-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CbNozAWctJK+a1ECshrDXUWx/Fqei157F+u0phk8RWjcxoa9yOkq+JkxCeq6XyW8 1I/Gm59TG2ARcrcCbKS9Bw== 0000315523-96-000003.txt : 19960517 0000315523-96-000003.hdr.sgml : 19960517 ACCESSION NUMBER: 0000315523-96-000003 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960429 DATE AS OF CHANGE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: USMX INC CENTRAL INDEX KEY: 0000315523 STANDARD INDUSTRIAL CLASSIFICATION: 1040 IRS NUMBER: 841076625 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-09370 FILM NUMBER: 96553959 BUSINESS ADDRESS: STREET 1: 141 UNION BLVD STE 100 CITY: LAKEWOOD STATE: CO ZIP: 80228 BUSINESS PHONE: 3039854665 MAIL ADDRESS: STREET 1: 141 UNION BLVD SUITE 100 CITY: LAKEWOOD STATE: CO ZIP: 80228 FORMER COMPANY: FORMER CONFORMED NAME: U S MINERALS EXPLORATION CO DATE OF NAME CHANGE: 19880222 10-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Mark One) X Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year December 31, 1995 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from ______________________ to ______________________ Commission File Number 0-9370 ___________________ USMX, INC. (Exact name of registrant as specified in its charter) ___________________ Delaware 84-1076625 (State or other (I.R.S. Employer Identification No.) jurisdiction of incorporation or organization) 141 Union Boulevard, Suite 100 Lakewood, Colorado 80228 (Address of principal executive (Zip Code) offices) (303) 985-4665 Registrant's telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value (Title of class) Pursuant to the requirements of Section 13 or 15(d) 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. USMX, INC. (Registrant) Date:4/29/96 By: /s/Donald E. Nilson Donald E. Nilson, Vice President - Finance PART III Item 10. Directors, Executive Officers, Promoters and Control Persons. The following table sets forth information regarding members of the Company's board of directors:
Current Director Term Name and Business Experience Since Expires - - - - ----------------------------------------- --------- -------- George J. Allen, age 67, has served as President of Allen Engineering since 1983. From 1951 to 1983, he served in various positions with Kennecott Corporation, including Vice President and Director of Tolling. 1990 1998 Phillips S. Baker, age 36, joined Pegasus Gold in January 1994 as Vice President, Finance and Chief Financial Officer. Prior to joining Pegasus, Mr. Baker worked seven years for Battle Mountain Gold Company, most recently as Treasurer. He also worked as an accountant for Arthur Andersen LLP. Mr. Baker is an Attorney, Certified Public Accountant and Certified Cash Manager. 1995 1996 Donald P. Bellum, age 63, has over 35 years of experience in the mining industry and related fields. Mr. Bellum currently serves as a consultant to the mining industry. Effective May 1, 1996, he will become Chairman of the Board of Directors and Chief Executive Officer of the Company. From 1987 to 1991, Mr. Bellum was Executive Vice President of Cyprus Minerals Company. He served as President of Cyprus Coal Company from 1978 to 1987. From 1974 to 1978, Mr. Bellum was Vice President of Operations for Tesoro Coal Company. Mr. Bellum served as Project Manager (1965 to 1969) and as Mine Manager (1969 to 1973) for Kennecott Copper Corporation. 1992 1997 James P. Geyer, age 43, joined Pegasus Gold in 1987 and was appointed Vice President, Operations in October 1995. Prior to joining Pegasus, Mr. Geyer worked 13 years for ASARCO and AMAX in various operating and engineering positions. Mr. Geyer is a mining engineer from the Colorado School of Mines. Mr. Geyer is a Director of Wheaton River Minerals Ltd. 1996 1999 James A. Knox, age 62, has served as President of the Company since June 1991. He will remain in this position until June 30, 1996. It is anticipated that he will thereafter concentrate his duties in the areas of acquiring mineral properties and mining operations for the Company. From 1969 until June 1991, he was an officer and director of Knox, Kaufman, Inc. That firm provided geological consulting services and managed exploration programs in the United States and Western Canada. Mr. Knox has previously been employed as a geologist with several other companies, including The Superior Oil Company where he was a district Exploration Manager, and Kermac Nuclear Fuels Corporation where he also managed the exploration efforts. 1985 1996 Terry P. McNulty, age 57, has served as President of T.P. McNulty & Associates, a consulting firm, since 1988. From 1983 to 1988, he was President of Hazen Research, Inc. 1990 1996 Werner G. Nennecker, age 41, joined Pegasus Gold Inc. in September 1992 as Senior Vice President and Chief Operating Officer. In November 1992, Mr. Nennecker assumed the position of President and Chief Executive Officer of Pegasus. Prior to joining Pegasus, Mr. Nennecker worked 15 years in the mining industry with Ranchers Exploration and Santa Fe Pacific Gold Corporation. Most recently, he held the positions of Executive Vice-President of Santa Fe Pacific Minerals Corporation and President of Santa Fe Pacific Gold Corporation. He has extensive experience in all aspects of the mining business. Mr. Nennecker is also a director of Pegasus Gold Inc., Zapopan NL, the Gold Institute, and the National Mining Hall of Fame. 1992 1998 Gregory Pusey, age 44, served as the Company's Chief Financial Officer from May 1989 until January 1990 and he also has served as Secretary and Treasurer of the Company. Since 1983, Mr. Pusey has been engaged in private investment activities. He has served as President of Livingston Capital, Ltd. And President of the General Partner of Graystone Capital, Ltd, a venture captial firm. He is also President and a Director of Cambridge Holdings, Ltd. Mr. Pusey was a founder of the Company. 1979 1997 Robert Scullion, age 56, has been a partner in Scullion, Strasheim & Company, a firm of Certified Public Accountants, since 1975. He is a Certified Public Accountant licensed in the United States as well as a Scottish Chartered Accountant. 1987 1998
Executive Officers Set forth below are the names and offices held by each of the executive officers of the Company:
Name and Business Experience Offices Held - - - - ---------------------------------------------- ---------------------------- James A. Knox. Information with respect to the age and business experience of Mr. Knox is President, Chief Executive set forth under "Directors" above. Officer, Chairman Paul L. Blair, age 54, joined the Company in Vice President -- Operations April 1995. Mr. Blair has 35 years experience for Latin America and the in the mining industry. He served as Caribbean President and General Manager of Golden Queen Mining Co., Inc. from December 1993 to April 1995. For the preceding seven years, Mr. Blair served as General Manager of Cactus Gold Mines Co. Dennis L. Lance, age 51, has served as Vice Vice President -- Exploration President -- Exploration of the Company since May 1989. He also served as Secretary of the Company from January 1990 to December 1990. He has served as a geologist with the Company since June 1986. Prior thereto, he was an independent consulting geologist. Donald E. Nilson, age 51, has served as Vice Vice President -- Finance and President--Finance and Secretary of the Secretary Company since his employment in October 1990. Mr. Nilson has been a Certified Public Accountant since 1968 and holds a graduate degree in Computer Information Systems. Paul B. Valenti, age 46, joined the Company in Vice President -- Operations May 1987 and was elected Vice President in August 1988. From November 1983 to May 1987, he served as the Metallurgy Manager for Silver King Mines.
There are no family relationships among the officers or directors. Donald P. Bellum has been elected Chairman of the Board of Directors and Chief Executive Officer of the Company effective May 1, 1996. Mr. Bellum is currently a director of the Company. Biographical information concerning Mr. Bellum is set forth under "Directors" above. Item 11. Executive Compensation Following is information regarding compensation paid during each of the last three completed fiscal years to the executive officers of the Company whose salary and bonus exceeded $100,000 during 1995. Summary Compensation Table
Annual Compensation ---------------------- Long Term Compensati All Other Name and Principal on Awards Compen Position Year Salary($) Bonus ($) (Options #) sation ($) - - - - ------------------------ ----- --------- ---------- ----------- ----------- James A. Knox, President and CEO 1995 $156,050 $10,000 50,000 $4,620 (1) 1994 $151,500 $20,000 30,000 $4,022 (1) 1993 $142,500 $25,000 30,000 $4,069 (1) Dennis L. Lance, V.P. -- Exploration 1995 $107,100 - 25,000 $3,213 (1) 1994 $93,816 $8,000 15,000 $2,814 1993 $89,256 $16,227 15,000 $2,678 Donald E. Nilson, V.P. -- Finance 1995 $105,100 - 25,000 $3,153 (1) 1994 $95,530 $8,000 15,000 $2,790 (1) 1993 $91,719 $10,000 15,000 $2,741 (1) Paul B. Valenti, V.P. -- Operations 1995 $108,150 - 25,000 $3,244 (1) 1994 $98,650 $8,000 15,000 $2,959 (1) 1993 $96,230 $13,050 15,000 $2,887 (1) (1) The amounts shown represent the Company's matching contribution for the stated individuals to its 401(K) plan.
The following table sets forth information with respect to stock options granted during 1995 to each executive named in the Summary Compensation Table. The assumed annual rates of stock price appreciation of 5% and 10% are set by a rule of the Securities and Exchange Commission, and are not intended as a forecast of possible future appreciation and stock prices. The potential value of options granted depends on an increase in the market price of the Company's common stock. If the stock price does not increase, the options would be worthless. If the stock price does increase, this increase would benefit both option holders and stockholders commensurately. Option Grants in 1995
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term ------------------------ % of Total Options Options Granted to Granted Employees in Exercise Expiration Name (#) Fiscal Year Price ($/Sh) Date 5% ($) 10% ($) - - - - ------------- ------- ------------ ------------ ---------- -------- ----------- James A. Knox 50,000 13.2 % $2.19 3/14/2005 $68,864 $174,515 Dennis L. Lance 25,000 6.6 % $2.19 3/14/2005 $34,432 $87,257 Donald E. Nilson 25,000 6.6 % $2.19 3/14/2005 $34,432 $87,257 Paul B. Valenti 25,000 6.6 % $2.19 3/14/2005 $34,432 $87,257 All Stock- holders (1) $20,168,000 $51,110,000 Executive officers' gain as a % of All Stock-holders' gain 0.85% 0.85% (1) The amounts shown for All Stockholders represent the potential realizable value assuming appreciation at the rates indicated based on the exercise price per share and the expiration date applicable to grants made in 1995 and the number of outstanding shares on the date of grant.
The following table sets forth, in the aggregate, the number of shares underlying options exercised during 1995 by each executive named in the Summary Compensation Table, and states the value at year-end of exercisable and unexercisable options remaining outstanding. Aggregated Option Exercises and Fiscal Year-End Option Values
Value of Number of Unexercised Shares Unexercised In-the-Money Acquired Options at FY- Options at FY- on Value End (#) End ($) Exercise Realized Exercisable/ Exercisable/ Name (#) ($) Unexercisable Unexercisable - - - - ------------------ --------- ----------- ------------- --------------- James A. Knox - - 190,000 / $9,000 / 50,000 - Dennis L. Lance - - 60,000 / $1,800 / 25,000 - Donald E. Nilson - - 30,000 - 25,000 - Paul B. Valenti - - 50,000 / $900 / 25,000 -
Compensation of Directors All directors who are not employed either by the Company or by Pegasus are paid a fee of $350 for each meeting of the Board attended. In addition, each director who is not a full-time employee of the Company receives a fee of $500 per month. These directors also receive additional compensation plus reasonable expenses for any additional services performed. Robert Scullion is paid an additional $4,000 per year as chairman of the Audit Committee. During 1995, certain directors were paid a total of $6,344 for consulting fees and out of pocket expenses pertaining to various Company projects. Employment Contracts and Termination of Employment and Change-in-Control Arrangements James A. Knox is employed by the Company as its President and Chief Executive officer. Mr. Knox will serve as Chief Executive Officer until May 1, 1996, and as President until June 30, 1996. Thereafter, Mr. Knox is expected to concentrate his duties in the areas of acquiring mineral properties and mining operations for the Company. In July 1993, the Company entered into an Employment Agreement with Mr. Knox for a two-year term which ended June 30, 1995, which provided for a minimum annual salary of $150,000. Upon Mr. Knox's termination of employment with the Company, he will receive severance pay at 50% of his current annual salary and the Company will pay his medical insurance premiums for six months after the date of termination. Mr. Knox has agreed not to acquire, for two years after the termination of the Employment Agreement, an interest in any mineral properties within two miles of any properties in which the Company has an interest or is, on the date of termination, negotiating to acquire an interest. Effective May 1, 1996, Donald P. Bellum will become Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Bellum will receive a salary of $16,800 per month and has been granted an option to purchase up to 150,000 shares of the Company's common stock at $2.55 per share. The options vest in annual installments of 50,000 shares each commencing on the date of grant. Vesting would occur in the event of termination of Mr. Bellum's employment without cause. This would include a change in control wherein the Company's executive offices were relocated or his duties were changed in a substantial manner. Compensation Committee Interlocks and Insider Participation in Compensation Decisions George J. Allen, Donald P. Bellum and Gregory Pusey served as members of the Compensation Committee during 1995. Mr. Pusey is a former officer of the Company. In 1996, Mr. Bellum resigned as a member of the Compensation Committee and Werner G. Nennecker was elected to serve as a member of the Compensation Committee. Effective May 1, 1996, Mr. Bellum will become Chairman of the Board of Directors and Chief Executive Officer of the Company. Board Compensation and Option Committees' Report on Executive Compensation The compensation policies of the Compensation Committee and the Option Committee applicable to the Company's executive officers are based on the continuing need to attract and retain a management team capable of guiding the growth of the Company over the long term. Compensation of executive officers paid during 1995 is based on the qualifications and experience of the individual officers, competitive market conditions for executive talent, and the contributions of the individuals to the long term growth and stability of the Company and to maximizing the long term value of stockholders' investment in the Company. Factors considered by the Compensation Committee and the Option Committee to be important in the long term growth and stability of the Company and to maximizing the long term value of the stockholders' investment include increasing the quantity and quality of the Company's portfolio of exploration properties, development of these properties into producing mines where justified, acquisition and improvement of producing properties, increasing the amount and timeliness of internal and external financial reporting and building and maintaining a complement of well trained and highly motivated employees. The Compensation and Option Committees also compared annual salary and bonuses with those paid by other gold mining companies. The Company's Compensation Committee did not make its determinations based specifically upon objective measures of corporate performance in 1995 such as revenue or net income, nor did those Committees set any targets of performance using such objective measures. The Committee believes that, for a growing exploration and mining company, primary emphasis should be placed on the exploration and development of mining properties with superior potential that will ultimately result in the achievement of improved financial results, through mineral production or property sale. The Committee considered the performance of the Company's CEO and other executive officers during 1995 as well as other factors discussed above in making its compensation decisions. The salary paid by the Company to James A. Knox for his services as President and Chief Executive Officer during 1995 was in accordance with the Employment Agreement which the Company entered into with Mr. Knox in July of 1993. During 1995 Mr. Knox was granted an option to purchase up to 50,000 shares of the Company's common stock. The number of options granted to Mr. Knox and the other executive officers was based on the Compensation Committee's assessment of the officers' performance and a review of similar benefits offered by other gold mining companies. The exercise price for all options granted in 1995 was the fair market value of the stock on the date of grant. George J. Allen Donald P. Bellum Gregory Pusey PERFORMANCE GRAPH - - - - ----------------- Graph showing permformance of USMX, INC. Stock as compared to NASDAQ Stock Market and S & P Gold Mining Index. The above graph assumes an initial investment of $100 as of the close of trading December 31, 1990. Each of the data points gives the dollar value of the investment from December 31, 1990, forward assuming dividends, where paid, are reinvested monthly plus any price change in the investment. Item 12. Security Ownership of Certain Beneficial Owners and Management Security Ownership of Certain Beneficial Owners The following table sets forth information as of March 18, 1996 with respect to any person who is known to the Company to be the beneficial owner of more than five percent of any class of the Company's voting securities:
Amount and Nature of Percent Title of Name and Address of Beneficial of Class Beneficial Owner Ownership Class - - - - ------------- --------------------- ------------- ----------- Common Pegasus Gold Inc. 601 West First Avenue, Suite 1500 Spokane, WA 99204 4,826,000 (1) 33.0% Common Van Eck Associates Corporation 122 East 42nd Street New York, New York 10168 1,045,000 (2) 7.1% (1) Represents direct ownership. (2) Van Eck Associates Corporation has advised the Company that it is a registered investment adviser, and that such shares are held for funds or trusts managed by it, including 715,000 shares (4.9%) held for Gold/Resources Fund and 275,000 shares (1.9%) held for International Investors Incorporated and 55,000 shares (0.4%) for a private investor. Gold/Resources Fund and International Investors Incorporated are open end, diversified investment management companies which concentrate investments in gold mining shares. The shares of both of such companies are publicly held and Van Eck Associates Corporation has advised the Company that to its knowledge no natural person owns beneficially more than 5% of the outstanding shares of either such company. John C. Van Eck, whose business address is the same as that of Van Eck Associates Corporation, has voting control of Van Eck Associates Corporation.
Security Ownership of Management Information regarding the Company's equity securities owned by directors and executive officers is set forth in the following table:
Shares of $0.001 Par Value Common Stock Beneficially Percent Name Owned of Class ---------------------- ------------------ ---------- George J. Allen 32,000 (2) * Phillips S. Baker 4,841,000 (4) (7) 31.9 % Donald P. Bellum 25,000(1) * James P. Geyer 4,836,000 (5) (7) 31.9 % James A. Knox 333,899 (6) 2.2 % Dennis L. Lance 157,068 (8) 1.0 % Terry P. McNulty 33,000 (2) * Werner G. Nennecker 4,851,000 (1) (7) 32.0 % Donald E. Nilson 60,584 (9) * Gregory Pusey 297,274 (4) 2.0 % Robert Scullion 21,750 (3) * Paul B. Valenti 114,783 (10) * All directors and executive officers as a group 5,951,358 (7)(11) 39.2 % (1) Includes 25,000 shares underlying currently exercisable options granted pursuant to the Company's Non-Discretionary Stock Option Plan For Non-Employee Directors. (2) Includes 20,000 shares underlying currently exercisable options granted pursuant to the Company's Non-Discretionary Stock Option Plan For Non-Employee Directors. (3) Includes 21,750 shares underlying currently exercisable options granted pursuant to the Company's Non-Discretionary Stock Option Plan For Non-Employee Directors. (4) Includes 15,000 shares underlying currently exercisable options granted pursuant to the Company's Non-Discretionary Stock Option Plan For Non-Employee Directors. (5) Includes 10,000 shares underlying currently exercisable options granted pursuant to the Company's Non-Discretionary Stock Option Plan For Non-Employee Directors. (6) Includes 206,667 shares underlying currently exercisable options granted pursuant to the Company's 1987 Stock Option Plan. (7) Messrs. Nennecker , Baker , and Geyer are officers and Mr. Nennecker is a director of Pegasus. As such, they can be considered to be beneficial owners of the 4,826,000 shares held of record by Pegasus. Accordingly, the figures opposite their names reflect the 4,826,000 shares owned by Pegasus. (8) Includes 68,334 shares underlying currently exercisable options granted pursuant to the Company's 1987 Stock Option Plan. (9) Includes 38.334 shares underlying currently exercisable options granted pursuant to the Company's 1987 Stock Option Plan. (10) Includes 58,334 shares underlying currently exercisable options granted pursuant to the Company's 1987 Stock Option Plan. (11) Includes currently exercisable options to purchase 523,419 shares. * Represents less than 1%.
Item 13. Certain Relationships and Related Transactions. Transactions with Management and Others As of December 31, 1995, the Company had provided collateral in the form of Certificates of Deposit totaling approximately $283,000 to secure repayment of bank loans to four employees of the Company including two officers (Paul B. Valenti - $114,408 and Donald E. Nilson - $52,778). The employees have pledged a total of 134,439 shares of the Company's common stock to the Company to secure repayment of these obligations. In March 1995, the Company acquired all of the outstanding capital stock of Mega Minerals S.A., an Ecuadorian company. The Company assumed obligations of approximately $120,000, and agreed to pay the seller a 10% net proceeds royalty on any production from the concessions after recovery of all capital expenditures. Gregory Pusey, a director and principal shareholder of the seller, is also a director of the Company. The assets of Mega Minerals S.A. consist of eight exploration concessions and the rights to acquire four additional exploration concessions, all located in the Nambija-Zamora gold belt of southern Ecuador. INDEX TO EXHIBITS NUMBER DESCRIPTION - - - - --------- ------------------------------------------ Exhibit 3.1 Certificate of Incorporation of the Company, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1987, is incorporated herein by this reference. Exhibit 3.2 Bylaws of the Company, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1987, is incorporated herein by this reference. Exhibit 4 Specimen Certificate of the $.001 par value common stock, previously filed as an Exhibit to the Company's registration statement on Form S- 3 (No. 33-19699), is incorporated herein by this reference. Exhibit 10.2 The Company's 1987 Stock Option Plan, as amended, previously filed as an Exhibit to the Company's registration statement on Form S-8 (No. 33-49392), is incorporated herein by this reference. Exhibit 10.3 The Company's Savings and Investment Plan, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1987, is incorporated herein by this reference. Exhibit 10.7 Agreement, dated January 1, 1986, between the Company and Centennial Minerals Ltd., previously filed as Exhibit 10.17 to the Company's Report on Form 10-K for the year ended May 31, 1986, is incorporated herein by this reference. Exhibit 10.7A Amendment of Agreement and Deed dated July 15, 1991, by and between Montana Tunnels Mining, Inc., USMX, INC. and USMX of Montana, Inc., previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1991, is incorporated herein by this reference. Exhibit 10.33 Non-Discretionary Stock Option Plan, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1991, is incorporated herein by this reference. Exhibit 10.40 Asset Purchase Agreement, dated June 11, 1993, between the Company and Placer Dome U.S. Inc., as amended, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1993, is incorporated herein by this reference. Exhibit 10.42 Employment Agreement, dated July 16, 1993, between the Company and James A. Knox, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1993, is incorporated herein by this reference. Exhibit 10.44 Exploration and Option to Purchase Agreement, dated effective July 9, 1993, between the Company and Dewey Mining Company and Thunder Mountain Gold, Inc., Ronald C. Yanke and Donald J. Nelson, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by this reference. Exhibit 10.45 Purchase and Sale Agreement, dated April 14, 1994, among the Company, Cominco American Resources Incorporated and Alta Gold Co., previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by this reference. Exhibit 10.46 Agreement, dated effective December 16, 1994, between the Company and North Pacific Mining Corporation, previously filed as an Exhibit to the Company's Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by this reference. Exhibit 10.46a Letter dated February 5, 1996 amending the Agreement dated effective December 16, 1994, between the Company and North Pacific Mining Corporation. Exhibit 10.47* Post-Termination Agreement, dated February 16, 1996, between the Company and Bull Valley L.L.C. Exhibit 10.48* Exploration Discovery Bonus Plan, dated effective September 1, 1989. Exhibit 10.49* Mine Services and Earthworks Contract, dated January 19, 1996, between the Company and D.H. Blattner & Sons, Inc. Exhibit 10.50* Purchase and Sale Agreement, dated March 20, 1995, among the Company, Mega Metals, Inc.; Mega Minerals S.A.; Greg Pusey; John Dreier and Gary McAdam. Exhibit 22* Subsidiaries of the Company Exhibit 24.1* Consent of KPMG Peat Marwick LLP * Exhibit filed with original Form 10-K for the year ended December 31, 1995. EX-10.46A 2 February 5, 1996 Mr. Gerald G. Booth President North Pacific Mining Corporation 2525 "C" Street, Suite 500 P.O. Box 93330 Anchorage, AK 99509-3330 Dear Jerry: As discussed at our October 26th meeting in Denver pertaining to the status of the Illinois Creek Project, USMX would like to be able to initiate production at Illinois Creek by the 3rd Quarter of 1996. I believe this is also the desire of NPMC. However, assuming a positive Feasibility Report is completed by the end of February 1996, USMX still cannot make a formal Production Decision until receipt of all required Approvals, currently expected in April 1996. If USMX were to make a Production Decision at that time, NPMC would not be required to make an election to either participate for a 25% working interest, or to receive a 5% royalty, until mid to late June of 1996. This uncertainty creates a problem for both companies. In order for the desired Illinois Creek production schedule to remain on track, USMX must begin making significant capital expenditures and contractual commitments in January 1996. As the Agreement is presently written, in the event NPMC were ultimately to elect to participate, it would have no liability for its share of such expenditures made prior to late June. Assuming that a positive Feasibility Report is completed or substantially completed in February 1996 which justifies a continued accelerated property Development schedule, USMX is willing to make the following proposal: 1. In the event that USMX's Board of Directors elects in the first half of February 1996, to initiate property Development (which election by USMX's Board is hereinafter referred to as the "Development Decision") which will include the making of expenditures related to engineering of the project, purchasing of equipment, entering into construction and mining contracts and engaging in related activities in preparation for the startup of production, and committing to production upon receipt of all required Approvals, presently anticipated in April 1996, assuming no material adverse change in project economic conditions subsequent to the Development Decision in February 1996, USMX shall make a non-refundable payment to NPMC of one million dollars in USMX common stock, cash, or a combination thereof (the "Development Decision Payment") in the same manner described in Section 4 of the Agreement for making the Production Decision Payment, excepting that the average closing price for purposes of payment in USMX shares shall be calculated for the thirty (30) trading days immediately preceding January 31February 1, 1996; and excepting that the 2.5% limitation in section 4.2(b) (ii) shall not apply until and unless the $3 million balance of the Production Decision Payment becomes due and payable; and provided further that if USMX elects to make the Development Decision Payment in Shares, USMX shall thereupon take all of the actions as to said Shares as are required by Section 4 of the Agreement just as if the entire Production Decision Payment were then being made, including but not limited to the specific actions set forth in section 4.3. Upon receipt of all required Approvals, and assuming that no material adverse change in project economics has occurred subsequent to the effective date of the Development Decision, USMX shall make a Production Decision within 15 days after receiving all Approvals and shall pay to NPMC the balance of the Production Decision Payment (three million dollars in USMX common stock, cash, or a combination thereof as described in Section 4 of the Agreement). If USMX fails to make a Production Decision by December 31, 1996, and does not pay the balance of the Production Decision Payment by that date, then any participation election previously made by NPMC shall be null and void as of such date and NPMC shall be entitled to again exercise its full election rights in accordance with Section 5 of the Agreement when and if USMX does make a Production Decision. In consideration for the commitments set forth above, NPMC agrees that within 30 days after (a) the effective date of Notice of USMX'x Development Decision, and (b) NPMC's receipt of the Feasibility Report and related information, whichever is last to occur, NPMC shall make its election as provided by Section 5 of the Agreement as amended hereunder to either: (i) receive a 5% Net Returns Royalty, or (ii) participate for a 25% working interest, in which event, NPMC will, within 30 days after that election, reimburse USMX for 25% of the project expenditures (which shall not include the Development Decision Payment or the Production Decision Payment) incurred subsequent to the effective date of USMX's Development Decision. 2. It is also agreed between the parties that in the event that NPMC elects under paragraph 1 above to receive a 5% Net Returns Royalty rather than to participate for a 25% working interest, and in the event that USMX at some future date may delineate the existence of additional ore reserves on the Illinois Creek Upland Mining Lease which increase the total proven ore reserves to at least one million ounces of equivalent gold ore reserves beyond the proven equivalent gold ore reserves stated in the Feasibility Report which forms the basis for USMX's Development Decision in 1996, NPMC shall have an additional opportunity to elect (within 60 days after receipt of USMX's notice of those additional reserves) to participate in subsequent mining operations with respect to those additional reserves for a 25% working interest by reimbursing USMX 120% of NPMC's 25% share of the Exploration, Development and capital costs (which shall not include the Development Decision Payment or the Production Decision Payment) incurred by USMX subsequent to the effective date of its 1996 Development Decision, and which are directly related to the delineation and/or production of the additional reserves.. We believe that this proposal is equitable for both parties. USMX is willing to take the near-term financial risk necessary to seek a late 1996 production date, if NPMC will make an early decision with respect to participation and reimburse USMX for NPMC's share of the cost incurred subsequent to the effective date of the 1996 Development Decision by USMX, in the event NPMC decides to make such participation election. The magnitude of such a financial commitment by USMX prior to NPMC's election will be substantial. Under this proposed scenario, both companies' goals should be attainable. I also wish to note that under the terms of the Agreement, NPMC, CIRI and their affiliates have been given the opportunity to bid on the contracts for work in connection with all Operations for the proposed Illinois Creek project. It is anticipated that the bids by such entities will be competitive, and that such bids will be considered in good faith by USMX. If the terms of this letter are acceptable to NPMC, please so indicate by signing a copy and returning it to USMX, and we will consider the Agreement to be revised as specifically set forth in this letter. All other terms and conditions of the Agreement shall remain unchanged and in full force and effect and nothing herein shall accelerate the Transfer Date or constitute a waiver or relinquishment of any of such other terms and conditions by either NPMC or USMX unless specifically set forth in this letter. Capitalized terms used in this letter have the same definitions as provided in the Agreement, unless otherwise herein clearly indicated. Sincerely, USMX, INC. /s/ James A. Knox James A. Knox President JAK395/caw Accepted this 12th day of February, 1996. /s/ Gerald G. Booth Gerald G. Booth, President North Pacific Mining Corporation -----END PRIVACY-ENHANCED MESSAGE-----