel Augen, the latter will earn a 100% working
interest in the Gold Hill Property. Hagel Augen is committed
to the following payments and investments on the property:
- a cash payment of $53,000 U.S. (paid) upon execution of the
agreement.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
2. INVESTMENT IN AND EXPENDITURES ON RESOURCE PROPERTIES, CONTINUED
(c) Gold Hill Property, Nevada
- a cash investment of $147,000 U.S. in the property which
includes 1998 property maintenance payments on or before
December 31, 1998.
- a cash investment of $400,000 U.S. in the property which
includes 1998 property maintenance payments on or before
December 31, 1999.
- a cash investment of $500,000 U.S. in the property which
includes year 2000 property maintenance payments on or
before December 31, 2000.
- a cash investment of $500,000 U.S. in the property which
includes year 2001 property maintenance payments on or
before December 31, 2001.
- a cash investment of $500,000 U.S. in the property which
includes year 2001 property maintenance payments on or
before December 31, 2002.
- a cash investment of $500,000 U.S. in the property which
includes year 2001 property maintenance payments on or
before December 31, 2003.
Hagel Augen did not complete their portion of the agreement
to this point, consequently they lost their interest in the
Gold Hill property.
Deferred exploration and development expenditures of $310,159
have been incurred to date by the Company on the property.
(d) OK Copper Mine, Utah
By an agreement dated November 7, 1997 between the Company
and Centurion Mines Corporation (the "Vendor"), the Company
purchased copper properties in four townships in Beaver
County, Utah. Consideration is the issuance of 2 million
common shares of the Company (issued). The Vendor also
retains a 12% net profits interest to apply to all copper
production coming from any claims.
A finder's fee of 150,000 shares at a price of $0.65 Cdn. was
paid in fiscal 1998.
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
2. INVESTMENT IN AND EXPENDITURES ON RESOURCE PROPERTIES (Continued)
(e) Beaver Lake, Utah
By an agreement dated November 4, 1997 between the Company
and Cortex Mining & Exploration Co. Inc. (the "Vendor"), the
Company purchased mining claims in Beaver County, Utah.
Consideration is 2 million common shares of the Company
issued in two tranches: one million shares upon closing
(issued) and another one million upon the Company's
successful completion of a favourable feasibility study or
upon commencement of commercial production. The Vendor also
retains a 2% net smelter return royalty which will not exceed
3 million dollars (U.S.) in aggregate. The Company also
granted Cortex one million warrants for the Company's shares
exercisable at $1.00 per share.
A finder's fee of 75,000 shares at a price of $0.65 Cdn. each
was paid in fiscal 1998.
3. CAPITAL STOCK
(a) Authorized
100,000,000 Common shares without par value
(b) Issued
<TABLE>
<CAPTION>
1999 1998
------------------------ ------------------------
Number Number
of Shares Amount of Shares Amount
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, Beginning of
Period 23,461,738 $ 9,704,111 17,421,685 $ 6,367,317
---------- ----------- ---------- -----------
Issued for cash
Private placement 0 0 1,013,418 557,380
Exercise of share
purchase options 1,584,204 763,910 645,031 262,989
Exercise of share
purchase warrants 0 0 507,812 189,299
Issued for debt
settlement 3,258,043 847,484 0 0
---------- ----------- ---------- -----------
4,842,247 1,611,394 2,166,261 1,009,668
---------- ----------- ---------- -----------
Balance, End of Period 28,303,985 $11,315,505 19,587,946 $ 7,376,985
========== =========== ========== ===========
</TABLE>
<PAGE>
NEVADA STAR RESOURCE CORP.
Notes to Consolidated Financial Statements
Nine Month Period Ended May 31
(Unaudited - Prepared by Management)
3. CAPITAL STOCK, CONTINUED
(c) At May 31, the following share purchase options were
outstanding
Exercise Number
Expiry Date Price of Shares
----------------------------- ------------ ---------
July 20, 2000 $0.30 70,779
March 2, 2001 $0.30 2,490,895
(d) At May 31, the following share purchase warrants were
outstanding
Exercise Number
Expiry Date Price of Shares
----------------------------- ------------ ---------
February 15, 2000 $0.70 year 1 1,013,418
June 4, 2000 $1.00 year 1 1,000,000
4. RELATED PARTY TRANSACTIONS
(a) Consulting fees of $17,500 (1998 - $22,500) paid to an
officer.
(b) An option to acquire a 100% interest in the Eagle (Rio Yaqui)
Claims (note 2(a)) and an agreement to acquire a 90% interest
in the Rainier claims in Mexico (note 2(b)) are both from a
director and officer.
(c) Investment in and expenditures on resource properties
includes $62,253 (1998 - $77,735) paid in the year to
directors and/or Companies controlled by directors for
geological consulting services, labour and travel.
5. SUBSEQUENT EVENTS
Subsequent to the nine month period ended May 31, 1999, the
Company issued 74,245 shares at $0.30 per share for exercising of
options.
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
(1) Underwriting agreement N/A
(2) Plan of acquisition, reorganization arrangement,
liquid, or succession. N/A
(3) (i) Certificate and Memorandum of Incorporation Page
(ii) Articles Page
(iii) Certificate and Articles of Continuance Page
(4) Instruments defining the rights of holders,
including indentures N/A
(5) Opinion re: legality N/A
(6) No exhibit required N/A
(7) [Removed and reserved] N/A
(8) Opinion re: tax matters N/A
(9) Voting trust agreement N/A
(10) Material contracts P
(11) Statement re: computation of per share earnings N/A
(12) No exhibit required N/A
(13) Annual or quarterly reports, Form 10-Q N/A
(14) [Removed and reserved] N/A
(15) Letter on unaudited interim financial information N/A
(16) Letter on change in certifying accountant N/A
(17) Letter on director resignation N/A
(18) Letter on change in accounting principles N/A
(19) Reports furnished to security holders N/A
(20) Other documents or statements to security holders N/A
(21) Subsidiaries of the registrant Page
(22) Published report regarding matters submitted to
vote N/A
(23) Consent of experts and counsel N/A
(24) Power of attorney N/A
(25) Statement of eligibility of trustee N/A
(26) Invitations for competitive bids N/A
(27) Financial Data Schedule Filed Electronically Only
(28) [Removed and reserved]
[Reserved (29) through (98)]
(99) Additional Exhibits N/A
ITEM 2. DESCRIPTION OF EXHIBITS.
Not Applicable
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated this 9th day of September 1999
NEVADA STAR RESOURCE CORP.
By: Monty D. Moore
-------------------------------
Monty D. Moore, President
EXHIBIT 21
----------
Subsidiaries of the Registrant
The Registrant has two wholly owned subsidiaries.
The Company conducts its operations through, Nevada Star Resource
Corp. (U.S.), a Nevada corporation and Nevada Star Resource de Mexico,
S.A. de C.V., a wholly owned subsidiary of Nevada Star Resource Corp.
(U.S.).
EXHBIT 3(i)
-----------
Memorandum of Incorporation
COMPANY ACT
MEMORANDUM
NEVADA STAR RESOURCE CORP.
I wish to be formed into a Company with limited liability under the
Company Act in pursuance of this Memorandum.
1. The name of the Company "NEVADA STAR RESOURCE CORP."
2. The authorized capital of the Company consists of 100,000,000
Common shares without par value.
3. I agree to take the number of shares in the Company set opposite
my name below.
FULL NAME, RESIDENT ADDRESS NUMBER OF SHARES
AND OCCUPATION OF SUBSCRIBER TAKEN BY SUBSCRIBER
One Common Share
Jill Gamley without par value
#9 35 West 3rd Avenue
Vancouver, B.C.V6J lL4
Corporate Records Assistant
TOTAL SHARES TAKEN: One Common Share
without par value
DATED at Vancouver, British Columbia, this 24th day of April, 1987.
EXHIBIT 3.(ii)
--------------
Articles of Nevada Star Resource Corp.
'COMPANY ACT'
ARTICLES
OF
NEVADA STAR RESOURCE CORP.
TABLE OF CONTENTS
PART ARTICLES PAGES
1 DEFINITIONS AND CONSTRUCTION 1 - 3 1
2 SHARE CAPITAL 4 - 8 2
3 REGISTRATION OF MEMBERS AND
SHARE CERTIFICATES 9 - 13 2 - 4
4 TRANSFER AND TRANSMISSION OF
SHARES AND DEBENTURES 14 - 22 4 - 7
5 GENERAL MEETINGS 23 - 41 7 - 11
6 DIRECTORS 42 - 61 11-15
7 MANAGEMENT OF THE COMPANY 62 15
8 BORROWING AND MORTGAGING 63 - 65 15
9 SAFEGUARDING, INDEMNITY, ETC.
OF DIRECTORS 66 - 69 16
10 EXECUTION OF DOCUMENTS 70 - 73 17
11 DIVIDENDS 74 - 80 17
12 NOTICES 81 - 84 18 - 19
<PAGE>
'COMPANY ACT'
ARTICLES
OF
NEVADA STAR RESOURCE CORP.
PART I - DEFINITIONS AND CONSTRUCTION
1. In these Articles, except as the context otherwise requires:
(a) "board" means the board of directors for the time being of
the Company;
(b) "Company Act" means the Company Act (British Columbia) and
regulations thereunder from time to time in force;
(c) "registered address" of a member means the address of the
member as recorded in the Company's register of members;
(d) "registered address" of a director means the address of the
director as recorded in the Company's register of directors;
(e) words or expressions contained in these Articles bear the
same meaning as in the Company Act or any statutory
modification thereof in force on the date on which these
Articles come into effect;
(f) expressions referring to writing include printing,
typewriting, lithography, photography and any other means of
presenting language in visible and lasting form; and
(g) words importing the singular include the plural and vice
versa, words importing a male person include a female, and
words importing an individual include a corporation.
2. If any provision of these Articles is in whole or in part void,
illegal or invalid, the remaining provisions will be construed
and take effect as if every provision or part thereof which so
offends had been omitted.
3. If there is any conflict between the provisions of these Articles
and the Memorandum of the Company, the provisions of the
Memorandum will govern.
PART 2 - SHARE CAPITAL
4. The Company may allot and issue its shares at such times, in such
manner and to such persons, or class of persons, as the directors
determine.
5. The board will determine the price or consideration at or for
which the shares are to be allotted and issued.
6. The Company may by resolution of the board purchase any of its
issued shares.
<PAGE>
7. The Company may by ordinary resolution alter its Memorandum to
increase its authorized capital by:
(a) creating shares with par value or shares without par value
or both;
(b) increasing the number of shares of any class with par value
or shares of any class without par value or both; or
(c) increasing the par value of a class of shares with par
value, if no shares of that class are issued.
8. The Company may, to the extent permitted by law, pay a commission
or allow a discount to any person in consideration of his
subscribing or agreeing to subscribe, whether absolutely or
conditionally, or procuring or agreeing to procure subscriptions,
whether absolute or conditional, for shares in the capital of the
Company.
PART 3 - REGISTRATION OF MEMBERS AND SHARE CERTIFICATES
9. Except as these Articles otherwise provide, the Company and its
directors, officers and agents may treat the registered holder of
a share as the absolute owner thereof, and will not, except as
required by statute or as ordered by a court of competent
jurisdiction, be bound to recognize even when having notice
thereof, any claim to, interest in, or right in respect of such
share on the part of any other person.
10. A share held in the names of two or more persons will be deemed
to be held jointly.
11. Except in the case of the personal representatives of, or
trustees of the estate of, a deceased member, the Company may
refuse to register more than three persons as joint holders of a
share.
12. A share certificate may be delivered to a member entitled thereto
by mailing it by prepaid registered post in the manner provided
in these Articles for the giving of notices, or otherwise as
directed by the member in writing, and neither the Company nor
its transfer agent will be liable for any loss occasioned to a
member or person claiming through a member by reason that a share
certificate so mailed or so otherwise sent is not received by the
addressee.
13. A certificate for a share registered in the names of two or more
persons may be delivered to or to the direction of any one of
them.
<PAGE>
PART 4 - TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES
14. For the purpose of countersigning, issuing, registering,
transferring, canceling and certifying the shares and share
certificates of the Company, the Company may appoint
(a) a registrar;
(b) one or more transfer agents, one of whom may be the
registrar; and
(c) one or more branch transfer agencies and securities
registrars both in and outside British Columbia.
15. For the purpose of these Articles "instrument of transfer" means:
(a) such form of transfer as may appear on the back of the share
certificate representing the share proposed to be
transferred; or
(b) such form of separate transfer document as may from time to
time be in general use.
16. (1) In order to effect a transfer of a share:
a) an instrument of transfer must be executed by the
registered holder of the share, or his attorney duly
authorized in writing;
b) unless the proposed transferee has acquired the share
through a registrant, he will, if not a member, execute
an acknowledgment that he agrees to become a member;
c) the execution of the instrument of transfer and any
acknowledgment must be attested and validated as in
either case the board from time to time reasonably
requires; and
d) the certificate representing the share to be
transferred, the instrument of transfer and the
acknowledgment, if required, will be delivered to the
Company's transfer agent or, if the Company has no
transfer agent, to the records office of the Company.
(2) There shall be a separate instrument of transfer for each
class of shares proposed to be transferred.
(3) When the transfer agent or the Company receives for the
purpose of a proposed share transfer a duly executed
instrument of transfer, the Company and its directors,
officers and agents, will:
(a) where the instrument of transfer designates the
transferee; or
<PAGE>
(b) where the instrument of transfer was executed and is
delivered in blank, and the person by or on whose behalf
the instrument of transfer is delivered designates in
writing a transferee; be entitled to treat the person so
designated as the beneficial owner of:
(c) if the instrument of transfer is endorsed on a share
certificate, the number of shares represented by the
certificate or such lesser number as may be specified in
the instruments of transfer; or
(d) if the instrument of transfer is not so endorsed, such
number of shares registered in the name of the
transferor as are represented by every unendorsed
certificate deposited with the Company or its transfer
agent for the purpose of the transfer, or such lesser
number as may be specified in the instrument of
transfer; and upon compliance with, and subject to all
other provisions of these Articles, the Company will
cause the name of the proposed transferee to be entered
in the register of members of the Company as holder of
each such share.
17. A share may be registered in the name of a person as executor,
administrator, guardian, committee, curator or trustee of, or
otherwise as fiduciary for, a named person, trust or estate, and
(a) where application is made to issue or transfer a share to a
fiduciary, the Company will be obliged to inquire into the
authority of the fiduciary, who will be presumed, as against
the Company, to be acting in accordance with his authority
unless, in the case of a transfer of a share, the transfer
proposed is from the person whose estate or interest is
sought to be represented;
(b) in the case of a transfer by a fiduciary, including a
transfer by a fiduciary to himself, the Company will not be
obligated to inquire into the authority of the fiduciary or
the propriety of the transaction or to ascertain whether the
fiduciary continues to occupy his office at the time of
transfer;
(c) in all cases the Company will be entitled to act on an order
of a court of record, wherever constituted or having
jurisdiction in proceedings to which the registered holder
appears from the order to have been subject, directing a
vesting or declaring the ownership of shares, as evidenced
by a copy of the order of the court certified as such in
accordance with the practice of the court;
(d) any grant of letters probate or letters of administration or
order appointing a trustee, guardian, committee, curator or
directing a vesting or declaring the ownership of shares,
dated not more than one year before the date on which a copy
<PAGE>
of the grant or order, certified in accordance with the
practice of the authority issuing the grant or order, is
received by the Company or its transfer agent, will be
deemed to be in full force and effect and not to have been
amended, revoked or reversed, unless and until there is
delivered to the transfer agent of the Company or, if the
Company has no transfer agent, to the records office of the
Company
(i) a certificate of a court of record appearing to have
the required jurisdiction, certified in accordance
with the practice of such court, that proceedings
have been commenced by way of appeal or otherwise to
amend, revoke or reserve the grant or order, or
(ii) a copy of an order of a court of record appearing to
have the necessary jurisdiction certified as
aforesaid, by which the earlier grant or order is
amended, revoked or reversed; and
(e) any certificate or a court of record, certified as
aforesaid, and delivered to the transfer agent of the
Company or, if the Company has no transfer agent, to the
records office of the Company, to the effect that any grant
or order of that court of the nature described in clause (d)
remains in full force and effect, and has not been amended,
revoked or reversed and that there is not outstanding with
respect to the grant or order any proceeding of the nature
referred to in subclause (d)(i), will create the same
presumption as to the validity of the grant or order as
though the grant or order bore the same date as the
certificate.
18. The Company or its registrar or transfer agent may refuse to
recognize the transfer of a share to an infant, bankrupt or
person suffering mental infirmity.
19. Where a transfer of a share is completed by registration in the
register of members of the Company, the instrument of transfer
and any accompanying acknowledgment will be retained by the
Company or its transfer agent but where the Company declines to
complete a proposed transfer of a share the instrument of
transfer, share certificate and other documentation deposited for
the purpose of the transfer will, on demand, be returned to the
person depositing the same, or other person entitled thereto.
20. There must be paid to the Company or its transfer agent in
respect of the registration of any transfer or transmission such
fee as the board determines.
21. (1) The personal representative of a deceased member (not being
one of several joint holders) will be the only person
recognized by the Company as having any title to a share
registered in the name of the deceased.
<PAGE>
(2) On the death of one of joint registered holders of a share,
the survivor or survivors will be the only person or persons
recognized by the Company as having any title to or interest
in the share.
22. The Company may, if authorized by a debenture or any trust
indenture pursuant to which a registered debenture has been
issued, cause to be kept one or more branch registers of its
debenture holders.
PART 5 - GENERAL MEETINGS
23. General meetings of the Company will be held at such time and
place, in accordance with the Company Act and these Articles as
the board determines.
24. Notice of a meeting is sufficient if it specifies the place, the
day and the hour of the meeting and the general nature of any
business to be considered at the meeting.
25. The accidental omission to give notice of a general meeting to,
or the non-receipt of such notice by, any of the persons entitled
to receive the notice will not invalidate any proceedings of that
meeting or any meeting adjourned therefrom.
26. The quorum for the transaction of business at a general meeting
is two individuals present at the commencement of the meeting
holding or representing by proxy the holder or holders of shares
carrying not less than one-twentieth of the votes eligible to be
cast at the meeting.
27. Unless a quorum is present at the commencement of a general
meeting, no business may be transacted other than the selection
of the chairman and the adjournment or termination of the
meeting.
28. If by half an hour after the time appointed for a general meeting
a quorumis not present, the meeting, if convened upon
requisition, will be terminated, and in any other case will stand
adjourned to the same day in the next week at the same time and
place, or to such later date, other time or other place as the
chairman specifies on the adjournment, and if at the adjourned
meeting a quorum is not present by half an hour after the time
appointed for the meeting, the meeting will then terminate.
29. The chairman of a general meeting will be:
(a) the chairman of the board, if any; or
(b) if there is no such chairman or if he is absent or unwilling
to act,the president; or
(c) so failing the president, a director present chosen by the
directors present; or
<PAGE>
(d) if no such director is chosen and willing to act, any
individual present as a member, proxy holder, or
representative of a corporate member who is duly chosen by
the individuals so present.
30. (1) The chairman may, with the consent of the meeting at which a
quorum is present, and will in pursuance of a resolution to
that effect, adjourn the meeting from time to time and from
place to place, but no business will be transacted at an
adjourned meeting other than the business left unfinished at
the meeting from which the adjournment takes place.
(2) No notice need be given of an adjournment or of the business
to be conducted at an adjourned meeting unless the meeting
is adjourned for more than 31 days, in which case not less
than 10 days' notice of the adjourned meeting must be given.
31. (1) A member entitled to vote at a general meeting may, by means
of a proxy, appoint a proxy holder and such proxy holder
will be entitled to attend, speak, act and vote on a show of
hands and on a poll for the member and on his behalf at the
meeting subject only to any limitation imposed on the
authority of the proxy holder by the proxy.
(2) A proxy must be in writing, dated the date on which it is
executed, must be executed by the member or his attorney
authorized in writing or if the member is a corporation, by
a duly authorized officer or attorney of the corporation
and, if to apply to less than all the shares registered in
the nameof the member, must specify the number of shares to
which it is to apply.
(3) A proxy holder may be appointed to act for a member at every
annual or other general meeting, or at one or more annual or
other general meetings that may be held within such period
of time from the date of the proxy, accordingly as the proxy
specifies.
(4) A proxy will, to the extent that it is inconsistent with
another proxy of an earlier date, be deemed to revoke such
other proxy.
(5) A vote given in accordance with the terms of a proxy is not
invalidated by the previous death, bankruptcy or mental
infirmity of the member giving the proxy unless written
notice of the death, bankruptcy or infirmity is received by
the chairman before the declaration of the result of the
vote.
(6) The board may make regulations providing for the deposit of
proxies at specified places and at specified times before
meetings and adjourned meetings of the Company, and
providing for particulars of such proxies to be cabled or
telegraphed or sent in writing before the meeting or
<PAGE>
adjourned meeting to the Company or to any agent of the
Company appointed for the purpose of receiving such
particulars, and providing that particulars so received will
be as effective as though the proxies themselves were
deposited.
(7) Every proxy may be revoked by an instrument in writing
executed by the member or his attorney authorized in writing
or, where the member is a corporation, by a duly authorized
officer or attorney of the corporation, and delivered to the
records office of the Company at any time up to and
including the last business day preceding the day of the
meeting or any adjournment thereof at which the proxy is to
be used, or to the chairman of the meeting or any
adjournment thereof.
32. A proxy, other than one required by law to be in particular form,
will be substantially in the following form:
"The undersigned hereby appoints ___________________________________,
of ______________________(or failing him ______________________, of as
proxy holder for the undersigned to attend, speak and vote for and on
behalf of the undersigned in respect of all (or _____________________)
shares registered in the name of the undersigned at the general
meeting of the Company to be held on the ________ day of
________________________, 19___, and at any adjournment thereof.
Signed this ______________ day of _____________________________,
(Signature of Member)"
<PAGE>
33. A corporation which is a member and is not a subsidiary of the
Company may, by instrument under the hand of its duly authorized
officer or attorney, appoint a representative who, until his
appointment is in like manner terminated, will be entitled to
attend meetings, act and vote, both on a show of hands and on a
poll, either in person or by proxy, and other wise exercise the
rights of membership of the corporation appointing him and will,
for all purposes in connection with any meeting of the Company
other than the giving of notice, be reckoned as a member holding
the shares registered in the name of such corporation.
34. Any one of the joint holders of a share may vote in respect of
the share at a general meeting, either personally or by proxy
holder, as if he were solely entitled thereto, and if more than
one of the joint holders is present or represented by proxy
holder or corporate representative that one of them whose name
appears first on the register of members in respect of the share,
or his proxy holder or representative, will alone be entitled to
vote in respect thereof.
35. A member for whom a committee has been duly appointed may vote,
whether on a show of hands or on a poll, by his committee and the
committee may appoint a proxy holder.
36. (1) A poll demanded on the election of a chairman or on a
question of adjournment will be taken forthwith and without
an intervening adjournment.
(2) The demand for a poll and the carrying out of a poll will
not, unless the chairman so rules, prevent the continuance
of a meeting for the transaction of business other than that
on which the poll is demanded.
37. On a poll a person entitled to more than one vote need not use
all his votes or cast all the votes he uses in the same way.
38. In the case of an equality of votes, whether on a show of hands
or on a poll, the chairman may exercise a casting vote in
addition to any other vote which he may have exercised.
39. The chairman may move, propose or second a resolution.
40. The chairman of a meeting of shareholders will have regard to
accepted rules of parliamentary procedure, except that
(a) the chairman will have absolute authority over matters of
procedure and there will be no appeal from his ruling, but
if the chairman deems it advisable to dispense with the
rules of parliamentary procedure at any general meeting or
part thereof, he must so state and must state clearly the
rules under which the meeting or the appropriate part
thereof will be conducted;
(b) any dispute as to the admission or rejection of a vote will
be determined by the chairman and his determination will be
final and conclusive;
<PAGE>
(c) if disorder arises which prevents continuation of the
business of the meeting, the chairman may quit the chair and
announce the adjournment of the meeting, and upon his so
doing, the general meeting is, notwithstanding Article 30,
immediately adjourned;
(d) the chairman may require anyone to leave the meeting who is
not a registered shareholder entitled to vote at the meeting
or proxy holder for or corporate representative of such a
shareholder;
(e) a resolution or motion will be considered for vote only if
proposed by a shareholder, proxy holder or representative of
a corporate shareholder and (except for a nomination for
election of directors or appointment of auditors) seconded
by a shareholder, proxy holder, or representative other than
the person who proposed the resolution or motion.
41. The Company by ordinary resolution may from time to time adopt
any Rules of Order which shall, insofar as not inconsistent with
the Company Act or these Articles, govern the conduct of general
meetings.
PART 6 - DIRECTORS
42. The subscribers to the Memorandum shall be the first directors.
The directors to succeed the first directors and the number of
directors may be determined in writing by the subscribers to the
Memorandum. The number of directors may be changed from time to
time by ordinary resolution, at an annual general meeting, or by
special resolution at any other meeting at which directors are to
be elected, but shall never be less than one while the Company is
not a reporting company and three if the Company is or becomes a
reporting company.
43. (1) At each annual general meeting of the Company directors will
be elected to hold office commencing at the termination, or
earlier adjournment, of the meeting at which they have been
elected.
(2) If the number of eligible persons nominated for election as
directors is equal to or less than the number of directors
to be elected, no vote will be required and those nominated
will be deemed elected by acclamation.
(3) A retiring director is eligible for re-election.
44. The office of a director will terminate:
(a) on his resignation;
(b) on his removal from office as provided in the Company Act;
(c) on his ceasing to be qualified as a director under the
Company Act; or
(d) on the adjournment or termination of the annual general
meeting which next follows his election or appointment and
at which a director is elected but he is not elected.
<PAGE>
45. (1) The board may appoint any individual qualified to act as a
director to the board to fill any casual vacancy in the
board.
(2) A vacancy resulting from an increase in the number of
directors will be deemed not to be a casual vacancy unless,
and will be deemed to be a casual vacancy if, the vacancy is
not filled by the shareholders at the meeting at which the
increase is authorized.
(3) Any vacancy on the board that has not been filled by an
appointment made by the board may be filled by an
appointment made by ordinary resolution.
(4) The board may appoint one or more additional directors of
the Company but the number of additional directors so
appointed shall not exceed one-third of the number of
directors elected or appointed at the last general meeting.
46. A person who is not a member who becomes a director is deemed to
have agreed to be bound by the provisions of these Articles to
the same extent as a member.
47. (1) A director will be paid such reasonable travelling, lodging,
subsistence and other expenses as he incurs in or about the
business of the Company.
(2) The remuneration of the directors may from time to time be
fixed by the board subject to any limitations established by
ordinary resolution, and may, in the case of a director who
is also an officer or employee of the Company, be in
addition to any remuneration to which he is entitled as such
an officer or employee.
(3) If a director performs any professional or other service for
the Company that, in the opinion of the board, is outside
the ordinary duties of a director, or if he is otherwise
specially occupied in or about the Company's business, he
may be paid a special remuneration to be fixed by the board
or, at the option of the director, by the Company in general
meeting.
(4) Remuneration of a director payable on a periodic basis will
be deemed to accrue from day to day.
(5) Except as restricted by ordinary resolution, the board may
cause the Company to pay a gratuity, pension or allowance on
retirement to any director who has held any salaried office
or place of profit with the Company, or to his widow or
dependents and may make contributions to any fund for, and
pay premiums for the purchase or provision of, any such
gratuity, pension or allowance.
48. (1) A director (in this Article called "appointor") may appoint
another director as his alternate director.
<PAGE>
(2) An appointment of an alternate will not be effective until
an instrument in writing signed by the appointor, or a
telegram, telecopy, telex or cable dispatched by the
appointor, declaring the appointment, is received by the
Company.
(3) An appointor may revoke an appointment of his alternate by
notice in writing, telegram, telecopy, telex or by cable
delivered to the Company.
(4) The appointment of an alternate terminates if the appointor
or the alternate ceases to be a director.
(5) A director may act as alternate for more than one director
and will be entitled at a meeting of the board to cast one
vote for each director for whom he is the alternate in
addition to the vote to which he is entitled as a director
in his own right.
(6) Unless otherwise determined by the board, an alternate will
not be counted as representing his appointor in determining
whether a quorum is present.
49. The directors may meet together at such places, or convene
meetings by telephone, and adjourn and otherwise regulate their
meetings and proceedings as they see fit.
50. A director may at any time, and the secretary upon the request of
the director will, convene a meeting of the board.
51. (1) Notice of a meeting of the board must be given to each
director at least four days before the time fixed for the
meeting unless a majority of the directors reside outside of
the municipality where the meeting is to be held, in which
case notice shall be given at least seven days before the
time fixed for the meeting.
(2) Notice may be given verbally, personally or by telephone, or
in writing, personally or by delivery through the post, or
telegraph, or by any other means of communication in common
usage.
(3) When notice of A meeting is given to a director other than
personally, it will be addressed to him at his registered
address.
(4) Where the board has established a fixed time and place for
holding regular meetings of the board and holds such a
meeting accordingly, no notice of the next meeting to be so
held need be given to any director.
(5) No notice need be given to a director of a meeting of the
board at which he is appointed or which immediately follows
a general meeting at which he is elected or appointed.
<PAGE>
52. The board may act notwithstanding any vacancy in its body, so
long as the number of directors in office is not reduced below
the number fixed as the quorum of the board.
53. The board may from time to time fix the quorum necessary for the
transaction of business and until so fixed the quorum will be a
majority of the number last determined under Article 42.
54. The chairman of the board, if any, or in his absence or if there
is no chairman of the board, the president, will be chairman of
each meeting of the board, but if at any meeting neither the
chairman of the board nor the president is, within fifteen
minutes after the time appointed for holding the meeting, present
and willing to act, the directors present may choose one of their
number to be chairman of the meeting.
55. A meeting of directors at which a quorum is present is competent
to exercise all or any of the authorities, powers and discretions
for the time being vested in or exercisable by the board
generally.
56. Questions arising at a meeting of the board will be decided by a
majority of votes.
57. In the case of an equality of votes, the chairman will not have a
second or casting vote.
58. A director who is interested in a proposed contract or
transaction or other business to be considered or conducted at a
meeting of the board and who has disclosed his interest in
accordance with the provisions of the Company Act will be counted
in the quorum at any meeting of the board at which the proposed
contract or transaction or such other business is considered,
approved or otherwise acted upon.
59. The board may on such terms as it sees fit, delegate any of its
powers to committees each consisting of one or more directors,
which will function in such manner as the board from time to time
directs.
60. (1) The board will elect annually from among its number an audit
committee to be composed of not fewer than three directors
of whom a majority shall not be officers or employees of the
Company or its affiliates.
(2) The audit committee will review the annual audited financial
statements of the Company before, and will comment thereon
when, such statements are submitted to the board for its
approval.
61. (1) All appointments of officers will be made upon such terms
and conditions and at such remuneration, whether by way of
salary, fee, commission, participation in profits, or
otherwise as the board determines, and every such
<PAGE>
appointment will be subject to termination at the pleasure
of the board, but without prejudice to any right that may
thereby arise under any contract.
(2) The appointment of an officer will not terminate merely by
reason that all or any of the members of the board by which
he was appointed have ceased to be directors at an annual
general meeting or otherwise, unless he has thereby ceased
to hold the qualification for his office.
PART 7 - MANAGEMENT OF THE COMPANY
62. The board may exercise all such powers and do all such acts and
things as the Company may exercise and do and which are not by
these Articles or otherwise lawfully directed or required to be
exercised or done by the Company in general meeting, but subject
nevertheless to the provision of these Articles and all laws
affecting the Company and to any rules, not inconsistent with
these Articles, made from time to time by the Company in general
meeting; but no such rule will invalidate any prior act of the
board that would have been valid if the rule had not been made.
PART 8 - BORROWING AND MORTGAGING
63. The board may from time to time at its discretion authorize
theCompany to borrow any sum of money for the purposes of the
Company and may raise or secure the repayment of such sum or the
performance of any other obligation of the Company in such manner
and upon such terms and conditions in all respects as the board
thinks fit, and without limiting the generality of the foregoing,
by the issue of bonds, debentures, or other instruments, or any
mortgage or charge, whether specific or floating, or other
security on the undertaking of the whole or any part of the
property of the Company, both present and future.
64. The board may make any such bond, debenture, or other instrument,
mortgage or charge, or any other security by its terms assignable
free from any equity between the Company and the person to whom
it is issued, or any other person who lawfully acquires the same
by assignment, purchase or otherwise.
65. The board may authorize the issue of any such bond, debenture, or
other instrument, or mortgage or charge or other security at a
discount, premium or otherwise, and with special or other rights
or privileges as to redemption, surrender, drawings, allotment of
or conversion into or exchange for shares, attendance at general
meetings of the Company, and otherwise as the board determines at
or before the time of issue.
PART 9 - SAFEGUARDING. Indemnity, ETC, OF DIRECTORS
66. A director of the Company may be or become a director or officer
of, or otherwise interested in, any corporation promoted by the
Company or in which the Company is interested, as shareholder or
otherwise, or any corporation which owns or controls shares of
<PAGE>
the Company, and will not be liable to account to the Company for
any remuneration or other benefit received by him as a director
or officer of, or from his interest in, such other corporation.
67. A director may hold any office or place of profit under the
Company in conjunction with his directorship for such period and
on such arrangement as toremuneration and otherwise as the board
determines, and no director or proposed director is disqualified
by that relationship from contracting with the Company either
with regard to his tenure of such other of f ice or place of
profit, or as vendor, purchaser or otherwise, nor is a director
so contracting or being so interested liable to account to the
Company for any profit realized by any such arrangement or
contract, by reason only that the director holds that office or
of the fiduciary relationship thereby established.
68. The board may cause the Company to provide indemnity by way of
insurance or otherwise to any director, officer, employee or
other person who has undertaken or is about to undertake any
liability on behalf of the Company or any corporation controlled
by it and to secure such director, officer, employee or other
person against loss by mortgage and charge upon the whole or any
part of the real and personal property of the Company and any
action taken by the board under this paragraph will not require
approval or confirmation by the members.
69. No director, officer or employee for the time being of the
Company will beliable for the acts, receipts, neglects or
defaults of any other director, officer or employee, or for
joining in any receipt or act for the sake of conformity, or for
any loss, damage or expense happening to the Company through the
insufficiency or deficiency of title to any property acquired by
order of the board for or on behalf of the Company, or for the
insufficiency or deficiency of any security in or upon which any
of the monies of or belonging to the Company are placed out or
invested or for any loss or damages arising from the bankruptcy,
insolvency or wrongful act of any person, firm or corporation
with whom or which any monies, securities or effects are lodged
or deposited or for any other loss, damage or misfortune whatever
which may happen in the execution of the duties of his respective
office or trust or in relation thereto unless the same happens by
or through his own willful neglect or default.
PART 10 - EXECUTION OF DOCUMENTS
70. The board may adopt a common seal for the Company and may, from
time to time, adopt a new common seal and will provide for the
safe custody of the common seal.
71. The Company may have an official seal for use in any other
province, territory, state or country.
72. Neither the common seal nor an official seal will be impressed on
any document or instrument except
<PAGE>
(a) pursuant to the authorization of a resolution of the board,
which authorization may extend to the sealing of a
particular document or instrument, one or more documents and
instruments meeting a description, or to all documents and
instruments to be executed under seal, or
(b) by the secretary or an assistant secretary for the purpose
of certifying copies of or extracts from the Memorandum or
Articles of the Company, minutes of meetings or resolutions
of the shareholders or board or committees of the board or
any instrument executed or issued by the Company.
73. The signature of any officer or director of the Company, that is,
by authority of the board, printed, lithographed, engraved or
otherwise reproducedupon any instrument or document (including
any negotiable instrument) to be signed, executed or issued by
the Company or by any of its officers or directors, and any
instrument or document on which the signature of any such person
is so reproduced, will be as valid as if the signature had been
affixed manually by such person, and will be so valid
notwithstanding that, at the time of the issue or delivery of the
instrument or document, the person whose signature is so
reproduced is deceased, has ceased to hold the office giving rise
to his authority or is otherwise incapacitated from personally
signing such instrument or document.
PART 11 - DIVIDENDS
74. Except as otherwise provided by special rights or restrictions
attached to any shares, all dividends will be declared according
to the number of shares held.
75. Dividends may be paid out of any of the surplus accounts of the
Company.
76. No notice of the declaration of any dividend need be given to any
member, and no dividend will bear interest against the Company.
77. A resolution declaring a dividend may direct payment of the
dividend wholly or partly by the distribution of specific assets
or of paid-up shares,bonds, debentures or debenture stock of the
Company, or in any one or more such ways, and where any
difficulty arises in regard to the distribution, the board may
settle the same as it thinks expedient, and in particular may fix
the value for distribution of specific assets, and may determine
that cash payments shall be made to members upon the footing of
the values so fixed or in lieu of fractional shares, bonds,
debentures or debenture stock, in order to adjust the rights of
all parties, and may vest any such specific assets in trustees
upon such trusts for the persons entitled as may seem expedient
to the board.
78. The Company may retain the dividends payable on a share in
respect of which a fiduciary is entitled to become a member until
the fiduciary becomes the registered holder of such share.
<PAGE>
79. Any dividend or other monies payable in cash in respect of a
share may be paid by check or warrant sent through the post to
the registered holder of the share in like manner as provided in
these Articles for the giving of notices, or to such person and
to such address as the holder or joint holders, as the case may
be, in writing direct.
80. Any one of two or more joint holders may give effectual receipts
for any dividend or other monies payable or assets distributable
in respect of a share held by them as joint holders.
PART 12 - NOTICES
81. A notice may be given or a document delivered by the Company to a
member or director, either personally or by sending it through
the post to him in a prepaid letter, envelope or wrapper
addressed to the member or director at his registered address.
82. Notice may be given or a document delivered by the Company to the
joint holders of a share by giving the notice or delivering the
document to the joint holder first named in the register of
members in respect of the share.
83. A notice may be given or a document delivered by the Company to a
person claiming entitlement to a share in consequence of the
death, bankruptcy or mental infirmity of a member, by sending it
through the post in a prepaid letter, envelope or wrapper
addressed to such person by name, or by suitable title as
representing the deceased, bankrupt or mentally infirm member, at
the address, if any, supplied to the Company for the purpose by
such person, or, until an address has been so supplied, by giving
the notice or delivering the document in any manner in which the
same might have been given or delivered if the death, bankruptcy
or mental infirmity had not occurred.
84. A notice or document sent through the post to or left at the
registered address of a member will, notwithstanding that the
member is then deceased and whether or not the Company or its
agent has notice of his decease, be deemed tohave been duly given
or delivered in respect of any share registered in the name of
the member and will for all purposes of these Articles be deemed
sufficiently given or delivered to his personal representatives
and to any person jointly interested with the member in any such
share.
NAME, ADDRESS AND OCCUPATION OF SUBSCRIBER
JILL GAMLEY
#9 - 2035 W 3rd Avenue
Vancouver, B. C.
V6J lL4
Corporate Records Assistant
DATED the 24th day of April, 1987.
EXHIBIT 3.(iii)
---------------
Certificate and Articles of Continuance
YUKON BUSINESS CORPORATIONS ACT
Justice FORM 3
Certificate of Continuance
NEVADA STAR RESOURCE CORP.
I hereby certify that the above-mentioned corporation was continued
into Yukon, as set out in the attached Articles of Continuance, under
section 190 of the Business Corporations Act.
Corporate Access Number: 26611
Date of Continuance: 1998-06-17 /s/ M. Richard Roberts
Registrar of Corporations
<PAGE>
YUKON BUSINESS CORPORATIONS ACT
(Section 190) Form 3-01
ARTICLES OF CONTINUANCE
1. Name of Corporation.
NEVADA STAR RESOURCE CORP.
2. The classes an any maximum number of shares that the corporation
is authorized to issue
The attached Schedule "A" is incorporated into and forms part of
the Articles of Continuance.
3. Restrictions if any on share transfers:
There are no restrictions on the share transfers.
4. Number (or minimum or maximum number) of Directors:
Not less that three (3), not more than fifteen (15)
5. Restrictions if any on business the corporation may carry on.
The Corporation is restricted from carrying on the business of a
railway, steamship, air transport, canal, telegraph, telephone or
irrigation company.
6. If change of name effected, previous name: NOT APPLICABLE
7. Details of incorporation:
Incorporated on April 29, 1987 under the laws of the Province of
British Columbia under the name Nevada Star Resource Corp.
8. Other provisions if any:
The attached Schedule "B" is incorporated into and form part of
these Articles of Continuance.
9. Date: June 1, 1998
Signature
Title:
Corporate Secretary
FILED
JUNE 17, 1998
DEPUTY REGISTRAR
OF CORPORATIONS
<PAGE>
SCHEDULE "A"
NEVADA STAR RESOURCES CORP.
The classes and any maximum number of share that the Corporation is
authorized to issue:
The Corporation is authorized to issue an unlimited number of shares
without nominal or par value and the authorized capital of the
Corporation is to be divided into:
1. Common shares which have attached thereto the following
preferences, rights, conditions, restrictions, limitation, or
prohibitions:
(a) Voting
Holders of Common shares shall be entitled to vote at any meeting
of the shareholders of the Corporation and have one vote in
respect of each Common share held by them.
(b) Dividends
Holders of Common shares shall be entitled to received, out of all
profits or surplus available for dividends, any dividend declared
by the Corporation on the Common shares.
(c) Participation in Assets on Dissolution
In the event of liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, holders of Common
shares shall be entitled to receive the remaining property of the
Corporation.
SCHEDULE "B"
NEVADA STAR RESOURCES CORP.
Other provisions, if any:
1. A meeting of the shareholders of the Corporation may, in the
directors' unfettered discretion, be held at any location in North
America, South America, Europe and Asia specified by the directors
in the Notice of such meeting.
2. The directors may, between annual general meetings, appoint one of
more additional directors of the Corporation to serve until the
next annual general meeting, but the number of additional
directors shall not at any time exceed one third of the number of
directors who held office at the expiration of the last annual
general meeting of the Corporation, provided that the total number
of directors shall not exceed the maximum number of directors
fixed pursuant to the Articles.
<PAGE>
YUKON BUSINESS CORPORATIONS ACT
(Sections 107, 114, and 290)
Form 1-03
NOTICE OF DIRECTORS AND OFFICERS OR
NOTICE OF CHANGE OF DIRECTORS AND OFFICERS
1. Name of Corporation: NEVADA STAR RESOURCES CORP.
2. Notice is given that on the day of continuance, the following
person(s) were appointed Director(s):
Name Mailing Address
SEE ATTACHED LIST
3. Notice is given that on the day of . . the following person(s)
ceased to hold office as Director(s):
Name Mailing Address
NOT APPLICABLE
4. The officers of the corporation as this date are:
Name Office(s) Held
Monty D. Moore President
Beverly Bullock Secretary
5.
Date
June 1, 1998
Signature
Title:
Corporate Secretary
FILED
JUNE 17, 1998
DEPUTY REGISTRAR
OF CORPORATIONS
<PAGE>
NEVADA STAR RESOURCES CORP.
LIST OF DIRECTORS AS OF CONTINUANCE
Monty D. Moore 10733 Stone Avenue North
Seattle, Washington 98133
Richard W. Graeme 4619 E. Coronado Drive
Tucson, Arizona 85718
Stuart Havenstrite 8111 Malo Drive
Sandy, Utah 84093
Rich Havenstrite 2113 N. Cottontail
Cedar City, Utah 84720
Kevin Weaver 966 Lampson Place
Victoria, B.C. V7M 1P1
Gary Claytens 2404 - 144 W. 14th
North Vancouver, B.C. V7M 1P1
Bary Nimetz 402-30 Charlevoix Street
Vanier, Ontario L1L 8K5
Sashi M. Gupta 110117 Tuxedo Drive
Port Moody, B.C. V3H 1L3
Leo Berezan 11528 Bailey Crescent
Surrey, B.C. V3V 2V3
<PAGE>
YUKON BUSINESS CORPORATIONS ACT
(Section 22) Form 1-02
NOTICE OF ADDRESS OR
NOTICE OF CHANGE OF ADDRESS
1. Name of Corporation: NEVADA STAR RESOURCES CORP.
2. Address of Registered Office:
Preston, Willis & Lackowicz
Barristers & Solicitors
2093 Second Avenue
Whitehorse, Yukon
Y1A 1B5
3. Records Address:
Preston, Willis & Lackowicz
Barristers & Solicitors
2093 Second Avenue
Whitehorse, Yukon
Y1A 1B5
4. Post Office Box (address for service by mail):
Not Applicable
5. Date: June 1, 1998
Signature: Title: Corporate Secretary
FILED
JUNE 17, 1998
DEPUTY REGISTRAR
OF CORPORATIONS
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