-----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, EZxaNL6U2YlJAxomE4wVYP4/2rEq9mRD2W/Ve2Gbu80iA+s3PoCygrCI5JW7SVpq +QjFT/7UuyWqprXXuEbjRA== 0000824590-97-000007.txt : 19970804 0000824590-97-000007.hdr.sgml : 19970804 ACCESSION NUMBER: 0000824590-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970801 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GETCHELL GOLD CORP CENTRAL INDEX KEY: 0000824590 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 640748908 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11847 FILM NUMBER: 97649609 BUSINESS ADDRESS: STREET 1: 5460 S QUEBEC ST STE 240 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037719000 FORMER COMPANY: FORMER CONFORMED NAME: FIRSTMISS GOLD INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ________ Commission file number: 0-16484 Getchell Gold Corporation (Exact name of Registrant as specified in its charter) Delaware 64-0748908 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5460 South Quebec Street Suite 240 Englewood, Colorado 80111 (Address of principal executive offices) (Zip code) (303) 771-9000 (Registrant's telephone number including area code) Not applicable (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 ____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ____ No ____ (APPLICABLE ONLY TO CORPORATE ISSUERS) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title Outstanding Common Stock, par value $0.0001 26,778,491 on July 30, 1997 Page 1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GETCHELL GOLD CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 1997 1996 1997 1996 ------- ------- ------- ------- Net sales $18,675 $17,193 $33,537 $31,848 Cost of sales 21,726 18,436 41,537 35,014 ------- ------- ------- ------- Gross loss 3,051 1,243 8,000 3,166 General and administrative expenses 643 1,222 3,763 2,440 Exploration expenses 424 731 996 1,583 ------- ------- ------- ------- Loss from operations 4,118 3,196 12,759 7,189 Interest expense, net of capitalized interest (221) (301) (442) (534) Interest and other income 1,255 1,476 2,138 3,099 ------- ------- ------- ------- Loss before income taxes 3,084 2,021 11,063 4,624 Income tax benefit - - - 870 ------- ------- ------- ------- Net loss $ 3,084 $ 2,021 $11,063 $ 3,754 ======= ======= ======= ======= Loss per common share $ 0.12 $ 0.08 $ 0.42 $ 0.15 ======= ======= ======= ======= Weighted average number of shares outstanding 26,775 25,716 26,358 25,705 ======= ======= ======= =======
The accompanying notes are an integral part of these statements. Page 2 GETCHELL GOLD CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except per share data)
June 30, December 31, 1997 1996 -------- ------------ ASSETS Current assets: Cash and cash equivalents $ 82,448 $ 64,130 Accounts receivable: Trade 2,853 2,478 Employee 171 171 Other 44 315 -------- -------- Total accounts receivable 3,068 2,964 -------- -------- Inventories: Ore and ore in process 2,821 1,816 Materials and supplies 8,623 8,676 -------- -------- Total inventories 11,444 10,492 -------- -------- Deferred hedging gains, net - 362 Prepaid expenses 599 1,098 -------- -------- Total current assets 97,559 79,046 Property, plant and equipment, net 149,340 129,762 Other 110 - -------- -------- Total assets $247,009 $208,808 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,255 $ 8,378 Accrued expenses 1,569 1,740 Current portion of capital lease obligations 2,037 1,753 Stock Appreciation Rights liability 2,045 - Other 391 - -------- -------- Total current liabilities 13,297 11,871 Long-term debt 26,187 25,336 Capital lease obligations, less current installments 7,882 9,092 Deferred income taxes 7,741 7,741 Reclamation liabilities 2,650 2,694 Other liabilities 1,173 852 -------- -------- Total liabilities 58,930 57,586 -------- -------- Stockholders' equity: Preferred stock, par value $0.0001; 10,000 shares authorized; none issued - - Common stock, par value $0.0001; 100,000 shares authorized; issued and outstanding 26,778 at June 30, 1997 and 25,766 at December 31, 1996 3 3 Contributed and paid-in capital 220,800 172,879 Accumulated deficit (32,724) (21,660) -------- -------- Total stockholders' equity 188,079 151,222 -------- -------- Total liabilities and stockholders' equity $247,009 $208,808 ======== ========
The accompanying notes are an integral part of these statements. Page 3 GETCHELL GOLD CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended June 30, -------------------- Cash flows from operating activities: 1997 1996 --------- -------- Net loss $(11,063) $(3,754) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, depletion and amortization 5,068 4,261 Accrued interest converted to loan principal 772 - Deferred income taxes - (870) Deferred hedging gain, net 362 990 Other 391 7 Net change in operating assets and liabilities: Accounts receivable (105) 875 Inventories (951) (756) Prepaid expenses 499 161 Accounts payable (1,559) 1,356 Accrued expenses (170) 1,113 Stock Appreciation Rights liability 2,045 - Other liabilities 277 109 -------- -------- Cash provided by (used in) operating activities (4,434) 3,492 -------- -------- Cash flows from investing activities- Additions to property, plant and mine development (24,120) (19,888) -------- -------- Cash flows from financing activities: Net proceeds from issuance of common stock 47,798 668 Proceeds from long-term debt - 31 Principal payments under capital lease obligation (926) (749) ------- -------- Cash provided by (used in) financing activities 46,872 (50) ------- -------- Net increase (decrease) in cash and cash equivalents 18,318 (16,446) Cash and cash equivalents at beginning of period 64,130 114,633 ------- -------- Cash and cash equivalents at end of period $82,448 $ 98,187 ======= ========
The accompanying notes are an integral part of these statements. Page 4 GETCHELL GOLD CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) GENERAL The financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments of a normal and recurring nature which are necessary to present fairly the financial position, results of operations and cash flows for the interim periods. These financial statements should be read in conjunction with the Annual Report of Getchell Gold Corporation (the "Company") on Form 10-K for the year ended December 31, 1996. Certain prior year amounts have been reclassified to conform with the current year presentation. (2) EARNINGS PER SHARE In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"), which specifies the computation, presentation and disclosure requirements for earnings per share. SFAS 128 is effective for periods ending after December 15, 1997 and requires retroactive restatement of prior periods earnings per share. The statement replaces the "primary earnings per share" calculation with a "basic earnings per share" and redefines the "dilutive earnings per share" computation. Had earnings per share been determined in accordance with SFAS 128 for the three and six months ended June 30, 1997, the Company's reported income per common share would not have been affected. (3) $50 MILLION PUBLIC EQUITY OFFERING On March 17, 1997, the Company completed an equity offering of 1,000,000 common shares which resulted in net proceeds to the Company of $47.7 million after offering costs and expenses of $2.3 million. Net proceeds of the offering will be used for the continued development of the Turquoise Ridge mine, for exploration on the Getchell property and for general corporate purposes. (4) HEDGING AND OTHER PRECIOUS METAL CONTRACT COMMITMENTS Precious metal contracts consist of spot deferred and European call option contracts. The Company uses the spot deferred contracts to protect earnings and cash flows from the impact of short-term drops in gold price. Risk of loss on the spot deferred contracts arises from the possible inability of the counterparty to fulfill its obligations under the contracts and from Page 5 GETCHELL GOLD CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS changes in the Company's potential ability to deliver gold, although nonperformance by any party to the contract is not anticipated. At June 30, 1997, the Company had outstanding spot deferred contracts for 80,000 ounces at an average price of $386 per ounce. Of these contracts, 20,000 ounces were for delivery in 1997 at a weighted average price of $387 and 60,000 ounces were for delivery in 1998 at a price of $385. Based on the market price of gold at June 30, 1997, the unrealized gains on the spot deferred contracts were approximately $4.1 million. Recognition of premiums received for call options sold are deferred until the option expires or the related transaction occurs at which time the deferred amounts are recognized in income. Risk of loss on European call option contracts exists if the market price were to exceed the exercise price of the option on the date designated in the contract. At June 30, 1997, the Company had outstanding European call option contracts for 175,000 ounces of gold at a weighted average price of $367 per ounce and 50,000 ounces of silver at a weighted average price of $5.5 per ounce. All call option contracts expire prior to January 1998. (5) PROPERTY, PLANT AND EQUIPMENT (In thousands) At At June December 30, 1997 31, 1996 -------- -------- Land and land improvements $ 9,544 $ 9,524 Buildings and equipment 117,655 115,550 Mine development 49,849 38,757 Construction-in-progress 60,345 48,916 -------- -------- Total property, plant and equipment 237,393 212,747 Accumulated depreciation, depletion and amortization (88,053) (82,985) -------- -------- Net property, plant and equipment $149,340 $129,762 ======== ======== Depreciation and depletion expense was $2.7 million and $2.5 million for the three months ended June 30, 1997 and 1996, respectively, and $5.1 million and $4.3 million for the six months ended June 30, 1997 and 1996, respectively. Page 6 GETCHELL GOLD CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Capitalized interest was $0.4 million and $0.3 million for the three months ended June 30, 1997 and 1996, respectively, and $0.8 million and $0.6 million for the six months ended June 30, 1997 and 1996, respectively. (6) EMPLOYEE BENEFITS On February 14, 1997, the Compensation, Human Resource and Director Affairs Committee of the Board of Directors of the Company granted stock appreciation rights ("SARS") under the Company's 1996 Long Term Equity Incentive Plan with respect to 75,983 shares at a weighted average option price of $8.32 per share to certain executives and other employees of the Company, as detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Compensation with respect to SARS is accounted for on a variable basis and is "marked to market" at the end of each fiscal quarter based on the market price of the Company's Common Stock. Based on the $35.125 market price of the Company's Common Stock at June 30, 1997, the Company recognized compensation expense of $2.0 million, or $0.08 per share, in the six months ended June 30, 1997. Of the $2.0 million, $1.3 million was charged to general and administrative expenses, $0.5 million was charged to cost of sales and $0.2 million was charged to exploration. The Company's future quarterly results will reflect only compensation expense or income with respect to these SARS based on the change in the market price of the Common Stock as compared to the market price at the end of the preceding quarter. The Company recognized compensation income of $0.4 million in the second quarter of 1997 related to the SARS based on the change in the market price of the Company's Common Stock at June 30, 1997 from March 31, 1997. (7) SUPPLEMENTAL CASH FLOW INFORMATION Net cash provided by operating activities includes the following cash payments (in thousands): Six Months Ended June 30, ---------------- 1997 1996 ------ ------ Interest, net of amounts capitalized $(356) $(206) Income taxes paid $ - $ - (8) COMMITMENTS AND CONTINGENCIES Environmental Obligations The Company's mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with all applicable laws and regulations. The Company has made, and expects to Page 7 GETCHELL GOLD CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS make in the future, expenditures to comply with such laws and regulations. The Company cannot predict such future expenditures. Internal Revenue Service Tax Claim In October 1996, the Internal Revenue Service ("IRS") filed a notice of deficiency, stating that the IRS is proceeding against the Company's former Parent Company, ChemFirst Inc. ("ChemFirst") and, thus the Company (see Note 7 to Item 8 - "Financial Statements and Supplementary Data" as found in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 regarding the Amended Tax Sharing Agreement between ChemFirst and the Company), for income taxes associated with ChemFirst's consolidated income tax returns filed in 1989 and 1990. The Company's share of the asserted deficiency, including interest, totals approximately $4.5 million. In response, ChemFirst and the Company filed a petition with the United States Tax Court in December 1996. The Company believes it has adequately reserved for this tax matter. Major Contracts The Company has an agreement with an independent contractor who provides oxygen for the autoclave process in the mill. The agreement requires, among other things, that the Company must pay the independent contractor at a rate (subject to future adjustments for inflation) of approximately $0.2 million a month. The Company is also obligated to pay a termination fee if the contract were to be terminated prior to January 2004. The termination fee is $2.8 million in 1997 and decreases each year until reaching $0.4 million in 2004. Royalties The Company is obligated to pay a 2% royalty on net smelter returns of the current mineral production from certain of its mining properties. Royalties, recorded as operating costs, amounted to $0.2 million and $0.4 million in the three months ended June 30, 1997 and 1996, respectively, and $0.3 million and $0.6 million in the six months ended June 30, 1997 and 1996, respectively. Letter of Credit At December 31, 1996, a $1.0 million unsecured letter of credit was outstanding for bonding of a reclamation plan. In January 1997, this letter of credit was increased to $4.5 million. This letter of credit reflects fair value as a condition of its underlying purpose and is subject to fees competitively determined in the market place. Page 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The information set forth in this discussion and analysis includes both historical information and "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by that section. To the extent that this report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other operations of the Company, the Company's actual financial condition, operating results and business prospects may differ materially from that projected or estimated by the Company in such forward-looking statements. Factors that realistically could cause results to differ materially from those projected in the forward-looking statements are set forth in "Risk Factors" below. Results of Operations Results for the quarter ended June 30, 1997 were a loss of $3.1 million, or $0.12 per share versus a loss of $2.0 million, or $0.08 per share, for the same quarter of 1996. Results for the six months ended June 30, 1997 were a loss of $11.1 million, or $0.42 per share, compared with a loss of $3.8 million, or $0.15 per share, in the same period of 1996. The following table highlights sales and production information for the three and six month periods ended June 30, 1997 and 1996:
Three Months Ended Six Months Ended June 30, June 30, ------------------------- --------------------------- 1997 1996 1997 1996 ----------- ----------- ------------ ------------ Ounces of gold sold 48,262 43,802 85,991 81,019 Average realized price per ounce $387 $393 $390 $393 Average market price per ounce $341 $388 $344 $395 Cash cost per ounce $393 $361 $423 $378 Total cost per ounce $450 $421 $483 $432 Ore milled (dry tons) 283,437 291,016 553,682 559,241 Average grade of ore milled (ounces per ton) 0.188 0.162 0.173 0.153 Underground ore milled (dry tons) 136,956 98,400 241,118 187,011
Sales revenue of $18.7 million in the second quarter of 1997 was up from $17.2 million in the same period of 1996 and sales revenue of $33.5 million in the first six months of 1997 was up from $31.8 million in the same period of 1996. The increases in the ounces sold in the 1997 periods as compared to the 1996 periods were the result of improvements in underground mining operations that led to improvements in Page 9 the overall grade of ore milled. The increase in ounces sold resulted in $1.7 million more in revenues in the second quarter of 1997 and $1.9 million more in revenues in the first six months of 1997, as compared to the same periods of 1996, with each periods revenue offset by $0.2 million due to the lower prices in the 1997 periods as compared to 1996. Gold production in the first six months of 1997, although higher than the previous years production, was adversely affected by rain induced flooding of the Getchell Underground mine access and a fatality of a mine worker in the first quarter of 1997. Initial revenue from the Turquoise Ridge mine development ore, expected no earlier than the fourth quarter of 1997, will be offset against the capital costs of the Turquoise Ridge project until the Turquoise Ridge mine is declared to be in commercial production, which is expected no earlier than the second half of 1998. The Company hedged a portion of its production which resulted in higher realized gold prices of $387 and $390 than the average market gold prices of $341 and $344 per ounce in the 1997 second quarter and first six months, respectively. Cost of sales was $21.7 million in the second quarter of 1997, up from $18.4 million in the second quarter of 1996, and cash costs per ounce produced were $393 and $361 for the two periods, respectively. For the first six months, cost of sales was $41.5 million in 1997, up from $35.0 million in 1996, and cash costs per ounce produced were $423 and $378 for the two periods, respectively. Underground mining costs, mine site general and administrative ("G&A") costs and depreciation and depletion were higher in the second quarter and first six months of 1997 as compared to the same periods last year, with milling costs only higher in the first six months. Increases in underground mining costs were related to higher maintenance costs, as well as the effects of the flooding and fatality in the first quarter. Higher reagent and maintenance expenditures associated with the harder and more carbonaceous underground ore contributed to increased mill costs. Mine site G&A costs have risen primarily due to increased support services as the Company expands its operations. Higher depreciation and depletion costs reflect the addition of assets throughout 1996, mostly at the mill and in the Getchell Underground operation. On February 14, 1997, the Compensation, Human Resource and Director Affairs Committee of the Company's Board of Directors granted stock appreciation rights ("SARS") under the Company's 1996 Long Term Equity Incentive Plan with respect to 75,983 shares at a weighted average option price of $8.32 per share to certain executives and other employees of the Company, as detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Compensation with respect to SARS is accounted for on a variable basis and is "marked to market" at the end of each fiscal quarter based on the market price of the Company's Common Stock. Based on the $35.125 market price of the Company's Common Stock at June 30, 1997, the Company recognized compensation expense of $2.0 million, or $0.08 per share, in the first six months of 1997. Of the $2.0 million, $1.3 million was charged to G&A expenses, $0.5 million was charged to cost of sales and $0.2 million was charged to exploration. The Company's future quarterly results will reflect only compensation expense or income with Page 10 respect to these SARS based on the change in the market price of the Common Stock as compared to the market price at the end of the preceding quarter. Corporate G&A costs increased to $3.8 million in the first six months of 1997 from $2.4 million in the same period of 1996 primarily due to the impact of the grant of the SARS. Based on the change in the market price of the Company's Common Stock at June 30, 1997 from March 31, 1997, the second quarter 1997 G&A expenses reflect compensation income of $0.3 million related to the SARS. Exploration expenses were lower for the three months and six months ended June 30, 1997 as compared to the same periods of 1996 due to the Company's current focus on the delineation and expansion of known ore zones, for which drilling expenditures are capitalized. Interest and other income was lower in the 1997 second quarter and first six months than in the same periods of 1996 due to lower cash and cash equivalent balances throughout the periods in 1997. A $0.9 million tax benefit was recognized on the pretax loss in the first quarter of 1996 with no additional benefits taken subsequent to the first quarter of 1996. Based upon tax planning strategies and estimates of future operations, the Company anticipates being subject to the alternative minimum tax in the future. As such, it is more likely than not that the Company will be unable to realize the benefit of federal net operating loss carryforwards. Liquidity and Capital Resources During the first six months of 1997, the Company consumed $4.4 million of cash in operations and $24.1 million in capital expenditures. These capital expenditures included $12.4 million on the Turquoise Ridge mine development, $6.1 million on the Getchell Underground mine, $1.8 million on the mill, $2.7 million on development drilling and $1.1 million on other items. On the Turquoise Ridge mine construction, sinking of the ventilation shaft had reached a depth of 1,491 feet at June 30,1997, with expected completion for initial development ore production no earlier than the end of 1997. Production shaft sinking had reached a depth of 877 feet at June 30, 1997. All surface hoisting and support facilities are completed. Total expenditures on the Turquoise Ridge mine construction through June 30, 1997 were $40 million, with an estimated $49 million more to be spent in 1997 and 1998 to complete the project, although there can be no assurance that actual expenditures will not differ materially from this amount. In March 1997, the Company completed an equity offering of 1,000,000 shares of Common Stock which resulted in net proceeds to the Company of $47.7 million. As of June 30, 1997, cash and cash equivalents were $82.4 million. Approximately $45 million is expected to be spent on capital projects in the remaining six months of 1997, including the Turquoise Ridge mine as discussed, modifications to the mill, Page 11 the Getchell Underground mine development, equipment and development drilling, although there can be no assurance that actual expenditures will not differ materially from this amount. The Company plans on financing these capital development projects and its operations from the existing cash and cash equivalents. Any shortfalls in funds required to meet these needs may be supplemented by additional funds raised through borrowings or securities offerings. In July 1997, the Company's S-3 shelf registration statement for up to $300 million in securities was declared effective by the Securities and Exchange Commission. The recoverability of the Turquoise Ridge assets and completion of the underground mine is dependent on the Company's ability to raise sufficient funds to complete the construction. There can be no assurance that funding will be available on favorable terms, if at all. The principal balance of the Company's promissory note with ChemFirst was $26.1 million at June 30, 1997. The promissory note is due September 22, 2000 or upon a change in control of the Company and may be prepaid without penalty. The interest rate on the loan is the London Interbank Offered Rate for a period selected by the Company, plus an applicable margin based on the Company's leverage ratio. The interest rate was 6-5/8% at June 30, 1997. Since the inception of the promissory note, interest has been capitalized to the note at the end of each interest period. An interest period ended in May 1997, at which time $0.8 million was capitalized to the note. Risk Factors Readers should carefully consider the risk factors set forth below, as well as all information included in this document and the Annual Report of the Company on Form 10-K for the year ended December 31, 1996 and the documents incorporated by reference therein. Gold Price Volatility The Company's profitability is significantly affected by changes in the price of gold. Gold prices may fluctuate widely and are affected by numerous industry factors, such as demand for precious metals, forward selling by producers, central bank sales and purchases of gold and production and cost levels in major gold-producing regions. Moreover, gold prices are also affected by macro-economic factors such as expectations for inflation, interest rates, currency exchange rates and global or regional political and economic situations. The current demand for and supply of gold affects gold prices, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. The potential supply of gold consists of new mine production plus existing stocks of bullion and fabricated gold held by governments, financial institutions, industrial organizations and individuals. Since mine production in any single year constitutes a very small portion of the total potential supply of gold, normal variations in current production do not necessarily have a significant effect on the supply of gold or on its price. If gold prices should decline below the Company's expected cash costs of production and remain at such levels for any sustained period, the Company could determine that it is not economically feasible to continue commercial production. Page 12 The volatility of gold prices is illustrated in the following table of the annual high, low and average London P.M. Fix: Price Per Ounce ---------------------------------- Calendar Year High Low Average - ------------------------------------------ --------- -------- --------- 1987...................................... $ 500 $ 390 $ 446 1988...................................... $ 484 $ 395 $ 437 1989...................................... $ 416 $ 356 $ 381 1990...................................... $ 424 $ 346 $ 383 1991...................................... $ 403 $ 344 $ 362 1992...................................... $ 360 $ 330 $ 344 1993...................................... $ 406 $ 326 $ 360 1994...................................... $ 396 $ 370 $ 384 1995...................................... $ 396 $ 372 $ 384 1996...................................... $ 415 $ 367 $ 387 1997 (through July 30).................... $ 367 $ 317 $ 344 The London P.M. Fix on July 30, 1997, was $328 per ounce. Continuing Losses The Company reported a net loss of $11.1 million for the six months ended June 30, 1997, $14.0 million for the year ended December 31, 1996, $5.0 million for the six months ended December 31, 1995 and $18.4 million for the fiscal year ended June 30, 1995. The Company expects to continue to experience losses until higher grade ore from Turquoise Ridge or other sources is produced. There can be no assurance that such higher grade ores will be obtained by the Company. Funds Needed for Development of Turquoise Ridge If there are any shortfalls in funds required to meet the needs for the development of Turquoise Ridge, they may be supplemented by additional funds raised through borrowings or securities offerings. The recoverability of the Turquoise Ridge assets and completion of the underground mine at Turquoise Ridge is dependent on the Company's ability to raise sufficient funds to complete the construction. There can be no assurance that funding will be available on favorable terms, if at all. Reserves The ore reserves described by the Company are, in large part, estimates made by the Company and confirmed by independent mining consultants known as Mine Development Associates ("MDA") and Mineral Resource Development, Inc. ("MRDI"). The reserves confirmed by MDA and MRDI are subject to certain risks and assumptions, including those discussed in "Certain Turquoise Ridge Mine Risks" below. Additionally, no assurance can be given that the indicated level of recovery of gold will be realized or that the assumed gold price of $400 per ounce will be obtained. Reserve estimates may require revision based on actual production experience. Market price fluctuations of gold, as well as increased production costs Page 13 or reduced recovery rates, may render ore reserves containing relatively lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. Moreover, short-term operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the processing of new or different ore grades, may adversely affect the Company's profitability in any particular period. Declines in the market price of gold may also render ore reserves containing relatively lower grades of gold mineralization uneconomic to exploit unless the utilization of forward sales contracts or other hedging techniques is sufficient to offset the effects of a drop in the market price of the gold expected to be mined from such reserves. If the Company's realized price per ounce of gold, including hedging benefits, were to decline substantially below the levels set for calculation of reserves for an extended period, there could be material delays in the development of new projects, increased net losses, reduced cash flow, reductions in reserves and asset impairments. Project Development Risks The Company from time to time engages in the development of new ore bodies. Specific risks associated with the Company's development of the Turquoise Ridge mine are discussed below. The Company's ability to sustain or increase its present level of gold production is dependent in part on the successful development of such new ore bodies and/or expansion of existing mining operations. The economic feasibility of any such development project, and all such projects collectively, is based upon, among other things, estimates of reserves, metallurgic recoveries, capital and operating costs of such projects and future gold prices. Development projects are also subject to the successful completion of feasibility studies, issuance of necessary permits and receipt of adequate financing. Development projects have no operating history upon which to base estimates of future cash operating costs and capital requirements. In particular, estimates of reserves, metal recoveries and cash operating costs are to a large extent based upon the interpretation of geologic data obtained from drill holes and other sampling techniques and feasibility studies which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates of metals from the ore, comparable facility and equipment costs, anticipated climate conditions and other factors. As a result, it is possible that actual cash operating costs and economic returns of any and all development projects may materially differ from the costs and returns initially estimated. Certain Turquoise Ridge Mine Risks The Turquoise Ridge mine involves numerous risks. These include the following: Capital Requirements. Expenditures required to advance the Turquoise Ridge mine to the point of a production test are large, particularly since the Company has decided to proceed with shaft systems capable of being used in full-scale production in order to save time and money should trial mining be confirmed as viable. Thus, to a large extent, expenditures which would usually Page 14 be supported by a feasibility study will depend on the data in-hand and assumptions made in the Company's mine plans with an attendant higher level of uncertainty. See "-Funds Needed for Development of Turquoise Ridge." Reserves. There can be no assurance that the probable reserves set forth in reserve reports by MRDI and MDA for Turquoise Ridge and Shaft Zone will actually be mined and milled on an economic basis, if at all. The MDA and MRDI reports are based upon many assumptions, some or all of which may not prove to be accurate. The failure of any such assumptions to prove accurate may alter the conclusions of MDA's and/or MRDI's report on reserves and may have a material adverse affect on the Company. The resource and reserve estimates were prepared using geological and engineering judgment based on available data. In the absence of underground development, such estimates must be regarded as imprecise and some of the assumptions made may later prove to be incorrect or unreliable. The grade distribution at Turquoise Ridge is between 0.2 to 0.6 ounces per ton. Small changes in cutoff grade can cause large shifts in the reserves. If dilution and/or mining costs related to poor ground conditions are higher than expected, the reserves could be substantially reduced, resulting in a shortening of mine life and a reduced or negative cash flow. Dilution. The tonnage and grade of the mill feed material was estimated by applying dilution factors to certain resource data. The dilution agents are backfill, waste from the back of overcut crosscuts and drifts, and from the walls. In the case of the latter two, MRDI assumed that there would be an average of one foot of back and wall dilution. MDA used approximately 15% dilution and 95% recovery of the mineable reserve. If this dilution increases, there will be corresponding negative effects on the tonnage and grade to mill. This risk is related to the irregular configuration of the ore body which, even with the tight cut-and-fill stoping method used, could make achievement of the assumed dilution impossible to achieve in practice. Production Shaft Completion. The two-year assumed construction period for the Production Shaft, which was started in the fourth quarter of 1996, is an aggressive schedule. Delay in construction would necessitate removing ore through the Ventilation Shaft, which is basically designed for waste and the limited ore from early production. Additionally, the availability of the final ventilation circuit required for mining depends upon the completion of the Production Shaft. Mining Costs. As part of the project risk assessment, sensitivities were run on various mining costs. Due to uncertainties about actual ground conditions and productivities, these costs are only predictable within a broad range and the predictions may not be valid. Therefore, actual mining costs may have a material adverse effect on the viability of the Turquoise Ridge project and on the Company. Hydrology. Drainage of the ore body and surrounding rock will be critical to the achievement of the mining efficiencies and costs estimated for the study. If the deposit is not drained and water remains in this clay-rich environment, mining conditions could worsen, and ground support costs Page 15 will increase. If, due to the presence of fine clays, the deposit drains slowly, the start of production may be delayed, and the build-up to full production may be of longer duration. Additionally, depending upon the quantity and quality of water encountered, the water treatment/disposal options presently available to the Company may be insufficient to meet estimated amounts needed to treat water pumped from Turquoise Ridge during dewatering. Geotechnical Considerations. The Turquoise Ridge ore zones contain areas of poor ground conditions due to a high percentage of the ground being comprised of low rock mass rating rock and clay. As a result, additional ground support may be required. Dependence on a Single Property All of the Company's revenues are derived from its mining and milling operations at the Getchell Property. If the operations at the Getchell Underground mine or at any of the Company's processing facilities were to be reduced, interrupted or curtailed, the Company's ability to generate revenues and profits in the future would be materially adversely affected. Exploration Mineral exploration, particularly for gold, is highly speculative in nature, involves many risks and frequently is unsuccessful. The Company is seeking to expand its reserves only through exploration and development at the Getchell Property. There can be no assurance that the Company's exploration efforts will result in the discovery of any additional gold mineralization or that any mineralization discovered will result in an increase of the Company's reserves. If reserves are developed, it may take a number of years and substantial expenditures from the initial phases of drilling until production is possible, during which time the economic feasibility of production may change. No assurance can be given that the Company's exploration programs will result in the replacement of current production with new reserves or that the Company's development program will be able to extend the life of the Company's existing mines. Hedging Activities The Company currently uses spot deferred contracts to protect earnings and cash flows from the impact of short-term drops in gold prices. These transactions have been designated as hedges of the price of future production and are accounted for as such. Spot deferred contracts are agreements between a seller and a counterparty whereby the seller commits to deliver a set quantity of gold, on an established future date and at an agreed upon price. The established forward price is equal to the current spot gold price on the day the agreement is signed plus "contango." Contango is equal to the difference between the prevailing market interest rate for cash deposits less the gold lease rate, for comparable periods. The contango rate was from 3.7% to 3.9% per annum for one-month to twelve-month periods at June 30, 1997. On the scheduled future delivery date, the seller may deliver gold and thereby fulfill the contract or defer delivery to a future date. If the spot price on the delivery date is greater than the Page 16 contract price, delivery on the contract may be deferred to a new future date and the gold is sold at the higher spot price. If the spot price is lower than the contract price, the delivery may be made against the contract and the higher contract price is realized. In practice, this generally allows the seller to maximize the price realized. Each time a seller defers delivery, the forward sales price is increased by the then prevailing contango (assuming it is positive) for the next period out to the newly established future delivery date. Generally, the counterparty will allow the seller to continue to defer contract deliveries providing that there is sufficient scheduled production from proven and probable reserves to fulfill the commitment. At June 30, 1997, the Company's outstanding hedge contracts were for 80,000 ounces at an average price of $386 per ounce. Of these contracts, 20,000 ounces are for delivery in 1997 at an average price of $387 and 60,000 ounces are for delivery in 1998 at a price of $385. Risk of loss from these forward sales agreements arises from the possible inability of a counterparty to honor contracts and from changes in the Company's potential ability to deliver gold. The Company's accounting treatment for hedging is outlined in Notes 2 and 3 to Item 8 "Financial Statements and Supplementary Data" as found in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Other Precious Metal Contract Commitments The Company has entered into European call option contracts. European call option contracts are agreements between a seller and a counterparty whereby the counterparty has the right, but not the obligation, to buy gold from the seller at a predetermined price on a predetermined date. The counterparty pays a premium for this right. The premiums are deferred until the option expires or the related transaction occurs at which time the deferred amounts are recognized in income. Risk of loss on European call option contracts exists if the market price were to exceed the exercise price of the option on the date designated in the contract. At June 30, 1997, the Company had outstanding European call option contracts for 175,000 ounces of gold at a weighted average price of $367 per ounce and 50,000 ounces of silver at a weighted average price of $5.5 per ounce. All call option contracts expire prior to January 1998. Dependence on Key Personnel The Company is dependent on the services of certain key officers and employees, including its Chief Executive Officer, its Chief Financial Officer, its Chief Operating Officer and its Chief Administrative Officer. Competition in the mining industry for qualified individuals is intense, and the loss of any of these key officers or employees, if not replaced, could have a material adverse effect on the Company's business and its operations. The Company currently does not have key person insurance. The Company has entered into Termination Agreements with its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Administrative Officer which provide for certain payments upon termination or resignation resulting from a change of control (as defined in such agreements). Page 17 In connection with the development of Turquoise Ridge, the Company expects that it will require a significant number of additional skilled employees. The Company faces intense competition from other mining companies in connection with the recruitment and retention of such employees. Additionally, although the Company does not currently have any unionized employees, there can be no assurance that unionization will not occur in the future. Government Regulation Safety. The mining operations of the Company are subject to inspection and regulation by the Mine Safety and Health Administration of the United States Department of Labor ("MSHA") under the provisions of the Mine Safety and Health Act of 1977. The Occupational Safety and Health Administration ("OSHA") also has jurisdiction over safety and health standards not covered by MSHA. On January 15, 1997, a mine site accident involving a Tamrock loader resulted in the death of a Company employee. As required by federal law, MSHA officials investigated the accident. MSHA issued seven enforcement actions, one of which was vacated subsequently. The maximum civil penalties for which the Company could be assessed as the result of such actions is $0.3 million. MSHA also conducted a special investigation to determine whether knowing and/or willful violations on the part of the Company or any agent, officer or director of the Company occurred. The result of that investigation is unknown, but could result in additional criminal penalties for the Company and/or civil or criminal penalties for agents, officers, or directors of the Company. While management of the Company believes that the results of the investigation will not have a materially adverse impact on the financial position, operating results or liquidity of the Company, no assurance can be given that the outcome of this investigation will not have such effects. On May 26, 1997, a worker employed by the ventilation shaft sinking contractor was killed in an accident at the bottom of the ventilation shaft due to a mechanical failure of a safety device. As required by federal law, MSHA officials investigated the cause of the accident. Enforcement action was taken against the contractor, but the Company did not receive any citations as a result of that accident investigation. Current Environmental Laws and Regulations. The Company must comply with standards, laws and regulations which may entail greater or lessor costs and delays depending on the nature of the regulated activity and how stringently the regulations are implemented by the regulatory authority. It is possible that the costs and delays associated with compliance with such laws, regulations and permits could become such that the Company would not proceed with the development of a project or the operation or further development of a mine. Laws and regulations involving the protection and remediation of the environment and the governmental policies for implementation of such laws and regulations are constantly changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, significant expenditures to comply with such laws and regulations. These requirements include regulations under: (i) the Comprehensive Environmental Response, Compensation and Liability Page 18 Act of 1980 ("CERCLA" or "Superfund") which regulates and establishes liability for the release of hazardous substances; (ii) the Endangered Species Act ("ESA") which identifies endangered species of plants and animals and regulates activities to protect these species and their habitats; (iii) the Clean Water Act; (iv) the Clean Air Act; (v) the Resource Conservation and Recovery Act for disposal of hazardous waste; (vi) the Migratory Bird Treaty Act; (vii) the Safe Drinking Water Act; (viii) the Federal Land Policy and Management Act; (ix) the National Environmental Policy Act; (x) the National Historic Preservation Act; and many other state and federal laws and regulations. The United States Environmental Protection Agency ("EPA") continues the development of a solid waste regulatory program specific to mining operations under the Resource Conservation and Recovery Act ("RCRA"). EPA is currently evaluating a Draft Hardrock Mining Framework which, if ultimately implemented, could create a system of federal regulation of the entire mine site focused on water quality and waste management. The requirements being considered by the EPA are very similar to the existing Nevada regulations concerning environmental controls at mine sites. Many of the requirements being considered by EPA could be duplicative of existing Nevada regulations. The effect of compliance with a new EPA program would depend on the extent to which the substantive or procedural requirements of such new federal regulations would exceed the existing requirements of the Nevada regulations. Environmental laws and regulations may also have an indirect impact on the Company, such as increased cost for electricity due to acid rain provisions of the Clean Air Act Amendments of 1990. Charges by refiners to which the Company sells its metallic concentrates and products have substantially increased over the past several years because of requirements that refiners meet revised environmental quality standards. The Company has no control over the refiners' operations or their compliance with environmental laws and regulations. Potential Legislation. Several recent legislative developments have affected or may in the future affect the cost of and the ability of mining claimants to use the Mining Law of 1872, as amended (the "General Mining Law"), to acquire and use federal lands for mining operations. Since October 1994, a moratorium has been imposed on processing new patent applications for mining claims. This moratorium should not affect the status of the patent applications made by the Company under the General Mining Law before the moratorium was imposed. Also, since 1993, a rental or maintenance annual fee of $100 per claim has been imposed by the Federal government on unpatented mining claims in lieu of the prior requirement for annual assessment work. During the last several Congressional sessions, bills have been repeatedly introduced in the U.S. Congress which would supplant or radically alter the General Mining Law. As of June 30, 1997, no such bills have been passed. Such bills have proposed, among other things, to permanently eliminate or greatly limit the right to a mineral patent, impose royalties, and impose new Federal reclamation, environmental control and other restoration requirements. Royalty proposals have ranged from a 2% royalty on "net profits" from mining claims to an 8% royalty on modified gross income/net smelter returns. It is anticipated that similar legislation will again be introduced in 1997. If enacted, such legislation could substantially impair the ability of Page 19 companies to economically develop mineral resources on federal lands. The extent of the changes, if any, which may be made by Congress to the General Mining Law is not presently known, and the potential impact on the Company as a result of future Congressional action is difficult or impossible to predict. Although a majority of the Company's existing mining operations occur on private or patented property, the proposed changes to the General Mining Law could adversely affect the Company's ability to economically develop mineral resources on federal lands. Disposal of overburden and mineral processing wastes by the Company occur on both private and federal lands. Exploration activities occur on both private and federal lands. Other legislative initiatives regarding environmental laws potentially applicable to mining include proposals to substantially alter CERCLA, the Clean Water Act, Safe Drinking Water Act, Endangered Species Act and bills which introduce additional protection of wetlands. Adverse developments and operating requirements in these acts could impair the ability of the Company as well as others to develop mineral resources. Revisions to current versions of these bills could occur prior to passage. Thus, the potential impact on the Company of such legislative initiatives is not clear at this time. Environmental Matters and Safety Environmental Liability. Mining is subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products that could occur as a result of the Company's mineral exploration, development and production. Environmental liability also may result from mining activities conducted by others prior to the Company's ownership of a property. Historic mining disturbances, facilities, waste materials and other discrete areas of potential contamination associated with gold, tungsten, and molybdenum production between 1937 and 1969 by previous owners and operators are encompassed within the area of the Company's Getchell Property operations. Restoration of certain areas of historic disturbance and contamination has been undertaken in conjunction with current mining operations and has been incorporated into the Company's state permits in coordination with the federal land management agency. Pollution Insurance. Insurance for environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) has not been purchased by the Company as it is not generally available at a reasonable price to the Company or to other companies within the industry. To the extent the Company is subject to environmental liabilities, the payment of such liabilities or the costs which must be incurred to remedy environmental pollution would reduce funds otherwise available to the Company and could have a material adverse effect on the Company. Should the Company be unable to fully remedy an environmental problem, the Company might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. The potential exposure may be significant and could have a material adverse effect on the Company. Environmental Permits. All of the Company's exploration, development and production activities are subject to regulation under one or more of the various state and federal Page 20 environmental laws and regulations. These laws address emissions to the air, discharges to water, management of wastes, management of hazardous substances, protection of natural resources, protection of antiquities and restoration of lands which are disturbed by mining. Many of the regulations require permits to be obtained for the Company's activities. The Company maintains permits required for its facilities and operations which provide for ongoing compliance and monitoring. Some of the permits include Bureau of Land Management Plan of Operations No. N24-87-003P; EPA Hazardous Waste Facility No. NVD986774735; Nevada water pollution control permits NEV86014 (for mining and mineral processing) and NEV95113 (for excess mine water disposal); Nevada reclamation permit 0105; and Nevada air quality permit AP1041-0292. These permits must be updated and reviewed from time to time, and normally are subject to environmental impact analyses and public review processes prior to approval of the activity. For example, the Company has applied for air permits required by Title V of the 1990 Amendments to the Clean Air Act to maintain compliance with applicable requirements for air emissions sources of the types utilized by the Company in its operations. It is possible that future changes in applicable laws, regulations and permits could have a significant impact on some portion of the Company's business, causing those activities to be economically re-evaluated at that time. Restoration. The Company accrues expenses over the productive life of its mine for anticipated costs associated with restoration of the mine site. Activities which result in restoration costs include the permanent closure of the mining and mineral processing operations and the reclamation of the disturbed land to a productive use. This includes restoration of historic and current mining and mineral processing operations and associated land disturbances. Restoration takes place concurrent with and after the productive life of the operations. Activities which result in restoration costs after permanent closure and reclamation primarily relate to monitoring and other post mining management activities. The uncertainties related to future restoration costs result from unknown future additional regulatory requirements, significant new surface disturbances or additional mineral processing facilities and the potential for recognition in the future of additional activities needed for restoration. The technologies for restoration are evolving during the life of the operations. Periodic review of the activities and costs for restoration, and consequent adjustments to the ongoing accrual, are conducted. The Company conducts concurrent restoration of mining disturbances and anticipates an ongoing program of restoration over the productive life of the operations. Activities have included regrading, seeding and planting, monitoring, and restoration research. In accordance with the State of Nevada Division of Environmental Protection ("NDEP"), the Company has posted a bond of $4.5 million to cover the costs for reclamation of the Getchell Property. As of June 30, 1997, the total estimated restoration costs for the Getchell Property were $5.5 million, of which the Company had accrued $2.7 million. The amount of total estimated restoration costs has increased over time due to more stringent regulation requirements and expanded mining activities and additional increases may occur in the future for the same reasons. The Company has begun reclamation of surface mining disturbances and anticipates an Page 21 ongoing program of reclamation over the next several years. Activities have included regrading, revegetation and soil stabilization. This includes restoration activities for which bonding must be provided and other restoration costs not included in bonding calculations. Mining Risk and Insurance The gold ore located on the Getchell Property and the existing tailings ponds and waste dumps located on the Getchell Property contain relatively high levels of arsenic, and the milling of such ore involves the use of other toxic substances, including sodium cyanide, sodium hydroxide, sulfuric acid and nitric acid. In addition, the business of gold mining is generally subject to a number of risks and hazards, including environmental hazards, industrial accidents, labor disputes, the encounter of unusual or unexpected geological conditions, slope failures, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, blizzards and earthquakes. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. The Company maintains insurance against risks that are typical in the gold mining industry and in amounts that the Company believes to be reasonable, but which may not provide adequate coverage in certain unforeseen circumstances. However, insurance against certain risks (including certain liabilities for environmental pollution or other hazards as a result of exploration and production) has not been purchased by the Company as such coverage is not generally available to it or to other companies within the industry. Title to Properties Certain of the Company's mineral rights consist of unpatented mining claims. Unpatented mining claims are unique property interests that are generally considered to be subject to greater title risk than other real property interests. The greater title risk results from unpatented mining claims being dependent on strict compliance with a complex body of federal and state statutory and decisional law, much of which compliance involves physical activities on the land, and from the lack of public records which definitively control the issues of validity and ownership. See "Potential Legislation" under "Government Regulation" above. Page 22 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders on May 2, 1997, the Company stockholders, pursuant to proxies solicited under Regulation 14A, cast votes on proposals as follows: Proposal No. 1 - Election of Directors For Withhold Authority R. Michael Summerford 16,771,158 3,813,639 J. Kelley Williams 16,769,994 3,814,803 Al Winters 16,784,217 3,800,580 Continuing directors are: Walter A. Drexel Robert C. Horton Pete Ingersoll John Racich Charles E. Stott, Jr. G. W. Thompson Robert L. Zerga Proposal No. 2 - Increase in Authorized Common Share Capital For Against Abstain Non Vote 19,272,076 1,229,446 83,274 5,187,075 Proposal No. 3 - Ratification of Appointment of Independent Auditors For Against Abstain Non Vote 20,550,786 11,159 22,850 5,187,075 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits The following exhibits are filed herewith and are referred to and incorporated herein by reference to such filings. 27. - Financial Data Schedule. Reports on Form 8-K During the three months ended June 30, 1997 there were no reports filed on Form 8-K. Page 23 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. Getchell Gold Corporation July 31, 1997 By: /s/ G. W. Thompson Date G. W. Thompson, President, Chief Executive Officer and Director July 31, 1997 By: /s/ Donald S. Robson Date Donald S. Robson, Vice President and Chief Financial Officer (Principal Financial Officer) Page 24 EX-27 2 FDS --
5 1000 3-MOS DEC-31-1997 APR-01-1997 JUN-01-1997 82448 0 3068 0 11444 97559 237393 88053 247009 13297 31 0 0 3 188076 247009 18675 18675 21726 21726 (188) 0 221 (3084) 0 (3084) 0 0 0 (3084) (0.12) (0.12)
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