-----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, VbHQiEHWi2yhnXj88rbPgK4xQL3IVOn8NcEP5G51lY/pZvDs74Y9TQ0LBve9pVsU o8IiYCQf1qy28YWAbshwTQ== 0001021890-98-000023.txt : 19980217 0001021890-98-000023.hdr.sgml : 19980217 ACCESSION NUMBER: 0001021890-98-000023 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19980212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISCHER WATT GOLD CO INC CENTRAL INDEX KEY: 0000844788 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 880227654 STATE OF INCORPORATION: NV FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17386 FILM NUMBER: 98535688 BUSINESS ADDRESS: STREET 1: 1621 NORTH 3RD STREET STREET 2: SUITE 1000 CITY: COEUR D'ALENE STATE: ID ZIP: 83814 BUSINESS PHONE: 208-664-67 MAIL ADDRESS: STREET 1: 1621 NORTH 3RD ST STREET 2: STE 1000 CITY: COEUR DALENE STATE: ID ZIP: 83814 10QSB 1 QUARTERLY REPORT ON FORM 10-QSB--OCTOBER 31, 1997 U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: October 31, 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 0-17386 FISCHER-WATT GOLD COMPANY, INC. --------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) NEVADA 88-0227654 --------------------------- ---------------------------------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation) 1621 North 3rd Street, Suite 1000, Coeur d'Alene, ID 83814 -------------------------------------- (Address of principal executive offices) (208) 664-6757 ------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] The number of shares of Common Stock, $0.001 par value, outstanding as of January 15, 1998, was 35,159,784. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] PART 1 - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS
FISCHER-WATT GOLD COMPANY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS October 31, 1997 ---------------- CURRENT ASSETS: Cash ................................................................ $ 373,000 Certificate of deposit .............................................. 502,000 Accounts receivable ................................................. 306,000 Due from related parties ............................................ 48,000 Inventories ......................................................... 802,000 Prepaid expenses .................................................... 38,000 ------------ Total current assets .............................................. 2,069,000 MINERAL INTERESTS, net .................................................... 4,314,000 PLANT, PROPERTY, AND EQUIPMENT ............................................ 2,492,000 LESS ACCUMULATED DEPRECIATION ............................................. (555,000) ------------ 1,937,000 FOREIGN TAX REFUNDS, net of $182,000 reserve .............................. 392,000 OTHER ASSETS .............................................................. 51,000 ------------ Total assets ...................................................... $ 8,764,000 ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses ............................... $ 3,183,000 Notes payable ....................................................... 795,000 ------------ Total current liabilities ......................................... 3,978,000 LONG-TERM LIABILITIES: Convertible note payable to shareholder ............................. 765,000 ------------ Total liabilities ................................................. $ 4,743,000 ============ SHAREHOLDERS' EQUITY: Common stock, $0.001 par value, 50,000,000 shares authorized; 35,159,784 shares outstanding at October 31, 1997 ............... 35,000 Additional paid-in capital .......................................... 13,249,000 Capital stock subscribed ............................................ 721,000 Foreign Currency translation adjustments ............................ 261,000 Deficit ............................................................. (10,245,000) ------------ Total shareholders' equity ........................................ 4,021,000 Total liabilities and shareholders' equity ........................ $ 8,764,000 ============
The accompanying notes are an integral part of these balance sheets. 2
FISCHER-WATT GOLD COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended October 31, October 31, 1997 1996 1997 1996 ---- ---- ---- ---- SALES OF PRECIOUS METALS .......................... $ 1,121,000 $ 1,243,000 $ 4,063,000 $ 3,212,000 COSTS APPLICABLE TO SALES ......................... (1,218,000) (1,014,000) (3,886,000) (3,015,000) ------------ ------------ ------------ ------------ GAIN (LOSS) FROM MINING ........................... (97,000) 229,000 177,000 197,000 GAIN (LOSS) ON SALE OF ASSETS ..................... -0- -0- (3,000) -0- COSTS AND EXPENSES: Abandoned and impaired mineral interests ..... -0- -0- -0- 3,000 Selling, general and administrative .......... 411,000 502,000 1,176,000 1,337,000 Exploration .................................. 67,000 117,000 223,000 333,000 ------------ ------------ ------------ ------------ 478,000 619,000 1,399,000 1,673,000 ------------ ------------ ------------ ------------ OTHER INCOME (EXPENSE): Interest income (expense) .................... (100,000) (17,000) (196,000) 23,000 Other (expense) income ....................... 12,000 (2,000) 2,000 29,000 Currency exchange losses, net ................ (500,000) 56,000 (768,000) (244,000) ------------ ------------ ------------ ------------ (588,000) 37,000 (962,000) (192,000) ------------ ------------ ------------ ------------ Net loss before income taxes ...................... (1,164,000) (353,000) (2,187,000) (1,668,000) TAX PROVISION ..................................... -0- -0- -0- -0- ------------ ------------ ------------ ------------ NET LOSS .......................................... ($ 1,164,000) ($ 353,000) ($ 2,187,000) ($ 1,668,000) =========== =========== =========== =========== LOSS PER SHARE .................................... ($.03) ($.01) ($.07) ($.06) ------------ ------------ ------------- ----------- WEIGHTED AVERAGE SHARES OUTSTANDING .................................... 35,090,117 31,213,427 33,112,060 29,274,760 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these statements. 3
FISCHER-WATT GOLD COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended October 31, 1997 1996 ----------- ---------- Net cash used in operating activities ................................ $ (759,000) $(3,238,000) Net cash used in investing activities ................................ (325,000) (551,000) Net cash provided by financing activities ............................ 973,000 5,062,000 ----------- ----------- NET INCREASE (DECREASE) IN CASH ...................................... (111,000) 1,273,000 CASH, at beginning of period ......................................... 484,000 266,000 ----------- ----------- CASH, at end of period ............................................... $ 373,000 $ 1,539,000 ----------- ----------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest ........................ $ 209,000 $ 32,000 Cash paid during the period for taxes ........................... 71,000 164,000 SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NONCASH ACTIVITIES: Common stock issued in exchange for professional services rendered ...................................................... $ 53,000 $ 21,000 Common stock issued in satisfaction of a note payable ........... $ 110,000 -0- Common stock issued in exchange for certain unpatented mining claims ................................................. -0- $ 50,000 Long-term debt incurred in connection with purchase of mineral interest .............................................. -0- $ 700,000
The accompanying notes are an integral part of these statements. 4 FISCHER-WATT GOLD COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SUMMARY OF ACCOUNTING POLICIES Reclassifications Certain amounts in the 1996 (fiscal 1997) financial statements have been reclassified to conform to the 1997 (fiscal 1998) presentation. 1. FINANCIAL CONDITION AND LIQUIDITY The accompanying financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation have been made. These financial statements and notes thereto should be read in conjunction with financial statements and related notes included in Fischer-Watt Gold Company, Inc.'s ("Fischer-Watt" or the "Company") Annual Report on Form 10-KSB/A for the year ended January 31, 1997 ("Form 10-KSB/A"). Future Financing and Realization Fischer-Watt incurred a net loss of $3,378,000 in fiscal 1997, has an accumulated deficit of $10,245,000, has a net working capital deficiency of $1,909,000 and continues to experience negative cash flow and losses from operations. The Company did report net income in fiscal 1996, however this was principally the result of realized gains on the sale or exchange of non-producing mineral properties. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management previously anticipated achieving levels of production sufficient to fund the Company's operating needs by the end of fiscal 1998. The Company exceeded targeted levels of production, however, these efforts were offset by a sharp decline in the market price of gold that has prevented the realization of positive cash provided from operating activities. Management believes that as the El Limon Mine gold property held by Oronorte is further developed and production levels increase, sufficient cash flows will exist to fund the Company's Colombian operations. Based on an estimated sales price per ounce of gold of $300 for the first four months of 1998, and $310 per ounce for the remaining eight months of 1998, management anticipates the Company's Colombian operations will generate a self-sustaining cash flow during the fiscal year ending January 31, 1999. Expansion and or development efforts in other countries, and administrative expenses, will need to be funded with cash raised from future equity or debt financing, the exercise of common stock warrants (see Note 9 to Financial Statements of Form 10-KSB/A for the fiscal year ended January 31, 1997 and related discussion in Liquidity and Capital Resources section of this report), and disposition of or joint ventures with respect to mineral properties. Additionally, if the market price of gold remains below the estimated sales price of gold set forth above, the Company's Colombian operations will likely require additional capital. Expenditures for exploration projects have been reduced, and may be reduced further, if necessary. The ability of the Company to achieve its operating goals and thus positive cash flows from operations is dependent upon the future market price of gold, future capital raising efforts, and the ability to achieve future operating efficiencies anticipated with increased production levels. Management's plans will require additional financing, additional reductions in exploration activity, or disposition of or joint ventures with respect to mineral properties. While the Company has been successful in these capital raising endeavors in the past, there can be no assurance that its future efforts, and anticipated operating improvements will be successful. The Company does not currently have adequate capital to continue its contemplated business plan beyond the later part of the first quarter of fiscal 1999. The Company is presently investigating all of the alternatives identified above to meet its short-term liquidity needs. The Company believes that it can arrange a transaction or transactions to meet its short-term liquidity needs, however there can be no assurance that any such transactions will be concluded or that if concluded they will be on terms favorable to the Company. 5 2. ACCOUNTS RECEIVABLE Accounts receivable at October 31, 1997 consist of: Trade ...................................................... $ 212,000 Other ...................................................... 94,000 ---------- Total accounts receivable ............................. $ 306,000 3. INVENTORIES Inventories at October 31, 1997 consist of: Finished products and products in process ................... $ 334,000 Supplies, materials and spare parts ........................ 468,000 ---------- Total inventories ...................................... $ 802,000 4. MINERAL INTERESTS Capitalized costs for mineral interests at October 31, 1997 consist of: Operating mining property: El Limon Mine, Oronorte District ........................... $ 1,472,000 Less accumulated depletion ................................. (382,000) ---------- $ 1,090,000 Non-operating properties, net of reserves: El Carmen, Colombia ........................................ $ 485,000 La Aurora, Colombia ........................................ 441,000 Juan Vara, Colombia ........................................ 151,000 El Viente, Colombia ........................................ 1,000 Los Verdes, Mexico ......................................... 28,000 Kobeh, Nevada .............................................. 84,000 Castle ..................................................... 780,000 Coal Canyon, Nevada ........................................ 608,000 Red Canyon, Nevada ......................................... 334,000 Tempo, Nevada .............................................. 51,000 Sacramento Mountains, California ........................... 154,000 Water Canyon, Nevada ....................................... 19,000 Amador, Nevada ............................................. 15,000 Modoc, California .......................................... 73,000 ---------- Total mineral interests ................................ $ 4,314,000 5. NOTES PAYABLE Pursuant to agreements among Greenstone Resources Ltd. ("Greenstone"), Dual Resources Ltd. ("Dual"), and the Company, Greenstone made a payment of $300,000 to Dual in August 1995 to acquire 2,800,000 shares of Oronorte common stock for the benefit of the Company. The Company's obligation to repay Greenstone this $300,000 is evidenced by a note payable which bears interest at the rate of 10% per annum. This note became payable, in full, on June 20, 1996 at which time the Company withheld payment while negotiating the settlement of amounts owed to the Company by Greenstone (see Note 13 to Financial Statements of Form 10-KSB/A for the fiscal year ended January 31, 1997). 6 The Company has a $500,000 line of credit with a Colombian bank. Advances under this line, which totaled $343,000 at September 30, 1997, accrue interest at rates from 26% to 39% and are collateralized by a $502,000 certificate of deposit which bears interest at 3.9%. The Company has a $94,000 note payable to a bank at September 30, 1997. The note bears interest at the legal Colombian rate (DTF) plus 10 points (30.25% at June 30, 1997), requires interest to be paid quarterly, and is collateralized by a building. The Company has an uncollateralized note payable to a Colombian labor cooperative in the amount of $55,000, which bears interest at 29%, and requires interest to be paid quarterly. Principal and remaining interest was due in full on January 31, 1998. The Company is currently renegotiating the repayment terms. The Company delivered to Kennecott Exploration Company, a shareholder of the Company, a promissory note in the amount of $700,000, which bears interest at an annual interest rate equal to the prime or base rate, or legal rate, if less. The note was issued in connection with the acquisition of mineral interests. Principal and interest are due in cash on September 30, 1998 or, at the option of the Company, by issuance of 1,000,000 (one million) shares of the Company's common stock and payment in cash of accrued interest. Accrued interest at October 31, 1997 was $65,000. The Company's option to issue shares in satisfaction of the principal portion of this debt is subject to a limitation that Kennecott's ownership of Fischer-Watt cannot exceed 10% of the outstanding voting common stock. 6. EQUITY AND COMMON STOCK On March 12, 1996 the Company completed a $5 million foreign offering of equity pursuant to Regulation "S". This offering consisted of the sale of 4,980,000 units at $1.06 per unit. Each unit was composed of two shares of Fischer-Watt common stock and one share purchase warrant. Each of these warrants entitles the holder to purchase one additional share of Fischer-Watt common stock at the following prices during the noted periods: 1) prior to September 30, 1997 at a price of 22 cents per share, 2) between October 1 and November 30, 1997 at 40 cents per share, 3) between December 1, 1997 and February 28, 1998 at 60 cents per share, and 4) between March 1, 1998 and their expiration date of February 28, 1999 at 75 cents per share. These securities were not registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The funds raised were used to finance capital equipment and working capital needs for further development and expansion of Fischer-Watt's gold mining operation in Colombia and its exploration and development activities in Colombia and Nevada. As part of this offering, 680,000 of such units were sold in the form of Special Warrants, convertible into 680,000 units at any time prior to February 28, 1998, and the collected proceeds of $721,000 attributable to the sale of those units are classified as capital stock subscribed within the Company shareholders' equity accounts. As of October 31, 1997, none of the 680,000 units had been issued. In March 1997, the Company issued 100,000 common shares in exchange for professional services rendered. The shares had an estimated fair market value of $53,000. In April 1997, the Company completed a private placement to accredited investors located in the United States pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as amended (the "1933 Act"). The estimated net proceeds from this offering of $442,000 are to finance the Company's working capital requirements and needs related to further development, expansion, and exploration of mining properties. This Regulation D offering consisted of the sale of 459,000 units at $1.06 per unit. Each unit was composed of two shares of Fischer-Watt common stock and one share purchase warrant. Each of these warrants entitles the holder to purchase one additional share of Fischer-Watt common stock at 1) prior to September 30, 1997 at a price of 22 cents per share, 2) between October 1 and November 30, 1997 at 40 cents per share, 3) between December 1, 1997 and February 28, 1998 at 60 cents per share, and 4) between March 1, 1998 and their expiration date of February 28, 1999 at 75 cents per 7 share. These securities were not registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. In September 1997 the Company received $46,000 which resulted from the exercise of 209,000 warrants at an exercise price of 22 cents per share. On February 1, 1997, an officer was granted options to purchase 100,000 shares of common stock at 53 cents per share (fair market value at the time of grant). These options become exercisable on March 1, 1998 and expire five years after they become exercisable. In June 1997, the Company issued 300,000 common shares pursuant to the exercise of warrants issued in November 1995, which expired August 31, 1997, at an exercise price of 30 cents per share. The shares had an estimated market value of $90,000. On July 23, 1997, the Company issued 185,624 common shares in satisfaction of a note payable with principal and interest totaling $109,753, to Serem Gatro, the previous owner of GBEM. The shares had an estimated fair market value of $109,753 at the time the agreement was entered into. In August 1997, the Company issued 2,150,400 common shares pursuant to the exercise of warrants issued in November 1995, which expired August 31, 1997, at an exercise price of 22 cents per share. The Company received total gross proceeds of approximately $473,000. In September 1997, two consultants were each granted options to purchase a total of 200,000 shares of common stock at 22 cents per share (fair market value at time of grant) in consideration for investment banking and promotional services. These options become exercisable on September 1, 1998 and expire five years after they become exercisable. On October 31, 1997, an officer was granted options to purchase 250,000 shares of common stock at 16.5 cents per share (fair market value at time of grant). These options become exercisable on October 31, 1998 and expire five years after they become exercisable. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Statements which are not historical facts contained herein are forward looking statements that involve risks and uncertainties that could cause actual results to differ from projected results. Such forward-looking statements include statements regarding expected commencement dates of mining or mineral production operations, projected quantities of future mining or mineral production, and anticipated production rates, costs and expenditures, as well as projected demand or supply for the products that FWG and/or FWG subsidiaries produce, which will affect both sales levels and prices realized by such parties. Factors that could cause actual results to differ materially include, among others, risks and uncertainties relating to general domestic and international economic and political risks associated with foreign operations (including the effects of inflation and currency exchange rate fluctuations on the results of foreign operations), the selling price of metals, unanticipated ground and water conditions, unanticipated grade and geological problems, metallurgical and other processing problems, availability of materials and equipment, the timing of receipt of necessary governmental permits, the occurrence of unusual weather or operating conditions, force majeure events, lower than expected ore grades and higher than expected stripping ratios, the failure of equipment or processes to operate in accordance with specifications and expectations, labor relations, accidents, delays in anticipated start-up dates, environmental costs and risks, the results of financing efforts and financial market conditions, and other factors described herein and in FWG's annual report on Form 10-KSB/A. Many of such factors are beyond the Company's ability to control or predict. Actual results may differ materially from those projected. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws. 8 The following is a discussion of Fischer-Watt Gold Company, Inc.'s (the "Company") current financial condition as well as its operations for the nine months ended October 31, 1997 (fiscal 1998) and October 31, 1996 (fiscal 1997). This discussion should be read in conjunction with the Financial Statements in Item 1 of this report as well as the Financial Statements in Form 10-KSB/A for the fiscal year ended January 31, 1997 on file with the Securities and Exchange Commission, as the discussion set forth below is qualified in its entirety by reference thereto. LIQUIDITY AND CAPITAL RESOURCES Short-term Liquidity As of January 15, 1998 the Company had approximately $160,000 in cash, and accounts payable of approximately $2,819,000. On October 31, 1997, the Company's current ratio was .5:1 based on current assets of $2,069,000 and current liabilities of $3,978,000. On October 31, 1996, the Company's current ratio was 1.4:1 based on current assets of $3,235,000 and current liabilities of $2,341,000. The decrease in the current ratio at October 31, 1997 is primarily related to a decrease in the cash balance of approximately $666,000 and a decrease in amounts due from related parties of approximately $448,000, which were both utilized to finance the Company's capital equipment and working capital needs related to further development and expansion of the Colombian gold mining operation and the Company's exploration and development activities in Colombia and Nevada, a decrease in inventories of approximately $37,000, an increase in accounts payable and accrued expenses of approximately $1,470,000 and an increase in notes payable of approximately $167,000, all of which are related to the increased activity and working needs of the mining operation in Colombia. The above items are partially offset by an increase in prepaid expenses of approximately $18,000, which relates to the increased activity associated with the mining operation in Colombia. A current ratio of less than 1:1 indicates the Company does not have sufficient cash and other current assets to pay its bills and other liabilities incurred at the end of its fiscal year and due and payable within the next year. Fischer-Watt incurred a net loss of $3,378,000 in fiscal 1997, has an accumulated deficit of $10,245,000, has a net working capital deficiency of $1,909,000 and continues to experience negative cash flow and losses from operations. The Company did report net income in fiscal 1996, however this was principally the result of realized gains on the sale or exchange of non-producing mineral properties. These conditions have caused the Company's independent auditor to raise substantial doubt about the Company's ability to continue as a going concern. Management previously anticipated achieving levels of production sufficient to fund the Company's operating needs by the end of fiscal 1998. The Company exceeded targeted levels of production, however, these efforts were offset by a sharp decline in the market price of gold that has prevented the realization of positive cash provided from operating activities. Management believes that as the El Limon Mine gold property held by Oronorte is further developed and production levels increase, sufficient cash flows will exist to fund the Company's Colombian operations. Based on an estimated sales price per ounce of gold of $300 for the first four months of 1998, and $310 per ounce for the remaining eight months of 1998, management anticipates the Company's Colombian operations will generate a self-sustaining cash flow during the fiscal year ending 1999. Expansion and/or development efforts in other countries, and administrative expenses, will need to be funded with cash raised from future equity or debt financing, the exercise of common stock warrants (see Note 9 to Financial Statements of Form 10-KSB/A for the fiscal year ended January 31, 1997 and related discussion in Liquidity and Capital Resources section of this report), and disposition of or joint ventures with respect to mineral properties. Additionally, if the market price of gold remains below the estimated sales price of gold set forth above, the Company's Colombian operations will likely require additional capital. Expenditures for exploration projects have been reduced, and may be reduced further, if necessary. 9 Additionally, effective February 1, 1998, the Company's senior management elected to defer ten percent (10%) of their gross salaries. Future repayment of the deferred salaries will be at the discretion of the Board of Directors. The selling price of gold and silver is established by the world market. This price is determined by many factors, none of which are in the control of the Company. The major adverse factor has been the selling of gold reserves by various central banks. The selling price of the Company's major product, gold, has declined approximately 17% during the year, from approximately $385 per ounce of gold to approximately $320 per ounce of gold. The ability of the Company to achieve its operating goals and thus positive cash flows from operations is dependent upon the future market price of gold, future capital raising efforts, and the ability to achieve future operating efficiencies anticipated with increased production levels. Management's plans will require additional financing, further reductions in exploration activity, or disposition of or joint ventures with respect to mineral properties. While the Company has been successful in these capital raising endeavors in the past, there can be no assurance that its future efforts, and anticipated operating improvements will be successful. The Company does not currently have adequate capital to continue its contemplated business plan beyond the later part of the first quarter of fiscal 1999. The Company is presently investigating all of the alternatives identified above to meet its short-term liquidity needs. The Company believes that it can arrange a transaction or transactions to meet its short-term liquidity needs, however there can be no assurance that any such transactions will be concluded or that if concluded they will be on terms favorable to the Company. As noted above, earlier in the year Management anticipated achieving levels of production sufficient to fund the operating needs of the Colombian subsidiary by the end of fiscal 1998. The Company has exceeded targeted levels of production, however, these efforts were offset by a decline in the market price of gold that has prevented the realization of positive cash provided from operating activities. The lack of positive cash provided from operating activities has created a weak cash position for the Company's Colombian subsidiary, which has made timely payment to vendors and creditors difficult. As a result of the weak cash position the Company was unable to pay it's 1995 and 1996 taxes to the Colombian government, which led to the placement of an embargo on the bank accounts of the Colombian subsidiary in October 1997. Management has negotiated a five year repayment plan with the Colombian tax authorities and anticipates that the embargo will be lifted soon. The Company is currently focusing its efforts on diversifying its operations to include production of copper in addition to gold. The Company is involved in the pre-feasibility stage of a copper property located in Mexico (see related discussion in Item 5 of this report). Management believes that this copper property, the Los Verdes, will produce high purity copper cathodes from open pit mining and Solvent Extraction Electrowinning (SX-EW) processing technology. In order to complete the feasibility study, the Company needs to raise approximately $500,000. From March 11, 1997 through April 16, 1997, the Company conducted a private placement in the United States. The estimated net proceeds from this offering of $442,000 were for purposes of financing the Company's working capital requirements and needs related to further development, expansion, and exploration of mining properties. This offering consisted of the sale of 459,000 units at $1.06 per unit. Each unit was composed of two shares of Fischer-Watt common stock and one share purchase warrant. Each of these warrants entitles the holder to purchase one additional share of Fischer-Watt common stock at the following prices during the noted periods: 1) prior to September 30, 1997 at a price of 22 cents per share, 2) between October 1 and November 30, 1997 at 40 cents per share, 3) between December 1, 1997 and February 28, 1998 at 60 cents per share, and 4) between March 1, 1998 and their expiration date of February 28, 1999 at 75 cents per share. These securities were not registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. In September 1997 the Company received approximately $46,000 which resulted from the exercise of 209,000 warrants at an exercise price of 22 cents per share. 10 In June 1997 the Company issued 300,000 common shares pursuant to the exercise of warrants issued in November, 1995, which expired August 31, 1997, at an exercise price of 30 cents per share. The Company received total gross proceeds of approximately $90,000. In August 1997 the Company issued 2,150,400 common shares pursuant to the exercise of warrants issued in November 1995, which expired August 31, 1997, at an exercise price of 22 cents per share. The Company received total gross proceeds of approximately $473,000. In September 1997, the Company issued 209,000 common shares pursuant to the exercise of warrants issued in April, 1997, which expired February 28, 1999, at an exercise price of 22 cents per share. The Company received total gross proceeds of approximately $46,000. Pursuant to agreements among Greenstone Resources Ltd. ("Greenstone"), Dual Resources Ltd. ("Dual"), and the Company, Greenstone made a payment of $300,000 to Dual to acquire 2,800,000 shares of Oronorte common stock for the benefit of the Company. The Company's obligation to repay Greenstone this $300,000 is evidenced by a note payable which bears interest at the rate of 10% per annum. This note became payable, in full, on June 20, 1996 at which time the Company withheld payment while negotiating the settlement of amounts owed to the Company by Greenstone. (See Part I-Item 3. Legal Proceedings of Form 10-KSB/A for the fiscal year ended January 31, 1997.) Prior to its acquisition by the Company, GBEM borrowed funds from Serem Gatro Canada Inc. This loan was evidenced by a note. The note payable is for monies lent and advanced to GBEM by SGC during the period April 1, 1995, to May 31, 1995, as provided under the share purchase agreement among Serem Gatro, GBEM and GBM made as of May 31, 1995. The note was to be repaid not later than September 30, 1995, and bore interest at 8%. On July 23, 1997, the Company issued 185,624 common shares in satisfaction of a note payable with principal and interest totaling $109,753, to Serem Gatro, the previous owner of GBEM. The shares had an estimated fair market value of $109,753 at the time the agreement was entered into. Long-term Liquidity The Company will likely need to supplement anticipated cash from operations with future debt or equity financings and dispositions of or joint ventures with respect to mineral properties to fully fund its future business plan which includes exploration projects and property development. While the Company has been successful in capital raising endeavors in the past, there can be no assurance that its future efforts will be successful. There can be no assurance that the Company will be able to conclude transactions with respect to its mineral properties or additional debt or equity financings or that such capital raising opportunities will be available on terms acceptable to the Company, or at all. At October 31, 1997 the Company had long term debt of $765,000 compared to $700,000 at October 31, 1996. The increase of $65,000 is solely related to the accrual of interest on a note payable to Kennecott Exploration Company as described below. During fiscal 1997, the Company delivered to Kennecott Exploration Company a promissory note in the amount of $700,000, which bears interest at an annual interest rate equal to the prime or base rate, or legal rate, if less. Principal and interest are due on September 30, 1998 or at the option of the Company, by issuance of 1,000,000 (one million) shares of the Company's stock and payment in cash of accrued interest. The Company's option to issue shares in satisfaction of the principal portion of this debt is subject to a limitation that Kennecott's ownership of Fischer-Watt cannot exceed 10% of the outstanding voting common stock. 11 RESULTS OF OPERATIONS Three months ended October 31, 1997 compared with three months ended October 31, 1996. The Company had net loss of $1,164,000 ($.03 per share) compared to $353,000 ($.01 per share) during the quarters ended October 31,1997 and 1996, respectively. The increase in net loss of $811,000 primarily relates to an increase in currency exchange loss of approximately $557,000, resulting from an increase in the exchange rate of 11.2% during the quarter ended October 31, 1997, as compared to a decrease in the exchange rate of 2.3% during the quarter ended October 31, 1996; an increase in costs applicable to sales of approximately $204,000 which primarily resulted from a $268,000 misclassification during the quarter ended October 31, 1996, which was adjusted during the fourth quarter 1996, which caused the costs applicable to sales to be understated during the quarter ended October 31, 1996; a decrease in sales of precious metals of $122,000 resulting from an increase in gold ounces shipped of 215, offset by a decrease in the average sales price per ounce of gold of approximately $58. All of the above were partly offset by an increase in interest expense of approximately $83,000 related to decreased interest earnings on lower cash balances and an increase in interest expense associated with increased debt related to the operating mine in Colombia; a decrease in selling, general and administrative costs of approximately $91,000 related to a decrease in expenses associated with the Colombian subsidiary resulting from reduction in legal fees and rent expense, coupled with administrative cutbacks made in the Medellin office; a decrease in exploration expenses of approximately $50,000 and a decrease in other expenses of approximately $14,000. The cash cost per ounce of gold for the nine months ended October 31, 1997 was $292.88 as compared to $305.66 for the nine months ended October 31, 1996. The improvement relates to operational efficiencies gained with the increase in production of 2,710 ounces from 9,128 gold ounces produced to 11,838 gold ounces produced during the nine months ended October 31, 1996 and 1997, respectively. The increase in production resulted from further development of the El Limon mine, coupled with an increase in ore grade, and augmented production from the La Aurora. Additionally, the improvement in cash cost per ounce related to the implementation of administrative cost reductions. Further reductions in the cash cost per ounce are anticipated as a result of additional administrative cutbacks, and continued improvement of grade and planned modifications of the plant. Gain (Loss) From Mining Sales of precious metals decreased $122,000, from $1,243,000 to $1,121,000 during the quarters ended October 31, 1996 and 1997, respectively. The decrease in sales relates to a decrease in the average sales price per ounce of gold of approximately $58, partly offset by an increase in gold ounces shipped of 215 ounces, from 3,290 ounces of gold shipped to 3,505 ounces of gold shipped during the quarters ended October 31, 1996 and 1997, respectively. The increase in gold ounces shipped relates to an increase in ore grade, coupled with an increase in tonnes produced, which resulted from further development of the El Limon mine and augmented production from the La Aurora. The decrease in the average sales price per ounce of gold is directly related to the decline in the gold market. The Company does not presently employ forward sales contracts or engage in any hedging activities. Costs applicable to sales increased $204,000 from $1,014,000 to $1,218,000 during the quarters ended October 31, 1996 and 1997, respectively. The increase relates to a $268,000 misclassification during the quarter ended October 31, 1996, which was adjusted during the fourth quarter 1996, which caused the costs applicable to sales to be understated during the quarter ended October 31, 1996. The adjustment for the misclassification results in a remaining decrease in costs applicable to sales of $64,000, which relates to the following: an increase in inventory of approximately $187,000 which resulted from an increase in the ounces in ending inventory of approximately 540 ounces as compared to an increase in the ounces in ending inventory of approximately 496 ounces during the quarters ended October 31, 1997 and 1996, respectively; a reduction in 12 independent contractor fees of approximately $60,000, which relates to the assignment of certain tasks to salaried personnel; a reduction in fees of approximately $43,000, related to reduced consulting fees; reductions in energy of approximately $15,000; and reductions in maintenance and repair of approximately $11,000. All of the above were partly offset by the following: an increase in the provision for ending inventory of approximately $138,000 during the quarter ended October 31, 1997, as compared to a decrease in the provision for ending inventory of approximately $63,000 during the quarter ended October 31, 1996; an increase in personnel expenses of approximately $30,000 primarily resulting from inflationary wage increases of 13% in April 1996, 9% in October 1996 and 11.5% in April 1997; and an increase in selling expenses of approximately $19,000, which is attributed to an increase in ounces sold of approximately 215 ounces. Costs and Expenses Selling, general and administrative costs decreased $91,000, from $502,000 to $411,000 during the quarters ended October 31, 1996 and 1997, respectively. The decrease primarily relates to a decrease in general and administrative expenses associated with the Colombian subsidiary resulting from reductions in legal fees associated with prior year legalization and foreign investment, a reduction in rent expense related to the exercise of an option to purchase the office building in December 1996, a reduction in travel expense, and other reductions which resulted from administrative cutbacks implemented in the Medellin office. The decrease in selling, general and administrative expenses associated with the Colombian subsidiary were partly offset by an increase in Corporate selling, general and administrative expenses. The increase in Corporate expenses is primarily attributable in an increase in Corporate Relations expenses associated with the Annual Shareholders Meeting held on August 22, 1997, and the write-off of various capitalized asset balances. Exploration expense decreased $50,000, from $117,000 to $67,000 during the quarters ended October 31, 1996 and 1997, respectively. This decrease primarily relates to the reduction in staffing by one person, and a reduction in fees associated with conferences and other office expense reductions for the Great Basin Management office. Exploration expense will continue to decrease in future months. The most significant decrease will relate to the closing of the Company's Great Basin Management subsidiary office located in Reno, effective October 31, 1997. Net interest expense increased $83,000, from $17,000 to $100,000 during the quarters ended October 31, 1996 and 1997, respectively. This increase relates to decreased interest earnings on a lower cash balance, which resulted from the financing of capital equipment and working capital needs related to further development and expansion of the Colombian gold mining operation, and the Company's exploration and development activities in Colombia and Nevada, coupled with an increase in interest expense associated with increased debt related to the operating mine in Colombia. Nine months ended October 31, 1997, compared with nine months ended October 31, 1996. The Company had net loss of $2,187,000 ($ .07 per share) compared to $1,668,000 ($.06 per share) in the nine months ended October 31, 1997 and 1996, respectively. The primary reasons for the change relates to the following: an increase in sales of precious metals of $851,000 resulting from an increase in gold ounces shipped of 3,481, partly offset by a decrease in the average sales price per ounce of approximately $39; a decrease in selling, general and administrative expenses of approximately $161,000 which relates to reductions in legal fees and rent expense, coupled with administrative cutbacks implemented in Colombia, partly offset by an increase in corporate overhead, and a decrease in exploration expenses of $110,000 which resulted in cutbacks made in the Great Basin Management subsidiary office. All of the above were offset by the following: an increase in costs applicable to sales of $871,000 which resulted from a $524,000 misclassification during the nine months ended October 31, 1996, which caused the costs applicable to sales to be understated during the nine months ended October 31, 1996, the remaining increase in costs applicable to sales of $347,000 relates to a decrease in ending inventory from the prior year, and increases in personnel, materials and energy expenses associated with an increase in gold ounces produced of 2,451 ounces: an increase in personnel and energy expenses resulting from inflationary increases, and an increase in labor 13 costs associated with a negotiated increase in the labor cooperative's contract, an increase in selling expenses attributed to an increase in gold ounces sold of 3,481, partly offset by reductions in contractor fees, consulting fees and maintenance and repair costs; coupled with an increase in currency exchange loss of approximately $524,000 which relates to an increase in the exchange rate of approximately 19%; an increase in interest expense of $219,000 related to decreased interest earnings on lower cash balances and an increase in interest expense associated with increased debt related to the operating mine in Colombia; and an increase in other expense of $27,000. Gain (Loss) From Mining Sales of precious metals increased $851,000, from $3,212,000 to $4,063,000 during the nine months ended October 31, 1996 and 1997, respectively. The increase in sales relates to an increase in gold ounces shipped of 3,481 ounces, from 8,499 gold ounces shipped to 11,981 gold ounces shipped during the nine months ended October 31, 1996 and 1997, respectively, partly offset by a decrease in the average sales price per ounce of approximately $39. The increase in gold ounces shipped relates to an increase in ore grade, coupled with an increase in tonnes produced, which resulted from further development of the El Limon mine and augmented production from the La Aurora. The decrease in the average sales price per ounce of gold is directly related to the decline in the gold market. Costs applicable to sales increased $871,000, from $3,015,000 to $3,886,000 during the nine months ended October 31, 1996 and October 31, 1997, respectively. The increase relates to a $524,000 misclassification during the nine months ended October 31, 1996, which was adjusted during the fourth quarter 1996, which caused the costs applicable to sales to be understated during the nine months ended October 31, 1996. The adjustment for the misclassification results in a remaining increase of $347,000 which relates to the following: a decrease in inventory of approximately $27,000 resulting from a decrease in the ounces in ending inventory of approximately 143 ounces as compared to an increase in the ounces in ending inventory of approximately 629 ounces during the nine months ended October 31, 1997 and 1996, respectively; an increase in selling expenses of approximately $132,000 which is attributed to an increase in ounces sold of 3,481 ounces; a reduction in the provision for ending inventory of approximately $133,000 during the nine months ended October 31, 1996, as compared to an increase in the provision for ending inventory of approximately $10,000 during the nine months ended October 31, 1997. Additionally, gold ounces produced increased 2,709 ounces, from 9,129 gold ounces produced to 11,838 gold ounces produced during the nine months ended October 31, 1996 and 1997, respectively. The increase in production contributed to an increase in personnel expenses of approximately $14,000 associated with an increase in the average number of employees and hours paid, and an increase in materials of approximately $65,000. Personnel expenses increased approximately $115,000 as a result of inflationary wage increases of 13% in April 1996, 9% in October 1996 and 11.5% in April 1997. Labor costs associated with the labor cooperative increased approximately $98,000 resulting from a negotiated increase in the contract effective January 15, 1997. Energy expense increased approximately $36,000 as a result of inflation. All of the above were partly offset by a reduction in independent contractor fees of approximately $142,000, which relates to the assignment of certain tasks to salaried personnel, a reduction in fees of approximately $76,000 related to reduced consulting fees, and reductions in repair and maintenance expense of approximately $32,000. The Company does not presently employ forward sales contracts or engage in any hedging activities. Cost and Expenses The cost of abandoned mineral interests decreased $3,000, from $3,000 to $-0- during the nine months ended October 31, 1996 and 1997, respectively. During the nine months ended October 31, 1996, the La Victoria was abandoned for an associated cost of $3,000. Abandonments are a natural result of the Company's ongoing program of acquisition, exploration and evaluation of mineral properties. When the Company determines that a property lacks continuing economic value, it is abandoned. It cannot be determined at this time when or if any of the Company's current property interests will be abandoned. 14 Selling, general and administrative costs decreased $161,000, from $1,337,000 to $1,176,000 during the nine months ended October 31, 1996 and 1997, respectively. The decrease primarily relates to a decrease in general and administrative expenses associated with mining operations of approximately $306,000 resulting from a reduction in legal fees resulting from prior year fees associated with legalization and foreign investment, a decrease in rent related to the exercise of an option to purchase the office building in December 1996, a reduction in travel expense, and other reductions which resulted from administrative cutbacks implemented in the Medellin office in Colombia. The decreases above were partly offset by an increase in corporate overhead of approximately $145,000 associated with the addition of two Vice President positions and the position of Chief Financial Officer, as well as increases in legal and corporate relations expenses. Exploration expense decreased $110,000, from $333,000 to $223,000 during the nine months ended October 31, 1996 and 1997, respectively. This decrease relates to the reduction in staffing by one person, a reduction in legal fees associated with drafting the Tempo joint venture agreement and assistance with claim filings, a reduction in fees associated with conferences and other office expense reductions for the Great Basin Management office. Exploration expense will continue to decrease in future months. The most significant decrease will relate to the closing of the Company's Great Basin Management subsidiary office located in Reno, effective October 31, 1997. Net interest expense increased $219,000, from income of $23,000 to expense of $196,000 during the nine months ended October 31, 1996 and 1997, respectively. This increase relates to decreased interest earnings on a lower cash balance, which resulted from the financing of capital equipment and working capital needs related to further development and expansion of the Colombian gold mining operation, and the Company's exploration and development activities in Colombia and Nevada, coupled with an increase in interest expense associated with increased debt related to the operating mine in Colombia. The Company accounts for foreign currency translation in accordance with the provisions of Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS No.52"). The assets and liabilities of the Colombian unit are translated at the rate of exchange in effect at the balance sheet date. Income and expenses are translated using the weighted average rates of exchange prevailing during the period. The related translation adjustments are reflected in the accumulated translation adjustment section of shareholders' equity. The Company recognized a currency exchange loss of $244,000 and $768,000 in the nine months ended October 31, 1996 and 1997, respectively. The increase in the currency exchange loss of $524,000 relates to an increase in the exchange rate, from Colombian peso to US dollar, of approximately 19% during the nine months ended October 31, 1997, as compared to an increase in the exchange rate of approximately 3% during the nine months ended October 31, 1996. COMMITMENTS AND CONTINGENCIES Foreign companies operating in Colombia, South America, may be subject to discretionary audit by the Colombian Government in respect of their monetary exchange declarations. Any such audit by the Colombian Government must be initiated within two years of filing an exchange declaration. While the Company has not received any notice of intention from the Colombian Government to conduct such an audit and the Company has no reason to believe that the Colombian Government will conduct such an audit in respect of its subsidiary, Donna Ltd., the Company has the right to claim indemnity from Greenstone Resources Canada Limited pursuant to the terms of agreements made regarding the acquisition of Greenstone of Colombia, Ltd. and the Oronorte properties. (See Part I - Item 3. Legal Proceedings of Form 10-KSB/A for the fiscal year ended January 31, 1997) In connection with the purchase of GRC, Greenstone agreed to reimburse the Company for certain liabilities, including contingent liabilities, existing at the date of purchase in excess of $1,000,000. At the present time, the Company has paid or identified as current payables approximately $309,000 in excess of the $1,000,000. Management is seeking to recover these excess liabilities from Greenstone in accordance with the terms of the purchase agreement. (See Part I - Item 3. Legal Proceedings of Form 10-KSB/A for the fiscal year ended January 31, 1997) 15 PART II - OTHER INFORMATION Item 2. CHANGES IN SECURITIES In August 1997, the Company issued 2,150,400 common shares pursuant to the exercise of warrants issued in November 1995, which expired August 31, 1997, at an exercise price of 22 cents per share. The Company received total gross proceeds of approximately $473,000. The shares were issued to the holders of such warrants pursuant to the exemption from registration provided by Section 4(2) of the Securities Act in a private transaction to a sophisticated purchaser and are restricted from transfer unless such transfer is registered under the Securities Act or made pursuant to an exemption therefrom. In September 1997, two consultants were each granted options to purchase a total of 200,000 shares of common stock at 22 cents per share (fair market value at time of grant) in consideration for investment banking and promotional services. These options become exercisable on September 1, 1998 and expire five years after they become exercisable. These securities were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act in a private transaction to a sophisticated purchaser and are restricted from transfer unless such transfer is registered under the Securities Act or made pursuant to an exemption therefrom. On October 31, 1997, an officer was granted an option to purchase 250,000 shares of common stock at 16.5 cents per share (fair market value at time of grant). This option becomes exercisable on October 31, 1998 and expires five years after it becomes exercisable. These securities were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act in a private transaction to a sophisticated purchaser and are restricted from transfer unless such transfer is registered under the Securities Act or made pursuant to an exemption therefrom. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On August 22, 1997, at the Annual Meeting of Stockholders, the Company's stockholders voted on two proposals as follows: 1) Election of Directors - All nominees for director were elected. The votes were cast as follows:
Name For Withhold Authority Abstain Not Voted ---- --- ------------------ ------ --------- George Beattie 21,148,795 27,500 104,500 11,205,865 Gerald D. Helgeson 21,141,795 62,000 104,500 11,205,865 Anthony P. Taylor 21,099.195 77,100 104,500 11,205,865 Peter Bojtos 21,148,795 27,500 104,500 11,205,865 James M. Seed 21,148,795 27,500 104,500 11,205,865 Jorge Ordonez 21,137,295 39,000 104,500 11,205,865
2) Increase in authorized shares of common stock and elimination of preferred stock - The Company's stockholders ratified and approved an amendment to the Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 200,000,000 and to eliminate the previously authorized 250,000 shares of preferred stock. The votes were cast as follows: 16
For Against Abstain Broker Non-Votes Not Voted --- ------- ------- ---------------- --------- 16,787,097 344,160 81,488 4,068,050 11,205,865
Item 5. OTHER INFORMATION On October 28, 1997, the Company's subsidiary, Great Basin Exploration and Mining Company, Inc. (GBEM), entered into a Letter Agreement with First Point Minerals Corporation (First Point), wherein First Point paid $11,178 to GBEM in consideration for an option to acquire the Amador and Water Canyon properties. The letter Agreement requires First Point ot maintain all of the Claims in good standing. The option may be exercised by First Point at any time on or before August 31, 2002, to acquire all or any portion of the claims. Following exercise of the option, First Point shall deliver to GBEM or its permitted assigns, 200,000 shares of common stock. On January 16, 1998, the Company entered into an Option Agreement with Zephyr Resources, Inc. (Zephyr), wherein Zephyr paid $20,000 to Fischer-Watt in consideration for an option to receive a Lease of Mining Property covering the Castle property. The Option Agreement grants Zephyr 150 days to exercise its option to receive the Lease. Upon exercise of the option, Zephyr shall pay Fischer-Watt $40,000 cash. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - Exhibit Item 601 No. Category Exhibit - --- -------- ------- 1 3(i) Articles of Incorporation as amended. Filed as exhibit 2-3 to Form 10-QSB filed January 8, 1998, and incorporated herein by reference. 2 3(ii) By-Laws of the Corporation. Amended and restated. Filed as exhibit 3-3 to Form 10- QSB filed December 16, 1996, and incorporated herein by reference. 3 10 Option effective August 31, 1997, whereby Fischer-Watt Gold Company, Inc., grants Bob Chapman an option to purchase 50,000 shares of Fischer-Watt Gold Company, Inc., restricted common stock. 4 10 Option effective August 31, 1997, whereby Fischer-Watt Gold Company, Inc., grants Rick Lundgren an option to purchase 150,000 shares of Fischer-Watt Gold Company, Inc., restricted common stock. 5 10 English translation of contract dated September 1, 1997, between Minera Constelacion, S.A. de C.V. and Minera Montoro S.A. de C.V. regarding an option to acquire the Los Verdes. 6 10 English translation of addendum, dated October 1, 1997, to Purchase-Sale Agreement between Compania Minera Oronorte S.A. (seller) and NISSHO IWAI Corporation (buyer) dated December 19, 1995 (filed as exhibit 34-10 to Form 10-KSB filed September 25, 1996). 17 7 10 Employment agreement effective October 24, 1997, between Fischer-Watt Gold Company, Inc., and George Beattie whereby Fischer-Watt agrees to employ Mr. Beattie for a two-year period as President. 8 10 Letter agreement dated October 28, 1997, between First Point Minerals Corporation and Great Basin Exploration and Mining Company, Inc., wherein Great Basin Exploration and Mining Company, Inc., grants First Point Minerals Corporation an option to acquire the claims of the Amador and Water Canyon properties. 9 10 Option effective October 31, 1997, whereby Fischer-Watt Gold Company, Inc., grants George Beattie an option to purchase 250,000 shares of Fischer-Watt Gold Company, Inc., restricted common stock. 10 27 Financial Data Schedule for the nine (9) month period ended October 31, 1997. (b) Reports on Form 8-K During the quarter ended October 31, 1997, no reports on Form 8-K were filed by the Registrant. 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized. FISCHER-WATT GOLD COMPANY, INC. February 11, 1998 By: /s/ George Beattie --------------------------------- George Beattie, President, Chief Executive Officer (Principal Executive Officer), Chairman of the Board and Director February 11, 1998 By: /s/ Michele D. Wood --------------------------------- Michele D. Wood, Treasurer, Chief Financial Officer (Principal Financial and Accounting Officer) 19 EX-1 2 EXHIBIT 3-10--CHAPMAN OPTION OPTION THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS. OPTION TO PURCHASE 50,000 SHARES OF COMMON STOCK FISCHER-WATT GOLD COMPANY, INC. (A Nevada Corporation) Not Transferable or Exercisable Except upon Conditions Herein Specified Void after 5:00 O'Clock P.M., Pacific Time, on August 31, 2003 Fischer-Watt Gold Company, Inc., a Nevada corporation (the "Company") hereby certifies that Bob Chapman or his registered successors and permitted assigns, registered on the books of the Company maintained for such purposes as the registered holder hereof (the "Holder"), for value received, is entitled to purchase from the Company the number of fully paid and non-assessable shares of Common Stock of the Company, of the par value of $.001 per share (the "Shares"), stated above at the purchase price of $.22 per Share (the "Exercise Price") (the number of Shares and Exercise Price being subject to adjustment as hereinafter provided) upon the terms and conditions herein provided. 1. Exercise of Option. (a) Subject to subsection (b) of this Section 1, upon presentation and surrender of this Option Certificate, with the attached Purchase Form duly executed, at the principal office of the Company at 1621 North Third Street, Suite 1000, Coeur d'Alene, Idaho 83814, or at such other place as the Company may designate by notice to the Holder hereof, together with a certified or bank cashier's check payable to the order of the Company in the amount of the Exercise Price times the number of Shares being purchased, the Company shall deliver to the Holder hereof, as promptly as practicable, certificates representing the Shares being purchased. This Option may be exercised in whole or in part; and, in case of exercise hereof in part only, the Company, upon surrender hereof, will deliver to the Holder a new Option Certificate or Option Certificates of like tenor entitling the Holder to purchase the number of Shares as to which this Option has not been exercised. (b) This Option may be exercised in whole or in part at any time after September 1, 1998 and prior to 5:00 o'clock P.M. Pacific Time, on August 31, 2003. 2. Exchange and Transfer of Option. This Option at any time prior to the exercise hereof, upon presentation and surrender to the Company, may be exchanged, alone or with other Options of like tenor registered in the name of the Holder, for another Option or other Options of like tenor in the name of such Holder exercisable for the same aggregate number of Shares as the Option or Options surrendered. 3. Rights and Obligations of Option Holder. (a) The Holder of this Option Certificate shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, in the event that any certificate representing the Shares is issued to the Holder hereof upon exercise of this Option, such Holder shall, for all purposes, be deemed to have become the holder of record of such Shares on the date on which this Option Certificate, together with a duly executed Purchase Form, was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such Share certificate. The rights of the Holder of this Option are limited to those expressed herein and the Holder of this Option, by its acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Option Certificate, including, without limitation, all the obligations imposed upon the Holder hereof by Section 5 hereof. In addition, the Holder of this Option Certificate, by accepting the same, agrees that the Company may deem and treat the person in whose name this Option Certificate is registered on the books of the Company maintained for such purpose as the absolute, true and lawful owner for all purposes whatsoever, notwithstanding any notation of ownership or other writing thereon, and the Company shall not be affected by any notice to the contrary. (b) No Holder of this Option Certificate, as such, shall be entitled to vote or receive dividends or to be deemed the holder of Shares for any purpose, nor shall anything contained in this Option Certificate be construed to confer upon any Holder of this Option Certificate, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any action by the Company, whether upon any recapitalization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise, receive notice of meetings or other action affecting stockholders (except for notices provided for herein), receive dividends, subscription rights, or otherwise, until this Option shall have been exercised and the Shares purchasable upon the exercise thereof shall have become deliverable as provided herein; provided, however, that any such exercise on any date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for those Shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open, and the Option surrendered shall not be deemed to have been exercised, in whole or in part as the case may be, until the next succeeding day on which stock transfer books are open for the purpose of determining entitlement to dividends on the Company's common stock. -2- 4. Shares Underlying Option. The Company covenants and agrees that all Shares delivered upon exercise of this Option shall, upon delivery and payment therefor, be duly and validly authorized and issued, fully paid and non-assessable, and free from all stamp-taxes, liens, and charges with respect to the purchase thereof. In addition, the Company agrees at all time to reserve and keep available an authorized number of Shares sufficient to permit the exercise in full of this Option. 5. Disposition of Option or Shares. (a) The holder of this Option Certificate and any transferee hereof or of the Shares issuable upon the exercise of the Option Certificate, by their acceptance hereof, hereby understand and agree that the Option, and the Shares issuable upon the exercise hereof, have not been registered under either the Securities Act of 1933 (the "Act") or applicable state securities laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated, or otherwise transferred (whether or not for consideration) except upon the issuance to the Company of a favorable opinion of counsel or submission to the Company of such evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act and the State Acts. It shall be a condition to the transfer of this Option that any transferee hereof deliver to the Company its written agreement to accept and be bound by all of the terms and conditions of this Option Certificate. (b) The stock certificates of the Company that will evidence the shares of Common Stock with respect to which this Option may be exercisable will be imprinted with a conspicuous legend in substantially the following form: The shares represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") or applicable state securities laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated or otherwise transferred (whether or not for consideration) by the holder except upon the issuance to the Company of a favorable opinion of its counsel or submission to the Company of such other evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act and the State Acts. The Company has not agreed to register any of the holder's shares of Common Stock of the Company with respect to which this Option may be exercisable for distribution in accordance with the provisions of the Act or the State Acts and, the Company has not agreed to comply with any exemption from registration under the Act or the State Acts for the resale of the holder's shares of Common Stock of the Company with respect to which this Option may be exercised. Hence, it is the understanding of the holders of this Option that by virtue of the provisions of certain rules respecting "restricted securities" promul gated by the SEC, the shares of Common Stock of the Company with respect to which this Option may be exercisable may be required to be held indefinitely, unless and until registered under the Act and the State Acts, unless an exemption from such registration is available, in which case the holder may still be limited as to the number of shares of Common Stock of the Company with respect to which this Option may be exercised that may be sold. -3- 6. Adjustments. The number of Shares purchasable upon the exercise of this Option is subject to adjustment from time to time upon the occurrence of any of the events enumerated below. (a) In case the Company shall: (i) pay a dividend in Shares, (ii) subdivide its outstanding Shares into a greater number of Shares, (iii) combine its outstanding Shares into a smaller number of Shares, or (iv) issue, by reclassification of its Shares, any shares of its capital stock, the amount of Shares purchasable upon the exercise of this Option immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive upon exercise of the Option that number of Shares which such Holder would have owned or would have been entitled to receive after the happening of such event had such Holder exercised the Option immediately prior to the record date, in the case of such dividend, or the effective date, in the case of any such subdivision, combination or reclassification. An adjustment made pursuant to this subsection (a) shall be made whenever any of such events shall occur, but shall become effective retroactively after such record date or such effective date, as the case may be, as to any exercise between such record date or effective date and the date of happening of any such event. (b) Notice to Option Holders of Adjustment. Whenever the number of Shares purchasable hereunder is adjusted as herein provided, the Company shall cause to be mailed to the Holder in accordance with the provisions of this Section 6 a notice (i) stating that the number of Shares purchasable upon exercise of this Option have been adjusted, (ii) setting forth the adjusted number of Shares purchasable upon the exercise of this Option, and (iii) showing in reasonable detail the computations and the facts, including the amount of consideration received or deemed to have been received by the Company, upon which such adjustments are based. 7. Fractional Shares. The Company shall not be required to issue any fraction of a Share upon the exercise of this Option. If more than one Option shall be surrendered for exercise at one time by the same Holder, the number of full Shares which shall be issuable upon exercise thereof shall be computed on the basis of the aggregate number of Shares with respect to which this Option is exercised. If any fractional interest in a Share shall be deliverable upon the exercise of this Option, the Company shall make an adjustment therefor in cash equal to such fraction multiplied by the Exercise Price. 8. Loss or Destruction. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Option Certificate and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement or bond satisfactory in form, substance and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of this Option Certificate, the Company at its expense will execute and deliver, in lieu thereof, a new Option Certificate of like tenor. 9. Survival. The various rights and obligations of the Holder hereof as set forth herein shall survive the exercise of the Option represented hereby and the surrender of this Option Certificate. -4- 10. Notices. Whenever any notice, payment of any purchase price, or other communication is required to be given or delivered under the terms of this Option, it shall be in writing and delivered by hand delivery or United States registered or certified mail, return receipt requested, postage prepaid, and will be deemed to have been given or delivered on the date such notice, purchase price or other communication is so delivered or posted, as the case may be; and, if to the Company, it will be addressed to the address specified in Section 1 hereof, and if to the Holder, it will be addressed to the registered Holder at its, his or her address as it appears on the books of the Company. FISCHER-WATT GOLD COMPANY, INC. By ---------------------------------------- George Beattie, Chief Executive Officer Date -------------------------------------- -5- PURCHASE FORM ----------------, ---- TO: FISCHER-WATT GOLD COMPANY, INC The undersigned hereby irrevocably elects to exercise the attached Option Certificate to the extent of __________ shares of the Common Stock, par value $.001 per share, of Fischer-Watt Gold Company, Inc. and hereby makes payment of $_____ in accordance with the provisions of Section 1 of the Option Certificate in payment of the purchase price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: ------------------------------------------------------------------------- (Please typewrite or print in block letters) Address: ---------------------------------------------------------------------- By ------------------------------- -6- ASSIGNMENT FORM For value received, the undersigned hereby sells, assigns, and transfers to Name ------------------------------------------------------------------------- Address ----------------------------------------------------------------------- this Option and irrevocably appoints ------------------------------- attorney (with full power of substitution) to transfer this Option on the books of the Company. Date: ---------------------------- ---------------------------------------- (Please sign exactly as name appears on Option) Taxpayer ID No. ------------------------ -7- EX-2 3 EXHIBIT 4-10--LUNDGREN OPTION OPTION THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS. OPTION TO PURCHASE 150,000 SHARES OF COMMON STOCK FISCHER-WATT GOLD COMPANY, INC. (A Nevada Corporation) Not Transferable or Exercisable Except upon Conditions Herein Specified Void after 5:00 O'Clock P.M., Pacific Time, on August 31, 2003 Fischer-Watt Gold Company, Inc., a Nevada corporation (the "Company") hereby certifies that Rick Lundgren or his registered successors and permitted assigns, registered on the books of the Company maintained for such purposes as the registered holder hereof (the "Holder"), for value received, is entitled to purchase from the Company the number of fully paid and non-assessable shares of Common Stock of the Company, of the par value of $.001 per share (the "Shares"), stated above at the purchase price of $.22 per Share (the "Exercise Price") (the number of Shares and Exercise Price being subject to adjustment as hereinafter provided) upon the terms and conditions herein provided. 1. Exercise of Option. (a) Subject to subsection (b) of this Section 1, upon presentation and surrender of this Option Certificate, with the attached Purchase Form duly executed, at the principal office of the Company at 1621 North Third Street, Suite 1000, Coeur d'Alene, Idaho 83814, or at such other place as the Company may designate by notice to the Holder hereof, together with a certified or bank cashier's check payable to the order of the Company in the amount of the Exercise Price times the number of Shares being purchased, the Company shall deliver to the Holder hereof, as promptly as practicable, certificates representing the Shares being purchased. This Option may be exercised in whole or in part; and, in case of exercise hereof in part only, the Company, upon surrender hereof, will deliver to the Holder a new Option Certificate or Option Certificates of like tenor entitling the Holder to purchase the number of Shares as to which this Option has not been exercised. (b) This Option may be exercised in whole or in part at any time after September 1, 1998 and prior to 5:00 o'clock P.M. Pacific Time, on August 31, 2003. 2. Exchange and Transfer of Option. This Option at any time prior to the exercise hereof, upon presentation and surrender to the Company, may be exchanged, alone or with other Options of like tenor registered in the name of the Holder, for another Option or other Options of like tenor in the name of such Holder exercisable for the same aggregate number of Shares as the Option or Options surrendered. 3. Rights and Obligations of Option Holder. (a) The Holder of this Option Certificate shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, in the event that any certificate representing the Shares is issued to the Holder hereof upon exercise of this Option, such Holder shall, for all purposes, be deemed to have become the holder of record of such Shares on the date on which this Option Certificate, together with a duly executed Purchase Form, was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such Share certificate. The rights of the Holder of this Option are limited to those expressed herein and the Holder of this Option, by its acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Option Certificate, including, without limitation, all the obligations imposed upon the Holder hereof by Section 5 hereof. In addition, the Holder of this Option Certificate, by accepting the same, agrees that the Company may deem and treat the person in whose name this Option Certificate is registered on the books of the Company maintained for such purpose as the absolute, true and lawful owner for all purposes whatsoever, notwithstanding any notation of ownership or other writing thereon, and the Company shall not be affected by any notice to the contrary. (b) No Holder of this Option Certificate, as such, shall be entitled to vote or receive dividends or to be deemed the holder of Shares for any purpose, nor shall anything contained in this Option Certificate be construed to confer upon any Holder of this Option Certificate, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any action by the Company, whether upon any recapitalization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise, receive notice of meetings or other action affecting stockholders (except for notices provided for herein), receive dividends, subscription rights, or otherwise, until this Option shall have been exercised and the Shares purchasable upon the exercise thereof shall have become deliverable as provided herein; provided, however, that any such exercise on any date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for those Shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open, and the Option surrendered shall not be deemed to have been exercised, in whole or in part as the case may be, until the next succeeding day on which stock transfer books are open for the purpose of determining entitlement to dividends on the Company's common stock. -2- 4. Shares Underlying Option. The Company covenants and agrees that all Shares delivered upon exercise of this Option shall, upon delivery and payment therefor, be duly and validly authorized and issued, fully paid and non-assessable, and free from all stamp-taxes, liens, and charges with respect to the purchase thereof. In addition, the Company agrees at all time to reserve and keep available an authorized number of Shares sufficient to permit the exercise in full of this Option. 5. Disposition of Option or Shares. (a) The holder of this Option Certificate and any transferee hereof or of the Shares issuable upon the exercise of the Option Certificate, by their acceptance hereof, hereby understand and agree that the Option, and the Shares issuable upon the exercise hereof, have not been registered under either the Securities Act of 1933 (the "Act") or applicable state securities laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated, or otherwise transferred (whether or not for consideration) except upon the issuance to the Company of a favorable opinion of counsel or submission to the Company of such evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act and the State Acts. It shall be a condition to the transfer of this Option that any transferee hereof deliver to the Company its written agreement to accept and be bound by all of the terms and conditions of this Option Certificate. (b) The stock certificates of the Company that will evidence the shares of Common Stock with respect to which this Option may be exercisable will be imprinted with a conspicuous legend in substantially the following form: The shares represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") or applicable state securities laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated or otherwise transferred (whether or not for consideration) by the holder except upon the issuance to the Company of a favorable opinion of its counsel or submission to the Company of such other evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act and the State Acts. The Company has not agreed to register any of the holder's shares of Common Stock of the Company with respect to which this Option may be exercisable for distribution in accordance with the provisions of the Act or the State Acts and, the Company has not agreed to comply with any exemption from registration under the Act or the State Acts for the resale of the holder's shares of Common Stock of the Company with respect to which this Option may be exercised. Hence, it is the understanding of the holders of this Option that by virtue of the provisions of certain rules respecting "restricted securities" promul gated by the SEC, the shares of Common Stock of the Company with respect to which this Option may be exercisable may be required to be held indefinitely, unless and until registered under the Act and the State Acts, unless an exemption from such registration is available, in which case the holder may still be limited as to the number of shares of Common Stock of the Company with respect to which this Option may be exercised that may be sold. -3- 6. Adjustments. The number of Shares purchasable upon the exercise of this Option is subject to adjustment from time to time upon the occurrence of any of the events enumerated below. (a) In case the Company shall: (i) pay a dividend in Shares, (ii) subdivide its outstanding Shares into a greater number of Shares, (iii) combine its outstanding Shares into a smaller number of Shares, or (iv) issue, by reclassification of its Shares, any shares of its capital stock, the amount of Shares purchasable upon the exercise of this Option immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive upon exercise of the Option that number of Shares which such Holder would have owned or would have been entitled to receive after the happening of such event had such Holder exercised the Option immediately prior to the record date, in the case of such dividend, or the effective date, in the case of any such subdivision, combination or reclassification. An adjustment made pursuant to this subsection (a) shall be made whenever any of such events shall occur, but shall become effective retroactively after such record date or such effective date, as the case may be, as to any exercise between such record date or effective date and the date of happening of any such event. (b) Notice to Option Holders of Adjustment. Whenever the number of Shares purchasable hereunder is adjusted as herein provided, the Company shall cause to be mailed to the Holder in accordance with the provisions of this Section 6 a notice (i) stating that the number of Shares purchasable upon exercise of this Option have been adjusted, (ii) setting forth the adjusted number of Shares purchasable upon the exercise of this Option, and (iii) showing in reasonable detail the computations and the facts, including the amount of consideration received or deemed to have been received by the Company, upon which such adjustments are based. 7. Fractional Shares. The Company shall not be required to issue any fraction of a Share upon the exercise of this Option. If more than one Option shall be surrendered for exercise at one time by the same Holder, the number of full Shares which shall be issuable upon exercise thereof shall be computed on the basis of the aggregate number of Shares with respect to which this Option is exercised. If any fractional interest in a Share shall be deliverable upon the exercise of this Option, the Company shall make an adjustment therefor in cash equal to such fraction multiplied by the Exercise Price. 8. Loss or Destruction. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Option Certificate and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement or bond satisfactory in form, substance and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of this Option Certificate, the Company at its expense will execute and deliver, in lieu thereof, a new Option Certificate of like tenor. 9. Survival. The various rights and obligations of the Holder hereof as set forth herein shall survive the exercise of the Option represented hereby and the surrender of this Option Certificate. -4- 10. Notices. Whenever any notice, payment of any purchase price, or other communication is required to be given or delivered under the terms of this Option, it shall be in writing and delivered by hand delivery or United States registered or certified mail, return receipt requested, postage prepaid, and will be deemed to have been given or delivered on the date such notice, purchase price or other communication is so delivered or posted, as the case may be; and, if to the Company, it will be addressed to the address specified in Section 1 hereof, and if to the Holder, it will be addressed to the registered Holder at its, his or her address as it appears on the books of the Company. FISCHER-WATT GOLD COMPANY, INC. By ---------------------------------------- George Beattie, Chief Executive Officer Date -------------------------------------- -5- PURCHASE FORM ----------------, ---- TO: FISCHER-WATT GOLD COMPANY, INC The undersigned hereby irrevocably elects to exercise the attached Option Certificate to the extent of __________ shares of the Common Stock, par value $.001 per share, of Fischer-Watt Gold Company, Inc. and hereby makes payment of $_____ in accordance with the provisions of Section 1 of the Option Certificate in payment of the purchase price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: ------------------------------------------------------------------------- (Please typewrite or print in block letters) Address: ---------------------------------------------------------------------- By ------------------------------- -6- ASSIGNMENT FORM For value received, the undersigned hereby sells, assigns, and transfers to Name ------------------------------------------------------------------------- Address ----------------------------------------------------------------------- this Option and irrevocably appoints ------------------------------- attorney (with full power of substitution) to transfer this Option on the books of the Company. Date: ---------------------------- ---------------------------------------- (Please sign exactly as name appears on Option) Taxpayer ID No. ------------------------ -7- EX-3 4 EXHIBIT 5-10--CONTRACT DATED SEPTEMBER 1, 1997 THIS CONTRACT SIGNED ON SEPTEMBER 1, 1997 BETWEEN: MINERA MONTORO S.A. de C.V. (Hereinafter "Montoro") AND: COMPANIA MINERA CONSTELACION, S.A. de C.V. (Hereinafter "Constelacion). WHEREAS: A. Constelacion holds the Los Verdes Concession comprising 11 exploitation mining concessions located in the municipality of Yecora, Sonora State, which are more particularly described in Schedule "A" attached to this Agreement and are hereinafter defined as the Concession together with the "Ampliacion Los Verdes" exploration mining concession currently pending registration at the Mining Ministry in Hermisillo, Sonora with File No. 18,087 once this concession is registered in favor of Constelacion before the Public Registry of Mining. B. Constelacion has agreed to grant Montoro the option to acquire the Property on the terms and conditions hereinafter set forth. NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual covenants and agreements hereinafter contained the parties agree as follows: 1. INTERPRETATION 1.01 In this Agreement the following words, phrases and expressions shall have the following meanings: (a) "Minerals" means any and all ores, and minerals, precious and base, metallic or non-metallic, in, on or under the Property which under the laws, regulations, orders, decrees or other instruments having the force of law may be explored for, developed, mined, extracted, worked, treated, carried away, sold and disposed of, and further includes all concentrates and metals. (b) "Exploration" means every kind of work done on or in respect of the Concession by or under the direction of Montoro including, without limiting generality, investigating, prospecting, exploring and preparing a feasibility report. (c) "Mining Operations" means every kind of exploitation work done on or in respect of the Concession by or under the direction of Montoro, including without limiting generality, development, designing, equipping, improving, surveying, construction and mining, and the milling concentrating, smelting, treating, refining, transporting, handling, marketing and selling of Minerals. (d) "Interest Rate" means the interest rate stated by the Citibank main office in New York, as being charged by it on US Dollar demand loans to most creditworthy domestic Commercial customers. (e) "Production Date" means the date upon which the first regular commercial shipment of Minerals extracted from the Property is made from a mine on the Property. (f) "Concession" means the exploitation and exploration concessions listed in Schedule A. (g) "Lot" means surface covered by mining concessions referred by the Concession. (h) "Option" means the purchase option of the Concessions that Constelacion grants unto Montoro in the terms mentioned in subsection 3.01, 3.02 and 3.03 below. (i) "Purchase Price" means the total amount of US$50,000.00 that Montoro will pay to Constelacion in the terms mentioned in subsection 4.01 below. (j) "Anticipated Royalties" means all advances against royalties over the Concession production that Montoro will pay to Constelacion in the terms and conditions mentioned in subsection 4.02 below. (k) "Royalties" means royalties over Concessions production that Montoro will pay to Constelacion in the terms and conditions mentioned in subsection 4.03 below. (l) "Concession Assignment Date" means the date in which Montoro and Constelacion celebrates this agreement in which Constelacion assigns the titled of the Concessions to Montoro. (m) "$" means United States dollars. 2. DECLARATIONS AND WARRANTIES 2.01 Constelacion warrants and represents to Montoro that: (a) It is the sole legal and beneficial holder of the Property; (b) it has the right and capacity to enter and carry out this Agreement and to dispose of the Concession; (c) the Concession is not encumbered, neither Constelacion nor any of its predecessors in interest or title has done anything whereby the Concession may become encumbered; and (d) there is no lawsuits or arbitraments that involve or may involve the Concession, and neither other use or date of this agreement which in the future may bring any lawsuit or arbitrament. (e) it has fulfilled all its obligations as title of the Concessions in accordance with all applicable legislation including without limiting generality the obligations mentioned in Article 27 of the Mining Law and additional obligations mentioned by the same Law and its Bylaw and the General Law of Ecological Equilibrium and Environment Protection. 3. DUE DILIGENCE 3.01 In consideration of US$25,000 paid on signing this Agreement, Constelacion hereby gives and grants unto Montoro the sole and exclusive Option 3.02 Montoro shall have four months as of the signing of this Agreement to perform due diligence on title matters and site evaluations of the Property as well as approaching prospective lenders regarding financing requirements of the project. If the financial institutions request additional or confirmation drilling on the Property, then Montoro shall request and Constelacion shall grant an extension of an additional 60 days for this option period. Constelacion is compelled to give all kind of documentation and information required by Montoro and allow Montoro free access to the Concession to review Constelacion obligations mentioned in the above paragraph. 3.03 If Montoro wishes to exercise the Option contemplated in section 3.01, it will give notice to Constelacion in writing on or before the end period of the Option or the extension granted in subsection 3.02, and Constelacion is compelled to execute an agreement assigning the Concession to Montoro within the following 30 days upon Constelacion receiving such notice. If Montoro does not give notice by that date or elects not to proceed, this Agreement will be of no further force or effect. In case that in the execution of the above mentioned agreement the "Ampliacion Los Verdes" exploration mining concession, mentioned in Schedule A, is not assigned to Montoro, Constelacion should assign this concession to Montoro within the following 30 days upon Registration of this concession in favor of Constelacion by Public Registry of Mining. 4. PURCHASE PRICE AND ROYALTIES 4.01 Purchase Price: If Montoro elects to exercise the Option as contemplated in subsection 3.03, Montoro shall pay to Constelacion the total amount of US$50,000.00 as Purchase Price of the Concession once this agreement is executed assigning Montoro the Concession. 4.02 Advanced Royalties: Montoro shall pay yearly to Constelacion as Advanced Royalties over Concession production the amount of US$100,000.00 no later than each anniversary of the Assignation date of the Concession until and including the year of the production date. 4.03 Royalties: Montoro will pay as royalties over Concession production as per: a) US$1,000,000 yearly as royalties on each anniversary of the Production Date over the understanding that the first and subsequent anniversary payment must be reduced, until the paid amounts mentioned in subsection 4.02 have been deducted, however, the amount to be paid in each anniversary would not be lower than US$75,000.00 understanding that such royalties should be paid although the Concession production in interrupted. b) The total amount of the Royalties should be US$4,950,000 without including the advanced payments as "Advanced Royalties" mentioned in subsection 4.02. If following the Production Date, Montoro wishes to delay the payment of any amount due under paragraph 4.03, by reason of low metal prices affecting the operations or other reasonable cause, Montoro may request and Constelacion will grant a 90-day extension with interest charged during the extension at Prime Rate. 4.04 If Montoro fails to make any payment due pursuant to subsection 4.01, 4.02 or 4.03, Constelacion may give Montoro notice in writing of the default. Montoro shall be entitled to pay to Constelacion within 14 days of receipt of Constelacion's notice 105 percent of the cash payment which is overdue. Any increased payment so made within the 14-day period shall be deemed to have been duly and properly made and this Agreement shall remain in full force and effect. 4.05 All payments payable under this Agreement shall be paid by Montoro in Mexican National currency using the official exchange rate on the day before the payment is made, published in the Official Gazette of the Federation for credit to Constelacion at the bank as follows: Bank: Banamex, S.A. Branch: 274 Account No.: 5472187 5. REGISTRATION IN THE "REGISTRO PUBLICO DE MINERIA" 5.01 Montoro shall pay the costs associated with the public deed transferring of the Concession from Constelacion and its registration at the Public Registry of Mining. After signature of this agreement, Montoro shall present all notices and/or notifications required by the Public Registry of Mining in reference with this Option, and Constelacion requested by Montoro shall sign on time, any application, permit or acceptance and deliver to Montoro any information required by authorities related to the presentation of such advertisements and/or notifications. 6. AREA OF INTEREST 6.01 During the term of this Agreement that area of land which is within 2,500 meters in radius form the existing portal of the "Los Verdes Adit" shall be deemed to comprise the "Area of Interest." Any exploration or exploitation concessions acquired by either party within the Area of Interest shall be deemed to be part of the Concession and to be subject to this Agreement. 7. MINING OPERATIONS AND REPORTING 7.01 Constelacion grants Montoro the exclusive right to exploit and explore the Lotes including all rights derived from its Exploration Works and Mining Operations in the terms and conditions of this agreement. 7.02 Until the purchase price, advance royalties and royalties have been paid in full, Montoro shall: (a) perform its Mining Operations in a sound and workmanlike manner, in accordance with sound mining and engineering practices and in compliance with all material applicable federal, provincial and municipal laws, by-laws, ordinances, rules and regulations and this Agreement; (b) not commence or continue a work program unless it has sufficient funds secured or on hand to pay for budgeted costs plus a reasonable allowance for contingencies; and (c) permit Constelacion to inspect the Property at reasonable intervals and times, previously agreed by both parties provided that the Inspections are at Constelacion's sole risk and expense and Constelacion does not disrupt Mining Operations, Montoro will not unreasonably refuse the dates proposed by Constelacion for these inspections. (d) keep the title of the Property in good standing. (e) Only sell or encumber the Property in any manner until all considerations mentioned in section 4 above are paid, or with previous agreement with Constelacion. 7.03 Until the purchase price, advance royalties and royalties have been paid in full, Montoro shall provide to Constelacion: (a) quarterly regular reports of Mining Operations of the results obtained therefrom; (b) copies of any news releases it proposes to make prior to making the same. 8. PROPERTY ADMINISTRATION 8.01 During the term of this Agreement, Montoro shall pay such taxes and other payments and file, to the maximum extent possible, assessment credit, such work as may be required to keep the Property in good standing. Notwithstanding the foregoing, Montoro may abandon from any or all of the concessions comprised in the Concession and such action shall not after the terms of this Agreement with respect to the remainder of the Concession. However: (a) concessions will be abandoned only after Montoro has given notice of abandonment to Constelacion; and (b) all concessions proposed for abandonment shall be in good standing for a least 90 days from the date of Montoro's notice of abandonment and shall be transferred to Constelacion forthwith upon request made by Constelacion within 30 days of Montoro's notice of abandonment. If this Agreement were in force and effect 90 days prior to the expiration date of a concession, Montoro must submit the respective mineral exploitation concession application for the mineral lots at least 30 days before the expiration date. Constelacion will provide such reasonable assistance as Montoro may request to this end and sign all the required documents. 8.02 If this Agreement terminates without Montoro having paid the purchase price and royalties in full, Montoro will: (a) Upon request made within 30 days or termination, deliver to Constelacion copies of all pertinent plans, assay maps and diamond drill records relating to the Mining Operations which have previously not been delivered; and (b) cause sufficient work to be recorded or money paid in lieu thereof to maintain the concessions which then comprise the Property in good standing for at least one year from the date of termination contemplated in paragraph 9.01(a); and (c) offer to transfer the Property to Constelacion as contemplated in subsection 9.02 forthwith upon request made by Constelacion within 30 days of Montoro's notice of abandonment. 9. TERMINATION 9.01 This Agreement shall terminate: (a) If any cash payment listed in subsection 4.01, 4.02, 4.03 is not paid or delivered by the due date listed or the later date permitted in subsection 4.04; or (b) on Montoro giving notice of termination to Constelacion which it shall be at liberty to do at any time after the execution of this Agreement. 9.02 If this Agreement terminates without Montoro having paid the purchase price, Advance Royalties and Royalties in full, Montoro shall offer to transfer the Concession to Constelacion and any mining concessions held by Montoro or any mining claim request by Montoro, once it is titled, within the Area of Interest. If Constelacion accepts Montoro's offer within 30 days or if Montoro failed to make an offer and Constelacion registered that the Concession be transferred to Constelacion, Montoro shall transfer the Concessions to Constelacion for US$1.00 within 14 days of Constelacion's acceptance or request, and for that purpose Montoro is obliged to fulfill all necessary requirements and execute whatever documents may be required to transfer the Concession to Constelacion upon receipt of notice from Constelacion that it is entitled to a transfer of the Concession under this section. 9.03 Upon termination of this Agreement, Montoro shall cease to be liable to Constelacion save for the performance of those of its covenants which theretofore should have been performed and its obligations under subsections 7.02, 7.03, 8.02 and 9.02. 9.04 Montoro shall vacate the Property within 180 days after termination, but shall have the right of access to the Property for a reasonable time thereafter to remove its buildings, machinery, equipment and supplies. 9.05 Constelacion shall under no circumstances be obligated to return any amounts which it may have received from Montoro. 10. INDEMNITY AND INSURANCE 10.01 Montoro shall indemnify and save Constelacion harmless from and against any loss, liability, claim, demand, damage, expense, injury or death (including, unless Montoro assumes and pays the defense of legal fees and the reasonable cost of investigating and defending against any judicial proceedings once they are reasonable and documented) arising out of or in connection with exploration activities conducted during the subsistence of the Option or arising out of or in connection with the sale or attempted sale of any interest in the Concession to a third party. 10.02 During the term of this Agreement, Montoro shall provide, maintain and pay for the following insurance which shall be placed with such insurance company or companies and in such form as may be acceptable to Constelacion: (a) Comprehensive General Liability Insurance protecting Montoro and its employees, agents, contractors, invitees and licensees against damages arising from personal injury (including death) and from claims for property damage which may arise directly or indirectly out of the operations of Montoro and Constelacion under this Agreement including coverage for liability and contractual liability; and (b) automobile insurance on Montoro's owned vehicles, if any, protecting Montoro and its employees, agents, contractors, invitees, and licensees against damages arising from bodily injury (including death) and from claims for property damage arising out of the operations of Montoro under this Agreement. 10.03 Each policy of insurance contemplated in subsection 10.02 shall: (a) Be in an amount acceptable to Montoro and (b) indicate that the insurer will give Constelacion 30 days' prior written notice of cancellation or termination of the coverage. Montoro shall provide Constelacion with such evidence of insurance as Constelacion may request. 10.04 Montoro will, at its expense, obtain insurance in such greater amounts and for such greater coverage as it deems prudent to protect itself and Constelacion hereunder. 10.05 Constelacion shall indemnify and save Montoro harmless from and against any loss, liability, claim, demand, damage, expense, injury or death (including, unless Constelacion assumes and pays the defense of legal fees and the reasonable cost of investigating and defending against any judicial proceedings) arising out of or in connection with exploration activities conducted before the subsistence of the Option or arising out of or in connection with representations by Constelacion. 11. NOTICES 11.01 All notices, demands or requests required or permitted to be given hereunder shall be in writing and may be delivered personally, sent by telecopier or forwarded by prepaid registered mail. Any notice sent by telecopier or personally delivered shall be deemed to have been given and received on the business day next following the date of sending or delivery. Any notice mailed shall deemed to have been given and received on the seventh day following the date of posting, addressed as follows: If to Constelacion: Compania Minera Constelacion , S.A. de C.V. Pable Neruda #2886 Col. Providencia 44639 Guadalajara, Jalisco, Mexico Attention: Manager Tel: 01 (3) 642-5014 Fax: 01 (3) 640-2472 Copy to: Cominco Ltd. 500-200 Burrard Street Vancouver, BC V6C 3L7 Attention: General Manager, International Exploration If to Montoro: MINERA MONTORO, S.A. DE C.V. Palmas #735-205 Lomas de Chapultepec 11000 Mexico, D.F. Attention: President Tel: 01 (5) 520-2926 Fax: 01 (5) 520-2893 Copy to: FISCHER-WATT GOLD COMPANY, INC. 1621 N. 3rd Street, Suite 1000 Coeur d'Alene, ID 83814-3304 Attention: President and Chief Executive Officer Tel: 001 (208) 664-6757 Fax: 001 (208) 667-6516 or to such other address as wither party may subsequently specify by notice to the other. However, if there is a mail strike, slowdown or other labor dispute which might affect delivery of the notice by mail, then the notice shall be effective only if actually delivered. 12. ASSIGNMENT 12.01 During the term of this Agreement: (a) Montoro, previous agreement with Constelacion, could only sell, transfer, assign or otherwise dispose this Agreement or its right or interest in the Concession. (b) Montoro, previous writing agreement with Constelacion, could pledge, mortgage, charge or otherwise encumber their beneficial interest in the Concessions or their rights under this Agreement. 13. FURTHER ASSURANCES 13.01 Each of the parties shall do all such further acts and execute and deliver such further deeds and documents as shall be reasonably required in order fully to perform the terms of this Agreement. 14. CAPTIONS 14.01 The captions in this Agreement have been inserted for convenient reference and shall be disregarded interpreting this Agreement. 15 ENTIRE AGREEMENT 15.01 This is the entire agreement between the parties relating to the Concession and supersedes all previous negotiations and communications including, without limiting generality, the Letter of Intent signed on June 3, 1997. 16 EXPENDITURES AND TAXES 16.01 Montoro will cover all the expenditures and taxes under the public deed, and in this case, those under the purchase and sale of concession rights' deed. 16.02 Constelacion will cover any income or profit taxes associated with its sale of the Property. 16.03 The Value Added Tax shall be added to all amounts agreed in this agreement. 17. GOVERNING LAW 17.01 For any controversy that would arise between the parties in respect to the interpretation and execution of the present contract, the parties will abide by the laws of the courts of Mexico, Federal District, and expressly renounce any other. IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written. MINERA MONTORO S.A. de C.V. By: Ing. Jorge E. Ordonez Cortes ------------------------------------- (Title) COMPANIA MINERA CONSTELACION, S.A. de C.V. By: Lic. Yvonne Avalos Cazares ------------------------------------- (Title) Attachment "A" of the Minero Montoro, S.A. de C.V. and Compania Minera Constelacion, S.A. de C.V. Agreement made as of 1st September 1997. The Concession is composed of: I. The exploitation mining Concessions of the following lots located in Muncipality of Yecora, Sonora State. Name Title Hectares ---- ----- -------- 1. "Bacanora" 168,625 238.9685 2. "Bacanora Tres" 194,437 12.0000 3. "Los Verdes" 168,566 14.0000 4. "Buena Vista" 168,569 21.0000 5. "Piedras Azules" 178,925 132.7287 6. "Continuacion Buena Vista" 168,574 30.000 7. "La Nueva Cruz de San Nicolas 168,573 81.0000 8. "La Frontera" 168,575 15.0000 9. "Dos Picachos" 168,621 31.0000 10. "La Bufita" 193,491 10.0000 11. "La Verde" 168,576 9.0000 The above mentioned concessions are grouped to comply with the mining tax obligations being head of the group the "Los Verdes" concession, Title 168,566. II. The application for the "Ampliacion Los Verdes" exploration mining claim its being handled under file 18,087 before the Mining Agency in Hermosillo. III. The mining concession requested by Montoro within the area of interest entitled to Montoro or Constelacion or from which they obtained contractual right to explore or exploit or an option to acquire their ownership. EX-4 5 EXHIBIT 6-10--ADDENDUM DATED OCTOBER 1, 1997 ADDENDUM NO. 1 TO PURCHASE-SALE AGREEMENT dated December 19, 1995 COMPANIA MINERA ORONORTE S.A.("Seller") and NISSHO IWAI CORPORATION ("Buyer") agreed to make the following amendments to the above agreement. Clause 5. Quality Gold and Silver Concentrate of two different types with typical assays as follows ; High Grade Concentrate Low Grade Concentrate ---------------------- --------------------- (HGC) (LGC) Au 700 - 1,500g/dmt 300 - 550g/dmt Ag 850 - 1,300g/dmt 600 - 800g/dmt Cu less than 0.5% same As less than 1.0% same Fe 25 - 30% same S 30% same Hg less than 125ppm same Al2O3 less than 1% same Bi less than 10ppm same TiO2 less than 1% same Pb 6 - 7% same Zn 5 - 9% same Sb less than 0.5% same H2O 4 - 6% same F less than 100 ppm same Clause 6. Quantity The quantity of concentrates covered by the agreement shall be the annual production of EL Limon mine during 1997. Clause 7. Duration January 1, 1997 through December 31, 1997 All other terms and conditions of Purchase - Sale Agreement as of December 19, 1995 will remain unchanged. EX-5 6 EXHIBIT 7-10--EMPLOYMENT AGREEMENT--GEORGE BEATTIE EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made this 24th day of October, 1997, by and between Fischer-Watt Gold Company, Inc., a Nevada corporation (the "Corporation"), and George Beattie (the "Employee"). 1. Employment The Corporation hereby employs the Employee as President and the Employee hereby accepts such employment in accordance with the terms and conditions of this Agreement. 2. Duties of Employee The duties of the Employee are to serve as the Corporation's chief executive officer, exercising detailed supervision over all of the Corporation's property, operations, and business affairs, subject to the direction and control of the Board of Directors of the Corporation. The powers and duties of the Employee may include other duties as may be more specifically determined and set, and may be changed, by the Board of Directors of the Corporation from time to time. The Employee shall strictly adhere to all of the rules and regulations of the Corporation which are presently in force or which may be established hereafter with respect to the conduct of Employees. 3. Other Employment The Employee is required to refrain from acting in any other work capacity or employments without having first obtained the written consent of the Corporation. It is the Corporation's intention that the Employee devote all of the Employee's work effort towards the fulfillment of the Employee's obligations under this Agreement. 4. Place of Employment The Employee's initial place of work is the principal office of the Corporation located at 1621 North Third Street, Suite 1000, Coeur d'Alene, Idaho. However, the Corporation may require that the Employee work at such other place or places as the Corporation may direct. However, if the Employee is requested to relocate, the Corporation shall pay the Employee's reasonable expenses in that regard. 5. Compensation of Employee As compensation for all services rendered by the Employee under this Agreement, the Corporation shall pay the Employee a salary of $100,000 annually, payable not less frequently than in monthly installments. 1 In addition, upon execution of this Agreement, the Employee shall receive a stock option representing the option to purchase 250,000 shares of the Corporation's common stock at an exercise price of $.__, exercisable at any time after November 1, 1998 and prior to the close of business on October 31, 2003, as evidenced by and pursuant to the terms of the option certificate attached to this Agreement as Exhibit A. 6. Employee Benefits The Employee shall be entitled to four weeks paid vacation per year, to be taken as shall be reasonably consistent with the Employee's duties and obligations to the Corporation. The Corporation shall reimburse the Employee on an annual basis for the cost of the annual premium of a $500,000 term life insurance policy insuring the life of the Employee, up to a maximum of $3,000 per year. The Corporation shall also provide the Employee with such other benefits, including life and health insurance, as the Corporation generally provides to its employees, which may be changed from time to time at the discretion of the Corporation. Vacation and other benefits are subject to the policies of the Corporation, as in effect from time to time. 7. Employee Expenses The Corporation shall reimburse the Employee for all reasonable and necessary expenses incurred by the Employee in the furtherance of or in connection with the business of the Corporation. In order to obtain reimbursement, the Employee shall submit to the Corporation an itemized statement of such expenses along with copies of bills and receipts. Further explanations may be required of the Employee. Payments shall be made within 30 days after receipt of all necessary documentation. 8. Term of Employment The term of employment shall begin October 24, 1997 and extend to October 31, 1999. 9. Termination of Employment a. The Corporation may terminate the Employee's employment at will, with or without cause and at any time, without prior notice. "Cause" shall mean breach by the Employee of any term or provision of this Agreement, or any other conduct or behavior by the Employee which the Corporation reasonably believes constitutes criminal or unethical conduct or behavior or which has a material adverse effect on the Corporation. The Employee may terminate his employment at any time upon 30 day's notice. 2 b. If the Employee shall become unable to attend to the duties of employment as required by this Agreement and it becomes necessary for the Corporation to replace the Employee either temporarily or permanently, the Corporation may do so and at the same time may suspend all further payments to the Employee for salary or bonuses and all other related compensation. The Corporation will recommence the payment of salaries, bonuses and other compensation at such date as the Employee shall resume and perform the Employee's duties under this Agreement. The right of the Corporation as set forth above is in addition to the right of the Corporation to terminate the Employee's employment at any time as set forth above. c. If the Employee's employment is terminated, all salaries, bonuses, other compensation and benefits shall accrue and be paid to the Employee to the date of the termination. Payments will be made with respect to each item of compensation or benefit as soon as the amount due is determined. In addition, if the Employee's employment is terminated by the Corporation for any reason other than for cause: (i) the Corporation shall pay to the Employee from the date of termination, as severance compensation, the monthly salary of the Employee at the date of termination for a period of six months plus an additional two months for each full year of employment since September 1, 1993; and (ii) the Corporation shall pay on behalf of the Employee from the date of termination the Employee's monthly health insurance premium for a period of plus an additional two months for each full year of employment since September 1, 1993, up to a maximum of twelve months. In the event the Employee's employment is terminated for cause, the Corporation shall have the right to withhold any and all monies due to the Employee and shall apply the same as an offset against any monies due to the Corporation from the Employee as a result of any damages suffered by the Corporation arising from the conduct or behavior which resulted in termination for cause. d. If the Employee dies while employed by the Corporation, this Agreement shall automatically terminate. 10. Arbitration of Disputes Any controversy or claim arising out of or relating to this Agreement, the interpretation or breach of this Agreement, the Employee's employment by the Corporation, or the termination of the Employee's employment shall be submitted to and settled by arbitration in accordance with the Idaho Uniform Arbitration Act. Judgment upon the award rendered in connection with such arbitration may be entered in any court having jurisdiction thereof. 11. Severability; Governing Law If any clause or provision of this Agreement shall be adjudged invalid or unenforceable, it shall not affect the validity of any other clause or provision, which shall remain in full force and effect. In the event any provision of this Agreement is found to be unenforceable for any reason the 3 parties shall attempt to modify that portion in a manner to preserve the intent of the parties in entering into the Agreement. The laws of Idaho shall apply to this Agreement, except where Federal law applies. The parties consent to jurisdiction and venue in any court of competent jurisdiction in the County of Kootenai, Idaho, for any court proceedings which may be necessary following arbitration or which may otherwise arise from this Agreement. 12. Complete Agreement This Agreement supersedes all prior Agreements and understandings between the Employee and the Corporation and may not be modified, changed or altered by any unwritten promise or statement by whomsoever made; nor shall any modification of it be binding upon the Corporation until such written modification shall have been approved in writing by the President of the Corporation. 13. Waiver of Breach The waiver by the Corporation of a breach of any provision of this Agreement by the Employee shall not operate or be construed as a waiver of any other breach by the Employee. 14. Employment by Subsidiary If the Corporation owns, acquires or forms subsidiary companies or becomes connected with other affiliate corporations, the Employee agrees to be employed by any of the same and in such event all of the terms and conditions set forth herein shall bind the parties. 15. General This Agreement shall be binding upon and benefit any heirs, subsidiaries, affiliates, successors, or assigns of the parties. All captions used in this Agreement are for convenience only and shall have no meaning in the interpretation or effect of this Agreement. The provisions of Section 10 of this Agreement will survive the termination of this Agreement and remain in full force and effect. 4 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on and as of the date set forth above. THE CORPORATION: FISCHER-WATT GOLD COMPANY, INC., a Nevada corporation By: ----------------------------------- Name: -------------------------------- Title: -------------------------------- THE EMPLOYEE: GEORGE BEATTIE ------------------------------------- George Beattie 5 EX-6 7 EXHIBIT 8-10--LETTER AGREEMENT--OCTOBER 28, 1997 GREAT BASIN EXPLORATION & MINING CO., INC. 1621 NORTH THIRD STREET, SUITE 1000 COEUR D'ALENE, IDAHO 83814 October 28, 1997 First Point Minerals Corp. 1050 W. Pender Street, #2170 Vancouver, British Columbia Canada V6E 3S7 Re: Option to Acquire Amador and Water Canyon Properties, Lander County, Nevada Gentlemen: This letter, when countersigned by you, will confirm and memorialize our agree ment with respect to the grant by Great Basin Exploration & Mining Co., Inc. ("GBEM") to you of an option (the "Option") to acquire the Amador and Water Canyon properties (comprised of the claims set forth on Exhibit A hereto; the "Claims") held by GBEM, and the terms upon which the Option may be exercised by you. Our agreement is on the terms, and subject to the conditions, described below. 1. Fundamental Terms. A. GBEM hereby grants you the Option. The terms of the Option are as follows: (i) subject to the provisions of Items 1C and 4 hereof, the Option may be exercised by you at any time on or before August 31, 2002 (the "Expiration Date") to acquire all or any portion of the Claims (the "Exercised Claims"); (ii) within 90 days following exercise of the Option (in whole or in part) you shall deliver to GBEM or its permitted assigns 200,000 shares of common stock (the "Shares") of First Point Minerals Corp. ("First Point"); and (iii) upon delivery of the Shares following exercise GBEM shall execute and deliver to you a quitclaim deed conveying all of GBEM's right, title and interest in and to the Exercised Claims. B. The Shares to be issued upon the exercise of the Option are subject to adjustment from time to time upon the occurrence of any of the events as follows. (i) In case First Point shall: (a) pay a dividend in shares of common stock, (b) subdivide its outstanding shares of common stock into a greater number of shares, (c) combine its outstanding shares of common stock into a smaller number of shares, or (d) issue, by reclassification of its shares of common stock, any shares of its capital stock, the amount of the Shares to be issued upon the exercise of the Option immediately prior thereto shall be adjusted so that upon the exercise of the Option there shall be issued that number of Shares which a holder of the Shares would have owned or would have been entitled to receive after the happening of such event had the Option been exercised immediately prior to the record date, in the case of such dividend, or the effective date, in the case of any such subdivision, combination or reclassification. An adjustment made pursuant to this Item 1B shall be made whenever any of such events shall occur, but shall become effective retroactively after such record date or such effective date, as the case may be, as to any exercise between such record date or effective date and the date of happening of any such event. (ii) In case of any merger of First Point with any other corporation (other than a merger in which First Point is the continuing corporation), any share exchange or any sale or transfer (other than to a wholly owned subsidiary) of all or substantially all of the assets of First Point, either First Point, the corporation into which First Point shall have been merged, the corporation which shall have acquired all the issued or all the outstanding shares of common stock of First Point or the corporation which shall have acquired such assets, as the case may be, shall make appropriate provision so that, upon exercise of the Option, there shall be issued the kind and amount of shares of stock and other securities and property receivable upon such merger, share exchange, or transfer which a holder of the Shares would have received had the Option been exercised immediately prior to such merger, share exchange or transfer. The above provisions shall similarly apply to successive mergers, share exchanges or transfers. C. Upon execution of this letter agreement you shall pay GBEM the amount of US$11,178 as reimbursement for payments made by GBEM since August 1, 1997 to governmental authorities to maintain the Claims. From the date hereof through the Expiration Date (unless, commencing calendar year 1999, you shall notify GBEM in writing on or before May 31st of a calendar year that you do not intend to make those payments which may be due to governmental authorities in August and September of such calendar year, in which case any Claims with respect to which you have stated your intention not to make payments shall no longer be deemed a Claim subject to the Option) you shall make, in the name of GBEM, any and all payments to governmental authorities required to maintain all of the Claims in good standing. In the event that you fail to make any of the payments provided for in this Item 1C when due, you shall incur liability for damages suffered by GBEM resulting from such failure to pay any such payment when due (up to a maximum aggregate amount of liability for such damages of US$35,000), the Option shall immediately terminate and become null and void and of no further force or effect, you shall be prohibited from acquiring any of the Claims (directly or indirectly) for a period of two years following such date of termination of the Option. 2. Covenants. First Point covenants and agrees that the Shares delivered upon exercise of the Option shall, upon delivery, be duly and validly authorized and issued, fully paid and non-assessable, and free from all stamp-taxes, liens, and charges with respect to the purchase thereof. GBEM covenants and agrees that it shall not encumber or transfer (other than pursuant to exercise of the Option) the Claims subject to the Option from the date hereof through the earlier to occur of the Expiration Date or termination of the Option pursuant to Item 1C hereof. 3. Representations and Warranties. GBEM represents and warrants that, to the best of its knowledge, other than rights of Serem Gatro Canada Inc. ("SGC") arising pursuant to and in accordance with that certain Participation Agreement, by and among SGC, GBEM and Great Basin Management Co., Inc., dated May 31, 1995 (the "Participation Agreement"), the Claims are unencumbered. First Point represents and warrants that it has received and reviewed the Participation Agreement and has been advised by GBEM to seek the advice and assistance of counsel in connection therewith.. 4. Participation Agreement Compliance. All of the applicable terms and conditions of Section 14.01 of the Participation Agreement shall be satisfied prior to any exercise of the Option. Each party shall cooperate with the other and use its best efforts to comply therewith. 5. Press Releases and Disclosure. Each party agrees that it will not issue any press release or other disclosure of this letter agreement without the prior approval of the other, which shall not be unreasonably withheld, unless such disclosure is required by law or the rules or practices of any stock exchange or automated quotation system and time does not permit the obtaining of such consent, or such consent is withheld. 6. Permitted Assigns. GBEM may assign its right to receive the Shares upon exercise of the Option to any corporation which owns all of the outstanding shares of capital stock of GBEM (a "Parent Corporation") or to any corporation which owns all of the outstanding shares of capital stock of a Parent Corporation. You may assign the Option to (i) any corporation all of the outstanding shares of capital stock of which are owned, directly or indirectly, by First Point or (ii) any joint venture to which First Point is a party, but any such assignment shall not relieve First Point of the obligation to issue the Shares following exercise of the option. 7. Entire Agreement and Governing Law. This letter agreement is the sole and entire agreement between the parties with respect to the subject matter hereof and shall be governed by the laws of the State of Idaho of the United States of America. 8. Further Assurances. The parties agree to take such further action and execute such additional documents as may be necessary to fully effectuate the terms of this letter agreement. Very truly yours, GREAT BASIN EXPLORATION & MINING CO., INC. By ----------------------------------- George Beattie, President and Chief Executive Officer Confirmed and Agreed: FIRST POINT MINERALS CORP. By Date: ---------------------------------- ----------------- Peter Bradshaw, President and Chief Executive Officer The following is a compilation of claims associated with the Amador property. The property is located in Sections 28, 29, 30, 31, 32, and 33, T20N, R44E, MDB&M, Lander County, Nevada
Recorded in Co. Name of claims(s) or site(s): Location Date Book Page - --------------------------- ------------- ------------------------- BLM Serial No(s): ---------------- 49ER 425 9/22/96 436 183 757658 49ER 426 9/22/96 436 182 757659 49ER 427 9/22/96 436 181 757660 49ER 428 9/22/96 436 188 757661 49ER 429 9/22/96 436 179 757662 49ER 430 9/22/96 436 178 757663 49ER 431 9/22/96 436 177 757664 49ER 432 9/22/96 436 176 757665 49ER 433 9/22/96 436 175 757666 49ER 434 9/22/96 436 174 757667 49ER 435 9/22/96 436 173 757668 49ER 436 9/22/96 436 172 757669 49ER 525 9/22/96 436 171 757670 49ER 526 9/22/96 436 170 757671 49ER 527 9/22/96 436 169 757672 49ER 528 9/22/96 436 168 757673 49ER 529 9/22/96 436 167 757674 49ER 530 9/22/96 436 166 757675 49ER 531 9/22/96 436 165 757676 49ER 532 9/22/96 436 164 757677 49ER 533 9/22/96 436 163 757678 49ER 534 9/22/96 436 162 757679 49ER 535 9/22/96 436 161 757680 49ER 536 9/22/96 436 160 757681 49ER 625 9/22/96 436 159 757682 49ER 626 9/22/96 436 158 757683 49ER 627 9/22/96 436 157 757684 49ER 628 9/22/96 436 156 757685 49ER 629 9/22/96 436 155 757686 49ER 630 9/22/96 436 154 757687 49ER 631 9/22/96 436 153 757688 49ER 632 9/22/96 436 152 757689 49ER 633 9/22/96 436 151 757690 49ER 634 9/22/96 436 150 757691 49ER 635 9/22/96 436 149 757692 49ER 636 9/22/96 436 148 757693 49ER 725 9/22/96 436 147 757694 49ER 726 9/22/96 436 146 757695 49ER 727 9/22/96 436 145 757696 49ER 728 9/22/96 436 144 757697 49ER 729 9/22/96 436 143 757698 49ER 730 9/22/96 436 142 757699 49ER 731 9/22/96 436 141 757700 49ER 732 9/22/96 436 140 757701 49ER 733 9/22/96 436 139 757702 49ER 734 9/22/96 436 138 757703 49ER 735 9/22/96 436 137 757704 49ER 736 9/22/96 436 136 757705
The following is a compilation of claims associated with the Water Canyon property. The property is located in Sections 27, 28, 33, and 34, T20N, R47E, MDB&M, Lander County, Nevada Recorded in Co. Name of claims(s) or site(s): Location Date Book Page - --------------------------- ------------- ------------------------ BLMSerialNo(s): -------------- WC 651 9/25/96 436 244 757706 WC 652 9/25/96 436 243 757707 WC 653 9/25/96 436 242 757708 WC 654 9/25/96 436 241 757709 WC 655 9/25/96 436 240 757710 WC 656 9/25/96 436 239 757711 WC 657 9/25/96 436 238 757712 WC 658 9/25/96 436 237 757713 WC 659 9/25/96 436 236 757714 WC 660 9/25/96 436 235 757715 WC 661 9/25/96 436 234 757716 WC 662 9/25/96 436 233 757717 WC 663 9/25/96 436 232 757718 WC 664 9/25/96 436 231 757719 WC 665 9/25/96 436 230 757720 WC 751 9/25/96 436 229 757721 WC 752 9/25/96 436 228 757722 WC 753 9/25/96 436 227 757723 WC 754 9/25/96 436 226 757724 WC 755 9/25/96 436 225 757725 WC 756 9/25/96 436 224 757726
Recorded in Co. Name of claims(s) or site(s): Location Date Book Page - ---------------------------- ------------- ----------------------- BLMSerialNo(s): -------------- WC 757 9/25/96 436 223 757727 WC 758 9/25/96 436 222 757728 WC 759 9/25/96 436 221 757729 WC 760 9/25/96 436 220 757730 WC 761 9/25/96 436 219 757731 WC 762 9/25/96 436 218 757732 WC 763 9/25/96 436 217 757733 WC 764 9/25/96 436 216 757734 WC 765 9/25/96 436 215 757735 WC 851 9/24/96 436 214 757736 WC 852 9/24/96 436 213 757737 WC 853 9/24/96 436 212 757738 WC 854 9/24/96 436 211 757739 WC 855 9/24/96 436 210 757740 WC 856 9/24/96 436 209 757741 WC 857 9/24/96 436 208 757742 WC 858 9/24/96 436 207 757743 WC 859 9/24/96 436 206 757744 WC 860 9/24/96 436 205 757745 WC 861 9/24/96 436 204 757746 WC 862 9/24/96 436 203 757747 WC 863 9/24/96 436 202 757748 WC 864 9/24/96 436 201 757749 WC 865 9/24/96 436 200 757750
Recorded in Co. Name of claims(s) or site(s): Location Date Book Page - ---------------------------- ------------- ---------------------- BLMSerialNo(s): -------------- WC 951 9/24/96 436 199 757751 WC 952 9/24/96 436 198 757752 WC 953 9/24/96 436 197 757753 WC 954 9/24/96 436 196 757754 WC 955 9/24/96 436 195 757755 WC 956 9/24/96 436 194 757756 WC 957 9/24/96 436 193 757757 WC 958 9/24/96 436 192 757758 WC 959 9/24/96 436 191 757759 WC 960 9/24/96 436 190 757760 WC 961 9/24/96 436 189 757761 WC 962 9/24/96 436 188 757762 WC 963 9/24/96 436 187 757763 WC 964 9/24/96 436 186 757764 WC 965 9/24/96 436 185 757765
EX-7 8 EXHIBIT 9-10--BEATTIE OPTION OPTION THIS OPTION AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURI TIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDER ATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS. OPTION TO PURCHASE 250,000 SHARES OF COMMON STOCK FISCHER-WATT GOLD COMPANY, INC. (A Nevada Corporation) Not Transferable or Exercisable Except upon Conditions Herein Specified Void after 5:00 O'Clock P.M., Pacific Time, on August 31, 2003 Fischer-Watt Gold Company, Inc., a Nevada corporation (the "Company") hereby certifies that George Beattie or his registered successors and permitted assigns, registered on the books of the Company maintained for such purposes as the registered holder hereof (the "Holder"), for value received, is entitled to purchase from the Company the number of fully paid and non-assessable shares of Common Stock of the Company, of the par value of $.001 per share (the "Shares"), stated above at the purchase price of $.22 per Share (the "Exercise Price") (the number of Shares and Exercise Price being subject to adjustment as hereinafter provided) upon the terms and conditions herein provided. 1. Exercise of Option. (a) Subject to subsection (b) of this Section 1, upon presentation and surrender of this Option Certificate, with the attached Purchase Form duly executed, at the principal office of the Company at 1621 North Third Street, Suite 1000, Coeur d'Alene, Idaho 83814, or at such other place as the Company may designate by notice to the Holder hereof, together with a certified or bank cashier's check payable to the order of the Company in the amount of the Exercise Price times the number of Shares being purchased, the Company shall deliver to the Holder hereof, as promptly as practicable, certificates representing the Shares being purchased. This Option may be exercised in whole or in part; and, in case of exercise hereof in part only, the Company, upon surrender hereof, will deliver to the Holder a new Option Certificate or Option Certificates of like tenor entitling the Holder to purchase the number of Shares as to which this Option has not been exercised. (b) This Option may be exercised in whole or in part at any time after September 1, 1998 and prior to 5:00 o'clock P.M. Pacific Time, on August 31, 2003. 2. Exchange and Transfer of Option. This Option at any time prior to the exercise hereof, upon presentation and surrender to the Company, may be exchanged, alone or with other Options of like tenor registered in the name of the Holder, for another Option or other Options of like tenor in the name of such Holder exercisable for the same aggregate number of Shares as the Option or Options surrendered. 3. Rights and Obligations of Option Holder. (a) The Holder of this Option Certificate shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, in the event that any certificate representing the Shares is issued to the Holder hereof upon exercise of this Option, such Holder shall, for all purposes, be deemed to have become the holder of record of such Shares on the date on which this Option Certificate, together with a duly executed Purchase Form, was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such Share certificate. The rights of the Holder of this Option are limited to those expressed herein and the Holder of this Option, by its acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Option Certificate, including, without limitation, all the obligations imposed upon the Holder hereof by Section 5 hereof. In addition, the Holder of this Option Certificate, by accepting the same, agrees that the Company may deem and treat the person in whose name this Option Certificate is registered on the books of the Company maintained for such purpose as the absolute, true and lawful owner for all purposes whatsoever, notwithstanding any notation of ownership or other writing thereon, and the Company shall not be affected by any notice to the contrary. (b) No Holder of this Option Certificate, as such, shall be entitled to vote or receive dividends or to be deemed the holder of Shares for any purpose, nor shall anything contained in this Option Certificate be construed to confer upon any Holder of this Option Certificate, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any action by the Company, whether upon any recapitalization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise, receive notice of meetings or other action affecting stockholders (except for notices provided for herein), receive dividends, subscription rights, or otherwise, until this Option shall have been exercised and the Shares purchasable upon the exercise thereof shall have become deliverable as provided herein; provided, however, that any such exercise on any date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for those Shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open, and the Option surrendered shall not be deemed to have been exercised, in whole or in part as the case may be, until the next succeeding day on which stock transfer books are open for the purpose of determining entitlement to dividends on the Company's common stock. -2- 4. Shares Underlying Option. The Company covenants and agrees that all Shares delivered upon exercise of this Option shall, upon delivery and payment therefor, be duly and validly authorized and issued, fully paid and non-assessable, and free from all stamp-taxes, liens, and charges with respect to the purchase thereof. In addition, the Company agrees at all time to reserve and keep available an authorized number of Shares sufficient to permit the exercise in full of this Option. 5. Disposition of Option or Shares. (a) The holder of this Option Certificate and any transferee hereof or of the Shares issuable upon the exercise of the Option Certificate, by their acceptance hereof, hereby understand and agree that the Option, and the Shares issuable upon the exercise hereof, have not been registered under either the Securities Act of 1933 (the "Act") or applicable state securities laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated, or otherwise transferred (whether or not for consideration) except upon the issuance to the Company of a favorable opinion of counsel or submission to the Company of such evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act and the State Acts. It shall be a condition to the transfer of this Option that any transferee hereof deliver to the Company its written agreement to accept and be bound by all of the terms and conditions of this Option Certificate. (b) The stock certificates of the Company that will evidence the shares of Common Stock with respect to which this Option may be exercisable will be imprinted with a conspicuous legend in substantially the following form: The shares represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") or applicable state securities laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated or otherwise transferred (whether or not for consideration) by the holder except upon the issuance to the Company of a favorable opinion of its counsel or submission to the Company of such other evidence as may be satisfactory to counsel to the Company, in each such case, to the effect that any such transfer shall not be in violation of the Act and the State Acts. The Company has not agreed to register any of the holder's shares of Common Stock of the Company with respect to which this Option may be exercisable for distribution in accordance with the provisions of the Act or the State Acts and, the Company has not agreed to comply with any exemption from registration under the Act or the State Acts for the resale of the holder's shares of Common Stock of the Company with respect to which this Option may be exercised. Hence, it is the understanding of the holders of this Option that by virtue of the provisions of certain rules respecting "restricted securities" promul gated by the SEC, the shares of Common Stock of the Company with respect to which this Option may be exercisable may be required to be held indefinitely, unless and until registered under the Act and the State Acts, unless an exemption from such registration is available, in which case the holder may still be limited as to the number of shares of Common Stock of the Company with respect to which this Option may be exercised that may be sold. -3- 6. Adjustments. The number of Shares purchasable upon the exercise of this Option is subject to adjustment from time to time upon the occurrence of any of the events enumerated below. (a) In case the Company shall: (i) pay a dividend in Shares, (ii) subdivide its outstanding Shares into a greater number of Shares, (iii) combine its outstanding Shares into a smaller number of Shares, or (iv) issue, by reclassification of its Shares, any shares of its capital stock, the amount of Shares purchasable upon the exercise of this Option immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive upon exercise of the Option that number of Shares which such Holder would have owned or would have been entitled to receive after the happening of such event had such Holder exercised the Option immediately prior to the record date, in the case of such dividend, or the effective date, in the case of any such subdivision, combination or reclassification. An adjustment made pursuant to this subsection (a) shall be made whenever any of such events shall occur, but shall become effective retroactively after such record date or such effective date, as the case may be, as to any exercise between such record date or effective date and the date of happening of any such event. (b) Notice to Option Holders of Adjustment. Whenever the number of Shares purchasable hereunder is adjusted as herein provided, the Company shall cause to be mailed to the Holder in accordance with the provisions of this Section 6 a notice (i) stating that the number of Shares purchasable upon exercise of this Option have been adjusted, (ii) setting forth the adjusted number of Shares purchasable upon the exercise of this Option, and (iii) showing in reasonable detail the computations and the facts, including the amount of consideration received or deemed to have been received by the Company, upon which such adjustments are based. 7. Fractional Shares. The Company shall not be required to issue any fraction of a Share upon the exercise of this Option. If more than one Option shall be surrendered for exercise at one time by the same Holder, the number of full Shares which shall be issuable upon exercise thereof shall be computed on the basis of the aggregate number of Shares with respect to which this Option is exercised. If any fractional interest in a Share shall be deliverable upon the exercise of this Option, the Company shall make an adjustment therefor in cash equal to such fraction multiplied by the Exercise Price. 8. Loss or Destruction. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Option Certificate and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement or bond satisfactory in form, substance and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of this Option Certificate, the Company at its expense will execute and deliver, in lieu thereof, a new Option Certificate of like tenor. 9. Survival. The various rights and obligations of the Holder hereof as set forth herein shall survive the exercise of the Option represented hereby and the surrender of this Option Certificate. -4- 10. Notices. Whenever any notice, payment of any purchase price, or other communication is required to be given or delivered under the terms of this Option, it shall be in writing and delivered by hand delivery or United States registered or certified mail, return receipt requested, postage prepaid, and will be deemed to have been given or delivered on the date such notice, purchase price or other communication is so delivered or posted, as the case may be; and, if to the Company, it will be addressed to the address specified in Section 1 hereof, and if to the Holder, it will be addressed to the registered Holder at its, his or her address as it appears on the books of the Company. FISCHER-WATT GOLD COMPANY, INC. By ---------------------------------------- George Beattie, Chief Executive Officer Date -------------------------------------- -5- PURCHASE FORM ----------------, ---- TO: FISCHER-WATT GOLD COMPANY, INC The undersigned hereby irrevocably elects to exercise the attached Option Certificate to the extent of __________ shares of the Common Stock, par value $.001 per share, of Fischer-Watt Gold Company, Inc. and hereby makes payment of $_____ in accordance with the provisions of Section 1 of the Option Certificate in payment of the purchase price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: ------------------------------------------------------------------------- (Please typewrite or print in block letters) Address: ---------------------------------------------------------------------- By ------------------------------- -6- ASSIGNMENT FORM For value received, the undersigned hereby sells, assigns, and transfers to Name ------------------------------------------------------------------------- Address ----------------------------------------------------------------------- this Option and irrevocably appoints ------------------------------- attorney (with full power of substitution) to transfer this Option on the books of the Company. Date: ---------------------------- ---------------------------------------- (Please sign exactly as name appears on Option) Taxpayer ID No. ------------------------ -7- EX-27 9 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED OCTOBER 31, 1997 CONTAINED IN FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS JAN-31-1998 AUG-01-1997 OCT-31-1997 1 373 0 306 0 802 2,069 2,492 555 8,764 3,978 0 0 0 35 3,968 8,764 4,063 4,063 3,886 5,285 769 0 196 (2,187) 0 (2,187) 0 0 0 (2,187) (0.07) (0.07)
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