FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---------- to ----------.
Commission File Number 2-2274
ALTA GOLD CO.
------------------------------
(Exact Name of Registrant as specified in its charter)
Nevada 87-0259249
(State or other jurisdiction (I.R.S.Employer
of incorporation or organization) Identification Number)
601 WHITNEY RANCH DRIVE, SUITE 10,
HENDERSON, NEVADA 89014
---------------------------------- ------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(702) 433-8525
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
The number of shares outstanding of the Registrant's Common Stock
as of June 30, 1995 was 28,452,780.
ALTA GOLD CO.
INDEX
Page
PART I Financial Information Number
Item 1 Financial Statements
Condensed Balance Sheets as of
June 30, 1995 and December 31, 1994. . . . . . . 3
Condensed Statements of Operations for the
Three Months Ended June 30, 1995 and 1994 . . . 5
Six Months Ended June 30, 1995 and 1994 . . . . 6
Condensed Statements of Cash Flows for the
Six Months Ended June 30, 1995 and 1994. . . . . 7
Notes to Condensed Financial Statements . . . . 9
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations ..12
PART II Other Information
Item 4 Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . .. .15
Item 6 Exhibits and Reports on Form 8-K . . . . . . . .15
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . .16
2
ALTA GOLD CO.
CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,319 $ 471
Short-term investments - 262
Receivables 103 428
Inventories 5,481 3,806
Prepaid expenses and other 547 437
------ ------
Total current assets 7,450 5,404
PROPERTY, BUILDINGS AND EQUIPMENT, net
Mining properties and claims 18,399 18,399
Buildings and equipment 14,533 11,611
Construction in progress - 2,044
------ ------
32,932 32,054
Less - accumulated depreciation ( 6,203)( 5,740)
------- --------
Total property, buildings and equipment, net 26,729 26,314
DEFERRED MINE DEVELOPMENT COSTS, net 7,596 6,308
OTHER ASSETS 522 429
-------- --------
Total assets $ 42,297 $ 38,455
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed balance sheets.
3
ALTA GOLD CO.
CONDENSED BALANCE SHEETS (continued)
(Unaudited)
(In thousands, except share and par value data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 1,343 $ 2,205
Accrued liabilities 741 840
Current portion of long-term debt 7,209 4,750
------- -------
Total current liabilities 9,293 7,795
LONG-TERM DEBT, net of current portion 3,003 4,256
DEFERRED INCOME TAXES 755 755
OTHER LONG-TERM LIABILITIES 1,740 1,711
------- -------
Total liabilities 14,791 14,517
------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; authorized
40,000,000 shares, issued 28,452,780 and
27,950,851 shares, respectively 29 28
Additional capital 42,360 41,799
Accumulated deficit ( 14,883)( 17,889)
-------- ---------
Total stockholders' equity 27,506 23,938
-------- ---------
Total liabilities and stockholders' equity $42,297 $38,455
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed balance sheets.
4
ALTA GOLD CO.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1995 1994
<S> <C> <C>
REVENUE:
Sales of gold and other metals $3,597 $4,397
------ ------
OPERATING COSTS AND EXPENSES:
Direct mining, production and
holding cost 2,047 3,476
General and administrative 333 402
Exploration 8 104
Depreciation, depletion and amortization 603 245
------ ------
2,991 4,227
------ ------
Income from operations 606 170
------ ------
OTHER INCOME (EXPENSE), net:
Interest income and other 51 61
Interest expense and other ( 190) ( 55)
------ -----
( 139) 6
------- -----
INCOME BEFORE PROVISION FOR
INCOME TAXES AND EXTRAORDINARY ITEM 467 176
PROVISION FOR INCOME TAXES - -
------- ------
INCOME BEFORE EXTRAORDINARY ITEM 467 176
EXTRAORDINARY ITEM:
Gain on extinguishment of debt - 2,182
------- ------
NET INCOME $ 467 $2,358
======= ======
NET INCOME PER SHARE:
Before extraordinary item $ 0.02 $ 0.01
Extraordinary item - 0.08
------ -------
$ 0.02 $ 0.09
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 28,452,780 27,593,555
========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
5
ALTA GOLD CO.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
<S> <C> <C>
REVENUE:
Sales of gold and other metals $6,292 $5,314
------ ------
OPERATING COSTS AND EXPENSES:
Direct mining, production and
holding costs 3,873 4,063
General and administrative 698 724
Exploration 17 162
Depreciation, depletion and amortization 947 512
------ ------
5,535 5,461
------ ------
Income (loss) from operations 757 ( 147)
------ -------
OTHER INCOME (EXPENSE), net:
Gain on sale of assets 2,425 -
Interest income and other 97 277
Interest expense and other ( 273) ( 200)
------- ------
2,249 77
------- ------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES AND EXTRAORDINARY ITEM 3,006 ( 70)
PROVISION FOR INCOME TAXES - -
------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 3,006 ( 70)
EXTRAORDINARY ITEM:
Gain on extinguishment of debt - 2,182
------ ------
NET INCOME $3,006 $2,112
====== ======
NET INCOME PER SHARE:
Before extraordinary item $ 0.11 $ -
Extraordinary item - 0.08
------ ------
$ 0.11 $ 0.08
====== ======
WEIGHTED AVERAGE SHARES OUTSTANDING 28,222,233 27,320,828
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
6
ALTA GOLD CO.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,006 $2,112
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on extinguishment of debt - (2,182)
Depreciation, depletion and
amortization 947 512
Net gain on sale of assets (2,425) -
Stock compensation 47 50
Interest expense on term
loan payable to Mase
Westpac, Ltd. - 194
Decrease (increase) in -
Short-term investments 262 963
Receivables 325 39
Inventories (1,675) 306
Prepaid expenses and other (110) 266
Other (29) (69)
Increase (decrease) in -
Accounts payable ( 862) ( 539)
Accrued liabilities ( 99) 269
------- -----
Net cash provided by (used in)
operating activities (613) 1,921
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings
and equipment ( 1,322) (2,200)
Additions to deferred mine
development costs (1,309) ( 770)
Proceeds from sale of property,
buildings and equipment 2,425 -
------- ------
Net cash used in investing
activities ( 206) ( 2,970)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt settlement - 4,214
Proceeds from issuance of debt 3,652 -
Payments on debt ( 2,000) ( 78)
Increase in restricted
short-term investments - (184)
Other 15 -
------- ------
Net cash provided by
financing activities 1,667 3,952
-------- ------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 848 2,903
CASH AND CASH EQUIVALENTS,
beginning of period 471 3,432
------- ------
CASH AND CASH EQUIVALENTS,
end of period $ 1,319 $ 6,335
====== ======
</TABLE>
7
ALTA GOLD CO.
CONDENSED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
------------------------------------------------
<S> <C> <C>
Cash paid during the period for interest,
net of amount capitalized $108 $5
Cash paid during the period for income taxes $65 $18
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
----------------------------------------------
During the six months ended June 30, 1995, the Company retired $500
in outstanding debt through the issuance of common stock valued at $500.
During the six months ended June 30, 1994, the Company acquired
mining interests totaling $7,364 through the issuance of debt in the amount
of $5,696 and common stock valued at $1,668.
During the six months ended June 30, 1994, the Company transferred
gold in process totaling $1,132 from deferred development costs to gold
inventories.
The accompanying notes are an integral part of these condensed
financial statements.
8
ALTA GOLD CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Interim Financial Statement Policies and Disclosures
-------------------------------------------------------------
The unaudited, condensed financial statements of Alta Gold Co. (the
"Company") included herein have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally required in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading.
These interim, unaudited, condensed financial statements should be
read in conjunction with the Company's Annual Report on Form 10-K for the
year ended December 31, 1994, as filed with the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month and six month
periods ended June 30, 1995 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1995.
Cash and Cash Equivalents and Short-Term Investments
----------------------------------------------------
For purposes of the balance sheets and statements of cash flows, the
Company considers all investments with an original maturity of three months
or less to be cash equivalents.
Reclamation Costs
-----------------
Minimum standards for mine reclamation have been established by
various governmental agencies which affect certain operations of the
Company. The Company's general policy is to accrue estimated
reclamation costs during each property's productive life based on estimated
reserves using the units of production method. As of June 30, 1995 and
December 31, 1994, the Company had reserved approximately $1,909,000
and $2,088,000, respectively, for reclamation activities of which
approximately $169,000 is expected to be expended during the last six
months of 1995.
Net Income per Share
--------------------
Net income per share is computed based on the weighted-average
number of shares and common stock equivalents, if dilutive, actually
outstanding during the period. For primary weighted-average purposes,
common stock equivalents are the shares that would be outstanding
assuming exercise of dilutive stock warrants and stock options having
exercise prices less than the average market price of the common stock
using the treasury stock method.
On a fully diluted basis, the common stock equivalents are adjusted
to reflect exercise prices less than the period end market price (when
greater than the average market price).
No common stock equivalents were included in the computations for
the periods ended June 30, 1995 and June 30, 1994, because they were
anti-dilutive.
9
Note 2. Inventories
--------------------
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Precious metals:
Refined product $ 639,000 $ 7,000
In process 4,730,000 3,657,000
Consumable supplies 112,000 142,000
----------- -----------
$5,481,000 $3,806,000
=========== ===========
</TABLE>
Inventories of in-process metals and consumable supplies are valued
at the lower of cost (using the first-in, first-out method) or market.
Inventories of refined product are valued at market.
Note 3. Extinguishment of Debt
--------------------------------
On May 23, 1994 the Company entered into a Settlement Agreement
and Mutual Release ("Settlement Agreement") with Mase Westpac, Ltd.,
one of the Company's former lenders, and related parties ("Mase") in regard
to certain litigation which had been ongoing since the first quarter of 1991.
Under the terms of the Settlement Agreement, in addition to the
release of all litigation, the Company released the entire balance held in an
investment escrow fund having an estimated value of approximately
$16,200,000 in exchange for a cash payment of $4,500,000 plus Mase's
release of claims of approximately $14,200,000 in amounts owed under a
revolving credit agreement.
In the second quarter of 1994, the Company recorded $2,182,000 as
Extraordinary Gain - Extinguishment of Debt, which amount recognizes the
aforementioned settlement net of $286,000 in associated litigation expense
incurred by the Company in 1994.
10
Note 4 - Long-Term Debt
-------------------------
Long-term debt is summarized as follows:
June 30, December 31,
1995 1994
[S] [C] [C]
Note payable due February1995; interest at 10.5%;
secured by equipment $ - $ 500,000
Note payable due February 1995; interest at 10%;
unsecured - 500,000
Note payable due April 1995; non-interest bearing;
secured by Kinsley - 1,500,000
Note payable due July 1995; interest at prime plus
2%; secured by Olinghouse 2,250,000 2,250,000
Note payable, half due August 1995 and the
remainder due February 1996; interest at 12%;
secured by buildings and equipment 1,250,000 -
Notes payable, half due September 1995 and the
remainder due October 1995; interest at prime
plus 1.5%; secured by Kinsley, Easy Jr. and
Olinghouse 1,125,000 -
Note payable due October 1995; interest at prime
plus 2%; secured by equipment 1,000,000 -
Note payable due in 34 monthly installments of
$10,201; interest imputed at 16.1%; secured
by equipment 277,000 -
Subordinated debenture due June 1996; interest
at 6%; convertible at the option of the debt
holder through maturity into common stock
at a conversion price of $4.00 per share 1,500,000 1,500,000
Subordinated debenture due June 1998; interest
at 6%; convertible at the option of the debt
holder through maturity into common stock
at a conversion price of $4.00 per share 1,500,000 1,500,000
Subordinated zero coupon debenture with a redemption
price of $4,000,000 due June 2008; discounted
at 9% compounded per annum 1,310,000 1,256,000
---------- ----------
10,212,000 9,006,000
Less - current portion (7,209,000) (4,750,000)
---------- ----------
Total long-term debt $3,003,000 $4,256,000
========== ==========
[/TABLE]
11
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
COMPARISON OF THREE-MONTH PERIODS ENDED JUNE 30, 1995
AND JUNE 30, 1994.
In the second quarter of 1995, the Company had $3,597,000 in revenue
from the sale of 9,100 ounces of gold at an average price of $395/oz, as
compared to $4,397,000 in revenue in 1994 from the sale of 11,300 ounces
of gold at an average price of $389/oz. In the second quarter of 1995, the
Company produced 10,732 ounces of gold, 7,548 ounces from Kinsley at
an average cash cost of $199/oz and 3,184 ounces from Easy Jr. at an
average cash cost of $273/oz. In the second quarter of 1994, the Company
produced 6,770 ounces of gold, all of it from Easy Jr. at an average cash
cost of $214/oz.
Mining began at Kinsley in the fourth quarter of 1994 and gold production
began in late January 1995. Mining at Easy Jr. was completed in the third
quarter of 1994; however, gold production is expected to continue through
year-end 1995 as the stockpiled ore is crushed and processed. The
decrease in revenue between the second quarter of 1995 and the second
quarter of 1994 is solely due to timing differences in the sale of inventoried
refined product. Revenue in the second quarter of 1994 included the sale
of 4,526 ounces of gold which had been held in inventory as of March 31,
1994; conversely revenue in the second quarter of 1995 did not include
1,632 ounces of gold which had been produced during this time period but
remained in inventory as of June 30, 1995. The decrease in direct mining,
production and holding costs from $3,476,000 to $2,047,000 between
comparable periods is directly related to the decrease in revenue and to
mark-to-market valuations associated with gold bullion inventory.
The decrease in general and administrative expenses from $402,000 in
1994 to $333,000 in 1995 is due to several factors, including a reduction in
administrative personnel.
The decrease in exploration expenses from $104,000 in 1994 to $8,000
in 1995 is due to the progression from exploration to development of
Olinghouse, Copper Flat and Griffon.
The increase in depreciation, depletion and amortization from $245,000
in 1994 to $603,000 in 1995 is due to depreciation, depletion and
amortization of various costs associated with Kinsley, which began
producing gold in 1995.
Interest expense and other increased from $55,000 in the second quarter
of 1994 to $190,000 in the second quarter of 1995 as the result of
additional financing costs incurred in 1995 associated with new borrowings.
No provision for income taxes was required in either 1994 or 1995
because of the utilization of net operating loss carryforwards. As of June
30, 1995, the Company estimates that it has approximately $16,000,000 in
remaining net operating loss carryforwards. These net operating loss
carryforwards are scheduled to expire during the period 2000 to 2008.
In the second quarter of 1994, the Company settled all outstanding
litigation with a former creditor. Under the terms of the settlement, the
Company realized $2,182,000 as an extraordinary item - gain on
extinguishment of debt (please refer to "Note 3. Extinguishment of Debt"
for further information).
12
COMPARISON OF SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND
JUNE 30, 1994.
In the first half of 1995, the Company had $6,292,000 in revenue from the
sale of 16,000 ounces of gold at an average price of $393/oz, as compared
to $5,314,000 in revenue in 1994 from the sale of 13,700 ounces of gold at
an average price of $388/oz. In the first half of 1995, the Company
produced 17,643 ounces of gold, 10,407 ounces from Kinsley at an average
cash cost of $207/oz and 7,236 ounces from Easy Jr. at an average cash
cost of $274/oz. In the first half of 1994, the Company produced 10,078
ounces of gold, all of it from Easy Jr. at an average cash cost of $218/oz.
Mining began at Kinsley in the fourth quarter of 1994 and gold production
began in late January 1995. Mining at Easy Jr. was completed in the third
quarter of 1994; however, gold production is expected to continue through
year-end 1995 as the stockpiled ore is crushed and processed. The
increase in revenue from $5,314,000 to $6,292,000 between comparable
periods is due to having two mines in production in 1995 as compared to
only one in 1994, as partially offset by the sale of 3,459 ounces of gold in
1994 which had been inventoried as of December 31, 1993 and the
inventorying of 1,643 ounces of 1995 production as of June 30, 1995. The
decrease in direct mining, production and holding costs from $4,063,000 to
$3,873,000 between comparable periods is principally due to mark-to-
market valuations associated with gold bullion inventory, as partially offset
by increased production costs related to increased production.
The decrease in general and administrative expenses from $724,000 in
1994 to $698,000 in 1995 is due to several factors, including a reduction in
administrative personnel.
The decrease in exploration expenses from $162,000 in 1994 to $17,000
in 1995 is due to the progression from exploration to development of
Olinghouse, Copper Flat and Griffon.
The increase in depreciation, depletion and amortization from $512,000
in 1994 to $947,000 in 1995 is due to depreciation, depletion and
amortization of various costs associated with Kinsley, which began
producing gold in 1995.
In the first quarter of 1995, the Company sold its remaining interest in the
Robinson Copper Property for a net gain of $2,425,000; there were no
similar transactions in 1994. Interest income and other decreased from
$277,000 in 1994 to $97,000 in 1995 as the result of the settlement of
litigation with a former creditor in 1994 (please refer to "Note 3.
Extinguishment of Debt" for further information). The increase in interest
expense and other from $200,000 in 1994 to $273,000 in 1995 is due to
additional financing costs incurred in 1995 associated with new borrowings,
as partially offset by the effect of the settlement of litigation with a former
creditor in 1994.
No provision for income taxes was required in 1995 because of the
utilization of net operating loss carryforwards. As of June 30, 1995, the
Company estimates that it has approximately $16,000,000 in remaining net
operating loss carryforwards. These net operating loss carryforwards are
scheduled to expire during the period 2000 to 2008.
In the second quarter of 1994, the Company settled all outstanding
litigation with a former creditor. Under the terms of the settlement, the
Company realized $2,182,000 as an extraordinary item - gain on
extinguishment of debt (please refer to "Note 3. Extinguishment of Debt"
for further information).
13
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of June 30, 1995, the Company had a working capital deficit of
$1,843,000, a $548,000 improvement from the December 31, 1994 working
capital deficit of $2,391,000. This improvement was expected and is
principally due to internal funds generated since the initiation of gold
production at Kinsley in January 1995.
As Kinsley continues to build up to full production in the second half of
1995, the Company anticipates that the working capital deficit will continue
to improve and become positive by year-end 1995. In order to provide
flexibility during this interim period, the Company obtained a $2,250,000
short-term production advance facility and an additional short-term loan of
$1,000,000 in April 1995.
The $2,250,000 short-term production advance facility may be drawn
down in increments of $562,500, with interest thereon at prime plus 1.5%.
As of June 30, 1995, the Company had drawn down $1,125,000, or 50%,
of this advance facility, which must be paid off by year-end 1995. The
$1,000,000 short-term loan, with interest thereon at prime plus 2%, is due
on October 31, 1995.
Between funds expected to be generated from gold production at Kinsley
and Easy Jr., cash and gold bullion on hand and the remaining available
credit facility, the Company believes that it has adequate liquidity for its
operating and capital needs during the next twelve months.
INVESTING AND FINANCING ACTIVITIES
----------------------------------
In the first half of 1995, the Company expended $1,322,000 for facilities
and equipment at Kinsley, $1,309,000 on the development of Olinghouse,
Copper Flat and Griffon and $2,000,000 for the retirement of short-term
debt. During the same period, the Company received $2,425,000 from the
sale of its remaining interest in the Robinson Copper Property, $3,375,000
in short-term financing and $277,000 in a three-year equipment loan.
OUTLOOK
-------
During the remaining half of 1995, the Company has budgeted cash
expenditures of $669,000 for mine development, $169,000 for reclamation
and $5,078,000 for retirement of debt. These expenditures are expected
to be funded from cash on hand, gold bullion inventory and gold production
from Kinsley and Easy Jr. The budgeted cash expenditures are based
upon future events which cannot be predicted and which may be beyond
the control of the Company, nevertheless, the Company expects to meet its
obligations.
As of June 30, 1995, the Company had sold forward 11,600 ounces of
gold at an average price of $407 per ounce.
14
PART II OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
(a) The 1995 Annual Meeting of Stockholders ("Annual Meeting") of the
Company was held on June 9, 1995.
(b) The Annual Meeting involved the election of directors of the Company.
Three directors were elected at the Annual Meeting: Messrs. Robert
N. Pratt and Ralph N. Gilges and Dr. Thomas A. Henrie. Four other
directors, each of whom having terms of office extending through and
beyond the Annual Meeting continued as directors after the Annual
Meeting: Messrs. Iwao Ino, John A. Keily, Thomas D. Mueller and
Toshiaki Tanaka.
(c) A tabulation of votes with respect to the election of directors is as
follows:
<TABLE>
<CAPTION>
Name For Withheld
---- --- -------
<S> <C> <C>
Robert N. Pratt 22,523,810 342,923
Ralph N. Gilges 22,539,106 327,627
Thomas A. Henrie 22,520,227 346,506
</TABLE>
No abstentions were cast.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.57 Facility Agreement between Gerald Metals, Inc. and Alta
Gold Co. dated March 28, 1995.
10.58 Margin Agreement between Gerald Metals, Inc. and Alta
Gold Co. signed March 28, 1995.
10.59 Purchase/Refining Agreement between Gerald Metals, Inc.
and Alta Gold Co. dated March 28, 1995.
10.60 Stock Option Agreement between Gerald Metals, Inc. and
Alta Gold Co., dated March 28, 1995.
(b) No reports were filed on Form 8-K during the three-month period
ended June 30, 1995.
15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALTA GOLD CO.
------------
(Registrant)
August 7, 1995 BY: /s/ John A. Bielun
-------------- -----------------------
(Date) John A. Bielun
Chief Financial Officer and
Principal Accounting Officer
<PAGE>
FACILITY AGREEMENT
--------------------------------
Alta Gold Co., a Nevada corporation (hereinafter called the
"Seller") agrees to sell and deliver, and Gerald Metals, Inc., a
Delaware corporation with a principal office located at High Ridge
Park, Stamford, Connecticut 06904, USA (hereinafter called the
"Buyer"), agrees to buy, receive and pay for the material as
specified under the following terms and conditions:
1. Material:
-----------
Standard London Good Delivery Gold bars .995 minimum
purity.
2. Quantity:
-----------
Eighty Thousand (8,000) fine troy ounces plus or minus 0.5
percent (0.5%).
3. Delivery:
-----------
In accordance with the following schedule during each
contractual month of delivery, to Buyer's unallocated
account.
<TABLE>
<CAPTION>
Month (1995) Troy Ounces
------------- ------------
<S> <C>
September 2000
October 2000
November 2000
December 2000
</TABLE>
Each of the months from September 1995 through
December 1995, to be considered as a "contractual month
of delivery". References to the contractual month of
delivery will refer to the aforementioned months.
4. Location
-----------
Delivered for the account of Buyer at Johnson Matthey,
Inc., Salt Lake City, Utah. Seller will provide assay results,
weight, date of delivery and other details as may be
reasonably required by Buyer, no later than three (3)
business days prior to the date of delivery.
5. Pricing:
----------
At mutually agreed spot, forward or option-related prices
not later than the delivery date of the material each month.
For any unpriced gold in a monthly delivery as of the
delivery day, Seller will price the unpriced quantity at spot
market bid price for such gold by noon (New York time) on
the open delivery date. Eight Thousand (8,000) fine troy
ounces have a price of US $394 per fine troy ounce
covering the advance payments described in Paragraph 6
hereof. The required hedging program has been
implemented as follows:
<TABLE>
<CAPTION>
Our Reference Month (1995) Troy Ounce Price
-------------- ------------ ---------------- ------
<C> <S> <C> <C>
41-2749-95 September 29 2000 394
41-2751-95 October 31 2000 394
41-2753-95 November 30 2000 394
41-2755-95 December 29 2000 394
</TABLE>
6. Payment:
--------
Following the presentation to the Stamford, Connecticut,
USA office of Buyer (or such other locations as designated
by Buyer), of the documents listed in "A" through "H" below,
the Buyer will make four (4) advance payments (advance
payment against future deliveries) of Five Hundred Sixty-
Two Thousand Five Hundred US Dollars ($562,500)
covering approximately 2000 fine troy ounces of gold each
(for a total of 8000 troy ounces and US $2,250,000), which
will be made by telegraphic transfer to Seller's nominated
bank account at any time designated by Seller at least one
day in advance from March 28, 1995 until September 1,
1995, provided the condition listed in "I" below has been
fulfilled:
A. Seller's provisional invoice for Five Hundred Sixty-
Two Thousand Five Hundred US Dollars (US
$562,500), covering approximately Two Thousand
(2000) fine troy ounces of gold, subject to the terms
of this contract substantially in the form of Exhibit A
attached hereto.
B. Notes of Borrower each in the principal amount of
Five Hundred Sixty-Two Thousand Five Hundred
Dollars (US $562,500), subject to the terms of this
contract substantially in the form of Exhibit B
attached hereto (collectively, the "Notes").
C. An executed Refining Agreement between Buyer and
Seller of even date herewith.
D. An executed Security Agreement between Buyer and
Seller of even date herewith.
E. Deeds of Trust of Seller in favor of Buyer, as
beneficiary, and First American Title Insurance
Company of Nevada, as trustee, of even date
herewith.
F. A certificate of Seller in favor of Buyer substantially
in the form of Exhibit C attached hereto.
G. A Stock Option Agreement of Seller in favor of Buyer
of even date herewith.
H. A title opinion with respect to the Kinsley Project
millsite claims (as listed in Exhibit D attached hereto)
satisfactory in all respects to Buyer.
I. Deliveries on all contracts of gold outstanding with
Buyer are current.
7. Prepayment
----------
Seller may prepay the principal of all of the Notes, in whole
at any time, or in part from time to time, upon not less than
five (5) business days prior written notice to Buyer, and in
the case of a partial payment, provided such payment is in
an amount of not less than US Dollars Ten Thousand (US
$10,000). Any prepayment shall be made without premium
or penalty. Each prepayment shall be accompanied by the
interest accrued on the principal amount so prepaid through
the date of prepayment.
8. Interest:
----------
Buyer will charge Seller interest in arrears on the daily
balance of the advance payment outstanding. Interest will
be charged at the per annum rate of one and one-half
percent (1.5%) in excess of the Prime Rate as announced
by The Chase Manhattan Bank, New York, New York, as
its prime commercial lending rate, for the term of each Note
described in Paragraph 6. B hereof.
9. Application on Contract:
--------------------------------
The value of each delivery will be applied to the contract as
follows:
A. First, to all accrued and unpaid interest to date of
each delivery.
B. Second, to principal against the outstanding balance
of each advance payment against future deliveries,
in accordance with the following schedule:
<TABLE>
<CAPTION>
Month U.S. Dollars
-------- -------------
<S> <C>
September 29, 1995 562,500
October 31, 1995 562,500
November 30, 1995 562,500
December 29, 1995 562,500
---------
Total 2,250,000
</TABLE>
C. Thirdly, the balance of the value of the delivery will
be credited to or paid to the designated account of
the Seller.
10. Documentation:
---------------------
A. Included with each delivery will be the following
documents provided to the Buyer (if requested) at
Seller's expense:
(i) Seller's Final Commercial Invoice.
(ii) Seller's weight and quality certificate.
(iii) A packing list.
B. Seller shall provide Buyer with a weekly report
detailing the recoverable gold contained on the heap
leach pads at the Kinsley and Easy Junior Mines.
11. Final Settlement:
----------------------
After the last pricing and arrival of the contracted material,
a final settlement will be made reflecting the difference
between the total value of the gold as determined in
Paragraph 5 hereof and the advance payment made by
Buyer as stipulated in Paragraph 6 hereof. Any overage
will be promptly repaid to Seller.
Interest will continue to accrue to Buyer until the date of
final settlement which will be not later than seven (7)
business days after the date of last delivery is received.
12. Force Majeure:
-------------
Neither an event of force majeure not political interference
shall void any of the obligations of either party hereunder.
13. Events of Default:
-----------------
Seller shall be in default under this contract upon the
occurrence of any one or more of the following events
(each such event is herein referred to as an "Event of
Default"):
A. Failure of Seller to pay (i) any amount of principal or
interest under any of the Notes or (ii) any other
indebtedness, obligation or liabilities of Seller to
Buyer, in each case within two business days after
the same is due.
B. Failure of Seller to perform, comply with or observe
any other term, covenant or agreement applicable to
Seller pursuant to this contract, the Notes, the
Refining Agreement between Seller and Buyer of
even date herewith (the "Refining Agreement"), or
any other agreements between Seller and Buyer.
C. Any representation or warranty made by or on behalf
of Seller pursuant to this contract, the Notes, the
Refining Agreement or any other agreement,
document, instrument or certificate executed by
Seller in favor of Buyer shall be untrue or misleading
in any material respect as of the date such
representation or warranty was made or is deemed
to have been made;
D. Seller shall (i) discontinue or abandon operation of its
business (except for normal shutdowns), (ii) apply for
or consent to or suffer the appointment of a receiver,
trustee, custodian or liquidator of it or any of its
property, (iii) admit in writing its inability to pay its
debts as they mature, (iv) make a general
assignment for the benefit of creditors, (v) file, or
have filed against it, a petition for relief under Title
11 of the United States Code, (vi) file or have filed
against it, a petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement
with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation law or statute, or an
answer admitting the material allegations of a petition
filed against it in any proceeding under any such law,
or if corporate action shall be taken for the purpose
of effecting any of the foregoing, (vii) become
insolvent, (viii) fail to generally pay its debts as they
mature or (ix) have liabilities which exceed the fair
value of its assets.
14. Remedies in Event of Default:
----------------------------
Upon or at any time after the occurrence of any Event of
Default, Buyer may (i) exercise any or all of the remedies
set forth in Section 8 of the Security Agreement of even
date herewith between Seller and Buyer, as the same may
be amended or modified from time to time (the "Security
Agreement"), (ii) close out in whole or in part the priced
quantities of material which have not been delivered at
market prices therefor as determined in good faith by Buyer
(upon any close out, either party shall pay to the other the
net amount due hereunder, within two (2) business days)
and (iii) cover by borrowing or purchasing material equal to
the quantity of material due from Seller.
15. Warranties:
----------
Each party hereby represents and warrants to the other
party that it possesses all necessary power, authority and,
to the extend applicable, approvals necessary to enter into
this contract, that the execution and implementation hereof
will not cause it to be in violation of any other agreement or
law, regulation, order or court process or decision to which
it is a party or to which it is in any way subject, and that
this contract constitutes its valid and binding agreement
enforceable against it in accordance with its terms.
Such warranties will run to the other party, its successors or
assigns. Each party agrees to hold the other harmless
from any damage or liability arising from its breach of these
warranties.
16. Governing Law and Submission to Jurisdiction:
--------------------------------------------
The contract shall be construed in accordance with and
governed by the laws of the State of New York without
giving effect to principles of conflict of laws. Each of the
parties hereto hereby submits to the exclusive jurisdiction of
the courts of the State of New York and any United States
Federal Court located in the Borough of Manhattan in the
City of New York, as well as to the jurisdiction of all courts
from which an appeal may be taken or other review sought
from the aforesaid courts, for the purpose of any suit, action
or other proceeding arising out of any of the transactions
contemplated by this contract, the Notes or any of the
documents or agreements contemplated herein or therein.
Each of the parties hereto expressly waives any or all
objections it may have as to venue in any such courts or
that such action or proceeding in such Federal or state
court has been brought in an inconvenient forum. Both
parties hereby expressly waive trial by jury in any action
brought on or with respect to this contract.
17. Miscellaneous:
-------------
Buyer will be entitled to at any time during this contract to
set off any amount owed by Seller to Buyer against any
amount payable at any time by Buyer or its subsidiary or
associated companies in connection with this contract. This
contract constitutes the entire agreement between the
parties relating to the subject matter hereof and may not be
amended except by a writing signed by both parties. This
contract may not be assigned by the either party, by
operation of law or otherwise, without the express written
consent of the other party except that Buyer may assign
this contract, and any Notes and invoices related thereto,
for financing purposes. All the terms, covenants, and
conditions of this contract will be binding upon and inure to
the benefit of, and be enforceable by, the parties hereto
and their respective successors and assigns.
18. Notices:
-------
All notices hereunder shall be in writing by certified mail or
by telex or telefax and deemed given when received at the
respective party's address set forth below unless sent by
telex or telefax in which case the same shall be deemed
given when sent to the telex or telefax address of the
respective party set forth below and for telex confirmed by
the respective answerback specified below, and for telefax
confirmed as being received by the respective party.
If to Gerald: If to Alta Gold Co.:
Gerald Metals, Inc. Alta Gold Co.
P.O. Box 10134 601 Whitney Ranch Drive
High Ridge Park Suite 10
Stamford, CT 06904 Henderson, NV 89014
Attn: Sue Scoggins
cc: Treasurer Attn: Robert Pratt
Telefax: 203-329-4844 Telefax: 702-433-1547
Telex: 620226
ANSWERBACK: GENNARD
ACCEPTED BY:
------------
ALTA GOLD CO. GERALD METALS, INC.
By:Robert N. Pratt By: Louis J. Fox
President and Chief Senior Vice President
Executive Officer
By:John A. Bielun By: Robert C. Kaeser
Vice President - Finance Vice President
Date: 3/28/95
ALTA GOLD CO. EXHIBIT A
601 Whitney Ranch Drive, Suite 10
Henderson, Nevada 89014
Tel: (702) 433-8525. Fax: (702) 433-1547
PROVISIONAL INVOICE
SOLD TO: GERALD METALS, INC.
ROBERT C. KAESER
P.O. BOX 10134
HIGH RIDGE PARK
STAMFORD, CT 06904
INVOICE DATE CONTRACT NUMBER PAYMENT TERMS
----------- ---------------- ----------------
Sept. 29, 1995 GERALD'S CONTRACT NET CASH VIA
NO. 41-9000-94 TELEGRAPHIC
TRANSFER
DELIVER TERMS
------------------------
DELIVERED TO JOHNSON MATTHEY, SALT LAKE CITY, UTAH
DESCRIPTION WEIGHT AMOUNT
----------- ------------ -------------
GOLD BARS --- FINE TROY OUNCES $562,500
PAYMENT IS TO BE MADE TO ALTA GOLD CO. VIA
TELEGRAPHIC TRANSFER C/O:
BANKING INFORMATION
ACCOUNT NAME: ALTA GOLD CO.
ACCOUNT NO.:
ROUTING NO.:
ALTA GOLD CO. EXHIBIT B
601 Whitney Ranch Drive, Suite 10
Henderson, Nevada 89014
Tel: (702) 433-8525. Fax: (702) 433-1547
NOTE
US $562,500 MARCH , 1995
FOR VALUE RECEIVED, ALTA GOLD CO., A NEVADA
CORPORATION ("BORROWER"), PROMISES TO PAY TO THE
ORDER OF GERALD METALS, INC., A DELAWARE
CORPORATION ("GERALD"), THE PRINCIPAL SUM OF FIVE
HUNDRED SIXTY-TWO THOUSAND FIVE HUNDRED AND
NO/100 DOLLARS (US $562,500), OR THE AGGREGATE
UNPAID PRINCIPAL AMOUNT OF ALL SUMS ADVANCED TO
BORROWER PURSUANT TO THAT CERTAIN FACILITY
AGREEMENT ADVANCED TO BORROWER PURSUANT TO
THAT CERTAIN FACILITY AGREEMENT ("THE CONTRACT")
DATED MARCH , 1995, BETWEEN BORROWER AND GERALD.
ALL UNPAID PRINCIPAL SHALL BE DUE AND PAYABLE ON
OR BEFORE SEPTEMBER 29, 1995.
BORROWER FURTHER PROMISES TO PAY TO THE ORDER
OF GERALD INTEREST ON THE UNPAID PRINCIPAL AMOUNT
OF THIS NOTE FROM THE DATE HEREOF UNTIL THE DATE
PAID IN FULL, AT THE RATE SPECIFIED IN THE CONTRACT.
THIS NOTE IS REFERRED TO IN, AND IS GOVERNED BY AND
ENTITLED TO THE BENEFITS OF, THE CONTRACT WHICH
CONTAINS, AMONG OTHER THINGS, PROVISIONS
PERTAINING TO ACCELERATION OF THE MATURITY HEREOF
UPON THE HAPPENING OF CERTAIN STATED EVENTS, AND
TO THE RATE OF INTEREST DUE GERALD FOR SUMS DUE
HEREUNDER. THIS NOTE EVIDENCES CERTAIN ADVANCE
PAYMENTS BY GERALD AGAINST FUTURE DELIVERIES OF
MATERIAL BY BORROWER UNDER THE PROVISIONS OF THE
CONTRACT.
BORROWER AGREES TO PAY ALL COSTS AND EXPENSES
OF GERALD INCURRED IN CONNECTION WITH THE
ENFORCEMENT OR COLLECTION OF THIS NOTE, INCLUDING
REASONABLE FEES AND EXPENSES OF COUNSEL FOR
GERALD.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICT OF LAWS.
ALTA GOLD CO.
By:
Robert N. Pratt
President and Chief Executive Officer
By:
John A. Bielun
Vice President - Finance
EXHIBIT C
CERTIFICATE
--------------------
The undersigned, Alta Gold Co., a Nevada corporation ("Alta"),
hereby certifies to Gerald Metals, Inc., a Delaware corporation
("Gerald"), that as of the date hereof:
1. Alta owns the entire undivided legal and equitable
interest in the mining claims and holdings and water rights (and
applications for water rights) and all necessary data and
information pertaining thereto which is commonly known as the
Kinsley Mountain Project, Elko County, Nevada (the "Property");
and
2. The Property is free and clear of all liens, claims and
encumbrances (other than a Deed of Trust of Alta in favor of
Gerald, as beneficiary, and First American Title Company of
Nevada, as Trustee, dated as of March 28, 1995) and Alta is not
aware of, nor has it received, notice from any party of any adverse
claim against Alta's title to the Property.
IN WITNESS WHEREOF, Alta has executed and delivered
this Certificate as of the ----- day of ------, 1995.
ALTA GOLD CO.
By --------------------------
Title -------------------------
EXHIBIT D
KINSLEY PROJECT
Unpatented mining claims located approximately within portions of
Sections 4 and 5, Township 26 North, Range 68 East, Mount
Dieblo Base and Meridian, in Elko County, Nevada, and more
particularly described as follows:
<TABLE>
<CAPTION>
CLAIM NAME COUNTY RECORDING BLM SERIAL
AND NUMBER BOOK PAGE NUMBER
------------ ---------------- ---------------
<S> <C> <C> <C>
FLUSH 5662 641 188 NMC 515511
FLUSH 5663 641 189 NMC 515512
FLUSH 5664 641 190 NMC 515513
FLUSH 5665 641 191 NMC 515514
FLUSH 5666 641 192 NMC 515515
FLUSH 5667 641 193 NMC 515516
FLUSH 5668 641 194 NMC 515517
FLUSH 5764 641 198 NMC 515521
FLUSH 5765 641 199 NMC 515522
FLUSH 5766 641 200 NMC 515523
FLUSH 5767 641 201 NMC 515524
FLUSH 5768 641 202 NMC 515525
</TABLE>
MARGIN AGREEMENT
-------------------------------
This Agreement sets forth the provisions in fulfillment of margin
obligations by Alta Gold Co. in connection with presently
outstanding and future contracts entered into from time to time
between Alta Gold Co. ("Alta Gold") and Gerald Metals, Inc.
("Gerald") for the purchase and sale of gold and gold options.
1. DEFINITIONS
------------------
A. "Forward Contract" means any contract between the
parties for the purchase or sale of gold having a maturity
date more than two (2) business days forward. A Forward
Contract is outstanding until payment and performance are
completed in accordance with its terms.
B. "Contract Value" of any Forward Contract means the
product obtained by multiplying (i) the number of fine troy
ounces of gold covered by that Forward Contract by (ii) the
price per troy ounce specified in that Forward Contract.
C. "Market Value" for margin purposes of any Forward
Contract means that product obtained by multiplying (i) the
number of fine troy ounces of gold covered by that
Forward Contract by (ii) the settlement quotation of gold on
the Commodity Exchange, Inc. ("Comex") corresponding to
the delivery month specified in the contract or if no such
quotation is available then the settlement quotation of gold
for such month shall be determined in good faith by
Gerald. However, in the event the spot quotation of gold
on the Comex changes more than the limit change allowed
for the forward quotations then the settlement quotation of
the forward months shall be adjusted to reflect the excess
market move.
D. "Business Day" shall mean a day on which banks in New
York City and the Comex are open for business.
E. "Metal" shall mean gold in the form of 400 fine troy ounce
(minimum .995 fine) bars, subject to variations permitted in
the trade.
F. "Call Option" shall mean that the purchaser has the right
but not the obligation to purchase Metal.
G. "Put Option" shall mean that the purchaser has the right
but not the obligation the sell Metal.
H. "Option" or "Options" shall mean Put and Call Options
collectively.
I. "Metal Quantity" for any Option means the number of troy
ounces of Metal covered by that Option as stated in the
confirming telex, as defined in paragraph 2.
J. The term "Metal Value" of any Option on any day, shall
mean the value of Metal for delivery on the expiration date
as extrapolated from Comex gold futures settlements per
troy ounce multiplied by the Metal Quantity of that option.
K. "Strike Price" of any Option means the price fixed by the
Option for the purchase (in the case of a Call Option) or
the sale (in the case of a Put Option) of the Metal Quantity
covered thereby. "Strike Value" of any Option shall mean
an amount equal to its Strike Price multiplied by its Metal
Quantity.
L. "Intrinsic Value" at any time shall mean, (i) in the case of a
Call Option, an amount in U.S. Dollars equal to the
amount, if any, by which its Metal Value exceeds its Strike
Value and (ii) in the case of a Put Option, an amount in
U.S. Dollars equal to the amount, if any, by which its Strike
Value exceeds its Metal Value.
M. "Time Value" at any time shall mean the theoretical value
as calculated using a standard formula accepted in the
industry, using as volatility input Gerald's best estimate of
appropriate volatility. Whenever appropriate, volatility will
be calculated so as to be in line with the volatility of
respective Comex gold option contracts.
N. "Option Value" shall mean the sum of Intrinsic Value, if
any, plus Time Value.
O. "Funds" shall mean U.S. Dollars paid by wire transfer in
immediately available funds to the bank account
designated by the party receiving payment.
P. "Grantor" shall mean the party writing an Option.
Q. "Holder" shall mean the party to which an Option is
granted.
R. "Expiration Date" shall mean 9:30 a.m. (New York Time)
on the date agreed to by the Grantor and the Holder and
set forth in the confirmation of the transaction, at which
time the Option shall expire worthless unless previously
exercised in accordance herewith.
S. "Premium Amount" shall mean the consideration for an
Option paid by the Holder to the Grantor.
T. "European Option" shall mean an option which may be
exercised only on the agreed Expiration Date of the option,
although irrevocable notice of intent to exercise a
European Option may be given prior to Expiration Date.
2. OPTION CONFIRMATION
------------------------
Each Option purchased and sold hereunder shall be evidenced
by a written or telex confirmation listing:
a) trade date e) metal type (gold)
b) premium payment due date f) metal quantity
c) premium amount g) option type (European)
d) strike price h) option expiration date
and time
3. OPTION TERMS AND CONDITIONS
-------------------------------------------
A. The Premium Amount for any Option granted hereunder
shall be paid by the Holder of such Option to the Grantor
two Business Days after the date such Option is entered
into.
B. In the event an Option is exercised, on the second
Business Day after the date of exercise, (i) in the case of a
Put Option, the Grantor shall pay the Strike Value of that
Option to the Holder and the Holder shall deliver the Metal
Quantity of that Option to the Grantor and (ii) in the case
of a Call Option, the Grantor shall deliver to the Holder the
Metal Quantity of that Option, and the Holder shall pay the
Strike Value of that Option to the Grantor; except that at
the Holder's option, expressed by irrevocable notice to the
Grantor at the time the Option is entered into, or at any
other time by mutual agreement of the parties, the Option
may be settled in cash (and thus no delivery of Metal will
take place) by the Grantor transferring to the Holder on
such second Business Day after the date of exercise an
amount equal to the Option Value of such Option at the
time of exercise adjusted for any margin advances, if any,
for the specific Option.
4. PAYMENT AND DELIVERY
-------------------------------------
A. All amounts payable hereunder and under any Forward
Contract or Option shall be paid in Funds.
B. Delivery of Metal under any Forward Contract or Option
shall be effected by credit of the appropriate type of Metal
(in form and purity qualifying as such) to the unallocated
account specified in the Forward Contract or Option, or
such other location as mutually agreed.
5. MARGIN
------------
In order to secure Alta Gold's obligations to Gerald under this
Agreement and any outstanding Forward Contracts and
Options, Alta Gold agrees to margin its obligations under
Forward Contracts and Options in the following manner:
A. The amount of exposure under all Options outstanding
between Gerald and Alta Gold shall be the sum of the
Option Value of all outstanding options granted by Alta
Gold less the sum of the Option Value of all outstanding
Options granted by Gerald, hereafter referred to as the
"Option Exposure".
B. It is agreed that the purchaser under a Forward Contract,
has an unrealized gain if the Market Value of such contract
exceeds its Contract Value and that the seller under a
Forward Contract, has an unrealized gain if the Contract
Value of such contract exceeds its Market Value. At the
close of business on each Business Day, the net
unrealized gain of all Forward Contracts then outstanding
shall be calculated by (i) determining the difference
between the Market Value and Contract Value of each
Forward Contract and (ii) netting these amounts against
each other. The net unrealized gain is referred to herein
as the "Market Exposure", and the party having the net
unrealized gain is referred to as the party then "Market
Exposed",
C. For purposes of all margin calculations under this
Agreement, all purchase and sales of Forward Contracts
shall be netted. Furthermore, the combination of the
Option Exposure and the Market Exposure is referred to
as the "Total Exposure".
D. During the period that any Forward Contracts are
outstanding and Gerald's Total Exposure equals or
exceeds US $750,000 (Seven Hundred and Fifth
Thousand U.S. Dollars) (the "Margin Line") Gerald shall
receive a margin deposit from Alta Gold for amounts in
excess of US $750,000 (Seven Hundred and Fifth
Thousand U.S. Dollars) in the form of Funds, or other
mutually agreed upon forms of margin. Thereafter, margin
cover shall be deposited or returned whenever Gerald's
Total Exposure, less margin already deposited increases
or decreases by US $50,000 (Fifth Thousand U.S.
Dollars). All margin deposits or returns shall be made by
the close of business on the business day following
notification. In no event shall Gerald return funds greater
than the total funds received from Alta Gold.
E. Margin received in the form of cash shall be credited with
interest at a rate equal to the overnight federal funds rate
as published by the New York Federal Reserve Bank,
basis a 360 day year. Interest charges shall be credited
and paid monthly by wire transfer to the account of Alta
Gold.
6. SECURITY INTEREST
------------------------------
Each party hereby represents that it is now, and will at all
times during the continuance of this Agreement be, the sole
and absolute owner of any property delivered by such party as
margin hereunder, free and clear of any and all charges, liens,
encumbrances or security interests of any kind other than the
interest of the other party provided for in this paragraph 6.
Without prejudice to any other rights which a party may have
hereunder, any margin delivered to a party hereunder shall be
and hereby is pledged to such party by way of a first priority
security interest as security for all obligations of the party
delivering such margin under all contracts and transactions
relating or pursuant thereto. The security interest provided for
herein is to be a continuing security interest, notwithstanding
any intermediate payment or settlement of any such
obligations. Neither this Agreement nor the security interest
provided for herein shall be terminated, affected or prejudiced
by any bankruptcy, liquidation, amalgamation, reorganization or
reconstruction of, or merger involving, the party delivering
margin to which such security interest attaches.
7. NON-PERFORMANCE
-------------------------------
Notwithstanding any other provisions hereof or any Forward
Contract or opinion, in the event Alta Gold (a) defaults in the
payment or performance of any obligation to Gerald hereunder
or under any other agreements with Gerald, (b) files a petition
or otherwise commences or authorizes the commencement of
a proceeding under any bankruptcy or similar law or have any
such petition filed or proceeding commenced against it, (c)
discontinues operation of a material portion of its business for
any reason, (d) is unable to pay its debts as they fall due; then
in any such event Gerald shall have the right at any time:
A. To reduce the Margin Line as specified herein to U.S.
$1.00 (One U.S. Dollar) (the "Reduced Margin Line") and
thereby accelerate any and all of Gerald's Total Exposure
as margin due and payable to Gerald by Alta Gold, by the
close of business in New York on the next Business Day.
Margin cover shall be deposited in the form of cash or
other mutually acceptable form of margin. Thereafter, the
Reduced Margin Line shall be effective until Gerald notifies
Alta Gold, in writing, as to otherwise;
B. To liquidate any or all Forward Contracts and Options then
outstanding by:
(i) Closing out each Forward Contract and Option at the
time of liquidation so that each such Forward
Contract and Option is cancelled and market
damages equal to their then Total Exposure is
calculated and a settlement payment in an amount
equal to such Total Exposure, if any, less any margin
held, is then due the party then Market Exposed.
(ii) Setting off against each other all settlement
payments which Gerald owes to Alta Gold as a result
of such liquidation and all settlement payments which
Alta Gold owes to Gerald as a result thereof, and all
other settlements or payments due or payable under
any other Agreements including any margin deposits
or other collateral, so that all such amounts are
netted to a single liquidated amount payable by one
party to the other party. The net amount so
determined shall be paid by the close of business in
New York on the next Business Day. Gerald's rights
under this paragraph 6 shall be in addition to, and
not in limitation or exclusion of, any other rights
which Gerald may have, whether by agreement,
operation of law or otherwise;
C. To terminate performance of any or all of its obligations to
Alta Gold;
D. To draw on any Corporate Guaranty or otherwise convert
to cash any margin deposits and set off such amounts in
accordance with paragraph 7B. (ii);
E. Claim and receive payment from Alta Gold for all expenses
including reasonable legal expenses incurred in the
exercise of the foregoing and any other remedies.
8. MISCELLANEOUS
--------------------------
A. Each Forward Contract shall be governed by the "terms
and conditions" set forth on the reverse side of Gerald's
"Confirmation of Contract" annexed hereto as an exhibit.
In case of conflict with this Agreement, this Agreement will
prevail.
B. This Agreement and each Forward Contract and Option is
for the benefit of the parties and their respective
successors and permitted assigns. No other person or
entity (including without limitation any customer of either
party) shall have any rights hereunder or thereunder. This
Agreement and each Forward Contract and Option and the
rights and duties under this Agreement or any Forward
Contract or Option may not be assigned by either party (in
whole or in part) without the written consent of the other
party, except that Gerald may assign this agreement and
any or all Forward Contracts and Options entered into
between the parties for financing purposes.
C. Neither this Agreement nor any Forward Contract or
Option may be amended except by a writing signed by
both parties or by a telex sent by each party to the other.
The paragraph headings are for convenience and
reference only and shall not affect the confirmation or
interpretation of any provisions hereunder.
D. This agreement shall be governed by the laws of the State
of New York without giving effect to principles of conflict of
laws. Each party hereto consents to the exclusive
jurisdiction of the courts of the State of New York and/or of
any U.S. Federal Court located in the City of New York
over any disputes arising in connection with the transaction
completed hereby and thereby. Final judgement in any
action shall be binding upon the parties hereto and may be
enforced in such courts or in the courts of any country to
which jurisdiction the party against whom the action is
brought is subject. ALTA GOLD AND GERALD EACH
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER OF THEM AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING HEREUNDER
(INCLUDING, WITHOUT LIMITATION, ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT, ANY OTHER DOCUMENTS EXECUTED
IN CONNECTION HEREWITH OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN).
E. This Agreement, together with all Forward Contracts and
Options entered into, shall be considered one integrated
contract. Performance by any party on any day hereunder
or under any Forward Contract or Option is conditional on
performance then due by the other party hereunder or
thereunder. The parties hereby acknowledge that all
transactions under these Agreements are commercial
transactions.
F. Each party hereto represents and warrants to the other
that it possesses all necessary power, authority and, to the
extent applicable, approvals necessary to enter into this
Agreement and any Forward Contracts or Options it enters
into, that the execution and implementation hereof or
thereof will not cause such party to be in violation of any
other agreement or law, regulation, order or court process
or decision to which it is a party or to which it is in any
way subject, and that this Agreement and each Forward
Contract and Option constitutes its valid and binding
Agreement enforceable against it in accordance with its
terms.
G. Each party hereto represents and warrants to the other
that, on the date hereof, and at the time any Forward
Contract or Option is entered into, it is a producer,
processor or commercial user of, or a merchant handling
gold or the products or by-products thereof, and is entering
into this Agreement and any Forward Contract or Option
solely for the purpose of its business as such.
H. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way
be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
I. Each party reserves the right to review and/or withdraw
this Agreement in accordance with changing market and/or
financial conditions. In no event will such withdrawal of
this Agreement affect outstanding transactions or
obligations.
J. Neither a failure nor a delay on the part of either party in
exercising any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or future exercise, or
the exercise of any other right, power or privilege.
9. NOTICES
--------------
All notices hereunder shall be in writing or by telex or telefax
and deemed given when received at the respective party's
address set forth below unless sent by telex or telefax in which
case the same shall be deemed given when sent to the telex
or telefax address of the respective party set forth below and
for telex confirmed by the respective answerback specified
below, and for telefax confirmed as being received by the
respective party.
If to Gerald: If to Alta Gold:
Gerald Metals, Inc. Alta Gold Co.
P.O. Box 10134 601 Whitney Ranch Drive
High Ridge park Suite 10
Stamford, CT 06904 Henderson, NV 89014
ATTN: Susan A. Scoggins ATTN: Robert N. Pratt
Telefax: 203-329-4844 Telefax: 702-433-1547
ACCEPTED BY:
----------------------
ALTA GOLD CO. GERALD METALS, INC.
By: Robert N. Pratt By: Robert C. Kaeser
Vice President
Date: 3/23/95 By: Mark A. Edelstein
Credit Manager
PURCHASE /REFINING AGREEMENT
----------------------------------------------------
This letter will confirm our agreement pursuant to which Alta Gold
Co., a Nevada corporation ("Alta"), shall deliver and sell to Gerald
Metals, Inc., a Delaware corporation ("Gerald"), the gold and silver
contained in the Dore ("Dore") produced by Alta in accordance
with the following terms:
1. Material/Refiner/Quantity
---------------------------------
(a) The Dore covered by this agreement is Dore bullion (the
"Dore") assaying approximately as follows:
Gold: 40-60%
Silver: 30-50%
No deleterious elements above levels acceptable to
refiner shall be contained in the Dore.
(b) The Payable Gold and Payable Silver (as defined in
Paragraph 5 hereof) contained in the Dore to be
purchased by Gerald hereunder shall be recovered for
its account by Johnson Matthey, Inc., 4601 West 2100
South, Salt Lake City, Utah ("Refiner" or "Refinery"), and
Alta consents to the refining of the Dore at the Refinery.
(c) The annual quantity under this agreement is 100% of the
gold and silver Dore produced by Alta.
2. Delivery
-----------
Delivery shall be made to Gerald's account at the Refinery.
Upon Receipt, Gerald shall take full responsibility for risk of
loss or damage of the Dore.
3. Weighing and Sampling
--------------------------------
Weighing and sampling shall be accomplished at the Refinery
using industry accepted practices. Alta, at its expense, shall
have the right to have its representative at the weighing and
sampling. If Alta is not represented at the weighing and
sampling, and the weights are at variance by more than .2%,
then each lot will be held pending agreement of weights by
Alta. In the event that the weights between Alta and the
Refiner vary by less than .2 percent, Refinery weights shall
govern. Sampling shall always be determined in accordance
with the Refiner standard procedures. Refiner shall take four
(4) representative samples from each sample lot. The
samples will be obtained by melting the dore in an induction
furnace and vacuum dip tube sampling when the lot is fully
molten and turbulent. Each sample will be marked
Umpire/Alta/Refiner as taken and the weights recorded. All
samples except those labeled "Refiner" shall be sealed. Two
samples shall remain with the Refiner, the Alta sample will be
sent to Alta's designated location by the following day and the
umpire sample shall be held in reserve. The Refiner, reserve,
and umpire samples, if not used, shall be included in the
settlement weight.
Immediately upon signature of the weighing report (except as
provided above when Alta is not represented), the Refiner may
treat the Dore. A dedicated crucible will be used for all
melting, and slag will be retained for Alta's account.
4. Assays and Splitting Limits
-------------------------------------
Assays shall be made independently by each party by
corrected fire assay techniques. The results of such assays
shall be exchanged within fifteen (15) business days from the
date of sampling by letters crossing simultaneously by mail on
a date to be agreed upon in advance. Should the difference
between the results of the parties be not more than:
Gold:
Assay above 30%: 1.0 parts per thousand
Assay below 30%: 0.5 parts per thousand
Silver: 2.5 parts per thousand
Then the exact mean of the two results shall be taken as the
Agreed Assay for all purposes and the assay shall be deemed
finally determined not later than seven (7) days subsequent to the
mailing of the assays. In the event of a greater difference, an
umpire assay shall be made. The party's assay closer to the
umpire assay will be the Agreed Assay. Should the umpire assay
be the exact mean of the parties' assay, then the umpire assay
shall be borne by the party whose result is further from the
umpire's. The cost of the umpire assay shall be borne equally by
the parties in the event the umpire assay shall be the exact mean
of the exchanged assays. In the event an umpire assay should
be required, the assay shall be deemed finally determined not
later than seven (7) days subsequent to the mailing of the assay
by the umpire (or other written transmission to the parties). For
the purposes of this agreement, the umpire shall be one of the
following:
(1) ALEX STEWART ASSAYERS, LTD.
KNOWSLEY INDUSTRIAL ESTATE
KNOWSLEY
MERSEYSIDE L34 9ER
UNITED KINGDOM
(2) INSPECTORATE GRIFFITH USA, INC.
180 SOUTH MAIN STREET
P.O. BOX 558
AUBLER, PA 19002
(3) LEDOUX & COMPANY
359 ALTREO AVENUE
TEANECK, NY 07668
The employment of a firm as a representative or to perform
the initial assay shall automatically disqualify that firm for umpire
work for that lot.
5. Sale of Payable Gold and Payable Silver
-------------------------------------------------------
Alta hereby agrees to sell to Gerald and Gerald hereby agrees
to purchase from Alta the Payable Gold and Payable Silver
contained in the Dore under the terms and conditions set forth
herein.
Gold assay 40% or above:
"Payable Gold" shall be defined as 99.85% of the gold
content of the Dore as determined by the Agreed Assay
if the assay is above 40% gold.
"Payable Silver" shall be defined as 98.00% of the silver
content of the Dore as determined by the Agreed Assay.
Gold assay below 40%:
"Payable Gold" shall be defined as 99.80% of the gold
content of the Dore as determined by the Agreed Assay
if the assay is above 40% gold.
"Payable Silver" shall be defined as 99.50% of the silver
content of the Dore as determined by the Agreed Assay.
6. Term
-------
Subject to Paragraph 13 hereof, this agreement shall be for
the term of two (2) years. All obligations of the parties existing
at the expiration of this agreement shall be governed by the
terms hereof.
7. Pricing
---------
For all gold and silver not sold under Contract No. 41-2917-95
dated March 28, 1995, shall be sold to Gerald as follows:
A. Spot Pricing
At spot market bid price for gold and silver at any time
during normal business hours in New York. In addition,
Gerald will accept firm offers at specific prices and
maturity dates to work on behalf of Alta during our
business hours in New York or overnight in Gerald's
European or Far East Offices.
B. Forward Pricing
Gerald may provide Alta with a forward pricing facility,
subject to forward term, quantity and margin facility.
C. Options
Gerald may provide Alta with physical bullion options for
both puts and calls for gold and silver. Alta will have the
ability to buy or write such option instruments at its strike
price and for any odd day maturity for an agreed upon
term. In the case where Alta is a seller of an option
instrument, a mutually agreed margin facility will be
required. Gerald may make available to Alta a strategy
whereby Alta will be able to simultaneously buy puts and
write calls in order to establish a minimum and maximum
price band on production or portions thereof, without any
cash flow effect.
D. Hedging Strategies
In connection with the foregoing Gerald will, from time to
time, consult with Alta and advise it of various trading
and hedging strategies for the production from Alta's
mines.
8. Charges
---------
Treatment Charges: Minimum charge $350.00 per lot.
Gold assay 40% or above:
U.S. $0.70 per troy ounce of Dore received.
Gold assay below 40%:
U.S. $0.25 per troy ounce of Dore received.
Refining charge of $1.00 per troy ounce of gold
credited.
Transportation Charges: None.
9. Rejection of Material
----------------------------
The Dore shall be free of any elements above levels deemed
by the Refiner to impair the Refiner's ability to refine the Dore.
If a shipment of the Dore contains any elements that the
Refiner deems to impair its ability to refine the Dore, the
Refiner shall have the right to reject such shipment, and shall
have no liability for such rejection, provided the Refiner clearly
determines the reason(s) for rejecting such shipment.
However, Gerald shall use its best efforts to have such
rejected Dore treated elsewhere.
If the Refiner rejects any shipment of Dore, Gerald shall have
the right to liquidate the forward contracts for priced estimated
Payable Gold and Payable Silver with respect to such
shipment by selling back such estimated Payable Gold and
Payable Silver to Alta at a price per troy ounce equal to the
next available London P.M. Gold Fixing and London Silver
Fixing after notice from Gerald of its intent to sell back such
gold and silver to Alta. The net amount due one party to the
other as a result of such liquidation shall be paid within two (2)
business days after such liquidation and thereafter Alta shall
remove such Dore at its risk and expense from the Refinery.
10. Settlement of Differences
----------------------------------
In the event that quantity of priced estimated Payable Gold
and estimated Payable Silver in the shipment does not exactly
equal the quantity of the Payable Gold and Payable Silver in
such shipment, Alta and Gerald shall settle the difference by
Gerald purchasing any amount by which Payable Gold and
Payable Silver exceeds such quantity of priced estimated
Payable Gold and/or estimated Payable Silver or by Alta
repurchasing any amount by which priced estimated Payable
Gold and/or estimated Payable Silver exceeds Payable Gold
and/or Payable Silver.
In either case, pricing shall be at the open market bid or offer
price as appropriate for gold and for silver subsequent to the
day Gerald receives the final assays of such shipment or
when such differences become known.
Alternatively, in the event the priced estimated Payable Gold
and/or estimated Payable Silver is greater than the Payable
Gold or Payable Silver, Alta, at its option, may settle the
differences by delivering the shortfall of Payable Gold and/or
Payable Silver in the next shipment. In the event the priced
estimated Payable Gold and/or estimated Payable Silver is
less than the Payable Gold or Payable Silver, Alta can settle
the differences by selling the Payable Gold or Payable Silver
as described above or by accumulating such gold and/or silver
to be priced at a later date.
In the event that the provisional payment for a shipment is in
excess of the final payment, Alta will promptly return such
excess to Gerald by wire transfer or funds to Gerald's
designated bank account.
11. Payment
------------
(a) Provisional Payment
----------------------------
One hundred percent (100%) provisional payment for the
priced estimated Payable Gold based upon mine weights
and assays less estimated charges and less amounts
due from advance payments made by Gerald under
Gerald's Contract No. 41-2917-95 dated March 28, 1995,
will be made on the second business day after pricing
and electronic transfer in same day funds to Alta's
designated bank account.
(b) Final Payment
-------------------
On the second business day following finalization of
assays and agreement of settlement details, Gerald shall
make a final payment to Alta for the Payable Gold and
Payable Silver, if priced, in such shipment of Dore in an
amount equal to:
(i) the value of the estimated Payable Gold and
Payable Silver, if priced, of the shipment as
determined pursuant to Paragraph 7 hereof,
adjusted by
(ii) the settlement of differences determined in
accordance with Paragraph 10 hereof; less
(iii) the charges set forth in Paragraph 8 hereof with
respect to such shipment; less
(iv) the provisional payment made pursuant to
paragraph 11(a).
(c) All payments shall be made by electronic transfer of
funds in U.S. dollars to Alta's designated bank account.
(d) In the event that Alta elects to price the Payable Silver
subsequent to payment for Payable Gold, in accordance
with this paragraph 11, then payment for such priced
silver shall be made on the second business day
following such pricing.
12. Title
------
Title to all shipments of Dore and the gold and silver therein
contained, free and clear of any lien or encumbrance, shall
pass to Gerald upon delivery of the Dore to Gerald in
accordance with Paragraph 2 hereof.
13. Force Majeure
-------------------
Notwithstanding anything to the contrary herein contained, any
delay or failure in the production and/or refining of the Dore or
the release of the gold and silver contained therein to Gerald
caused by any factors outside the reasonable control of Alta,
the Refiner or Gerald shall be deemed to be an event of force
majeure and shall permit the delay of performance hereunder
for the duration of the force majeure. In the event force
majeure is declared, upon Gerald's direction, (a) no further
shipments shall be made by Alta during the force majeure
period, (b) the term of this agreement shall be extended for a
period equal to the force majeure period and (c) Gerald and
Alta shall agree on an alternate refinery within five (5)
business days.
Notwithstanding the foregoing, if a shipment of Dore fails to be
delivered to Gerald pursuant to paragraph 2 for any reason on
or before the 60th day after the scheduled delivery of the gold
or silver estimated to be contained therein, Gerald shall have
the right to cancel such shipment and liquidate the forward
contracts for priced gold or silver estimated to be contained in
such shipment by selling back such gold and silver to Alta at a
price equal to the next available London P.M. Gold Fixing and
the London Silver Fixing. The net amount due one party to
the other party as a result of such liquidation shall be made
within two (2) business days thereafter,
14. Events of Default (Alta)
-------------------------------
Alta shall be in default under this agreement upon the
occurrence of any one or more of the following events (each
such event is herein referred to as an "Event of Default"):
A. failure of Alta to pay (i) any amount of principal or
interest under the Notes (as hereinafter defined) or (ii)
any other indebtedness, obligations or liabilities of Alta to
Gerald, when the same shall become due and payable,
whether at the due date thereof or at a date fixed for
prepayment or by acceleration or otherwise which is not
cured within two days;
B. failure of Alta to perform, comply with or observe any
other term, covenant or agreement applicable to Alta
pursuant to this agreement, a certain facility agreement
of even date herewith between Alta and Gerald
(identified as Gerald's contract #41-2917-95 and
hereinafter referred to as the "Facility Agreement"), each
promissory note of Debtor issued pursuant to such
Facility Agreement (collectively, the "Notes") or any other
agreements between Alta and Gerald;
C. any representation or warranty made by or on behalf of
Alta pursuant to this agreement, the Notes, the Facility
Agreement or any other agreement, document,
instrument or certificate executed by Alta in favor of
Gerald shall be untrue or misleading in any material
respect as of the date such representation or warranty
was made or is deemed to have been made;
D. Alta shall (i) discontinue or abandon operation of its
business (except for normal shutdowns or force
majeure), (ii) apply for or consent to or suffer the
appointment of a receiver, trustee, custodian or liquidator
of it or any of its property, (iii) admit in writing its inability
to pay its debts as they mature, (iv) make a general
assignment for the benefit of creditors, (v) file, or have
filed against it, a petition for relief under Title 11 of the
United States Code, (vi) file, or have filed against it, a
petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the
material allegation of a petition filed against it in any
proceeding under any such law, or if corporate action
shall be taken for the purpose of effecting any of the
foregoing, (vii) become insolvent, (viii) fail to generally
pay its debts as they mature or (ix) have liabilities which
exceed the fair market value of its assets;
15. Remedies Upon Alta Event of Default
--------------------------------------------------
Upon or at any time after the occurrence of any Event of
Default, Gerald may (i) terminate performance of any or all of
its obligations to Alta, (ii) treat as immediately due and
payable any or all of Alta's obligations to Gerald, (iii) sell any
or all collateral in such manner as Gerald determines to be
commercially reasonable, (iv) exercise any or all of the
remedies set forth in Section 8 of the Security Agreement of
even date herewith between Alta and Gerald, as the same
may be amended or modified from time to time, and (v) close
out in whole or in part the priced quantities of gold and/or
silver which have not been delivered at market prices
therefore as determined in good faith by Gerald (upon any
close out, either party shall pay to the other the net amount
due hereunder, within two (2) business days).
16. Default (Gerald); Remedies of Alta
-----------------------------------------------
Gerald shall be in default under this Agreement if, the
following repayment and performance in full of all
indebtedness, liabilities and obligations of Alta to Gerald under
that certain Facility Agreement of even date herewith between
Gerald and Alta (Gerald's Contract No. 41-2917-95) and the
Notes therein, any one or more of the events described in
subpart D. of paragraph 14 hereof shall occur as to Gerald.
Upon or at any time after the occurrence of any such default,
Alta may terminate its obligation to deliver and sell Dore to
Gerald.
17. Governing Law
---------------------
This agreement shall be governed by and construed in
accordance with the laws of the State of New York without
giving effect to principles of conflict of laws. Each party hereto
consents to the exclusive jurisdiction of the courts of the State
of New York and/or of any U.S. Federal Court located in the
Borough of Manhattan in the City of New York over any
disputes arising in connection with the transaction
contemplated hereby. Final judgment in any action shall be
binding upon the parties hereto and may be enforced in such
courts or in the courts of any country to which jurisdiction the
party against whom the action is brought is subject.
ALTA AND GERALD EACH WAIVES TRAIL BY JURY IN ANY
LEGAL ACTION, PROCEEDING OR COUNTER CLAIM
BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON
ANY MATTER WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT, ANY OTHER
DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN
OR THEREIN),
18. Notices
----------
All notices hereunder shall be in writing and shall be sent by
telefax transmission or by certified mail to the attention of the
respective parties at the addresses set forth below:
Alta Gold Co. Gerald Metals, Inc.
601 Whitney Ranch Drive P.O. Box 10134
Suite 10 High Ridge Park
Henderson, NV 89014 Stamford, CT 06904
Attn: Robert Pratt Attn: Susan A. Scoggins
Telefax: 702-433-1547 Telefax: 203-329-4844
CC: Treasurer
Notices shall be deemed to have been given when received at
the respective party's address set forth above unless sent by
telefax, in which case the same shall be deemed given when
sent to the telefax address of the respective party set forth
above and confirmed as being received by the respective
party.
19. Miscellaneous
-------------------
This agreement constitutes the entire agreement between the
parties relating to the subject matter hereof, superseding all
prior agreements and understanding with respect thereto
(either oral or written) and may not be amended except by
writing signed by both parties.
This agreement may not be assigned by either party without
the written consent of the other parties (such consent not to
be unreasonably withheld), except that (i) Gerald may assign
its rights hereunder for financing purposes and (ii) following
repayment and performance in full of all indebtedness,
liabilities and obligations of Alta to Gerald under the Facility
Agreement and the Notes described therein, Alta may assign
its rights to receive payment hereunder.
To signify your agreement to these terms, will you kindly sign the
attached copy of this letter and return it to the undersigned for our
records.
ALTA GOLD CO. GERALD METALS, INC.
By: Robert N. Pratt By: Louis J. Fox
President & Chief Senior Vice President
Executive Officer
By: John A. Bielun
Vice President - Finance
Date: 3/28/95
STOCK OPTION AGREEMENT
----------------------------------------
THIS AGREEMENT is made as of the 28th day of March, 1995,
between ALTA GOLD CO., a Nevada corporation ("Company"), and
GERALD METALS, INC., a Delaware corporation ("Gerald").
W I T N E S S E T H
---------------------------
WHEREAS, Gerald has loaned certain funds to Company and has
provided financial and consulting services to Company including
consultation services in connection with hedging and precious metals
sales pursuant to that certain Purchase/Refining Agreement of even date
herewith;
NOW, THEREFORE, in consideration of Gerald's funding and
services and the covenants and agreements herein contained, the
parties hereto hereby agree as follows:
1. GRANT OF STOCK OPTION. Company hereby grants to
Gerald a stock
option (the "Option") entitled Gerald, at any time and from time to time
during the period set forth in Section 2 of this Agreement, to purchase
from Company, at a price of One and 1/32nd Dollars ($1-1/32) per share,
up to, but not exceeding in the aggregate, one hundred fifty thousand
(150,000) shares of Company's Common Stock ("Common Stock").
"Dollars" and the sign "$", as used in this Agreement, shall mean lawful
money of the United States of America.
2. VESTING AND EXERCISE OF OPTION. The Option shall
be fully vested and exercisable beginning on the date hereof and
continuing for a period of five (5) years from the date hereof.
3. METHOD OF EXERCISING OPTIONS. Gerald, from time
to time, may exercise the Option in whole or in part by delivering to
Company: (i) a written notice duly signed by Gerald, stating the number
of shares that Gerald has elected to purchase at that time from Company
and (ii) cash, check, bank draft, bank wire transfer or postal or express
money order payable to the order of Company, or Common Stock with a
fair market value on the exercise date, in an amount equal to the
purchase price of the shares then to be purchased.
4. ISSUANCE OF SHARES. As promptly as practical after
receipt of such written notification and consideration, Company shall
issue or transfer to Gerald the number of shares with respect to which
the Option has been so exercised and shall deliver to Gerald a certificate
or certificates therefor in Gerald's name.
5. TRANSFERABILITY AND INVESTMENT INTENT. The
Option is transferable by Gerald; Gerald agrees that any such transfer
will be in compliance with all applicable laws, including all federal and
state securities laws. Gerald acknowledges that the option has not been
registered under the Securities Act of 1933, as amended, and that the
Option may not be sold or transferred unless it is subsequently
registered or an exemption from registration is available. Gerald is
acquiring the Option for its own account, for investment purposes only
and not with a view toward the resale or distribution thereof.
6. REGISTRATION AND LISTING. Company hereby agrees
to promptly register the shares issuable under the Option with the
Securities and Exchange Commission on Form S-8 (or other comparable
available form) and to keep such registration effective during the term of
the Option, subject to notice of issuance, on NASDAQ and any other
stock exchange in which the Common Stock may be listed. Company
further agrees to promptly register or qualify the shares issuable under
the Option with any other applicable governmental body as may be
required, and to otherwise comply regulatory body as may be required,
and to otherwise comply with all applicable laws, rules and regulations
relating to Company's obligation to sell and deliver shares hereunder.
7. NOTICE. Every notice or other communication relating to
this Agreement shall be in writing, and shall be mailed to or delivered to
the party for whom it is intended at such address as may from time to
time be designated by it in a notice mailed or delivered to the other party
as herein provided; provided that, unless and until some other address is
so designated, all notices or communications by Gerald to Company
shall be mailed or delivered to Company at its office at 601 Whitney
Ranch Drive, Suite 10, Henderson, Nevada 89014, Attention: President,
and all notices or communications by Company to Gerald shall be mailed
or delivered to Gerald at its office at High Ridge Park, P.O. Box 10134,
Stamford, Connecticut 06904, Attention: Robert C. Kaeser, Vice
President.
8. ADJUSTMENTS. In the event of any change in the voting
Common Stock of Company by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of voting Common Stock, or any rights offering
to purchase voting Common Stock at a price substantially below fair
market value, or of any similar change affecting the voting Common
Stock, then in any such event the number and kind of shares subject to
the Option and their purchase price per share shall be appropriately
adjusted consistent with such change in such manner as to prevent
substantial dilution or enlargement of the rights granted to Gerald
hereunder.
9. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
ALTA GOLD CO.
By: Robert N. Pratt
Title: President
GERALD METALS, INC.
By: Robert C. Kaeser
Title: Vice President
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