-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K/wNHcs9tRchLJyL+VtJejka3gRacDRlD6yuMMb2LaUE7Lp9psoh9SueT+SV5Yhg 7OOY5JtX/4LxrPd/y+ObhQ== 0000891554-99-002235.txt : 19991124 0000891554-99-002235.hdr.sgml : 19991124 ACCESSION NUMBER: 0000891554-99-002235 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AURORA GOLD CORP CENTRAL INDEX KEY: 0001037049 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 133945947 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24393 FILM NUMBER: 99762576 BUSINESS ADDRESS: STREET 1: 1505 1060 ALBERNI ST CITY: VANCOUVER BC CAN V6E STATE: A1 MAIL ADDRESS: STREET 1: 1505-1060 ALBERNI STREET STREET 2: VANCOUVER BC CANADA V6E 4K2 10QSB 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _ _ _ _ _ _ _ _ _ _ to _ _ _ _ _ _ _ _ _ _ Commission file number 0-24393 AURORA GOLD CORPORATION (Exact name of small business issuer as specified in its charter) Delaware 13-3945947 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 1505 - 1060 ALBERNI STREET, VANCOUVER B.C. CANADA V6E 4K2 (Address of principal executive offices) (604) 687-4432 (Issuer's Telephone Number) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check, whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of securities under a plan confirmed by court. YES [ ] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 11740,641 shares of Common Stock were outstanding as of September 30, 1999. Transitional Small Business Disclosure Format (check one); YES [ ] NO [X] AURORA GOLD CORPORATION This quarterly report contains statements that plan for or anticipate the future and are not historical facts. In this Report these forward looking statements are generally identified by words such as "anticipate", "plan", "believe", "expect", "estimate", and the like. Because forward looking statements involve future risks and uncertainties, these are factors that could cause actual results to differ materially from the estimated results. These risks and uncertainties are detailed in Part 1 - Financial Information - Item 1. "Financial Statements", Item 2. "Management's Discussion and Analysis or Plan of Operation". The Private Securities Litigation Reform Act of 1995, which provides a "safe harbor" for such statements, may not apply to this Report. PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PAGE ---- Consolidated Balance Sheet 3 Consolidated Statements of Stockholder's Equity 4 Consolidated Statements of Operations 5 Consolidated Statement of Cash Flows 6 Consolidated Statements of Mineral Properties 7 Notes to Financial Statements 8-10 2
- ---------------------------------------------------------------------------------------- Aurora Gold Corporation Consolidated Balance Sheet (unaudited) (Expressed in U.S. Dollars) September 30, December 31, 1999 1998 - ---------------------------------------------------------------------------------------- Assets Current Cash and cash equivalents $ 14,972 $ 68,326 Non-trade accounts receivable -- -- -------------------------- 14,972 68,326 Fixed assets -- -- Notes receivable 20,000 20,000 Mineral property costs 113,820 69,441 Organizational costs 2,880 4,607 -------------------------- $ 151,672 $ 162,374 - ---------------------------------------------------------------------------------------- Liabilities and Stockholders' Surplus (Deficiency) Current Accounts payable $ 15,134 $ 20,580 Notes payable 192,023 -- -------------------------- 207,157 20,580 Stockholders' deficiency, Share Capital Authorized 50,000,000 common shares, par value $0.001 Issued 11,740,641 (1998 - 11,181,494) common shares 11,740 11,181 Additional paid-in capital 2,629,440 2,259,305 Deficit accumulated during the development stage (2,696,665) (2,128,692) -------------------------- (55,485) 141,794 -------------------------- $ 151,672 $ 162,374 - ----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. Approved on behalf of the Board: /s/ DAVID JENKINS (Director) /s/ JOHN A.A. JAMES (Director) - ------------------------------- -------------------------------- 3
- ----------------------------------------------------------------------------------------------------------------------------------- Aurora Gold Corporation Consolidated Statements of Stockholder's Equity (Expressed in U.S. Dollars) (Unaudited) For the period ended September 30, 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Deficit Acumulated Common Stock Additional during the Total -------------------------------- Paid-In development Stockholder's Shares Amount Capital stage Equity ------------------------------------------------------------------------------- Balance, January 1, 1997 9,920,389 $ 9,920 $ 344,461 $ (361,208) $ (6,827) Issuance of common stock For cash in March 1997 at $1.00 per share (less issue costs of $4,842) 750,000 750 744,408 -- 745,158 Net loss for the year (615,880) (615,880) ------------------------------------------------------------------------------- Balance, December 31, 1997 10,670,389 10,670 1,088,869 (977,088) 122,451 Issuance of common stock For cash in May 1998 at $1.25 per share 200,000 200 249,800 -- 250,000 For cash in November 1998 at $0.698 per share 71,667 72 53,676 -- 53,748 For settlement of indebtedness - November 1998 54,100 54 37,142 -- 37,196 For cash in December 1998 at $0.750 per share 143,333 143 107,357 -- 107,500 For settlement of indebtedness - December 1998 42,005 42 31,461 -- 31,503 Grant of options to employees and directors -- -- 518,900 -- 518,900 Grant of options to Consultants -- -- 172,100 -- 172,100 Net loss for the year (1,151,604) (1,151,604) ------------------------------------------------------------------------------- Balance, December 31, 1998 11,181,494 11,181 2,259,305 (2,128,692) 141,794 Issuance of common stock For settlement of indebtedness - January 1999 50,000 50 42,140 -- 42,190 For settlement of indebtedness - February 1999 8,615 9 6,991 -- 7,000 For finders fee - February 1999 25,000 25 20,287 -- 20,312 For cash - March 1999 at $0.656 per share 22,871 23 14,977 -- 15,000 For settlement of indebtedness - March 1999 31,510 31 22,620 -- 22,651 For cash in August 1999 at $0.625 per share 280,000 280 174,720 -- 175,000 For settlement of indebtedness - August 1999 141,161 141 88,400 -- 88,541 Net loss for the period (567,973) (567,973) ------------------------------------------------------------------------------- 11,740,651 $ 11,740 $ 2,629,440 $ (2,696,665) $ (55,485) - -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 4
- ------------------------------------------------------------------------------------- Aurora Gold Corporation Consolidated Statements of Operations (Expressed in U.S. Dollars) October 10 1995 Nine-months ended (inception) to September 30, September 30, ------------------------- 1999 1999 1998 For the periods ended (cumulative) (Unaudited) (Unaudited) - ------------------------------------------------------------------------------------ Expenses Accounting and legal $ 184,567 $ 17,667 $ 28,755 Administrative and general 441,918 16,654 80,911 Amortization and depreciation 18,982 1,727 6,112 Exploration 989,092 472,350 47,887 Interest and bank charges 36,219 16,295 4,200 Salaries and consulting fees 316,924 43,867 68,994 Stock option compensation 691,000 -- -- -------------------------------------------------------------- 2,678,702 568,560 236,859 Less interest income 21,447 587 2,634 -------------------------------------------------------------- 2,657,255 567,973 234,225 Write off of mineral property costs 39,410 -- -- -------------------------------------------------------------- Net loss for the period $ 2,696,665 $ 567,973 $ 234,225 - ------------------------------------------------------------------------------------ Loss per share Basis and diluted $ 0.05 $ 0.02 - ------------------------------------------------------------------------------------ Weighted average common shares outstanding Basic and diluted 11,229,522 10,774,065 - ------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 5
- ----------------------------------------------------------------------------------------------------------------- Aurora Gold Corporation Consolidated Statements of Cash Flows (Expressed in U.S. Dollars) October 10 1995 Nine-months ended (inception) to September 30, September 30, -------------------------------- 1999 1999 1998 For the periods ended (cumulative) (Unaudited) (Unaudited) - ----------------------------------------------------------------------------------------------------------------- Cash provided (used) by: Cash flows from operating activities Net loss for the period $(2,696,665) $ (567,973) $ (234,225) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 18,982 1,727 6,112 Write off of mineral properties 39,410 -- -- Compensation on stock options 691,000 -- -- Expenses satisfied with common stock 240,329 160,382 -- Changes in assets and liabilities Decrease (increase) in accounts receivable -- -- (7,674) Increase(decrease) in accounts payable 15,134 (5,446) (35,108) --------------------------------------------------- (1,691,810) (411,310) (270,895) --------------------------------------------------- Investing activities Purchase of fixed assets (24,800) -- -- Mineral property costs (153,230) (44,379) (152,736) Notes receivable (20,000) -- -- Proceeds on disposal of fixed assets 14,449 -- 14,449 Incorporation costs (11,511) -- -- --------------------------------------------------- (195,092) (44,379) (138,287) --------------------------------------------------- Financing activities Proceeds from issuance of common stock 1,539,539 190,000 250,000 Issuance of common stock for debt (50,000) -- 37,196 Issuance of common stock for finders fee 20,312 20,312 -- Proceeds from notes and advances payable 392,023 192,023 -- --------------------------------------------------- 1,901,874 402,335 287,196 --------------------------------------------------- Increase (decrease) in cash for the period 14,972 (53,354) (121,986) Cash, beginning of period -- 68,326 122,921 --------------------------------------------------- Cash, end of period $ 14,972 $ 14,972 $ 935 - ----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 6 - ---------------------------------- Aurora Gold Corporation Consolidated Statements of Mineral Properties - - Acquisition and Exploration Expenses (Expressed in U.S. Dollars)
October 10 1995 (inception) to Additions Additions Write-off Additions Additions September 30, Jan - Dec Jan - Dec Jan - Dec Jan - Dec Jan - Sep 1999 1996 1997 1997 1998 1999 (cumulative) ------------------------------------------------------------------------------- Property acquisition expenditures Canada - Cape Breton $ 14,600 $ -- $ (14,600) $ -- $ -- $ -- Canada - Kumealon (Limestone) -- -- -- -- 23,629 23,629 Canada - Northwest Territories 21,810 -- (21,810) -- -- -- Canada - Yukon -- -- -- -- -- -- Guatemala -- 30,499 -- 37,942 15,750 84,191 Tunisia -- -- -- -- -- -- United States - Totem Talc - -- -- 1,000 5,000 6,000 ----------------------------------------------------------------------------- $ 36,410 $ 30,499 $ (36,410) $ 38,942 $ 44,379 $ 113,820 ----------------------------------------------------------------------------- Property exploration expenditures Canada - Cape Breton $ 3,000 $ 96,186 $ (3,000) $ -- $ -- $ 96,186 Canada - Kumealon (Limestone)- -- -- -- 2,286 2,286 Canada - Northwest Territories -- -- -- -- -- -- Canada - Yukon -- -- -- -- 325,725 325,725 Guatemala -- 45,900 -- 148,744 58,247 252,891 Tunisia -- -- -- -- 34,580 34,580 United States - Totem Talc -- -- -- 11,418 31,883 43,301 General exploration expenditures 93,751 73,429 -- 47,314 19,629 234,123 ----------------------------------------------------------------------------- $ 96,751 $ 215,515 $ (3,000) $ 207,476 $ 472,350 $ 989,092 ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Total mineral property costs $ 133,161 $ 246,014 $ (39,410) $ 246,418 $ 516,729 $1,102,912 -----------------------------------------------------------------------------
7 Notes to Interim Consolidated Financial Statements (Unaudited) Basis of Presentation In the opinion of management, the accompanying interim financial statements contain all material adjustments consisting only of normal recurring adjustments necessary to present fairly the financial position, the results of operations and cash flows of the Company and its consolidated subsidiaries for the interim period. Users of the financial information produced for the interim periods are encouraged to refer to the footnotes contained in the Annual Report on Form 10-KSB when reviewing interim financial results. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Aurora Gold, S.A. and Aurora Gold (BVI) Ltd. All intercompany transactions and balances have been eliminated. Exploration costs are charged to operations as incurred as are normal development costs until such time that proven reserves are discovered. At September 30, 1999 and 1998, the Company did not have proven mineral reserves. Costs of initial acquisition of mineral rights and concessions are capitalized until the properties are abandoned or the right expires. 1. Nature of Business and Going Concern The Company was formed on October 10, 1995 under the laws of the State of Delaware and is in the business of exploration and development of mineral properties. The Company has not yet determined whether its properties contain mineral resources that may be economically recoverable. These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The general business strategy of the Company is to acquire mineral properties either directly or through the acquisition of operating entities. The continued operations of the Company and the recoverability of mineral property costs is dependent upon the existence of economically recoverable reserves, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the development and upon future profitable production. The Company has incurred recurring operating losses and requires additional funds to meet its obligations and maintain its operations. Management's plans in this regard are to raise equity financing as required. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty. 2. Fixed Assets
September 30, 1999 September 30, 1998 ----------------------------------------------------- Accumulated Accumulated Cost Depreciation Cost Depreciation ----------------------------------------------------- Furniture $ -- $ -- $ 5,229 $ 873 Computer equipment -- -- 11,554 7,584 Office equipment -- -- 8,017 1,894 ----------------------------------------------------- -- -- 24,800 10,351 ----------------------------------------------------- Cost less accumulated depreciation $ -- $14,449 =====================================================
8 3. Organization Costs September 30, 1999 September 30, 1998 Cost $11,511 $11,511 Less accumulated amortization 8,631 6,501 ------------------------------------------ $ 2,880 $ 5,010 ========================================== 4. Related Party Transactions Related party transactions not disclosed elsewhere in these financial statements include: a) Included in accounts payable is $0 (September 30, 1998 - $2,279) due to directors and a company controlled by a director in respect of salaries, consulting fees and reimbursement for operating expenses. b) During the nine month period ended September 30, 1999, consulting fees, salaries and wages of $113,190 (September 30, 1998 - $51,538) were paid or are payable to directors or companies controlled by directors. 5. Non Cash Investing and Financing Activities Amounts owing to a director of $42,190 were settled in January 1999 with the issuance of 50,000 common shares. In February accounts payable of $7,000 were settled with the issuance of 8,615. In February, a finder's fee of $20,312 was settled with the issue of 25,000 shares of common stock. In March, amounts owing to a director of $22,650 were settled with the issuance of 31,510 shares. In August accounts payable of $61,691 were settled with the issuance of 26,201. In August, amounts owing to a director of $13,350 were settled with the issuance of 21,329 shares. The conversion of indebtedness was done at the following prices: Conversion Indebtedness Price Shares -------------------- ------------------ ------------------ $ 42,190 $0.84 50,000 7,000 $0.81 8,615 20,312 $0.81 25,000 22,650 $0.72 31,510 15,000 $0.62 24,000 70,042 $0.62 112,066 3,500 $0.69 5,095 -------------------- ------------------ $180,694 256,286 ========================================================== The carrying value of the indebtedness approximated the fair value of the common shares issued. 9 6. Outstanding Options At September 30, 1999, the Company had 1,530,000 options outstanding which are exercisable between $0.01 and $0.75 per common share at varying dates through 2004. ITEM 2. MANAGEMENT'S' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A. General The Company is a mineral exploration company based in Vancouver, Canada engaged in the exploration of base and precious metals worldwide. The Company was incorporated under the laws of the State of Delaware on October 10, 1995, under the name "Chefs Acquisition Corp." and is a development stage company. Since commencement of its exploration operations in 1996, the Company has undertaken a review of potential world mining properties with the objective of acquisitions, exploration and development. In addition to British Columbia and the Yukon Territories in Canada, Guatemala in Central America, Tunisia in North Africa, and Washington State in the U.S.A., other primary regions under investigation by the Company include Argentina, Egypt, Mexico, West Africa and South Africa and elsewhere in both Canada and the U.S.A. The management of the Company has developed the following exploration objectives, viz: the acquisition of properties with large scale potential; to minimize capital costs on leases or concessions; the acquisition of properties adjacent or in close proximity to recent discoveries of large scale Mineral Reserves; to be the first-in staking where possible; secured repatriation on mineral rights and royalties and to establish joint ventures and/or partnerships with established companies that possess the resources to complete mine development. All of the Company's properties are in the preliminary exploration stage without any presently known body of Mineral Reserves. B. Exploration 1. British Columbia, Canada In February 1999, the Company acquired, by staking, a high grade limestone property six (6) square kilometers (741 acres) located on the north shore of Kumealon Inlet, 54 kilometers south-southeast of Prince Rupert, B.C. Canada. The Company's plans for a complete geological investigation in connection with an extensive bedrock-sampling program have been deferred until 2000. 2. Yukon Territories, Canada In May and June, - 1999 the Company acquired by staking, 100% interest in five gold exploration properties covering approximately 240 square kilometers, in the Yukon's Tintina Gold Belt. The primary interest lies between the Tintina Fault to the north and the Denali Fault to the south and defining a broad arc through central Alaska and the Yukon. The Company compiled geochemical, geophysical and Yukon Minifile information in a computer-based Graphical Information System. With these data the Company identified a large number of gold targets within the Yukon's Tintina Gold Belt. In the period from July 10 through September, 1999 the Company conducted field programs involving soil and stream sediment geochemical sampling and geological mapping. The results of the field work will be assessed in the last quarter of 1999 allowing decisions to be made with regard to the next phases of field work to be conducted in 2000, and any associated increases, or decreases, to the areas of exploration. 3. Guatemala, Central America During fiscal 1998 and the first quarter of fiscal 1999, the Company carried out programs of geological reconnaissance, sampling of rock outcrops and sampling of stream sediments, on ten (10) mineral exploration concession licenses. In addition, similar programs were completed on five (5) properties for which applications for mineral exploration concession licenses were pending. As a consequence of the results of these programs, it was decided to surrender six (6) mineral exploration concession licenses and withdraw four (4) applications. The Company was subsequently granted a mineral exploration licence at La Esperanza, the fifth property for which an application had been filed. With La Esperanza, the Company now holds (5) mineral exploration concession licenses, the others being known as Aguas Calientes, Apantes, Jicaro and Valenton 1: and one(1) mineral reconnaissance license covering 800 square kilometers, known as San Diego. During the balance of 1999 and early 2000, the Company will concentrate on initial evaluation of the San Diego mineral reconnaissance concession which will involve archival and other research to identify prospective areas for subsequent field mapping; and, sampling of outcrops, soils and stream sediments. 4. Tunisia, North Africa The Company reviewed an extensive collection of data prepared by the Office National des Mines ("ONM") of Tunisia which included historical production, detailed geological mapping, geochemistry, geophysics and in many cases, drill hole data, to outline areas of interest. Based on its analysis the Company entered into five (5) option agreements with High Marsh Holdings Ltd. ("High Marsh") in July, 1999, to acquire 100% interest in five properties, considered highly prospective for discovery of predominantly zinc-bearing deposits, similar to those currently being exploited in Tunisia. The properties are located within, or near the `Zone des Domes" district, a southwest to northeast striking belt of Triassic salt-domes and diapirs intruded into Cretaceous carbonates, located in northern Tunisia. The zone is approximately 250 kilometers long and 80 kilometers wide. Nearly all of the historic lead/zinc producers, and three currently producing lead/zinc mines are located in the Zone des Domes district. The exploration targets are replacement-type deposits of galena (lead sulfide, PbS) and sphalerite (zinc sulfide ZnS), accompanied by barite and fluorite. The geological setting is similar to `Mississippi Valley Type' lead/zinc deposits occurring in the U.S.A., but the Tunisian deposits tend to have appreciably higher zinc grades. The five exploration permits (Permis de Recherche des Mines) under option have been formally awarded to High Marsh by the Director General of Mines for Tunisia (Le Directeur General des Mines). In the quarter ended September 30, 1999, the Company has continued with its technical investigations in Tunisia and is preparing budgets and schedules for exploration programs to commence in 2000. 11 5. Washington State, U.S.A. The Totem Talc property, located near Metalline Falls, Pend Oreille County, Washington, consists of ten unpatented lode claims, covering approximately 206 acres, and is held under option by Aurora in an agreement with the joint venture owners, United Catalysts Inc. and Getchell Gold Corporation. The Company has considered strategies for advancing the development of the property based on the conclusions and recommendations in the report provided by the international firm of consultants responsible for the re-estimation of the Mineral Resources. A decision on the next phase of work is expected to be made by the end of 1999. C. Financial Information Nine Months Ended September 30, 1999 versus Nine Months Ended September 30, 1998 Net loss for the nine months ended September 30, 1999 was $567,973 compared to a loss of $234,225 for the nine months ended September 30, 1998. The increase in the current period net loss is the result of (1) increased exploration expenditures of $424,463 to $472,350 (September 30, 1998 - $47,887); (2) decrease in accounting and legal expenses of $26,988 to $17,667 (September 30, 1998 - $28,755); (3) decrease in administrative and general expenses of $64,257 to $16,654 (September 30, 1998, - $80,911); (4) decrease in salaries and consulting expenses of $$25,127 to $43,867 (September 30, 1998 - $68,994). D. Financial Condition At September 30, 1999, the Company had cash and cash equivalents of $14,972 (September 30, 1998 - $20,935) and a working capital deficiency of $192,185 (working capital deficiency September 30, 1998 - $12,823) respectively. Total liabilities as of September 30, 1999 were $207,157 (September 30, 1998 - $33,758), an increase of $173,399. During the nine months ended September 30, 1999 investing activities consisted of additions to mineral properties $44,379 (1998 - $152,736). Net loss for the nine months ended September 30, 1999 increased $33,748 to $567,973 (Loss September 30, 1998 - $234,225). The Company does not have sufficient working capital to (i) pay its administrative and general operating expenses through December 31, 2000 and (ii) to conduct its preliminary exploration programs. Without cash flow from operations, it may need to obtain additional funds (presumably through equity offerings and/or debt borrowing) in order, if warranted, to implement additional exploration programs on its properties. Failure to obtain such additional financing may result in a reduction of the Company's interest in certain properties or an actual foreclosure of its interest. The Company has no agreements or understandings with any person as to such additional financing. None of the Company's properties has commenced commercial production and the Company has no history of earnings or cash flow from its operations. While the Company may attempt to generate additional working capital through the operation, development, sale or possible joint venture development of its properties, there is no assurance that any such activity will generate funds that will be available for operations. The Company has not declared or paid dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. E. Year 2000 Issues The company utilizes software and related technologies in its business that will be affected by the "Year 2000 computer problem", which is common to many corporations and 12 governmental entities. This problem concerns the inability of information systems, primarily computer software programs and certain hardware, to properly recognize and process date-sensitive information as the Year 2000 approaches. Absent corrective actions, computer programs that have date-sensitive software may recognize a date using "00" as the year 1900 rather than 2000. This could result in system failure or miscalculation causing disruptions to various activities and organizations. The Company has modified and tested all the critical applications along with all non-critical applications of its information technology ("IT"), the result of which is that all such applications have been either modified or replaced and are now Year 2000 compliant. The Company used an independent consultant to oversee the Year 2000 project as well, as to perform certain remediation efforts. In-addition, progress on the Year 2000 project is also monitored by senior management, and reported to the Board of Directors. The total amount of the payments made to-date and to be made hereafter to such independent consultant are not expected to be material. Based on the Company's analysis to date, the Company believes that its material non-IT systems are either Year 2000 compliant, or do not need to be made Year 2000 compliant in order to continue to function in substantially the same manner in the Year 2000. Contingency plans are being developed for all major components in case of system failures surrounding the Year 2000. The Company's Year 2000 compliance work has not caused, nor does the Company expect that it will cause, a deferral on the part of the Company of any material IT or non-IT projects. The Company has identified critical suppliers, as well as other essential service providers, and has surveyed their Year 2000 compliancy. Based on expected compliance dates expressed by some of these critical suppliers and other service providers, additional follow-up will be required to fully assess their state of readiness for the Year 2000. These follow-up activities will occur throughout 1999. For other suppliers and service providers, risk assessments and contingency plans, where necessary were developed. The Company has taken the above steps to address issues surrounding suppliers and service providers; however the Company has no direct ability to influence other parties' compliance actions. The Company believes it has taken the necessary actions to mitigate the effect of the Year 2000 risks, however, there can be no assurance that any of the Company's vendors or others, with whom it transacts business, will be Year 2000 compliant prior to such date. The company is unable to predict the ultimate effect that the Year 2000 problem may have upon the Company, in that there is no way to predict the impact that the problem will have nation-wide or world-wide and how the Company will in turn be affected, and, in addition, the company cannot predict the number and nature of its vendors and customers who will fail to become Year 2000 compliant prior to January 1, 2000. Significant Year 2000 difficulties on the part of vendors or customers could have a material adverse impact upon the Company's operating results and financial condition. The Company's most likely potential risk is a temporary inability of third party assay labs to correctly assay the mineral content of the rock and soil samples sent to them for analysis. The Company has prepared a list of alternative labs to use should the assay lab currently used not be able to correctly assay the material. Contingency plans for the Year 2000 related business interruption are being developed and are expected to be completed by mid November 1999 and will include, but not be limited to, the development of emergency backup recovery procedures, replacing automated processes with manual processes and identification of alternative suppliers. The Company's Year 2000 efforts are ongoing and its overall plan, as well as the consideration of contingency plans, will continue to evolve as new information becomes available. While the Company is taking steps it believes to be necessary to prevent any major interruption to its business activities that will depend in part, upon the ability of third parties to be Year 2000 compliant. 13 PART 11. OTHER INFORMATION ITEM 1. Legal Proceedings The Company is not party to any litigation, and has no knowledge of any pending or threatened litigation against it. ITEM 2. Changes in Securities Not Applicable ITEM 3. Defaults Upon Senior Securities Not Applicable ITEM 4. Submission of Matters to a Vote of Security Holders The Company held its Annual General Meeting on September 30, 1999. At the meeting two shareholders holding 141,667 shares were present in person and 98 shareholders holding 6,500,311 were represented by proxy. At the meeting unanimous approval by a show of hands was given in respect to: 1. The election of Messrs. Antonino G. Cacace, John A.A. James, David Jenkins, Richard O'C Whittall as directors of the Company, and 2. The appointment of BDO Dunwoody as auditors of the Company. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None. (b) Reports on Form 8-K None. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized. Date: November 15, 1999 BY: /s/ David Jenkins ----------------- ----------------- David Jenkins Director and President Date: November 15, 1999 BY: /s/ John A.A. James ----------------- ------------------- John A.A. James Director and Vice-President 15 EX-27.1 2 FDS --
5 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 14,972 0 0 0 0 14,972 113,820 0 151,672 207,157 0 0 0 11,740 (67,225) 151,672 0 0 0 0 567,973 0 0 (567,973) 0 (567,973) 0 0 0 (567,973) (0.05) (0.05)
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