SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A-1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12 (b) or 12(g) of
The Securities Exchange Act of 1934
NAPTAU GOLD CORPORATION
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(Name of Small Business Issuer in its charter)
Delaware 22-3386947
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(State or other Jurisdiction I. R. S. Employer
of incorporation or organization) Identification No.
9551 Bridgeport Road, Richmond, B.C., Canada V6X 1S3
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(Address of principal executive offices) (Zip code)
Issuer's telephone number, 604-273-9992
Securities to be registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
None
Securities to be registered pursuant to Section 12 (g) of the Act:
Common Stock
(Title of Class)
Common Stock, Par Value $0.001 per share
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TABLE OF CONTENTS
Page
PART I
ITEM 1. DESCRIPTION OF BUSINESS 1
ITEM 2. PLAN OF OPERATION 17
ITEM 3. DESCRIPTION OF PROPERTY 18
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 19
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS 21
ITEM 6. EXECUTIVE COMPENSATION 23
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 24
ITEM 8. DESCRIPTION OF SECURITIES 25
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS OF THE REGISTRANT'S COMMON
STOCK AND OTHER STOCKHOLDER MATTERS 28
ITEM 2. LEGAL PROCEEDINGS 29
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 29
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES 29
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS 30
APPENDIX A
GLOSSARY OF CERTAIN MINING TERMS 36
PART F/S - FINANCIAL STATEMENTS 42
PART III
ITEM 1.
EXHIBIT INDEX
Signatures
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Introduction
Naptau Gold Corporation ("Naptau" or the "Company") is engaged in the
acquisition, exploration and development of mineral properties, primarily gold
properties located in the Cariboo Mining District of British Columbia. The
Company was formed in January 1988 under the name Herman Melville Investment
Company, Inc. under the laws of the State of Delaware. Due to a lack of
available financing, the Company did not engage in any business operations until
June 1995. In June 1995 the Company changed its name to Naptau Gold Corporation
and commenced operations through the acquisition of four placer mining leases in
a transaction with Noble Metal Group Incorporated ("Noble") more fully described
below.
On June 6, 1995 the Company entered into an agreement of business combination
(the "Exchange Agreement") with Noble, a British Columbia company, pursuant to
which the Company acquired four placer mining leases (the "Noble Leases")
located in the Cariboo Mining District of British Columbia from Noble in
exchange for 4,000,000 shares of common stock $0.001 par value (the "Common
Stock"), of the Company, then representing a 59.7% interest in the Company. In
connection with the Exchange Agreement, the Company and Noble also entered into
an Operating Agreement pursuant to which Noble will remain the operator for the
mining activities on the Noble Leases through June 2005, with Noble having the
option of renewing the agreement for a further 10 years. The Company agreed to
pay Noble $1 million (the "Upfront Fee") in consideration for entering into the
Operating Agreement. In addition, the Company agreed to pay $1 million (the
"1995 Payment") in respect of 1995 exploration and development expenditures on
the Noble Leases and agreed to fund future annual operating expenditures on such
Leases. The Operating Agreement provides that Noble shall lease to the Company
the equipment and facilities necessary to conduct the mining operations on the
Company's placer leases at certain prescribed monthly rental rates (See
"Equipment and Facilities" below). In addition to funding future annual
operating expenditures on the Noble Leases, the Company agreed that the proceeds
from the mining operations on the Noble Leases will be divided between Naptau
and Noble as follows:
- For the first $1 million of proceeds or 2,500 ounces of gold
(converted to a dollar amount), whichever is lesser, 10% of such
proceeds are payable to Noble;
- For the next $1 million of proceeds or 2,500 ounces of gold
(converted to a dollar amount), whichever is lesser, 17.5% of such
proceeds are payable to Noble; and
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- For cumulative proceeds in excess of $2 million or 5,000 ounces of
gold (converted to a dollar amount), whichever is lesser, 25% of
such proceeds are payable to Noble.
In April 1996, the Company and Noble entered into an agreement extending the due
date of the Upfront Fee and the 1995 Payment until June 30, 1996, in
consideration for the Company's agreement to deliver 300 ounces of gold to Noble
from Naptau's share of the future production from the Placer Mining Leases and
to issue 85,000 shares of Common Stock to Noble. In July 1996, through a further
agreement, Noble agreed to cancel the $1,000,000 due it in consideration for
entering into the Operating Agreement and Naptau agreed to pay Noble, from
Naptau's future share of gold produced from its' Placer Mining Leases, 3,421
ounces of raw gold and Noble granted Naptau a further extension of time until
June 30, 1997 to pay the balance of $954,500 plus interest at 10% per annum,
payable semi-annually, due and owing by the previous agreement for the deemed
1995 mining operating expenses.
In October 1995, the Company entered into an agreement (the "PL#1160 Agreement")
with Dorothy Dennis, an affiliate of the Company (the "Affiliate") to acquire a
placer mining lease owned by the Affiliate which is adjacent to the Noble Leases
(the "PL#1160 Lease") for a purchase price equal to $200,000 plus the issuance
of 800,000 shares of Common Stock to such Affiliate. In April 1996, the Company
entered into an agreement with the Affiliate to extend the payment date of the
$200,000 until October 1996 in consideration for the issuance of 8,500 shares of
Common Stock. In December of 1996 the Company concluded a Second Extension
Agreement to extend the date for the payment of the $200,000 up to October, 1997
in consideration of the payment of 100 ounces of raw gold from the Company's
share of the gold produced from the mining operations.
In May 1996 the Company recorded the Bill of Sale Absolute on placer claims Lou
1 and Lou 2 (the "Lou Claims") which were earlier staked by William G. Timmins
as agent for Naptau. The addition of these claims gives the Company comfort as
the projected route of the channels under exploration appear to extend into
these claim areas. The claims are adjacent to and contiguous with the present
claims owned.
Because of the inconsistency of placer golds, none of the Company's prospects or
properties may be defined as containing proven or probable reserves. The Company
has carried out extensive exploration and geological delineations of the placer
bearing channels on its properties to the extent that it is of the opinion
(supported by earlier recommendations from Lorimer, September 1980 and January
1982, and completion of the additional site preparation recommended by W. G. T.
Consultants Ltd., October 1986 and Davenport, November 1987) that enough placer
gravels have been identified with indicated economically recoverable gold
content to warrant commencing a large scale testing program in 1997.
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If the indicated potential recoveries are confirmed during testing, the testing
program will be expanded into full-scale operations.
The Company has never generated any revenues from its mineral exploration
activities and does not expect to generate revenues until such time as it is
able to commence its placer mining operations. The Company's ability to commence
mining operations is dependent upon its ability to raise substantial additional
funds (see Item 2, "Plan of Operation"). All of the Company's exploration
activities to date have been conducted with funds provided from Noble. If the
Company is unable to raise the funds necessary to commence mining operations,
the Company may be unable to realize on the investment in its placer mining
leases. At December 31, 1996 the Company had an accumulated deficit of $207,882.
The financial statements of the Company contained herein have been prepared on a
going concern basis. If the Company were unable to raise the funds necessary to
commence mining operations or was unable to generate positive cash flow from
such operations, it might be forced to liquidate. In such event, it is unlikely
that the Company would realize the amounts indicated on the balance sheet upon
the sale of its placer properties.
For the definitions of certain mining terms used in this Registration Statement,
see Appendix A - Glossary of Certain Mining Terms.
For discussion of certain material risks involved in the Company's business, see
"Risk Factors" below.
History Of The Cariboo Mining District
The Company's exploration properties are comprised of the Placer Mining Leases #
29, 1159, 1850, 2093, and 1160, and the Staked Placer Claims Lou 1 and Lou 2
(collectively, the "Properties"). The Properties are adjacent properties which
are located at the confluence of Keithley Creek and Snowshoe Creek, in the
Cariboo Mining Division of British Columbia (the "Cariboo Mining Division").
In considering the following discussion of the history of gold recoveries in the
Cariboo Mining Division, it should be noted that historical gold recoveries
provide no assurance of future recoveries and as a result there can be no
guaranty that the Company will be successful in its gold exploration and mining
activities even though its Properties are located in the Cariboo Mining
Division. As a result, prospective shareholders should not place undue reliance
on these historical recoveries in evaluating the Company.
Since 1860, the Cariboo Mining Division has produced about 2.5 to 3 million
ounces of gold. Several large (200 cubic meters per day processed) placer mines
are now active in the region,
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as well as over 200 small operations, including hand mining and exploration
projects . (V.M. Levson and T.R. Giles, B.C.G.S. , Geological Fieldwork 1990,
Paper 1191-1).
Lower Keithley Creek, one of the famous placer creeks of the early Cariboo gold
excitement is credited with production of gold valued at $6,000,000
(approximately $96,000,000 at present day prices of $400 per ounce - W.G.T.
Consultants Ltd., June 1995) according to reports of the Minister of Mines. Most
of this gold was taken along a distance of 8 miles starting at the mouth of
Lower Keithley Creek.
Placer gold was first found on Snowshoe Creek in September 1860, as well as
Little Snowshoe and French Snowshoe Creeks. In 1868 it is reported that the
"Live Yankee" at the head of Little Snowshoe Creek was working and paying wages.
The August 5, 1868 issue of the Cariboo Sentinel reports that both banks of
Little Snowshoe Creek were being worked by separate companies.
In 1869 more than a dozen companies were working on Keithley Creek, while on
Little Snowshoe three companies had started to sink shafts. According to a B.C.
provincial government map dated 1885-1886 of Little Snowshoe and Keithley Creeks
nuggets of 36 ounces and 88 ounces valued at $400 and $1,100 at that time
(approximately $12,600 and $30,800 at present day prices of $350 per ounce),
were discovered.
Keithley Creek and its tributaries enjoyed intermittent production up until
1906. An operation on the Old Luce Claim (Live Yankee) employed a crew of seven
to ten men and maintained a hydraulic operation until 1913. Since 1913, when the
hydraulic operation closed down, there has been intermittent placer mining on
Little Snowshoe and Keithley Creek.
The pre-glacial channel (paleogulch) of Snowshoe Creek emerges into Keithley
Creek Valley just below the mouth of Snowshoe Creek. This pre-glacial channel
contains auriferous gravels along its length. The channel drained the southwest
flank of Yank's Peak which rises to 1900 meters above sea level and the
Company's Placer Lease #29 lies at an elevation of 1,100 meters.
Much of the past lode deposit history of the area consisted of staking "Quartz
Claims". These claims were 100 feet square and were normally placed on top of,
and encompassing, a showing. On October 24, 1862, Hayward and Jeffrey, two
prospectors in the area, announced their discovery of the Douglas Vein. This led
to a rush of quartz-claim staking on Little Snowshoe Creek in the Spring 1863.
In August 1864 Hayward and ten others known as the Rising Sun Company recorded
eleven claims on Yank's Peak. These claims were the most prominent of the lode
deposits in the area of Keithley and Snowshoe Creeks. This mountain was the site
of numerous discoveries of auriferous quartz veins. On Yank's Peak, a discovery
was made of four semi-parallel veins of
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oxidized quartz about 1.5 feet in width and 25 feet apart. Two open cuts 250
feet apart intersected and appeared to be the same vein on which two samples
were taken. One sample showed only a trace of gold and silver while the other
assayed 3.60 oz./ton gold and .4 oz./ton silver. The sample width in both cases
being 1.5 feet (Report of the Minister of Mines 16 Geol 5 p. Al 61).
Gibraltar Mines has been a long time producer in the area, and in recent years
the entire region has been the scene of active exploration and development for
precious and base metal lode deposits. A copper-gold porphyry deposit, some 56
km northeast of Williams Lake, 14 km from Naptau's Placer Claims, under the
direction of Imperial Metals Corporation, Mount Pauley Mines (also known as the
Cariboo-Bell Mine) is scheduled for production at an invested cost of
$102,000,000. Major and junior companies as well as individuals are currently
exploring both lode (hard rock) and placer deposits in the area surrounding the
Company's Properties. It should be noted, however, that gold recoveries in
surrounding areas provide no assurance of gold recoveries on the Company's
Properties and shareholders should not place undue reliance on these neighboring
recoveries in evaluating the Company.
Description Of The Placer Leases
General
The Company holds a 100% interest in all of its Properties which are designated
by the following numbers:
Placer Mining Leases
PL # 29 (Tenure #262692)
PL # 1159 (Tenure #262768)
PL # 1160 (Tenure #262769)
PL # 1850 (Tenure #262822)
PL # 2093 (Tenure #262832)
Placer Claims
Lou #1 (Tenure #337015)
Lou #2 (Tenure #337016)
The Placer Properties comprise approximately 815 acres of land in the aggregate
and constitute a contiguous mining site. The Placer Mining Leases are renewable
placer mining leases assigned to the Company pursuant to the Noble Agreement and
the PL#1160 Agreement. To maintain the Leases in full force and effect during
their respective terms, the Company is required to pay, in Canadian dollars,
dependent upon the specific type of lease, an annual licensing expenditure of
$5.00 per hectare of land on any Leases of Placer Minerals, $250.00
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on any Placer Mining Leases (PML) or Placer Leases (PL). The Placer Claims are
renewable annually by carrying out a minimum of $500.00 of qualified work or
paying $500.00 cash in lieu of work and a $100.00 recording fee. Except for the
division of gold with Noble pursuant to the Operating Agreement, there are no
other third party fees or royalty interests payable with respect to the Placer
Leases. The fees payable by the Company with respect to the Placer Leases
aggregate to Cdn $2,450, per annum, inclusive of payments in lieu of work.
In British Columbia the term "mineral title" as used in the Mineral Tenure Act
includes mineral and placer claims and leases.
Legal title to minerals in the province can be held under four types of tenure:
Freehold;
Crown granted mineral claim;
Located (staked) Mineral or Placer Claim; and
Mining or Placer Lease.
The Company holds the interests in its properties as either Located Mineral or
Placer Claims, or as a Mining or Placer Lease. Title to located Mineral and
Placer Claims, and Mining and Placer Leases is issued and administered by the
Mineral Titles Branch, Ministry of Energy, Mines and Petroleum Resources and are
subject to all provisions in the Mineral Tenure Act which is also administered
by the above noted Department. A claim or lease title conveys to the holder the
right to all minerals or placer minerals as defined in the Mineral Tenure Act
and which were available at the time of location or have subsequently become
available under the terms of the Act.
Placer minerals are ores of metal and other natural substances that occur either
loose or in fragmented rock. They are found in loose earth, gravel and sand,
having been transported from the original bedrock source by natural means such
as glacial and water action. Placer minerals also include materials from placer
mine tailings and previously mined deposits of placer minerals.
There are no surface rights included in the Company's Placer Leases, but the
Company has the right to use the surface of the claim for mining purposes only.
This does not include the right to live on the claim, or build a cabin, house or
any other building or dwelling.
A Mining or Placer Lease contains the same rights as a claim, but is also an
interest in land. However, this is not the same as surface rights and the right
to reside on the land is still contingent to the work program and requires
approval. All work carried out on a claim or lease must receive approval from
the District Inspector of Mines prior to commencement and work which disturbs
the surface by mechanical means requires a Notice of Work under the Mines Act.
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Location and Access
The Placer Leases are located at the confluence of Keithley Creek and Snowshoe
Creek 28 miles northwest of Likely, British Columbia in the Cariboo Mining
Division of British Columbia, and are accessible by gravel road. The town of
Likely is about 64 miles northeast of Williams Lake, British Columbia, and may
be accessed by paved highway or private plane.
Geology and Unproven Reserves
Metasedimentary rocks of the Cariboo Group, principally the Snowshoe Formation,
underlie the Placer Leases. The rocks are considered to range in age from
Hadrynian to Paleozoic. The formation is composed predominantly of elastic rocks
with subsidiary limestone. Micaceous quartzites are the most common type of
arenaceous rock while the argillaceous rocks are comprised mainly of phyllites
with fine siltstones. The calcareous rocks of the Snowshoe Formation are
important because of gold-bearing pyritic replacement of certain beds.
The main fault of the area is the Keithley Creek Thrust Fault that runs from
Shoals Bay on Quesnel Lake, up Keithley Creek and crosses Lightning Creek in the
Wingdam area; the fault is post-metamorphic. A north-south fault, probably a
continuation of the Antler Creek fault extends southward through Snowshoe and
Rabbit Creek converging with the Keithley Creek Thrust Fault on the Naptau Gold
Corporation property.
During pre-glacial times, weathering and stream action caused the disintegration
of the rocks and subsequent deposition of placer gold deposits in the valleys.
Through the glacial periods further disintegration occurred and the old
streambeds were filled. Postglacial streams cut new channels through the debris
resulting in further concentration of gold and other heavy minerals in stream
bed deposits leaving large lower grade gravel benches on the flanks, as is the
case on the Placer Leases.
"Tertiary buried placer deposits in the Cariboo can be subdivided into
paleochannel and paleoalluvial fan/fan-delta deposits, of these, paleochannel
deposits are the most common and have been further classified into four types
with distinctive sedimentary characteristics and geomorphic settings." (Levson,
Giles Bulletin '89).
The channels on the Placer Leases fall into the paleochannel and paleogulch
(narrow valley setting) category. Paleogulch placers occur in relatively steep,
narrow, canyon-type, buried channels that may have high boulder content. Pay
zones occur on or near bedrock. Paleogulches carry large volumes of water and
sediment during episodic floods.
High stream discharge, capacity and competence are ideal for mobilizing and
re-concentrating coarse placer gold and consequently such placers in the Cariboo
have proven to be productive.
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These streams have limited drainage areas and their deposits occur near the
primary ore source. Paleochannels also occur as buried channels directly
underneath, or adjacent to, modern alluvial channels, or as buried high level
valleys, 20 to 100 meters above and roughly parallel to modern streams.
Exploration Results and Potential Mineral Deposits
The Placer Leases have been the object of considerable exploration and testing
which has resulted in estimates of substantial mineral deposits. In 1982, an
independent mining consultant (Lorimer) calculated that 4,100,000 cubic yards of
gold-bearing gravels containing widely distributed gold values are present on
the north bench of Keithley Creek on Placer Lease #29. Although not homogeneous,
the gold is contained in zones of varying richness.
The "Tertiary Channel", a buried paleogulch channel on Placer Leases #29 and
#1850 which is a former course of Snowshoe Creek, was first identified by a
Seismic Refraction Survey in 1982. This Channel contains an estimated minimum of
1,000,000 cubic yards of recoverable and commercially viable gold bearing
gravels. Previous work and test production figures indicate that the average
grade of the pay zones ranges from 0.02 oz. per cubic yard to 0.03 oz. per cubic
yard. It should be noted that placer gold from Keithley Creek in comparison to
other creeks is of a very high fineness and on the Company's Leases averages 890
fine indicating proximity to the source (by comparison pure gold is 1000 fine
and the average fineness of placer gold obtained in California is 885 fine - BLM
Technical Bulletin 4, May 1973).
Significant potential occurs in extensions of buried channels and additional
channels within the Placer Leases. Preliminary interpretation of the results of
a Seismic Refraction Survey which was completed in May 1995 further defined the
Tertiary Channel and its rim rock edges on Placer Leases #29 and #1850. A second
subparallel north trending channel (the "Eastern Channel") has been located to
the east of the known Tertiary Channel on Placer Leases #29 and #1850. The two
channels appear to converge to the north of Placer Lease #1850. The width of
each channel varies from 50 to 80 meters and the eastern sub channel is
shallower than the known Tertiary Channel to the west.
The 1995 Seismic Refraction Survey also indicates the occurrence of a third,
sub-parallel channel (the "Third Channel") further to the east on Placer Leases
#1159, #1850 and #2093. Additional seismic work is required to define this
channel or fault structure.
Field results of a Seismic Refraction Survey completed in May 1995 on Placer
Lease #1160, traces the northern continuation of the known Tertiary Channel on
Placer Lease #29 through Placer Lease #1160. This Seismic Refraction Survey also
delineates the occurrence of a second placer channel on this lease (the "1160
Channel") converging with the known Tertiary Channel at the center of Placer
Lease #1160.
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At the bottom of the Tertiary Channel near Keithley Creek on Placer Lease #29,
large gold nuggets up to 1 1/2 ounces were recovered from gravel testing in
1994, thus providing an explanation for the occurrence of the coarse gold well
above the level of Keithley Creek, and significantly further east of the known
Tertiary Channel previously tested.
The newly delineated Channel on Placer Lease #1160 is estimated to be 85 meters
in width at the southern boundary, 40 meters in width at the center of the
Lease, and runs some 200 to 250 meters north, where it converges with the known
Tertiary Channel of Placer Lease #29, which is approximately the same width. The
total width of the two merging channels at the center of Placer Lease #1160 is
about 85 meters, which extends a further 200 meters through the northern
boundary of Placer Lease #1160 onto the Lou Claims. It is estimated that a
minimum of 1,000,000 cubic yards of placer gravels is contained on Placer Lease
#1160.
The Company believes that grades should be similar to the grades obtained on
Placer Lease #29, which were determined by various drilling programs, trenching,
other work and volume testing of the placer gravels. The recovery from the
testing ranged from 0.02 oz. gold per cubic yard to 0.03 oz. gold per cubic yard
which with gold valued at $380 per oz. converts to a recovery value of $7.60 to
$11.40 per cubic yard.
Exploration and Development Activities on the Placer Leases
It is estimated that the Company and the prior owners of the Placer Leases have
expended an aggregate of approximately $4,000,000 in exploring and developing
the Placer Leases. Placer Lease #29 was acquired by its original owner in 1978.
Additional placer leases were then staked by such entity in 1979 and 1980.
Preliminary testing was first carried out in 1981. Prior to 1993, access roads
were constructed and upgraded, camp trailers installed and several exploration
programs, including seismic refraction surveys, geochemical soil sampling
analysis, trenching, percussion and sonic drilling, and various bulk tests
utilizing-different types of equipment and recovery systems, were carried out.
During 1993-1994 old roads were widened, new roads were constructed, camp
facilities were expanded by the addition of two more trailers, an office and map
room, and a building for tools, supplies and drilling samples.
During the 1995 season the Company continued upgrading the physical site,
buildings and reinforcing roadways. Construction of the settling, tailing and
water reservoir ponds was completed. Clearing and raking of newly opened areas
continued as required. The Company also carried out geological, geophysical and
further Seismic Refraction surveys to delineate the channels and production
area. In total the Company expended just under $400,000 on the site and survey
programs.
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In 1996 an I.P. Survey was carried out on the most southerly tip of the Ancient
Tertiary channel, and the centre and eastern channels of Keithley Creek.
The I.P. Survey resistivity values of the centre channel revealed a narrow or
gulch-type depression in the bedrock. The resistivity values of the eastern
channel identified a pronounced depression in the bedrock with a magnitude of
some 75 meters in depth. These channels were previously identified by the 1995
Seismic Refraction Survey.
A test program of the upper gravels in the centre and most eastern channel (the
third channel) verified the existence of fine gold averaging $5.70 per cubic
yard based on a gold price of $380.00 per ounce.
The resistivity values from the IP Survey of the center channel revealed a
narrow or gulch-type depression in the bedrock. The resistivity values of the
eastern channel identified a pronounced depression in the bedrock with a
magnitude of some 75 meters in depth. These channels were previously identified
by the 1995 Seismic Refraction Survey.
In preparation for production, over 65,000 cubic yards of overburden material
was removed from the mining area. During the construction of several benches to
prevent slides and sloughing of materials an additional 10,000 cubic yards of
material was removed. Drainage ditches and a main waterway were constructed to
contain and redirect excess water flows during spring runoffs. New hauling roads
were constructed to expedite the movement of materials during production.
Valuation of the Noble Leases and PL#1160 Lease by W.G.T. Consultants Ltd.
To assist the Company in determining the value of the Noble Leases and their
potential for future development, in June 1995, the Company obtained an opinion
(the "Noble Valuation") on the fair market value of the Noble Leases from W.G.T.
Consultants Ltd. ("W.G.T."), an independent mining consulting firm headquartered
in Calgary, Alberta, Canada.
In rendering the Noble Valuation, W.G.T. relied on published and private
reports, maps and data (the "Exploration Data") provided by the Company, Noble
and past visits by W.G.T.'s personnel to the Lease sites in 1985, 1986, 1994 and
1995.
Based upon the Exploration Data, for purposes of the Valuation, W.G.T. estimated
that the Nobles Leases contained a minimum of 1,000,000 cubic yards of gold
bearing gravels in the "Tertiary Channel" located on Placer Lease #29, plus a
minimum of 1,000,000 cubic yards in the second channel to the east. In addition,
the Valuation took into account a potential of 2,000,000 cubic yards in the
third (centre) channel, and an allowance for additional potential
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mineral deposits estimated at 2,000,000 cubic yards for the lower north bench of
Placer Lease #1159, and the presence of other channels on untested portions of
the Noble Leases.
Based upon such estimates and depending on the average recovered grade of gold,
the Fair Market Value of the Noble Leases was estimated to be as follows (as of
June 1995 - Gold Price US$385.00 per ounce / Exchange Rate US$1.00-Cdn$1.40):
Assumed Grade
-------------
0.02 oz. 0.03 oz.
Au/cu. yd. Au/cu. yd.
---------- ----------
1. Estimated Net Present Value Cdn$11,911,000 Cdn$19,814,000
of Tertiary Channel and Second
Channel located to the east
2. Estimated Net Present Value Cdn$ 7,485,000 Cdn$12,990,000
----------- -----------
of Potential Placer Deposits
Total Estimated Net Present Value Cdn$19,396,000 Cdn$32,804,000
=========== ===========
US$13,854,000 US$23,431,000
=========== ===========
In addition, in May 1996, W.G.T. prepared a valuation opinion (the "1160
Valuation") with respect to Placer Lease #1160. Based upon the Exploration Data,
W.G.T., estimated that this Lease contained a minimum of 1,000,00 cubic yards of
gold bearing gravels with a minimum value (based upon anticipated grades of 0.02
to 0.03 ounces of gold per cubic yard) of $3,000,000.
The foregoing calculations for both the Noble Placer Leases and the 1160 Placer
Lease are based upon a gold price of $385 per ounce and have been discounted and
assigned various degrees of risk after deducting mining costs.
Copies of the Noble Valuation and the 1160 Valuation of Placer Leases are
available from the Company and the foregoing summary is qualified in its
entirety by reference to the full text of such Valuations set forth therein.
W.G.T. received a fee of $1,006.67 from the Company for updating the previous
Noble Valuation and a fee of $1,712.00 from the Affiliate for the preparation of
the 1160 Valuation.
In considering the foregoing Valuations, it should be noted that at present,
because of the inconsistency of placer golds, none of the Company's prospects or
properties may be
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defined as containing proven or probable reserves. The Company and prior owners
have carried out extensive exploration and geological delineations of the placer
bearing channels to the extent that it is of the opinion (supported by earlier
recommendations from Lorimer, September 1980 and January 1982 and completion of
the additional site preparation recommended by W. G. T. Consultants Ltd.,
October 1986 and Davenport, November 1987) that enough placer gravels have been
identified with indicated economically recoverable gold content to warrant
further testing in 1997. If the indicated potential recoveries are confirmed
during testing, the testing program will be escalated into full-scale
operations.
Licenses and Permits
The gold exploration and mining industry in Canada operates under both federal
and provincial legislation governing exploration, development, production and
decommissioning of mines. Such legislation relates to the method of acquisition
and ownership of mineral rights, labor, health and safety standards, royalties,
mining and income taxes, exports, reclamation and rehabilitation of mining lands
and other matters.
The mining industry in Canada is also subject to legislation at both the federal
and provincial levels concerned with the protection of the environment. In
particular, such legislation imposes high standards on the mining industry to
reduce or eliminate the effects of wastes generated by extraction and processing
operations and subsequently deposited on the ground or emitted into the air or
water. Accordingly, the design of mines and mills and the conduct of overall
extraction and processing operations are subject to the restrictions contained
in such legislation. In addition, the construction, development and operation of
a mine, mill and refinery typically entail compliance with applicable
environmental legislation and/or review processes and the obtaining of land use
permits, water licenses, discharge approvals and similar authorizations from
various governmental agencies.
Failure to comply with the requirements of environmental legislation may result
in orders being issued thereunder which may result in the cessation, curtailment
or modification of operations or may require installation of additional
facilities or equipment to protect the environment. Violators may be required to
compensate those suffering loss or damage by reason of their mining activities
and such violators, including officers and directors thereof, may be fined or in
some cases imprisoned if convicted of an offense under such legislation.
Provincial mining legislation establishes requirements for the decommissioning,
reclamation and rehabilitation of mining properties in a state of temporary or
permanent closure. Such closure requirements relate to the protection and
restoration of the environment and the protection of public safety.
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All the necessary licenses and permits that are required for the Company to
commence placer mining operations on the Placer Leases are in place and are
valid until December 2001. These include a Mining Permit, Hydraulic License,
Water Use Permit and Disposal Permit. In addition, the Company has received a
"free miner certificate" from the Province of British Columbia that is required
in order to explore for minerals or placer minerals or acquire a mineral or
placer title in British Columbia. As only an individual free miner can locate
(stake) a claim, a corporate free miner must locate a claim by having an
individual free miner act as an agent in staking the claim.
Equipment and Facilities
In accordance with the Operating Agreement, Noble has made available the
facilities and equipment necessary to conclude the Company's exploration program
and commence production. The composition and cost of such camp facilities and
equipment is agreed to by budget prior to the commencement of operations each
season. The Company is currently indebted to Noble in the amount of $137,068 for
equipment and facilities provided to date.
Risk Factors
Ownership of the Company's securities is highly speculative, involves a high
degree of risk and is not suitable for anyone who cannot afford the loss of his
entire investment. In addition to the other information contained herein,
prospective stockholders should carefully consider the following risk factors
before acquiring securities of the Company.
Limited Operations; Need for Additional Funds. To date, prior exploration
programs have produced in excess of 300 ounces of raw gold from various test
programs at the Properties. Nevertheless, the Company, has not generated any
revenues and will not generate revenues until the commencement of placer mining
operations which are subject to the Company's ability to raise the required
additional funds. Even though carrying costs to maintain the leases in good
standing are minimal, an inability to raise the required capital may result in
the Company being unable to realize a return on its investment in its placer
mining leases and, possibly, forfeiting its interest in the Placer Leases. At
December 31, 1996, the Company had an accumulated deficit of $207,882.
Preparation of Financial Statements. The financial statements of the Company
contained herein have been prepared on a going concern basis. If the Company
were unable to raise the funds necessary to commence mining operations or was
unable to generate positive cash flow from such operations, it might be forced
to liquidate. In such event, it is unlikely that the Company would realize the
amounts indicated on the balance sheet upon the sale of its mineral properties.
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No Proven or Probable Reserves. The Company is in the exploration stage, and at
present, because of the inconsistency of placer golds, none of the Company's
prospects or properties may be defined as containing proven or probable
reserves. The Company and the prior owners of the Placer Leases have carried out
extensive exploration and geological delineations of the placer bearing channels
to the extent that the Company is of the opinion (supported by earlier
recommendations from Lorimer, September 1980 and January 1982 and upon
completion of the additional site preparation recommended by W. G. T.
Consultants Ltd., October 1986 and Davenport, November 1987) that enough placer
gravels have been identified with indicated economically recoverable gold
content to warrant commencing a large scale testing program in 1997. If the
indicated potential recoveries are confirmed the testing program is designed to
escalate into full-scale operations. The Company will be able to determine the
extent to which its prospects or properties contain a commercially viable ore
body (reserves) upon completion of appropriate geological exploration work and a
comprehensive evaluation based on unit cost, grade, resources and other factors,
to conclude economic feasibility.
If the Company is able to establish proven and probable reserves, market price
fluctuations of gold as well as increased production costs or reduced recovery
rates, may nevertheless render ore reserves containing relatively lower grades
of mineralization uneconomic and may ultimately result in a restatement of ore
reserves.
Speculative Nature of Mineral Exploration and Development. Mineral exploration,
particularly for gold and other precious metals, is highly speculative in
nature, involves many risks and frequently is non-productive. There can be no
assurance that the Company's mineral exploration efforts will be successful.
Placer Mining, the type of mining that the Company proposes to engage in, is a
non-definitive type of mining as opposed to lode or hard rock mining in that
recovery of gold or gold bearing ores are not contiguous as in veins and
therefore there is no guarantee of a consistent rate and quality of recovery for
the expenditure of specific dollars.
Once gold mineralization is discovered, it takes a number of years from the
initial phases of exploration until production is possible, during which time
economic feasibility of production may change. Substantial expenditures are
required to establish reserves through drilling and other exploration
procedures, to determine metallurgical processes to extract the metals from the
placer deposits and, in the case of new properties, to construct mining and
processing facilities. As a result of these uncertainties, no assurance can be
given that the Company's exploration programs will result in commercially viable
gold production.
Mining Risks and Insurance. The business of gold mining is generally subject to
a number of risks and hazards, including environmental hazards, industrial
accidents, labor disputes, encountering unusual or unexpected geologic
formations, cave ins, flooding, forest fires, periodic interruptions due to
inclement or hazardous weather conditions and gold bullion losses.
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Such risks could result in damage to, or destruction of, mineral properties or
producing facilities, personal injury, environmental damage, delays in mining,
monetary losses and possible legal liability. Although pursuant to the Operating
Agreement, Noble is required to maintain adequate insurance coverage for risks
relating to personal injuries, property damage including business interruption
coverage and to the extent possible potential environmental claims, no assurance
can be given that such insurance will be available at economically feasible
premiums.
Feasibility Studies. The Company has relied heavily upon the study conducted by
W.G.T. Consultants Ltd., Lorimer, September 1980 and January 1982, Davenport,
November 1987 and the Company's exploratory activities in determining whether
the Placer Leases can support full scale operations. Such evaluations may prove
to be unreliable.
Risks of Foreign Operations. The Company's operations in British Columbia,
Canada, are subject to the risks normally associated with conducting business in
foreign countries, including foreign exchange controls and currency
fluctuations, foreign taxation, labor disputes and uncertain economic
environments or other risks which may limit or disrupt production in markets,
restrict the movement of funds or result in the depravation of contract rights
or the taking of property by nationalization or expropriation without fair
compensation. Although the Company has not experienced any problem in Canada
rising from nationalistic policies, political instability, economic instability,
labor disputes or currency fluctuations or restrictions, there can be no
assurance that such a problem will not arise in the future. Laws and policies of
the United States affecting foreign trade, investment and taxation may also
adversely affect foreign operations and investments.
Compliance with Governmental Regulations. The Company's activities are subject
to extensive federal, provincial and local laws and regulations in Canada
controlling not only the mining of and exploration of mineral properties, but
also the possible effects of such activities upon the environment. Existing and
possible future legislation and regulations could cause additional expense,
capital expenditures, restrictions and delays in the development of the
companies properties, the extent of which cannot be predicted by management of
the Company.
Reliance on Third Parties for Exploration and Mining Services. The Company has
entered into the Operating Agreement with its principal stockholder, Noble,
pursuant to which Noble has agreed to provide all of the exploration and mining
services and lease the required equipment and facilities to the Company in order
to develop and operate the Placer Leases. The loss of Noble's services could
have a material adverse affect on the Company.
Capitalization and Commercial Liability. The exploration and development of
mineral properties is a capital intensive enterprise. As a result the Company
expects it will be necessary to obtain additional funding to continue its
operations. The Company has limited financial resources and there can be no
assurance that additional funding will be available to the Company
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for exploration or development of properties it may acquire or to fulfill its
obligations under any applicable agreements. There also can be no assurance that
the Company will be able to obtain adequate financing in the future or that the
terms of such financing will be favorable, or that joint ventures will be
available for the Company's properties once acquired. Failure to obtain such
additional financing could result in delay or indefinite postponement of
exploration and development of acquired properties with the possible loss of
such properties. Such delays could have material adverse effect on the Company's
business, financial condition and results of operation.
If the Company proceeds to production on a particular property, commercial
viability will be affected by certain factors that are beyond the Company's
control, including the specific attributes of the deposit, the fluctuation in
metal prices, the costs of constructing and operating a production facility in a
specific environment, the cost and availability of processing and refining
facilities, the availability of economical sources of energy and water,
government regulations, including regulations relating to prices, royalties,
duties, taxes, restrictions on production, quotas on exportation of minerals, as
well as the costs of protection of the environment and agricultural lands.
Individually or in combination, these factors could have a material adverse
effect on the Company's business, financial condition and results of operations.
Requirement for Permits and Licenses. The operations of the Company may require
licenses and permits from various governmental authorities. Management believes
that the Company can obtain all necessary licenses and permits to carry on the
activities which it anticipates conducting under applicable laws and regulations
in respect to properties acquired. There can be no assurance, however, that the
Company will be able to obtain or maintain in force all necessary licenses and
permits that may be required to conduct exploration or commence construction or
operation of mining facilities at properties under exploration. The failure to
obtain or maintain a necessary license could have a material adverse effect on
the Company's business, financial condition or results of operations.
Competition. The mineral exploration and mining business is competitive in all
of its phases. The Company competes with numerous other companies and
individuals in a search for and the acquisition of attractive mineral
properties. Many of these companies possess greater financial and technical
resources. The Company's ability to develop reserves in the future will depend
not on its ability to develop its present properties, but also on its ability to
select and acquire suitable prospects for mineral exploration. There can be no
assurance that the Company can effectively compete in this environment.
Uninsurable Risks. In the course of exploration, development and production of
mineral properties, several risks, and in particular, unusual geological or
unexpected operating conditions, may occur. The Company may also incur liability
as a result of pollution and other casualties. The Company may not be able to
insure fully, if at all, against such risks or the
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Company may decide not to take out insurance against such risks as a result of
high premiums or other reasons. Paying compensation for obligations resulting
from such liability may entail significant costs for the Company and could have
a material adverse effect on the Company's business, financial condition or
results of operations.
A Lack of Public Market; Possible Volatility of Stock Price. There is no public
market for the Company's Common Stock. There is no assurance that such a market
for the Common Stock will develop or that, if developed, such market will be
sustained. Market prices for the Common Stock will be influenced by a number of
factors, including exploration results obtained from the Company's mineral
properties, the Company's ability to acquire additional mineral properties,
quarterly variations in the financial results of the Company and its
competitors, changes in earnings, estimates by analysts, conditions in the
natural resource markets, the overall economy and financial markets and
political factors.
Gold Price Volatility. To successfully develop a commercial gold mining
operation, the Company's profitability will be significantly affected by changes
in the market price of gold. Gold prices fluctuate widely and are affected by
numerous factors such as expectations for inflation, levels of interest rates,
currency exchange rates, central bank sales, forward selling by producers,
demand for precious metals, global or regional political and economic crises and
production costs in major gold producing regions. The aggregate effect of these
factors, all of which are beyond the Company's control, is impossible for the
management of the Company to predict.
Cautionary statement for Purposes of The "Safe Harbor" Provisions of The Private
Securities Litigation Reform Act of 1995. The United States Private Securities
Litigation Reform Act of 1995 provides a new "safe harbor" for certain
forward-looking statements. The following factors set forth under "Risk Factors"
among others, could cause actual results to differ materially from those
contained in forward-looking statements made in this Registration Statement,
future filings by the Company with the SEC, in the Company's press releases and
in oral statements made by authorized officers of the Company. When used in this
Registration Statement, the words "estimate," "project," "anticipate," "expect,"
"intend," "believe" and similar expressions are intended to identify
forward-looking statements.
ITEM 2. PLAN OF OPERATION
The Company intends to complete exploratory activities on the Placer Leases
during the early part of the 1997 mining season, which generally runs from late
April to mid- November. Based upon results of exploratory activities to date,
the Company intends to move a production plant on site with a processing
capacity of approximately 400,000 cubic yards of material over the course of the
mining season. The Company anticipates that it will process between 150,000 to
200,000 cubic yards of material during the 1997 mining season. This estimate
assumes
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shakedown time will be required during start-up to production and the necessity
to process marginal pay gravels while working its way into the main channel
deposits.
The processing plant will cost approximately $250,000. Funds necessary to
acquire the plant and to commence operations will be loaned by Noble. It is
anticipated that operating costs for the 1997 mining season estimated at
approximately $1,500,000 will be offset, in part, with funds from initial
operating activities. Currently, the Company is obligated to Noble in the amount
of $1,295,831 pursuant to the Operating Agreement.
The Company will need to raise cash, in the form of either debt or equity, to
conduct operations as planned. Currently, the Company anticipates that cash
sufficient to carry it through the 1997 mining season will be provided by Noble.
Nevertheless, the Company intends to seek to raise up to $3,000,000 through a
private placement of either debt or equity. There is no assurance that any
monies will be made available to the Company or whether, if available, the terms
thereof will be acceptable to the Company.
ITEM 3. DESCRIPTION OF PROPERTY
The Company occupies office space provided by its President, E.D. Renyk, at 9551
Bridgeport Road, Richmond, BC, Canada, V6X 1S3. No rent is paid for the use of
this office. The space is adequate for the planned future conduct of the
Company's business over the next twelve months.
The following is a description of the Placer Leases that were assigned to the
Company in 1995 pursuant to Exchange Agreements with Noble and an Affiliate. All
Placer Leases or Placer Claims carry the right to multiple extensions.
Placer Mining Lease #29 was originally issued to Howard Reid and Addison
Manners of Vancouver, B.C. and acquired on March 15, 1981 by Noble. The
present Lease term of 10 years became effective October 7, 1991 and
expires October 15, 2001.
Placer Mining Lease #1159 was originally issued to Mr. J. Emery of
Vancouver, B.C. and acquired on August 21, 1980 by Noble. The present
lease term of 5 years became effective June 28, 1993 and expires October
15, 1998.
Placer Mining Lease #1850 was issued July 31, 1979 to Noble. The present
lease term of 5 years became effective September 27, 1994 and expires on
October 15, 1999.
Placer Mining Lease #2093 was issued September 14, 1979 to Noble. The
present lease term of 5 years became effective September 27, 1994 and
expires on October 15, 1999.
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Placer Mining Lease #1160 was staked by agents for D. Dennis. The present
lease term of five years expires on December 29, 1998.
Placer Claims Lou 1 and Lou 2 were staked by William G. Timmins as agent
for Naptau and registered in Naptau's name May 31, 1996.
The Company, through Noble, has filed an application with the governing bodies
for a grouping of leases and to upgrade each of its title to a "Lease of Placer
Minerals" as is now allowed under the revised provisions of the "Mineral Tenure
Amendment Act, 1995).
Placer Claims
Placer claims are valid for one year. To maintain a placer claim the holder
must, on or before the anniversary date of the claim, pay the prescribed
recording fee and either: (a) record the exploration and development work
carried out on that claim during the current anniversary year which must equal
or exceed the minimum specified value per unit; or (b) pay cash in lieu of work.
If the value of work performed in a year is greater than the required minimum,
the surplus is termed excess work. This excess work, in full year multiples, can
be applied to cover work requirements on the claim for additional years, subject
to the limits specified in applicable regulations.
Placer Mining Leases (PML)/Placer Leases (PL)
Placer leases (PML or PL) issued under the former acts are subject to an annual
rental which must be paid on or before the anniversary date each year. If the
annual rentals are not paid these leases automatically forfeit and title to the
ground can only be re-acquired by locating a placer claim. These placer leases
are entitled to one term extension under the Mineral Tenure Act.
The holder of a valid placer lease (PML or PL) issued under the former acts or a
placer claim, or an adjoining group of these, may apply for a Lease of Placer
Minerals (LPM). A LPM is issued for a term of ten years and may be renewed for
further terms of up to ten years each. During the term of the lease an annual
rental must be paid on or before the anniversary date each year. A lease may be
ordered forfeited if the rental is not paid.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 30, 1997 by its executive
officers and directors, both individually and as a group, and by each person
known by the Company to own more than 5% of the outstanding Common Stock:
Number of Percentage of
Name Shares owned (1) Shares Owned (2)
Noble Metal Group Incorporated 4,085,000 58.92%
801-409 Granville Street
Vancouver BC, Canada V6C 1T2
James A. Howell 1,150,000 16.59%
Maritime Transport
& Technology, Inc.
161 W. 15th St., Ste. 7A
New York, NY 10011
E.D. Renyk 390,000 5.62%
9551 Bridgeport Rd.
Richmond, BC, Canada V6X 1S3
Director, President &
Chief Financial Officer
J.J. McIntyre 390,000 5.62%
McIntyre Winteringham
1501 - 543 Granville St.
Vancouver, BC, Canada V6C 1X8
Director & Secretary
Lloyd Mear 70,000 *
9551 Bridgeport Rd.
Richmond, BC, Canada V6X 1S3
Director
D. Dennis 808,500 11.66%
705 - 588 Broughton St.
Vancouver, BC, Canada V6G 3E3
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Warren W. Gayle 20,000 *
2081 Gordon Avenue
West Vancouver, BC, Canada V7V 1V8
Director
Murray A. Braaten 20,000 *
708 W. 22nd Avenue
Vancouver, BC, Canada V5Z 1Z7
Director
Officers 890,000 12.84%
and Directors
as a Group (5 persons)
* Less than 1%
(1) Unless otherwise indicated all shares are held of record by the beneficial
holders named above.
(2) Based upon 6,933,500 shares of Common Stock outstanding on April 30, 1997
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
Name Age Positions Held With The Corporation
- ---- --- -----------------------------------
Edward D. Renyk 58 Director, President & Chief
Financial Officer
John J. McIntyre 41 Director, Secretary
Lloyd E. Mear 60 Director
Warren W. Gayle 43 Director
Murray A. Braaten 42 Director
E. D. Renyk. Mr. Renyk has served as the President, Chief Financial Officer and
a Director of the Company since June 8, 1995. Mr. Renyk is a member of the
Canadian, Alberta,
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and British Columbia Institutes of Chartered Accountants. He has been a
Chartered Accountant for 33 years, managing and directing his own practice for
most of that period, specializing in consulting to both private and publicly
traded corporate firms. Prior to establishing his own practice and subsequent to
obtaining his designation as a Chartered Accountant he held positions ranging
from Controller to Vice president of Finance with various corporations.
Mr. Renyk was admitted as a member of the Institute of Chartered Accountants of
Alberta in 1962.
J. J. McIntyre. Mr. McIntyre has served as Secretary and a Director of the
Company since June 8, 1995. Mr. McIntyre has recently founded his own law firm,
McIntyre Winteringham, after having practiced from 1984 to 1996 as a partner and
associate of Alexander Holburn Beaudin & Lang. Mr. McIntyre's current and former
firms are located in Vancouver, British Columbia. Previously Mr. McIntyre was
employed as a Crown Counsel, also in Vancouver, for the Ministry of Attorney
General of British Columbia, from 1981 - 1984. While primarily a litigator, Mr.
McIntyre has been involved in advising mining companies throughout his time in
private practice.
Mr. McIntyre is a graduate of the University of Saskatchewan, located in
Saskatoon, Saskatchewan. He graduated with his LL.B. in 1980 and with his B.Sc.
(High Honors - Chemistry) in 1977.
Lloyd E. Mear. Mr. Mear has served as a Director of the Company since June 8,
1995. Mr. Mear has over thirty years of experience as a Civil Engineer including
fifteen years as an executive in the Mining Industry. From 1987 to date he has
served as the President and Chief Executive Officer of ReDev, Inc., a company
that extracts gold and platinum group metals from water sources throughout the
western United States and Canada.
Mr. Mear received a degree in Civil Engineering/Surveying in 1956 from
University of Alberta, Calgary, Alberta.
Warren W. Gayle. Mr. Gayle has served as a Director of the Company since October
5, 1995. Mr. Gayle owns a Consulting Firm in Vancouver specializing in
structured and tax driven financing for medium to large resource and
manufacturing based organizations. Prior to establishing his Company in 1991,
Mr. Gayle held various sales and management positions with multinational
corporations.
Mr. Gayle received a Bachelor of Commerce Degree - Finance in 1979 from the
University of British Columbia, Vancouver, British Columbia.
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Murray A. Braaten. Mr. Braaten has served as a Director of the Company since
December 8, 1995. Mr. Braaten is a partner in the Vancouver law firm of Lando &
Co. He joined the firm as an Associate in 1981, became a partner two years
later, and has been the managing partner since 1987. Mr. Braaten has extensive
experience in business, business law, construction and real estate development.
Mr. Braaten graduated in 1980 with a Bachelor of Business Administration with
Distinction from the University of Regina and a Bachelor of Laws from the
University of Saskatchewan in Saskatoon.
Each director is elected for a period of one year at the Company's annual
meeting of shareholders and serves until his successor is duly elected and
qualified. Officers are appointed and serve at the will of the Board of
Directors.
To date the amount of time that Mr. Renyk has devoted to the business of the
Company has ranged from 40% to 100% of his business time depending on the
activities at hand. Mr. McIntyre has expended approximately 25% of his business
time on Company affairs. Messrs. Renyk and McIntyre expect their positions to
graduate to full time as the Company' s financing and operations progress.
Messrs. Mear, Gayle and Braaten will expend such time as is required to fulfill
their duties as Directors.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation for the fiscal years ended
December 31, 1995 and 1996 ("fiscal years") payable to Mr. Renyk, the Company's
President. No other officer received any compensation from the Company in these
fiscal years.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Awards
Compensation ------------
------------ Restricted Stock All Other
Salary(1) Awards Compensation
--------- ------ ------------
Edward Renyk 1995 $45,000 $20(2) $Nil
1996 $90,000 -- --
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(1) On June 30, 1995, the Company entered into a five year employment
agreement with Mr. Renyk that provides for a salary of $7,500 per month
beginning July 1, 1995 (plus a cost of living adjustment to be made on the
first day of each calendar year). The agreement also provides for
additional incentive compensation equal to 1/2 of 1% of net sales up to
$5,000,000, 3/4 of 1% on the next $20,000,000 in net sales and 1 percent
of net sales above $25,000,000.
(2) Represents the fair market value on the date of grant (as determined by
the Board of Directors) of 20,000 shares of common stock granted to Mr.
Renyk pursuant to the Company's Stock Grant Program in consideration for
Mr. Renyk's services as a director of the Company. The shares are
non-transferable, except for transfers back to the issuer, for a period of
one year from the date of issue.
Stock Options
The Company did not grant any stock options to any executive officer during
fiscal years 1995 and 1996.
Stock Option Plan and Stock Grant Program
In June 1995 the Company adopted a non-qualified stock option plan and a stock
grant program with the following provisions:
Stock Option Plan
The Company has reserved 300,000 shares of its authorized Common Stock for
issuance to key employees and consultants of the Company and all of its
subsidiaries or affiliates. Under this plan, no employee may receive more than
100,000 stock options. Options are non-transferable and expire if not exercised
within two years from the date of issue. The options are issuable to officers,
key employees and consultants in such amounts and prices as determined by the
Board of Directors. As of December 31, 1996, no options were granted pursuant to
this plan.
Stock Grant Program
The Company has reserved 300,000 shares of its authorized Common Stock for
issuance to key employees and directors. Under this plan, no employee may
receive more than 100,000 shares. The program requires the employee to remain in
the employ of the Company for at least one year following the grant and to agree
not to engage in any activity which would be considered in competition with the
Company's business. If the employee violates any one of these conditions the
ownership of the shares issued under the program shall revert back to the
Company. The shares issued under the program are non-transferable, except for
transfers back to the issuer, for
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a period of one year from the date of issue. As of December 31, 1996, a total of
100,000 shares had been granted to five directors pursuant to this plan.
Board Compensation
The Board, from time to time, is authorized to establish compensation for the
Directors, but none has been set at this date. All of the directors are
reimbursed for their expenses incurred in connection with their attendance at
Board of Directors meetings.
During fiscal 1995, each director received a grant of 20,000 shares of Common
Stock pursuant to the Company's Stock Grant Program. The Shares are
non-transferable for two years.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1988 the Company issued 1,900,000 shares of Common Stock to James A.
Howell in consideration of $1,400 and certain organizational expenses paid by
Mr. Howell on behalf of the Company. In May 1995 Mr. Howell transferred 350,000
shares to each of Mr. Renyk and Mr. McIntyre.
In June 1995 the Company issued 4,000,000 shares of Common Stock to Noble
pursuant to the Exchange Agreement. In April 1996 the Company issued an
additional 85,000 shares to Noble in partial consideration of its agreement to
extend the due date of certain amounts due under the Operating Agreement entered
into with respect to the Placer Leases. For a more complete description of the
terms of the Exchange Agreement, the Operating Agreement and certain related
agreements entered into by the Company and Noble See "Item 1. Description of
Business - Introduction."
In October 1995 the Company issued 800,000 shares of Common Stock to an
Affiliate as partial consideration for the assignment of the PL #1160 Lease
pursuant to the PL #1160 Agreement. In April 1996 the Company issued an
additional 8,500 shares to this Affiliate in consideration of her agreement to
extend the due date of $200,000 payable pursuant to the PL #1160 Lease
Agreement. For a more complete description of the terms of the PL#1160 Lease
Agreement and certain related agreements between the Company and this Affiliate,
see "Item 1. Description of Business - Introduction.
During 1995 certain officers and directors loaned the Company an aggregate of
$101,677, which loans were non-interest bearing and payable on demand. In 1996,
such officers and directors agreed to convert $96,000 of those loans into 40,000
shares of Common Stock at a conversion price of $2.40 per share.
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In accordance with the Operating Agreement the Company's principal stockholder,
Noble, has agreed to serve as the operator of the Company's mining activities.
The terms of the Operating Agreement are discussed in Item 1 - "Description of
Business - Introduction."
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock, par value $.001 per share, and 5,000,000 shares of preferred
stock, par value $.001 per share ("Preferred Stock"). As of April 30, 1997,
there are outstanding 6,933,500 shares of Common Stock and no shares of
Preferred Stock.
Common Stock
Holders of Common Stock are entitled to one vote per share for the election of
directors and on all other matters requiring stockholder action. Subject to the
rights of the holders of any series of Preferred Stock having a preference over
the Common Stock, holders of Common Stock are entitled to dividends, when, as
and if declared by the Board of Directors out of funds legally available for the
payment of dividends. Upon any liquidation, dissolution or winding up of the
Company, subject to the prior liquidation rights of the holders of Preferred
Stock, if any, the net assets of the Company remaining after payment of
creditors will be distributed pro rata to the holders of Common Stock in
proportion to their interests. Holders of Common Stock are not entitled to vote
cumulatively for the election of directors (which means that the holder or
holders of a simple majority of the shares entitled to vote can elect all of the
directors), and have no conversion rights, preemptive rights or rights to
subscribe for or purchase additional shares or other securities of the Company.
Preferred Stock
The Board of Directors of the Company has the authority, without further action
by the stockholders, to issue the shares of Preferred Stock in one or more
series with dividend, liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of the
Common Stock. In addition, the issuance of Preferred Stock could have the effect
of delaying, deterring or preventing a change in control of the Company. No
shares of Preferred Stock are currently issued and outstanding and the Company
has no plans to issue any Preferred Stock at this time.
Dividends
The payment of dividends is contingent upon the Company's revenues and earnings,
if any, capital requirements and general financial condition. The payment of
dividends in the future is
28
<PAGE>
within the discretion of the Company's then Board of Directors. It is the
present intention of the Board of Directors to retain all earnings, if any for
use in the Company's business operations and , accordingly, the Board does not
anticipate declaring any dividends in the foreseeable future. The Company has
not paid any dividends on its Common Stock to date.
Delaware Anti-Takeover Law
Under Section 203 of the Delaware General Corporation Law ("Delaware
Anti-Takeover Law"), certain "business combinations" are prohibited between a
Delaware corporation, the stock of which is generally publicly traded or held of
record by more than 2,000 stockholders, and an "interested stockholder" of such
corporation for a three-year period following the date that such stockholder
became an interested stockholder, unless (i) the corporation has elected in its
certificate of incorporation not to be governed by the Delaware Anti-Takeover
law (the Company has not made such an election), (ii) the business combination
was approved by the board of directors of the corporation before the other party
to the business combination became an interest stockholder, (iii) upon
consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan), or (iv) the business combination was approved by the board of
directors of the corporation and ratified by 66 2/3% of the voting stock which
the interested stockholder did not own. The three-year prohibition also does not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of certain extraordinary transactions
involving the corporation and a person who had not been an interest stockholder
during the previous three years or who becomes an interested stockholder with
the approval of a majority of the corporation's directors. The term "business
combination" is defined generally to include mergers or consolidations between a
Delaware corporation and an interested stockholder, transactions with an
interested stockholder involving the assets or stock of the corporation or its
majority-owned subsidiaries and transactions which increase an interested
stockholder's percentage ownership of stock. The term "interested stockholder"
is defined generally as those stockholders who become beneficial owners of 15%
or more of a Delaware corporation's voting stock.
Limitation of Liability and Indemnification Matters. The Company has included in
its Certificate of Incorporation provisions to limit the personal liability of
its officers and directors for monetary damages for breach of their fiduciary
duty as directors, except for liability that cannot be eliminated under the
Delaware General Corporation Law. The Company's Certificate of Incorporation
provides that directors of the Company will not be personally liable for
monetary damages for breach of their fiduciary duty of directors, except for
liability (i) for any breach of their duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for any
29
<PAGE>
unlawful payment of a dividend or unlawful stock repurchase or redemption, as
provided in Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit. The
By-Laws of the Company also provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law, including circumstances in which
indemnification is otherwise discretionary.
The indemnification provided by the Company's By-laws would provide coverage for
claims arising under the Securities Act of 1933, as amended. Insofar as
indemnification for liabilities arising under the Act may be permitted to
directors, officers and controlling persons of the company pursuant its
Certification of Incorporation or By-law, or the Delaware General Corporation
Law, or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
30
<PAGE>
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS OF THE REGISTRANT'S COMMON STOCK AND OTHER
STOCKHOLDER MATTERS
Market Information
There is no public trading market for the Company's Common Stock. The Company
currently has 6,933,500 shares of Common Stock outstanding.
All of the issued and outstanding shares of Common Stock of the Company were
issued in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended, and are "Restricted Securities" as that term
is defined in Rule 144 adopted pursuant to the Act.
In general, under Rule 144 as currently in effect, any person (or persons whose
shares are aggregated) who has beneficially owned shares for at least one year
is entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then outstanding shares of the Company's
Common Stock or the average weekly public trading volume of the Company's Common
Stock during the four calendar weeks preceding the date on which notice of sale
is filed with the Commission. Sales under Rule 144 are also subject to certain
manner of sale provisions, notice requirements and the availability of current
public information about the Company. Any person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the three months preceding a sale and who is deemed to have owned
shares, as provided in Rule 144 (k) without regard to the volume limitations,
manner of sale provision, public information or notice requirements. Under Rule
701 shares privately issued under certain compensatory stock-based arrangements
may be resold under Rule 144 by non-affiliates subject only to the manner of
sale requirement, and by affiliates without regard to the two-year holding
requirement, commencing 90 days after the Company becomes subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended. Under Regulation S Shares of the Company's Common Stock offered or
sole, under specified conditions, in an "offshore transaction" (as defined in
Regulation S) are eligible for offer and sale in the United States upon
expiration of a 40-day "restricted period" (as defined in Regulation S).
Holders
The Company has approximately twenty holders of its Common Stock.
31
<PAGE>
Transfer Agreement
The transfer agent and registrar for the Company's Common Stock is Liberty
Transfer Co., P.O. Box 558, Huntington, New York 11743.
ITEM 2. LEGAL PROCEEDINGS
The Corporation is not engaged in any pending, and is aware of no threatened,
legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Effective March, 1996, the Company Board of Directors approved the engagement of
KPMG to act as its principal accountant to audit its financial statements
filling the vacancy created on December 31, 1995 when the engagement of Thomas
Monahan, CPA expired. The Company had not previously consulted KPMG on any
matter.
The accountant's report of Thomas Monahan on the financial statements of the
Company for the six months' ended June 30, 1994 and 1995 did not contain adverse
opinions, or disclaimers of opinions.
During the Company's two most recent fiscal years and the subsequent interim
period preceding the termination of Mr. Monahan's engagement, there were no
disagreements between Mr. Monahan and the Company on any matter of accounting
principle or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Mr.
Monahan, would have caused Mr. Monahan to make reference to the subject in his
report. In addition, during the Company's two most recent fiscal years and the
interim preceding the termination of Mr. Monahan's engagement, no reportable
events, as defined in item 304(a)(2)(v)(A) through (D) of Regulation S-B,
occurred.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the Company issued the following securities without
registration under the Securities Act of 1933, in reliance upon the exemption
from registration pursuant to Section 4(2) of the Act:
(i) 4,000,000 shares to Noble in June 1995, pursuant to the Exchange
Agreement.
(ii) 800,000 shares to an Affiliate in October 1996, pursuant to the
PL#1160 Agreement.
32
<PAGE>
(iii) 85,000 shares to Noble in April 1996 in consideration for agreeing
to defer the due date of the upfront fee and the 1995 payment.
(iv) 8,500 shares to an Affiliate on April 30, 1996 in consideration for
agreeing to defer the due date of the cash portion of the purchase
price for the PL#1160 lease.
(v) an aggregate of 40,000 shares to certain officers and directors in
April, 1996 upon conversion of $96,000 in principal amount of loans
to the Company.
(v) an aggregate of 100,000 shares to the Directors in 1996 (20,000
shares each) pursuant to the Company's Stock Grant Program.
The Company effected a one for 10,000 stock split in June 1995. The issuance of
shares in connection with a split of Common Stock was exempt from registration
under the Securities Act of 1933 as amended in accordance with Section 2(3) of
such Act as a transaction not involving a "sale" of securities as such term is
defined in this section.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-Laws of the Company provide for indemnification of officers and
directors. The specific provision of the By-Laws related to such indemnification
is as follows:
ARTICLE XI INDEMNIFICATION AND INSURANCE:
Section 1. (a) RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be
made a party or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer, of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification
33
<PAGE>
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition: provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT
If a claim under paragraph (a) of this Section is not paid in
full by the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such
34
<PAGE>
applicable standard or conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard or conduct.
INDEMNIFICATION
Notwithstanding any limitation to the contrary contained in
sub-paragraphs (a) and (b) of this section, the corporation shall, to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified may
be entitled under any By-law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such a person.
(d) INSURANCE
The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
35
<PAGE>
Appendix A
Glossary of Certain Mining Terms
alluvial 1. Deposited by a stream.
alluvial channels 2. Relating to deposits made by flowing water.
alluvial fan fan a cone-shaped deposit of alluvium made by a stream
where it runs out onto a level plain or meets a slower
stream. The fans generally form where streams issue
from mountains upon the lowland.
alluvial mining (placer mining) the recovery of heavy minerals (high
specific gravity) that have become concentrated in
secondary deposits, following separation by weathering
agencies from primary veins higher up the watershed.
alluvium a general term for all detrital deposits
resulting from the operations of modern rivers, thus
including the sediments laid down in river beds, flood
plains, lakes, fans at the foot of mountain slopes,
and estuaries.
arenaceous rock resembling, made of, or containing sand or sandy
particles
argillaceous of, relating to, or containing clay or clay minerals
argillaceous rock
auriferous containing gold
bedrock the solid rock underlying auriferous gravel, sand,
clay, etc., and upon which the alluvial gold rests. In
placer use, the term bedrock may be generally applied
to any consolidated formation underlying the
goldbearing gravel. Bedrock may be composed of
igneous, metamorphic or sedimentary rock. See - False
bedrock
claim an area of land staked by a prospector or mining
company and then recorded (see <<staking")
clastic rocks made up of fragments of pre-existing rocks <a--sediment>
concessions: that in which the State or private owner of mining
alluvial concessions property has the right to grant concessions or leases
and rights to individuals or corporations at discretion, or under
grant concessions or leases to individuals or
development corporations at discretion, or under nationality or
concessions color, has the right to locate on discovery or
otherwise certain limited areas of ground and under
certain conditions to hold, work or dispose of the
same. (The "Claim" system).
confluence a junction or flowing together of streams; the place
where streams meet.
36
<PAGE>
detritus a general name for incoherent sediments, produced by
the wear and tear of rocks through the various
geological agencies. The name is from the Latin for
"worn" rock waste. A deposit of such material.
false bedrock a hard or relatively tight formation within a
placer deposit, at some distance above true bedrock,
upon which gold concentrations are found. Clay,
volcanic ash, caliche or "tight" gravel formations can
serve as false bedrocks. A deposit may have gold
concentration on one or more false bedrocks, with or
without a concentration on true bedrock.
fine gold 1. Pure gold, i.e., gold of 1,000-fineness. 2. Gold
occurring in small particles such as those which would
pass a 20-mesh screen but remain on 40-mesh.
fineness the proportion of pure gold in bullion or in a natural
alloy, expressed in parts per thousand. Natural gold
is not found in pure form; it contains varying
proportions of silver, copper and other substances.
For example, a piece of natural gold containing 150
parts of silver and 50 parts of copper per thousand,
and the remainder pure gold, would be 800-fine. The
average fineness of placer gold obtained in California
is 885.
fines 1. The sand or other small-size components of a placer
deposit. 2. The material passing though a screen
during washing or other processing steps of a placer
operation.
geochemical survey the search for mineral deposits, particularly
geochemical soil metalliferous deposits, by analyzing rocks, stream
sampling surveys silts, springs, soils, surface waters or organisms for
abnormal concentrations of elements.
geophysical survey Geophysical exploration, commonly called applied
geophysics or geophysical prospecting, is conducted to
locate economically significant accumulations of oil,
natural gas, and other minerals, including
groundwater. Surveys are generally identified by the
property being measured namely, electrical, gravity,
magnetic, seismic, thermal, or radioactive properties.
Used primarily in the search for oil, gas, and base
metals, electrical and electromagnetic surveys map
variations in the conductivity or capacitance of
rocks.
glacial periods pertaining to, characteristic of, produced or
deposited by, or derived from a glacier.
37
<PAGE>
gold-bearing gravels see "placers"
Hadrynian one of the three eras of the Proterozoic times which
is of, relating to, or being the eon of geologic time
or the corresponding system of rocks that includes the
interval between the Archean and Phanerozoic eons,
perhaps exceeds in length all of subsequent geological
time, and is marked by rocks that contain fossils
indicating the first appearance of eukaryotic
organisms (as algae).
homogenous 1 : of the same or a similar kind or nature; 2 : of
uniform structure or composition throughout
hydraulic operation mining in which a bank of gold-bearing earth or gravel
is washed away by a powerful jet of water and carried
into sluices, where the gold separates from the earth
by its specific gravity.
I.P. surveys (induced polarization) a method, the basis of which
is, when an electrical circuit is passed through
certain kinds of ground between electrodes placed at
the surface, is interrupted, the electrical potential
is reduced (decays) gradually and measurable. The
method has been most effective where grains of
metalliferous minerals are disconnected, with large
surface areas and large ionic effects, and where the
host rock has suitable resistivity.
lode a general term for metalliferous and some
non-metalliferous deposits in solid, consolidated
(hard rock) state as distinguished from unconsolidated
deposits such as placers.
metamorphic of, relating to, or produced by metamorphism
metamorphism the mineralogical and structural adjustment of solid
rocks to physical or chemical conditions differing
from those under which they were formed.
metasedimentary rocks later or more highly organized or specialized form of
sedimentary rock
micaceous quartzites mica - any of various colored or
transparent mineral silicates crystallizing in
monoclinic forms that readily separate into very thin
leaves _ micaceous \ adj.
38
<PAGE>
mineral deposits Most minerals are found in veins, or tabular-shaped
deposits of nonsedimentary origin, often dipping at
high angles; in beds, or seams, which are tabular
deposits conforming to the stratification of enclosing
rocks; and as masses, or large ore bodies of irregular
shape standing at any angle. Gold, diamonds, tin, and
platinum are often found in placers, or deposits of
sand and gravel containing particles of the mineral.
ore reserve that part of a mineral deposit which could be
economically and legally extracted or produced at the
time of the reserve determination.
overburden worthless or low-grade surface material covering a
body of useful mineral.
oxidized 1. to change (a compound) by increasing the proportion
oxidized quartz of the electronegative part or change (an element or
ion) from a lower to a higher positive valence. 2.
remove one or more electrons from an atom, ion, or
molecule ~ vi : to become oxidized _ ox-i-diz-able
\, adj.
pale- or paleo- 1 : involving or dealing with ancient forms or
conditions <paleobotany>
2 : early : primitive : archaic <Paleolithic>
paleoalluvial fan see "alluvial fan"
paleochannel ancient channel
paleogulch ancient gulch (narrow valley setting)
paleozoic ancient geological era
placer an alluvial, marine, or glacial deposit containing
particles of valuable mineral and esp. of gold.
placers the term is applied to deposits of sand, gravel, and
other detrital or residual material containing a
valuable mineral which has accumulated through
weathering and mechanical concentration processes. The
term as used in this report applies to ancient
(Tertiary) gravels as well as to recent deposits, and
to underground (drift mines) as well as to surface
deposits.
39
<PAGE>
placer channels a stream-eroded depression in the bedrock, ordinarily
filled with gravel. See - Tertiary channel.
placer mining see "alluvial mining"
pre-glacial channel see "paleogulch"
proven ore reserves reserves for which (a) quantity is
computed from dimensions revealed in outcrops,
trenches, workings, or drill holes; grade and/or
quality are computed from the results of detained
sampling and (b) the sites for inspection, sampling
and measurements are spaced so closely and the
geologic character is so well defined that size,
shape, depth and mineral content of reserves are well
established.
probable ore reserves reserves for which quantity and grade/or quality are
computed from information similar to that used for
proven reserves, but the sites for inspection, sampling,
and measurement are further apart or are otherwise less
adequately spaced. The degree of assurance, although
lower than that for proven reserves, is high enough to
assume continuity between points of observation.
pyritic any of various metallic-looking sulfides of which
pyrite is the most common.
rim rock (or rim) the bedrock rising to form the boundary of a placer or
gravel deposit. (Fay)
seismic refraction
surveys a method which interprets the time interval between the
initiation of elastic waves generated by man-made
explosions and the first and later disturbances of the
ground as detected by a seismometer at a known distance
from the source of energy.
staking the measuring and marking with stakes or posts of an
area on the ground to establish mineral rights.
tertiary the earlier of the two geologic periods(1 million to
60 million) comprised in the Cenozoic era (present day
back to 60 million years ago), in the classification
generally used. Also, the system of strata deposited
during that period. (AGI)
tertiary channels Ancient gravel deposits, often auriferous
(containing gold), composed of Tertiary stream
alluvium.
40
<PAGE>
- -zoic adj. comb form [Gk zoe life] : of, relating to, or
being a (specified) geological era <Archeozoic>
<Mesozoic>
41
<PAGE>
PART F/S - Statements
Page
AUDITED FINANCIAL STATEMENTS
Auditors' Report to the Shareholders...................................F-1
Balance sheets, December 31, 1996 and 1995.............................F-2
Statements of operations and deficit, years
ended December 31, 1996, 1995 and 1994................................ F-3
Statements of cash flows, three years ended
December 31, 1996, 1995 and 1994...................................... F-4
Notes to Financial Statements...................................F-5 - F-12
UNAUDITED FINANCIAL STATEMENTS
Balance sheets March 31, 1997, December 31, 1996 and 1995.............F-14
Statements of Operations and deficit, three months ended
March 31, 1997........................................................F-15
Statements of Cash Flows, three months ended March 31, 1997...........F-16
Notes to Unaudited Financial Statements........................F-17 - F-23
42
<PAGE>
Financial Statements of
NAPTAU GOLD CORPORATION
(expressed in United States dollars)
December 31, 1996
<PAGE>
[KPMG Letterhead]
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the balance sheets of Naptau Gold Corporation as at December31,
1996 and 1995 and the statements of operations and deficit and cash flows for
each of the years in the three year period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1996 in
accordance with generally accepted accounting principles in the United States.
Signed
Chartered Accountants
Vancouver, Canada
March 24, 1997
COMMENTS BY AUDITOR FOR U.S. READERS ON
CANADA-U.S. REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties such as that referred to in
the attached balance sheets as at December 31, 1996 and 1995 and as described in
note 1 of the consolidated financial statements. Our report to the shareholders
March 24, 1997 is expressed in accordance with Canadian reporting standards
which do not permit a reference to such an uncertainty in the auditors' report
when the uncertainty is adequately disclosed in the financial statements.
Signed
Chartered Accountants
Vancouver, Canada
March 24, 1997
F-1
<PAGE>
NAPTAU GOLD CORPORATION
Balance Sheets
(expressed in United States dollars)
December 31, 1996 and 1995
<TABLE>
<CAPTION>
========================================================================================
1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current asset:
Cash $ - $ 1,000
Mineral properties (note 3) 2,988,850 2,374,726
Deferred financing costs 9,090 40,000
- ----------------------------------------------------------------------------------------
$2,997,940 $2,415,726
========================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities (note 4) $ 157,183 $ 45,000
Contracts payable to related parties (note 3) 1,494,830 2,154,500
Loans payable to related parties (note 4) 12,770 101,697
------------------------------------------------------------------------------------
1,664,783 2,301,197
Shareholders' equity:
Capital stock (note 5):
Authorized:
5,000,000 preferred shares with a par value of
$0.001 per share
20,000,000 common shares with a par value of
$0.001 per share
Issued and outstanding:
6,933,500 common shares (1995 - 6,700,000) 6,934 6,700
Additional paid-in capital (note 5) 1,534,105 168,339
Shares alloted but unissued (note 5(c)(ii)) - 100
Deficit (207,882) (60,610)
------------------------------------------------------------------------------------
1,333,157 114,529
Continuing operations (note 1)
Commitments and contingency (notes 3 and 6)
- ----------------------------------------------------------------------------------------
$2,997,940 $2,415,726
========================================================================================
</TABLE>
See accompanying notes to financial statements
On behalf of the Board:
Signed
________________________________ Director
Signed
________________________________ Director
F-2
<PAGE>
NAPTAU GOLD CORPORATION
Statements of Operations and Deficit
(expressed in United States dollars)
<TABLE>
<CAPTION>
==============================================================================================
Years ended December 31,
-------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses:
Management salary (note 6) $ 90,000 $ 45,000 $ --
Professional fees 25,940 12,853 --
Office and administrative 1,332 757 --
Stock grant program expense (note 5(c)(ii)) -- 100 --
Write-off of deferred financing costs 30,000 -- --
- ----------------------------------------------------------------------------------------------
Loss for the year (147,272) (58,710) --
Deficit, beginning of year (60,610) (1,900) (1,900)
- ----------------------------------------------------------------------------------------------
Deficit, end of year $(207,882) $ (60,610) $ (1,900)
==============================================================================================
Loss per share $ (0.02) $ (0.01) $ --
==============================================================================================
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
NAPTAU GOLD CORPORATION
Statements of Cash Flows (note 8)
(expressed in United States dollars)
<TABLE>
<CAPTION>
=================================================================================================
Years ended December 31,
-------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash generated from (used in):
Operations:
Loss for the period $(147,272) $ (58,710) $ --
Add items not involving cash:
Write-off of deferred financing costs 30,000
Stock grant program expense, -- 100 --
Changes in non-cash operating working capital:
Accounts payable and accrued liabilties 112,183 45,000 --
- -------------------------------------------------------------------------------------------------
(5,089) (13,610) --
Financing:
Deferred financing costs recovered (incurred) 910 (40,000) --
Payment of contracts payable -- (45,500) --
Loans payable to related parties 7,073 101,697 --
- -------------------------------------------------------------------------------------------------
7,983 16,197 --
Investing activities:
Mineral properties (3,894) (1,587) --
- -------------------------------------------------------------------------------------------------
Increase (decrease) in cash $ (1,000) $ 1,000 $ --
Cash, beginning of year 1,000 -- --
- -------------------------------------------------------------------------------------------------
Cash, end of year $ -- $ 1,000 $ --
=================================================================================================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
1. Continuing operations:
Naptau Gold Corporation (the "Company") was formed under the laws of the
State of Delaware on January 8, 1988 and was inactive until 1995 when it
entered into an agreement to acquire certain mineral properties (note 3). The
Company's principal business activity is the exploration and development of
mineral properties, with its principal mineral properties comprising of
various placer leases in the Cariboo Mining Division of British Columbia,
Canada (the "Placer Leases").
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern. At December 31, 1996, the Company
had a working capital deficiency of approximately $1,700,000, a significant
portion which is due to related parties. The Company's continuing operations
and the ability of the Company to discharge its liabilities are dependent
upon the continued financial support of related parties and the ability of
the Company to obtain the necessary financing to meet its liabilities as they
come due.
The recoverability of the amounts shown as mineral properties is dependent
upon the existence of economically recoverable mineral reserves, the ability
of the Company to obtain the necessary financing to complete the development
of its mineral properties and upon future profitable production or proceeds
from the disposition thereof.
2. Significant accounting policies:
The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.
(a) Mineral property interests:
Mineral property acquisition costs and related exploration and
development expenditures are deferred until the property is placed into
production, sold or abandoned. These costs will be amortized on a
unit-of-production basis over the estimated proven and probable reserves
of the property following commencement of commercial production or
written off if the property is sold, allowed to lapse or abandoned.
Mineral property acquisition costs include cash consideration and the
fair value of common shares issued for mineral properties. Administrative
expenditures are expensed in the period incurred.
On an on-going basis, the Company evaluates the status of its mineral
properties based on results to date to determine the nature of
exploration and development work that is warranted in the future. If
there is little prospect of further work on a property being carried out,
the deferred costs related to that property are written down to their
estimated recoverable amount.
The amounts shown for mineral properties represent costs incurred to date
and is not intended to reflect present or future values.
F-5
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
2. Significant accounting policies (continued):
(b) Deferred financing costs:
The Company defers costs associated with specific financing activities
and charges those costs against the related share capital or to
operations if the financing activity is unsuccessful.
(c) Loss per share:
Loss per share has been calculated using the weighted average number of
common shares outstanding during the year
3. Mineral properties:
================================================================================
December 31,
1996 1995
- --------------------------------------------------------------------------------
Placer Leases, Cariboo Mining Division, British Columbia:
Acquisition costs:
Placer Leases acquired from Noble (note 3(a)) $ 1,775,000 $ 1,775,000
Placer Leases acquired from an affiliate of the
Company (note 3(b)) 200,800 200,800
- --------------------------------------------------------------------------------
1,975,800 1,975,800
Deferred interest and financing costs:
Paid or accrued to Noble (note 3(a)) 251,725 --
Paid to an affiliate of the Company (note 3(b)) 20,400 --
- --------------------------------------------------------------------------------
272,125 --
Exploration and development expenditures:
Incurred by Noble 735,445 397,339
Incurred by the Company 5,480 1,587
- --------------------------------------------------------------------------------
740,925 398,926
- --------------------------------------------------------------------------------
$ 2,988,850 2,374,726
================================================================================
F-6
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
3. Mineral properties (continued):
(a) Placer Leases acquired from Noble:
During 1995, the Company entered into an agreement to acquire certain
Placer Leases owned by Noble Metal Group Incorporated (a British Columbia
company) ("Noble") in exchange for 4 million common shares of the
Company, representing an initial 59.7% interest in the Company. As Noble
acquired control of the Company by this exchange, it is considered a
common control transaction and, accordingly, the common shares have been
accounted for at the carrying value of the Placer Leases in the accounts
of Noble at December 31,1994 of $1,775,000 (Noble, in association with
limited partnerships, had also expended an additional $550,000 on
exploration of the Placer Leases which was recovered from these limited
partnerships and accordingly, is not reflected in the aforementioned
carrying value). A British Columbia Mineral Tenure Act "Bill of Sale
Absolute" held by the Company relating to the Placer Leases has not yet
been registered with the appropriate authorities and as a result,
registration of the Placer Leases remains in the name of the operator,
Noble. The Company can, at any time and without any restriction, apply to
conclude registration in its name.
The Company and Noble also entered into an operating agreement whereby
Noble will remain the operator for the mining activities on the Placer
Leases for a term of ten years, with Noble having the option of renewing
the agreement for a further ten year term. The Company agreed to pay Noble
$1,000,000 in consideration for entering into this operating agreement. In
addition, the Company is obligated to pay $1,000,000 in respect of 1995
exploration and development expenditures and agreed to fund future annual
operating expenditures on the Placer Leases, including the lease of
certain equipment and facilities owned by Noble. These required payments
have been accrued in contracts payable (See below). However, as this is a
common control transaction, the amount of $1,602,661, being the excess of
these amounts over the estimated book value of the related assets in the
accounts of Noble was charged against additional paid-in capital during
1995 (note 5). During 1996, this amount was reduced by $45,500 to reflect
the actual book value of the related assets in the accounts of Noble at
December 31, 1995. To December 31, 1995, the Company had advanced $45,500
to Noble with respect to exploration and development expenditures on the
Placer Leases which has been recorded as a reduction in the Company s
contracts payable.
F-7
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
3. Mineral properties (continued):
(b) Placer Leases acquired from Noble (contnued):
During 1996, the Company entered into an extension agreement with Noble
with respect to its contract payable to Noble, whereby the Company issued
85,000 common shares to Noble at an agreed price of $2.40 per share and
agreed to pay Noble 300 ounces of gold from the Company's share of gold
produced from mining operations on its placer mining leases, if any, to
initially extend the due date for the amount outstanding under the
contract payable to June 30, 1996. The value ascribed to the common
shares issued has been included in deferred interest and financing costs
in mineral properties, however, the value of the gold to be paid to Noble
has not been accrued in these financial statements due to the uncertainty
of ultimate payment.
The Company and Noble subsequently agreed to amend certain of the terms
of the operating agreement originally entered into whereby the Company
was obliged to pay $1,000,000 to Noble as consideration for entering into
the operating agreement. The amending agreement cancelled the Company's
obligation to pay $1,000,000 to Noble and the Company agreed to pay Noble
3,421 ounces of gold from the Company's share of gold produced from
mining operations on its placer mining leases, if any. Noble also granted
the Company an extension to June 30, 1997 of the revised balance due of
$954,500 as at December 31, 1995 in consideration for the Company
agreeing to pay interest on such balance at a rate of 10% per annum. The
Company reduced contracts payable and increased additional paid-in
capital by $1,000,000 each during 1996 as a result of this amending
agreement. The Value of the gold to be paid to Noble has not been accrued
in these financial statements due to the uncertainty of ultimate payment.
In addition to funding future annual operating expenditures on the Placer
Leases, the operating agreement provides that the proceeds from
production from the Placer Leases, if any, will be divided between the
Company and Noble as follows:
o for the first $1,000,000 of proceeds or 2,500 ounces of raw gold
(converted to a dollar amount), whichever is lesser, 10% of such
proceeds to Noble;
o for the next $1,000,000 of proceeds or 2,500 ounces of raw gold
(converted to a dollar amount), whichever is lesser, 17.5% of such
proceeds to Noble; and
o for cumulative operating revenues in excess of $2,000,000 or 5,000
ounces of raw gold (converted to a dollar amount), whichever is
lesser, 25% of such proceeds to Noble.
(b) Placer Lease acquired from an affiliate of the Company:
During 1995, the Company acquired a Placer Lease owned by an affiliate of
the Company (the "Affiliate"), for $200,000 (accrued but not yet paid)
and 800,000 common shares of the Company that have been assigned their
par value of $0.001 per share.
F-8
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
3. Mineral properties (continued):
(b) Placer Lease acquired from an affiliate of the Company (continued):
During 1996 the Company entered into extension agreements with the
Affiliate with respect to its contract payable to the Affiliate, whereby
the Company issued 8,500 common shares at an agreed price of $2.40 per
share to initially extend the due date for the amount outstanding under
the contract payable to June 30, 1996 and subsequently agreed to pay the
Affiliate 100 ounces of gold produced from mining operations on all of
its placer mining leases, if any, for extending the due date to October
12, 1997. The ascribed value for the common shares issued has been
included in deferred interest and financing costs in mineral properties,
however, the value of the gold to be paid to the Affiliate has not been
accrued in these financial statements due to the uncertainty of ultimate
payment.
4. Amounts payable to related parties:
Loans payable to related parties consist of amounts received from directors
and officers are non-interest bearing and have no specific terms of
repayment. During 1996, the directors and officers converted $96,000 of these
loans into 40,000 shares at a price of $2.40 per share.
At December 31, 1996, accounts payable and accrued liabilities include
accruals totalling $135,000 (1995 - $45,000) for salaries to a director and
officer pursuant to an employment agreement (note 6), which are included in
managmenet salary expense for the period.
5. Capital stock:
(a) Authorized:
During 1995, the Company increased the authorized capital stock from 200
common shares with a par value of $0.001 per share to 25,000,000 shares
consisting of 5,000,000 preferred shares and 20,000,000 common shares,
each with a par value of $0.001 per share, of which 1,900 common shares
were outstanding. The Company subsequently split the 1,900 common shares
outstanding on a 10,000 new for 1 old basis. The number of shares issued
as at December 31, 1994 have been restated to reflect this share split as
if it had occurred on inception.
F-9
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
5. Capital stock (continued):
(b) Issued:
A continuity of the Company's issued and outstanding capital stock is as
follows:
<TABLE>
<CAPTION>
========================================================================================================
Common shares
----------------------- Additional
Year Consideration Number Amount Paid-in capital Total
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance December 31, 1994 (note 5(a)) 1,900,000 $ 1,900 $ -- $ 1,900
1995 Mineral properties (note 3(a)) 4,000,000 4,000 1,771,000 1,775,000
1995 Reduction in additional
paid-in capital relating to
operating agreements with
Noble (note 3(a)) -- -- (1,602,661) (1,602,661)
1995 Mineral properties (note 3(b)) 800,000 800 -- 800
--------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 6,700,000 6,700 168,339 175,039
1996 Services under stock grant
program (note 5(c)(ii)) 100,000 100 -- 100
1996 On conversion of loans payable
to related parties(note 4) 40,000 40 95,960 96,000
1996 As consideration for extending
the due dates of contracts
payable (note 3) 93,500 94 224,306 224,400
1996 Increase in additional paid-in
capital resulting from
amendment to operation
agreement with Noble (note
3(a)) -- -- 1,000,000 1,000,000
1996 Increase in additional paid-in
capital relating to operating
agreements with Noble (note 3(a)) -- -- 45,500 45,500
-------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 6,933,500 $ 6,934 $ 1,534,105 1,541,039
=======================================================================================================
</TABLE>
F-10
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
5. Capital stock: (continued)
(c) Stock option plan and stock grant program:
In June, 1995 the Company adopted a non-qualified stock option plan and a
stock grant program with the following provisions:
(i) Stock option plan:
The Company has reserved 300,000 shares of its authorized common
stock for issuance to key employees or consultants of the Company
and affiliates. Under this plan, no employee may receive more than
100,000 stock options. Options are non-transferable and expire if
not exercised within two years. The options may not be exercised by
the employee until after the completion of two years of employment
with the Company. The options are issuable to officers, key
employees and consultants in such amounts and prices as determined
by the Board of Directors. As of March 31, 1997, no options were
granted pursuant to this plan.
(ii) Stock grant program:
The Company has reserved 300,000 shares of its authorized common
stock for issuance to key employees and directors. Under this plan,
no employee may receive more than 100,000 shares. The program
requires the employee to remain in the employ of the Company for at
least one year following the grant and to agree not to engage in any
activity which would be considered in competition with the Company's
business. If the employee violates any one of these conditions the
ownership of the shares issued under the program shall revert back
to the Company. The shares issued under the program are
non-transferable for two years. As of December 31,1995, a total of
100,000 shares had been granted to five directors pursuant to this
plan which were issued during in 1996. These shares were recorded
during the period granted at their par value of $0.001 per share and
were presented as shares allotted but unissued as at December 31,
1995.
6. Commitments:
On June 30, 1995, the Company entered into a five-year employment agreement
with the President of the Company that provides for a salary of $7,500 per
month beginning July 1,1995 (plus a cost of living adjustment to be made on
the first day of each calendar year). The agreement also provides for
additional incentive compensation equal to 1/2 of 1% Of net sales up to
$5,000,000, 3/4 of 1% on the next $20,000,000 in net sales and 1 percent of
net sales above $25,000,000.
F-11
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
December 31, 1996
================================================================================
7. Income taxes:
Under the asset and liability method of accounting for income taxes, deferred
income tax assets and liabilities are measured using enacted tax rates for
the future income tax consequences attributable to differences between the
financial statement carrying amount of existing assets and liabilities and
their respective tax bases.
For all periods presented, the Company has not recognized any deferred tax
assets or liabilities as the available benefits, primarily as a result of
loss carry forwards of approximately $222,000 arising in 1995 and l996, are
fully offset by a valuation allowance of the same amount.
8. Supplementary cash flow information:
The following non-cash financing and investing activities occurred during the
period:
================================================================================
Year ended December 31,
---------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Expenditures on mineral properties
by way of increase in contracts
payable $ 340,330 $ -- $ --
Acquisition of mineral properties
for contracts payable 2,200,000 --
Reduction of contracts payable on
amendment of operating agreement
with Noble and resulting increase
in additional paid-in capital 1,000,000 -- --
Issue of common shares: For mineral
properties, net of reduction of
additional paid-in capital
relating to agreements with Noble 269,900 173,139 --
On settlement of loans payable to
related parties 96,000 -- --
================================================================================
The Company did not pay any interest or income taxes during the periods ended
December 31, 1996, 1995 or 1994.
F-12
<PAGE>
Financial Statements of
NAPTAU GOLD CORPORATION
(expressed in United States dollars)
Three months ended March 31, 1997
Prepared by NAPTAU GOLD CORPORATION
F-13
<PAGE>
NAPTAU GOLD CORPORATION
Balance Sheets
(expressed in United States dollars)
<TABLE>
<CAPTION>
======================================================================================================
March 31, December 31,
-------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current asset:
Cash $ -- $ -- $ 1,000
Mineral properties (note 3) 2,988,850 2,988,850 2,374,726
Deferred financing costs (note 2(b)) 9,191 9,090 40,000
- ------------------------------------------------------------------------------------------------------
$ 2,998,041 $ 2,997,940 $ 2,415,726
======================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities (note 4) $ 183,280 $ 157,183 $ 45,000
Contracts payable (note 3) 1,494,830 1,494,830 2,154,500
Loans payable to related parties (note 4) 13,370 12,770 101,697
- ------------------------------------------------------------------------------------------------------
1,691,480 1,664,783 2,301,197
Shareholders' equity:
Capital stock (note 5):
Authorized:
5,000,000 preferred shares with a par value of
$0.001 per share
20,000,000 common shares with a par value of
$0.001 per share
Issued and outstanding:
6,700,000 common shares 6,934 6,934 6,700
Additional paid-in capital (note 5) 1,534,105 1,534,105 168,339
Shares alloted but unissued (note 5(c)(ii)) -- -- 100
Deficit (234,478) (207,882) (60,610)
- ------------------------------------------------------------------------------------------------------
1,306,562 1,333,157 114,529
Continuing operations (note 1)
Commitments (notes 3 and 6)
Subsequent events (notes 3, 4 and 5(c))
- ------------------------------------------------------------------------------------------------------
$ 2,998,042 $ 2,997,940 $ 2,415,726
======================================================================================================
</TABLE>
See accompanying notes to financial statements
On behalf of the Board:
________________________________ Director
________________________________ Director
F-14
<PAGE>
NAPTAU GOLD CORPORATION
Statements of Operations and Deficit
(expressed in United States dollars)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Three Months
Inception to ended Years ended December 31,
March 31, March 31, ---------------------------------
1997 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses:
Management salary (note 6) $ 157,500 $ 22,500 $ 90,000 $ 45,000 $ --
Professional fees 42,888 4,095 25,940 12,853 --
Office and administrative 2,089 -- 1,332 757 --
Stock grant program expense (note 5(c)(ii)) 100 -- -- 100 --
Write-off of deferred financing costs 30,000 -- 30,000 -- --
- -----------------------------------------------------------------------------------------------------------
Loss for the period -- (26,595) (147,272) (58,710) --
Deficit, beginning of period (1,900) (207,882) (60,610) (1,900) (1,900)
- -----------------------------------------------------------------------------------------------------------
Deficit, end of period $ (1,900) $(234,478) $(207,882) $ (60,610) $ (1,900)
===========================================================================================================
Loss per share $ -- $ (0.00) $ (0.02) $ (0.01) $ --
===========================================================================================================
</TABLE>
See accompanying notes to financial statements
F-15
<PAGE>
NAPTAU GOLD CORPORATION
Statements of Cash Flows (note 8)
(expressed in United States dollars)
<TABLE>
<CAPTION>
============================================================================================================
Three Months
Inception to ended
March 31, March 31, Years ended December 31,
1997 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash generated from (used in):
Operations:
Loss for the period (232,578) $ (26,595) $(147,272) $ (58,710) $ --
Add items not involving cash:
Write-off of deferred financing costs 30,000 30,000
Stock grant program expense, 100 -- -- 100 --
Changes in non-cash operating working capital:
Accounts payable and accrued liabilties 183,280 26,097 112,183 45,000 --
- ------------------------------------------------------------------------------------------------------------
(19,198) (499) (5,089) (13,610) --
Financing:
Deferred financing costs recovered (incurred) (39,191) (101) 910 (40,000) --
Changes in contracts payable (45,500) -- -- (45,500) --
Loans payable to related parties 109,370 600 7,073 101,697 --
- ------------------------------------------------------------------------------------------------------------
24,679 499 7,983 16,197 --
Investing activities:
Mineral properties (5,481) -- (3,894) (1,587) --
- ------------------------------------------------------------------------------------------------------------
Increase in cash $ (0) $ (0) $ (1,000) $ 1,000 $ --
Cash, beginning of period -- (0) 1,000 -- --
- ------------------------------------------------------------------------------------------------------------
Cash, end of period $ (0) $ (0) $ (0) $ 1,000 $ --
============================================================================================================
</TABLE>
See accompanying notes to financial statements.
F-16
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
1. Continuing operations:
Naptau Gold Corporation (the "Company") was formed under the laws of the
State of Delaware on January 8, 1988 and was inactive until 1995 when it
entered into an agreement to acquire certain mineral properties (note 3).
The Company's principal business activity is the exploration and
development of mineral properties, with its principal mineral properties
comprising of various placer leases in the Cariboo Mining Division of
British Columbia, Canada (the "Placer Leases").
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern. At March 31, 1997, the Company
had a working capital deficiency of approximately $1,700,000, a
significant portion which is due to related parties. The Company's
continuing operations and the ability of the Company to discharge its
liabilities are dependent upon the continued financial support of related
parties and the ability of the Company to obtain the necessary financing
to meet its liabilities as they come due.
The recoverability of the amounts shown as mineral properties is dependent
upon the existence of economically recoverable mineral reserves, the
ability of the Company to obtain the necessary financing to complete the
development of its mineral properties and upon future profitable
production or proceeds from the disposition thereof.
2. Significant accounting policies:
The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.
(a) Mineral property interests:
Mineral property acquisition costs and related exploration and
development expenditures are deferred until the property is placed
into production, sold or abandoned. These costs will be amortized on
a unit-of-production basis over the estimated proven and probable
reserves of the property following commencement of commercial
production or written off if the property is sold, allowed to lapse
or abandoned.
Mineral property acquisition costs include cash consideration and
the fair value of common shares issued for mineral properties.
Administrative expenditures are expensed in the period incurred.
On an on-going basis, the Company evaluates the status of its
mineral properties based on results to date to determine the nature
of exploration and development work that is warranted in the future.
If there is little prospect of further work on a property being
carried out, the deferred costs related to that property are written
down to their estimated recoverable amount.
The amounts shown for mineral properties represent costs incurred to date
and is not intended to reflect present or future values.
F-17
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
2. Significant accounting policies (continued):
(b) Deferred financing costs:
The Company defers costs associated with specific financing
activities and charges those costs against the related share capital
or to operations if the financing activity is unsuccessful.
(c) Loss per share:
Loss per share has been calculated using the weighted average number
of common shares outstanding during the year
3. Mineral properties:
<TABLE>
<CAPTION>
==============================================================================================================================
March 31 December 31,
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Placer Leases, Cariboo Mining Division, British Columbia:
Acquisition costs:
Placer Leases acquired from Noble (note 3(a)) $ 1,775,000 $ 1,775,000 $ 1,775,000
Placer Leases acquired from an affiliate of the
Company (note 3(b)) 200,800 200,800 200,800
------------------------------------------------------------------------------------------------------------------------------
1,975,800 1,975,800 1,975,800
Deferred interest and financing costs:
Paid or accrued to Noble (note 3(a)) 251,725 251,725 --
Paid to an affiliate of the Company (note 3(b)) 20,400 20,400 --
------------------------------------------------------------------------------------------------------------------------------
272,125 272,125 --
Exploration and development expenditures:
Incurred by Noble 735,445 735,445 397,339
Incurred by the Company 5,480 5,480 1,587
------------------------------------------------------------------------------------------------------------------------------
740,925 740,925 398,926
------------------------------------------------------------------------------------------------------------------------------
$ 2,988,850 $ 2,988,850 2,374,726
==============================================================================================================================
</TABLE>
F-18
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
3. Mineral properties (continued):
(a) Placer Leases acquired from Noble:
During 1995, the Company entered into an agreement to acquire
certain Placer Leases owned by Noble Metal Group Incorporated (a
British Columbia company) ("Noble") in exchange for 4 million common
shares of the Company, representing an initial 59.7% interest in the
Company. As Noble acquired control of the Company by this exchange,
it is considered a common control transaction and, accordingly, the
common shares have been accounted for at the carrying value of the
Placer Leases in the accounts of Noble at December 31,1994 of
$1,775,000 (Noble, in association with limited partnerships, had
also expended an additional $550,000 on exploration of the Placer
Leases which was recovered from these limited partnerships and
accordingly, is not reflected in the aforementioned carrying value).
A British Columbia Mineral Tenure Act "Bill of Sale Absolute" held
by the Company relating to the Placer Leases has not yet been
registered with the appropriate authorities and as a result,
registration of the Placer Leases remains in the name of the
operator, Noble. The Company can, at any time and without any
restriction, apply to conclude registration in its name.
The Company and Noble also entered into an operating agreement
whereby Noble will remain the operator for the mining activities on
the Placer Leases for a term of ten years, with Noble having the
option of renewing the agreement for a further ten year term. The
Company agreed to pay Noble $1,000,000 in consideration for entering
into this operating agreement. In addition, the Company is obligated
to pay $1,000,000 in respect of 1995 exploration and development
expenditures and agreed to fund future annual operating expenditures
on the Placer Leases, including the lease of certain equipment and
facilities owned by Noble. These required payments have been accrued
in contracts payable (See below). However, as this is a common
control transaction, the amount of $1,602,661, being the excess of
these amounts over the estimated book value of the related assets in
the accounts of Noble was charged against additional paid-in capital
during 1995 (note 5). During 1996, this amount was reduced by
$45,500 to reflect the actual book value of the related assets in
the accounts of Noble at December 31, 1995. To December 31, 1995,
the Company had advanced $45,500 to Noble with respect to
exploration and development expenditures on the Placer Leases which
has been recorded as a reduction in the Company s contracts payable.
During 1996, the Company entered into an extension agreement with
Noble with respect to its contract payable to Noble, whereby the
Company issued 85,000 common shares to Noble at an agreed price of
$2.40 per share and agreed to pay Noble 300 ounces of gold from the
Company's share of gold produced from mining operations on its
placer mining leases, if any, to initially extend the due date for
the amount outstanding under the contract payable to June 30, 1996.
The value ascribed to the common shares issued has been included in
deferred interest and financing costs in mineral properties,
however, the value of the gold to be paid to Noble has not been
accrued in these financial statements due to the uncertainty of
ultimate payment.
The Company and Noble subsequently agreed to amend certain of the
terms of the operating agreement originally entered into whereby the
Company was obliged to pay $1,000,000 to Noble as consideration for
entering into the operating agreement. The amending agreement
cancelled
F-19
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
the Company's obligation to pay $1,000,000 to Noble and the Company
agreed to pay Noble 3,421 ounces of gold from the Company's share of
gold produced from mining operations on its placer mining leases, if
any. Noble also granted the Company an extension to June 30, 1997 of
the revised balance due of $954,500 as at December 31, 1995 in
consideration for the Company agreeing to pay interest on such
balance at a rate of 10% per annum. The Company reduced contracts
payable and increased additional paid-in capital by $1,000,000 each
during 1996 as a result of this amending agreement. The Value of the
gold to be paid to Noble has not been accrued in these financial
statements due to the uncertainty of ultimate payment.
In addition to funding future annual operating expenditures on the
Placer Leases, the operating agreement provides that the proceeds
from production from the Placer Leases, if any, will be divided
between the Company and Noble as follows:
o for the first $1,000,000 of proceeds or 2,500 ounces of raw
gold (converted to a dollar amount), whichever is lesser, 10%
of such proceeds to Noble;
o for the next $1,000,000 of proceeds or 2,500 ounces of raw
gold (converted to a dollar amount), whichever is lesser,
17.5% of such proceeds to Noble; and
o for cumulative operating revenues in excess of $2,000,000 or
5,000 ounces of raw gold (converted to a dollar amount),
whichever is lesser, 25% of such proceeds to Noble.
(b) Placer Lease acquired from an affiliate of the Company:
During 1995, the Company acquired a Placer Lease owned by an
affiliate of the Company (the "Affiliate"), for $200,000 (accrued
but not yet paid) and 800,000 common shares of the Company that have
been assigned their par value of $0.001 per share.
During 1996 the Company entered into extension agreements with the
Affiliate with respect to its contract payable to the Affiliate,
whereby the Company issued 8,500 common shares at an agreed price of
$2.40 per share to initially extend the due date for the amount
outstanding under the contract payable to June 30, 1996 and
subsequently agreed to pay the Affiliate 100 ounces of gold produced
from mining operations on all of its placer mining leases, if any,
for extending the due date to October 12, 1997. The ascribed value
for the common shares issued has been included in deferred interest
and financing costs in mineral properties, however, the value of the
gold to be paid to the Affiliate has not been accrued in these
financial statements due to the uncertainty of ultimate payment.
4. Amounts payable to related parties:
Loans payable to related parties consist of amounts received from
directors and officers are non-interest bearing and have no specific terms
of repayment. During 1996, the directors and officers converted $96,000 of
these loans into 40,000 shares at a price of $2.40 per share.
F-20
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
At March 31,1997, accounts payable and accrued liabilities include
accruals totaling $157,500 (1996 - $90,000, 1995 - $45,000) for salaries
to a director and officer pursuant to an employment agreement (note 6),
which are included in management salary expense for the period.
5. Capital stock:
(a) Authorized:
During 1995, the Company increased the authorized capital stock from
200 common shares with a par value of $0.001 per share to 25,000,000
shares consisting of 5,000,000 preferred shares and 20,000,000
common shares, each with a par value of $0.001 per share, of which
1,900 common shares were outstanding. The Company subsequently split
the 1,900 common shares outstanding on a 10,000 new for 1 old basis.
The number of shares issued as at December 31, 1994 have been
restated to reflect this share split as if it had occurred on
inception.
(b) Issued:
A continuity of the Company's issued and outstanding capital stock
is as follows:
<TABLE>
<CAPTION>
======================================================================================================================
Common shares
-------------------------- Additional
Year Consideration Number Amount Paid-in capital Total
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance December 31, 1994 (note 5(a)) 1,900,000 $ 1,900 $ $ 1,900
1995 Mineral properties (note 3(a)) 4,000,000 4,000 1,771,000 1,775,000
1995 Reduction in additional
paid-in capital relating to operating
agreements with Noble (note 3(a)) (1,602,661) (1,602,661)
1995 Mineral properties (note 3(b)) 800,000 800 800
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 6,700,000 6,700 168,339 175,039
1996 Services under stock grant
program (note 5(c)(ii)) 100,000 100 - 100
1996 On conversion of loans payable to related 40,000 40 95,960 96,000
parties(note 4)
1996 As consideration for extending the due 93,500 94 224,306 224,400
dates of contracts payable (note 3)
1996 Increase in additional paid-in capital 1,000,000 1,000,000
resulting from amendment to operation
agreement with Noble (note 3(a))
1996 Increase in additional paid-in capital 45,500 45,500
resulting from amendment to operation
agreement with Noble (note 3(a))
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 and March 31, 1997 6,933,500 $ 6,934 $ 1,534,105 1,541,039
======================================================================================================================
</TABLE>
F-21
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
5. Capital stock: (continued)
(c) Stock option plan and stock grant program:
In June, 1995 the Company adopted a non-qualified stock option plan
and a stock grant program with the following provisions:
(i) Stock option plan:
The Company has reserved 300,000 shares of its authorized
common stock for issuance to key employees or consultants of
the Company and affiliates. Under this plan, no employee may
receive more than 100,000 stock options. Options are
non-transferable and expire if not exercised within two years.
The options may not be exercised by the employee until after
the completion of two years of employment with the Company.
The options are issuable to officers, key employees and
consultants in such amounts and prices as determined by the
Board of Directors. As of March 31, 1997, no options were
granted pursuant to this plan.
(ii) Stock grant program:
The Company has reserved 300,000 shares of its authorized
common stock for issuance to key employees and directors.
Under this plan, no employee may receive more than 100,000
shares. The program requires the employee to remain in the
employ of the Company for at least one year following the
grant and to agree not to engage in any activity which would
be considered in competition with the Company's business. If
the employee violates any one of these conditions the
ownership of the shares issued under the program shall revert
back to the Company. The shares issued under the program are
non-transferable for two years. As of December 31,1995, a
total of 100,000 shares had been granted to five directors
pursuant to this plan which were issued during in 1996. These
shares were recorded during the period granted at their par
value of $0.001 per share and were presented as shares
allotted but unissued as at December 31, 1995.
6. Commitments:
On June 30, 1995, the Company entered into a five-year employment
agreement with the President of the Company that provides for a salary of
$7,500 per month beginning July 1,1995 (plus a cost of living adjustment
to be made on the first day of each calendar year). The agreement also
provides for additional incentive compensation equal to 1/2 of 1% Of net
sales up to $5,000,000, 3/4 of 1% on the next $20,000,000 in net sales and
1 percent of net sales above $25,000,000.
F-22
<PAGE>
NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States Dollars)
March 31, 1997
================================================================================
7. Income taxes:
Under the asset and liability method of accounting for income taxes,
deferred income tax assets and liabilities are measured using enacted tax
rates for the future income tax consequences attributable to differences
between the financial statement carrying amount of existing assets and
liabilities and their respective tax bases.
For all periods presented, the Company has not recognized any deferred tax
assets or liabilities as the available benefits, primarily as a result of
loss carry forwards of approximately $222,000 arising in 1995 and l996,
are fully offset by a valuation allowance of the same amount.
8. Supplementary cash flow information:
The following non-cash financing and investing activities occurred during
the period:
<TABLE>
<CAPTION>
===========================================================================================================================
Inception to Three months to
March 31, March 31, Year end December 31,
---------------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenditures on mineral properties by way of $ 340,330 $ 0 $ 340,330 $ 0 $ 0
increase in contracts payable
Acquisition of mineral properties for contracts 2,200,000 2,200,000
payable
Reduction of contracts payable on amendment of 1,000,000 1,000,000
operating agreement with Noble and resulting
increase in additional paid-in capital
Issue of common shares: For mineral properties, 443,039 269,900 173,139
net of reduction of additional paid-in
capital relating to agreements with Noble
On settlement of loans payable to related 96,000 96,000
parties
===========================================================================================================================
</TABLE>
The Company did not pay any interest or income taxes during the periods
ended December 31, 1996, 1995 or 1994.
F-23
<PAGE>
PART III
ITEM 1. EXHIBIT INDEX
3.1 Certificate of Incorporation of the Registrant (1)
3.2 Certificate of Amendment dated June 23, 1989 to Certificate of
Incorporation (1)
3.3 Certificate of Amendment dated June 1, 1995, to Certificate of
Incorporation (1)
3.4 Certificate for Renewal and Revival of Charter dated June 1, 1995 (1)
3.5 By-laws of the Registrant (1)
4.1 Form of Common Stock Certificate (3)
10.1 Agreement to Exchange Assets for Stock (1)
10.2 Operating Agreement (1)
10.3 Extension Agreement between the Registrant and Noble dated September 1,
1995 (2)
10.4 Second Extension Agreement between the Registrant and Noble dated April
30, 1996 (2)
10.5 Satisfaction of Debt with Stock-Noble Metal Group Incorporated (2)
10.6 Modification and Extension Agreement between Registrant and Noble dated
July 1996 cancelling $1,000,000 obligation and further extending date for
payment of $954,500 in consideration for agreement to deliver 3,421 ounces
of gold (2)
10.7 Agreement of Business Combination by Exchange of Assets for
Stock Regarding Placer Lease #1160 Between the Registrant and
Dorothy Dennis (2)
10.8 Extension Agreement between the Registrant and Dorothy
Dennis dated April 30, 1996 (2)
10.9 Satisfaction of Debt with Stock - Dorothy Dennis (2)
10.10 Satisfaction of Debt with Stock - E.D. Renyk (2)
10.11 Satisfaction of Debt with Stock - J.J. McIntyre (2)
10.12 Stock Option Program (1)
10.13 Stock Grant Program (1)
10.14 Employment Agreement of Edward D. Rneyk (1)
10.15 Second Extension Agreement between Registrant and Dorothy
Dennis dated October 1996 (2)
24.1 Consent of W.G.T. Consultants Ltd. (2)
- ------------------
(1) Previously Filed
(2) Filed Herewith
(3) To be filed by Amendment
<PAGE>
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this Amendment No. 1 to Registration
Statement on Form 10-SB to be signed on its behalf by the undersigned, thereunto
duly authorized.
NAPTAU GOLD CORPORATION
a Delaware Corporation
Dated: September 16, 1997 By:/s/
-----------------------------
Edward D. Renyk
President and Director
Dated: September 16, 1997 By:/s/
-----------------------------
John J. McIntyre
Secretary and Director
Dated: September 16, 1997 By:/s/
-----------------------------
Lloyd E. Mear
Director
Dated: September 16, 1997 By:/s/
-----------------------------
Warren W. Gayle
Director
Dated: September 16, 1997 By:/s/
-----------------------------
Murray A. Braaten
Director
Exhibit 10.3
<PAGE>
EXTENSION AGREEMENT
BETWEEN:
NOBLE METAL GROUP INCORPORATED, a British Columbia Corporation having its
principal place of business at 801-409 Granville Street, Vancouver,
British Columbia V6C lT2 (herein "Noble")
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation, having its registered
offices at 11th Floor, Rodney Square North, 11th and Market Streets,
Wilmington, New Castle County, Delaware 19801 (herein "NAPTAU")
W I T N E S S E T H
WHEREAS, Noble and Maritime Transport & Technology Ltd., a New York Corporation,
entered into an agreement on the 6th day of June, 1995 providing for the
acquisition by Naptau of certain assets of Noble, consisting of Placer Mining
Leases in the Cariboo Mining Division of British Columbia in the area of Likely,
British Columbia, Canada, (the "Exchange Agreement"); and
WHEREAS, on the same date, Naptau entered into an agreement with Noble for the
operation by Noble of the Placer Mining Leases on behalf of Naptau (the
"Operating Agreement"); and
WHEREAS, under the terms of the Exchange Agreement and the Operating Agreement,
Naptau is obligated to pay Noble USD$1,000,000 by September 3, 1995 for the
entering into of the Operating Agreement, and is obligated to pay a further
USD$1,000,000 by October 3, 1995 for the funding of the 1995 mining operations
on the Placer Mining Leases; and
WHEREAS, Naptau is unable to pay the sums due and owing until such time as the
company has been granted approval for its Registration Statement filed with the
United States Security and Exchange Commission on August 9, 1995, and granted a
listing on the NASDAQ Small Cap Market as soon as the listing requirements are
met; and
WHEREAS, both Noble and Naptau wish to have fulfilled the obligations of the
Exchange Agreement and Operating Agreement as soon as Naptau is in a position to
complete;
IT IS NOW THEREFORE AGREED that in consideration of the payment of TEN DOLLARS
($10) by Naptau to Noble, the receipt of which is hereby acknowledged, and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
<PAGE>
1. Noble hereby grants to Naptau an extension of the time period in which to pay
the sums due and owing under the Extension Agreement and the Operating Agreement
until December 31, 1995.
2. Naptau agrees to pay the sums due and owing under the Extension Agreement and
Operating Agreement as soon as the United States Security and Exchange
Commission accepts the Registration Statement of Naptau, and the company as a
consequence thereof is listed on the NASDAQ Small Cap Market.
3. This Agreement shall be construed in accordance with the laws of the Province
of British Columbia, Canada.
IN WITNESS WHEREOF THE PARTIES HERETO, CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS AS OF THE 1ST DAY OF SEPTEMBER, 1995.
NOBLE METAL GROUP INCORPORATED
--------------------------- -----------------------------
BY: DOROTHY DENNIS, PRES. BY: WILLIAM C. JACKSON, DIRECTOR
NAPTAU GOLD CORPORATION
---------------------------
BY: EDWARD D. RENYK, PRES.
Exhibit 10.4
<PAGE>
SECOND EXTENSION AGREEMENT
BETWEEN:
NOBLE METAL GROUP INCORPORATED, a British Columbia Corporation
having its principal place of business at
801-409 Granville Street, Vancouver,
British Columbia, V6C lT2 (herein "Noble")
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation,
having its registered offices at
11th Floor, Rodney Square North, 11th and Market Streets,
Wilmington, New Castle County, Delaware 19801 (herein "NAPTAU")
WITNESS THAT
WHEREAS
(1) Noble and Maritime Transport & Technology Ltd., a New York Corporation,
entered into an agreement on the 6th day of June, 1995 providing for the
acquisition by Naptau of certain assets of Noble, consisting of Placer Mining
Leases in the Cariboo Mining Division of British Columbia in the area of Likely,
British Columbia, Canada, (the "Exchange Agreement");
(2) On the same date, Naptau entered into an agreement with Noble for the
operation by Noble of the Placer Mining Leases on behalf of Naptau (the
"Operating Agreement");
(3) Under the terms of the Exchange Agreement and the Operating Agreement,
Naptau is obligated to pay Noble USD$1,000,000 by September 3, 1995 for the
entering into of the Operating Agreement, and is obligated to pay a further
USD$1,000,000 by October 3, 1995 for the funding of the 1995 mining operations
on the Placer Mining Leases;
(4) Naptau is unable to pay the sums due and owing until such time as the
company has been granted approval for its Registration Statement filed with the
United States Security and Exchange Commission on August 9, 1995, and granted a
listing on the NASDAQ Small Cap Market as soon as the listing requirements are
met;
(5) Both Noble and Naptau wish to have fulfilled the obligations of the Exchange
Agreement and Operating Agreement as soon as Naptau is in a position to
complete; and
(6) By an Agreement dated September 1, 1995, Naptau was previously granted an
extension of the time for performance of its obligations under the Exchange
Agreement and Operating Agreement to December
<PAGE>
31, 1995 (the "Extension Agreement") which time has expired and Naptau is now in
breach of its obligations under the said agreements;
IT IS NOW AGREED that in consideration of the payment of TEN DOLLARS ($10) by
Naptau to Noble, the receipt and sufficiency of which is hereby acknowledged,
and the further mutual covenants and agreements following, that:
1. Naptau will pay to Noble 300 ounces of raw gold from its share of gold
produced from the mining operations on the Placer Mining Leases.
2. Noble hereby grants to Naptau a further extension of time in which to pay the
sums due and owing under the Extension Agreement, the Exchange Agreement and the
Operating Agreement until June 30, 1996.
3. Naptau agrees to pay in settlement of the interest amounts owing on the sums
in arrears under the agreements referred to in paragraph 2, USD$200,000 which
Naptau and Noble agree to convert into shares of Naptau at a deemed price of
USD$2.40 per share for a total of 85,000 common shares;
4. This Agreement shall be in addition to the Extension Agreement and shall also
be construed in accordance with the laws of the Province of British Columbia,
Canada.
5. This Agreement may be executed in counterpart and by faxed signature and the
parties agree to deliver executed copies of the original document.
IN WITNESS WHEREOF THE PARTIES HERETO, CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS AS OF THE 30TH DAY OF APRIL, 1996.
NOBLE METAL GROUP INCORPORATED
- --------------------------------- ---------------------------------
BY: DOROTHY DENNIS, PRES. BY: ROSE M. RAE, DIRECTOR
NAPTAU GOLD CORPORATION
- ---------------------------------
BY: EDWARD D. RENYK, PRES.
- 2 -
Exhibit 10.5
<PAGE>
NAPTAU GOLD CORPORATION
a Delaware Corporation, having its registered offices
at 11th Floor, Rodney Square North, 11th and Market Streets, Wilmington,
New Castle County, Delaware 19801
April 30, 1996
Noble Metal Group Incorporated
801 409 Granville St.
Vancouver, B.C.
V6C lT2
Dear Sirs/Mesdames:
Re: Satisfaction of Debt with Stock
Naptau Gold Corporation is presently indebted to you for interest owing on the
payment of $1,000,000 due September 3, 1995 pursuant to an Exchange Agreement
entered into on June 6, 1995, and is also indebted to you for the interest owing
on the further payment of $1,000,000 due October 3, 1995 pursuant to an
Operating Agreement also entered into on June 6, 1995. In a Second Extension
Agreement entered into on April 30, 1996 for the time for payment of the above
principal sums owing, the amount of the interest due under the above agreements
has been agreed to be $200,000 (the "Debt").
Please confirm by your signature below, that you have agreed to convert the Debt
into 85,000 common shares of Naptau Gold Corporation at a deemed price of $2.40
per share in complete satisfaction of the Debt.
Upon receipt of a copy of this letter executed by you we will arrange for 85,000
common shares of Naptau Gold Corporation to be issued to you. Please be advised
that the said shares will be registered under the Securities Laws of the United
States.
Yours very truly,
NAPTAU GOLD CORPORATION
per: E.D. Renyk, President
ACCEPTED AND AGREED TO AS OF THE 30TH DAY OF APRIL, 1996.
NOBLE METAL GROUP INCORPORATED
- -------------------------------------
per: Dorothy Dennis, President
Exhibit 10.6
<PAGE>
MODIFICATION AND THIRD EXTENSION AGREEMENT
BETWEEN:
NOBLE METAL GROUP INCORPORATED, a British Columbia Corporation having its
principal place of business at 801-409 Granville Street, Vancouver, British
Columbia, V6C lT2 (herein "Noble")
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation, having its
registered offices at 11th Floor, Rodney Square North, 11th
and Market Streets, Wilmington, New Castle County, Delaware
19801 (herein "NAPTAU")
WITNESS THAT
WHEREAS
(1) Noble and Maritime Transport & Technology Ltd., a New York Corporation,
entered into an agreement on the 6th day of June, 1995 providing for the
acquisition by Naptau of certain assets of Noble, consisting of Placer Mining
Leases in the Cariboo Mining Division of British Columbia in the area of Likely,
British Columbia, Canada, (the "Exchange Agreement");
(2) On the same date, Naptau entered into an agreement with Noble for the
operation by Noble of the Placer Mining Leases on behalf of Naptau (the
"Operating Agreement");
(3) Under the terms of the Exchange Agreement and the Operating Agreement,
Naptau is obligated to pay Noble USD$1,000,000 by September 3, 1995 for the
entering into of the Operating Agreement, and is obligated to pay a further
USD$1,000,000 by October 3, 1995 for the funding of the 1995 mining operations
on the Placer Mining Leases;
(4) Naptau paid to Noble a total of USD$45,500 by December 31, 1995 for the
operating expenses relating to the 1995 mining operations on the Placer Mining
Leases;
(5) Naptau is unable to pay the balance of the sums due and owing until such
time as the company has been granted approval for its Registration Statement
filed with the United States Security and Exchange Commission on August 9, 1995,
and has also been granted a listing on the NASDAQ Small Cap Market as soon as
the listing requirements are met;
(6) Both Noble and Naptau wish to have fulfilled the obligations of the Exchange
Agreement and Operating Agreement as soon as Naptau is in a position to
complete; and
<PAGE>
(7) By an Agreement dated September 1, 1995, Naptau was previously granted an
extension of the time for performance of its obligations under the Exchange
Agreement and Operating Agreement to December 31, 1995 (the "Extension
Agreement);
(8) By a Second Extension Agreement dated April 30, 1996, Naptau was granted a
further extension for performance of its obligations under the Exchange
Agreement and Operating Agreement to June 30, 1996 (the " Second Extension
Agreement) on terms which provided for the settlement of interest owing on the
sums due under the Exchange Agreement and Operating Agreement at USD$200,000
(TWO HUNDRED THOUSAND DOLLARS), converted into common shares of Naptau, and in
consideration of the agreement of Naptau to pay to Noble 300 ounces of raw gold
from its share of gold produced from the mining operations on the Placer Mining
Leases;
(9) The Second Extension Agreement has now expired:
AND WHEREAS Naptau and Noble wish to revise the terms and conditions regarding
the obligation to pay the USD$1,000,000 due to Noble in consideration for the
entering into of the Operating Agreement in order to provide Noble with a larger
raw gold reserve and in order to allow Naptau sufficient time to become listed
on NASDAQ.
IT IS NOW AGREED that in consideration of the payment of TEN DOLLARS ($10) by
Naptau to Noble, the receipt and sufficiency of which is hereby acknowledged,
and the further mutual covenants and agreements following, that:
1. Noble hereby cancels the USD$1,000,000 due to it in consideration for the
entering into of the Operating Agreement and Naptau agrees instead, that it will
pay to Noble from Naptau's share of gold produced from the mining operations on
the Placer Mining Leases 3,421 ounces of raw gold, valued at a deemed price of
USD$380 per ounce to equal USD$1,300,000.
2. The total number of ounces of raw gold to be paid by Naptau to Noble, shall
be distributed to Noble from the Proceeds from the mining operations (as defined
in the Operating Agreement) due to Naptau on the following basis:
a. the first 300 ounces of raw gold due to Naptau to be paid in satisfaction
of the terms of the Second Extension Agreement;
b. up to 40% of the balance of the number of ounces of raw gold due to Naptau
from the 1996 Placer Mining operations, until the total number of ounces
due under paragraph 1 above is reached;
<PAGE>
c. the balance, if any, to be paid to Noble from up to 50% of the number of
ounces of raw gold due to Naptau from the 1997 Placer Mining operations,
until the total number of ounces due under paragraph 1 above is reached;
d. the balance, if any, to be paid to Noble from up to 60% of the number of
ounces of raw gold due to Naptau from the 1998 Placer Mining operations,
and thereafter until the total number of ounces due under paragraph 1
above is reached;
3. Noble hereby grants to Naptau a further extension of time until June 30,
1997, in which to pay the balance of USD$954,500 due and owing under the terms
of the Exchange Agreement and the Operating Agreement for the deemed expenses of
the 1995 mining operations on the Placer Mining Leases. Interest will be due and
owing on the above amount at the rate of 10% per annum payable semi-annually.
4. Naptau may at any time, at its option elect to pay to Noble more ounces of
raw gold than the minimum levels specified in the schedule set out in paragraph
2, but may not, without the written consent of Noble elect to pay in currency or
any other consideration, the balance of the number of ounces of raw gold owing
as converted to a dollar amount in accordance with paragraph 2.
5. This Agreement is in addition to the Extension Agreement and the Second
Extension Agreement and shall also be construed in accordance with the laws of
the Province of British Columbia, Canada.
6. This Agreement may be executed in counterpart and by faxed signature and the
parties agree to deliver executed copies of the original document.
IN WITNESS WHEREOF THE PARTIES HERETO, CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS AS OF THE 12TH DAY OF JULY, 1996.
NOBLE METAL GROUP INCORPORATED
------------------------------ ------------------------------
BY: DOROTHY DENNIS, PRES. BY: ROSE M. RAE, DIRECTOR
NAPTAU GOLD CORPORATION
------------------------------
BY: EDWARD D. RENYK, PRES.
Exhibit 10.7
<PAGE>
AGREEMENT OF BUSINESS COMBINATION
BY EXCHANGE OF ASSETS FOR
STOCK
AGREEMENT dated this 12TH day of October, 1995, by and between DOROTHY DENNIS,
businesswoman (herein "Dennis"), of #705, 588 Broughton St., Vancouver, British
Columbia, V6G 3E3, and NAPTAU GOLD CORPORATION, a Delaware Corporation (herein
"NAPTAU"), having its registered offices at 11th Floor, Rodney Square North,
11th and Market Streets, Wilmington, New Castle County, Delaware 19801
W I T N E S S E T H
WHEREAS, Dennis is desirous of exchanging certain of her assets, consisting of
Placer Mining Lease #1160 in the Cariboo Mining Division of British Columbia, in
the area of Likely, British Columbia, Canada (the "Lease"); and
WHEREAS, NAPTAU is desirous of acquiring the Lease of Dennis;
IT IS NOW THEREFORE AGREED that in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Exchange of Assets.
1.1 Subject to the terms and conditions of this Agreement and the performance by
the parties hereto of their respective obligations hereunder, Dennis shall
exchange, transfer, convey, assign and deliver to NAPTAU, and NAPTAU shall
receive, acquire and accept on the Closing Date (as such term is hereinafter
defined) all of the right, title and interest of Dennis in and to the Lease,
being generally described as a placer mining lease, as the same shall exist on
the Closing Date, including, without limitation, all rights relating to or
arising out of the mining of the Lease conducted by Dennis, free and clear of
all liabilities, obligations, liens and encumbrances, except as expressly
assumed by NAPTAU under Section 2 below.
1.2 The transfer of the Lease as herein provided shall be effected by a bill of
sale, endorsement, assignment, draft, check, deed or other instrument of
transfer and conveyance delivered to NAPTAU on the Closing Date in a form
sufficient to transfer the Lease as contemplated by this agreement and any other
such as shall be reasonably requested by NAPTAU. Dennis covenants that she will,
at any time and from time to time after the Closing Date, execute and deliver
such other instruments of transfer and conveyance and do all such further acts
and things as may be reasonably requested by
<PAGE>
NAPTAU to transfer and deliver to NAPTAU or to aid and assist NAPTAU in
collecting and reducing to possession, the Lease.
2. Assumption of Liabilities. NAPTAU shall assume no liabilities of Dennis,
except those which are generally any royalties, land owner payments, government
fees, or other fees which become due upon completion relating to the Lease
acquired.
3. Closing. The Closing hereunder (the "Closing") shall take place at 11:30 A.M.
on or about the 12th day of October, 1995 at the offices of Roger L. Fidler,
Esq., 400 Grove Street, Glen Rock, New Jersey 07452 or at such other time and
place as may be agreed by NAPTAU and Dennis (the "Closing Date").
4. Exchange Terms; Allocation. In consideration of the exchange and immediate
transfer of the Lease herein, within 30 days or such other date as is agreed to
by the parties but not later than 60 days from the Closing Date, NAPTAU shall
pay to Dennis the sum of $200,000 U.S. currency and shall deliver to Dennis or
her nominees, certificates for 800,000 (EIGHT HUNDRED THOUSAND) shares of
NAPTAU's common stock.
5. Representations and Warranties of Dennis. Dennis hereby represents and
warrants as follows:
5.1 On or before closing Dennis shall establish to the satisfaction of NAPTAU
that she has title to the Lease and authority to convey the same in accordance
with the terms of this Agreement. Dennis has taken no action and has not failed
to take any action, which action or failure would preclude or prevent NAPTAU
from conducting the business of Dennis in relation to the Lease in the manner
heretofore conducted.
5.2 No action, approval, consent or authorization, including but not limited to
any action, approval, consent or authorization by any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality is
necessary as to Dennis in order to constitute this agreement as a binding and
enforceable obligation of Dennis in accordance with its terms.
5.3 Dennis has not incurred any obligation or liability (absolute or contingent,
liquidated or unliquidated, choate or inchoate) except current obligations and
liabilities incurred in the ordinary course of her businesses which would act as
a lien against the Lease.
5.4 Dennis has not leased, encumbered or effected any transfer of the Lease.
6. Representations and Warranties of NAPTAU. NAPTAU hereby represents and
warrants that on the Closing Date all of the following will be true, except as
further qualified herein below:
- 2 -
<PAGE>
6.1 NAPTAU is a Corporation duly organized, validly existing and in good
standing under the laws of a state of the United States. NAPTAU will be
registered under the 1934 Securities Exchange Act not more than thirty (30) days
after closing and within a reasonable time thereafter will be trading in the
NASDAQ Small Capitalization Board market. NAPTAU is not conducting any business
in any location. Complete and correct copies of the Certificate of Incorporation
of NAPTAU and all amendments thereto, certified in each case by the secretary of
State of the State of Delaware, and of the By-Laws of NAPTAU, and all amendments
thereto, certified by the secretary of NAPTAU, have been or will be delivered to
Dennis on or prior to the Closing Date by NAPTAU. NAPTAU will present at closing
a Certificate of good standing or its equivalent. NAPTAU has taken no action and
has not failed to take any action, which action or failure would preclude or
prevent NAPTAU from conducting the contemplated business of NAPTAU in relation
to the Leases.
6.2 NAPTAU has no subsidiaries.
6.3 NAPTAU has no authorized or outstanding securities other than its preferred
stock which consists of 5,000,000 authorized shares with a par value of one mill
($0.001) each, none of which have been issued, and its common stock with a par
value of one mill ($0.001) per share, (the "Common Stock"), which consists of
20,000,000 authorized shares of which not more than 6,700,000 shares are to be
outstanding immediately after the Closing Date. All outstanding Common Stock is
duly authorized, validly issued, fully-paid and non-assessable (except for such
statutory and constitutional obligations as may be imposed notwithstanding full
payment for and valid issuance of such shares), and there are no presently
issued or outstanding securities of NAPTAU convertible into common stock nor are
there any outstanding options, warrants, agreements, rights or commitments of
any kind relating to the authorized but unissued Common Stock save for a Stock
Grant Program and a Stock Option Program. All transfer taxes, if any, with
respect to transfers of securities of NAPTAU made prior to the date hereof have
been paid. All of the Common Stock is owned, both beneficially and of record,
free of any security interests, liens, pledges, claims, charges, escrows
encumbrances, options, rights of first refusal, mortgagee, indentures, security
agreements or other contracts (whether or not relating in any way to credit or
the borrowing of money) and the designated owner thereof has the unrestricted
right to vote such Common Stock.
6.4 NAPTAU's Board of Director's will recommend to certain controlling
shareholders, as soon as practicable after receipt of a report from an
independent geologist as to the underlying value of the Lease, approval of the
transaction contemplated herein and obtain written consent to take such acts and
actions as may be deemed necessary or advisable by counsel to NAPTAU to fully
empower NAPTAU and its Board of Directors to enter into and consummate this
- 3 -
<PAGE>
transaction, including the giving of notice to NAPTAU shareholders as required
by New York law.
6.5 NAPTAU has full power and authority, corporate and otherwise, to enter into
this agreement and to assume and perform its, his or her obligations hereunder.
The execution and delivery of this agreement and the performance by NAPTAU of
its obligations hereunder have been duly authorized by the Board of Directors of
NAPTAU and no further action or approval, except shareholder approval, corporate
or otherwise, is required in order to constitute this agreement as a binding and
enforceable obligation on NAPTAU. The execution and delivery of this agreement
and the performance by NAPTAU of its obligations hereunder do not and will not
violate any provision of the Certificate of Incorporation or By-Laws of NAPTAU
and do not and will not conflict with or result in any breach of any condition
or provision of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its assets by reason
of the terms of any contract, mortgage, lien, lease, agreement indenture,
instrument, judgment or decree to which NAPTAU is a party or which is or
purports to be binding upon NAPTAU or which affects or purports to affect any of
its assets.
6.6 No action, approval, consent or authorization, including but not limited to
any action, approval, consent or authorization by any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality is
necessary as to NAPTAU in order to constitute this agreement as a binding and
enforceable obligation of NAPTAU in accordance with its terms.
6.7 Since the date at the last financial statement of NAPTAU, a copy of which
has been provided to Dennis and is hereby acknowledged as having been received
by her, there have been no adverse changes in the financial condition, assets,
liabilities, properties or business of NAPTAU and NAPTAU has not:
6.7.1 declared, set aside or made any dividend or other distribution or
purchased, redeemed or reclassified any of their capital stock or effected any
stock split, stock dividend, exchange or recapitalization or entered into any
agreement in respect of the foregoing;
6.7.2 incurred any damage, destruction or similar loss, whether or not covered
by insurance, materially affecting their businesses or properties;
6.7.3 sold, assigned or transferred, any of their tangible assets or any patent,
trademark, tradename, copyright, license, franchise, design or other intangible
assets or properties;
- 4 -
<PAGE>
6.7.4 mortgaged, pledged, granted or suffered to exist any lien or other
encumbrance or charge on any of their assets or properties, tangible or
intangible;
6.7.5 waived any rights or material value or cancelled, discharged, satisfied or
paid any material debts or claims;
6.7.6 leased or effected any transfer of any of their assets or properties;
6.7.7 entered into, made any amendment of or terminated any lease, material
contract or license;
6.7.8 amended their Certificate of Incorporation or By-Laws;
6.7.9 effected any change in their accounting practices, procedures or methods;
6.7.10 entered into any transaction other than in the ordinary course of
business, or changed in any way any of their business policies or practices.
6.8 NAPTAU is not a party to nor has it any contract or commitment of any kind
or nature whatsoever, written or oral, formal or informal, with any government
or agency thereof, pursuant to which its right to compete with any entity or
person in the conduct of its business is restrained or restricted for any reason
or in any way.
7. Miscellaneous.
a) This Agreement shall constitute the entire agreement of the parties hereto
and may not be amended, except by written consent of the parties hereto in
writing executed by them.
b) This Agreement shall be construed according to the laws of the State of New
York and shall be enforceable in any court of competent jurisdiction located in
the State of New York.
c) This Agreement shall inure to the benefit of the parties and their heirs,
administrators and successors in interest, if any, but shall not otherwise be
assignable.
d) Where in this Agreement the singular or masculine gender are referred to, the
same shall be construed to include the plural, feminine or body corporate as the
case might require.
e) This Agreement may be executed in counterparts and receipt of facsimile
transmission of signatures shall be sufficient to effect acceptance of this
Agreement, although the parties hereto agree to submit within a reasonable time
duplicate original signed copies of this Agreement to each other.
- 5 -
<PAGE>
8. Indemnification.
Each party to this Agreement shall indemnify and hold harmless each other party
at all times after the Closing Date against and in respect of any liability,
damage or deficiency, all actions, suits, proceedings, demands, assessments,
judgments, costs and expenses, including attorney's fees incident to any of the
foregoing, resulting from any misrepresentation, breach of covenant or warranty
for non-fulfillment of any agreement on the part of such party under this
Agreement, or from any misrepresentation in or omission from any certificate
furnished or to be furnished to a party hereunder. Subject to the terms of this
Agreement, the defaulting party shall reimburse the other party or parties on
demand for any reasonable payments made by said parties at any time after the
date of closing, in respect to any liability or claim to which the foregoing
indemnity relates, if such payment is made after reasonable notice to the other
party to defend or satisfy the same, and such party failed to defend or satisfy
the same.
IN WITNESS WHEREOF THE PARTIES HERETO, IF CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS ON THE DATE FIRST ABOVE WRITTEN.
NAPTAU GOLD CORPORATION
BY: EDWARD D. RENYK, President
EXECUTED BY DOROTHY DENNIS )
IN THE PRESENCE OF: )
Name: _______________________ )
Address: ____________________ ) ________________________________
_____________________________ ) DOROTHY DENNIS
Occupation: _________________ )
- 6 -
Exhibit 10.8
<PAGE>
EXTENSION AGREEMENT
BETWEEN:
DOROTHY DENNIS, businesswoman (herein "Dennis"),
of #705 588 Broughton St., Vancouver, British Columbia, V6G 3E3
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation
(herein "NAPTAU"), having its registered offices at
11th Floor, Rodney Square North, 11th and Market Streets,
Wilmington, New Castle County, Delaware 19801
WITNESS THAT
WHEREAS
(1) NAPTAU and Dennis entered into an agreement on the 12th day of
October, 1995 for the acquisition by NAPTAU of Placer Lease #1160 in the Cariboo
Mining Division of British Columbia, in the area of Likely, British Columbia,
Canada (the "Agreement");
(2) Pursuant to the Agreement NAPTAU was obligated, in part, to pay the
sum of USD$200,000 to Dennis on or before December 12, 1995;
(3) NAPTAU has not as yet made the payment above referred to; and
(4) Both Dennis and NAPTAU would like to extend the time for payment of
the said principal sum on mutually satisfactory terms;
IT IS NOW AGREED that in consideration of the payment of TEN DOLLARS ($10) by
NAPTAU to Dennis, the receipt and sufficiency of which is hereby acknowledged,
and the further mutual covenants and agreements following, that:
1. The time for payment of the principal sum of USD$200,000 as required by
the Agreement is hereby extended to October 12, 1996.
2. NAPTAU agrees to pay forthwith in consideration for entering this
extension agreement and in settlement of the interest owing on the above
principal sum the amount of USD$20,000.
3. Dennis may choose to convert the amount required to be paid by
paragraph 2 into shares of the common stock of NAPTAU.
4. NAPTAU may pay at any time before October 12, 1995 the principal sum
due under the Agreement, but if it chooses to do so
<PAGE>
there will be no adjustment of the amount required to be paid by NAPTAU pursuant
to paragraph 2.
IN WITNESS WHEREOF THE PARTIES HERETO, IF CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS AS OF THE 30TH DAY OF APRIL, 1996.
NAPTAU GOLD CORPORATION
BY: EDWARD D. RENYK, President
EXECUTED BY DOROTHY DENNIS )
IN THE PRESENCE OF: )
Name: _______________________ )
Address: ____________________ ) ________________________________
_____________________________ ) DOROTHY DENNIS
Occupation: _________________ )
- 2 -
Exhibit 10.9
<PAGE>
NAPTAU GOLD CORPORATION
a Delaware Corporation, having its registered offices
at 11th Floor, Rodney Square North, 11th and Market Streets, Wilmington,
New Castle County, Delaware 19801
April 30, 1996
Dorothy Dennis
#705 588 Broughton St.
Vancouver, B.C.
V6G 3E3
Dear Madam:
Re: Satisfaction of Debt with Stock
Naptau Gold Corporation is presently indebted to you in the principal sum
$20,000 (the "Debt") as a result of an extension agreement entered into by you
with Naptau Gold Corporation on April 30, 1996 extending the time for payment of
other funds due to you as per an agreement dated October 12, 1995.
Please confirm by your signature below, that you have agreed to convert the Debt
into 8,500 common shares of Naptau Gold Corporation at a deemed price of $2.40
per share in complete satisfaction of the Debt.
Upon receipt of a copy of this letter executed by you we will arrange for 8,500
common shares of Naptau Gold Corporation to be issued to you. Please be advised
that the said shares will be registered under the Securities Laws of the United
States.
Yours very truly,
NAPTAU GOLD CORPORATION
per: E.D. Renyk
President
ACCEPTED AND AGREED TO AS OF THE 30TH DAY OF APRIL, 1996.
- ---------------------------------
Dorothy Dennis
Exhibit 10.10
<PAGE>
NAPTAU GOLD CORPORATION
a Delaware Corporation, having its registered offices
at 11th Floor, Rodney Square North, 11th and Market Streets, Wilmington,
New Castle County, Delaware 19801
April 30, 1996
E.D. Renyk, C.A.
9551 Bridgeport Road
Richmond, B.C.
V6E 1S3
Dear Sir:
Re: Satisfaction of Debt with Stock
Naptau Gold Corporation is presently indebted to you in the principal sum
$50,848.50 (the "Debt") as a result of advances made by you to the company prior
to December 31, 1995, as verified and vouched for in the audited statements of
the company.
Please confirm by your signature below, that you have agreed to convert
$48,000.00 of the Debt into 20,000 common shares of Naptau Gold Corporation at a
deemed price of $2.40 per share in complete satisfaction of that portion of the
Debt.
Upon receipt of a copy of this letter executed by you we will arrange for 20,000
common shares of Naptau Gold Corporation to be issued to you. Please be advised
that the said shares will be registered under the Securities Laws of the United
States.
Yours very truly,
NAPTAU GOLD CORPORATION
per: J.J. McIntyre
Secretary
ACCEPTED AND AGREED TO AS OF THE 30TH DAY OF APRIL, 1996.
- -----------------------------
E.D. Renyk
Exhibit 10.11
<PAGE>
NAPTAU GOLD CORPORATION
a Delaware Corporation, having its registered offices
at 11th Floor, Rodney Square North, 11th and Market Streets, Wilmington,
New Castle County, Delaware 19801
April 30, 1996
J.J. McIntyre
c/o 2700 700 W. Georgia St.
Vancouver, B.C.
V5Y 2B1
Dear Sir:
Re: Satisfaction of Debt with Stock
Naptau Gold Corporation is presently indebted to you in the principal sum
$50,848.50 (the "Debt") as a result of advances made by you to the company prior
to December 31, 1995, as verified and vouched for in the audited statements of
the company.
Please confirm by your signature below, that you have agreed to convert
$48,000.00 of the Debt into 20,000 common shares of Naptau Gold Corporation at a
deemed price of $2.40 per share in complete satisfaction of that portion of the
Debt.
Upon receipt of a copy of this letter executed by you we will arrange for 20,000
common shares of Naptau Gold Corporation to be issued to you. Please be advised
that the said shares will be registered under the Securities Laws of the United
States.
Yours very truly,
NAPTAU GOLD CORPORATION
per: E.D. Renyk, President
ACCEPTED AND AGREED TO AS OF THE 30TH DAY OF APRIL, 1996.
- ----------------------------
J.J. McIntyre
Exhibit 10.15
<PAGE>
SECOND EXTENSION AGREEMENT
BETWEEN:
DOROTHY DENNIS, businesswoman (herein "Dennis"), of #705 588 Broughton
St., Vancouver, British Columbia, V6G 3E3
AND:
NAPTAU GOLD CORPORATION, a Delaware Corporation (herein "NAPTAU"),
having its registered offices at 11th Floor, Rodney
Square North, 11th and Market Streets,
Wilmington, New Castle County, Delaware 19801
WITNESS THAT
WHEREAS
(1) NAPTAU and Dennis entered into an agreement on the 12th day of October, 1995
for the acquisition by NAPTAU of Placer Lease #1160 in the Cariboo Mining
Division of British Columbia, in the area of Likely, British Columbia, Canada
(the "Agreement");
(2) Pursuant to the Agreement NAPTAU was obligated, in part, to pay the sum of
USD$200,000 to Dennis on or before December 12, 1995;
(3) By an agreement dated April 30, 1996, NAPTAU was granted an extension of the
time for performance of its obligation to make the above payment to October 12,
1996 (the "Extension Agreement"). The Extension Agreement also included terms
reflecting settlement of any interest due on the above sum.
(4) The Extension Agreement has now expired and NAPTAU has not as yet made the
payment above referred to; and
(5) Both Dennis and NAPTAU would like to extend the time for payment of the said
principal sum on mutually satisfactory terms;
IT IS NOW AGREED that in consideration of the payment of TEN DOLLARS ($10) by
NAPTAU to Dennis, the receipt and sufficiency of which is hereby acknowledged,
and the further mutual covenants and agreements following that:
1. The amount agreed to be paid by NAPTAU to Dennis in para.2 above shall be
paid on or before the 12th day of October, 1997.
2. NAPTAU hereby agrees to pay Dennis 100 ounces of raw gold from its share of
the gold produced from the mining operations on all of its placer mining leases
in the Cariboo Mining Division of British Columbia (the "Leases").
<PAGE>
3. The total number of ounces of raw gold to be paid to Dennis under the terms
of this agreement shall be distributed to Dennis from NAPTAU's share of the raw
gold due to it for the 1997 placer mining operations on the Leases, immediately
following the accumulation by NAPTAU of sufficient ounces of raw gold to meet
its obligations and commitments to Noble Metal Group Incorporated under prior
agreements for the 1997 placer mining season, but in advance of any other party
including NAPTAU itself.
4. NAPTAU may not, without Dennis's consent substitute refined gold or its
equivalent in value for raw gold.
IN WITNESS WHEREOF THE PARTIES HERETO, IF CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS AS OF THE ___ DAY OF OCTOBER, 1996.
NAPTAU GOLD CORPORATION
---------------------------
BY: EDWARD D. RENYK, President
EXECUTED BY DOROTHY DENNIS )
IN THE PRESENCE OF: )
)
Name: )
---------------------- )
)
Address: )
------------------- )
)
- --------------------------- )
)
Occupation: )
---------------- )
Exhibit 24.1
<PAGE>
W.G.T. Consultants Ltd.
405-455 Granville Street
Vancouver, BC V6C 1T1
October 17, 1996
To Whom it May Concern:
Dear Sir:
This letter provides my consent for the reproduction and use of my report
entitled "Valuation of the Placer Lease No. 1160, Cariboo Mining Division,
British Columbia, Canada" dated May 26, 1995 for the purpose of filing a
Prospectus or Statement of Material Facts.
There has been no change in the property since May 26, 1995.
Yours Truly,
W.G. Timmins, P. Eng
WGT Consultants Ltd.
<PAGE>
W.G.T. Consultants Ltd.
405 - 455 Granville Street
Vancouver, British Columbia V6C 1T1
(604) 689-9523
November 25, 1996
Naptau Gold Corporation
9551 Bridgeport Road
Richmond, B.C. V6X 1S3
Attention: Mr. E.D. Renyk, President
Dear Sir:
This letter provides my consent to Naptau Gold Corporation for the reproduction
and use of my report entitled "Valuation of the Placer Gold Property of Naptau
Gold Corporation, Cariboo Mining Division, British Columbia, Canada" dated June
15, 1995 for the purpose of filing a Prospectus or Statement of Material Facts.
All required permits authorizing the Company to proceed with production have
been extended from 1997 to the year 2001.
No material change has occurred in this past year, however, the property has
been enhanced by the continued stripping of overburden materials in preparation
for processing of gravels. In excess of 65,000 cubic yards of overburden
materials have been removed. Also, small tests of the upper 20 to 30 feet of
gravels in the center and most eastern channel were successfully completed.
Yours Truly,
W.G. Timmins, P. Eng.
W.G.T. Consultants Ltd.
WGT/ta
W.G.T. CONSULTANTS LTD.
