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, 1997
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 (I.R.S. Employer
jurisdiction Identification
of incorporation Number)
or organization)
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 August 4, 1997 was
29,316,214.
-1-
<PAGE>
ALTA GOLD CO.
INDEX
Page
Number
------
PART I Financial Information
Item 1 Financial Statements
Condensed Balance Sheets as
of June 30, 1997 and
December 31, 1996 3
Condensed Statements of
Operations for the
Three Months Ended June 30,
1997 and 1996 5
Six Months Ended June 30, 1997
and 1996 6
Condensed Statements of Cash
Flows for the Six Months
Ended June 30, 1997 and 1996 7
Notes to Condensed Financial
Statements 9
Item 2 Management's Discussion and
Analysis of Financial Condition
and Results of Operations 13
PART II Other Information
Item 2 Changes in Securities 18
Item 4 Submission of Matters to a
Vote of Security Holders 18
Item 6 Exhibits and Reports on
Form 8-K 19
SIGNATURE 20
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<PAGE>
ALTA GOLD CO.
-------------
CONDENSED BALANCE SHEETS
------------------------
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash
equivalents $ 6,713,000 $ 518,000
Inventories 5,778,000 4,568,000
Prepaid expenses
and other 571,000 133,000
----------- ----------
Total current
assets 13,062,000 5,219,000
PROPERTY AND EQUIPMENT,
net
Mining properties and
claims 20,567,000 20,500,000
Buildings and
equipment 15,202,000 13,851,000
----------- -----------
35,769,000 34,351,000
Less - accumulated
depreciation (10,916,000) (10,237,000)
----------- -----------
Total property and
equipment, net 24,853,000 24,114,000
DEFERRED MINE DEVELOP-
MENT COSTS, net 20,103,000 16,037,000
OTHER ASSETS 1,272,000 1,251,000
----------- -----------
Total Assets $59,290,000 $46,621,000
=========== ===========
</TABLE>
The accompanying notes to condensed financial
statements are an integral part of these
statements.
-3-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED BALANCE SHEETS (continued)
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
1997 1996
---------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 590,000 $ 1,378,000
Accrued liabilities 832,000 1,058,000
Current portion of
long-term debt 4,513,000 5,417,000
----------- -----------
Total current
liabilities 5,935,000 7,853,000
LONG-TERM DEBT, net
of current portion 14,233,000 1,993,000
DEFERRED INCOME TAXES 662,000 662,000
OTHER LONG-TERM
LIABILITIES 1,648,000 509,000
----------- ----------
Total liabilities 22,478,000 11,017,000
----------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.001
par value; authorized
60,000,000 shares,
issued 29,204,092
and 29,022,371
shares,
respectively 29,000 29,000
Additional capital 44,513,000 44,328,000
Accumulated deficit (7,730,000) (8,753,000)
----------- -----------
Total stockholders'
equity 36,812,000 35,604,000
----------- -----------
Total liabilities
and stockholders'
equity $59,290,000 $46,621,000
=========== ===========
</TABLE>
The accompanying notes to condensed financial
statements are an integral part of these
statements.
-4-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
REVENUE $2,991,000 $5,186,000
---------- ----------
OPERATING COSTS AND
EXPENSES:
Direct mining,
production,
reclamation and
maintenance
costs 2,472,000 3,793,000
General and
administrative 386,000 377,000
Exploration 61,000 14,000
---------- ----------
2,919,000 4,184,000
---------- ----------
Income from
operations 72,000 1,002,000
---------- ----------
OTHER INCOME
(EXPENSE), net:
Interest income
and other 90,000 30,000
Interest expense
and other (2,000) (57,000)
---------- ---------
88,000 (27,000)
---------- ---------
INCOME BEFORE PROVISION
FOR INCOME TAXES AND
EXTRAORDINARY ITEM 160,000 975,000
PROVISION FOR INCOME
TAXES - -
---------- ----------
INCOME BEFORE EXTRA-
ORDINARY ITEM 160,000 975,000
EXTRAORDINARY ITEM:
Gain on extinguish-
ment of debt 784,000 -
----------- ----------
NET INCOME $ 944,000 $ 975,000
=========== ==========
NET INCOME PER
SHARE (Primary and
fully diluted):
Income before
extraordinary
item $ 0.01 $ 0.04
Extraordinary
item 0.02 -
------------ -----------
Net income per
share $ 0.03 $ 0.04
=========== ==========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
(Primary and
fully diluted): 34,868,975 31,319,906
=========== ==========
</TABLE>
The accompanying notes to condensed financial
statements are an integral part of these
statements.
-5-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
REVENUE $ 5,849,000 $10,371,000
OPERATING COSTS AND
EXPENSES:
Direct mining,
production,
reclamation and
maintenance costs 4,856,000 7,827,000
General and
administrative 785,000 750,000
Exploration 87,000 16,000
----------- -----------
5,728,000 8,593,000
----------- -----------
Income from
operations 121,000 1,778,000
----------- -----------
OTHER INCOME
(EXPENSE), net:
Interest income
and other 120,000 58,000
Interest expense
and other (2,000) (128,000)
----------- ----------
118,000 (70,000)
----------- ----------
INCOME BEFORE PROVISION
FOR INCOME TAXES AND
EXTRAORDINARY ITEM 239,000 1,708,000
PROVISION FOR
INCOME TAXES - -
---------- ----------
INCOME BEFORE
EXTRAORDINARY ITEM 239,000 1,708,000
EXTRAORDINARY ITEM:
Gain on extinguish-
ment of debt 784,000 -
---------- ----------
NET INCOME $1,023,000 $1,708,000
========== ==========
NET INCOME PER SHARE
(Primary and fully
diluted):
Income before extra-
ordinary item $ 0.01 $ 0.06
Extraordinary item 0.02 -
---------- ----------
Net income per
share $ 0.03 $ 0.06
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
(Primary and fully
diluted): 34,782,969 30,240,811
========== ==========
</TABLE>
The accompanying notes to condensed financial
statements are an integral part of these
statements.
-6-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $1,023,000 $1,708,000
Adjustments to
reconcile net income
to net cash provided
by (used in)
operating activities:
Depreciation,
depletion and
amortization 1,006,000 1,546,000
Gain on extinguish-
ment of debt (784,000) -
Stock compensation - 80,000
Decrease (increase)
in:
Inventories (1,210,000) 674,000
Prepaid expenses
and other (459,000) (230,000)
Increase (decrease)
in:
Accounts payable (788,000) (190,000)
Accrued and other
liabilities (226,000) (331,000)
---------- ---------
Net cash provided by
(used in) operating
activities (1,438,000) 3,257,000
---------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Additions to property,
buildings and
equipment (1,451,000) (1,322,000)
Additions to deferred
mine development
costs (3,179,000) (1,949,000)
---------- ----------
Net cash used in
investing activities (4,630,000) (3,271,000)
---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from
issuance of debt 17,978,000 1,707,000
Payment on debt (5,900,000) (1,265,000)
Proceeds from
exercise of stock
options 185,000 -
Other - (110,000)
----------- ----------
Net cash provided by
financing activities 12,263,000 332,000
----------- ----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 6,195,000 318,000
CASH AND CASH
EQUIVALENTS, beginning
of period 518,000 369,000
----------- ---------
CASH AND CASH
EQUIVALENTS, end of
period $6,713,000 $ 687,000
========== =========
</TABLE>
-7-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF CASH FLOWS (Continued)
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<S> <C> <C>
Cash paid during the period
for interest, net of amount
capitalized $ - $ 125,000
Cash paid during the period
for income taxes $ - $ 18,000
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
During the six months ended June 30, 1996,
the Company retired $3,000,000 in convertible
debentures - $1,600,000 through the issuance of
400,000 shares of common stock and 400,000
warrants and $1,400,000 through the exercise of
offset provisions as provided in the asset
purchase agreement underlying the convertible
debentures. Concurrently with the exercise of the
offset provisions, the cost and book value of the
assets acquired under the asset purchase agreement
was also reduced by $1,400,000.
During the six months ended June 30, 1997 and
1996, the Company capitalized interest of $42,000
and $59,000, respectively, on zero coupon
debentures to deferred mine development costs.
The accompanying notes to condensed financial
statements are an integral part of these
statements.
-8-
<PAGE>
ALTA GOLD CO.
-------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
---------------------------------------
(Unaudited)
Note 1. Interim Financial Statement Policies and
- -------------------------------------------------
Disclosures
- -----------
The interim, 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, 1996, 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 six months ended June
30, 1997 are not necessarily indicative of the
results that may be expected for the year ending
December 31, 1997.
Cash and Cash Equivalents
- -------------------------
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,
1997 and December 31, 1996, the Company had
reserved approximately $670,000 and $958,000,
respectively, for reclamation activities of which
approximately $133,000 is expected to be expended
during the last six months of 1997.
Income Taxes
- ------------
No provision for income taxes was required in
either 1997 or 1996 because of the utilization of
net operating loss carryforwards. As of June 30,
1997, the Company estimates that it has
approximately $23,978,000 in remaining net
operating loss carryforwards. These net operating
loss carryforwards are scheduled to expire during
the period from 2005 to 2011.
-9-
<PAGE>
Net Income per Share
- --------------------
Net income per share is computed based on the
weighted-average number of shares of common stock
and common stock equivalents, if dilutive,
actually outstanding during the period.
On a primary basis, net income per share is
based on common stock equivalents adjusted to
reflect additional shares that would be
outstanding (1) using the treasury stock method
assuming exercise of dilutive stock warrants and
stock options having exercise prices less than the
average market price, and (2) using the as-
converted method for convertible debentures.
On a fully diluted basis, net income per
share is based on common stock equivalents
adjusted to reflect additional shares that would
be outstanding (1) using the treasury stock method
assuming exercise of dilutive stock warrants and
stock options having exercise prices less than the
period end market price (when greater than the
average market price), and (2) using the as-
converted method for convertible debentures.
In February 1997, the Financial Accounting
Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128") which establishes a new
accounting standard for the computation and
reporting on net income per share. SFAS No. 128
is effective for financial statements issued for
periods ending after December 15, 1997, and early
adoption is prohibited. The Company expects that
there will be no material effect upon implementing
SFAS No. 128 on its net income per share
computations.
Note 2. Inventories
- --------------------
<TABLE>
<CAPTION>
Inventories consist of the following:
June 30, December 31,
1997 1996
-------- -----------
<S> <C> <C>
Precious metals:
Refined products $ 33,000 $ 132,000
In process 5,667,000 4,293,000
Consumable supplies 78,000 143,000
---------- ----------
$5,778,000 $4,568,000
========== ==========
</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 products are
valued at market.
-10-
<PAGE>
Note 3 - Long-Term Debt
- -------------------------
<TABLE>
<CAPTION>
Long-term debt is summarized as follows:
June 30, December 31,
1997 1996
-------- ------------
<S> <C> <C>
Notes payable to Gerald
Metals, Inc. and BHF-
Bank; interest at
LIBOR plus 2%; due
March 31, 1999: secured
by a first priority
mortgage on Kinsley
and Griffon $ 6,000,000 $4,900,000
Zero coupon $4,000,000
subordinated debenture;
discounted at an
imputed rate of 9%;
due June 2008 - 1,492,000
Note payable; interest
at 12%; due January 1998;
secured by property and
equipment 1,400,000 -
Notes payable; interest
at various rates of 8.2%
to 16.1%; due at various
dates between April 1998
and June 2000; secured
by equipment 1,346,000 1,018,000
Convertible debentures;
interest at 4%; due
April 14, 1999;
unsecured 10,000,000 -
----------- ---------
18,746,000 7,410,000
Less - current portion (4,513,000) (5,417,000)
Total long-term debt $14,233,000 $ 1,993,000
=========== ===========
</TABLE>
On April 10, 1997, the Company entered into a
loan agreement with Gerald Metals and BHF-Bank
Aktiengesellschaft ("BHF Bank") to borrow up to
$8,500,000. The loan is evidenced by two
promissory notes, each in the original principal
amount of $4,250,000, payable to Gerald Metals and
BHF Bank, respectively. The notes payable to
Gerald Metals and BHF Bank contain certain
covenants that impose various restrictions on the
ability of the Company to, among other things,
change the Company's corporate structure, pay
dividends on or repurchase the Company's common
stock, and create or suffer to exist any liens
(other than certain permitted liens) on the
Company's assets or properties. In addition, the
Company is required to sell 100% of its gold
production to Gerald Metals through March 31,
1999. All sales to Gerald Metals are made at the
market price prevailing at the time of sale.
-11-
<PAGE>
On April 14, 1997, the Company completed a
private placement of $10,000,000 in convertible
debentures (the "Debentures") to a small group of
accredited investors. The Debentures accrue
interest at an annual rate of four percent and
mature on April 14, 1999. The Debentures may be
converted into the Company's common stock at a
conversion price equal to the lesser of (i) 90% of
the average of the closing bid prices of the
Company's common stock for the five trading days
preceding a notice of conversion, or (ii) $4.00.
The Debentures contain certain covenants that
impose restrictions on the ability of the Company
to, among other things, pay dividends on or
repurchase the Company's common stock.
On May 12, 1997, the Company paid $750,000 in
cash to the holder of a $4,000,000 zero coupon
debenture due in 2008 (the "Debenture") in
exchange for the full and complete satisfaction of
the Debenture and the termination of an associated
agreement under which the holder of the Debenture
had the right to receive up to $4,000,000 in
royalties from future production from Copper Flat.
As the result of the transaction, the Company
retired the Debenture, which had a net book value
of $1,534,000, and recorded a one-time
extraordinary gain of $784,000.
-12-
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Section 21E of the Securities Exchange Act of
1934 provides a "safe harbor" for forward-looking
statements. Certain information included herein
contains statements that are forward-looking, such
as statements regarding management's expectations
about future production and development activities
as well as other capital spending, financing
sources and the effects of regulation. Such
forward-looking information involves important
risks and uncertainties that could significantly
affect anticipated results in the future and,
accordingly, such results may differ from those
expressed in any forward-looking statements made
herein. These risks and uncertainties include,
but are not limited to, those relating to the
market price of metals, production rates,
production costs, the availability of financing,
the ability to obtain and maintain all of the
permits necessary to put and keep properties in
production, development and construction
activities and dependence on existing management.
The Company cautions readers not to place undue
reliance on any such forward-looking statements,
and such statements speak only as of the date
made.
RESULTS OF OPERATIONS
- ---------------------
Comparison of Three Month Periods ended June 30,
1997 and June 30, 1996
In the second quarter of 1997, the Company had
$2,991,000 in revenue from the sale of 8,731
ounces of gold at an average price of $343/oz, as
compared to $5,186,000 in revenue from the sale of
13,000 ounce of gold at an average price of
$399/oz in the second quarter of 1996. In the
second quarter of 1997, the Company mined 453,245
tons of ore at Kinsley with an average grade of
0.0337 oz/ton gold containing 15,283 ounces of
gold and produced 8,751 ounces of gold from
Kinsley at an average cash cost of $207/oz. In
the second quarter of 1996, the Company mined
381,072 tons of ore at Kinsley with an average
grade of 0.0401 oz/ton gold containing 15,294
ounces of gold and produced 13,374 ounces of gold,
11,575 ounces from Kinsley at an average cash cost
of $225/oz and 1,799 ounces from pad-rinsing at
Easy Junior. Although gold mined at Kinsley was
essentially the same for both the second quarter
of 1997 and the second quarter of 1996, actual
gold production between both periods decreased
from 13,374 ounces to 8,751 ounces because of (1)
slower gold recoveries at Kinsley in the second
quarter of 1997 due to both weather conditions and
the increased elevation of the leach pad and (2)
the completion of gold production from Easy Junior
at the end of 1996. Production at Kinsley in the
second quarter of 1997 increased by 659 ounces as
compared to the first quarter of 1997 and is
expected to continue to increase in the third and
fourth quarters of 1997 through both regularly
scheduled production and the extended recovery of
in-process gold.
Direct mining, production, reclamation and
maintenance costs decreased from $3,793,000 in the
second quarter of 1996 to $2,472,000 in the second
quarter of 1997 principally due to (1) decreased
gold production at Kinsley, (2) lower cash
production costs at Kinsley and (3) the completion
of gold production from Easy Junior at the end of
1996. The decrease in cash production costs at
Kinsley between comparable periods is attributed
principally to an improvement in the stripping
ratio. In the second quarter of 1997, the
stripping ratio at Kinsley was 2.63:1.00 as
compared to a much higher stripping ratio of
4.58:1.00 in the second quarter of 1996.
-13-
<PAGE>
The change in general and administrative
expenses between comparable periods, from $377,000
in the second quarter of 1996 to $386,000 in the
second quarter of 1997, was de minimis.
Exploration expense increased from $14,000 in
the second quarter of 1996 to $61,000 in the
second quarter of 1997 principally as the result
of exploration activities conducted in the second
quarter of 1997 on properties acquired in the
latter half of 1996.
Interest income and other increased from
$30,000 to $90,000 between comparable periods as
the result of more funds being available for
investment in the second quarter of 1997. The
decrease in interest expense and other from
$57,000 in the second quarter of 1996 to $2,000 in
the second quarter of 1997 was due to increased
capitalization of interest in the second quarter
of 1997.
In the second quarter of 1997, the Company
recorded $784,000 from an extraordinary gain from
the retirement of debt. The gain resulted from
the retirement of a $4,000,000 zero coupon
debenture due in 2008. The Company paid $750,000
in cash to retire the debenture which had a net
carrying value of $1,534,000 at the time of
retirement.
No provision for income taxes was recognized
in either the second quarter of 1997 or the second
quarter of 1996 because of the utilization of net
operating loss carryforwards. As of June 30,
1997, the Company estimates that it has
approximately $23,978,000 in remaining net
operating loss carryforwards. These net operating
loss carryforwards are scheduled to expire during
the period 2005 to 2011.
Comparison of Six Month Periods ended June 30,
1997 and June 30, 1996.
In the first half of 1997, the Company had
$5,849,000 in revenue from the sale of 16,890
ounces of gold at an average price of $346/oz, as
compared to $10,371,000 in revenue from the sale
of 25,900 ounces of gold at an average price of
$400/oz in the first half of 1996. In the first
half of 1997, the Company mined 870,311 tons of
ore at Kinsley with an average grade of 0.0326
oz/ton gold containing 28,334 ounces of gold and
produced 16,843 ounces of gold from Kinsley at an
average cash cost of $214/oz. In the first half
of 1996, the Company mined 643,555 tons of ore at
Kinsley with an average grade of 0.0387 oz/ton
gold containing 24,930 ounces of gold and produced
25,971 ounces of gold, 22,667 ounces of gold from
Kinsley at an average cash cost of $234/oz and
3,124 ounces from pad-rinsing at Easy Junior.
Although gold mined at Kinsley increased by nearly
10% between comparable periods, actual gold
production between both periods decreased from
25,971 ounces to 16,843 ounces because of (1)
slower gold recoveries at Kinsley in the first
half of 1997 due to both weather conditions and
the increased elevation of the leach pad and (2)
the completion of gold production from Easy Junior
at the end of 1996. Production at Kinsley is
expected to improve in the second half of 1997
through both regularly scheduled production and
the extended recovery of in-process gold.
Direct mining, production, reclamation and
maintenance costs decreased from $7,827,000 in
the first half of 1996 to $4,856,000 in the first
half of 1997 principally due to (1) decreased gold
production at Kinsley, (2) lower cash production
costs at Kinsley and (3) the completion of gold
production from Easy Junior at the end of 1996.
The decrease in cash production costs at Kinsley
-14-
<PAGE>
between comparable periods is attributed
principally to an improvement in the stripping
ratio. In the first half of 1997, the stripping
ratio at Kinsley was 2.30:1.00 as compared to a
much higher stripping ratio of 5.02:1.00 in the
first half of 1996.
The change in general and administrative
expenses between comparable periods, from
$750,000 in the first half of 1996 to $785,000 in
the first half of 1997, was de minimis.
Exploration expense increased from $16,000 in
the first half of 1996 to $87,000 in the first
half of 1997 principally as the result of
exploration activities conducted in the first half
of 1997 on properties acquired in the latter half
of 1996.
Interest income and other increased from
$58,000 to $120,000 between comparable periods as
the result of more funds being available for
investment in the first half of 1997. The
decrease in interest expense and other from
$128,000 in the first half of 1996 to $2,000 in
the first half of 1997 was due to increased
capitalization of interest in the first half of
1997.
In the first half of 1997, the Company
recorded $784,000 from an extraordinary gain from
the retirement of debt. The gain resulted from
the retirement of a $4,000,000 zero coupon
debenture due in 2008. The Company paid $750,000
in cash to retire the debenture which had a net
carrying value of $1,534,000 at the time of
retirement.
No provision for income taxes was recognized
in either the first half of 1997 or the first half
of 1996 because of the utilization of net
operating loss carryforwards. As of June 30,
1997, the Company estimates that it has
approximately $23,978,000 in remaining net
operating loss carryforwards. These net operating
loss carryforwards are scheduled to expire during
the period 2005 to 2011.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of June 30, 1997, the Company had
$7,127,000 in working capital, a $9,761,000
improvement from the December 31, 1996 working
capital deficit of $2,634,000. The increase in
working capital was due to: (1) the issuance of
$10,000,000 in convertible debt, (2) the receipt
of $6,000,000 from an $8,500,000 credit facility
and (3) funds generated from gold production at
Kinsley. The Company believes that production
from Kinsley will provide adequate liquidity for
the Company's operational needs during the
remainder of 1997. The ability of the Company to
satisfy the cash requirements of its operations,
however, will be dependent upon the future
performance of Kinsley which will continue to be
influenced by the prevailing market price of gold
and other factors, certain of which are beyond the
control of the Company. Additional financing will
be required to begin site development and
construction at Olinghouse. The Company
anticipates that these additional funds will be
obtained through equipment and project financing,
although no assurance can be made that such funds
will be available or on terms acceptable to the
Company. See "Outlook" below.
-15-
<PAGE>
INVESTING AND FINANCING ACTIVITIES
- ----------------------------------
During the first half of 1997, the Company
expended $3,179,000 for deferred mine development
costs, principally for the permitting and
development of Olinghouse and Griffon and the
permitting of Copper Flat, and $1,451,000 for
equipment, principally for Griffon and Olinghouse.
During the same period, the Company (1) received
$17,978,000 in debt financing, including
$10,000,000 from the issuance of convertible debt,
$6,000,000 from an $8,500,000 credit facility,
$1,400,000 from a short-term bank loan and
$578,000 from equipment financing; (2) received
$185,000 from exercised stock options; and (3)
retired $5,900,000 of debt.
On April 10, 1997, the Company entered into a
loan agreement to borrow up to $8,500,000 from
Gerald Metals and BHF Bank. The Company used
approximately $4,700,000 of the loan to repay
certain indebtedness due to Gerald Metals. The
remaining funds are to be used for the
construction of Griffon, working capital and the
payment of certain expenses. The loan accrues
interest at LIBOR plus two percent. Interest is
payable monthly commencing on April 30, 1997, and
principal is payable in fifteen equal monthly
installments commencing on January 31, 1998. The
loan is secured by a first priority mortgage on
Kinsley and Griffon, and a first priority security
interest in all of the Company's tangible and
intangible personal property. The loan contains
certain covenants that impose restrictions on the
ability of the Company to, among other things,
change the Company's corporate structure, pay
dividends on or repurchase the Company's common
stock, and create or suffer to exist any liens
(other than permitted liens) on the Company's
assets or properties. As of August 8, 1997, the
Company had drawn down $6,000,000 of the loan.
On April 14, 1997, the Company completed a
private placement of $10,000,000 in convertible
debentures (the "Debentures") to a small group of
accredited investors. The Debentures accrue
interest at an annual rate of four percent and
mature on April 14, 1999. The Debentures may be
converted into the Company's common stock at a
conversion price equal to the lesser of (1) 90% of
the average of the closing bid prices of the
Company's common stock for the five trading days
preceding a notice of conversion, or (2) $4.00.
The Debentures contain certain covenants that
impose restrictions on the ability of the Company
to, among other things, pay dividends on or
repurchase the Company's common stock.
OUTLOOK
- -------
On July 16, 1997, after having received all
of the necessary permits, the Company began
construction and site development at Griffon. The
property is expected to begin producing gold in
late December 1997/early January 1998 at an
annualized rate of 35,000 oz/year. The Company
estimates that $4,267,000 will be required to put
Griffon into production - $2,102,000 for site
development and facilities, $1,820,000 for working
capital and $345,000 for additional equipment.
In addition to the funds necessary to put
Griffon into production, the Company has budgeted
the following expenditures for the remainder of
1997: (1) $1,104,000 for permitting and holding
costs at Olinghouse, (2) $521,000 for permitting
and holding costs at Copper Flat, (3) $962,000 for
debt servicing, (4) $790,000 for drilling and
associated activities, and (5) $133,000 for
reclamation.
-16-
<PAGE>
Based on (1) the funds on hand as of June 30,
1997, (2) the remaining $2,500,000 available under
the Company's loan facility with Gerald Metals and
BHF Bank, and (3) funds expected to be generated
from gold production at Kinsley, the Company
anticipates to be able to meet all of these
funding requirements.
Based on the most recent information
available, the Company presently anticipates that
it will not receive all of the permits necessary
to put Olinghouse into production until the first
half of 1998. Based on the most recently
completed mine plan, the Company anticipates that
$24,500,000 will be required to put Olinghouse
into production - $9,000,000 for site development
and facilities, $10,600,000 for equipment and
$4,900,000 for working capital - all of which will
require additional financing. Site development
will begin only after all of the necessary permits
are in place and financing has been arranged. The
Company is investigating potential financing
vehicles for Olinghouse, but has not yet finalized
commitments for such financing. No assurance can
be given that the Company will obtain either all
of the necessary permits or financing to put
Olinghouse into production.
As of June 30, 1997, the Company had (1)
purchased put options for 100,500 ounces of gold
at $335/oz, of which options for 3,500 ounces
mature each month from July 1997 to December 1997
and options for 7,000 ounces mature each month
from January 1998 to December 1998, and (2) sold
call options for 45,000 ounces of gold at $390/oz,
of which options for 3,750 ounces mature each
month from January 1998 to December 1998.
No assurance can be given that any of the
Company's announced mining projects will be
permitted, financed, constructed or result in any
significant contribution to the Company's
reserves, cash flow or earnings.
The Company's business is subject to various
risk factors, some of which are discussed in the
Company's report on Form 10-K for the year ended
December 31, 1996, "Items 1. and 2. Business and
Properties - Risk Factors."
-17-
<PAGE>
PART II OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
As described in Part I, "Item 1. Financial
Statements - Notes to Condensed Financial
Statements," Note 3, the Company is subject to
prohibitions against the payment of dividends and
the repurchase of common stock pursuant to the
terms of its $8,500,000 loan facility and its
$10,000,000 in convertible debentures.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
(a) The 1997 Annual Meeting of Stockholders
("Annual Meeting") of the Company was held on
June 13, 1997.
(b) At the Annual Meeting, the following
proposals were voted upon:
1. To elect two directors to serve for three
year terms, or until their respective
successors shall be duly elected or
appointed.
2. To approve an amendment to the Company's
Articles of Incorporation to reflect a
change in the address of the Company's
principal office.
3. To approve an amendment to the Company's
Articles of Incorporation to name a
resident agent and registered office as
required under Nevada law.
4. To approve an amendment to the Company's
Articles of Incorporation to indemnify
the Company's directors, officers,
employees and agents to the fullest
extent permitted by Nevada law, and to
limit the personal liability of the
Company's directors and officers.
5. To approve stock options issued to
certain executive officers of the
Company.
6. To approve the adoption of the Company's
1996 Directors' Stock Option Plan.
7. To approve the adoption of the Company's
1997 Stock Option Plan.
All of the proposals were approved as
presented and two directors were elected - Messrs.
Jack W. Kendrick and Thomas D. Mueller. 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. Robert N. Pratt, Ralph N.
Gilges, Thomas A. Henrie and John A. Keily.
-18-
<PAGE>
<TABLE>
<CAPTION>
A tabulation of the votes is as follows:
Absten- Broker
For Against tions Non-Votes
---------- --------- ------ ----------
<S> <C> <C> <C> <C>
Proposal #1
Kendrick 22,825,538 263,520 - -
Mueller 22,822,420 266,638 - -
Proposal #2 22,832,658 109,326 147,074 -
Proposal #3 21,624,301 167,751 179,537 1,117,469
Proposal #4 21,082,496 1,553,456 453,106 -
Proposal #5 10,091,752 2,090,317 550,404 10,356,585
Proposal #6 10,839,146 2,107,321 524,322 9,618,269
Proposal #7 10,741,216 1,819,755 566,668 9,961,419
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.01 Debenture Payoff and Royalty
Termination Agreement dated May 12,
1997, between Alta Gold Co. and
StarTronix International, Inc.
(b) Reports on Form 8-K:
Form 8-K dated April 10, 1997, reporting an
$8,500,000 loan agreement with Gerald Metals,
Inc. and BHF-Bank Aktiengesellschaft.
Form 8-K dated April 14, 1997, reporting the
issuance of $10,000,000 in 4% convertible
debentures due 2009.
-19-
<PAGE>
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 6, 1997 By: /s/ John A. Bielun
- -------------- ------------------
(Date) John A. Bielun
Chief Financial
Officer and
Principal
Accounting
Officer
-20-
<PAGE>
EXHIBIT 10.01
DEBENTURE PAYOFF AND ROYALTY TERMINATION
AGREEMENT DATED MAY 12, 1997, BETWEEN
ALTA GOLD CO. AND STARTRONIX INTERNATIONAL, INC.
<PAGE>
DEBENTURE PAYOFF AND ROYALTY TERMINATION
AGREEMENT
This Debenture Payoff and Royalty Termination
Agreement (this "Agreement") is made and entered
into as of this 12th day of May, 1997, by and
between Alta Gold Co., a Nevada corporation ("Alta
Gold"), and StarTronix International, Inc., a
Delaware corporation ("StarTronix") and the
successor in interest to Gold Express Corporation,
a Washington corporation ("Gold Express").
R E C I T A L S
In connection with the purchase of certain
assets from Gold Express, Alta Gold (i) issued a
zero coupon debenture to Gold Express dated June
14, 1994, in the maturity amount of $4,000,000,
which debenture was subsequently amended and
replaced with a debenture dated June 28, 1996 (the
"Debenture"), a copy of which is attached hereto
as Exhibit A, and (ii) granted a royalty right to
Gold Express pursuant to a certain Provisional
Copper Production Royalty Agreement (the "Royalty
Agreement") dated June 14, 1994, a copy of which
is attached hereto as Exhibit B.
Pursuant to the terms of the Debenture and
the Royalty Agreement, any payment made by Alta
Gold under the Royalty Agreement was to be
credited toward Alta Gold's obligations under the
Debenture.
The parties desire that the Debenture be paid
off and canceled and that the Royalty Agreement be
terminated, under the terms and conditions set
forth herein.
Now, Therefore, for and in consideration of
the premises and mutual covenants, agreements,
understandings, undertakings, representations,
warranties and promises, and subject to the
conditions hereinafter set forth, and intending to
be legally bound thereby, the parties do hereby
covenant and agree that the Recitals set forth
above are true and accurate, and further covenant
and agree as follows:
ARTICLE I
DEBENTURE AND ROYALTY AGREEMENT
1.1 Debenture Payoff
As of the Closing Date (defined below),
the Debenture shall be deemed paid in full and
canceled, and all of the rights and obligations of
Alta Gold and StarTronix under the Debenture shall
terminate.
1.2 Royalty Agreement Terminated
As of the Closing Date, the Royalty
Agreement shall be null and void and of no further
force and effect, and all of the rights and
obligations of Alta Gold and StarTronix under the
Royalty Agreement shall terminate.
1.3 Consideration From Alta Gold
At the Closing (defined below), Alta Gold
shall pay to StarTronix the amount of $750,000
(the "Payment Amount").
ARTICLE II
CLOSING
2.1 Closing Date
The closing (the "Closing") under this
Agreement shall be at the offices of Kummer
Kaempfer Bonner & Renshaw, 3800 Howard Hughes
Parkway, Seventh Floor, Las Vegas, Nevada, 89109,
on May 8, 1997 (the "Closing Date") at 10:00 a.m.
2.2 Alta Gold's Closing Documents
At the Closing, Alta Gold shall deliver to
StarTronix (i) the Payment Amount, and (ii) a
certificate of the corporate secretary of Alta
Gold as to the incumbency of the officer executing
this Agreement on behalf of Alta Gold.
2.3 StarTronix's Closing Documents
At the Closing, StarTronix shall deliver to
Alta Gold (i) the Debenture, marked "Paid in Full"
across the face of the Debenture and signed by
StarTronix, (ii) a certified copy of the
resolutions of the board of directors of
StarTronix authorizing the execution and delivery
of this Agreement and the performance by
StarTronix of its obligations hereunder, and (iii)
a certificate of the corporate secretary of
StarTronix as to the incumbency of the officers
executing this Agreement on behalf of StarTronix.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALTA GOLD
Alta Gold hereby makes the following
representations and warranties to StarTronix, and
Alta Gold warrants that the following are true and
accurate on the Closing Date:
3.1 Authority
Alta Gold has the full right, power, legal
capacity and authority to enter into, and perform
its obligations under this Agreement.
3.2 Binding Nature of Agreement
This Agreement constitutes the valid and
binding obligation of Alta Gold, enforceable
against Alta Gold in accordance with its terms.
3.3 No Violation
Neither the execution and delivery of this
Agreement, the consummation of the transactions
contemplated hereby, nor the fulfillment of the
terms hereof by Alta Gold will conflict with, or
result in a breach of or default under, any of the
terms or provisions of (i) any agreement, note,
indenture, mortgage, deed of trust, instrument,
lease or franchise to which Alta Gold is a party
or by which it or any of its assets or properties
is bound, or (ii) any law, judgment, order,
arbitration award, rule, regulation, ordinance,
writ, injunction or decree of any governmental
agency or instrumentality or court applicable to
or having jurisdiction over Alta Gold or any of
its assets or properties.
3.4 Valid Corporate Organization and Good
Standing
Alta Gold is a corporation duly organized,
validly existing and in good standing under the
laws of the State of Nevada, and has the corporate
power and authority necessary and appropriate to
own its properties and to engage in the business
in which it is presently engaged.
3.5 Legal Representation
Alta Gold acknowledges the receipt of the
advice of independent legal counsel prior to the
execution of this Agreement; that the legal nature
and effect of this Agreement has been fully
explained to it by counsel; and that Alta Gold
fully understands the terms and provisions of this
Agreement and its nature and effect. Alta Gold
further represents that it is relying solely on
the advice of its own counsel in executing this
Agreement and has not relied on the representation
of any other party, except as expressly set forth
herein, or of the counsel for any other party.
Alta Gold further represents that this Agreement,
and the terms hereof, were arrived at after
negotiations between the parties, and each
provision hereof shall be construed as having been
drafted by each and both of the parties hereto.
3.6 No Representations Untrue
No representation made by Alta Gold in this
Agreement contains any untrue statement of a
material fact or omits to state any material fact
known to Alta Gold necessary to make any
statement, warranty or representation not
misleading to StarTronix. Except as set forth in
this Agreement, Alta Gold does not make any
representations or warranties to StarTronix.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STARTRONIX
StarTronix hereby makes the following
representations and warranties to Alta Gold, and
StarTronix warrants that the following are true
and accurate on the Closing Date:
4.1 Holder of Debenture
StarTronix is the sole and complete successor
in interest to Gold Express and, in such capacity
owns and holds all of the rights and has all of
the obligations of Gold Express under the
Debenture and the Royalty Agreement, free and
clear of all liens, encumbrances, security
agreements, assignments, charges, restrictions or
any other claims of any type, kind or nature
whatsoever.
4.2 No Liens
StarTronix has not caused any lien,
encumbrance, security agreement, charge,
restriction, or any other claim of any type, kind
or nature whatsoever, to be recorded or filed
against any of the property or assets of Alta
Gold, including, without limitation, the Copper
Flat project in Sierra County, New Mexico.
4.3 Authority
StarTronix has the full right, power, legal
capacity and authority to enter into, deliver and
perform its obligations under this Agreement,
including the termination of the Debenture and the
Royalty Agreement.
4.4 Binding Nature of Agreement
This Agreement constitutes the valid and
binding obligation of StarTronix, enforceable
against StarTronix, and as applicable, against
Gold Express, in accordance with its terms.
4.5 No Violation
Neither the execution and delivery of this
Agreement, the consummation of the transactions
contemplated hereby, nor the fulfillment of the
terms hereof by StarTronix will conflict with, or
result in a breach of or default under, any of the
terms or provisions of (i) the articles of
incorporation or bylaws of StarTronix or any
agreement, license, note, indenture, mortgage,
deed of trust, instrument, lease or franchise to
which StarTronix is a party or by which it or any
of its assets or properties is bound, or (ii) any
law, judgment, order, arbitration award, rule,
regulation, ordinance, writ, injunction or decree
of any governmental agency or instrumentality or
court applicable to or having jurisdiction over
StarTronix or any of its assets or properties.
4.6 Valid Corporate Organization and Good
Standing
StarTronix is a corporation duly organized,
validly existing and in good standing under the
laws of the State of Delaware, and has the
corporate power and authority necessary and
appropriate to own its properties and to engage in
the business in which it is presently engaged.
4.7 Approval
No authorization, approval or consent of any
court, governmental body, regulatory agency, self-
egulatory organization or stock exchange or
market, or the stockholders of StarTronix, or any
third party, is required to be obtained by
StarTronix, for the execution and delivery of this
Agreement and the transactions as contemplated by
this Agreement.
4.8 Legal Representation
StarTronix acknowledges the receipt of the
advice of independent legal counsel prior to the
execution of this Agreement; that the legal nature
and effect of this Agreement has been fully
explained to it by counsel; and that each party
fully understands the terms and provisions of this
Agreement and its nature and effect. StarTronix
further represents that it is relying solely on
the advice of its own counsel in executing this
Agreement and has not relied on the representation
of any other party, except as expressly set forth
herein, or of the counsel for any other party.
StarTronix further represents that this Agreement,
and the terms hereof, were arrived at after
negotiations between the parties, and each
provision hereof shall be construed as having been
drafted by each and both of the parties hereto.
4.9 Fair Value
The Payment Amount represents a fair present
sale value of the Debenture and the Royalty
Agreement based on the relevant risks, the long-
term nature of the Debenture and the unsuccessful
efforts of StarTronix to secure better terms from
other potential purchasers of the Debenture and
the Royalty Agreement.
4.10 No Representations Untrue
No representation made by StarTronix in this
Agreement contains any untrue statement of a
material fact or omits to state any material fact
known to StarTronix necessary to make any
statement, warranty or representation not
misleading to Alta Gold. StarTronix knows of no
material facts or conditions adversely affecting
the Debenture or the Royalty Agreement which have
not been disclosed to Alta Gold. Except as set
forth in this Agreement, StarTronix does not make
any representations or warranties to Alta Gold.
ARTICLE V
RELEASE AND INDEMNIFICATION
5.1 Release
StarTronix, on behalf of itself, its agents,
successors, predecessors, assigns and all
affiliated or related persons or entities, both
past and present, hereby waives, discharges and
releases Alta Gold, it agents, successors,
predecessors, assigns and all affiliated or
related persons or entities, both past and
present, from any and all liabilities, debts,
demands, contracts, promises, agreements, claims,
causes of action, injuries, costs, attorneys'
fees, or damages of any kind or character, both
known and unknown, which may now exist or later be
discovered, arising from related to, or connected
with any and all disputes and relationships
between the parties including, without limitation,
all claims directly or indirectly related to or
arising out of (i) the Debenture and the Royalty
Agreement, and (ii) any lien, encumbrance,
security agreement, assignment, charge,
restriction or any other claim caused to be
recorded or filed by StarTronix against any
property or assets of Alta Gold.
5.2 Indemnification
StarTronix shall indemnify, defend and hold
harmless Alta Gold against any and all claims,
demands, losses, expenses, costs, obligations,
defenses and liabilities, including interest,
penalties, and reasonable attorneys' fees, that
Alta Gold may incur by reason of (i) any breach
of, or failure by StarTronix to perform, any of
its obligations, covenants, or agreements in this
Agreement, (ii) any inaccuracy in the
representations and warranties of StarTronix in
Article IV of this Agreement, (iii) the failure of
StarTronix to release fully and effectively Alta
Gold from its obligations under the Debenture and
the Royalty Agreement, and (iv) the failure of
StarTronix to release any lien, encumbrance,
security agreement, charge, restriction or other
claim on the property or assets of Alta Gold.
ARTICLE VI
COSTS
StarTronix and Alta Gold shall each pay all
costs and expenses incurred or to be incurred by
each of them respectively in negotiating and
preparing this Agreement and in taking whatever
actions may be necessary or appropriate to
consummate the transactions contemplated by this
Agreement, including the costs of obtaining any
consents or approvals.
ARTICLE VII
MISCELLANEOUS
7.1 Further Acts
StarTronix, at any time before or after the
Closing, will execute, acknowledge, and deliver
any assignments, releases, conveyances, and other
assurances, documents, and instruments of
transfer, reasonably requested by Alta Gold, and
will take any other action consistent with the
terms of this Agreement that may reasonably be
requested by Alta Gold. If requested by Alta
Gold, StarTronix further agrees to prosecute or
otherwise enforce in its own name for the benefit
of Alta Gold any claims, rights or other benefits
that are transferred to Alta Gold under this
Agreement and that require prosecution or
enforcement in StarTronix's name. In the event
that StarTronix does not execute, acknowledge or
deliver any such instruments of transfer or
otherwise fails to perform in accordance with this
Section 7.1 within two business days following the
receipt of notice, StarTronix hereby grants to
Alta Gold an irrevocable power of attorney,
coupled with an interest, to sign, execute,
acknowledge, deliver, release any and all
instruments or documents necessary to release Alta
Gold from any liens, claims or encumbrances
against the property or assets of Alta Gold
pursuant to this Agreement, or to otherwise
perform the obligations of StarTronix under this
Agreement.
7.2 Captions
The subject headings or captions of the
sections and subsections of this Agreement are
included only for purposes of convenience and
shall not affect the construction or
interpretation of any provisions contained herein.
7.3 Entire Agreement
This Agreement (together with all exhibits,
documents, agreements and instruments executed or
furnished in connection herewith) constitutes the
entire agreement between the parties pertaining to
the subject matter hereof, and supersedes any and
all prior or contemporaneous written or oral
negotiations, agreements, representations, and
understandings of the parties with respect to such
subject matter.
7.4 Expenses
If any legal action or any arbitration or
other proceeding is brought for the enforcement of
this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in
connection with any of the provisions of this
Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other
relief to which it or they may be entitled.
7.5 Notice
Any and all notices required under this
Agreement shall be in writing and shall be either
(i) hand-delivered, (ii) mailed, first-class
postage prepaid, certified mail, return receipt
requested, or (iii) delivered via a nationally
recognized overnight courier service, addressed
to:
Alta Gold: Alta Gold Co.
601 Whitney Ranch Drive
Suite 10
Henderson, Nevada 89014
Attention: President
StarTronix: StarTronix International, Inc.
2402 Michelson Drive
Irvine, California 92715
Attention: President
All notices hand-delivered or delivered via
overnight courier shall be deemed delivered as of
the date actually delivered. All notices mailed
shall be deemed delivered as of three business
days after the date postmarked. Any changes in
any of the addresses listed herein shall be made
by notice as provided in this Section 7.5.
7.6 Modification, Amendment or Waiver
This Agreement may not be amended,
supplemented or otherwise modified, and none of
its terms may be waived, unless such amendment,
supplement, modification or waiver is in writing
and executed by the party or parties to be bound
thereby. The failure of any party at any time or
times to require performance of any provision
hereof shall not affect the right of such party at
a later time to enforce the same, and no waiver of
any term or provision hereof on any one occasion
shall be deemed to be a waiver of the same or any
other provision hereof at any subsequent time or
times.
7.7 Binding Effect; Assignment
This Agreement shall be binding upon, and
shall enure to the benefit of and be enforceable
by, the parties hereto, and their respective
heirs, successors, assigns and legal
representatives; provided, however, that no
assignment of any rights or delegation of any
obligations provided for herein may be made by
either party to this Agreement without the prior
written consent of the other party.
7.8 Construction
This Agreement shall be construed in
accordance with its intent and without regard to
any presumption or any other rule requiring
construction against the party causing the same to
be drafted.
7.9 Governing Law
The laws of the State of Nevada shall govern
the validity, performance and enforcement of this
Agreement and the courts of Nevada shall have the
sole and exclusive jurisdiction over any matter
brought under or by reason of this Agreement.
7.10 Counterparts
This Agreement may be executed in
counterparts, each of which shall be deemed an
original and all of which taken together shall
constitute the same instrument.
7.11 No Third Parties Benefited
This Agreement is made and entered into for
the sole protection and benefit of Alta Gold and
StarTronix, their successors and assigns, and no
other person or persons shall have any right of
action hereon.
7.12 Severability
If any provision of this Agreement, or any
portion of any provision, shall be deemed invalid
or unenforceable for any reason whatsoever, such
invalidity or unenforceability shall not affect
the enforceability and validity of the remaining
provisions hereof.
7.13 Time of the Essence
At all times stated herein, time shall be of
the essence.
In Witness Whereof, the parties hereto have
duly executed this Agreement on the date first set
forth above.
"Alta Gold"
Alta Gold Co., a Nevada corporation
By
--------------------
: Robert N. Pratt
President and Chief Executive Officer
"StarTronix"
StarTronix International, Inc., a Delaware
corporation
By
--------------------
:
Its:
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
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0
0
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