UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|
x |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended: December 31, 2012
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o |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from ________ to _________
Commission File Number: 000-50423
ARDENT MINES LIMITED
(Exact Name of Registrant as Specified in its Charter)
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Nevada |
88-0471870 |
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(State or Other Jurisdiction of |
(IRS Employer Identification |
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Incorporation or Organization) |
Number) |
100 Wall Street, 10th Floor
New York, New York 10005
(Address of principal executive offices)
(516) 602-9065
(Registrant's telephone number, including area code)
N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer |
o |
Accelerated Filer |
o |
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Accelerated Filer |
o |
Smaller Reporting Company |
x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: The Issuer had 37,229,555 shares of Common Stock, par value $0.00001, outstanding as of February 8, 2013.
ARDENT MINES LIMITED
FORM 10-Q
December 31, 2012
INDEX
PART I-- FINANCIAL INFORMATION
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Item 1. |
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Item 2. |
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Item 3 |
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Item 4. |
PART II-- OTHER INFORMATION
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Item 1 |
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Item 1A |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
2
ITEM 1. FINANCIAL STATEMENTS
Ardent Mines Limited
(An Exploration Stage Company)
December 31, 2012
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FINANCIAL STATEMENTS |
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F-1 | |
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Consolidated Statements of Expenses and Comprehensive Loss (unaudited) |
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F-2 |
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F-3 | |
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F-4 |
3
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(An Exploration Stage Company) CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||
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December 31, 2012 |
|
June 30, 2012 | |
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ASSETS |
|
|
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| |
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Current Assets |
|
|
|
| |
|
|
Cash and cash equivalents |
$ |
28,150 |
$ |
287,052 |
|
|
Employee advances |
|
51,434 |
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48,571 |
|
|
Prepaid expenses |
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36,247 |
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3,542 |
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|
Deferred financing costs |
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57,564 |
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- |
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Total Current Assets |
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173,395 |
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339,165 | |
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|
|
|
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| |
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Property and equipment, net of accumulated depreciation of $2,677 and $1,091, respectively |
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29,075 |
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27,684 | |
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Mining rights |
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1,154,684 |
|
898,577 | |
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|
|
|
|
| |
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TOTAL ASSETS |
$ |
1,357,154 |
$ |
1,265,426 | |
|
|
|
|
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| |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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|
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| |
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Current Liabilities |
|
|
|
| |
|
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Accounts payable and accrued liabilities |
$ |
762,189 |
$ |
606,516 |
|
|
Notes payable |
|
2,517,900 |
|
1,822,900 |
|
|
Convertible note payable |
|
55,000 |
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- |
|
|
Derivative liability |
|
2,249 |
|
301,249 |
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Total Current Liabilities |
|
3,337,338 |
|
2,730,665 | |
|
|
|
|
|
| |
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TOTAL LIABILITIES |
|
3,337,338 |
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2,730,665 | |
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|
|
|
|
| |
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Stockholders’ Deficit |
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|
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| |
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Preferred Stock, $0.00001 par value, 100,000,000 shares authorized, none issued and outstanding |
|
- |
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- |
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Common Stock, $0.00001 par value, 100,000,000 shares authorized, 37,229,555 and 16,623,391 issue and outstanding, respectively |
|
373 |
|
167 |
|
|
Additional paid-in capital |
|
11,541,225 |
|
10,657,758 |
|
|
Deficit accumulated during the exploration stage |
|
(13,551,115) |
|
(12,144,694) |
|
|
Accumulated other comprehensive income |
|
29,333 |
|
21,530 |
|
|
Total Stockholders’ Deficit |
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(1,980,184) |
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(1,465,239) |
|
|
|
|
|
| |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ |
1,357,154 |
$ |
1,265,426 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6
ARDENT MINES LIMITED
(An Exploration Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Ardent Mines Limited (“Ardent Mines”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in Ardent Mines' Annual Report filed with the SEC on Form 10−K for the fiscal year ended June 30, 2012. In the opinion of management, all adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for the fiscal year ended June 30, 2012 as reported in the Form 10−K have been omitted.
NOTE 2 - GOING CONCERN
Ardent Mines has incurred net losses since inception and has a working capital deficit at December 31, 2012. The ability of Ardent Mines to emerge from the exploration stage with respect to any planned principal business activity is dependent upon its successful efforts to raise additional equity financing and/or attain profitable mining operations. Management has plans to seek additional capital through a private placement of its common stock. There is no guarantee that Ardent Mines will be able to complete any of the above objectives. These factors raise substantial doubt regarding Ardent Mines' ability to continue as a going concern.
NOTE 3 – ACQUISITION OF MINING RIGHTS
Gold Hills Rights
On May 4, 2011, Ardent Mines acquired Gold Hills Mining Ltda. which owns certain mining rights in Brazil referred to as the Gold Hills Rights (Gold Hills Mining Ltda. subsequently acquired other rights, as described below). The aggregate purchase price paid for Gold Hills Mining Ltda. and the Gold Hills Rights was $350,000 which was recorded as capitalized mining rights in the balance sheet as of December 31, 2012.
Under the terms of the acquisition, additional amounts will be paid pursuant to the results of reserves testing performed on the mining properties. Exploratory drilling is currently occurring at Gold Hills. The Company’s reserves testing includes an economic assessment (a feasibility study). Considering the progress of the exploration campaign and the physical characteristics of the Gold Hills deposit, our expectation is to complete this reserves test between the end of 2014 and early 2015.
Should the reserves testing confirm the existence of gold, silver and byproduct reserves of less than 300,000 equivalent gold ounces, Ardent Mines will not be required to make an additional payment. Should the reserves testing confirm the existence of gold, silver and byproduct reserves between 300,000 and 499,999 equivalent gold ounces; Ardent Mines will be required to pay an additional $400,000 payable within 30 days after completion of a pre-feasibility study. Should the reserves testing confirm the existence of gold, silver and byproduct reserves in excess of 499,999 equivalent gold ounces; Ardent Mines will be required to pay an additional $1,000,000, payable within 30 days after completion of a pre-feasibility study, and $2.00 per additional ounce in excess of 500,000 equivalent gold ounces.
Following the completion of the reserves testing, the Company anticipates that a final exploration report will be submitted to the Brazilian Mining Authority (DNPM) expected to be between late 2014 and early 2015. The approval of this report by the DNPM will trigger the obligation to make the payments described above. Usually, the DNPM takes some months to analyze, check and issue the report approval, so a reasonable forecast for the payment deadline is the second or third quarter of 2014.
7
In addition to the amounts to be paid based upon the reserves testing, Ardent Mines will also be required to pay an additional $700,000 within 30 days from the date that Ardent Mines obtains an environmental installation license. There are three licenses necessary to build and operate a mine. The first one is the “previous license”, which entitles the company to receive its mining concession. This usually takes from 4 to 6 months to be obtained. The second environmental license is the “installation license”, necessary to develop or build the mine. This depends fundamentally on the coherence between the previous license and the engineering project submitted to the licensing authority. Although this process is less complex than the first license, it takes between 8-12 months to be granted. The operation license depends upon the checking and confirmation by the environmental authority that the mine facilities have been built in accordance with the two previous licenses. Normally that license takes less time than the previous ones. Considering government operations and the project location characteristics, the size of the projects and the environmental/economic trade-off of the project, no difficulties are envisaged for the environmental licensing process. It is reasonable to assume that the operational license will be granted between 12 and 18 months after the end of the exploration campaign, projecting the deadline for this payment after the second quarter of 2015.
Once Ardent Mines begins extracting gold, silver or byproduct from the properties, Ardent Mines will be required to pay a monthly royalty equal to 2% of the net income from the sale of the mineral product. Ardent Mines will also be required to invest at least $3,500,000 in Gold Hills Mining Ltda. upon the development of an extensive exploration program.
Carajas Mineral Province or Misty Hills Rights
On October 18, 2011, Gold Hills Mining Ltda., the Company’s wholly owned subsidiary, closed on its acquisition of the mineral rights in 9,000 acres located in the Carajas Mineral Province of Brazil with an option exercise payment of $350,000 made to the Cooperativa dos Produtores de Minerios de Curionópolis (“COOPEMIC”). These rights are referred to as the Serra do Sereno, or “Misty Hills” Rights. During the year ended June 30, 2012, aggregate payments (including the option exercise payment, purchase price and commissions) of $675,492 were made towards this acquisition. An additional payment of $250,000 was made toward this acquisition on November 8, 2012. The aggregate payments are classified on the balance sheet as mining rights as of December 31, 2012.
In addition to the option exercise payment made to COOPEMIC, Ardent Mines has undertaken certain exploration commitments to COOPEMIC. Ardent Mines has also agreed to make subsequent payments to COOPEMIC on the basis of the exploration report and the extent of the extraction of gold, silver, copper and their respective by-products. If Ardent Mines determines it is advisable to continue exploration, Ardent Mines shall pay to COOPEMIC $250,000 after six months of exploration and an additional $150,000 after twelve months of exploration. The $250,000 payment was made on November 8, 2012 and the $150,000 payment is due on April 8, 2013. If Ardent Mines’ exploration activities confirm the existence of gold, silver or copper and their respective by-products in excess of 400,000 gold equivalent ounces, Ardent Mines shall pay to COOPEMIC 30% of $24.00 per gold equivalent ounce ($7.20 per gold equivalent ounce) contained in the mineral reserves in three tranches: (i) one-third shall be paid when the Brazilian National Department of Mineral Production shall approve the final mineral exploration report; (ii) one-third shall be paid upon commencement of the extraction of gold, silver, copper and their respective by-products, contained in the areas covered by the mining rights; and (iii) one-third shall be paid within six months from the date of commencement of the extraction of gold, silver and copper and their respective by-products, contained in the areas covered by the mining rights.
NOTE 4 – NOTES PAYABLE
On March 1, 2012, the Company issued an Amended and Restated Senior Secured Note to CRG Finance AG in the amount of $1,142,900. The Amended and Restated Note consolidates (i) an outstanding convertible note payable to CRG Finance with a principal amount of $750,000 and accrued interest payable to CRG Finance AG of $56,250; (ii) additional advances and loans to the Company of $186,650; and (iii) all advisory fees due and payable to CRG Finance of $150,000. The note is secured by the assets of the Company, bears interest at 7.5% per annum and matures upon 30 days of demand. As of December 31, 2012, the outstanding principal balance of this note was $1,142,900.
8
On March 1, 2012, the Company and CRG Finance AG entered into a commitment letter (the “Commitment Letter”) pursuant to which CRG Finance AG agreed to provide the Company with up to $1,000,000 to maintain the Company’s ordinary course of business operations. The Commitment Letter was intended to facilitate funding for the Company as a supplement to the prior commitment of CRG Finance AG in the amount of One Million U.S. Dollars (USD $1,000,000) that was contained in the Corporate Development Services Agreement between CRG Finance AG and the Company, dated September 27, 2010, of which $1,000,000 has been drawn by the Company as of the date of this Report.
Between March and December of 2012, the Company borrowed an aggregate of $1,000,000 from CRG Finance AG which is the maximum allowed under the Commitment Letter. The loan is secured by the assets of the Company, bears interest at 7.5% per annum and matures 30 days after demand following the first anniversary of the date of the loans.
On April 3, 2012, the Company borrowed $250,000 from Tumlins Trade, Inc. The loan is unsecured, bears interest at 7.5% per annum and matures upon 30 days of demand following the first anniversary of the date of such note.
On June 18, 2012, the Company borrowed $300,000 from Volodymyr Khopta. The loan is unsecured, bears interest at 7.5% per annum and shall be due upon thirty (30) days notice and demand following the first anniversary of the date of such note.
On November 13, 2012, the Company borrowed an additional $55,000 from Volodymyr Khopta. The loan is unsecured, bears interest at 7.5% per annum and matures upon 30 days of demand following the first anniversary of the date of such note. This loan was subsequently modified whereby a conversion option was added to the loan. The loan is convertible into common stock of the Company at $0.10 per share. The Company evaluated the modification and determined that it does not qualify as an extinguishment of debt because the conversion option is not substantive. There was no gain or loss on the modification.
On November 14, 2012, the Company borrowed and additional $250,000 from Tumlins Trade, Inc. The loan is unsecured, bears interest at 7.5% per annum and matures upon 30 days of demand following the first anniversary of the date of such note.
On November 19, 2012, the Company borrowed $75,000 from Galyna Vynnyk. The loan is unsecured, bears interest at 7.5% per annum and matures upon 30 days of demand following the first anniversary of the date of such note.
On December 21, 2012, the Company entered into an agreement with Tumlins Trade, Inc. pursuant to which the outstanding principal owed to Tumlins of $500,000 and the accrued interest on these notes of $15,154 was extinguished through the issuance of an aggregate of 20,606,164 common shares. The issuance of these common shares resulted in a change in control with Tumlins Trade, Inc. owning more than 50% of the issued and outstanding common stock of the Company.
In connection with the loans from Tumlins Trade, Inc., Volodymyr Khopta and Galyna Vynnyk, the Company incurred commissions totaling $93,000. These commissions were recorded as deferred financing costs and are being amortized over the life of the loans using the effective interest rate method. As of December 31, 2012, the commissions were unpaid and accrued. Amortization expense of $35,436 was recorded during the six months ended December 31, 2012.
NOTE 5 – DERIVATIVE LIABILITIES
As of December 31, 2012, Ardent Mines has an aggregate of 277,923 outstanding warrants containing exercise price reset provisions which requires derivative treatment under FASB ASC 815-15. The warrants were originally issued on September 7, 2011.
The fair value of these liabilities as of September 7, 2011, June 30, 2012 and December 31, 2012 totaled $625,829, $301,249 and $2,249, respectively and was calculated using a lattice model. The net change in the fair value of these derivative liabilities during the six months ended December 31, 2012 resulted in a gain on the change in the fair value of derivatives of $299,000.
Fair Value Measurement
Ardent Mine’s values its derivative instruments under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
9
As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Ardent utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. Ardent classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy defined by ASC 820 are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.
Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Ardent Mine’s uses Level 3 to value its derivative instruments.
The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on December 31, 2012.
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Level 1 |
Level 2 |
Level 3 |
Total | ||||
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Assets |
|||||||
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None |
$ - |
$ - |
$ - |
$ - | |||
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Liabilities |
|||||||
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Derivative liabilities |
$ - |
$ - |
$ 2,249 |
$ 2,249 |
The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments measured at fair value on a recurring basis using significant unobservable inputs:
|
Derivative Warrants | |
|
Fair value at June 30, 2012 |
$ 301,249 |
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Fair value of warrants issued |
- |
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Change in fair value of derivative liabilities |
(299,000) |
|
Fair value at December 31, 2012 |
$ 2,249 |
NOTE 6 – STOCKHOLDERS’ EQUITY
Common Stock
On December 21, 2012, the Company entered into an agreement with Tumlins Trade, Inc. pursuant to which the outstanding principal owed to Tumlins of $500,000 and the accrued interest on these notes of $15,154 was extinguished through the issuance of an aggregate of 20,606,164 common shares. The issuance of these common shares resulted in a change in control with Tumlins Trade, Inc. owning more than 50% of the issued and outstanding common stock of the Company.
10
Common Stock Options
On May 12, 2011, the Company granted its Board members an aggregate of 1,300,000 stock options exercisable at $4.75 per share. The options vest 25% upon grant and an additional 25% vests each six months from the date of the grant. The fair value of the options was determined to be $5,368,121 using the Black-Scholes Option Pricing Model. The significant assumptions used in the model include (1) discount rate of 0.98%, (2) expected terms between 2.5 and 3.25 years (3) expected volatilities between 165.66% and 198.46% and (4) zero expected dividends. The fair value is being expensed over the vesting period of the options. During the six month ended December 31, 2012, a total of $148,696 was expensed under this grant. As of December 31, 2012, all options under this agreement have been expensed.
On February 24, 2012, the Company granted its Board members an aggregate of 1,300,000 stock options exercisable at $0.13 per share. The options vest 25% upon grant and an additional 25% vests each six months from the date of the grant. The fair value of the options was determined to be $218,045 using the Black-Scholes Option Pricing Model. The significant assumptions used in the model include (1) discount rate of 0.43%, (2) expected terms between 2.5 and 3.25 years (3) expected volatilities of 187.95% and (4) zero expected dividends. The fair value is being expensed over the vesting period of the options. During the six months ended December 31, 2012, $62,716 was expensed under this grant. A total of $32,259 will be expensed over the remaining vesting period.
On July 1, 2012, the Company granted Alexey Kotov, its Chief Exploration Geologist and Exploration Vice President of Gold Hills Limited and Stan Bezusov, its Investor Relations Manager, an aggregate of 300,000 common stock options (150,000 each) exercisable at $0.13 per share. The options vest 25% upon grant and an additional 25% vests each six months from the date of the grant. The fair value of the options was determined to be $222,638 using the Black-Scholes Option Pricing Model. The significant assumptions used in the model include (1) discount rate of 0.35%, (2) expected terms between 2.5 and 3.25 years (3) expected volatilities of 195.79% and (4) zero expected dividends. The fair value is being expensed over the vesting period of the options. During six months ended December 31, 2012, $157,107 was expensed under this grant. A total of $65,531 will be expensed over the remaining vesting period.
A summary of option activity for the six months period ended December 31, 2012 is reflected below:
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Options |
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Weighted- Average Exercise Price |
| |||
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Outstanding at June 30, 2012 |
1,850,000 |
|
|
$ |
1.50 |
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Granted |
300,000 |
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|
0.13 |
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| |
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Canceled |
- |
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|
- |
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| |
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Forfeited |
- |
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|
- |
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| |
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Outstanding at December 31, 2012 |
2,150,000 |
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|
$ |
1.31 |
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|
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Exercisable at December 31, 2012 |
1,275,000 |
|
|
$ |
2.12 |
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|
At December 31, 2012, the range of exercise prices and the weighted average remaining contractual life of the options outstanding were $0.13 to $4.75 and 4.65 years, respectively. The intrinsic value of the exercisable options outstanding at December 31, 2012 was $0.
11
Common Stock Warrants
A summary of warrant activity for the three month period ended December 31, 2012 is reflected below:
|
|
Warrants |
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Weighted- Average Exercise Price |
| |||
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Outstanding at June 30, 2012 |
287,923 |
|
|
$ |
4.14 |
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|
|
Granted |
- |
|
|
- |
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| |
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Canceled |
- |
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|
- |
|
| |
|
Expired/Forfeited |
(10,000) |
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|
3.85 |
|
| |
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Outstanding at December 31, 2012 |
277,923 |
|
|
$ |
4.15 |
|
|
|
Exercisable at December 31, 2012 |
277,923 |
|
|
$ |
4.15 |
|
|
At December 31, 2012, the exercise price and the weighted average remaining contractual life of the warrants outstanding were $4.15 and 3.56 years, respectively. The intrinsic value of the warrants exercisable at December 31, 2012 was $0.
NOTE 7- RELATED PARTY TRANSACTIONS
As of December 31, 2012 the Company had outstanding advances to employees totaling $51,434. The advances bear no interest, are due on demand and are to be used for future business expenses.
NOTE 8 – SUBSEQUENT EVENTS
On January 4, 2013, the Company’s Board of Directors approved a reverse stock split pursuant to which each one hundred (100) shares of our Common Stock issued and outstanding immediately prior to the record date will automatically and without any action on the part of the stockholders be converted into one share of our Common Stock. The Company’s Board of Directors also approved changing the name of the Company to Gold Hills Mining, Ltd. As of the date of the filing of this Report, neither the name change nor the reverse stock split have been effected. Accordingly, the share and per share amounts herein have not been retroactively restated to reflect the reverse stock split.
On January 29, 2013, the Company borrowed an additional $100,000 from Tumlins Trade, Inc. under a convertible promissory note. The loan is unsecured, bears interest at 7.5% per annum and matures upon 30 days of demand following the first anniversary of the date of such note. After the reverse stock split referred to above becomes effective, this loan is convertible into common stock at $0.10 per share. The $0.10 per share conversion rate is a post-split price that will not otherwise adjust for the stock split.
12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Report”). This Report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act.
Unless otherwise provided in this Report, references to the “Company,” the “Registrant,” the “Issuer,” “we,” “us,” and “our” refer to Ardent Mines Limited.
Corporate Information
We were incorporated in the State of Nevada on July 27, 2000. We are presently engaged in the acquisition and exploration of mining properties. The Company’s address is 100 Wall Street, 10th Floor, New York, NY 10005. The Company’s telephone number is (516) 620-9065.
Background
In August 2000, we acquired the right to prospect one mineral property containing eight mining claims located on Copperkettle Creek in British Columbia, Canada. We have allowed these claims to lapse. From August 26, 2006 to December 11, 2006, we did not conduct any operations. During that period, we intended to identify an acquisition or merger candidate with ongoing operations in any field. However in December 2006 we decided to acquire the right to explore a new property in British Columbia and returned to the business of mineral exploration. On April 30, 2009, the Company decided not to renew certain claims, and later determined not to pursue its remaining claim in Canada. The Company subsequently determined to pursue other mining development opportunities.
The Company’s Current Business Operations
The Company’s most significant achievement to date has been its acquisition of Gold Hills Mining Ltda., as described below.
Gold Hills Mining Ltda.
In January of 2011, we entered into a term sheet to acquire Gold Hills Mining Ltda. (“Gold Hills”), a Brazilian corporation which possesses rights for mineral extraction on properties located in Northeastern Brazil. After the completion of due diligence, on May 4, 2011, we acquired Gold Hills pursuant to a Purchase Agreement (the “Purchase Agreement”) by and between the Company, Gold Hills and the two shareholders of Gold Hills (such shareholders are referred to herein as the “Sellers”). Pursuant to the Purchase Agreement, the Sellers have sold us One Hundred Percent (100%) of all the issued and outstanding equity interests (the “Shares”) of Gold Hills. The Company has agreed to explore the Gold Hills property, and, if certain gold reserves are established, to make investments and pay additional sums to the Sellers, as set forth in the Purchase Agreement.
13
On July 2, 2012, the Company announced the commencement of geological exploration work at the Gold Hills project. Para Geoexperts Ltda., a Brazilian geological services company, was hired to implement a full review and detailing of the geological mapping and exploration target investigation in the Gold Hills Project, with the goal of preparing a drilling campaign. Seven priority exploration targets have been defined. The Company has also invested in building the necessary infrastructure for the exploration in order to meet both its operational needs and the security standards establish by Brazilian law. The exploration work has included extensive sampling, topography surveying, and detailed geological mapping of the surface and of old mine galleries at the property. To perform these activities, during the last two calendar quarters of 2012, the Company has utilized the services of 35 professionals, most of which were outsourced (from service companies) or hired on a temporary basis, including three geologists, exploration technicians and field assistants.
On August 16, 2012, the Company announced that it has contracted Drilrent Ltd., a Brazilian-based company, to commence an exploratory drilling campaign at Gold Hills. The drilling program is anticipated to cost approximately $700,000. Based on the maps and parameters established by the technical work developed by the geological detailing works, since July of 2012, a 3,000 meter drilling campaign has started, aiming to define the mineralization in the sub-surface. The campaign’s first phase was concluded in December 2012, with 1,604 meters drilled through 11 drill holes, and shall continue after the analysis of the drill cores (chemical and geological parameters) and the checking of the parameters for the implementation of the second phase. The drill cores has been sampled and the samples sent for the analysis to international accredit laboratory (ACME Labs), and the results are being currently processed and analyzed in order to plan the next exploration steps, in particular the second phase campaign.
Acquisition of Mineral Rights in Brazil’s Carajás Mining District in the State of Para, Brazil
The Company announced on October 24, 2011 that Gold Hills Mining Ltda., its wholly owned Brazilian subsidiary, has, effective October 18, 2011, closed on its acquisition of the mineral rights in a highly mineralized area of 9,000 Hectares located in the Carajas Mineral Province, State of Para, with an option exercise payment of $350,000 plus additional payments totaling $107,756 made to the Cooperativa dos Produtores de Minerios de Curionópolis (“COOPEMIC”). The Company refers to this property as Serra do Sereno, or Misty Hills.
The Serra dos Carajás Mineral Province is a distinct geologic dominium, well known worldwide for hosting Brazil’s largest iron, copper and gold deposits. The Company plans to begin the initial exploration campaign at Misty Hills as soon as financing for the project can be obtained. The Company has agreed, under the Option Agreement, to expend a minimum of $5,000,000 in the exploration of the applicable mining rights area. The Company expects that the initial campaign will cost between $5,000,000 and $10,000,000.
In addition to the option exercise payment made to COOPEMIC, the Company has undertaken certain exploration commitments to COOPEMIC. The Company has also agreed to make subsequent payments to COOPEMIC on the basis of the exploration report and the extent of the extraction of gold, silver, copper and their respective by-products.
On August 23, 2012, the Company announced that the Brazilian National Department of Minerals Production has completed the legal procedures required to transfer to the Company the exploration rights for the Company’s Misty Hills property. Currently, the environmental report and impact studies necessary to obtain the exploration license, mandatory in Para State, are being developed and shall be submitted to the state environmental authority by March 2013, in order to allow the start of the field work by early April 2013.
Plan of Operation
There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations.
The Company anticipates that it will require approximately $4,000,000 over the next twelve months to develop the Gold Hills project according to the Company’s plans. As of December 31, 2012, the Company had $28,150 in cash on hand. The Company will be seeking equity financing to provide the capital required to implement its exploration phase.
Should the Company develop additional mining projects, the Company will require additional funds in amounts to be determined.
14
Results of Operations
Losses
For the Three Month Period Ended December 31, 2012 and December 31, 2011
During the three month period ended December 31, 2012, we incurred a net loss of $790,665, as compared to the three month period ended December 31, 2011, in which we incurred a net loss of $2,321,330.
For the Six Month Period Ended December 31, 2012 and December 31, 2011
During the six month period ended December 31, 2012, we incurred a net loss of $1,406,421, as compared to the six month period ended December 31, 2011, in which we incurred a net loss of $4,396,878.
Losses Since Inception
From the Company’s inception through December 31, 2012, we did not earn any revenues and incurred a net loss of $13,551,115.
Expenses
For the Three Month Period Ended December 31, 2012 and December 31, 2011
During the three months ended December 31, 2012 we incurred total operating expenses of $769,309, which included $138,791 in executive and directors compensation, $9,697 in consulting fees, $43,523 in legal and accounting fees, $50,000 in investment banking services and $527,298 in other general and administrative fees. Comparatively, during the same period in 2011, we incurred total expenses of $2,840,608, which included $2,246,090 in executive compensation, $21,866 in consulting fees, $227,221 in legal and accounting fees, $5,068 in marketing expenses, $120,000 in investment banking services, $150,606 in other general and administrative fees, and $69,757 for travel expenses.
For the Six Month Period Ended December 31, 2012 and December 31, 2011
During the six months ended December 31, 2012 we incurred total operating expenses of $1,583,405 which included $408,541 in executive and directors compensation, $66,395 in consulting fees, $91,370 in legal and accounting fees, $150,000 in investment banking services, $797,099 in other general and administrative fees and $70,000 in marketing fees. Comparatively, during the same period in 2011, we incurred total expenses of $4,958,748 which included $3,629,885 in executive compensation, $80,104 in consulting fees, $460,398 in legal and accounting fees, $5,068 in marketing expenses, $120,000 in investment banking services, $428,653 in other general and administrative fees, and $234,640 for travel expenses.
Since Inception
Since the inception of the Company on July 27, 2000, we have incurred total operating expenses of $14,000,935 which included $3,296,213 in consulting fees, $6,750,690 in executive and director compensation, $708,560 in investment banking services, $1,311,037 in legal and accounting fees, $1,320,565 in other general and administrative fees, $161,148 in marketing, $30,788 in mining and exploration, and $421,934 for travel expenses.
15
Liquidity and Capital Resources
As of December 31, 2012, we had total assets of $1,357,154, including total current assets of $173,395, property and equipment, net of accumulated depreciation of $29,075, and mining rights of $1,154,684. The Company’s total current assets included cash and cash equivalents of $28,150, employee advances of $51,434, prepaid expenses of $36,247 and deferred financing costs of $57,564. Total assets declined from June 30, 2012, at which time we had total assets of $1,265,426, including total current assets of $339,165, property and equipment, net of accumulated depreciation of $27,684, and mining rights of $898,577. The Company’s total current assets included cash and cash equivalents of $287,052, employee advances of $48,571 and prepaid expenses of $3,542.
The Company’s total liabilities at December 31, 2012 were $3,337,338, which was an increase from June 30, 2012, at which time the Company’s liabilities were $2,730,665. The Company’s total liabilities at December 31, 2012 included accounts payable and accrued liabilities of $762,189, notes payable of $2,517,900, convertible notes payable of $55,000 and derivative liability of $2,249. The Company’s total liabilities at June 30, 2012 included accounts payable and accrued liabilities of $606,516, notes payable of $1,822,900 and derivative liability of $301,249.
As of the date of this Report, we have yet to generate any revenues from our business operations. The Company has raised funds through the sale of equity and borrowing. The Company will need to raise additional capital to commence operations. The amount of capital required will be determined by the size and nature of the mining projects which the Company may commence in the future. We have no assurance that financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Any equity financing we may pursue will result in additional dilution to existing shareholders.
The Company will require significant additional funding in order to conduct proposed operations for the next year. The amount of funding required will be determined by the number of acquisitions of mining properties the Company engages in during such time.
On March 1, 2012, the Company and CRG Finance AG entered into a commitment letter (the “Commitment Letter”) pursuant to which CRG Finance AG agreed to provide the Company with up to One Million U.S. Dollars (USD $1,000,000) to maintain the Company’s ordinary course of business operations. The Commitment Letter was intended to facilitate funding for the Company as a supplement to the prior commitment of CRG Finance AG in the amount of One Million U.S. Dollars (USD $1,000,000) that was contained in the Corporate Development Services Agreement between CRG Finance AG and the Company, dated September 27, 2010, of which $1,000,000 has been drawn by the Company as of the date of this Report.
Between March and December of 2012, the Company borrowed an aggregate of $1,000,000 from CRG Finance AG which is the maximum allowed under the Commitment Letter. No further funds remain available under the Commitment Letter. The loan is secured by the assets of the Company, bears interest at 7.5% per annum and matures 30 days after demand following the first anniversary of the date of the loans.
On November 13, 2012, the Company borrowed $55,000 from Volodymyr Khopta. The loan is unsecured, bears interest at 7.5% per annum and upon thirty (30) days of demand following the first anniversary of the date of such note. This loan was subsequently modified whereby it became convertible at the holder’s option into common stock at $0.10 per share.
On November 14, 2012, the Company borrowed $250,000 from Tumlins Trade Inc. This loan was subsequently converted into restricted shares of the Company’s common stock pursuant to the Conversion Agreement described below.
On November 19, 2012, the Company borrowed $75,000 from Galyna Vynnyk. The loan is unsecured, bears interest at 7.5% per annum and upon thirty (30) days of demand following the first anniversary of the date of such note.
On December 21, 2012, the Company entered into an agreement with Tumlins Trade Inc. pursuant to which certain amounts owed by the Company to Tumlins Trade Inc. were converted into restricted shares of the Company’s common stock (the “Conversion Agreement”). The Company previously issued two Promissory Notes to Tumlins Trade Inc., dated as of April 3, 2012 and November 14, 2012, pursuant to which the Company owed principle in the amount of Five Hundred Thousand Dollars ($500,000) and interest totaling Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($15,154.11) (collectively, the “Loans”). The principle and interest of the Loans totaling Five Hundred and Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($515,154.11) were converted into Twenty Million Six Hundred and Six Thousand One Hundred and Sixty-Four (20,606,164) restricted shares of the Company’s common stock, par value $.00001 per share (the “Shares”).
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Employees and Directors
Since June of 2012, we have utilized the services of Para Geoexperts for certain tasks at the Gold Hills project as needed. The Company’s staff has includes one employee in the United States, one in Brazil and two in Europe (the Company’s Chief Exploration Geologist / Exploration Vice President of Gold Hills Ltda. and the Company’s Investor Relations Manager). The Company has also hired two independent consultants, a geologist and an exploration technician. In addition, the Company has announced that it has contracted Drilrent Ltd., a Brazilian-based company, to commence an exploratory drilling campaign at Gold Hills, and certain work at Gold Hills will be conducted by temporary employees of Drilrent. The Gold Hills project is currently staffed by 35 technicians, laborers and geologists at any given time, including Mr. Borges, the Company’s consultants, and employees of Para Geoexperts and Drilrent.
The Company has created an Advisory Board to assist the Company’s Board of Directors. The first two specialists to join the new Advisory Board are Yuriy Safonov and Boris Bogatyrev. Mr. Safonov, a Ph.D, has been a Professor of Geology-Mineralogy Sciences at the Russian Academy of Mineral Sciences in Moscow since 1991 and is a member of the International Association on Genesis of Ore Deposits (IAGOD). He has more than 40 years of experience in the study of gold-ore deposits, specifically in the field of endogenous gold deposits in all regions of the world and has had more than 200 scientific papers published. Mr. Bogatyrev graduated as an Engineer-Geologist from the Moscow State Institute of Nonferrous Metals and Gold, specializing in the study of the geology and exploration of rare and radioactive ores. He is currently the Senior Scientist at the Institute of Ore Deposits Geology, Petrography, Mineralogy and Geochemistry at the Russian Academy of Sciences. Mr. Bogatyrev has had more than 200 scientific papers published, including nine monographs. Each of Mr. Safonov and Mr. Bogatyrev shall be compensated at a rate of $500 per month.
Recent accounting pronouncements
Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.
Off Balance Sheet Arrangements
As of December 31, 2012, we did not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Subsequent Events
On January 25, 2013, the Company filed a Definitive Information Statement on Schedule 14C (the “Information Statement”) disclosing that the Company’s Board of Directors and the holder of a majority of the Company’s outstanding shares of Common Stock have approved resolutions to take the following corporate actions:
I. Amend Article 1 of the Company’s Articles of Incorporation by changing the Company’s name from “Ardent Mines Limited” to “Gold Hills Mining, Ltd.” (the “Name Change”).
II. To file a Certificate of Change with the State of Nevada to effect a one (1) for one hundred (100) reverse stock split of the Company’s issued and outstanding shares (this action is referred to herein as the “Reverse Stock Split”). Any fractional shares resulting from the Reverse Stock Split will be rounded up to the nearest whole share.
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The Name Change and Reverse Stock Split (collectively, the “Corporate Actions”) are described in greater detail in the Information Statement. As of the date of this Report, these actions have not yet been effected. The Company intends to complete these Corporate Actions during the month of February, 2013.
On January 29, 2013, the Company borrowed an additional $100,000 from Tumlins Trade Inc. The loan is unsecured, and bears interest at 7.5% per annum. This loan is payable on demand after the first anniversary, upon thirty (30) days notice. Tumlins Trade Inc. In lieu of repayment of such loan in cash, Tumlins Trade Inc., at its sole option and discretion may convert such note and request the Company to repay any or all of the principal and interest in the form of restricted common stock of the Company at a price per share equal to Ten Cents (US $0.10) (the “Conversion Price”). Such Conversion Price shall be effective after the completion of the Reverse Stock Split.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this Report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures in ensuring that information required to be disclosed by the Company in its reports is recorded, processed, summarized and reported within the required time periods. Based on their evaluation of the Company’s disclosure controls and procedures as of December 31, 2012, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of that date, the Company’s controls and procedures were not effective for the purposes described above.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended December 31, 2012 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Not Applicable.
Not Applicable.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On December 21, 2012, the Company entered into an agreement with Tumlins Trade Inc. pursuant to which certain amounts owed by the Company to Tumlins Trade Inc. were converted into restricted shares of the Company’s common stock (the “Conversion Agreement”). The Company previously issued two Promissory Notes to Tumlins Trade Inc., dated as of April 3, 2012 and November 14, 2012, pursuant to which the Company owed principle in the amount of Five Hundred Thousand Dollars ($500,000) and interest totaling Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($15,154.11) (collectively, the “Loans”). The principle and interest of the Loans totaling Five Hundred and Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($515,154.11) were converted into Twenty Million Six Hundred and Six Thousand One Hundred and Sixty-Four (20,606,164) restricted shares of the Company’s common stock, par value $.00001 per share (the “Shares”). The Loans were converted into shares of the Company’s common stock, at a conversion price equal to Fifty Percent (50%) of the Twenty (20) day average closing price of the Company’s common stock as of December 18, 2012, which is equal to $0.025 per share. The issuance of the Shares was made to a non-U.S. person and was undertaken by the Company in reliance upon the exemption from securities registration under Regulation S of the U.S. Securities Act of 1933, as amended. Following the issuance of the Shares, Tumlins Trade Inc. now owns 55.3% of the Company’s issued and outstanding common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES
This item is not applicable, as the Company does not own or operate mining operations in the United States. The Company plans to conduct its operations outside of the United States.
On December 21, 2012, in connection with the Conversion Agreement entered into with Tumlins Trade Inc., a change in control of the Company has occurred. Following the issuance of the Shares, Tumlins Trade Inc. now owns 55.3% of the Company’s issued and outstanding common stock.
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ITEM 6. EXHIBITS.
The following documents are included herein:
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Exhibit No. |
Document Description | ||
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Exhibit 10.31 |
Promissory Note to Tumlins Trade Inc. in the amount of $250,000, dated November 14, 2012, incorporated by reference to Exhibit 10.31 to the Company’s Amended Quarterly Report on Form 10-Q/A, filed with the Securities and Exchange Commission on November 21, 2012. | ||
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Exhibit 10.32 |
Promissory Note to Volodymyr Khopta in the amount of $55,000, dated November 13, 2012, incorporated by reference to Exhibit 10.32 to the Company’s Amended Quarterly Report on Form 10-Q/A, filed with the Securities and Exchange Commission on November 21, 2012. | ||
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Exhibit 10.33 |
Promissory Note to Galyna Vynnyk in the amount of $75,000, dated November 19, 2012. | ||
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Exhibit 10.34 |
Conversion Agreement, by and between the Company and Tumlins Trade Inc., dated as of December 21, 2012. | ||
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Exhibit 10.35 |
Convertible Promissory Note to Tumlins Trade Inc. in the amount of $100,000, dated January 29, 2013. | ||
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Exhibit 31.1 |
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
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Exhibit 31.2 |
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
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Exhibit 32.1 |
Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
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Exhibit 32.2 |
Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
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Exhibit 101 |
Interactive Data Files | ||
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101.INS – XBRL Instance Document | ||
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101.SCH - XBRL Taxonomy Schema | ||
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101.CAL - XBRL Taxonomy Calculation Linkbase | ||
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101.DEF - XBRL Taxonomy Definition Linkbase | ||
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101.LAB - XBRL Taxonomy Label Linkbase | ||
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101.PRE - XBRL Taxonomy Presentation Linkbase | ||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ARDENT MINES LIMITED (Registrant) | |
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By: |
/s/ URMAS TURU |
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Name: Urmas Turu |
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Title: Interim Chief Executive Officer, Principal Executive Officer and Director |
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By: |
/s/ GABRIEL MARGENT |
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Title: Chief Financial Officer, Director, Principal Financial Officer and Principal Accounting Officer |
Dated: February 12, 2013
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Exhibit 10.33
ARDENT MINES LIMITED
PROMISSORY NOTE
US$ 75,000.00 November 19th , 2012
1. FOR VALUE RECEIVED, Ardent Mines Limited, a Nevada corporation (the “Borrower”), hereby promises to pay to the order of the undersigned lender (“Lender”), at such time, place and in such manner as Lender may specify in writing, the principal amount of Seventy Five Thousand Dollars (US$ 75,000.00) (the “Principal”) pursuant to the terms and conditions specified herein (this “Note”). The Borrower shall pay interest on the outstanding principal of this Note at the annual rate of 7.5% per annum, calculated based on a year of 365 days and actual days elapsed (the “Interest”).
2. The Borrower hereby promises to pay to the order of the Lender the Principal and all Interest due thereon at any time after the first anniversary of the date hereof within thirty calendar (30) days of this Note upon delivery to the Borrower of written demand by the Lender (the “Due Date”), at such place and in such manner as Lender may specify in writing.
3. Any and all fees, costs, expenses and disbursements charged by financial institutions with respect to wire transfer or other transmittal charges incurred in connection with delivery of the Principal from the Lender to the Borrower shall be deemed to have been received by the Borrower from the Lender and all such amounts shall be included in the calculation of Principal hereunder.
4. This Note shall not be transferable by Borrower and the Borrower may not assign, transfer or sell all or a portion of its rights and interests to and under this Note to any persons and any such purported transfer shall be void ab initio. The Lender may transfer and assign this Note at its sole discretion.
5. The failure at any time of the Lender to exercise any of its options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of its options or rights at a later date. All rights and remedies of the Lender shall be cumulative and may be pursued singly, successively or together, at the option of the Lender. The acceptance by the Lender of any partial payment shall not constitute a waiver of any default or of any of the Lender's rights under this Note. No waiver of any of its rights hereunder, and no modification or amendment of this Note, shall be deemed to be made by the Lender unless the same shall be in writing, duly signed on behalf of the Lender; and each such waiver shall apply only with respect to the specific instance involved, and shall in no way impair the rights of the Lender in any other respect at any other time.
6. Any term or condition of this Note may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition.
Page 1 of 4
Ardent Mines Limited Promissory Note
7. The Borrower represents and warrants that this Note is the valid and binding obligation of the Borrower, fully enforceable in accordance with its terms. The execution and delivery by the Borrower of this Note, the performance by the Borrower of its obligations hereunder and the consummation of the transactions contemplated hereby and thereby does not and will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Borrower’s charter instruments; (b) conflict with or result in a violation or breach of any term or provision of any law or order applicable to the Borrower or any of its assets and properties; or (c) (i) conflict with or result in a violation or breach of, or (ii) result in or give to any person any rights or create any additional or increased liability of the Borrower under or create or impose any lien upon, the Borrower or any of its assets and properties under, any contract or permit to which the Borrower is a party or by which its assets and properties are bound.
8. If any provision of this Note is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any party hereto under this Note will not be materially and adversely affected thereby, (i) such provision will be fully severable; (ii) this Note will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; (iii) the remaining provisions of this Note will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from; and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Note a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.
9. Any notice, authorization, request or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given two days after it is sent by an internationally recognized delivery service to the address of record of the Lender or the Borrower, respectively. Any party may change its address for such communications by giving notice thereof to the other parties in conformity with this Section.
10. This Note shall be governed by and construed under the laws of the state of New York as applied to agreements entered into and to be performed entirely within such State. Each party hereby irrevocably consents to the jurisdiction of the courts of any competent jurisdiction over one or more of the parties. In any such litigation the Borrower waives personal service of any summons, complaint or other process and agrees that the service thereof may be made by certified or registered mail directed to the registered corporate office of Borrower. The Borrower hereby expressly waives trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Note or the validity, protection, interpretation, collection or enforcement hereof and the Borrower hereby waives the right to interpose any setoff or non-compulsory counterclaim or cross-claim in connection with any such litigation, irrespective of the nature of such setoff, counterclaim or cross-claim.
11. A default shall exist on this Note if any of the following occurs and is continuing: (i) Failure to pay Principal and any accrued Interest on the Note on or before the Due Date; (ii) Failure by the Borrower to perform or observe any other covenant or agreement of the Borrower contained in this Note; (iii) A custodian, receiver, liquidator or trustee of the Borrower, or
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Ardent Mines Limited Promissory Note
any other person acting under actual or purported force of law takes ownership, possession or title to Borrower property; (iv) any of the property of the Borrower is sequestered by court order; (v) a petition or other proceeding, voluntary or otherwise is filed by or against the Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or (vi) the Borrower makes an assignment for the benefit of its creditors, or generally fails to pay its obligations as they become due, or consents to the appointment of or taking possession by a custodian, receiver, liquidator or trustee of the Borrower or all or any part of its property. Upon any such default, the Borrower shall immediately notify the Lender, and upon notice to the Borrower, the Lender may declare the Principal of the Note, plus accrued Interest, to be immediately due and payable, upon which such Principal and accrued Interest shall become due and payable immediately. Interest upon default shall thereafter accrue at the rate of 15% per annum, calculated based on a year of 365 days and actual days elapsed from the date of such default.
12. The Borrower, any endorser, or guarantor hereof or in the future (individually an “Obligor” and collectively “Obligors”) and each of them jointly and severally: (a) waive presentment, demand, protest, notice of demand, notice of intent to accelerate, notice of acceleration of maturity, notice of protest, notice of nonpayment, notice of dishonor, and any other notice required to be given under the law to any Obligor in connection with the delivery, acceptance, performance, default or enforcement of this Note, any endorsement or guaranty of this Note, any pledge, security, guaranty or other documents executed in connection with this Note; (b) consent to all delays, extensions, renewals or other modifications of this Note, or waivers of any term hereof or thereof, or release or discharge by the Lender of any of Obligors, or release, substitution or exchange of any security for the payment hereof, or the failure to act on the part of the Lender or any indulgence shown by the Lender (without notice to or further assent from any of Obligors), and agree that no such action, failure to act or failure to exercise any right or remedy by the Lender shall in any way affect or impair the Obligations (as hereinafter defined) of any Obligors or be construed as a waiver by the Lender of, or otherwise affect, any of the Lender's rights under this Note, under any endorsement or guaranty of this Note; (c) if the Borrower fails to fulfill its obligations hereunder when due, agrees to pay, on demand, all costs and expenses of enforcement of collection of this Note or of any endorsement or guaranty hereof and/or the enforcement of the Lender's rights with respect to, or the administration, supervision, preservation, protection of, or realization upon, any property securing payment hereof, including, without limitation, all attorney's fees, costs, expenses and disbursements, including, without further limitation, any and all fees related to any legal proceeding, suit, mediation arbitration, out of court payment agreement, trial, appeal, bankruptcy proceedings or any other actions of any nature whatsoever required on the part of Lender or Lender’s representatives to enforce this Note and the rights hereunder; and (d) waive the right to interpose any defense, set-off or counterclaim of any nature or description.
13. The Borrower will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Borrower, but
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Ardent Mines Limited Promissory Note
will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Lender of this Note against impairment. This Note shall be enforceable against all successors and assigns of Borrower. Borrower hereby covenants that all of its subsidiaries and affiliates shall jointly and severally perform this Note to the same and full extent on behalf of Borrower if Borrower is unable to perform.
14. This Note supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.
15. If the Lender loses this Note, the Borrower shall issue an identical replacement note to the Lender upon the Lender's delivery to the Borrower of a customary agreement to indemnify the Borrower reasonably satisfactory to the Borrower for any losses resulting from issuance of the replacement note.
16. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Note, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Note, except as expressly provided in this Note.
17. This Note may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same document. This Agreement may be executed and delivered via facsimile or scanned electronic signature which shall be an original for all purposes.
IN WITNESS WHEREOF, the Borrower has caused this Note to be dated, executed and issued on its behalf, by its duly appointed and authorized officer, as of the date first above written.
ARDENT MINES LIMITED
By: /s/ URMAS TURU
Name: Urmas Turu
Title: Chief Executive Officer
LENDER:
By: /s/ GALYNA VYNNYK
Name: Galyna Vynnyk
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Exhibit 10.34
CONVERSION AGREEMENT
This Conversion Agreement, dated as of the date set forth below (this “Agreement”), by and between Ardent Mines Limited (the “Company”) and Tumlins Trade Inc. (“Tumlins Trade,” and together with the Company, collectively, the “Parties”).
Whereas, Tumlins Trade has loaned the Company an aggregate of Five Hundred Thousand Dollars ($500,000) in principle amount to the Company, which, through the date of this Agreement, have accrued interest in the amount of Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($15,154.11) (the aggregate of all such principle and interest, collectively, the “Loans”);
Whereas, the Company has issued two Promissory Notes to Tumlins Trade Inc. in connection with the Loans, dated as of April 3, 2012 and November 14, 2012 which collectively have a value, including interest accrued thereon through the date of this Agreement, in the amount of Five Hundred and Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($515,154.11) (the “Promissory Notes”);
Whereas, the Parties have determined that it is in their mutual best interest to convert any and all amounts due and owed pursuant to the Promissory Notes into shares of the Company’s common stock, at a conversion price equal to Fifty Percent (50%) of the Twenty (20) day average closing price of the Company’s common stock as of December 18, 2012;
Whereas, Fifty Percent (50%) of the Twenty (20) day average closing price of the Company’s common stock is equal to Two and One Half Cents ($0.025) as of December 18, 2012;
Whereas, Tumlins Trade and the Company desire to settle and release any and all obligations and liabilities due to Tumlins Trade by the Company for the agreed-upon amount of Five Hundred and Fifteen Thousand One Hundred and Fifty-Four Dollars and Eleven Cents ($515,154.11) (the “Loan Amount”) and conversion of such Loan Amount into Twenty Million Six Hundred and Six Thousand One Hundred and Sixty-Four (20,606,164) restricted shares of the Company’s common stock, par value $.00001 per share, pursuant to the terms and conditions of this Agreement (the “Conversion”); and
Whereas, in connection with the Conversion, the Company and Tumlins Trade desire to terminate the Promissory Notes;
NOW, THEREFORE, On the basis of the premises hereof and for good and valuable consideration, the adequacy of which is duly acknowledged as sufficient in all respects, the Company and Tumlins Trade hereby agree as follows:
1. Tumlins Trade does hereby convert, settle and release any and all obligations accrued, due or payable to Tumlins Trade in consideration for the issuance to Tumlins Trade of an aggregate of Twenty Million Six Hundred and Six Thousand One Hundred and Sixty-Four
Conversion Agreement
(20,606,164) restricted shares of common stock of the Company (collectively, the “Shares”) whereby the Company shall issue a stock certificate to Tumlins Trade representing the Shares within ten (10) days of the date hereof, and all such Shares when issued shall be duly authorized, validly issued, fully paid and non-assessable.
2. Upon execution hereof, Tumlins Trade and its past and present subsidiaries, officers, directors, partners, principals, employees, attorneys, insurers, agents, servants, consultants, and their respective representatives, successors, heirs, spouses, assigns, control persons and affiliates, hereby collectively release and forever discharge the Company and all past and present affiliates, subsidiaries, officers, directors, shareholders, partners, principals, employees, attorneys, insurers, agents, servants, consultants, and their respective representatives, successors, heirs, spouses, assigns, control persons and affiliates of any and all such persons (collectively, the “Company Released Parties”), from any and all fees, costs, expenses, claims, demands, obligations, losses, causes of action, costs, expenses, attorneys' fees and liabilities of any nature whatsoever, whether based on the Promissory Notes, the Loans, or any other loan, advance, payment, claim, contract, tort, or basis of statutory or other legal or equitable theory of recovery, whether known or unknown, which Tumlins Trade has, had or claims to have against any or all of the Company Released Parties, including but not limited to any and all claims which relate to, arise from, or are in any manner connected to the Promissory Note, the Loans and/or any other monetary consideration of any nature or kind, whether accrued or not or other reason or basis of any nature or kind whatsoever.
3. Global Full Force & Effect. Each party agrees that this Agreement is intended to be a global settlement and to cover any and all claims or possible or contingent claims, arising out of or related to any and all matters of any and all nature whatsoever in any and all jurisdictions worldwide, whether the same are known, unknown or hereafter discovered or ascertained.
4. Termination of Agreements. The parties hereto agree and confirm that, except for this Agreement, any and all other agreements, written or oral, including but not limited to the Promissory Notes, by and between the Company and Tumlins Trade, are hereby terminated and are of no further force and effect. All parties hereto agree that none of the terms, conditions or obligations of the Promissory Notes, if any, have survived termination. The parties expressly release each other from any and all continuing rights, duties and/or obligations under any of the Promissory Note and any and all other legal obligations, and Tumlins Trade shall make no further claim or demand for payment or performance any matters, including, without limitation, any interest or compensation even if otherwise allegedly entitled or otherwise within the terms of the Promissory Notes or any other agreement or arrangement or enforceable legal obligation of any nature or kind, except for performance of this Agreement with respect to issuance of the Shares.
5. No Tumlins Trade Lawsuits against Company. Tumlins Trade covenants and agrees that during the pendency of the period for completion of the issuance of Shares, which shall not exceed ten (10) business days from the date hereof, and at any and all times thereafter, except in the event of breach of this Agreement by the Company, Tumlins Trade shall not directly or indirectly, initiate, assign, maintain or prosecute, or in any way knowingly aid or assist in the
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Conversion Agreement
initiation, maintenance or prosecution of any claim, demand or cause of action at law or otherwise, against the Company Released Parties or any for damages, loss or injury of any kind arising from, related to, or in any way connected to any activity with respect to which a release has been given pursuant to this Agreement.
6. Representations of Tumlins Trade.
(a) Tumlins Trade acknowledges and agrees that the Company shall, and shall instruct its transfer agent to, refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant to an available exemption from registration required under the Securities Act.
(b) Tumlins Trade understands and acknowledges that the Shares have not been registered under the Securities Act and are being issued to Tumlins Trade in reliance upon the exemptions provided in Regulation S of the Securities Act and the Rules and Regulations adopted thereunder. Accordingly, the Shares may not be offered or sold in the U.S. or to U.S. Persons (as such term is used in Regulation S) unless the Shares are registered under the Securities Act, or an exemption from the regulation requirements is available. Furthermore, hedging transactions involving the Shares may not be conducted unless in compliance with the Securities Act.
(c) Tumlins Trade understands that the Company is under no obligation to register the Shares under the Securities Act, or to assist Tumlins Trade in complying with the Securities Act or the securities laws of any state of the United States or of any foreign jurisdiction. Tumlins Trade understands that the Shares must be held indefinitely unless the Shares are registered under the Securities Act or an exemption from registration is available. Tumlins Trade acknowledges that the officers of Tumlins Trade have been advised of the limitation of Rule 144 promulgated under the Securities Act (“Rule 144”), and that Tumlins Trade has been advised that Rule 144 permits resales only under certain circumstances which are currently not available with respect to the Shares. Tumlins Trade understands that it will be unable to sell or trade any of the Shares without either registration under the Securities Act or the availability of exemption from registration.
(d) Tumlins Trade acknowledges its understanding that the Conversion is intended to be exempt from registration under Rule 903 of Regulation S promulgated under the Securities Act. In furtherance thereof, in addition to the other representations and warranties of Tumlins Trade made herein, nothing herein shall construe Tumlins Trade as a distributor acting on behalf of the Company with respect to further distribution of the Shares issued to Tumlins Trade.
(e) Tumlins Trade expressly affirms and certifies the validity of the following acknowledgments, representations and warranties for the benefit of the Company with the intent that the same may be relied upon in determining the suitability of Tumlins Trade as a qualified Non-U.S. Person purchaser and transferee of Shares:
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Conversion Agreement
(i) Tumlins Trade did not receive the offer for the Shares (the “Offer”), nor was Tumlins Trade solicited to purchase or acquire the Shares, in the United States; that any and all documents underlying the Conversion have not been executed or delivered by Tumlins Trade in the United States, and neither Tumlins Trade nor any Person acting on behalf of Tumlins Trade has engaged, directly or indirectly, in any negotiations with respect to the Offer or the closing of the Conversion in the United States;
(ii) Tumlins Trade is not a U.S. Person (i.e., (i) not an individual resident in the U.S.; (ii) a partnership or corporation organized or incorporated in the United States; (iii) an estate of which any executor or administrator is a U.S. Person; (iv) a trust of which any trustee is a U.S. Person; (v) a dealer holding an account for a customer; (vi) an agency or branch of a foreign entity located in the U.S.; or (vii) a partnership or corporation (A) organized or incorporated under the laws of any foreign jurisdiction and (B) formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act and is not acquiring the Shares for the account or benefit of a U.S. Person;
(iii) Tumlins Trade is not acquiring the Shares as a result of, or subsequent to, (i) any advertisement, article, notice or other communication published in any newspaper, magazine or other publication or broadcast over television or radio in the U.S.; (ii) any promotional seminar or meeting in the U.S., or (iii) any solicitation by a Person not previously known to it in connection with investments in securities generally; and
(iv) The Shares have not been registered under the Securities Act or under any state securities laws and that Tumlins Trade agrees to transfer its Shares in the U.S. or to, or for the account or benefit of, U.S. Persons only if (i) the Shares are duly registered under the Securities Act and all applicable state securities laws; or (ii) there is an exemption from registration under the Securities Act, including any exemption from the registration requirements of the Securities Act which may be available pursuant to Rule 903 or Rule 904 under Regulation S, and all applicable state securities laws; that prior to any such transfer the Company may require, as a condition affecting a transfer of the Shares, an opinion of counsel in form and substance satisfactory to the Company as to the registration or exemption therefrom under the Securities Act and applicable state securities laws; that the Company is under no obligation to register the Shares under the Securities Act or any applicable state securities laws on its behalf or to assist it in complying with any exemption from such registration;
(v) The Shares will be acquired solely for the account of Tumlins Trade, for investment purposes only, and not with a view to, or for sale in connection with, any distribution thereof and with no present intention of distributing or reselling any part of the Shares, provided, however, Tumlins Trade reserves the right to sell or transfer the Shares at Tumlins Trade’s discretion at any time if made in compliance with the requirements prescribed by applicable law.
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Conversion Agreement
(vi) Tumlins Trade agrees not to sell, pledge, transfer, dispose of, or otherwise deal with or engage in hedging transactions involving, its Shares or any portion thereof except as otherwise permitted herein, unless and until counsel for the Company shall have determined that the intended disposition or action is permissible and does not violate the Securities Act or any applicable state securities laws, or the rules and regulations thereunder.
(vii) Tumlins Trade’s jurisdiction of principal place of business and corporate domicile, as set forth on the signature page hereto is true and correct.
(viii) Tumlins Trade is not the issuer of the Shares, or a distributor, dealer or an affiliate of the issuer, distributor or a dealer. Tumlins Trade is not receiving a selling concession, fee or other remuneration in respect of the Shares received by Tumlins Trade. Tumlins Trade undertakes and agrees that: (a) any offer or resale of the Shares within a one year restricted period shall be made solely outside of the United States in an offshore transaction on a designated offshore securities market as such term is defined in Rule 902(b) of Regulation S promulgated under the Securities Act; (b) No directed selling efforts shall be made in the United States by any issuer, an affiliate, or any person acting on their behalf; (c) the Company will send to Tumlins Trade a confirmation or other notice stating that the Shares may be offered and sold during the distribution compliance period only in accordance with the provisions of this Regulation S (Rule 901 through Rule 905, and Preliminary Notes); pursuant to registration of the Shares under the Act; or pursuant to an available exemption from the registration requirements of the Act.
(f) Without the prior written consent of the Company, Tumlins Trade shall not under any circumstances solicit, offer, introduce or close any transaction involving the Shares with any U.S. Person (as such term is defined under Rule 902(k) of Regulation S promulgated under the Securities Act of 1933, as amended) with respect to any and all offerings and/or placements of Company common stock or other securities, unless the Shares are registered with the U.S. Securities & Exchange Commission or an exemption from such registration is available thereof.
(g) Tumlins Trade agrees to fully comply with all applicable securities laws and not to trade at any time in any securities of the Company on the basis of material non-public information and will not disclose any confidential transactions involving the Company to any third parties, other than to authorized representatives of Tumlins Trade who shall be under strict instructions not to make any further disclosures to any other persons.
(h) All representations, warranties and covenants contained in this undertaking shall survive the date hereof and remain in full force and effect without termination.
(i) As a condition of the Conversion, Tumlins Trade agrees to execute and deliver such additional representations and warranties as are reasonably requested by the Company,
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Conversion Agreement
including, supplemental Regulation S Representations if necessary, in order to assure compliance with all applicable securities laws.
7. Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally against written receipt or by facsimile transmission or mailed by prepaid first class certified mail, return receipt requested, or mailed by overnight courier prepaid, to the parties at the following addresses or facsimile numbers:
If to the Company, to:
Ardent Mines Limited
100 Wall Street, 10th Floor
New York, NY 10005
Telephone No.: (778) 892-9490
Facsimile No.:
If to Tumlins Trade, to:
Tumlins Trade Inc.
C/O Tufinco Ltd
Usteristrasse 19
Ctl 8001 Zurich
Telephone No.: 41 43 210 2300
Facsimile No.: 41 43 210 2301
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, (iii) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given on the earlier of the third business day following mailing or upon receipt and (iv) if delivered by overnight courier to the address as provided in this Section, be deemed given on the earlier of the second business day following the date sent by such overnight courier or upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto.
8. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof.
9. Fees and Expenses. Each party will pay its own costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby.
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Conversion Agreement
10. Further Assurances. At any time or from time to time after the date hereof, each of the parties hereto shall execute and deliver to the other such other documents and instruments, provide such materials and information and take such other actions as such other party may reasonably request to cause each of the parties hereto to fulfill their respective obligations under this Agreement.
11. Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or otherwise afforded, will be cumulative and not alternative.
12. Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto.
13. Third Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer third-party beneficiary rights, and this Agreement does not confer any such rights, upon any other person.
14. No Assignment; Binding Effect. Neither this Agreement nor any right, interest or obligation hereunder may be assigned (by operation of law or otherwise) by the parties hereto without the prior written consent of the other parties and any attempt to do so will be void ab initio. Subject to the preceding sentence, this Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.
15. Headings; Construction. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. The parties hereto agree that this Agreement is the product of negotiation between sophisticated parties and individuals, all of whom were represented by counsel, and each of whom had an opportunity to participate in and did participate in, the drafting of each provision hereof. Accordingly, ambiguities in this Agreement, if any, shall not be construed strictly or in favor of or against any party hereto but rather shall be given a fair and reasonable construction without regard to the rule of contra proferentum.
16. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added
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Conversion Agreement
automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.
17. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of jurisdiction of the principal place of business operations of the Company at the address for notices above, without giving effect to any choice of law or conflict of law provision or rule (whether of such State or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than such State.
18. Jurisdiction and Venue; Jury Trial Waiver. All controversies arising out of or in connection with this Agreement shall be finally settled under the Rules of the International Center for Dispute Resolution by a single arbitrator appointed in accordance with said Rules. The place of arbitration shall be New York City, New York. The arbitration shall be conducted in the English language by an attorney having not less than ten years of corporate legal experience. The prevailing party in any such arbitration shall be awarded reimbursement of any and all fees, costs, expenses and disbursements incurred with respect to such arbitration. In the event of any controversy regarding the enforceability of this arbitration provision, this Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its conflicts of law principles. The award of any such arbitration may be entered by any court of competent jurisdiction. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL ACTION, PROCEEDING, OR LITIGATION ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.
19. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. This Agreement may be executed and delivered by facsimile or electronic (pdf) signatures, each of which shall be deemed to be an original.
[Signature Page Follows]
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Conversion Agreement
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of this 21st day of December, 2012.
TUMLINS TRADE INC.
By: /s/ WALTER SCHUMACHER
Name: Walter Schumacher
Title: Director
Jurisdiction of Incorporation:
ARDENT MINES LIMITED
By: /s/ URMAS TURU
Name: Urmas Turu
Title: CEO
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Exhibit 10.35
ARDENT MINES LIMITED
CONVERTIBLE PROMISSORY NOTE
THIS PROMISSORY NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PROVIDED HEREIN. ANY ATTEMPTED TRANSFER OF THIS PROMISSORY NOTE IN VIOLATION OF SUCH TERMS SHALL BE NULL AND VOID AND OF NO EFFECT. THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND NO OFFER, TRANSFER OR ASSIGNMENT OF THIS PROMISSORY NOTE MAY BE MADE IN THE ABSENCE OF SUCH REGISTRATIONS OR AVAILABLE EXEMPTIONS THERETO.
US $100,000.00 Dated: January 29, 2013
FOR VALUE RECEIVED, Ardent Mines Limited, a Nevada corporation (the “Borrower”), hereby promises to pay to the order of the Tumlins Trade Inc. (“Lender”), at such time, place and in such manner as Lender may specify in writing, the principal amount of One Hundred Thousand U.S. Dollars (the “Principal”) pursuant to the terms and conditions specified herein (this “Note”). The Borrower shall pay interest on the outstanding principal of this Note at the annual rate of 7.5% per annum, calculated based on a year of 365 days and actual days elapsed (the “Interest”).
1. The Borrower hereby promises to pay to the order of the Lender the Principal and all Interest due thereon after the first anniversary of the date of this Note upon delivery to the Borrower of written demand by the Lender for repayment of this Note within not less than thirty (30) calendar days (the “Due Date”), at such place and in such manner as Lender may specify in writing. In lieu of repayment of the Note in cash, the Lender at its sole option and discretion may convert this Note and request the Borrower to repay any or all of the Principal and Interest in the form of restricted common stock of the Borrower at a price per share equal to Ten Cents (US $0.10) (the “Conversion Price”). Such Conversion Price shall be effective after the completion of the Company’s reverse split of common stock, pursuant to which the Company shall effect a one (1) for one hundred (100) reverse stock split of the Company’s issued and outstanding shares as disclosed and filed by the Company with the U.S. Securities & Exchange Commission on the Definitive Schedule 14C on January 25, 2013 (the “Reverse Stock Split”). The Conversion Price is hereby deemed to reflect any and all effects of the Reverse Stock Split and the Conversion Price shall not be further adjusted or modified on or after the date hereof with respect to the Reverse Stock Split. The Borrower shall promptly deliver such restricted common stock in accordance with the request of Lender. Upon delivery of such shares of common stock this Note shall be deemed to be repaid and satisfied in full.
2. Any and all fees, costs, expenses and disbursements charged by financial institutions with respect to wire transfer or other transmittal charges incurred in connection with delivery of
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Ardent Mines Limited Promissory Note
the Principal from the Lender to the Borrower shall be deemed to have been received by the Borrower from the Lender and all such amounts shall be included in the calculation of Principal hereunder.
3. This Note shall not be transferable by Borrower and the Borrower may not assign, transfer or sell all or a portion of its rights and interests to and under this Note to any persons and any such purported transfer shall be void ab initio. The Lender may transfer and assign this Note at its sole discretion subject to applicable laws, rules and regulations pertaining to such transfers as to which a legal opinion of counsel to Lender shall be required to be delivered to Borrower, in form and substance acceptable to Borrower.
4. The failure at any time of the Lender to exercise any of its options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of its options or rights at a later date. All rights and remedies of the Lender shall be cumulative and may be pursued singly, successively or together, at the option of the Lender. The acceptance by the Lender of any partial payment shall not constitute a waiver of any default or of any of the Lender's rights under this Note. No waiver of any of its rights hereunder, and no modification or amendment of this Note, shall be deemed to be made by the Lender unless the same shall be in writing, duly signed on behalf of the Lender; and each such waiver shall apply only with respect to the specific instance involved, and shall in no way impair the rights of the Lender in any other respect at any other time.
5. Any term or condition of this Note may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition.
6. The Borrower represents and warrants that this Note is the valid and binding obligation of the Borrower, fully enforceable in accordance with its terms. The execution and delivery by the Borrower of this Note, the performance by the Borrower of its obligations hereunder and the consummation of the transactions contemplated hereby and thereby does not and will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Borrower’s charter instruments; (b) conflict with or result in a violation or breach of any term or provision of any law or order applicable to the Borrower or any of its assets and properties; or (c) (i) conflict with or result in a violation or breach of, or (ii) result in or give to any person any rights or create any additional or increased liability of the Borrower under or create or impose any lien upon, the Borrower or any of its assets and properties under, any contract or permit to which the Borrower is a party or by which its assets and properties are bound.
7. If any provision of this Note is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any party hereto under this Note will not be materially and adversely affected thereby, (i) such provision will be fully severable; (ii) this Note will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; (iii) the remaining provisions of this Note will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from; and (iv) in lieu of such illegal, invalid or unenforceable provision,
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Ardent Mines Limited Promissory Note
there will be added automatically as a part of this Note a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.
8. Any notice, authorization, request or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given two days after it is sent by an internationally recognized delivery service to the address of record of the Lender or the Borrower, respectively. Any party may change its address for such communications by giving notice thereof to the other parties in conformity with this Section.
9. This Note shall be governed by and construed under the laws of incorporation of the Borrower as applied to agreements entered into and to be performed entirely within such State. Each party hereby irrevocably consents to the jurisdiction of the courts of any competent jurisdiction over one or more of the parties. In any such litigation the Borrower waives personal service of any summons, complaint or other process and agrees that the service thereof may be made by certified or registered mail directed to the registered corporate office of Borrower in the State of its incorporation. The Borrower hereby expressly waives trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Note or the validity, protection, interpretation, collection or enforcement hereof and the Borrower hereby waives the right to interpose any setoff or non-compulsory counterclaim or cross-claim in connection with any such litigation, irrespective of the nature of such setoff, counterclaim or cross-claim.
10. A default shall exist on this Note if any of the following occurs and is continuing: (i) Failure to pay Principal and any accrued Interest on the Note on or before the Due Date; (ii) Failure by the Borrower to perform or observe any other covenant or agreement of the Borrower contained in this Note; (iii) A custodian, receiver, liquidator or trustee of the Borrower, or any other person acting under actual or purported force of law takes ownership, possession or title to Borrower property; (iv) any of the property of the Borrower is sequestered by court order; (v) a petition or other proceeding, voluntary or otherwise is filed by or against the Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or (vi) the Borrower makes an assignment for the benefit of its creditors, or generally fails to pay its obligations as they become due, or consents to the appointment of or taking possession by a custodian, receiver, liquidator or trustee of the Borrower or all or any part of its property. Upon any such default, the Borrower shall immediately notify the Lender, and upon notice to the Borrower, the Lender may declare the Principal of the Note, plus accrued Interest, to be immediately due and payable, upon which such Principal and accrued Interest shall become due and payable immediately. Interest upon default shall thereafter accrue at the rate of 15% per annum, calculated based on a year of 365 days and actual days elapsed from the date of such default.
11. The Borrower, any endorser, or guarantor hereof or in the future (individually an “Obligor” and collectively “Obligors”) and each of them jointly and severally: (a) waive presentment, demand, protest, notice of demand, notice of intent to accelerate, notice of acceleration of maturity, notice of protest, notice of nonpayment, notice of dishonor, and any other notice
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Ardent Mines Limited Promissory Note
required to be given under the law to any Obligor in connection with the delivery, acceptance, performance, default or enforcement of this Note, any endorsement or guaranty of this Note, any pledge, security, guaranty or other documents executed in connection with this Note; (b) consent to all delays, extensions, renewals or other modifications of this Note, or waivers of any term hereof or thereof, or release or discharge by the Lender of any of Obligors, or release, substitution or exchange of any security for the payment hereof, or the failure to act on the part of the Lender or any indulgence shown by the Lender (without notice to or further assent from any of Obligors), and agree that no such action, failure to act or failure to exercise any right or remedy by the Lender shall in any way affect or impair the Obligations (as hereinafter defined) of any Obligors or be construed as a waiver by the Lender of, or otherwise affect, any of the Lender's rights under this Note, under any endorsement or guaranty of this Note; (c) if the Borrower fails to fulfill its obligations hereunder when due, agrees to pay, on demand, all costs and expenses of enforcement of collection of this Note or of any endorsement or guaranty hereof and/or the enforcement of the Lender's rights with respect to, or the administration, supervision, preservation, protection of, or realization upon, any property securing payment hereof, including, without limitation, all attorney's fees, costs, expenses and disbursements, including, without further limitation, any and all fees related to any legal proceeding, suit, mediation arbitration, out of court payment agreement, trial, appeal, bankruptcy proceedings or any other actions of any nature whatsoever required on the part of Lender or Lender’s representatives to enforce this Note and the rights hereunder; and (d) waive the right to interpose any defense, set-off or counterclaim of any nature or description.
12. The Borrower will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Borrower, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Lender of this Note against impairment. This Note shall be enforceable against all successors and assigns of Borrower. Borrower hereby covenants that all of its subsidiaries and affiliates shall jointly and severally perform this Note to the same and full extent on behalf of Borrower if Borrower is unable to perform.
13. This Note supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.
14. If the Lender loses this Note, the Borrower shall issue an identical replacement note to the Lender upon the Lender's delivery to the Borrower of a customary agreement to indemnify the Borrower reasonably satisfactory to the Borrower for any losses resulting from issuance of the replacement note.
15. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Note, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors
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Ardent Mines Limited Promissory Note
and assigns any rights, remedies, obligations, or liabilities under or by reason of this Note, except as expressly provided in this Note.
[Signature Page Follows]
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Ardent Mines Limited Promissory Note
IN WITNESS WHEREOF, the Borrower has caused this Note to be dated, executed and issued on its behalf, by its duly appointed and authorized officer, as of the date first above written.
Ardent Mines Limited
By: /s/ URMAS TURU
Name: Urmas Turu
Title: Interm CEO
Lender: Tumlins Trade Inc.
By: /s/ WALTER SCHUMACHER
Name: Walter Schumacher
Title: Director
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Exhibit 31.1
OFFICER'S CERTIFICATION PURSUANT TO SECTION 302
I, Urmas Turu, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ardent Mines Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 12, 2013
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By: |
/s/ Urmas Turu |
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Name: Urmas Turu |
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Title: Principal Executive Officer |
Exhibit 31.2
OFFICER'S CERTIFICATION PURSUANT TO SECTION 302
I, Gabriel Margent, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ardent Mines Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
February 12, 2013
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By: |
/s/ Gabriel Margent |
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Name: Gabriel Margent |
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Title: Principal Financial Officer |
Exhibit 32.1
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ardent Mines Limited on Form 10-Q for the Quarter ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Urmas Turu, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 12, 2013
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By: |
/s/ Urmas Turu |
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Name: Urmas Turu |
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Title: Principal Executive Officer |
Exhibit 32.2
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ardent Mines Limited on Form 10-Q for the Quarter ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gabriel Margent, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 12, 2013
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By: |
/s/ Gabriel Margent |
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Name: Gabriel Margent |
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Title: Principal Financial Officer |