-----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, RexlX6QQ1AR8Pnm09fb3bXrB41DjZFLxbQX6ftGrpILwloYW0HX4K7W3Lr6r5hgV ilb9eNPi+wHDt6idrxQxEQ== 0000950123-98-005658.txt : 19980605 0000950123-98-005658.hdr.sgml : 19980605 ACCESSION NUMBER: 0000950123-98-005658 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19980604 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AURORA GOLD CORP CENTRAL INDEX KEY: 0001037049 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133945947 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-24393 FILM NUMBER: 98642400 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 10SB12G 1 AURORA GOLD CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-SB General Form For Registration of Securities of Small Business Issuers Under Section 12(b) or (g) of the Securities Exchange Act of 1934 AURORA GOLD CORPORATION (Name of Small Business Issuer in its Charter) Delaware 13-3945947 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1505-1060 ALBERNI STREET, VANCOUVER, B.C., CANADA V6E 4K2 (Address of principal executive offices) Zip Code (604) 687-4432 (Issuer's Telephone Number) Securities to be Registered under Section 12(b) of the Act: NONE Securities to be Registered under Section 12(g) of the Act: COMMON STOCK, $.001 PAR VALUE PER SHARE PAGE 1 OF 94 INDEX TO EXHIBITS IS ON PAGE 58 2 AURORA GOLD CORPORATION Registration Statement on Form 10 SB Part I
Page ---- Item 1. Description of Business 3 A. General B. Risk Factors Related to the Company's Business Item 2. Managements' Discussion and Analysis or Plan of Operation 11 Item 3. Description of Property 13 Item 4. Security Ownership of Certain Beneficial Owners and Management 22 Item 5. Directors, Executive Officers, Promoter and Control Persons 23 Item 6. Executive Compensation 24 Item 7. Certain Relationship Alterations 26 Item 8. Description of Securities 27 Part II Item 1. Market Price and Dividends on the Registrants' Common Equity and other Shareholder Matters 28 Item 2. Legal Proceeding 29 Item 3. Changes in and Disagreements with Accountants 29 Item 4. Recent Sales of Unregistered Securities 29 Item 5. Indemnifications of Directors and Officers Financial Statements 30 Part F/S Financial Statements 33 Part III Item 1. Index to Exhibits 56
2 3 ITEM 1. DESCRIPTION OF BUSINESS The Company was incorporated under the laws of the State of Delaware on October 10, 1995, under the name "Chefs Acquisition Corp." Initially formed for the purpose of engaging in the food preparation business, it redirected its business efforts in late 1995, to the acquisition, exploration and, if warranted, development of mineral resource properties. Since its redirection, the Company's activities have been limited primarily to the acquisition of rights to certain mineral properties and the sale of shares for working capital purposes. SEE "ITEM 3. DESCRIPTION OF PROPERTY." The Company is engaged in the location, acquisition, exploration and, if warranted, development of mineral resource properties. All of the mineral properties in which the Company has an interest or a right to acquire an interest in are currently in the exploration stage. None of the properties have a known body of ore. The Company's primary objective is to explore for gold, silver and base metals and, if warranted, to develop those existing mineral properties. Its secondary objective is to locate, evaluate, and acquire other mineral properties, and to finance their exploration and development either through equity financing, by way of joint venture or option agreements or through a combination of both. In Guatemala the State is the owner of all deposits that exist within the territory of the Republic, its continental platform and its exclusive economic zone. The Guatemala Mining Law requires titleholders of either reconnaissance or exploration licenses to provide a mitigation study related to the mining operations to be carried out in the authorized area. The study must be presented to the Mining Directorate before beginning any work and describes the reconnaissance and exploration operations and the consequences of such operations for the environment, with a view to protection and conservation. If the Directorate fails to respond to the technical report within thirty days, the study will be deemed accepted. Although compliance with such laws is not presently a significant factor in the Company's operations, there is no assurance that compliance with future changes in environmental regulation, if any, will not adversely affect the Company's operations. SEE "RISK FACTORS OF THE COMPANY'S BUSINESS." Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs, or a reduction in levels of production at producing properties, or require abandonment or delays in development of new mining properties. Changes to environmental regulations could have an adverse impact on the profitability or feasibility of the Company's projects. The Company is not aware of any specific environmental legislation proposed in any of the jurisdictions where it holds property, and 3 4 accordingly, it is not possible to assess the potential impact of such possible future regulations. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. The Constitution of the Republic of Guatemala, the Mining Law, the actual government policies and other Guatemalan laws, guarantee national and international investments in the following ways: (i) It is not necessary to have a local partner to make investments. (ii) There are no restrictions for foreign investors repatriating benefits or capital from investments. (iii) Foreign companies established in Guatemala can purchase in foreign currency without restrictions and have access to local credit lines. (iv) The Constitution of the Republic recognizes private property rights. (v) Concessions for mineral exploration and exploitation are granted by the Ministry of Energy and Mines. The Mining Law permits the participation of national and international companies. (vi) The owner of a mining right can import free of tax and tariff rights the goods that are utilized in the mining operations, such as machinery, equipment, spare parts, accessories, materials and explosives, whenever they are not produced in the country in quantities and qualities required. (vii) Free market policies that promote and guarantee foreign investment through fiscal incentives, international and bilateral agreements. The new Mining Law of Guatemala provides for the following three types of concessions: (i) A Reconnaissance concession is granted for a period of six months, and can be extended for another six months. It covers a minimum area of 500 square kilometers and a maximum of 3,000 square kilometers. The following fees are paid for the reconnaissance concessions (a) US$215 when granted (b) land fees of US$20 per square kilometer for every six month period. Work in the area must begin within thirty days of the concession being granted. (ii) Exploration concession is granted for a period of three years, and can be extended for two periods of two or more years for a total of seven years. For the first extension, the original exploration area has to be reduced by 50%. For the second extension, the area must be reduced by an additional 50%. The following fees are paid for the exploration concessions. (a) When granted US$215 (b) Land fees are charged in "UNITS" per squared kilometer. Their value will be between US$35 and US$185. Land fees are charges as follows - 3 Units per square kilometer per year for the first three years, 6 Units per square kilometer per year for the first two year extension, 9 Units per square kilometer per year for the second two year extension (c) Exploration work must commence within 90 days of the concession being granted. (iii) Exploitation concessions are granted for a period of twenty-five years and a single twenty-five year extension if necessary. The land fees for exploitation concessions are 12 Units per square kilometer per year. Exploitation work must begin within 90 days of the concession being granted. The Company believes that it is in substantial compliance with all material laws and regulations which currently apply to its mining and exploration activities and has all the required permits for its current operations. There can be no assurance that all permits which the Company may require for the construction of mining facilities and the conduct of mining operations will be obtainable on reasonable terms and that such laws and regulations would not 4 5 have an adverse effect on any activity it might undertake. There is also no assurance that the Company will obtain approval for the acquisition of additional concessions or property interests. The Company is in the development stage and has a limited operating history. No representation is made, nor is any intended, that the Company will be able to carry on its activities profitably. Moreover, the likelihood of the success of the Company must be considered in light of the expenses, difficulties, and delays frequently encountered in connection with mineral resource exploration and development and with the formation of a new business. Further, no assurance can be given that the Company will have the ability to acquire assets, businesses, or properties with any value to the Company. The Company is in the process of completing its assessment of its properties for exploration and over the course of the next twelve months, to initiate the recommended exploration programs. None of the Company's properties contain any known reserves. The Company's offices are located at 1505 - 1060 Alberni Street, Vancouver, British Columbia Canada V6E 4K2. B. RISK FACTORS RELATED TO THE COMPANY'S BUSINESS 1. GENERAL RISKS A. RECENTLY ORGANIZED COMPANY The Company was only recently organized and has no operating history. The Company, therefore, must be considered promotional and in its early formative and development stage. Prospective investors should be aware of the difficulties normally encountered by a new enterprise. There is nothing at this time upon which to base an assumption that the Company's business plan will prove successful, and there is no assurance that the Company will be able to operate profitably. The Company has limited assets and has had no revenues to date. B. EXPERIENCE OF MANAGEMENT Although the Company's management ("Management") has general business experience, prospective investors should be aware that Management has limited experience in the mining industry and in particular with respect to the acquisition, exploration and development of mineral resource properties. See "Directors and Officers." C. POTENTIAL FUTURE 144 SALES Of the 50,000,000 shares of the Company's Common Stock authorized, there are presently issued and outstanding 10,870,384; all but approximately 4,780,383 shares are "restricted securities" as that term is defined under the Act, and in the future may be sold in 5 6 compliance with Rule 144 of the Act, pursuant to a registration statement filed under the Act, or other applicable exemptions from registration thereunder. Rule 144 provides, in essence, that a person holding restricted securities for a period of one (1) year may sell those securities in unsolicited brokerage transactions or in transactions with a market maker, in an amount equal to one percent (1%) of the Company's outstanding Common Stock every three (3) months. Additionally, Rule 144 requires that an issuer of securities make available adequate current public information with respect to the issuer. Such information is deemed available if the issuer satisfies the reporting requirements of Sections 13 or 15(d) of the Exchange Act and of Rule 15c2-11 thereunder. Rule 144 also permits, under certain circumstances, the sale over a period without any quantity limitation and whether or not there is adequate current public information available. Investors should be aware that sales under Rule 144, or pursuant to a registration statement filed under the Act, may have a depressive effect on the market price of the Company's securities in any market that may develop for such shares. D. PENNY STOCK RULES Under Rule 15g-9 under the Exchange Act, a broker or dealer may sell a "penny stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny stock by any person unless: (1) such sale or purchase is exempt from Rule 15g-9; or (2) prior to the transaction the broker or dealer has (a) approved the person's account for transaction in penny stocks in accordance with Rule 15g-9 and (b) received from the person a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. The Commission adopted regulations that generally define a penny stock to be any equity security other than a security excluded from such definition by Rule 3a51-1. Such exemptions include, but are not limited to (a) an equity security issued by an issuer that has (i) net tangible assets of at least $2,000,000, if such issuer has been in continuous operations for at least three years, (ii) net tangible assets of at least $5,000,000, if such issuer has been in continuous operation for less than three years, or (iii) average revenue of at least $6,000,000, for the preceding three years; (b) except for purposes of Section 7(b) of the Exchange Act and Rule 419, any security that has a price of $5.00 or more; and (c) a security that is authorized or approved for authorization upon notice of issuance for quotation on the NASDAQ Stock Market, Inc.'s Automated Quotation System. It is likely that the Company's Common Stock will be subject to the regulations on penny stocks; consequently, the market liquidity for the Company's Common Stock may be adversely affected by such regulations limiting the ability of broker/dealers to sell the Company's Common Stock and the ability of purchasers in the offering to sell their securities in the secondary market. 6 7 E. FORWARD LOOKING STATEMENTS This registration statement includes "forward-looking statements" within the meaning of Section 27a of the act and Section 21e of the securities and exchange act of 1934, as amended (the "exchange act"). All statements other than statement of historical facts included in this registration statement, including, without limitation, the statements under and located elsewhere herein regarding industry prospects and the company's financial position are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectation will prove to have been correct. Important factors that could cause actual results to differ materially from the expectations ("cautionary statements") are disclosed in this registration statement, including, without limitation, in conjunction with the forward-looking statements included in this registration statement section entitled "Risk Factors Related to the Company's Business." All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. 2. RISK FACTORS OF THE COMPANY'S MINING BUSINESS Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits, but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of mining facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection; any combination of these factors may result in the Company not receiving an adequate return of investment capital. A. EXPLORATION AND DEVELOPMENT RISKS All of the Company's properties are in the exploration stages only and are without a known body of commercial ore. Development of these properties will only follow if satisfactory exploration results are obtained. Mineral exploration and development involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. There is no assurance that the Company's mineral exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company's operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors. Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. 7 8 Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities and grades to justify commercial operations or that the funds required for development can be obtained on a timely basis. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In additions, the grade of ore ultimately mined may differ from that indicated by drilling results. Short term factors relating to the reserves, such as the need for orderly development of ore bodies or the processing of new or different grades, may also have and adverse effect on mining operations and on the results of operations. Material changes in ore reserves, grades, stripping ratios or recovery rates may affect the economic viability of any project. Reserves are reported as general indicators of mine life. Reserves should not be interpreted as assurances of mine life or of the profitability of current or future operations. B. OPERATING HAZARDS AND RISKS Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of gold and other metals, such as unusual or unexpected formations, cave-ins, pollution, all of which could result in work stoppages, damages to property, and possible environmental damages. The Company does not have general liability insurance covering its operations and does not presently intend to obtain liability insurance as to such hazards and liabilities. Payment of any liabilities as a result could have a materially adverse effect upon the Company's financial condition. C. LIMITED OPERATING HISTORY AND LACK OF CASH FLOW None of the Company's properties has commenced commercial production and the Company has no history of earnings or cash flow from its operations. As a result, there can be no assurance that the Company will be able to develop any of its property profitably or that its activities will generate positive cash flow. The Company has not declared or paid dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. The only present source of funds available to the Company is through the sale of its Common Stock. Even if the results of exploration are encouraging, the Company may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially mineable deposit exists on any property. 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. D. TITLE RISKS 8 9 The Company has not obtained an opinion of counsel as to title to its properties nor has it obtained title insurance. Any of the Company's properties may be subject to prior unregistered agreements of transfer. E. CONFLICTS OF INTEREST Certain of the directors of the Company are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of the directors of the Company, a director who has such a conflict will abstain from voting for or against the approval of such a participation or such terms. In appropriate cases, the Company will establish a special committee of independent directors to review a matter in which several directors, or Management, may have a conflict. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participating in larger programs, permitting involvement in a greater number of programs and reducing financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In determining whether the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to the Company, the degree of risk to which the Company may be exposed and its financial position at that time. Other than as indicated, the Company has no other procedures or mechanisms to deal with conflicts of interest. F. COMPETITION AND AGREEMENTS WITH OTHER PARTIES The mineral resources industry is intensely competitive and the Company competes with many companies that have greater financial resources and technical facilities than itself. Significant competition exists for the limited number of mineral acquisition opportunities available in the Company's sphere of operations. As a result of this competition, the Company's ability to acquire additional attractive gold mining properties, on terms it considers acceptable, may be adversely affected. The Company may be unable in the future to meet its share of costs incurred under agreements to which it is a party and the Company may have its interests in the properties subject to such agreements reduced as a result. Furthermore, if other parties to such agreements do not meet their share of such costs, the Company may be unable to finance the costs required to complete the recommended programs. 9 10 G. FLUCTUATING MINERAL PRICES The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the sale of such minerals. Factors beyond the control of the Company may affect the marketability of any minerals discovered. Moreover, significant price movements in mineral prices over short periods of time may be affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the U.S. dollar relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. The effect of these factors on the price of minerals and, therefore, the economic viability of any of the Company's exploration projects cannot accurately be predicted. As the Company is in the development stage, the above factors have had no material impact on operations or income. H. ENVIRONMENTAL REGULATION All phases of the Company's operations in Guatemala are subject to environmental regulations. Environmental legislation in Guatemala is involving in a manner which will require stricter standards and enforcement, increased fines and penalties of non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. Although the Company believes it is in compliance with all applicable environmental legislation, there is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company's operations. I. ADEQUATE LABOR AND DEPENDENCE UPON KEY PERSONNEL The Company will depend upon recruiting and maintaining qualified personnel to staff its operations. The Company believes that such personnel are currently available at reasonable salaries and wages in the geographic areas in which the Company intends to operate. There can be no assurance, however, that such personnel will always be available in the future. In addition, it cannot be predicted whether the labor staffing at any of the Company's projects will be unionized. The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its Management. The loss of services of any of its Management could have a material adverse effect on the Company. J. POLITICAL RISKS There are significant political risks involving the Company's investment in Central America. These risks include, but are not limited to political, economic and social uncertainties in such countries. A change in policies by the government of the countries in which the company operates could adversely affect the Company's interest by, among other things, change in laws, regulations, or the interpretations thereof, confiscatory taxation, restriction on currency 10 11 conversions, imports and sources of supplies, or the expropriation of private enterprises. Although management of the Company does not believe that the political factors described above have affected the Company's activities to date, these factors may make it more difficult for the Company to raise funds for the development of its mineral interests in such developing countries. ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Aurora Gold Corporation is a mineral exploration company based in Vancouver, Canada engaged in the exploration of base and precious metals world wide. 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. The Company had limited operations for the year ended December 31, 1995. Since commencement of its exploration operations in 1996, the Company has undertaken a review of world mining properties with the objective of acquisitions, exploration and development. In addition to Guatemala, primary regions under investigation by the Company include Argentina, Canada, Egypt, Mexico, United States of America, West Africa and South Africa. The management of the Company has developed the following exploration objectives, 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 ore. In April 1996, the Company entered into a letter agreement whereby it obtained an option to earn a 49% interest in 59 mineral claims located in the South Mining District in the Northwest Territories, Canada. The terms of the agreement required the Company to pay a total of $73,525 before July 15, 1996, issue 300,000 restricted common shares of the Company upon signing the agreement and expend a total of $730,000 over three years on the mineral properties. Once the Company has earned their 49% interest they can elect to acquire an additional 16% interest in the property by expending an additional $750,000. Once an interest has been acquired by the Company it will be subject to a net smelter return royalty equal to 1.5% of the net smelter returns from the property. At December 31, 1996, the Company issued 300,000 restricted common shares and paid $18,250 in cash for the property. In March 1997 the Company abandoned its interest in the property and deferred 11 12 exploration costs of $21,810 were charged to income. In June, 1996 the Company entered into a letter agreement whereby the Company obtained an option to earn a 100% undivided interest in three groups of mineral claims totaling 95 claims located in the Victoria and Inverness counties of Nova Scotia, Canada. The Terms of the agreement require the Company to pay a total of $51,000 over a three year period, of which $14,600 was paid in June 1996, issue 200,000 free trading common shares in June, 1999 and expend minimum of $18,250 per year for three years on each group of claims. Each interest acquired by the Company will be subject to a net smelter return royalty equal to 2% of the net smelter returns from each relevant group of claims. During the period May 1, 1997 to September 30, 1997 the Company spent $96,186 on an exploration program on the three groups of mineral claims. In September 1997 the Company abandoned its interest in the properties and deferred exploration costs of $113,786 were charged to income. During the period May 1, 1997 to June 30, 1997 the Company incurred $26,600 in exploration expenditures on the Al Uwaynat area of southwestern Egypt. The Company abandoned its interest in the properties and exploration costs of $26,600 were charged to income. In July, 1997, the Company entered into a letter agreement, which was revised in November of 1997, whereby the Company obtained an option to earn a 100% undivided interest in four mineral concessions in Guatemala. The terms of the agreement are subject to (i) the Company completing its due diligence (ii) the Guatemala Governments approval of the applications for the four mineral concessions and (iii) the Company's payment of a total of $5,000 and issuance 1,500 common shares per concession for a total of 6,000 shares. The applications for the four mineral concessions have been presented to the Guatemala Government and Governmental approval is expected in the second quarter of 1998. In August, 1997, the Company entered into a letter agreement, which was revised in November of 1997, whereby the Company obtained an option to earn a 100% undivided interest in eight mineral concessions and two mineral reconnaissance concessions in Guatemala. The Terms of the agreement are subject to (i) the Company completing its due diligence (ii) the Guatemala Government's approval of the applications for the eight mineral concessions and two mineral reconnaissance concession and (iii) the Company's payment of $5,000 and issuance of 1,500 common shares per concession for a total of 15,000 shares. The applications for the eight mineral concessions and two reconnaissance concessions have been presented to the Guatemala Government and Governmental approval is expected in the second quarter of 1998. Both the July 1997 and the August 1997 letters of agreement and their respective revisions in November 1997 require that each distinct mineral deposit per mineral concession acquired by the Company will be subject to a net smelter return royalty equal to 1% of the net smelter returns payable to the Government of Guatemala. 12 13 In 1996 the Company raised an aggregate of $408,000 ($355,000 through the issuance of 5,800,000 shares in common stock of the Company and $50,000 through the issue of notes) which netted $392,920 after deducting offering expenses of $15,080. The Company also issued 300,000 restricted common shares ($3,000) upon signing the letter of agreement whereby the Company acquired an option to earn a 49% undivided interest in 59 mineral claims in the South Mining District in the Northwest Territories. In Fiscal 1997, the Company raised $750,000 through the issuance of 750,000 common shares at a price of $1.00 per share versus $355,000 in Fiscal 1996. Subsequent to Fiscal 1997, the Company raised an additional $250,000 through the issuance of 200,000 common shares at a price of $1.25 per share. TWELVE MONTHS ENDED DECEMBER 31, 1997 ("FISCAL 1997") VERSUS TWELVE MONTHS ENDED DECEMBER 31, 1996 ("FISCAL 1996"). Net loss in Fiscal 1997 increased by $208,772 over Fiscal 1996 to $569,980 as compared to $361,208 in Fiscal 1996, due primarily to (1) the Company's write off of certain mineral properties in the amount of $135,596. (See "Description of Properties"); (2) increased legal and accounting fees of $19,200 ($71,455 in Fiscal 1997 as compared to $52,225 in Fiscal 1996); and (3) increased payments to consultants ($46,378 in Fiscal 1997 as compared to $7,255 in Fiscal 1996). In Fiscal 1997 the Company incurred property acquisition costs and exploration expenditures of $172,585 versus $39,410 in Fiscal 1997. FISCAL 1996 VERSUS THE FISCAL YEAR ENDED DECEMBER 31, 1995 The Company had a three month fiscal period in 1995 without any financial activity other than as related to organizational expenses. Although the Company believes that it has sufficient working capital to (i) pay its administrative and general operating expenses through December 31, 1999 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 borrowings) 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. ITEM 3. DESCRIPTION OF PROPERTY All of the Company's properties are in the preliminary exploration stage and do not contain any known body of ore. 13 14 (A) ACQUISITION OF PROPERTY INTERESTS OR OPTIONS TO ACQUIRE PROPERTY INTERESTS The Company is currently a party to two exploration and property development agreements with respect to Guatemala Mineral Concessions. Two former Agreements, the Northwest Territories Agreement, and the Cape Bretton Island, Nova Scotia Agreement have been terminated. 1. NORTHWEST TERRITORIES AGREEMENT The Northwest territories Agreement was entered into in April 1996 (the "NT Agreement"). The parties to the Agreement are the Company as Optionee, and Camphor Ventures, Inc. as the Optionor. The NT Agreement encompasses mineral claims located in the South Mining District in the Northwest Territories, (the "NT Property"). The Company abandoned the Northwest Territories Mineral Claims in March 1997. 2. CAPE BRETON ISLAND, N.S. AGREEMENT The Cape Breton Agreement was entered into in June 1996 (the "CB Agreement"). The parties to the CB Agreement are the Company as Optionee, and Gaye Johnson, Danford G. Kelley and Gordon R. Cranton as the Optionors. The CB Agreement encompasses mineral claims located in Victoria and Inverness Counties in Cape Breton, Nova Scotia (collectively, the "CB Properties"). The Company abandoned the CB Properties in September 1997. 3. GUATEMALA, AGREEMENTS (i) Agreement dated July 7, 1997 as revised November 3, 1997 (the "Guatemala Agreement July 1997) The parties to the Guatemala Agreement of July 1997 are the Company as Optionee, and Mineral Montagua S.A. as the Optionor. The agreement covers four mineral concessions: El Triunfo, El Rejon, Bola de Oro and Carmona. The Guatemala Agreement of July 1997 allows the Company the option, upon the completion of the Company's due diligence and the Guatemala Government approval of the applications for the four mineral concessions, of acquiring 100% undivided interest in the mineral concessions, pursuant to the requirements of the Guatemala Agreement of July 1997. The granting by the Guatemala Government of a reconnaissance license confers to the titleholder the exclusive rights to identify and locate possible areas for exploration, within the license's territorial limits and to unlimited depth in the subsoil. The granting by the Guatemala Government of an exploration license confers to the titleholder the exclusive right to locate, study, analyze and evaluate the deposits which have been granted, within the licenses' territorial limits and to unlimited depths in the subsoil. 14 15 The Guatemala Agreement of July 1997 provides the Company with the option to acquire a 100% undivided interest in the four Guatemala mineral concessions. The Company, as Optionee will be granted an option to acquire a 100% undivided interest in the four Guatemala mineral concessions upon completion of the following three requirements. (1) Cash payment of US$5,000 on July 21, 1997; (2) issuance of 1,500 common shares per mineral concession for a total of 6,000 common shares upon completion of due diligence by the Company and the Guatemala Government approval of the four mineral concession applications; and (3) each distinct mineral deposit per mineral concession acquired by the Company will be subject to a net smelter return royalty equal to 1% of the net smelter returns payable to the Government of Guatemala. The application for the four mineral concessions have been presented to the Guatemala Government and Governmental approval is expected in the second quarter of 1998. (ii) Agreement dated August 16, 1997 as revised November 3, 1996 (the "Guatemala Agreement August 1997") The parties to the Guatemala Agreement of August 1997 are the Company as Optionee, and Mineral Montagua S.A. as the Optionor. The agreement covers eight mineral concessions: Los Cipreses, Chiyax, Los Angeles, La Union, Barranquillo, El Rancho, El Jicaro, Monjitas and two mineral reconnaissance concessions: Atitlan and San Diego. The Guatemala Agreement of August 1997 allows the Company the option, upon the completion of the Company's due diligence and the Guatemala government approval of the applications for the eight mineral concessions and two reconnaissance concessions, of acquiring a 100% undivided interest in the mineral concessions and the reconnaissance concessions, pursuant to the requirements of the Guatemala Agreement of August 1997. The granting by the Guatemala Government of a reconnaissance license confers to the titleholder the exclusive right to identify and locate possible areas for exploration, within the license's territorial limits and to unlimited depth in the subsoil. The granting by the Guatemala Government of an exploration license confers to the titleholder the exclusive right to locate, study, analyze and evaluate the deposits which have been granted, within the licenses' territorial limits and to unlimited depths in the subsoil. The Guatemala Agreement of August 1997 provides the Company with the option to acquire a 100% undivided interest in the eight mineral concessions and two reconnaissance concessions. The Company, as Optionee will be granted and option to acquire a 100% undivided interest in the eight Guatemala mineral concessions and two Guatemala reconnaissance concessions upon completion of the following three requirements: (1) Cash payment of US$5,000 on August 18, 1997; (2) issuance of 1,500 common shares per concession for a total of 15,000 common shares upon completion of due diligence by the Company and the Guatemala Government approval of the applications for the eight mineral concession and two reconnaissance concessions; and (3) each distinct mineral deposit per mineral concession acquired by the 15 16 Company will be subject to a net smelter return royalty equal to 1% of the net smelter returns payable to the Government of Guatemala. The application for the eight mineral concessions and two reconnaissance concessions have been presented to the Guatemala Government and governmental approval is expected in the second quarter of 1998. (B) PROPERTY DESCRIPTIONS (1) GUATEMALA PROPERTIES In July and August 1997 the Company entered into letters of intent, which were revised in November of 1997, with Mineral Motague S.A. ("Motague") of Guatemala, to acquire a 100% interest from Motague in twelve mineral concessions and two reconnaissance concessions in south central Guatemala for which approval by the Guatemala Government is pending. The fourteen concessions encompass a number of gold and silver mines that were operated in Central America and date as far back as 1657. All the concessions are located within the South Volcanic Belt in Guatemala, which is considered to be the geological setting with the greatest mineral potential in the country. The concessions were chosen based on current geological information and historical information obtained from the General Archive of Central America, which is a library which saves and preserves all documentation available from the colonial period in Central America and the Ministry of Energy and Mines of the Government of Guatemala. The July 18, 1997 agreement covers the four mineral concessions of: El Triunfo, El Rejon, Bola de Oro and Carmona. The August 16, 1997 agreement covers the eight mineral concessions: Los Cipreses, Chiyax, Los Angeles, La Union, Barranquillo, El Rancho, El Jicaro, Monjitas and the two mineral reconnaissance Atitlan and San Diego. The geology of Guatemala is diverse especially due to the tectonic interaction of the Cocos, Caribbean and North American plates, those over which Guatemala is located. The geologic environment is favorable for the formation of different types of mineral deposits, either of hydrothermal character, magnetic segregation, igneous-metamorphic, sedimentary and others. In general, the country can be divided in four important physiographic provinces, the Pacific Costal Plain, Volcanic Province, Metamorphic and Peten Lowlands which define the geomorphologic features. All the Company's concessions are located within the South Volcanic Belt in Guatemala, which is considered to be the geological setting with the greatest mineral potential in the country. The Volcanic Province is represented by a Quaternary chain of active volcanoes to the south and Tertiary igneous rocks to the north. In the Tertiary area, ignimbrites and ryolites crop out, as well as acidic tuffs and several intrusives. Gold-silver deposits are expected to be found in granites and in quartz veins within the tuffs. The epithermal type of precious and basic metallic 16 17 deposits and also the presence of lithofilic elements are associated with the geology of this area. In the eastern part of the volcanic province the most common mineralogy is pyrite and arsenopyrite with chalcopyrite, covelite and native gold as associated minerals, and it is related to epithermal processes associated with intrusive igneous bodies. Important deposits of copper-lead-zinc-silver, gold-silver and lead-zinc mineralization occur in veins emplaced in fractures within Tertiary volcanic rocks, typical features of epithermal deposits filling fissures that originated from tensional stresses. The mineralization consists mainly of zinc sulfides, lead-silver and copper with calcite and quartz as gangue minerals. Other deposits of economic importance are formed by a series of iron oxide bodies. it is important to note that most of this province has not yet been explored and evaluated, but it is one of the more important zones of interest due to its favorable geological environment for mineralization. Atitlan The Atitlan concession is a mineral reconnaissance concession located in the Sacatepequez, Chimaltenango, and Solola provinces in western Guatemala. It covers an area of 600 square kilometers. The Atitlan concession was requested based on the geological setting of the region and on several references from the Archives of Central America pointing to gold, silver and copper mineral occurrences in the area. These occurrences have yet to be located precisely. Geologically Atitlan is located within the central tertiary volcanic belt of southern Guatemala, which presents the best characteristics for epithermal mineralization in the country. The mineral reconnaissance application was presented to the Ministry of Energy and Mines on July 23, 1997. San Diego The San Diego is a mineral reconnaissance concession located in the Zacapa and Chiquimula province in eastern Guatemala, some 150 kilometers east of Guatemala City. Due to its reconnaissance status it covers a larger area than an exploration concession, namely 800 square kilometers. The San Diego reconnaissance concession was requested with the purpose of covering a large area of good prospective land in eastern Guatemala. The main feature of the reconnaissance concession is the fact that it completely surrounds the El Pato gold and silver mineral reserve, which is the best understood exploration project in Guatemala to date. The area has been studied by the General Mining Directorate and by the United Nations Revolving Fund for Natural Resources Exploration during the years 1990 and 1991. Geologically, due to its size this concession contains several geological settings. Most important is the presence of the Motagua Fault to the North and the Chiguimula Pluton (intrusive) on the eastern half of the concession. The mineral reconnaissance concession application was presented to the Ministry of Energy and Mines on July 24, 1997. 17 18 Monjitas The Monjitas concession is located in central Guatemala some 10 kilometers east of Guatemala City. It covers a total area of 20 square kilometers. The Monjitas concession was requested based on historical references obtained from the Archives of Central America. The concession is located in the mountains to the east of Guatemala City. This area is marked by the presence of a N-S fault, which is the eastern border of the Asuncion Valley. Tertiary volcanic rocks are predominant in the area. Several outcrops of silicified, oxidized and altered volcanic rocks have been located. The mineral reconnaissance concession application was presented to the Ministry of Energy and Mines on June 2, 1997. El Rancho The El Rancho concession is located in the El Progreso and Zacapa provinces in eastern Guatemala, some 95 kilometers east of Guatemala City. It covers a area of 90 square kilometers. The Archives of Central America refer to the presence of several copper, gold, silver and iron mineral deposits in the El Rancho mountains south of El Rancho. Geology is very similar to that found in the El Barranquillo and El Jicaro concessions, although El Rancho, is closest to the Motagua Valley and fault. On the other side of the Motagua River to the North of El Rancho, the Ministry of Energy and Mines has declared a mineral reserve area called San Agustin. The reserve was declared based on studies performed by a Korean prospecting mission which discovered several gold anomalies at San Agustin. The mineral exploration application was presented to the Ministry of Energy and Mines on June 26, 1997. Barranquillo The Barranquillo concession is located in the El Progreso province in eastern Guatemala, some 70 kilometers east of Guatemala City. It covers an area of 96 square kilometers. The Archives of Central America refer to the existence of an old copper-gold mine 10 kilometers east of the town of Barranquillo, on the road to Guastatoya. The geology of the concession is very similarly to that found in the Jicaro concession, which bounds Barranquillo to the east. The mineral exploration concession application was presented to the Ministry of Energy and Mines on June 2, 1997. Los Cipreses The Los Cipreses concession is located in the Totonicapan province in western Guatemala, 200 kilometers west of Guatemala City. It covers and area of 56 square kilometers. The Archives of Central America refer to the existence of a silver and gold mine on the road 18 19 from Momostenango to San Francisco el Alto. The Archives also mention a vein with an east west orientation on a hill called Trece. Assays yielded 3 ounces of silver per 100 pounds of rock and some gold. Geologically the area is located within the tertiary volcanic terrain close to several igneous bodies. It is important to recognize that the Motagua Fault is lost when it comes into contact with the tertiary volcanic rocks in the this particular area. It can be inferred that the Fault was buried but is still capable of controlling mineralization in the area in later tectonic events. The mineral exploration concession application was presented to the Ministry of Energy and Mines on April 24, 1997. Chiyax The Chiyax concession is located in the Totonicapan province of western Guatemala some 210 kilometers northwest of Guatemala City. It covers an area of 48 square kilometers. The Archives of Central America refer to the existence of gold and silver mines on the hills next to the town of Totonicapan. Special reference is made to the mines called Parrasqui and Choatulum. The geology of the area is very similar to that found at the Los Cipreses area due to their proximity. The mineral exploration concession application was presented to the Ministry of Energy and Mines on May 13, 1997. El Jicaro The El Jicaro concession is located in the El Progreso province of eastern Guatemala, some 80 kilometers east of Guatemala City. It covers an area of 90 square kilometers. The Archives of Central America refer to the presence of copper and gold bearing minerals on the Anchuga Mountain, close to the town of Guastatoya. This mountain is covered within the El Jicaro concession. The geology of the region is marked by the presence of the Motagua Fault, the largest east-west structure in Guatemala, which extends all the way to the Caribbean. Due to the proximity of such a large structure, geology is complex and is characterized by the presence of several rock types, including intrusives, tertiary rhyolites and redbeds of the Cretaceous age. The mineral exploration concession application was presented to the Ministry of Energy and Mines on June 2, 1997. Los Angeles 1 & La Union 1 The Los Angeles 1 and La Union 1 concessions are both located in the Zacapa province in eastern Guatemala close to the Honduras border. They cover an area of 180 square kilometers. The Los Angeles 1 and La Union 1 areas were requested based on the geological environment surrounding them and a very prominent topographic structure. The areas are 19 20 bounded to the north by the Managua area which was explored by the UN and the Ministry of Energy and Mines during the 1980's. Their combined findings yielded results of copper, lead, silver and gold. Geographically the area is located on Paleozoic metamorphic rocks in contact with an intrusive body and tertiary volcanic terrain. The Los Angeles 1 and La Union 1 area correspond to one concession but were divided in order to avoid an extremely large concession. The mineral exploration concession application was presented to the Ministry of Energy and Mines on April 24, 1997. El Rejon The El Rejon concession is located in the Sacatepeques and Chimaltenango provinces in central Guatemala approximately 3 kilometers west of Guatemala City. It covers an area of 77 square kilometers. The Archives of Central America refer to the presence of gold and silver mines located on the El Rejon hill close to Antigua Guatemala and the Parramos hill next to the town of Parramos which is located west of the El Rejon mine. The concession is located on tertiary volcanic terrain. The mineral exploration concession application was presented to the Ministry of Energy and Mines on April 30, 1997. Carmona The Carmona concession is located in the central part of the country close to the city of Antigua, some 30 kilometers south of Guatemala City. It covers an area of 72 square kilometers. The archives of Central America refer to the presence of a gold mine close to the former town of San Bartolome Carmona on top of the Carmona Mountain. The geology of the area is not well known but the mountain is located on the tertiary volcanic terrain, next to the Agua Volcano. The mineral exploration concession application was presented to the Ministry of Energy and Mines on May 13, 1997. Bola De Oro The Bola De Oro concession is located in the Chimaltenango province in western Guatemala some 60 kilometers west of Guatemala City. It covers an area of 110 square kilometers. The Archives of Central America refer to the presence of a mine close to the town of Comalapa which produced 2.25 ounces of silver per 100 pounds of rock and dome gold (not specified). The concession is located within the territory volcanic belt of Central Guatemala. The mineral exploration concession application was presented to the Ministry of Energy and Mines on April 30, 1997. 20 21 El Triunfo 1 The El Triunfo 1 concession is located in the Chimaltenango province in western Guatemala some 60 kilometers west of Guatemala City. It covers an area of 64 square kilometers. Historical information on file with the Ministry of Energy and Mines suggest that there have been approximately eight gold claims obtained on this concession and the archives of Central America refer to a gold mine close to the town of San Martin Jilotepeque which lies in this concession. The mineral exploration concession application was presented to the Ministry of Energy and Mines on April 24, 1997. 21 22 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, 1998 by (i) each person who is known by the Company to own beneficially more than five percent (5%) of the Company's outstanding Common Stock; (ii) each of the Company's directors and officers; and (iii) all directors and officers of the Company as a group. As at April 30, 1998 there were 10,870,384 shares of Common Stock issued and outstanding.
NAME OF SHARES OF COMMON APPROXIMATE BENEFICIAL STOCK BENEFICIALLY PERCENTAGE OWNER OWNED OWNED ----- ----- ----- Globe Entertech Ltd. 2,000,000 18.4% P.O. Box 209 Providencials, Turk & Caicos Islands, BWI Carrington International Limited 1,000,000 9.2% Suite 2402 Bank of America Tower 12 Harcourt Road Central, Hong Kong Officers and Directors David E. Jenkins 125,000 1.2% 1505-1060 Alberni Street Vancouver, B.C. Canada V6E 4K2 Antonino G. Cacace 8,333 * Crud-y-Gloyat Carswell Bay Swansea Wales, U.K. John James 24,000 * 64 West Street Torrensville, South Australia Australia, 5031 A. Cameron Richardson Nil * 1505-1060 Alberni Street Vancouver, B.C. Canada V6E 4K2 Officers and Directors (4 persons) 157,333 1.4%
* Less than 1%. 22 23 ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTER AND CONTROL PERSONS The following persons are the directors and executive officers of the Company:
Name Position - ---- -------- David E. Jenkins President and Director since October, 1995 John A. A. James Vice President and Director since October, 1996 Antonino G. Cacace Director since October, 1995 A. Cameron Richardson Controller since October 1997, and Secretary since April 1, 1998
All directors and officers of the Company are elected annually to serve for one year or until their successors are duly elected and qualified. Management's business experience during the past five years is as follows: DAVID E. JENKINS, President & Director Mr. Jenkins is the founder of Aurora Gold Corporation and the company's president. He is also President of a business consulting firm, specializing in venture capital. Prior to forming his consulting firm, Mr. Jenkins spent over ten years with a large investment bank, serving in corporate finance and asset management. Additionally, he has been a principle in a residential real estate development company in Vancouver, Canada. JOHN A.A. JAMES, Vice-President & Director Mr. James, Aurora Gold's Vice-President, is a Fellow of the Australasia Institute of Mining and Metallurgy as well as a member of the Society for Mining, Metallurgy and Exploration, Inc. and of the Colorado Mining Association. He is a certified mining engineer, specializing in mine planning and project management. For over 30 years, Mr. James has served in senior management and on Boards of Directors of mining companies in North America, South America and Australia. He has been involved in base and precious metal projects around the world, and has developed detailed programs for a number of mines now in operation. He has brought mines into production for international engineering firms such as James Askew Associates, as well as for small independents. ANTONINO G. CACACE, Director Mr. Cacace is a founder and current Managing Director of Stelax Industries, a medium-sized steel and stainless steel mill facility in the United Kingdom. In this capacity, Mr. Cacace applies skills and insights acquired in degree work in mechanical engineering and graduate work in business administration. 23 24 A. CAMERON RICHARDSON, Secretary and Controller Mr. Richardson has been employed as Controller of Aurora Gold Corporation since October 1997. From 1992 to 1997, Mr. Richardson held senior financial positions with a number of different publicly listed companies. From 1981 to 1992, he was employed by International Corona Corporation, a senior North American mining company, in various financial positions, most recently as mine controller at the company's Nickel Plate Gold Mine in Penticton B.C. Canada. He holds a bachelor's degree from York University and is a Certified Management Accountant. Mr. Richardson receives a monthly compensation from Aurora Gold Corporation in the amount of Cdn$1,250 per month. ITEM 6. EXECUTIVE COMPENSATION GENERAL The following table sets forth information concerning the compensation of the named executive officers for each of the registrant's last three completed fiscal year:
- ----------------------------------------------------------------------------------------------------------------------------------- Annual Compensation Long-Term Compensation ----------------------------------------------------------------------------------------------- Awards Payments -------------------------------------------------------- Securities Other Under- All Annual Restricted Lying other Name And Compen- Stock Options/ LTIP Compen- Principal Position Year Salary Bonuses sation Award(s) SARs Payouts sation ($) ($) ($) ($) (=) ($) ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) - ----------------------------------------------------------------------------------------------------------------------------------- David Jenkins 1998(1) 15,000 -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- 1997 60,000 -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- 1996 60,000 -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- James A. James 1998(1) -0- -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- 1997 34,713 -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- 1996 -0- -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Richard Bullock(2) 1998 -0- -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- 1997 -0- -0- -0- None None None -0- ----------------------------------------------------------------------------------------------------------- 1996 24,000(3) -0- -0- None None None -0- - -----------------------------------------------------------------------------------------------------------------------------------
(1) Through March 31, 1998. (2) Mr. Bullock resigned as officer and director of the Company on April 6, 1998. (3) Of this amount 14,879 was payable as of December 31, 1996, which payment was waived by Mr. Bullock in 1997. 24 25 OPTIONS/SAR GANTS TABLE The following table sets forth information concerning individual grants of stock options (whether or not in tandem with stock appreciation rights ("SARs")), and freestanding SARs made during the last completed fiscal year to each of the named executive officers;
- ------------------------------------------------------------------------------------------------------- OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS) ======================================================================================================= Percent Of Number of Total Options/ Securities SARs Granted Underlying To Employees Exercise Or Option/SARs In Fiscal Base Price Name Granted (#) Year ($/Sh) Expiration Date (a) (b) (c) (d) (e) - ------------------------------------------------------------------------------------------------------- None None None None None - -------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE The following table sets forth information concerning each exercise of stock options (or tandem SARs) and freestanding SARs during the last completed fiscal year by each of the named executive officers and the fiscal year-end value of unexercised options and SARs, on an aggregated basis:
- ------------------------------------------------------------------------------------------------------- AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES ======================================================================================================= Number of Securities Value Of Underlying Unexercised Unexercised In-The-Money Shares Options/SARs Options/SARs Acquired Value At FY-End($) At FY-End($) On Exercise Realized Exercisable/ Exercisable/ Name (#) ($) Unexercisable Unexercisable (a) (b) (c) (d) (e) - ------------------------------------------------------------------------------------------------------- None None None None None - -------------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE The following table sets forth information regarding each award made to a named executive officer in the last completed fiscal year under any LTIP: 25 26
- --------------------------------------------------------------------------------------------------------- LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR ========================================================================================================= ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE-BASED PLANS ----------------------------------------------------- NUMBER OF SHARES, PERFORMANCE UNITS OR OR OTHER OTHER PERIOD UNIT RIGHTS MATURATION THRESHOLD TARGET MAXIMUM NAME (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #) (A) (B) (C) (D) (E) (F) - --------------------------------------------------------------------------------------------------------- None None None None None None - ---------------------------------------------------------------------------------------------------------
None of the Company's officers and directors are currently party to an employment agreement with the Company. Mr. Jenkins had been party to a written agreement which was terminated January 1, 1998 pursuant to which he received $5,000 per month. It is anticipated that aggregate compensation to all directors and officers in the Fiscal year ending in 1998 will not exceed $75,000. In addition, directors and/or officers will receive expense reimbursement for expenses reasonably incurred on behalf of the Company. ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The proposed business of the Company raises potential conflicts of interests between the Company and certain of its officers and directors. Certain of the directors of the Company are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of the directors of the Company, a director who has such a conflict will abstain from voting for or against the approval of such a participation or such terms. In appropriate cases the Company will establish a special committee of independent directors to review a matter in which several directors, or Management, may have a conflict. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, involvement in a greater number of programs and reduction of the financial exposure with respect to any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In determining whether the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to the Company, the degree of risk to which the Company may be exposed and its financial position at that time. Other than as indicated, the Company has no other procedures or mechanisms to deal with conflicts of interest. The 26 27 Company is not aware of the existence of any conflict of interest as described herein. During the fiscal years ended December 31, 1997 and 1996 consulting fees, salaries and wages aggregating, respectively, $79,825 and $97,276 were paid or are payable to directors or corporations controlled by directors in connection with managerial, engineering and administrative services provided as follows:
1998 1997 1996 David Jenkins 15,000 60,000 60,000 John A James Nil 34,713 Nil
In addition, directors and/or officers will receive expense reimbursement for expenses reasonably incurred on behalf of the Company. Included in accounts payable at March 31, 1998 is $31,055 (December 31, 1997 - $45,532, December 31, 1996 - $84,642) due to directors and a corporation controlled by a director in respect of salaries, consulting fees and expenses. The Company believes that the amounts paid are comparable to amounts that would have been paid to at arms length third party providers of such services. ITEM 8. DESCRIPTION OF SECURITIES COMMON STOCK The Company is authorized to issue 50,000,000 shares of Common Stock, of which 10,870,384 shares were issued and outstanding as of the date of this Memorandum. Each outstanding share of Common Stock entitles the holder to one vote, either in person or by proxy, on all matters that may be voted upon by the owners thereof at meetings of the stockholders. The holders of Common Stock (i) have equal rights to dividends from funds legally available therefor, when, and if, declared by the Board of Directors of the Company; (ii) are entitled to share ratably in all of the assets of the Company available for distribution to the holders of Common Stock upon liquidation, dissolution or winding up of the affairs of the Company; (iii) do not have preemptive, subscription or conversion rights, and (iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of stockholders. The holders of shares of Common Stock of the Company do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, can elect all directors of the Company if they so choose and, in such event, the holders of the remaining shares will not be able to elect any of the Company's 27 28 directors. The present officers and directors of the Company own approximately 1.4% of the outstanding shares of the Company. PART II ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANTS 1 COMMON EQUITY AND OTHER SHAREHOLDER MATTERS The Common Stock of the Company has been quoted on the OTC Bulletin Board since December 5, 1996. The following table sets forth high and low bid prices for the Common Stock for the calendar quarters indicated as reported by the OTC Bulletin Board from December 5, 1996 through March 31, 1998. These prices represent quotations between dealers without adjustment for retail markup, markdown or commission and may not represent actual transactions.
Quarter Ending: High Low Volume - --------------- ---- --- ------ December 31, 1996(1) 1.37 0.31 149,000 March 31, 1997 3.50 1.40 1,052,485 June 30, 1997 4.50 2.87 1,057,070 September 30, 1997 3.66 2.50 645,113 December 31, 1997 3.375 1.25 872,118 March 31, 1998 2.875 1.75 673,884
- ---------------------- (1) From December 5, 1996 No assurance can be given that a market for the Company's Common Stock will be sustained or that the Common Stock will continue to be quoted on the OTC Bulletin Board. On April 30, 1998, the closing price of the Company's Common Stock as reported on the OTC Bulletin Board was $2.00 per share. DIVIDENDS The Company has not declared any dividends since inception, and has no present intention or paying any cash dividends on its Common Stock in the foreseeable future. The payment by the Company of dividends, if any, in the future, rests within the discretion of its Board of Directors and will depend, among other things, upon the Company's earnings, its capital requirements and its financial condition, as well as other relevant factors. 28 29 ITEM 2. LEGAL PROCEEDINGS The Company is not a party to any litigation, and has no knowledge of any pending or threatened litigation against it. ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS None. ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES Since inception the Registrant has sold securities in the manner set forth below without registration under the Securities Act of 1933, as amended (the "Act"). (1) On October 10, 1995, the Company issued in an exchange transaction 3,830,383 shares (adjusted for a 3 for 1 reverse stock split) at a price of $.001 per share in accordance with Rule 504 of Regulation D (2) In August, 1996, the Company issued 300,000 shares at a price of $.01 per share in connection with its acquisition of certain mineral properties in Canada. (3) In August, 1996, the Company issued 5,800,000 shares for an aggregate consideration of $355,000 in off shore transactions pursuant to Regulation S; (4) On February 28, 1997, the Company issued 750,000 shares at a price of $1.00 per share for an aggregate consideration of $750,000 pursuant to Rule 504 of Regulation D; and (5) On March 31, 1998, the Company issued 200,000 shares at a price of $1.25 per share for an aggregate consideration of $250,000 pursuant to Rule 504 of Regulation D. Except for shares issued pursuant to Rule 504, such shares are "restricted securities," as that term is defined in the rules and regulations promulgated under the Securities Act of 1933, as amended, subject to certain restrictions regarding resale. Certificates evidencing all of the above-referenced securities have been stamped with a restrictive legend and will be subject to stop transfer orders. The Registrant believes that each of the above-referenced transaction was exempt from registration under the Act, pursuant to Section 4(2) of the Act and the rules and regulations promulgated thereunder as a transaction by an issuer not involving any public offering. 29 30 ITEM 5. INDEMNIFICATIONS OF DIRECTORS AND OFFICERS Except as hereinafter set forth there is no charter provision, bylaw, contract, arrangement or statute under which any officer or director of the Registrant is insured or indemnified in any manner against any liability which he may incur in his capacity as such. STATUTORY INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of The Delaware General Corporation Law, as amended, provides for the indemnification of the Company's officers, directors and corporate employees and agents under certain circumstances as follows: INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEE AND AGENTS; INSURANCE (a) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fee), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding, by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he if or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person if fairly and reasonably 30 31 entitled to indemnity for such expenses which the Court of Chancery or such court shall deem proper. (c) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of the directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even, if obtainable a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (3) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of any undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section. Such expenses including attorneys' fees incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement expenses may be entitled under any bylaw, 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. (g) a corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section. (h) For purposes of this Section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation including (any constituent of a constituent) absorbed in a consolidation or merger which, if separate existence had continued, 31 32 would have had power and authority to indemnify its directors, officers and employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, reference to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any services as a director, officer, employee or agent of the corporation which imposes duties on, or involve services by, such director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. THE SECURITIES AND EXCHANGE COMMISSION'S POLICY ON INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to any provisions contained in its Certificate of Incorporation, or by-laws, or otherwise, the registrant 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. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defenses of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 32 33 PART F/S FINANCIAL STATEMENTS Aurora Gold Corporation (Formerly Chefs' Acquisition Corporation) Audited Financial Statements: Report of Independent Accountants 34 Balance Sheet as at December 31, 1997 and 1996 Statements of Operations and Accumulated Deficit Statements of Cash Flows for the year ended December 31, 1997, 1996 and for the three month period ended December 31, 1995 Summary of Significant Accounting Policies Notes to the Financial Statements Unaudited Financial Statements (Prepared by Management): 51 Balance Sheet as at March 31, 1998 and 1997 Statement of Operations and Accumulated Deficit for the three months ended March 31, 1998 and 1997 Statements of Cash Flows for the three months ended March 31, 1998 and 1997 Notes to Financial Statements
33 34 REPORT OF INDEPENDENT ACCOUNTANTS To The Board of Directors and Shareholders Aurora Gold Corporation We have audited the Balance Sheets of Aurora Gold Corporation (formerly Chefs' Acquisition Corp.), as at December 31, 1997 and 1996 and the related Statements of Operations and Accumulated Deficit and Cash Flows for the years ended December 31, 1997 and 1996 and the three month period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, these financial statements referred to above present fairly, in all material respects, the financial position of Aurora Gold Corporation as at December 31, 1997 and 1996 and the results of its operations and its cash flows for the years ended December 31, 1997 and 1996 and the three month period ended December 31, 1995 in conformity with generally accepted accounting principles in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. As discussed in Note 1 to the financial statements, the Company has incurred a loss from operations and lacks current liquidity which raises substantial doubt about its ability to pay the current liabilities, and, therefore, continue as a going concern. Management's plans concerning these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Vancouver, British Columbia CHARTERED ACCOUNTANTS March 6, 1998 (INTERNATIONALLY BDO BINDER) 34 35
- ----------------------------------------------------------------------------------------------------- AURORA GOLD CORPORATION Balance Sheets (Expressed in U.S. Dollars) DECEMBER 31 December 31 For the Periods Ended 1997 1996 - ----------------------------------------------------------------------------------------------------- ASSETS CURRENT Cash $ 122,921 $ 70,649 Non-trade accounts receivable 12,326 51,364 --------------------------------- 135,247 122,013 FIXED ASSETS (Note 2) 18,662 6,441 MINERAL PROPERTIES AND EXPLORATION EXPENDITURES (Note 3) 76,399 39,410 ORGANIZATION COSTS (Note 4) 6,909 9,211 --------------------------------- $ 237,217 $ 177,075 - ----------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' SURPLUS (DEFICIENCY) LIABILITIES CURRENT Accounts payable (Note 7) $ 68,866 $ 133,902 Notes payable (Note 5) -- 50,000 --------------------------------- 68,866 183,902 --------------------------------- STOCKHOLDERS' SURPLUS (DEFICIENCY) (Note 6) Share capital Authorized 50,000,000 common shares, par value $0.001 Issued 10,670,384 (1996 - 9,920,384) 10,670 9,920 Paid in capital 1,088,869 344,461 Deficit (931,188) (361,208) --------------------------------- 168,351 (6,827) --------------------------------- $ 237,217 $ 177,075 - -----------------------------------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes form an integral part of these financial statements. Approved on behalf of the Board: ___________________________Director ___________________________ Director 35 36
- ------------------------------------------------------------------------------------------ AURORA GOLD CORPORATION Statements of Operations and Accumulated Deficit (Expressed in U.S. Dollars) DECEMBER 31 December 31 December 31 1997 1996 1995 For the Periods Ended (12 MONTHS) (12 Months) (3 Months) - ------------------------------------------------------------------------------------------ ADMINISTRATIVE EXPENSES Amortization $ 6,923 $ 3,817 $ - Bank charges and interest income, net (13,508) (675) - Transfer agents, listing and filing fees 23,267 6,144 Shareholder relations, advertising and promotions 41,340 18,340 - Salaries and wages 49,440 97,276 - Office and miscellaneous 74,409 36,534 - Professional fees (legal and accounting) 71,455 52,255 - Consultants 46,378 7,255 - Rent and other 16,828 25,191 - Travel 28,917 7,323 - Property development and examinations 73,429 93,751 - Telephone 15,506 13,997 - ------------------------------------- NET LOSS FOR THE PERIOD BEFORE WRITE-OFF OF MINERAL PROPERTIES 434,384 361,208 - WRITE-OFF OF MINERAL PROPERTIES 135,596 - - ------------------------------------- NET LOSS FOR THE PERIOD 569,980 361,208 - ACCUMULATED DEFICIT, beginning of period 361,208 - - ------------------------------------- ACCUMULATED DEFICIT, end of period $931,188 $361,208 $ - - ------------------------------------------------------------------------------------------ LOSS PER SHARE - basic (Note 8) $ (0.05) $ (0.06) $ - - ------------------------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes form an integral part of these financial statements. 36 37
- ------------------------------------------------------------------------------------------ AURORA GOLD CORPORATION Statements of Cash Flows (Expressed in U.S. Dollars) DECEMBER 31 December 31 December 31 1997 1996 1995 For the Periods Ended (12 MONTHS) (12 Months) (3 Months) - ------------------------------------------------------------------------------------------ CASH PROVIDED (USED) BY: OPERATING ACTIVITIES Net loss for the period $(569,980) $(361,208) $ - Items not involving cash Amortization 6,923 3,817 - Write-off of mineral properties 135,596 - - ------------------------------------- (427,461) (357,391) - Changes in non-cash working capital balances (Decrease) increase in accounts payable (65,036) 133,852 50 Decrease (increase) in accounts receivable 39,038 (51,364) - ------------------------------------- (453,459) (274,903) 50 ------------------------------------- FINANCING ACTIVITIES Proceeds from the issuance of common stock 745,158 342,920 11,461 Notes payable (50,000) 50,000 - ------------------------------------- 695,158 392,920 11,461 ------------------------------------- INVESTING ACTIVITIES Purchase of fixed assets (16,842) (7,958) - Mineral properties (172,585) (39,410) - Incorporation costs - - (11,511) ------------------------------------- (189,427) (47,368) (11,511) ------------------------------------- INCREASE IN CASH FOR THE PERIOD 52,272 70,649 - CASH, beginning of period 70,649 - - ------------------------------------- CASH, end of period $122,921 $ 70,649 $ - - ------------------------------------------------------------------------------------------
The accompanying summary of significant accounting policies and notes form an integral part of these financial statements. 37 38 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Summary of Significant Accounting Policies (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- PRINCIPLES OF ACCOUNTING These financial statements have been prepared in accordance with accounting principles generally accepted in the United States. FIXED ASSETS Fixed assets are recorded at cost less accumulated amortization. Amortization is provided as follows: Computer equipment - straight-line basis over two years Office equipment and furniture - straight-line basis over five years MINERAL PROPERTIES AND EXPLORATION EXPENDITURES Non-producing mineral interests are initially recorded at acquisition cost. The cost basis of mineral interests include acquisition cost and the cost of exploration and development. Management evaluates the carrying value of mineral interests in unproven properties on a regular basis for possible impairment. Management evaluation considers all the facts and circumstances known about each property including the results of drilling and other exploration activities to date, the desirability and likelihood that additional future exploration activities will be undertaken by the Company or by others, the land holding costs including work commitments, the ability and likelihood of joint venturing the property with others, and, if producing, the cost and revenue of continued operations. Unproven properties are considered fully or partially impaired, and are fully or partially abandoned, at the earliest of the time that geological mapping, surface sample assays or drilling results fail to confirm the geological concepts involved at the time the property was acquired, a decision is made not to perform the work commitments or to make the lease payments required to retain the property, the Company discontinues its efforts to find a joint venture partner to fund exploration activities and has decided not to fund those costs itself, or the time the property interest terminates by contract or by operation of law. Upon commencement of commercial production, properties will be amortized using the units-of-production method. If properties are abandoned, sold or do not merit further development, related acquisition costs and exploration expenditures will be charged to income in the year. 38 39 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Summary of Significant Accounting Policies December 31, 1997 - ------------------------------------------------------------------------------- MINERAL PROPERTIES AND EXPLORATION EXPENDITURES - CONTINUED Exploration activities conducted jointly with others are reflected at the Company's proportionate interest in such activities. RECLAMATION AND DECOMMISSIONING COSTS Costs related to site restoration programs are accrued over the life of the project. TRANSLATION OF FOREIGN CURRENCIES The Corporation has adopted the United States dollar as its reporting currency. The Company translates monetary assets and liabilities denominated in foreign currencies at period end exchange rates. Non-monetary assets have been translated using historical rates of exchange. Expenses have been translated at the average rates of exchange during the periods except for charges relating to non-monetary assets which have been translated at the same rates as the related assets. Foreign exchange gains and losses on monetary assets and liabilities are included in operations. ORGANIZATION COSTS The Company capitalized all costs directly incurred in the formation of the Corporation. These costs are being amortized on a straight-line basis over five years. ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 39 40 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Summary of Significant Accounting Policies December 31, 1997 - ------------------------------------------------------------------------------- DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, non-trade accounts receivable, accounts payable and notes payable. Fair values were assumed to approximate carrying values for these financial instruments, except where noted, since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. Management is of the opinion that the Company is not exposed to significant interest, credit, or currency risks arising from these financial instruments. INCOME TAXES The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 109, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets using enacted rates in effect in the years in which the differences are expected to reverse. NEW ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130"), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS 130 is effective for financial statements for periods beginning after December 15, 1997 and requires comparative information for earlier years to be restated. Because of the recent issuance of this standard, management has been unable to fully evaluate the impact, if any, SFAS 130 may have on future financial statement disclosures. Results of operations and financial position, however, will be unaffected by implementation of this standard. 40 41 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Summary of Significant Accounting Policies (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131") which supersedes SFAS No. 14, Financial Reporting for Segments of a Business Enterprise. SFAS 131 establishes standards for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. SFAS 131 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. SFAS 131 is effective for financial statements for periods beginning after December, 15, 1997 and requires comparative information for earlier years to be restated. Because of the recent issuance of SFAS 131, management has been unable to fully evaluate the impact of SFAS 131, if any, it may have on future financial statement disclosures. Results of operations and financial position, however, will be unaffected by implementation of this standard. 41 42 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 1. NATURE OF BUSINESS AND GOING CONCERN The Corporation was formed on October 10, 1995 under the laws of the State of Delaware as Chef's Acquisition Corp. and is in the exploration stage. On May 20, 1996, the Corporation changed its name to Aurora Gold Corporation. The Company is in the business of developing mineral properties. The recovery of the amounts shown for interests in mineral properties and exploration costs is dependent upon the discovery of economically recoverable reserves or proceeds from the disposition thereof, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain financing to complete development of the properties and on future profitable operations. 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 Company 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 matters 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
1997 1996 Accumulated Accumulated Cost Amortization Cost Amortization ---------------------------------------------------------------- Furniture $ 5,229 $ 350 $ - $ - Computer equipment 11,554 4,695 4,837 1,207 Office equipment 8,017 1,093 3,121 310 --------------------------------------------------------------- 24,800 6,138 7,958 1,517 --------------------------------------------------------------- Cost less accumulated amortization $18,662 $ 6,441 ---------------------------------------------------------------
The estimated useful life of the fixed assets varies between two and five years. 42 43 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 3. MINERAL PROPERTIES AND EXPLORATION EXPENDITURES Mineral properties consist of:
1997 1996 (a) Cape Bretton Mineral Claims (Note 3) (d) Acquisition costs $ 14,600 $ 14,600 Exploration expenditures 99,186 3,000 Abandoned during period (113,786) - ---------------------- $ - $ 17,600 ---------------------- (b) Northwest Territories Mineral Claims (Note 3) (e) Acquisition costs $ 21,810 $ 21,810 Abandoned during period (21,810) - ---------------------- $ - $ 21,810 ====================== (c) Guatemala Mineral Claims (Note 3) (f) Acquisition costs $ 30,499 $ - Exploration expenditures 45,900 - ---------------------- $ 76,399 $ - ====================== Total $ 76,399 $ 39,410 ======================
43 44 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 3. MINERAL PROPERTIES - CONTINUED (d) Cape Bretton Mineral Claims During 1997, the Company abandoned the Cape Bretton Mineral Claims. (e) Northwest Territories Mineral Claims During 1997, the Company abandoned the Northwest Territories Mineral Claims. (f) Guatemala Mineral Claims In July 1997, the Company entered into a letter agreement, which was revised in November 1997, whereby the Company obtained an option to earn a 100% undivided interest in four mineral concessions: El Triunfo, El Rejon, Bola de Oro and Carmona. The agreement is subject to the completion of the Company's due diligence and the Guatemala Government's approval of the applications for the four mineral concessions. This option will be earned once the Company pays the following consideration: (i) Cash payments of: US$ 5,000 on July 21, 1997 (Paid) (ii) Issuance of 1,500 common shares per concession for a total of 6,000 shares upon completion of the Company's due diligence and governmental approval of the four applications. Each distinct mineral deposit per mineral concession acquired by the Company will be subject to a net smelter return royalty equal to 1% of the net smelter returns payable to the Government of Guatemala. 44 45 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 3. MINERAL PROPERTIES - CONTINUED In August 1997, the Company entered into a letter agreement, which was revised in November 1997, whereby the company obtained an option to earn a 100% undivided interest in eight mineral concessions: Los Cipreses, Chiyax, Los Angelas, La Union, Barranquillo, El Rancho, El Jicarco, Manjita and two mineral reconnaissance concessions Atitlan and San Diego. The agreement is subject to the completion of the Company's due diligence and the Guatemala Government's approval of the ten applications. This option will be earned once the Company pays the following consideration: (i) Cash payments: US$ 5,000 on August 18, 1997 (Paid) (ii) Issuance of 1,500 common shares per concession for a total of 15,000 shares upon completion of the Company's due diligence and governmental approval of the ten applications. Each distinct mineral deposit per mineral concession acquired by the Company will be subject to a net smelter return equal to 1% of the net smelter returns payable to the Government of Guatemala. In November 1997, the Company advanced a further $20,000 for locating additional concessions. - ------------------------------------------------------------------------------- 4. ORGANIZATION COSTS
1997 1996 Cost $11,511 $11,511 Accumulated amortization 4,602 2,300 -------------------- $ 6,909 $ 9,211 ====================
45 46 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 5. NOTES PAYABLE The Company had the following notes payable to shareholders which were repaid during 1997:
1997 1996 Note payable to C & P Leonard, unsecured, non-interest bearing and due on demand $ - $12,500 Note payable to R & B Friesen, unsecured, non-interest bearing and due on demand - 12,500 Note payable to Sunview Investments Ltd., unsecured, non-interest bearing and due on demand - 25,000 ------------------------ $ - $50,000 ------------------------
- ------------------------------------------------------------------------------- 6. STOCKHOLDERS' SURPLUS (DEFICIENCY) Share capital
1997 1996 ------------------------------------------------ Number Number of Shares Amount of Shares Amount ------------------------------------------------ Balance, beginning of year 9,920,384 $ 9,920 11,461,150 $ 11,461 Adjustment for reverse stock split - - (7,640,766) (7,641) Issued for cash Private placement 750,000 750 5,800,000 5,800 Issued for asset Resource property payment - - 300,000 300 ------------------------------------------------ 10,670,384 $10,670 9,920,384 $ 9,920 ------------------------------------------------
46 47 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 6. STOCKHOLDERS' SURPLUS (DEFICIENCY) - CONTINUED
1997 1996 Paid in capital Balance, beginning of year $ 344,461 $ - Adjustment for reverse stock split - 7,641 Private placement 749,250 349,200 Resource property - 2,700 ------------------------- 1,093,711 359,541 Share issue costs (4,842) (15,080) ------------------------- $ 1,088,869 $344,461 ------------------------- Deficit Balance at beginning of year $ (361,208) $ - Net loss for the period (569,980) (361,208) ------------------------- Balance at end of year $ (931,188) $(361,208) ------------------------- Shareholders' surplus (deficiency) $168,351 $ (6,827) -------------------------
- ------------------------------------------------------------------------------- 7. RELATED PARTY TRANSACTIONS (a) Included in accounts payable is $45,532 (December 31, 1996 - $84,642) due to directors and a corporation controlled by a director in respect of salaries, consulting fees and reimbursement for operating expenses. (b) During the year consulting fees, salaries and wages of $79,825 (December 31, 1996 - $97,276) were paid or are payable to directors or corporations controlled by directors. (c) Non-trade accounts receivable are due from companies sharing a common director, are without interest and are due on demand. 47 48 - ------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - ------------------------------------------------------------------------------- 8. LOSS PER SHARE Loss per share was computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. At December 31, 1997 10,528,717 common shares were outstanding (December 31, 1996 - 5,859,288). - -------------------------------------------------------------------------------- 9. NON-CASH TRANSACTIONS (a) Organization costs of $11,461 were paid by former directors during 1995, these former directors received 3,820,383 shares in respect of these expenses. (b) During 1996, the Company issued 300,000 shares at $0.01 as part of the acquisition cost of a mineral property (Note 3(b)). (c) During 1997, the Company wrote off its Northwest Territories Mineral Properties in the amount of $21,810 and wrote off its Cape Bretton Mineral Properties in the amount of $113,786. The above non-cash transactions have not been included on the Statements of Cash Flows. - -------------------------------------------------------------------------------- 10. COMMITMENTS The Company entered into a management contract with the President of the Company. The contract requires the Company to pay management fees totalling $5,000 per month together with an annual performance bonus. The contract can be terminated by either party with three months notice. This management contract was terminated on January 1, 1998 with the last payment being made March 1, 1998. 48 49 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - -------------------------------------------------------------------------------- 11. INCOME TAXES (a) The Company has net losses for tax purposes totalling approximately $927,559 which may be applied against future taxable income. Accordingly, there is no tax expense for the years ended December 31, 1997 and 1996. The potential tax benefits arising from these losses have not been recorded in the financial statements. The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management's judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in current income. The right to claim these losses expires as follows:
2011 $360,459 2012 567,100 -------- $927,559 --------
(b) Deferred Tax Assets (Liabilities), December 31, 1997
Statutory Tax Rate $ -------------------------------------- Tax asset related to depreciation $ 4,461 34% $ 1,517 Tax benefit of loss carry-forwards $927,559 34% 315,370 Valuation allowance (316,887) --------- $ - ---------
Deferred Tax Assets (Liabilities), December 31, 1996
Statutory Tax Rate $ --------------------------------------- Tax asset related to depreciation $ 1,755 34% $ 597 Tax benefit of loss carry-forwards $374,226 34% 127,237 Valuation allowance (127,834) --------- $ - ---------
49 50 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - -------------------------------------------------------------------------------- 12. COMPARATIVE FIGURES Certain of the comparative figures have been reclassified to conform with the current period presentation. Certain amounts totalling $54,715 accrued and payable at the option of the Company as at December 31, 1996 in connection with a mineral property abandoned in 1997 have been reversed and, accordingly, accounts payable and mineral properties have been restated as at December 31, 1996. 50 51 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Balance Sheet (Unaudited - Prepared by Management) (Expressed in U.S. Dollars)
MARCH 31 March 31 FOR THE PERIODS ENDED 1998 1997 - ------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT Cash $ 297,140 $ 793,442 FIXED ASSETS 16,555 8,647 MINERAL PROPERTIES AND EXPLORATION EXPENDITURES 111,393 22,439 ORGANIZATION COSTS 6,506 8,635 --------------------------- $431,594 $833,163 - ------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' SURPLUS (DEFICIENCY) LIABILITIES CURRENT Accounts payable $ 45,677 $ 167,483 Notes payable - 50,000 --------------------------- 45,677 217,483 --------------------------- STOCKHOLDERS' DEFICIENCY Share capital Authorized 50,000,000 common shares, par value $0.01 Issued 10,870,384 (1996 - 10,670,384) 10,920 10,670 Paid in capital 1,338,619 1,088,869 Deficit (963,622) (483,859) --------------------------- 385,917 615,680 --------------------------- $ 431,594 $ 833,163 - -------------------------------------------------------------------------------------------------------------------
Approved on behalf of the Board: - ----------------------------- ----------------------------------- Director Director 51 52 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Statements of Operations and Accumulated Deficit (Unaudited - Prepared by Management) (Expressed in U.S. Dollars)
MARCH 31 March 31 1998 1997 FOR THE PERIODS ENDED (3 MONTHS) (3 Months) - ------------------------------------------------------------------------------------------------------------------- ADMINISTRATIVE EXPENSES Amortization $ 2,510 $ 1,387 Bank charges and interest income, net (556) (3,288) Transfer agents, listing and filing fees 2,749 4,593 Shareholder relations, advertising and promotions 2,144 11,246 Salaries and wages 13,112 16,841 Office and miscellaneous 7,779 9,696 Professional fees (legal and accounting) 2,791 18,696 Consultants - 340 Rent and other 824 4,350 Travel - 5,641 Property development and examinations 477 27,159 Telephone 604 3,645 --------------------------- NET LOSS FOR THE PERIOD BEFORE WRITE-OFF OF MINERAL CLAIMS 32,434 100,306 WRITE-OFF OF MINERAL PROPERTIES - 22,345 --------------------------- NET LOSS FOR THE PERIOD 32,434 122,651 ACCUMULATED DEFICIT, beginning of period 931,188 361,208 --------------------------- ACCUMULATED DEFICIT, end of period $963,622 $483,859 - ------------------------------------------------------------------------------------------------------------------- LOSS PER SHARE - basic and diluted $ 0.003 $ 0.01 - -------------------------------------------------------------------------------------------------------------------
52 53 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Statements of Cash Flows (Unaudited -- Prepared by Management) (Expressed in U.S. Dollars)
MARCH 31 March 31 1998 1997 FOR THE PERIODS ENDED (3 MONTHS) (3 Months) - ------------------------------------------------------------------------------------------------------------------- CASH PROVIDED (USED) BY: OPERATING ACTIVITIES Net loss for the period $(32,434) $(100,306) Item not involving cash Amortization 2,510 1,387 --------------------------- (29,924) (98,919) Changes in non-cash working capital balances Decrease in accounts payable (23,189) (21,134) Decrease in accounts receivable 12,326 1,364 --------------------------- (40,787) (118,689) --------------------------- FINANCING ACTIVITY Proceeds from the issuance of common stock 250,000 795,158 --------------------------- INVESTING ACTIVITIES Purchase of fixed assets - (3,017) Mineral properties (34,994) 49,341 --------------------------- (34,994) 46,324 --------------------------- INCREASE IN CASH FOR THE PERIOD 174,219 722,793 CASH, beginning of period 122,921 70,649 --------------------------- CASH, end of period $297,140 $ 793,442
53 54 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Unaudited Financial Statements (Expressed in U.S. Dollars) - -------------------------------------------------------------------------------- 1. NATURE OF BUSINESS AND GOING CONCERN The Corporation was formed on October 10, 1995 under the laws of the State of Delaware as Chef's Acquisition Corp. and is in the exploration stage. On May 20, 1996, the Corporation changed its name to Aurora Gold Corporation. The Company is in the business of developing mineral properties. In the opinion of the Company these unaudited financial statements include all adjustments (which consist only of normally recurring items) to present fairly the financial position as of March 31, 1998 and the reserves of operation and cash flows for the three month period ended March 31, 1998. The results for the three month period ended March 31, 1998 are not necessarily indicative of the result to be expected for the year. 2. MINERAL PROPERTIES AND EXPLORATION EXPENDITURES All of the Company's property interests are located in Guatemala and consist of:
1998 Acquisition Costs: $ 30,499 Exploration Expenditures 80,894 ------ $111,393
3. ORGANIZATION COSTS
1998 Cost $11,511 Accumulated amortization 5,005 ------- $ 6,506
4. CAPITALIZATION
Share capital 1998 Number of Shares Amount -------------------------- Balance, beginning of year 10,670,384 $ 10,670 Issued for cash Private placement 200,000 200 -------------------------- 10,870,384 10,870 --------------------------
54 55 - -------------------------------------------------------------------------------- AURORA GOLD CORPORATION Notes to Financial Statements (Expressed in U.S. Dollars) December 31, 1997 - -------------------------------------------------------------------------------- 5. RELATED PARTY TRANSACTIONS Included in accounts payable is $31,055 due to a director for reimbursement of expenses. 6. LOSS PER SHARE Loss per share was computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. At March 31, 1998 10,670,834 common shares were outstanding. 7. NON-CASH TRANSACTIONS (a) Organization costs of $11,461 were paid by former directors during 1995, these former directors received 3,820,383 shares in respect of these expenses. (b) During 1996, the Company issued 300,000 shares at $0.01 as part of the acquisition cost of a mineral property. (c) During 1997, the Company wrote off its Northwest Territories Mineral Properties in the amount of $21,810 and wrote off its Cape Bretton Mineral Properties in the amount of $113,786. The above non-cash transactions have not been included on the Statements of Cash Flows. 8. COMMITMENTS The Company entered into a management contract with the President of the Company. The contract requires the Company to pay management fees totalling $5,000 per month together with an annual performance bonus. The contract can be terminated by either party with three months notice. This management contract was terminated on January 1, 1998 with the last payment being made March 1, 1998. 55 56 PART III ITEM 1. INDEX TO EXHIBITS
1.1 Certificate of Incorporation 1.2 Certificate of Amendment to the Certificate of Incorporation 1.3 Certificate of Restoration and Renewal of Certificate of Incorporation 1.4 Amended and Restated By-laws 3.1 Agreement dated July 18, 1997 between The Company and Minera Motagua, S.A. 3.2 Agreement dated August 16, 1997 between the Company and Minera Motagua, S.A. 3.3 Agreement dated November 3, 1997 between the Company and Minera Motagua, S.A. 27.1 Financial Data Schedule ITEM 2. DESCRIPTION OF EXHIBITS Not Applicable
56 57 SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 29, 1998 Aurora Gold Corporation By: /s/ David Jenkins -------------------------- David Jenkins, President 57 58 REGISTRATION STATEMENT ON FORM 10SB AURORA GOLD CORPORATION INDEX TO EXHIBITS
Page ---- 1.1 Certificate of Incorporation 59 1.2 Certificate of Amendment to the Certificate of Incorporation 61 1.3 Certificate of Restoration and Revival of Certificate of Incorporation 63 1.4 Amended and Restated By-laws 64 3.1 Agreement dated July 18, 1997 between The Company and Minera Motagua, S.A. 72 3.2 Agreement dated August 16, 1997 between the Company and Minera Motagua, S.A. 80 3.3 Agreement dated November 3, 1997 between the Company and Minera Motagua, S.A. 92 27.1 Financial Data Schedule 94
58 EX-99.1.1 2 CERTIFICATE OF INCORPORATION 1 CERTIFICATE OF INCORPORATION OF CHEFS ACQUISITION CORP. FIRST: The name of this corporation is CHEFS ACQUISITION CORP. SECOND: Its registered office in the State of Delaware is to be located at Three Christina Centre, 201 N. Walnut Street, Wilmington DE 19801. County of New Castle. The registered agent in charge thereof is The Company Corporation, address "same as above". THIRD: The nature of the business and, the objects and purposes proposed to be transacted, promoted and carried on are to do any or all the things herein mentioned as fully and to the same extent as natural persons might or could do, and in any part of the world, viz: The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The amount of the total authorized capital stock of this corporation is divided into 20,000.00 shares of stock at .0010 par value. FIFTH: The name and mailing address of the incorporator is as follows: Regina Cephas, Three Christina Centre, 201 N. Walnut St., Wilmington DE 19801 SIXTH: The Directors shall have power to make and to alter or amend the By-Laws: to fix the amount to be reserved as working capital, and to authorize and cause to be executed, mortgages and liens without limit as to the amount, upon the property and franchise of the Corporation. With the consent in writing, and pursuant to a vote of the holders of a majority of the capital stock issued and outstanding, the Directors shall have the authority to dispose, in any manner, of the whole property of this corporation. The By-Laws shall determine whether and to what extent the accounts and books of this corporation, or any of them shall be open to the inspection of the stockholder; and no stockholder shall have any right of inspecting any account, or book or document of this Corporation, except as conferred by the law of the By-Laws, or by resolution of the stockholders. The stockholders and directors shall have power to hold their meetings and keep the books, documents and papers of the Corporation outside of the State of Delaware, at such places as may be from time designated by the By-Laws or by resolution of the stockholders or 59 2 directors, except as otherwise required by the laws of Delaware. SEVENTH: Directors of the corporation shall not be liable to either the corporation or its stockholder for monetary damages for a breach of fiduciary duties unless the breach involves: (1) a director's duty of loyalty to the corporation or its stockholders; (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (3) liability for unlawful payments of dividends or unlawful stock purchase or redemption by the corporation; or (4) a transaction from which the director derived an improper personal benefit. I, THE UNDERSIGNED, for the purposes of forming a Corporation under the laws of the State of Delaware, do make, file and record this Certificate and do certify that the facts herein are true; and I have accordingly hereunto set my hand DATED: OCTOBER 10, 1995 ------------------------------------ 60 EX-99.1.2 3 CERTIFICATE OF AMENDMENT 1 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF CHEFS ACQUISITION CORP. David Jenkins and Richard Bullock certify that: They are the President and Secretary, respectively, of Chefs Acquisition Corp., a Delaware corporation (the "Company"). 1. Article First of the Certificate of Incorporation is amended by substituting the following in lieu thereof: "First: the name of the corporation is "Aurora Gold Corporation". 2. Article Fourth of the Certificate of Incorporation is amended by changing the reference to 20,000,000 shares therein, to 50,000,000. 3. Article Fourth of the Certificate of Incorporation of the Company is amended to add the following at the end thereof: "Effective on the date of the filing with the Secretary of Delaware of a Certificate of Amendment to the Certificate of Incorporation of the Company with respect hereto ("Effective Date"), every three shares of the Company's Common Stock outstanding immediately prior to such time shall be reclassified into one share of Common Stock. Stockholders who, as a result of the reverse stock split, own a fraction of a whole share of Common Stock, shall be entitled to receive from the Company one full share therefor upon the surrender of certificates representing Common Shares owned prior to the Effective Date." 4. The foregoing Certificate of Amendment of the Certificate of Incorporation has been duly approved by the Board of Directors. 5. The foregoing Certificate of Amendment of the Certificate of Incorporation has been duly approved by written consent of the majority of stockholders of the Company and written notice of such consent was given to non-consenting stockholders in accordance with Section 228(c) of the General Corporation Law of the State of Delaware, all in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. 61 2 6. The capital of the Company will not be reduced under, or by reason of, the foregoing Amendments to the Certificate of Incorporation of the Company. We further declare under penalty of perjury under the laws of the State of Delaware that the matters set forth in the foregoing Certificate are true and correct to our knowledge. IN WITNESS WHEREOF, this Certificate of Amendment is executed by David Jenkins, President and Richard Bulloch, Secretary, this 19th day of July, 1996. Chefs Acquisition corp. By: -------------------------------------- David Jenkins Title: President By: -------------------------------------- Richard Bulloch Title: Secretary 62 EX-99.1.3 4 CERTIFICATE OF RESTORATION 1 CERTIFICATE OF RESTORATION AND REVIVAL OF CERTIFICATE OF INCORPORATION OF AURORA GOLD CORPORATION It is hereby certified that: 1. The name of the corporation (hereinafter called the "corporation") is AURORA GOLD CORPORATION. 2. The corporation was organized under the provisions of the General Corporation Law of the State of Delaware. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware is October 10, 1995. 3. The address, including the street, city, and county, of the registered office of the corporation in the State of Delaware and the name of the registered agent at such address are as follows: Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805. County of New Castle. 4. The corporation hereby procures a restoration and revival of its certificate of incorporation, which became inoperative by law on March 1, 1997 for failure to file annual reports and non-payment of taxes payable to the State of Delaware. 5. The certificate of incorporation of the corporation, which provides for and will continue to provide for, perpetual duration, shall, upon the filing of this Certificate of Restoration and Revival of the Certificate of Incorporation in the Department of State of the State of Delaware, be restored and revived and shall become fully operative on February 28, 1997. 6. This Certificate of Restoration and Revival of the Certificate of Incorporation is filed by authority of the duly elected directors as prescribed by Section 312 of the General Corporation Law of the State of Delaware. Signed on May 14, 1997 ----------------------------------- David E. Jenkins President 63 EX-99.1.4 5 AMENDED AND RESTATED BY-LAWS 1 AMENDED AND RESTATED BYLAWS OF AURORA GOLD CORPORATION ARTICLE I--Offices The principal office of the corporation shall be located in the Province of British Columbia, Canada. The corporation may have such other offices, either within or outside the State of Delaware, as the Board of Directors may designate or as the business of the corporation may require from time to time. The registered office of the corporation may be, but need not be, identical with the principal office, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II--Shareholders Section 1. Annual Meeting. The annual meeting of the shareholders shall be held at in the month of May in each year, beginning with the year 1997. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. Section 2. Special Meetings. Special meetings of the shareholders, for any purpose, unless otherwise prescribed by statute, may be called by the president or by the Board of Directors, and shall be called by the president at the request of the holders of not less than one-tenth of all the outstanding shares of the corporation entitled to vote at the meeting. Section 3. Place of Meeting. The Board of Directors may designate any place as the place for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place as the place for such meeting. If no designation is made, or if a special meeting shall be called otherwise than by the Board, the place of meeting shall be the registered office of the corporation. Section 4. Notice of Meeting. Written or printed notice stating the place, day and hour of the meeting, and, in case of a special meeting, the purposes for which the meeting is called, shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting, except that if the authorized capital stock is to be increased at least thirty days notice shall be given. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. If requested by the person or persons lawfully calling such meeting, the secretary shall give notice thereof at corporate expense. 64 2 Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for any stated period not exceeding fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days, and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of the closing has expired. Section 6. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. For a period of ten days prior to such meeting, this list shall be kept on file at the principal office of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Section 7. Quorum. Thirty-three and one third Percent (33-1/3%) of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. 65 3 If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of voting by classes is required by law or the articles of incorporation. Section 8. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or his or her duly authorize attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Section 9. Voting of Shares. Each outstanding share, regardless of class, shall be entitled to one vote, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote at a meeting of shareholders. Cumulative voting shall not be allowed. Section 10. Voting of shares by Certain Holders. Neither treasury shares, nor shares of its own stock held by the corporation in a fiduciary capacity, nor shares held by another corporation if a majority of the shares entitled to vote for the election of Directors of such other corporation is held by this corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator, executer, guardian or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his or her name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Section 11. Informal action by Shareholders. Any action required to be taken at any annual or special meeting of the stockholders or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by 66 4 the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in this State, its principal place of business, or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Company's registered office shall be by hand or by certified or registered mail, return receipt requested. ARTICLE III--Board of Directors Section 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors, except as otherwise provided by statute or the articles of incorporation. Section 2. Number, Tenure and Qualifications. The number of Directors of the corporation shall be not less than three nor more than five, unless a lesser number is allowed by statute. Directors shall be elected at each annual meeting of shareholders. Each director shall hold office until the next annual meeting of shareholders and thereafter until his or her successor shall have been elected and qualified. Directors need not be residents of this state [Delaware] or shareholders of the corporation. Directors shall be removable in the manner provided by statute. Section 3. Vacancies. Any director may resign at any time by giving written notice to the president or to the secretary of the corporation. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors though not less than a quorum. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any Directorship to be filled by the affirmative vote of a majority of a Directors then in office or by an election at an annual meeting or at a special meeting of shareholders called for that purpose, and a director so chosen shall hold office for the term specified in Section 2 above. Section 4. Regular Meeting. A regular meeting of the Board of Directors shall be held without other notice than this bylaw immediately after and at the same place as the annual meeting of shareholders. The Board of Directors may provide by resolution the time and place for the holding of additional regular meetings without other notice than such resolution. Any such meeting may be held by telephone conference. Section 5. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the president or any two Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. Any such meeting may be held by telephone conference. 67 5 Section 6. Notice. Notice of any special meeting shall be given at least seven days previous thereto by written notice delivered personally or mailed to each director at his or her business address, or by notice given at least two days previously by telegraph. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of waiver of notice of such meeting. Section 7. Quorum. A majority of the number of Directors fixed by Section 2 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. Section 8. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 9. Compensation. By resolution of the Board of Directors, any director may be paid any one or more of the following: expenses, if any, of attendance at meetings; a fixed sum for attendance at each meeting; or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 10. Informal Action by Directors. Any action required or permitted to be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of the Directors. ARTICLE IV--Officers and Agents Section 1. General. The officers of the corporation shall be a president, one or more vice presidents, a secretary and a treasurer. The salaries of all of the officers of the corporation shall be fixed by the Board of Directors. One person may hold any two offices, except that no person may simultaneously hold the offices of president and secretary. Section 2. Election and Term of Office. The officers of the corporation shall be elected by the Board of Directors annually at the first meeting of the Board held after each annual meeting of the shareholders. 68 6 Section 3. Removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the corporation will be served thereby. Section 4. Vacancies. A vacancy in any office, however occurring, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. President. The president shall: (a) subject to the direction and supervision of the Board of Directors, be the chief executive officer of the corporation; (b) shall have general and active control of its affairs and business and general supervision of its officers, agents and employees; and (c) the president shall have custody of the treasurer's bond, if any. Section 6. Vice Presidents. The vice presidents shall: (a) assist the president; and (b) shall perform such duties a may be assigned to them by the president or by the Board of Directors. Section 7. Secretary. The secretary shall: (a) keep the minutes of the proceedings of the shareholders and the Board of Directors; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and affix the seal to all documents when authorized by the Board of Directors; (d) keep at its registered office or principal place of business a record containing the names and addresses of all shareholders and the number and class of shares held by each, unless such a record shall be kept at the office of the corporation's transfer agent or registrar; (e) sign with the president, or a vice president, certificates for shares of the corporation the issuance of which shall have been authorized by resolution or the Board of Directors; (f) have general charge of the stock transfer books of the corporation, unless the corporation has a transfer agent; and 69 7 (g) in general, perform all duties incident to the office as secretary and such other duties as from time to time may be assigned to him or her by the president or by the Board of Directors. Section 8. Treasurer. The treasurer shall: (a) be the principal financial officer of the corporation; (b) perform all other duties incident to the office of the treasurer and, upon request of the Board, shall make such reports to it as may be required at any time; (c) be the principal accounting officer of the corporation; and (d) have such other powers and perform such other duties as may be from time to time prescribed by the Board of Directors or the president; ARTICLE V--Stock Section 1. Certificates. The shares of stock shall be represented by consecutively numbered certificates signed in the name of the corporation by its president or a vice president and the secretary, and shall be sealed with the seal of the corporation, or with a facsimile thereof. No certificate shall be issued until the shares represented thereby are fully paid. Section 2. Consideration for Shares. Shares shall be issued for such consideration, expressed in dollars (but not less than the par value thereof, if any) as shall be fixed from time to time by the Board of Directors. Such consideration may consist, in whole or in part of money, other property, tangible or intangible, or in labor or services actually performed for the corporation, but neither promissory notes nor future services shall constitute payment for shares. Section 3. Transfer of Share. Upon surrender to the corporation or to a transfer agent of the corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and such documentary stamps as may be required by law, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate. Every such transfer of stock shall be entered on the stock book of the corporation which shall be kept at its principal office, or by its registrar duly appointed. Section 4. Transfer Agents, Registrars and Paying Agents. The Board may at its discretion appoint one or more transfer agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the corporation. 70 8 ARTICLE VI--Indemnification of Officers and Directors Each director and officer of this corporation shall be indemnified by the corporation against all costs and expenses actually and necessarily incurred by him or her in connection with the defense of any action, suit or proceeding in which he or she may be involved or to which he or she may be made a party by reason of his or her being or having been such director or officer, except in relation to matters as to which he or she shall be finally adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty. ARTICLE VII--Miscellaneous Section 1. Waivers of Notice. Whenever notice is required by law, by the articles of incorporation or by these bylaws, a waiver thereof in writing signed by the director, shareholder or other person entitled to said notice, whether before or after the time stated therein, or his or her appearance at such meeting in person or (in the case of a shareholders' meeting) by proxy, shall be equivalent to such notice. Section 2. Seal. The corporate seal of the corporation shall be in the form impressed on the margin hereof. Section 3. Fiscal Year. The fiscal year of the corporation shall be as established by the Board of Directors. Section 4. Amendments. The Board of Directors shall have power to make, amend and repeal the bylaws of the corporation at any regular meeting of the Board or at any special meeting called for the purpose. APPROVED: DATED: October 12, 1995 -------------------------------------------- Director -------------------------------------------- Director -------------------------------------------- Director 71 EX-99.3.1 6 AGREEMENT DATED JULY 18, 1997 1 AURORA GOLD CORPORATION 1400-400 Burrand Street Vancouver, B.C., Canada V6C 2W2 July 18, 1997 Minera Motagua, S.A. 30 calle 13-48 Zone 5 Guatemala City Guatemala Attention: Mr. Roberto Destarac & Mr. Roberto Velasquez Gentlemen, We agree to the terms of our last discussion and the revisions of your proposal of July 7, 1997. The new proposed agreement is as follows: 1. Aurora would make two cash payments: $5,000 USF on July 21, 1997 and $10,000 USF upon completion of our due diligence on the four mineral concessions. The combined total of these two payments if $15,000 USF. These two payments would be a one time cash payment. 2. Upon completion of our due diligence and governmental approval of the four applications, 10,000 common shares of Aurora Gold Corporation per mineral concession (a total of 40,000 common shares) will be issued to Minera Motagua, S.A. 3. A 2% Net Smelter Royalty Interest (NSR) will be granted to Minera Motagua, S.A. for each distinct mineral deposit per mineral concession. This NSR is exclusive of the mandatory 1% NSR granted to the Government of Guatemala. 4. 100,000 common shares of Aurora Gold Corporation will be issued to Minera Motagua, S.A. upon a positive feasibility report for each distinct mineral deposit per mineral concession that is deemed to be economically viable. 72 2 5. Aurora Gold Corporation shall have the First Right of Refusal for a period of twenty (20) days on terms mutually acceptable to Aurora Gold Corporation and Minera Motagua, S.A. on any other mineral concessions that Minera Motagua, S.A. has applied for and/or has been granted. This First Right of Refusal is exclusive of two pending transactions with BWI Resources and Megastar Ventures. 6. Aurora Gold Corporation or its wholly owned subsidiary Aurora Gold Corporation (B.V.I.) Limited or its nominees will be the party named in the final agreement. 7. Upon completion of our due diligence and governmental approval of applications for the four mineral concessions Aurora Gold Corporation and Minera Motagua, S.A. will enter into a final agreement transferring 100% ownership of each of the four mineral concessions to Aurora Gold Corporation and/or its subsidiary. 8. Aurora Gold Corporation will assume the payment of all fees and be responsible for maintaining the title to the concessions in accordance with the newly instituted mining law of Guatemala. The above mentioned terms and references are supported on the following knowledge of the four mineral concessions. EL TRIUNFO Is located in the Chimaltenango Province in Western Guatemala some sixty kilometers west of Guatemala City, and covers an area of 64 square kilometers. For UTM coordinates see appendix "A". EL REJON Is located on the borders of Sacatepequez and Chimaltenango Provinces in central Guatemala approximately 30 kilometers west of Guatemala City, and covers an area of 77 square kilometers. For UTM coordinates see appendix "A". BOLA DE ORO Is located in the Chimaltenango Province in Western Guatemala 60 kilometers west of Guatemala City, and covers an area of 110 square kilometers. For UTM coordinates see appendix "A". CARMONA Is located in the Guatemala Province in the central part of the County, close to the city of Antigua 30 kilometers south of Guatemala City, and covers an area of 72 square kilometers. For UTM coordinate see appendix "A". 73 3 Please sign below and return this letter to my attention, at which time we will begin drafting a formal Agreement. Yours truly, Aurora Gold Corporation David E. Jenkins President The terms outlined above are accepted by Minera Motagua, S.A., this 21st day of July, 1997. Minera Motagua, S.A. Per: ------------------------------------ Roberto Destarac Per: ------------------------------------ Roberto Velasquez DEJ:sg Enclosure 74 4 APPENDIX "A" Please see attached five (5) pages containing properties descriptions and a general location map. 75 5 "EL TRIUNFO 1" Is located in the Chimaltenano province in western Guatemala some sixty kilometers west of Guatemala City, and covers an area of 64 sq. kms. Its UTM coordinates are:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,636,000 738,000 2 1,644,000 738,000 3 1,644,000 746,000 4 1,636,000 746,000 - --------------------------------------------------------------------------------------------------------------------------
The "El Triunfo" concession was requested based on historical information obtained at the Ministry of Energy and Mines. A compilation prepared in the Mining Investigation department of the ministry which lists claims presented up to date, indicate approximately eight gold claims obtained in different periods of time on the area requested. There is also one more reference obtained from the General Archive of Central America, which is the library that saves and preserves all documents available from the colonial period in Central America, indicating the existence a gold mine close to the town of San Martin Jilotepeque, which lies within the area requested. The mineral concession application was presented in the Ministry of Energy and Mines on April 24, 1997. The area is plotted on the GUATEMALA 1:250,000 scale map included. 76 6 "EL REJON" Is located on the Sacatepequez and Chimaltenango provinces in central Guatemala approximately 30 kms. west of Guatemala city. It covers an area of 77 sq. kms, and its UTM coordinates are:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,619,000 748,000 2 1,618,000 748,000 3 1,618,000 749,000 4 1,615,000 749,000 5 1,615,000 751,000 6 1,613,000 751,000 7 1,613,000 749,000 8 1,611,000 749,000 9 1,611,000 745,000 10 1,613,000 745,000 11 1,613,000 743,000 12 1,612,000 743,000 13 1,612,000 739,000 14 1,617,000 739,000 15 1,617,000 743,000 16 1,619,000 743,000 - --------------------------------------------------------------------------------------------------------------------------
The "El Rejon" area was requested based on historical references obtained at the General Archives of Central America. A "Royal" mine existed at the site which produced gold and silver for several years. There are a total of seven references dating from 1657 through 1869 of a mine state: "Mr. Prudencio Castellanos, claims a native silver mine located close to Antigua Guatemala on a hill called El Rejon, which belongs to the country of Jocotenango. Its ore contains 52% silver."(1869) Reference is also made in 1657 to a mine located on the Parramos hill next to the town of Parramos which is located west of the El Rejon mine. The concession is located on tertiary volcanic terrain. The mineral concession application was presented in the Ministry of Mines on April 30, 1997. It is plotted on the GUATEMALA 1:250,000 scale map included. 77 7 "BOLA DE ORO" Is located in the Chimaltenango province in western Guatemala some 60 kms. west of Guatemala City. It covers an area of 110 sq. kms. Its UTM coordinates are:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,635,000 728,000 2 1,635,000 738,000 3 1,624,000 738,000 4 1,626,000 728,000 - --------------------------------------------------------------------------------------------------------------------------
The Bola de Oro (Golden Ball) concession was requested based on historical references obtained at the General Archives of Central America. An 1824 reference states the existence of a mine close to the town of Comalapa which produced 2.25 ounces of silver per 100 pounds of rock and some gold (not specified). There are presently two towns with the word mine in their names close to Comalapa. The presence of the word mine in a name usually makes reference to late mining operation. The concession is located within the Tertiary volcanic belt of Central Guatemala. The mineral exploration concession application was presented in the Ministry of Energy and Mines on April 30, 1997. The area is plotted on the GUATEMALA 1:250,000 scale map included. 78 8 "CARMONA" Is located on the Guatemala province on the central part of the Country, close to the city of Antigua Guatemala (Guatemalas Capital city until the 1800's), some 30 kms. south of Guatemala City. It covers an area of 72 sq. kms. and is bounded by the following UTM coordinates:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,610,000 746,000 2 1,604,000 746,000 3 1,604,000 748,000 4 1,600,000 748,000 5 1,600,000 754,000 6 1,610,000 754,000 - --------------------------------------------------------------------------------------------------------------------------
The Carmona property was requested based on two historical references from the Archives of Central America. The 1680 references mention the existence of a gold mine close to the now extinguished to town of San Bartolome Carmona on the top of the Carmona Mountain. There is a peak on the mountain called Cerro Las Minas, another one called Cerro Monterrico, and a river called Las Minas. The geology of the area is not well known but the mountain is located on tertiary volcanic terrain, next to the Agua Volcano. The mineral exploration concession application was presented to the Ministry of Energy and Mines on May 13, 1997. The area is plotted on the GUATEMALA 1:250,000 scale map provided. 79 EX-99.3.2 7 AGREEMENT DATED AUGUST 16, 1997 1 AURORA GOLD CORPORATION 1400-400 Burrand Street Vancouver, B.C., Canada V6C 2W2 August 16, 1997 Minera Motagua, S.A. 30 calle 13-38 Zone 5 Guatemala City Guatemala Attention: Mr. Roberto Destarac Dear Mr. Destarac, We agree to the terms of this agreement, as follows: 1. Aurora would make two cash payments: $5,000 USF on August 18, 1997 and $10,000 USF upon completion of our due diligence on the ten mineral concessions. The combined total of these two payments is $15,000 USF. These two payments would be a onetime cash payment. 2. Upon completion of our due diligence and governmental approval of the ten applications, 11,500 common shares of Aurora Gold Corporation per mineral concession (a total of 115,000 common shares) will be issued to Minera Motagua, S.A. 3. A 2% Net Smelter Royalty Interest (NSR) will be granted to Minera Motagua, S.A. for each distinct mineral deposit per mineral concession. This NSR is exclusive of the mandatory 1% NSR granted to the government of Guatemala. 4. 100,000 common shares of Aurora Gold Corporation will be issued to Minera Motagua, S.A. upon a positive feasibility report for each distinct mineral deposit per mineral concession that is deemed to be economically viable. 80 2 5. Aurora Gold Corporation shall have the First Right of Refusal for a period of twenty (20) days on terms mutually acceptable to Aurora Gold Corporation and Minera Motagua, S.A. on any other mineral concessions that Minera Motagua, S.A. has applied for and/or has been granted. This First Right of Refusal is exclusive of two pending transactions with BWI Resources and Megastar Ventures. 6. Aurora Gold Corporation or its wholly owned subsidiary Aurora Gold Corporation (B.V.I.) Limited or a wholly owned Guatemalan subsidiary or its nominees will be the party named in the final agreement. 7. Upon completion of our due diligence and Governmental approval of applications for the four mineral concessions Aurora Gold Corporation and Minera Motagua, S.A. will enter into a final agreement transferring 100% ownership of each of the ten mineral concessions to Aurora Gold Corporation and/or its subsidiary. 8. Aurora Gold Corporation will assume the payment of all fees and be responsible for maintaining the title to the concessions in accordance with the newly instituted mining law of Guatemala. The above mentioned terms and references are supported on the following knowledge of the ten mineral concessions. The following is a list of the ten mineral concession (lease see Appendix "A" for a complete property descriptions): LOS CIPRESES, CHIYAX, ATITLAN, LOS ANGELES, LA UNION, SAN DIEGO, BARRANQUILLO, EL RANCHO, EL JICARO AND MONJITAS. Please sign below and return this letter to my attention, at which time we will begin drafting a formal Agreement. Yours truly, Aurora Gold Corporation David E. Jenkins President The terms outlined above are accepted by Minera Motagua, S.A., this 16th day of August 1997. Minera Motagua, S.A. Per: ------------------------------------ Roberto Destarac 81 3 APPENDIX "A" Please see attached ten (10) pages containing properties descriptions and a general location map. 82 4 "MONJITAS" Is located on the Guatemala province in central Guatemala some 10 kilometers east of Guatemala City. It covers a total area of 20 sq. Kms. and is bounded by the following UTM coordinates;
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,627,000 769,000 2 1,627,000 776,600 3 1,632,000 776,000 4 1,632,000 769,000 - --------------------------------------------------------------------------------------------------------------------------
The Monjitas concession was requested based on historical references obtained from the Archives of Central America. One of them dating from 1892 states: "Mr Benito Vega, claims that in the place called Monjitas, in Santa Rosita, he discovered a gold and silver mine, which he pretends to name El Socorro." The concession is located on the mountains to the east of Guatemala City. This area is marked by the presence of a N-S fault, which is the eastern border of the Asuncion valley. Tertiary volcanic rocks are predominant in the area. Several outcrops of silicified, oxidized and altered volcanic rocks have been located. The mineral exploration concession application was presented to the Ministry of Energy and Mines on June 2, 1997. The concession is located within the GUATEMALA 1:250,000 scale base map. 83 5 "EL RANCHO" Is located on the El Progreso and Zacapa provinces in eastern Guatemala, some 95 kilometers east of Guatemala City. It covers an area of 90 sq., Kms. and is bounded by the following UTM coordinates:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,638,000 824,500 2 1,638,000 832,000 3 1,650,000 832,000 4 1,650,000 824,500 - --------------------------------------------------------------------------------------------------------------------------
The El Rancho exploration concession was requested based on references obtained from the Archives of Central America. The references in general state the presence of several copper, gold, silver, and iron mineral deposits on the El Rancho mountains south of a town with the same name. Geology is very similar to that one found in El Barranquillo and El Jicarro concessions, although El Rancho is closest to the Motagua valley and fault. On the other side of the Motagua River, to the north of El Rancho, the Ministry of Energy and Mines has declared a mineral reserve area called San Agustin. The reserve was declared based on studies performed a Korean prospecting mission which performed sediments sampling all around Guatemala and obtained several gold anomalies at San Agustin. The mineral exploration concession was presented to the Ministry of Energy and Mines on June 26, 1997. The concession can be plotted on the CHIQUIMULA 1:250,000 base map. 84 6 "BARRANQUILLO" Is located on the El Progreso province in eastern Guatemala, some 70 kilometers east of Guatemala City. It covers an area of 96 sq. Kms. and is bounded by the following UTM coordinates:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,637,000 805,000 2 1,637,000 817,000 3 1,645,000 817,000 4 1,645,000 805,000 - --------------------------------------------------------------------------------------------------------------------------
The Barranquillo concession was requested based on references obtained at the Archives of Central America. These references mention the existence of an old copper-gold mine 10 kilometers east of the town of Barranquillo, on the road to Guastatoya. All the locations mentioned are within the El Barranquillo concession. The geology of the concession is very similar to that found in the Jicaro concession, which bounds Barranquillo to the east. The mineral exploration concession application was presented to the Ministry of Energy and Mines on June 2, 1997. The concession can be plotted on the GUATEMALA 1:250,000 base map. 85 7 "LOS CIPRESES" Is located in the Totonicapan province in western Guatemala 200 kms. west of Guatemala City. It covers an area of 56 sq. kms. Its UTM coordinates are:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,653,000 675,000 2 1,653,000 666,000 3 1,662,000 666,000 4 1,662,000 675,000 - --------------------------------------------------------------------------------------------------------------------------
The Los Cipreses concession was requested based on references from the Archives of Central America. Two references state the existence of a silver and gold mine on the road from Momostenango to San Francisco el Alto. They mention a vein with an east west orientation on a hill called Trece. Assays yielded 3 ounces of silver per 100 pounds of rock and some gold. Geologically the area is located within tertiary volcanic terrain close to several igneous bodies. It is important to recognize that the Motagua Fault is lost when it come into contact with tertiary volcanic rocks at this particular area. It can be inferred that the Fault was buried but is still capable of controlling mineralization in the area on later tectonic events. The mineral exploration concession was presented to the Ministry of Mines on May 7, 1997. The area is plotted on the bottom-left corner of the COBAN, and on the upper-left corner of the GUATEMALA 1:250,000 maps provided. 86 8 "CHIYAX" Is located in the Totonicapan province of western Guatemala some 210 kms. northwest of Guatemala City. It covers an area of 48 sq. kms. and is bounded by the following UTM coordinates:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,652,000 678,000 2 1,646,000 678,000 3 1,646,000 686,000 4 1,652,000 686,000 - --------------------------------------------------------------------------------------------------------------------------
The Chiyaz area was requested based on several references obtained from the Archives of Central America. At least four references dating from 1796 through 1892 mention gold and silver mines on the hills next to the town of Totonicapan. Special reference is made to the mines called Parrasqui and Choatulum. The geology of the area is very similar to that found at the Los Cipreses area due to their proximity. The mineral exploration concession application was presented to the Ministry of Energy and Mines on May 13, 1997. The area is plotted on the upper-left-hand corner of the GUATEMALA 1:250,000 scale map provided. 87 9 "EL JICARO" Is located in the El Progreso province in eastern Guatemala, some 80 kilometers east of Guatemala City. It covers an area of 90 sq. Kms. and is bounded by the following UTM coordinates:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,638,000 817,000 2 1,638,000 824,500 3 1,650,000 824,500 4 1,650,000 817,000 - --------------------------------------------------------------------------------------------------------------------------
The El Jicaro concession was requested based on a reference obtained from the Archives of Central America. The reference mentions the presence of copper and gold bearing minerals on the Anchuga Mountain, close to the town of Guastatoya. This mountain is covered within the El Jicaro concession. The geology of the region is marked by the presence of the Motagua Fault, the largest east-west structure in Guatemala, which extends all the way to the Caribbean. Due to the proximity of such a large structure, geology is complex and is characterized by the presence of several rock types, including intrusives, tertiary rhyolites and redbeds of Cretaceous age. The mineral exploration concession application was presented to the Ministry of Energy and Mines on June 2, 1997. The concession can be plotted on the GUATEMALA and CHIQUIMULA 1:250,000 scale base maps. 88 10 "LOS ANGELES 1" & "LA UNION 1" Both are located in the Zacapa province in eastern Guatemala close to the border with Honduras, they cover an area of 180 sq. kms. Their UTM coordinates are: LOS ANGELES 1
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,645,000 236,000 2 1,655,000 236,000 3 1,655,000 245,000 4 1,645,000 245,000 - --------------------------------------------------------------------------------------------------------------------------
LAN UNION 1
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,646,000 245,000 2 1,646,000 254,000 3 1,648,000 254,000 4 1,648,000 257,000 5 1,657,000 257,000 6 1,657,000 254,000 7 1,653,000 254,000 8 1,653,000 245,000 - --------------------------------------------------------------------------------------------------------------------------
The Los Angeles 1 and La Union 1 areas were requested based on the geological environment surrounding it and a very prominent topographic structure. The area are bounded to the north by the Managua area which was explored by the UN and the Ministry of Energy and Mines during the 1980s and yielded results for copper, lead, silver, and gold. Geologists from the Ministry strongly recommend the area for exploration. A complete report of the Managua project is included for its review. Geologically, the area is located at on Paleozoic metamorphic rocks in contact with an intrusive body and tertiary volcanic terrain. The Los Angeles 1 area and the La Union 1 area correspond to one concession but were divided in order to avoid an extremely large concession. The application was presented to the Ministry of Mines on April 24, 1997. The area is plotted on the CHIQUIMULA 1:250,000 scale map included. 89 11 "ATITLAN" Also a mineral reconnaissance concession located in the Sacatepequez, Chimaltenango, and Solola provinces in western Guatemala. It covers an area of 600 sq. Kms., bounded by the following UTM coordinates:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,625,000 700,000 2 1,625,000 730,000 3 1,605,000 730,000 4 1,605,000 700,000 - --------------------------------------------------------------------------------------------------------------------------
The Atitlan concession was requested based on the geological setting of the region and on several references from the Archives of Central America pointing to mineral occurrences in the area. Geologically Atitlan is located within the central tertiary volcanic belt of southern Guatemala, which presents the best characteristics for epithermal mineralization in the country. References point out the existence of several gold, silver, and copper occurrences in the area which are yet to be located precisely. The mineral reconnaisance concession application was presented to the Ministry of Energy and Mines on July 23, 1997. The concession can be plotted in the GUATEMALA 1:250,000 base map. 90 12 "SAN DIEGO" Is a mineral reconnaissance concession located in the Zacapa and Chiquimula provinces in eastern Guatemala, some 150 Kms. east of Guatemala City. Due to its reconnaissance status it covers a larger area than exploration concessions, namely 800 sq. kms. the following UTM coordinates bound it:
- -------------------------------------------------------------------------------------------------------------------------- Apex North East - -------------------------------------------------------------------------------------------------------------------------- 1 1,650,000 190,000 2 1,650,000 230,000 3 1,630,000 230,000 4 1,630,000 190,000 - --------------------------------------------------------------------------------------------------------------------------
The San Diego reconnaissance concession was requested with the purpose of covering a large area of good, prospective land in eastern Guatemala. The main feature at San Diego is the fact that it completely surrounds the El Pato gold and silver mineral reserve, which is the best-understood exploration project in Guatemala to this date. The area has been studied by the General Mining Directorate and by the United Nations Revolving Fund for Natural Resources Exploration during the years 1990 and 1991. From these studies, a total of 850,000 MT averaging 7.0 g/t gold are proven. Possible reserves are 200,000 tone averaging 5.8 g/t gold. Geologically, due to its extension the area contains several geological settings. Most important is the presence of the Motagua Fault to the north and the Chiquimula Pluton (intrusive) on the eastern half of the concession. The mineral reconnaissance concession application was presented to the Ministry of Energy and Mines on July 24, 1997. The concession can be plotted on the CHIQUIMULA 1:250,000 base map. 91 EX-99.3.3 8 AGREEMENT DATED NOVEMBER 3, 1997 1 AURORA GOLD CORPORATION 1400-400 Burrand Street Vancouver, B.C., Canada V6C 2W2 November 3, 1997 Minera Motagua, S.A. 30 calle 13-48 Zone 5 Guatemala City Guatemala Attention: Mr. Roberto Destarac & Mr. Roberto Velasquez Gentlemen, This letter is to acknowledge a mutually agreed upon revision of our two previous agreements covering the application and the granting of mineral concession and mineral reconnaissance concessions in Guatemala. - - July 18, 1997 covering four (4) mineral concessions: El Triunfo, El Rejon, Bola de Oro and Carmona. - - August 16, 1997 agreement covering eight (8) mineral concessions: Los Cipreses, Chiyax, Los Angeles, La Union, Barranquillo, El Rancho, El Jicaro, Monjitas and two (2) mineral reconnaissance concessions Atitlan and San Diego. The mutually agreed upon revisions to the above two agreements are as follows: - - July 18, 1997 agreement - The elimination of the second cash payment of $10,000 USD. A reduction of the Aurora Gold Corporation common shares to be granted upon completion of due diligence and governmental approval of the four (4) mineral concessions from 10,000 common shares per concession to 1,500 common shares per concession for a new total of 6,000 Aurora Gold Corporation. Also, the elimination of any Aurora Gold Corporation common shares being granted upon completion of a positive feasibility report for each distinct mineral deposit per mineral concession that is deemed to be economically viable. 92 2 - - August 16, 1997 agreement - The elimination of the second cash payment of $10,000 USD. A reduction of Aurora Gold Corporation common shares to be granted upon completion of due diligence and governmental approval of eight (8) mineral concessions and two (2) mineral reconnaissance concessions from 11,500 common shares per concessions to 1,500 common shares per concession for a new total of 15,000 common shares. Also, the elimination of any Aurora Gold Corporation common shares being granted upon completion of a positive feasibility report for each distinct mineral deposit per mineral concession that is deemed to be economically viable. - - The elimination of the 2% Net Smelter Royalty Interest (NSR) to Minera Motagua, S.A. for each distinct mineral deposit per mineral concession under either the July 18, 1997 or August 16, 1997 agreements. It is acknowledged by all parties that Aurora Gold Corporation's nominee Aurora Gold, S.A. will be the local Guatemalan operating company and all the above concessions will be transferred and/or granted in the name of Aurora Gold, S.A. Yours truly, Aurora Gold Corporation David E. Jenkins President The terms outlined above are accepted by Minera Motagua, S.A., this 3rd day of November 1997. Minera Motagua, S.A. Per: ------------------------------------ Roberto Destarac Per: ------------------------------------ Roberto Velasquez 93 EX-27.1 9 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS. 1 1 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 122,921 0 12,326 0 0 0 0 0 135,247 68,866 0 0 0 168,351 0 237,217 0 0 0 0 569,980 0 0 (569,980) 0 (569,980) 0 0 0 (569,980) (0.05) (0.05)
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