-----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, Fz2u4sekGC/xaulx/4gVXuXMWZMKPHZwXlFXIUqMxvPpLtbEjPn0odEm63HDqz06 3Z0xoJ0Vgi4MJomNwJZ0Cg== 0000950148-96-002859.txt : 19961209 0000950148-96-002859.hdr.sgml : 19961209 ACCESSION NUMBER: 0000950148-96-002859 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 34 FILED AS OF DATE: 19961206 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEVADA MANHATTAN MINING INC CENTRAL INDEX KEY: 0000848821 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 880219765 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-17423 FILM NUMBER: 96677195 BUSINESS ADDRESS: STREET 1: 5038 N PARKWAY STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185914400 MAIL ADDRESS: STREET 1: 5038 N PARKWAY STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 SB-2 1 FORM SB-2 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1996. REGISTRATION NO. 33- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ NEVADA MANHATTAN MINING INCORPORATED (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER) ------------------------ NEVADA 1041 88-0219765 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
5038 NORTH PARKWAY CALABASAS, SUITE 100 CALABASAS, CALIFORNIA 91302 (818) 591-4400 (ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE OF BUSINESS) ------------------------ JEFFREY S. KRAMER CHIEF FINANCIAL OFFICER NEVADA MANHATTAN MINING INCORPORATED 5038 PARKWAY CALABASAS, SUITE 100 CALABASAS, CALIFORNIA 91302 (818) 591-4400 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ------------------------ COPIES TO: LLOYD S. PANTELL, ESQ. REINSTEIN, PANTELL & CALKINS 10940 WILSHIRE BOULEVARD, SUITE 1550 LOS ANGELES, CALIFORNIA 90024 TELEPHONE (310) 443-9559 FACSIMILE (310) 443-3281 ------------------------ APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. ------------------------ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ________ If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- PROPOSED PROPOSED TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM PRICE MAXIMUM OFFERING AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) REGISTRATION FEE - -------------------------------------------------------------------------------------------------- Common Stock, $0.01 par value(2).................... 4,866,120 $6.00 $29,328,720 $8,887.50 - -------------------------------------------------------------------------------------------------- Total............................................................................ $8,887.50 - -------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of completing the amount of the registration fee pursuant to Rule 457 based upon a bona fide estimate of the maximum offering price. (2) Includes 3,388,120 shares of Common Stock held by certain shareholders referred to in the Prospectus as "Selling Shareholders." THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 NEVADA MANHATTAN MINING INCORPORATED CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM SB-2
FORM SB-2 REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS ---------------------------------------------------------- ------------------------------- 1. Front of Registration Statement and Outside Front Cover of Prospectus................................................ Outside Front Cover 2. Inside Front and Outside Back Cover Pages of Prospectus... Inside Front Cover Page 3. Summary Information and Risk Factors...................... Summary of Offering; Risk Factors and Special Material Considerations 4. Use of Proceeds........................................... Use of Proceeds 5. Determination of Offering Price........................... Risk Factors and Special Material Considerations 6. Dilution.................................................. Risk Factors and Special Material Considerations; Description of Securities Being Offered 7. Selling Security Holders.................................. Principal and Selling Shareholders 8. Plan of Distribution...................................... Plan of Distribution 9. Interest of Named Experts and Counsel..................... Inapplicable 10. Directors, Executive Officers, Promoters and Control Persons................................................... Management; Principal and Selling Shareholders 11. Security Ownership of Beneficial Owners and Management.... Management; Principal and Selling Shareholders 12. Description of Securities................................. Description of Securities Being Offered 13. Interest of Named Experts and Counsel..................... Inapplicable 14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities................................ Management -- Limitations on Director and Officer Liability 15. Organization Within Last Five Years....................... Inapplicable 16. Description of Business................................... Description of Company's Business and Property 17. Management's Discussion and Analysis of Financial Position and Results of Operations................................. Management's Discussion and Analysis of Financial Position and Results of Operations 18. Description of Property................................... Description of Company's Business and Property 19. Certain Relationships and Related Transactions............ Management -- Significant Employees and Consultants; Management -- Summary Compensation Table; Management -- Options and Stock Appreciation Rights; Description of Company's Business and Property -- the Nevada Property
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FORM SB-2 REGISTRATION STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS -------------------------- ---------------------- 20. Market for Common Equity and Related Stockholder Matters................................................... Risk Factors and Special Material Considerations; Plan of Distribution; Principal and Selling Shareholders; Description of Securities Being Offered 21. Executive Compensation.................................... Management -- Significant Employees and Consultants; Management -- Executive Compensation 22. Financial Statements...................................... Financial Statements 23. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure....................... Inapplicable
4 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED , 1996 [LOGO] NEVADA MANHATTAN MINING, INC. MINING - DEVELOPMENT - EXPLORATION 4,888,120 SHARES OF COMMON STOCK ($.01 PAR VALUE) AT $6.00 PER SHARE Nevada Manhattan Mining, Inc. (The "Company"), is a Nevada corporation which was formed in 1985 (originally under the name "Epic Enterprises, Ltd.") for the purpose of engaging in the mining of precious metals with an emphasis in the mining of gold and silver. On the terms and conditions which follow, the Company and certain of its existing shareholders (the "Selling Shareholders") hereby offer a minimum of 250,000 shares and a maximum of 4,888,120 shares of its common stock (the "Common Stock") at a price of $6.00 per share which shall be issued, if at all, on or before the Offering Termination Date (presently scheduled for July 31, 1997). The minimum investment for each prospective Investor will be 500 shares of Common Stock. Of the amount hereby offered, up to 1,500,000 shares represent Common Stock offered by the Company. The balance of the shares hereby offered represent Common Stock in the possession of the Selling Shareholders. The Common Stock will be offered only to persons who meet the suitability requirements outlined elsewhere in this Prospectus. To the extent that sufficient investment Subscriptions are accepted by the Offering Termination Date, the Company intends to utilize the Net Proceeds received from such Subscriptions to further develop the mining property known as the Manhattan property (the "Nevada Property"); to enter into a binding agreement with New Concept Mining, Inc. ("New Concept Mining"); to purchase an interest in the mill currently located in the vicinity of the Nevada Property; to provide for mill services and/or to purchase various crushing, grinding, gravity separation, cyanide leach flotation and thickening equipment and to construct its own mill on site at the Property; to explore and develop the mining property located in Kalimantan, Indonesia (the "Indonesian Property"); to pay up to Three Hundred Eighty-Four Thousand Eight Hundred Dollars ($384,800) as the final installment payment due on the Nevada Property; and/or working capital. The offering represented by this Prospectus (the "Offering") involves certain factors which should be considered by all prospective Investors. See "RISK FACTORS AND SPECIAL MATERIAL CONSIDERATIONS." (Cover continued on next page) THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. =========================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO PUBLIC(1) AND COMMISSIONS(2) COMPANY(3) - --------------------------------------------------------------------------------------------------------- Per Unit..................................... $6,000 $600 $2,400 - --------------------------------------------------------------------------------------------------------- Total Minimum................................ $1,500,000 $150,000 $1,350,000 - --------------------------------------------------------------------------------------------------------- Total Maximum................................ $9,000,000 $900,000 $8,100,000 =========================================================================================================
(1) The minimum amount of shares which may be purchased by a prospective Investor will be Five Hundred shares (500) at a price of Six Dollars ($6.00) per share or a total of Three Thousand Dollars ($3,000). The Company reserves the right to sell the Common Stock in additional increments of one hundred (100) shares provided the minimum number of shares (500 shares) is purchased. (2) The Company intends to offer the Common Stock on a best-efforts basis. Sales will only be made by Affiliates of the Company including the Company's board of directors and executive officers. The Company may also enter into Underwriting Agreements with broker-dealers who are members of the National Association of Securities Dealers, Inc. It is anticipated that sales and underwriting commissions equal to ten percent (10%) of Subscriptions will be paid to those persons or entities entering into Underwriting Agreements. (3) Does not include the provision of up to One Hundred Sixty-Eight Thousand Dollars ($168,000) for Organization and Offering Expenses or the use of proceeds relative to the sale of Common Stock by the Selling Shareholders. See Section of the Prospectus entitled "USE OF PROCEEDS." THE DATE OF THIS PROSPECTUS IS , 1996. 5 (Cover page continued) In particular, prospective Investors should consider that: - the Company intends to utilize up to Three Hundred Eighty-Four Thousand Eight Hundred Dollars ($384,800) of the Net Proceeds derived from this Offering to pay amounts due under Property Agreements relative to the Nevada Property, expend approximately One Million Five Hundred Thousand Dollars ($1,500,000) for the further development of the Nevada Property and approximately Four Million Nine Hundred Fifteen Thousand Dollars ($4,915,000) in exploration costs relative to the Indonesian Property. - the Company is a development-stage company and has recently commenced the mining and extraction of precious metals from the Nevada Property and has commenced exploration of the Indonesian Property. The Company has not experienced profits to date from its operations. No assurance can be given that the Company will be able to profitably conduct mining operations even if all Subscriptions are sold pursuant to this Offering. - mining operations are speculative by their nature. Even though the Company has successfully located commercial quantities of precious metals on the Nevada Property and has commenced exploration on the Indonesian Property, prospective Investors should consider that unexpected problems, expenses, and delays are typically encountered in the development of complex mining properties thereby further complicating the ability of companies to successfully develop its mining properties. - having completed the initial phase of exploration and development on the Nevada Property and having received permits to commence operations thereon, additional development and other expenses and further permitting related to the Nevada Property is likely to be ongoing. - the Company's mining operations are subject to substantial governmental regulation including federal, state, and local regulations concerning mine safety and environmental protection. Compliance with these regulations may cause significant delays in the ongoing permitting process or may prevent the Company from ultimately maintaining the permits necessary to continue commercial mining operations on the Nevada Property. - prospective Investors who subscribe to the Common Stock will be subject to an immediate dilution of up to Five Dollars Forty Cents ($5.40) per share. - the Company does not currently intend to pay dividends and the rights of shareholders of the Common Stock to receive dividends are subordinate to the holders of the Company's Preferred Stock. - this Prospectus contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Prospective Investors are cautioned that such statements assume the existence of events in the future which cannot be assured will occur or even predicted with any reasonable level of certainty. - while the Company has received authority to trade and is currently trading on the Electronic Bulletin Board of NASDAQ, no assurance that the current market for the Common Stock can be maintained. i 6 SUMMARY OF THE OFFERING This summary is provided for quick reference only and is qualified in its entirety by the terms and conditions outlined in the remainder of this Prospectus and by the financial statements including the notes thereto appended to this Prospectus. Prospective Investors are urged to carefully review the entire Prospectus and to consult with their legal and/or professional advisors before reaching an investment decision. THE COMPANY Nevada Manhattan Mining, Incorporated (The "Company"), was formed on June 10, 1985, in the state of Nevada under the name of Epic Enterprises, Ltd. On September 11, 1987, the Company amended its Articles of Incorporation changing its name to Nevada Manhattan Mining Incorporated. The Company's articles currently authorize the issuance of 49,750,000 shares of Common Stock with a par value of one cent ($.01) per share and 250,000 shares of Series A preferred stock with a par value of $1.00 per share (the "Preferred Stock") convertible into Common Stock on the terms and conditions described elsewhere in this Prospectus. There were 8,676,155 shares of the Company's Common Stock and 135,735 shares of the Preferred Stock issued and outstanding as of August 31, 1996. The average price per share paid for the Common Stock to date has been approximately $2.00 per share. Holders of the Preferred Stock have paid $10.00 per share with an effective purchase price for the Common Stock (after giving effect to the conversion thereof on a one-for-ten basis) of $1.00 per share. The Company was formed primarily to develop the Nevada Property and other gold mining properties which it had previously owned and has recently acquired. Pursuant to prior action of both the Company's directors and its shareholders, certain properties have been abandoned so as to enable the Company to concentrate on the development of the Nevada Property and exploration of the Indonesian Property. The Company has its principal executive offices at 5038 North Parkway Calabasas, Suite 100, Calabasas, California 91302. Its telephone number is (818) 591-4400. Management of the Company presently consists of a five-member board of directors and employs two (2) full-time executive officers and an additional five (5) full-time employees. The Company has also entered into two consulting agreements with organizations with substantial experience in gold mining operations. See "MANAGEMENT," "PRINCIPAL AND SELLING SHAREHOLDERS," and "DESCRIPTION OF SECURITIES BEING OFFERED." PRINCIPAL OBJECTIVES OF THIS OFFERING The Net Proceeds derived from this Offering will be used for the purposes of: 1. Expending approximately One Million Five Hundred Thousand Dollars ($1,500,000) to further develop the Nevada Property consistent with the Company's business plan prepared by William R. Wilson and dated as of July 1995 (the "Business Plan"); 2. Expanding and/or delineating (to increase reserves and potential reserves of) the Nevada Property and, to the extent that it enters into a binding agreement with New Concept Mining, acquiring up to a fifty percent (50%) interest in the mill currently operating approximately one mile from the Nevada Property. In addition or in the alternative, the Company may enter into a contract for milling services with New Concept Mining or purchase all of the equipment necessary to construct a mill on site on the Property; 3. Paying up to Two Hundred Thirty-Two Thousand Dollars ($232,000) plus accrued interest through December 31, 1996, of One Hundred Fifty-Two Thousand Eight Hundred Dollars ($152,800) to Anthony C. Selig pursuant to the property agreements secured by a deed of trust issued on March 9, 1989, by the Company (the "Nevada Property Agreement" and the "Deed of Trust"); 4. Expending up to Four Million Nine Hundred Fifteen Thousand Dollars ($4,915,000) to explore and develop the Indonesian Property; and 5. Paying up to One Million Dollars ($1,000,000) in general and administrative expenses and/or retaining all or a portion of said sum as working capital. 1 7 THE OFFERING The Offering represents a proposal by the Company to sell up to 1,500,000 shares of the Common Stock at $6.00 per share and to register 3,388,120 shares of outstanding Common Stock held by the Selling Shareholders. The Offering will expire at 5:00 p.m. (PDT) on April 30, 1997 (the "Offering Commitment Date"), unless extended by the Company for a period or periods up to and through July 31, 1997 (the "Offering Termination Date"), or unless this Offering is terminated prior to such date by the Company. The Company has designated U.S. Stock Transfer Corporation, Glendale, California, its current transfer agent and registrar, to act as Transfer Agent. Prior to the Offering Commitment Date, all Subscription funds will be held in an escrow account with (the "Bank"). Provided the minimum number of Subscriptions are accepted by the Offering Commitment Date, the Company will offer and sell shares of the Common Stock through the Offering Termination Date. If the minimum amount of Subscription funds are not accepted by the Offering Commitment Date (i.e. $1,500,000), all funds held in the escrow account will be returned to the prospective Investors who tendered such funds. Any interest earned on Subscription funds will be distributed to the prospective Investors tendering such funds upon activation or termination of the Offering, as the case may be. The minimum Subscription will be 500 shares or $3,000. The Company reserves the right to sell additional one hundred (100) share lots of the Common Stock provided each prospective Investor agrees to subscribe to a minimum of 500 shares. SUITABILITY REQUIREMENTS Offers and sales of shares of Common Stock will only be made to persons who meet the following minimum suitability requirements: 1. He/she (either alone or together with his/her spouse) has a net worth (exclusive of home, furnishings, and automobiles) in excess of Fifty Thousand Dollars ($50,000); or 2. He/she (either alone or together with his/her spouse) has a net worth (exclusive of home, furnishings, and automobiles) in excess of Thirty-Five Thousand Dollars ($35,000) plus, during the year of investment, anticipates gross income as defined by Internal Revenue Code section 61 in excess of Sixty-Five Thousand Dollars ($65,000). PLAN OF DISTRIBUTION The Common Stock will be offered by the Company and Affiliates on a "best-efforts" basis to persons whom the Company believes to possess the minimum suitability standards. In cases where offer and sales of the Common Stock are affected by the Company and/or its Affiliates, no sales or underwriting commissions will be paid. The Company has recently entered into a financial advisory consulting agreement designed to result in the placement of Common Stock pursuant to this Offering through underwriters. In the event the Company enters into Underwriting Agreements with persons or entities who are broker-dealers and members of the National Association of Securities Dealers, Inc. ("NASD"), the Company may allot up to ten percent (10%) of the Subscription price for the Common Stock as sales and underwriting commissions and an additional two percent (2%) of such Subscription price as "due diligence" fees and expenses. APPLICATION OF PROCEEDS Net Proceeds derived from this Offering will be used to attain the principal objectives of this Offering. If only the minimum Subscriptions are accepted by the Company prior to the Offering Termination Date, only some of the principal objectives of this Offering will be met. See "USE OF PROCEEDS." NO BOARD RECOMMENDATION An investment in the Common Stock must be made pursuant to a prospective Investor's independent investment evaluation. The advisability of such an investment will depend upon a number of factors unique to each prospective Investor as well as such independent evaluation of the merits of an investment in the Common Stock. Accordingly, the Company's board of directors makes no recommendation to prospective Investors or others regarding whether they should purchase Common Stock. 2 8 RISK FACTORS AND SPECIAL MATERIAL CONSIDERATIONS THE PURCHASE OF SHARES OF COMMON STOCK INVOLVES A SUBSTANTIAL DEGREE OF RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL MEANS WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT. THIS SECTION OF THE PROSPECTUS SETS FORTH THE RISKS AND SPECIAL CONSIDERATIONS WHICH THE COMPANY BELIEVES MAY EXIST CONCERNING AN INVESTMENT IN THE COMMON STOCK. PROSPECTIVE INVESTORS SHOULD RECOGNIZE THAT FACTORS OTHER THAN THOSE SET FORTH BELOW MAY ULTIMATELY AFFECT AN INVESTMENT IN A MANNER AND TO A DEGREE WHICH CANNOT BE FORESEEN AT THIS TIME. ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH THEIR ADVISORS PRIOR TO MAKING AN INVESTMENT IN COMMON STOCK SO THAT THEY UNDERSTAND FULLY THE NATURE OF THE UNDERTAKING AND THE RISKS WHICH MAY BE INVOLVED PRIOR TO INVESTING. FURTHERMORE, ALL PROSPECTIVE INVESTORS ARE URGED TO REVIEW WITH THEIR COUNSEL, ACCOUNTANTS, AND PROFESSIONAL ADVISORS THE FINANCIAL STATEMENTS ATTACHED TO THE PROSPECTUS. ANY DOCUMENTS DESCRIBED IN THIS PROSPECTUS WHICH HAVE NOT BEEN ATTACHED AS EXHIBITS MAY BE OBTAINED BY PROSPECTIVE INVESTORS AND/OR THEIR ADVISORS UPON REQUEST FROM THE COMPANY. FINANCIAL CONDITION OF COMPANY Although the Company was formed in 1985 to engage in precious metal mining activities, its net worth is limited. The Company is and still should be considered in its development stage, having a net worth of Five Million Thirty Nine Thousand Two Hundred Eighty-Five Dollars ($5,039,285) as of August 31, 1996. Moreover, the Company's net worth and the value of its Common Stock will ultimately be dependent upon the overall success of mining operations conducted on the Nevada Property and the Indonesian Property. It should be noted that the sum of Three Hundred Eighty-Four Thousand Eight Hundred Dollars ($384,800) will be due and owing under the Nevada Property Agreement and Deed of Trust and that all sums under the Nevada Property Agreement will be due January 20, 1999. Until such time as all obligations due under the Nevada Property Agreement are paid in full and the Deed of Trust reconveyed to the Company, one of the primary assets of the Company, namely the Nevada Property, will be subject to the terms and conditions of such instruments. Any default under the Deed of Trust which remains uncured would subject the Company to the possible loss of the Nevada Property. Prospective Investors are cautioned that should the Company lose the Nevada Property, it is likely that all or a substantial portion of their investment pursuant to this Offering would be lost. DEPENDENCE UPON MANAGEMENT The business of the Company is and will be greatly dependent upon the active participation of Christopher D. Michaels and Jeffery S. Kramer. The Company also anticipates that it will be dependent upon the active participation of other key personnel and/or consultants in the future. The Company presently has employment agreements with both Mr. Michaels and Mr. Kramer and has entered into agreements with key consultants; nevertheless, the loss of the services of Mr. Michaels, Mr. Kramer and/or other key personnel (including such consultants) regardless of reason could adversely affect the Company and the Company's business. The Company does not maintain any life insurance policies enabling it to receive benefits in the case of either Mr. Michaels' or Mr. Kramer's death. To the extent that the services of Mr. Michaels or Mr. Kramer would be unavailable to the Company for any reason, the Company might be required to employ other executive personnel to manage and operate the Company. There is no assurance that the Company under such circumstances would be able to employ qualified persons on terms suitable to the Company to assure the fulfillment of the objectives stated in this Prospectus. LACK OF DIVERSIFICATION The Company has, in the past, maintained other mining properties for exploration and development. These properties were located in Bolivia, South America, and Vancouver, British Columbia. Through its board 3 9 of directors and shareholders, the Company previously elected to abandon such other properties. The Company's primary assets presently consist of the Nevada Property and the Indonesian Property. There can be no assurance given that once the Company completes its present exploration and development of the Nevada Property as described in further detail in this Prospectus, it will be able to establish and produce significant revenues from mining operations or become profitable. In addition, there can be no assurance that exploration activities currently being conducted on the Indonesian Property will result in the establishment of commercial quantities of mineralization on the Indonesian Property. As a result, prospective Investors should be aware that investment in the Common Stock represents an additional risk because the Company's activities are presently confined to the exploration, development, and gold production of only two mining properties. RISKS ASSOCIATED WITH MINING OPERATIONS There are a number of risks inherent in the mining of precious metals which may have a dramatic impact on the value of the Company and the liquidity of the Common Stock. These risks include, but are not limited to, the ability to obtain permits, licenses, and other governmental approvals; equipment availability; implementation of proper milling techniques; title problems; compliance with environmental laws, rules, and regulations; accuracy of reserve forecasts; and dramatic fluctuations in the price of precious metals. Because of these and other risk factors associated with mining operations, prospective Investors should be aware that an investment in the Common Stock is speculative and that the Company can give no assurance that prospective Investors will be able to realize either a return on investment or a return of capital. TITLE TO THE NEVADA PROPERTY Mineral interests in the United States are frequently owned by federal and state governments and private parties. When a prospective mineral property is owned by a private party or by a state, some type of property acquisition agreement is necessary in order for a company to explore or develop such property. Generally, these agreements take the form of purchase agreements, as in the case of the mining agreement and property agreement discussed below, or long-term mineral leases. Any such purchase agreements and leases are generally subject to termination in the event of a default. In addition to the acquisition of mineral rights by state or private parties, the Company also may acquire rights to explore for and produce minerals on federally owned lands. This acquisition is accomplished through the location of unpatented mining claims upon unappropriated federal land pursuant to procedures established by the General Mining Law of 1872, the Federal Land Policy and Management Act of 1976, and various state laws (or the acquisition of previously located mining claims from a private party). The location of a valid mining claim on federal lands requires the discovery of a valuable mineral deposit, the erection of appropriate monuments, the posting of a location notice at the point of discovery, the marking of the boundaries of the claim in accordance with federal law and the laws of the state in which it is located, and the filing of a notice or certificate of location and a map with the Bureau of Land Management and the real property recording official of the county in which the claim is located. Failure to follow the required procedures will render the mining claim void. If the statutes and regulations for the location of a mining claim are complied with, the locator obtains a valid possessory right to develop and produce minerals from the claim. This right can be freely transferred and is protected against appropriation by the government without just compensation. The interests represented by unpatented mining claims possess certain unique vulnerabilities not associated with other types of property interests. For example, in order to maintain each unpatented mining claim, the claimant must pay a claim maintenance fee or, if qualified to do so under the small miner exemption, annually perform not less than $100-worth of work or improvements on or for the benefit of the claim and must file with state and federal authorities appropriate documentation. Failure to pay the claim maintenance fee or perform assessment work will render the claim subject to being declared void or subject to relocation by third parties. Failure to make the required filings will make the property deemed to be abandoned. In addition, under applicable regulations and court decisions, in order for an unpatented mining 4 10 claim to be valid, the claimant must be able to prove that the mineral deposit on which the claim is based can be mined at a profit both at the time the claim is located and at all times thereafter. Thus, it is conceivable that, during times of declining metal prices, claims which were valid when located could be invalidated by the federal government. No generally applicable title opinions or title insurance has been obtained with respect to the Nevada Property with the attendant risk that some titles may be defective. In fact, the agreements which relate to the current ownership of the parties (i.e. the 1993 Joint Venture Agreement and the Amended Joint Venture Agreement) contain incomplete and inadequate descriptions of the mining claims. However, on the basis of periodic status reports and reviews by the Company's employees of the relevant land records, the Company believes that the joint venture of which the Company is a party has satisfactory title to the Nevada Property subject to exceptions which the Company does not believe materially impair the ability to continue to mine and process the ore and to obtain the economic benefits thereof. The Company first acquired its rights in and to the Nevada Property pursuant to a mining agreement dated April 4, 1987 (the "Nevada Property Agreement"), with Anthony C. Selig & Associates, Dixie Exploration Corporation, and Anthony C. Selig (the "Selig Entities"). The Selig Entities acquired their rights pursuant to a lease and option to purchase agreement which it had entered into on November 15, 1982 with Argus Resources, Inc. ("Argus"), pursuant to which the Selig Entities leased all of Argus' patented and unpatented mining claims comprising the Nevada Property. Under the terms of the Nevada Property Agreement, the Company was required to pay the Selig Entities the purchase price for the Nevada Property (ultimately determined to be $600,000). Additionally, the Company was required to and did issue 1,300,000 shares of Common Stock to Argus. The installment obligations owed to the Selig Entities were secured by a deed of trust on the Nevada Property (the "Deed of Trust"). The stock issued to Argus was subject to a one-for-ten reverse stock split approved by the Company's shareholders and effected in 1995. In 1992, the Company entered into an agreement with Argus, whereby Argus was to control sixty percent (60%) of the Nevada Property and was to act as operator in consideration of Argus' assumption of all remaining payments due to the Selig Entities under the Nevada Property Agreement. Argus and the Company subsequently entered into a joint venture agreement with Marlowe Harvey/Maran Holdings, Inc. ("Marlowe Harvey"), whereby in consideration of Marlowe Harvey assuming all of the then remaining obligations owed to the Selig Entities, Marlowe Harvey would acquire a fifty-one percent (51%) interest in the joint venture, Argus would earn a twenty-four and one-half percent (24.5%) interest in the joint venture, and the Company would earn a twenty-four and one-half percent (24.5%) interest in the joint venture. In turn, the Nevada Property was to be conveyed to the joint venture. The Company has executed agreements with interested parties which may result in the Company increasing its interest in the joint venture from twenty-four and one-half percent (24.5%) to a minimum fifty percent (50%) interest in the joint venture. The rights and responsibilities of both the Company and Marlowe Harvey/Maran Holdings, Inc., are currently the subject of a lawsuit filed by the Company on November 4, 1996, in Nye County, Nevada. This lawsuit, described in greater detail elsewhere in this Prospectus, will not affect the Company's right to its interest in the Nevada Property acquired pursuant to the various agreements previously entered into by the Company. As a result of the issues raised by the lawsuit, however, the Company may be required to hold or pay a portion of the revenues generated from mining operations for the benefit of Argus and Marlowe Harvey. TITLE TO THE INDONESIAN PROPERTY Mineral interests in Indonesia are controlled exclusively by the federal government through the Ministry of Mines and Energy. Title to a mineral property in Indonesia is subject to obtaining a contract of work (a "COW" or "KPE") for the extraction of commercial quantities of minerals after obtaining property rights from the fee owner. Title is confirmed by the issuance of a government seal affixed to specific property location maps. In August 1996, the Company entered into an agreement with Maxwells Energy and Metals Technology Ltd., a Singapore corporation ("Maxwells"), to acquire a fifty-one percent (51%) working interest in 10,000 5 11 hectares (approximately 25,000 acres) of real property located in Kalimantan, Indonesia. Maxwells had acquired its working interest in and to the Indonesian Property through an agreement with Abubakar Sidak, an Indonesian resident. Maxwells has provided the property location maps with affixed governmental seals and other property information thereby suggesting that title to the working interest noted above has been vested in the Company. These location maps and governmental seals were required as a condition to the Company agreeing to acquire its interest in the Indonesian Property and to pay the consideration for such interest. Under its agreement with Maxwells, the Company has assumed the obligation to conduct exploration activities on the Indonesian Property. While such obligation required the Company to commence exploration activities within one year from the date of execution of the agreement, the Company has already commenced such activities. In consideration of the acquisition of its fifty-one percent (51%) working interest, the Company was obliged to issue Four Hundred Thousand (400,000) shares of its Common Stock to Maxwells upon execution of the agreement. The Company is further obligated to issue an additional Four Million (4,000,000) shares of its Common Stock to Maxwells upon confirmation (through independent valuation) that a value of commercial mineralization or other natural resources in an amount of at least Twelve Million Dollars ($12,000,000 U.S.) has been established or upon the establishment of other conditions more particularly described elsewhere in this Prospectus. The Four Hundred Thousand (400,000) shares of Common Stock issued to Maxwells have been registered pursuant to Form B-D filed in connection with this Prospectus. The Company has entered into a contract with Behre Dolbear & Co., Inc., an international mining consulting firm to act as independent engineer and to oversee the exploration and development of the Indonesian Property including assisting the Company in various matters relating to title and governmental regulation. GOVERNMENTAL REGULATION Mining operations on the Nevada Property will be subject to substantial federal, state, and local regulation concerning mine safety and environmental protection. Some of the laws and regulations which will pertain to mining operations include maintenance of air and water quality standards, the protection of threatened, endangered and other species of wildlife and vegetation, the preservation of certain cultural resources and the reclamation of exploration, mining and processing sites. These laws are continually changing and, as a general matter, are becoming more restrictive. The location of the Nevada Property is found in an area which strongly encourages mining operation. However, the Company's inability to comply with such federal, state, or local ordinances and regulations on an ongoing basis may cause significant delays in the permitting process or in the operations anticipated to be conducted on the Nevada Property. In addition, delays in such compliance could result in unexpected and substantial capital expenditures. Although no such problems or delays are anticipated, no assurances can be given that the Company will be able to comply with all applicable law and regulations and maintain all necessary permits, licenses and approvals or, in the alternative, that compliance and/or permitting will be obtained without substantial delays and/or expenses. With regard to the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection ("NDEP"), the Company has received authorization to proceed with its currently planned mining operations on the Nevada Property pursuant to the applicable statutes and regulations relating to a small mining operation. In the event, however, the Company's operations exceed the designated limits for a small mining operation, a full reclamation plan will need to be prepared, submitted, and approved by NDEP. While the Company believes that it will be able to obtain such approval, there is no guarantee that the required approval will in fact be obtained by the Company. A change in the nature or magnitude of the Company's presently anticipated operations on the Nevada Property may trigger the need to obtain additional NDEP and other federal, state or local governmental approvals, licenses or permits. For example, water processing discharge needs may trigger the requirement that the Company obtain a water pollution control permit. Other significant permits, required by a change in operations on the Nevada Property, might include an NDEP permit, air quality permit, waste management permit, archeological clearance and wildlife permit. There is no guaranty that the Company will be able to 6 12 obtain any or all of the required federal, state or local permits that might be required to expand its operations on the Nevada Property. Even if the Company does not change its currently planned operations on the Nevada Property, the Company is nevertheless vulnerable to the various federal, state and local laws and regulations governing regulations and protection of the environment, occupational health, labor standards and other matters. The reason for this is that these laws are continually changing, and as a general matter, are becoming more restrictive. To comply with these federal, state and local laws, the Company may in the future be required to make capital and operating expenditures on environmental projects both with respect to maintaining at currently planned operations and the initiation of new operations. Such projects may include, for example, air and water pollution control equipment, treatment, storage and disposal facilities for solid and hazardous waste, remedial actions required for the containment of tailings pond seepage, continuous testing programs, data collection and analysis land reclamation (specifically including existing mine and processing waste on the Nevada Property), landscaping and construction projects. There is no guaranty that the Company will technically or financially be able to comply with any or all of these potential requirements. ENVIRONMENTAL REGULATION AND LIABILITY The Company's proposed mineral operations on the Nevada Property will be subject to environmental regulation by federal, state, and local authorities. Under applicable federal and state law, the Company may become jointly and severally liable with all prior property owners for the treatment, cleanup, remediation, and/or removal of substances discovered at the Property which are deemed by federal and/or state law to be toxic or hazardous ("Hazardous Substances"). Liability may be imposed among other things for the improper release, discharge, storage, use, disposal, or transportation of Hazardous Substances only in the areas which the Company disturbs. Applicable law imposes strict joint and several liability on, among others, "owners" and "operators" of properties contaminated with Hazardous Substances. Such liability may result in any and all "owners", "operators", and "transporters" of contaminated property being required to bear the entire cost of remediation. The Company may utilize substances which have been deemed by applicable law to be Hazardous Substances. The potential liability of the Company under such laws will be derived from the Company's classification as both an "owner" and "operator" of a contaminated property. While the Company intends to employ all reasonably practicable safeguards to prevent any liability under applicable laws relating to Hazardous Substances, mineral exploration by its very nature will subject the Company to substantial risk that remediation will be required. If the cleanup or remediation of hazardous substances is required on the Nevada Property, substantial delays could occur in the permitting process and/or in the further extraction of gold and other precious minerals on the Nevada Property. PUBLIC MARKET The Company received approval for trading of its Common Stock on the Electronic Bulletin Board (NASDAQ) in March 1996. From the period from December 1995 until March 1996, the Company published "bid" and "ask" prices on the "pink sheets". The low and high prices for the Common Stock since commencement of quotations are as follows:
HIGH DATE LOW DATE - ------ ---------------------------- ------ ---------------------------- $7.00 December 5, 1996 $1.25 December 1995
Since the commencement of trading on the Electronic Bulletin Board, the average monthly volume of trading of the Company's Common Stock has been approximately 200,000 shares. Prospective Investors should be aware that the volume of trading on the Electronic Bulletin Board traditionally has been limited and there can be no assurance that the Electronic Bulletin Board will provide an effective market for a shareholder to sell his or her Common Stock of the Company. 7 13 The Company contemporaneously herewith has filed an Application for Entry onto the NASDAQ Small Cap Market. It is anticipated that the Company will be included in the Small Cap Market for trading as of the effective date of this Prospectus. SEC INVESTIGATION In May 1989, the Company received notice that the Securities and Exchange Commission (the "Commission") had commenced an informal investigation into the Company's compliance with the registration and disclosure requirements of the Securities Act of 1933 (the " '33 Act") and the Securities Exchange Act of 1934 (the " '34 Act"). Thereafter the Commission commenced an extensive review of the Company's books and records relating to the Company's business and mining operations, its capital raising activities, and its financial condition and history. Through all stages of the investigation, the Company cooperated with the Commission. The Commission and the Company agreed to terminate the Commission's investigation by the entry of a consent judgment against the Company and certain of the Company's past and present key employees. These key employees include Christopher D. Michaels, Jeffrey Kramer and Stanley Mohr. The terms and conditions of the consent judgment can be summarized as follows: 1. The Company neither admitted nor denied any of the allegations alleged by the Commission; 2. The Company and its officers, agents, servants, employees, and others receiving actual notice of the consent judgment are permanently restrained and enjoined from selling securities in interstate commerce unless and until a registration statement is in effect or the security or transaction is exempt from the registration provisions of the '33 Act and/or the '34 Act; 3. The Company and its officers, agents, servants, employees, and others receiving actual notice of the consent judgment are permanently restrained from engaging in any transaction, practice, or course of conduct, employing any course of conduct, or obtaining any money or property by means of an untrue statement of a material fact, or any omission to state a material fact, necessary to make the statements made in light of the circumstances under which they were made not misleading. On April 7, 1994, the Company and the Commission entered into a stipulation regarding the resolution of all outstanding issues which then existed, which stipulation was entered as an order by the United States District Court for the Central District of California. Such stipulation contained an acknowledgement that the Company and its executive officers had received no ill-gotten gains as a result of prior activities by the Company in offering and selling its securities, and that the consent judgment resolved once and for all, all issues raised by the Commission as a result of the Company's prior activities. The Company was not required to pay any fines or required to disgorge any monies previously received by it in connection with its securities. RELATIONSHIP WITH OTHER OFFERINGS This Offering has been registered pursuant to Regulation S-B promulgated by the Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934 (the "Federal Securities Laws"). From the period September 1, 1993, through August 31, 1996, the Company has offered and sold 2,803,438 shares of its Common Stock and 135,735 shares of Preferred Stock. These sales were made primarily to its existing shareholders. The Company has relied upon applicable exemptions from the registration requirements of the Federal Securities Laws and upon compatible exemptions from securities registration under applicable state ("blue sky") laws. In the event that it is determined that the Company sold and issued these securities without complying with either the Federal Securities Laws or blue sky laws, the purchasers of these securities may have the right to rescind the sale of these securities and to recover the purchase price paid to the Company plus interest accrued on such purchase price. The Company does not currently have funds with which it could repay the purchase price and accrued interest from any prior sale of securities. Moreover, it is doubtful that the Company could continue operations if a significant number of existing shareholders were to seek to rescind their purchases of securities. The financial statements of the Company do not reflect a contingent liability for any such rescission rights. 8 14 FINANCIAL RISK OF PROPOSED ACTIVITIES The Net Proceeds derived from this Offering may not be sufficient to finance the completion of the exploration and development activities contemplated pursuant to this Offering. Moreover, if not all of the Common Stock offered pursuant to this Offering is sold, the Company's activities will be financed through existing capital which the Company then possesses. If the activities contemplated by the Company's Business Plan do not prove to be profitable or successful, the Company may suffer a loss with respect to operations conducted on the Properties, or in the alternative, will abandon either or both of the Properties as noneconomic. If such is the case, prospective Investors risk all or a substantial loss of their investment in the Common Stock. VALUATION OF COMMON STOCK The price per share of the Common Stock has been established based upon the current market price for the Common Stock. The current price is substantially higher than the average share price paid by existing shareholders of the Company. The Company has also considered several factors in determining the purchase price per share for the Common Stock including the state of development of the Properties, Company's management, the Company's current financial condition, and the general condition of the securities market. Prospective Investors should be advised that the price per share is not related to the Company's value of its assets, net worth, or results of operations conducted on the Properties. As a result, there is no assurance that prospective Investors will be able to liquidate their investment in the Common Stock or on terms resulting in any ultimately favorable return on their investment or upon any terms. SIGNIFICANT DILUTION The net book value of the Company per share as of August 31, 1996, was approximately forty-eight cents ($.48) per share. After taking into consideration the conversion rights of the shareholders holding or entitled to hold Preferred Stock as of August 31, 1996 (but exclusive of any dividends paid in stock), the total number of shares of Common Stock outstanding as of August 31, 1996, and assuming all 1,500,000 shares of the Company's Common Stock are sold pursuant to this Offering, the net tangible book value of the Common Stock immediately after the Offering after deducting One Million Eighty Thousand Dollars ($1,080,000) in Organization and Offering Expenses will be approximately One Dollar and Nine Cents ($1.09) per share of Common Stock. Investors who subscribe to shares of Common Stock will therefore realize an immediate dilution of Four Dollars and Ninety-One Cents ($4.91) per share of Common Stock. Assuming only the minimum number of shares are sold pursuant to this Offering, the net tangible book value of the Common Stock immediately after the Offering after deducting One Hundred Eighty Thousand Dollars ($180,000) in Organization and Offering Expenses will be approximately sixty cents ($.60) per share. Investors who subscribe to shares of Common Stock under these circumstances will therefore realize an immediate dilution of Five Dollars and Forty Cents ($5.40) per share. The price to be paid by Investors pursuant to this Offering should be compared to the prices paid by and the options granted to certain of the Company's executive officers, directors and the Selling Shareholders. See "DESCRIPTION OF SECURITIES BEING OFFERED" and "PRINCIPAL AND SELLING SHAREHOLDERS." FLUCTUATION OF GOLD PRICES Since its deregulation in August 1971, the market price for gold has been highly speculative and volatile. Since 1980, gold has fluctuated from a high of approximately $850 per ounce in January 1980 to a low of approximately $285 per ounce in 1985. Currently gold is trading at approximately $385 per ounce. In 1995, gold averaged over $380 per ounce. Instability in gold prices may effect the profitability of the Company's future operations. 9 15 DIVIDENDS The Company has not paid cash dividends on any of its Common Stock and does not anticipate paying any cash dividends on any of its Common Stock for the foreseeable future. Holders of the Preferred Stock are entitled to an annual cash or stock dividend offered at the rate of eight percent (8%) per year payable out of any funds legally available therefor and payable on January 1, April 1, July 1, and October 1 of each year. Such dividends are cumulative so that if the full dividends in respect of any previous dividend period is not paid, holders of the Preferred Stock are entitled to receive any deficiency before any dividend or other distribution may be made or declared by the Company with respect to any other class of stock including other series of preferred shares should the Company elect to issue such additional series. As of the date of this Prospectus, no quarterly dividends have been paid to holders of the Preferred Stock. Management of the Company is presently scheduling payment of accrued dividends in Common Stock as authorized in the Company's "Certificate of Determination of Preferences of Series A Preferred Stock" filed with the Nevada Secretary of State on October 25, 1995. SELECTED FINANCIAL DATA The financial information accompanying this Prospectus reflects the current financial condition of the Company. It should be noted that the Company has not reported a profit from operations since its inception to the present. Management projects that the further exploration and development of the Properties will result in profitable operations although, for the reasons stated elsewhere in this Prospectus, no guarantee to that effect can be made. USE OF FORWARD-LOOKING STATEMENTS This Prospectus contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are found in the Sections of the Prospectus entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION", "DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY" and elsewhere. Prospective Investors are cautioned that the assumptions upon which such statements are based cannot be guarantied by the Company to occur in the future or that the overall success of the Company might be materially adversely affected should such bases (or some of them) not occur. ADDITIONAL RISK FACTORS Prospective Investors should review the Company's audited financial statements included with this Prospectus and the remainder of this Prospectus in its entirety. Other sections of this Prospectus identify other potential risks and special material considerations which should be analyzed by each prospective Investor prior to a decision as to whether to invest in the Common Stock pursuant to this Offering. Prospective Investors are also cautioned that, as with any security, there may be other risks and special material considerations which are not foreseeable at this time which may also materially adversely affect an investment in the Common Stock. TERMS OF THE OFFERING GENERAL The Company is hereby offering a minimum of 250,000 shares and a maximum of 1,500,000 shares of its Common Stock at $6.00. An additional 3,388,120 of Common Stock held in the names of the Selling Shareholders are being registered pursuant to this Offering. The primary purposes for which Net Proceeds derived from this Offering are to be used include the following: 1. Further developing the Nevada Property consistent with the Company's Business Plan; 10 16 2. Expanding and/or delineating (to increase reserves and potential reserves) the Nevada Property, acquiring up to a fifty percent (50%) interest in the mill constructed approximately one mile from the Nevada Property and/or constructing its own mill on the Property; 3. Paying the sum of up to Two Hundred Thirty-Two Thousand Dollars ($232,000) plus accrued interest through December 31, 1996, of One Hundred Fifty-Two Thousand Eight Hundred Dollars ($152,800) to Anthony Selig pursuant to the Nevada Property Agreement and the Deed of Trust; 4. Engaging in exploration activities on the Indonesian Property; and 5. Paying up to One Million Dollars ($1,000,000) in general and administrative expenses and/or retaining all or a portion of said sum as working capital. SUBSCRIPTION There are hereby offered a total of 1,500,000 shares of the Company's Common Stock at a price of $6.00 per share. In addition, the Selling Shareholders are registering 3,388,120 shares pursuant to this Offering. Each prospective Investor must purchase a minimum of 500 shares of Common Stock. In addition, each prospective Investor will have the right to purchase additional blocks of 100-share lots of Common Stock. The Offering Commitment Date is presently scheduled for April 30, 1997, although the Company hereby reserves the right to extend this Offering through December 31, 1997 (the "Offering Termination Date"). On or before the Offering Commitment Date, the Company will be required to accept Subscriptions amounting to the purchase of at least 250,000 shares of Common Stock or to terminate the Offering without having sold any of the Common Stock. The Company reserves the right to accept Subscriptions through the Offering Commitment Date unless this Offering is terminated by the Company prior to such date. Each Subscription for the Common Stock will be held in an escrow account established with ________ (the "Bank"). Until such time as a minimum number of Subscriptions are accepted or the Offering Commitment Date is reached without the acceptance of the minimum number of Subscriptions necessary to activate this Offering, Subscription funds will be held in the escrow account but may be invested in short-term certificates of deposit, short-term government securities, demand deposits and bank money market accounts. If Subscriptions amounting to at least $1,500,000 (i.e. 250,000 shares) are not accepted on or before the Offering Commitment Date, all Subscription funds together with any interest earned on such funds held in the escrow account will be returned to the persons whose funds were deposited in the escrow account. If Subscriptions amounting to at least 250,000 shares of Common Stock are accepted by the Offering Commitment Date, further Subscriptions which are accepted by the Company will be deposited into an account opened up on behalf of the Company at the Bank and will not be subject to the terms and conditions of the escrow account. Any interest earned on Subscription funds will be distributed to prospective Investors tendering such funds upon activation or termination of the Offering as the case may be. The Company reserves the right to discontinue this Offering at any time and also reserves the right, in its absolute discretion, to reject, in whole or in part, any Subscription. No assurance can be given that any or all of the Common Stock will be sold. SUITABILITY OF INVESTORS Sales of Common Stock may be made pursuant to this Offering only to persons who represent that they meet the following minimum requirements: 1. He/she (either alone or together with his/her spouse) has a net worth (inclusive of home, furnishings, and automobiles) in excess of $50,000; or 2. He/she (either alone or together with his/her spouse) has a net worth (exclusive of home, furnishings, and automobiles) in excess of $35,000 and during the year of investment anticipates gross income as defined by Internal Revenue Code section 61 in excess of $65,000. 11 17 PLAN OF DISTRIBUTION The Common Stock will be offered by the Company through its Affiliates on a "best-efforts" basis to prospective Investors who the Company believes to possess the minimum suitability standards outlined elsewhere in this Prospectus. In cases where offers and sale of the Common Stock are affected by the Company and/or its Affiliates, no sales or underwriting commissions will be paid. The Company has entered into a financial advisory services agreement with Rhone Finance SA, Geneva, Switzerland, designed to result in the placement of common stock pursuant to this Offering through underwriters. In the event the Company enters into Underwriting Agreements with persons or entities who are broker-dealers and members of the National Association of Securities Dealers, Inc. ("NASD"), the Company may allot up to ten percent (10%) of the Subscription price for the Common Stock as sales and underwriting commissions and an additional two percent (2%) of such Subscription price as "due diligence" fees and expenses. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ "SMALL CAP" MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY THE COMPANY Nevada Manhattan Mining Incorporated (the "Company") was formed on June 10, 1985, under the provisions of the Nevada General Corporation Act and originally known as "Epic Enterprises Ltd." Pursuant to a Certificate of Amendment to its Articles of Incorporation, the Company changed its name to "Nevada Manhattan Mining Incorporated" on September 11, 1987. The Company's current capitalization consists of 49,750,000 shares of Common Stock with a par value of one cent per share ($.01) and 250,000 shares of Series A Preferred Stock with a par value of $1.00 per share. After taking into account a one-for-ten reverse stock split approved by the Company's shareholders and effected in January 1995, 8,676,155 shares of the Company's Common Stock and 135,735 shares of the Preferred Stock were issued and outstanding as of August 31, 1996. The average price per share paid for the Common Stock to date has been approximately $2.00 per share. Investors who subscribed to shares of Preferred Stock have paid $10.00 per share with an effective purchase price for the Common Stock upon conversion of $1.00 per share. The Company has its principal executive offices at 5038 North Parkway Calabasas, Suite 100, Calabasas, California 91302. Its telephone number is (818) 591-4400. Management of the Company presently consists of a five-member board of directors and employs two (2) full-time executive officers and an additional five (5) full-time employees. The Company has contracted with Harrison Western Mining and Construction, Lakeland, Colorado, to supply labor, service, materials and equipment for Nevada Property operations. The Company has also entered into an agreement with Gold King Mines Corporation to provide mining consulting services with respect to the Nevada Property and with Behre Dolbear & Company, Inc., to provide oversight to the exploration and development activities on the Indonesian Property. THE COMPANY'S BUSINESS The Company's business has been and will continue to be the exploration and mining of precious metals with emphasis in the mining of gold and silver. The Company's existing properties are known as the Manhattan Property (the "Nevada Property") which consists of approximately 1800 acres and which is located near the town of Manhattan, Nevada (approximately 45 miles northeast of Tonopah, Nevada) and 10,000 hectares (25,000 acres) located in the gold belt area of Kalimantan, Indonesia (the "Indonesian Property"). A more thorough description of the Properties is contained in these Sections of the Prospectus below entitled "The Nevada Property" and "The Indonesian Property." 12 18 Management of the Company generally reviews all proposed mining projects submitted by third parties. The Company initially will be heavily dependent upon the mill constructed approximately one mile from the Nevada Property which is currently owned and operated by New Concept Mining, Inc. ("New Concept"). The Company presently intends to use the New Concept mill for milling the ore produced from the Nevada Property and selling bullion dore bars or concentrate for sale to third party buyers. Under the terms of an agreement entered into with the Company, New Concept has agreed to provide the Company with the capacity to initially process between 1000-1200 tons of ore per month. New Concept has also agreed to increase processing capacity once the Company's development program expands. The Company has also been engaged in preliminary discussions with New Concept to purchase up to one half of the mill for the sum of Two Hundred Fifty Thousand Dollars ($250,000). These discussions have not yet resulted in a binding agreement between the Company and New Concept. However, the Company intends to reserve that amount in Net Proceeds to enable it to purchase an interest in the mill should a definitive agreement with New Concept be reached and the Company is successful in selling a sufficient number of shares of Common Stock pursuant to this Offering. In the alternative, the Company may use the amount so reserved from Net Proceeds to help finance the cost of constructing its own mill on the Nevada Property. Mining operations, in general, and the Company's proposed operations on the Nevada Property will be subject to extensive federal, state, and local governmental regulation affecting mining exploration, extraction, use and disposal of hazardous substances, reclamation of the surface and subsurface as a result of operations and other aspects of the Company's proposed operations on the Property. Some of these regulations and statutes are discussed in further detail in the section of the Prospectus entitled "RISK FACTORS AND SPECIAL MATERIAL CONSIDERATIONS." While regulation of mining operations has been extensive in the past and it is anticipated will continue to be extensive in the foreseeable future, it is impossible to anticipate any changes to such regulations. The implementation of additional regulations or the impact such changes or additional regulations may have on the Company's proposed operations. The Company has budgeted the sum of One Hundred Thousand Dollars ($100,000) from sums anticipated to be spent for compliance with applicable environmental laws. However, the Company can provide no assurance that the amount so budgeted for environmental compliance will be consistent with the amounts actually spent for compliance or that the actual amount of such compliance may not be substantially greater than that which has been projected to be spent by the Company pursuant to the budget. It should be noted that over the past three years, the Company has expended almost Five Hundred Seventy-Eight Thousand Dollars ($578,000) on research and development expenses on or relating to the Nevada Property. These expenses relate primarily to developing the most effective means by which to extract the ore and transport it to the New Concept mill approximately one mile from the Nevada Property. THE NEVADA PROPERTY The Nevada Property consists of 28 patented and 65 unpatented claims aggregating approximately 1,800 acres. The Company originally acquired its rights to the Nevada Property pursuant to a mining agreement dated April 4, 1987 (the "Nevada Property Agreement"), with Anthony C. Selig and related entities (the "Selig Entities"). On December 9, 1987, the Selig Entities and the Company entered into an amendment to the Nevada Property Agreement reducing the purchase price of the Nevada Property from Two Million One Hundred Thousand Dollars ($2,100,000) to Six Hundred Thousand Dollars ($600,000) and modifying, amongst other things, the schedule of semi-annual payments due from the Company to the Selig Entities in consideration of the purchase of the Nevada Property. On March 2, 1989, the Company entered into an agreement entitled "Manhattan Mining Property Agreement" with Argus Resources, Inc., a Nevada corporation; Argus Mines, Inc., a Nevada corporation (the "Argus Companies") and the Selig Entities (the "Nevada Property Agreement"). This agreement was entered into after a dispute had arisen between Argus Resources, Inc., and the Selig Entities under the lease 13 19 agreement which had been previously entered into between such parties and which originally formed the basis upon which the Company derived its title to the Property. This agreement also modified certain terms and conditions contained within the Nevada Property Agreement. Under the terms of the Nevada Property Agreement, as amended, the Company was required to pay and did pay to the other parties the sum of Twenty Five Thousand Dollars ($25,000) upon execution of the agreement. The Company also agreed to pay the Argus Companies the additional sum of One Hundred Sixty-Five Thousand Dollars ($165,000) in monthly installments of Seven Thousand Five Hundred Dollars ($7,500), commencing on April 15, 1989, and continuing thereafter until the entire sum was paid in full. The Nevada Property Agreement, as amended, further required the Company to issue 1,000,000 shares of Common Stock as additional consideration to Argus Resources, Inc. In fact, the Company paid the Argus Companies, Inc., and the Selig Entities all amounts due under the Nevada Property Agreement, as amended, and issued 1,000,000 of Common Stock to Argus Resources, Inc. Pursuant to the terms and conditions of the Nevada Property Agreement, as amended, the Argus Companies executed a Corporation Quitclaim Deed conveying a forty percent (40%) undivided interest in the Nevada Property to the Company on March 9, 1989. Concurrently therewith, the Company delivered a Deed of Trust and Assignment of Rents (the "Deed of Trust") to the Selig Entities to further secure the obligations under the Nevada Property Agreement. Both the Corporation Quitclaim Deed and the Deed of Trust were duly recorded in the office of the county records by and for Nye County, Nevada. In June 1993, the Company entered into a Joint Venture Agreement with Marlowe Harvey/Maran Holdings, Inc. ("Marlowe Harvey"), Argus Resources, Inc. and the Selig Entities respecting the Nevada Property. Under the terms of the Joint Venture Agreement, Marlowe Harvey was entitled to a fifty-one percent (51%) interest in the Nevada Property in consideration of Marlowe Harvey assuming certain obligations, including the purchase of the Deed of Trust from the Selig Entities. The remaining forty-nine percent (49%) interest in the Nevada Property was to be held by equally by Argus Resources, Inc. and the Company in consideration of their payment of their pro rata share of all amounts due under the promissory note secured by the Deed of Trust created by the Nevada Property Agreement, as amended. The failure of either Argus Resources, Inc. or the Company to pay any amounts due under the note during the first year of the joint venture was to be deemed a default, requiring the defaulting party to quit claim its interest in the Nevada Property to the remaining parties. The Argus Companies, Marlowe Harvey and the Company were also responsible for their pro rata share of all property development expenses. At the time, Marlowe Harvey was the operator of the Nevada Property and responsible for all operations relating to maintaining the Nevada Property in accordance with the Mining Agreement. On October 20, 1995, the Company and Mr. Harvey "as an individual and for Maran Holdings and Argus Resources" executed an agreement (the "Amended Joint Venture Agreement") which purports to amend the June 1993 Joint Venture Agreement. The Amended Joint Venture Agreement obligates Marlowe Harvey to convey to the Company within ten days of the date of execution of such Agreement fifty-two percent (52%) of the outstanding and issued stock in Argus Resources, Inc.("Argus") in exchange for the payment of One Hundred Forty-Seven Thousand Dollars ($147,000), to be paid in the future from a percentage of Argus' share of the net proceeds realized from the sale of gold production on the Nevada Property. In addition, Marlowe Harvey agreed to convey a 1% interest in the Nevada Property to the "management" of the Company (Messrs. Michaels and Kramer) in exchange for a "production payment" of Forty Seven Thousand Dollars ($47,000), likewise to be paid from future production attributable to Argus Resources, Inc. It was and is the intention of the Company's officers to convey their rights under the Amended Joint Venture Agreement to the Company in exchange for the Company's assumption of such officers' obligations under such Agreement. Both the obligations of the Company and its officers under the Amended Joint Venture Agreement were to be secured by the pledge of Common Stock (in the case of the Company, 1,235,429 shares) with "piggy back" registration rights to be granted to Marlowe Harvey in two years in the event $147,000 is not paid from production by that time. If only a portion of the production payment is made by October 20, 1997, the obligation to seek registration will be ratably reduced. The Company was further required to issue 1,186,981 14 20 shares of its Common Stock to Maran Holdings, Inc., an Affiliate of Argus, at the time at which it was obligated to issue to Argus the shares to be used as security for the production payment. The Amended Joint Venture Agreement also required both the Company and its joint venture partners to each make one-half of the property tax payments and the payments due to the Selig Entities under the Nevada Property Agreement. Both of these payments are due in January of each year. In January 1996, the Company notified Marlowe Harvey that it had been "ready, willing, and able" to convey the Common Stock pursuant to the terms of the Amended Joint Venture Agreement. In addition, the Company made all of the required property tax payments relating to the Nevada Property and the payments due to the Selig Entities in reliance upon the terms of the Amended Joint Venture Agreement. Marlowe Harvey has failed to reimburse the Company for its one-half share of the property tax payments and the payments due to the Selig Entities which were advanced on its behalf by the Company and has failed to make the conveyances required by the terms and conditions of the Amended Joint Venture Agreement. As a result, the Company instituted an action in Nye County, Nevada on November 4, 1996, seeking specific performance and damages against Marlowe Harvey, Maran Holdings Inc., Calais Resources Inc., and Argus Resources, Inc. This action is described in further detail under the Section of this Prospectus entitled "LEGAL MATTERS, AUDITORS, AND PENDING LEGAL PROCEEDINGS-Legal Proceedings". Regardless of the outcome of this action, the Company will continue to operate this property and believes it will continue to own the interest in the Nevada Property which it acquired by virtue of the previous agreements it entered into which relate to the Nevada Property. The Nevada Property is located in an historic mining district which has experienced mining operations from 1866 to the present with the major activity in the late 1860s, between 1906 and 1921, and from 1960 to the present. Placer and lode mining took place principally in the Reliance Mine, the White Caps Mine, the Union Amalgamated Mine, the Manhattan Consolidated Mine, the Earle Mine, the Big Four Mine, and the April Fool Mine. The United States Geological Survey reports historic production through 1959 of 260,000 ounces of lode gold and 206,000 ounces of placer gold mined in the Manhattan Mining District. Since 1959, the more significant gold production occurred from the Echo Bay and Nevada Gold Fields mines which border the Nevada Property. Such mines have yielded production in excess of 500,000 ounces of gold. The Nevada Property lies in several shallow gullies in a general area which is located between 7,500 to 7,800 feet in elevation. Mineralization of the Nevada Property appears to be structurally controlled by a series of parallel east-northeast trending faults dipping from 50 to 75 degrees southwest and with some cross or perpendicular faults. The Nevada Property consists of two distinct areas which require different mining and production techniques. Gold mineralization in the vicinity of "Litigation Hill" is near the surface and much less expensive to mine. The lower grade ore will be "leached" while higher grades of ore will be milled. Gold mineralization located in the White Caps Mine have revealed two delineated ore bodies below the 600-foot level and a deeper exploration target requiring substantially higher costs for extraction as compared to "Litigation Hill." "Dewatering" the mine and driving a decline to the 800-foot level could become quite costly. Additionally, gold ore obtained from the White Caps Mine may be required to be processed using autoclave technology in order to comply with environmental regulations due to the ore's high content of antimony, mercury, arsenic, and sulphur; nevertheless, the Company believes that the deep ore bodies located within the White Caps Mine may have sufficient potential to justify a large development program. Both the "Litigation Hill" and White Caps Mine areas of the Property will be discussed below. The Nevada Property is adjacent to three existing gold mines. Immediately adjacent to the west of the Nevada Property is the Manhattan Mine formerly owned by Echo Bay Minerals Company now a part of the Smokey Valley Combined Operation. This mine has produced approximately 500,000 ounces of gold over the last 10 to 15 years. Operations at this mine have been suspended. Immediately to the south of the Nevada Property is the Keystone Mine which was developed by Nevada Gold Fields Company. Proven reserves were reported at 100,000 tons of gold ore averaging .21 ounces per ton. Probable reserves were reported at an additional 100,000 tons. 15 21 Approximately 14 miles to the north of the Property is the Smokey Valley Combined Operation mining activities known as the Round Mountain Mine. This mine is currently the largest producer of gold ore in the district with production estimated at more than 350,000 ounces of gold per year and 7,000,000 ounces in reserve and is one of the largest heap leach operations in the world. The White Caps Mine was historically one of the more prolific gold mines located in the Manhattan Mining District. Production of gold began in 1911 and remained in production until 1935 when the vein was lost and the lower levels of the mine encountered water. A total of 120,000 ounces of gold were produced during that period. The mine was closed in 1942 by executive order relating to all "mining activities non-essential to the [World War II] effort." The mine was found to be flooded from its deepest point at the 1,300 foot level to the 450-foot level. Beginning in 1957, a $400,000 program was put in place to "dewater," renovate, and reactivate the mine. Pumping of water began that year and by 1958, the water level was down to the 800-foot level. At that time some exploration resumed at the upper levels of the mine. At the 300-foot level, antimony-mercury ore grading 60 percent and 8 percent, respectively, was discovered. An expensive antimony deposit (also containing gold and mercury values) was located near the 500-foot level and plans were made to begin mining activities after the renovation of the mine was completed. While continuing to explore for gold mineralization on the lower levels of the mine, the owners leased out the right to mine antimony-gold-mercury ore above the 600-foot levels in 1962 and production thereafter began. A diamond drilling program in 1962 relocated the gold ore vein which had been lost in 1935 when it faulted out at the 600-foot level. Drilling of the formation began at the head of the winze (i.e. incline shaft) and continued down to the 1,200-foot level. Eight regularly-spaced holes of approximately 100 feet in length were drilled. These holes revealed a gold mineralized area 65 feet wide with values ranging as high as 7.7 ounces per ton and averages over .8 ounces per ton. This mineralization is found in the foot wall of the old winze. The next phase of the 1962 drilling program consisted of diamond drilling a "hole" starting at the 1,200-foot level. Six holes of approximately 100 feet in length each were drilled and revealed gold values averaging over three ounces per ton with a high of six ounces per ton. This drilling program blocked out a proven ore reserve of over 14,000 ounces of gold according to a 1964 report published by the California Mining Journal. The program also indicated that an ore body containing several hundred thousand ounces of gold is present in the relocated vein which runs from the 600-foot level down to the 800-foot level and from the 1,200-foot level down to at least the 1,300-foot level. Before production could begin, a fire was accidentally started by a pumping subcontractor at the 300-foot level. The ore bins, shaft, and head frame were destroyed and the mine was closed in 1964. The low price of gold (then $35 per ounce), high costs to rebuild the damaged mine, and the lack of funds caused the White Caps Mine to close in 1964 and has remained closed since that time. The Company's plans include reentering this mine and resuming gold exploration and production. By contrast, "Litigation Hill" was the site of both Earle and Consolidated Mines, all early producers of high-grade ore until the veins ran out. Recent geomagnetic activity and a drilling program have located several small commercial-sized deposits of medium-grade gold ore which can be either milled or heap leached. The Company has conducted a geophysics and geochemical survey of Litigation Hill. A Schlumberger resistivity survey indicated gold mineralization down to a depth of 1,000 feet (the limit of the instrument's sensitivity). Bulk sampling of the ore dumps remaining at these mines indicated that the overall average grade of the dumps of .206 ounces of gold per ton. Over 1,500 tons of ore were proven with another 500 tons considered to be probable reserves. The 1987 exploration of underground workings on Litigation Hill showed that the Earle Mine had experienced massive cave-ins. Two samples were taken from channel cuts. These samples indicated values of .120 ounces of gold per ton. The Bath Mine was accessible through a stope which leads directly to the main 16 22 haulage decline. Channel cut samples were taken on pillars left in previously-worked stopes. Values varied from .64 to 1.288 ounces of gold per ton. The Company initiated a rotary drilling program in 1988. Holes drilled pursuant to the program varied in depth from 200 feet to 525 feet. Gold values located in the carbonates at a depth of 70 feet indicate that open pit mining is suitable for the lower grade ores which are present. The Company commenced an exploration program during the years 1989 and 1990. This program consisted of two parts: Conducting a magnetic survey of the Property and drilling 25 reverse circulation drill-angle holes varying in depth from 50 to 150 feet. The magnetic survey identified the areas around Litigation Hill and the White Caps Mine as strong targets for further exploration. The drilling program located several areas of gold mineralization and a small ore body of about 5,500 tons containing gold values of .18 ounces per ton. In September 1993, the joint venture partners began a decline (i.e. tunnel) in order to intercept a drill hole which had been drilled by Freeport Mining Company in 1983. The drill hole revealed that from 465 feet to 505 feet below the surface, an average gold grade of .886 ounces of gold per ton over 40 feet existed. The decline was completed during the spring of 1994, and drill stations were prepared. Exploration commenced and is ongoing as of the date of this Prospectus. Drilling commenced and is ongoing as of the date of this Prospectus. The decline is approximately nine feet by nine feet and runs at an approximately twelve degree grade. At the 500-foot level, a turnaround or transfer bay has been added to enable the operators of the mine to successfully remove ore in a cost-effective method. The 1993 drilling program also included the mapping and sampling of the old workings of the Consolidated Mine (which was closed in 1939) as well as the drilling and sampling of the decline itself in the immediate potential ore zones contained within the decline. In July 1995, the Company engaged the services of William R. Wilson, a minerals industry consultant, to prepare the Business Plan. According to the Business Plan, two alternative plans for exploration and development of the Property exist. The first plan would extend the existing decline in the White Caps Mine to the 565-foot level, rehabilitate and mine old workings in the Consolidated Manhattan Mine, drift and mine a new area near the drill hole which was intercepted by the decline formed during the 1993 program, rehabilitate the White Caps Shaft, and mine the 565-foot level, 670-foot level, 800-foot level, 910-foot level, 1120-foot level, 1200-foot level, and 1300-foot level of the White Caps Mine. According to the Business Plan, the major advantage to this alternative would be that access to the lower levels of the White Caps Mine would be considerably improved. It is anticipated that the lower levels may yield higher grade ore as compared to the yields anticipated at current levels of the mine. A cash analysis pertaining to the first alternative projected capital costs during the first year of operations to be $1,463,290, operating costs of $1,719,699 and production of 7,960 ounces of gold resulting in revenues of $3,088,430. As a result, the cash analysis prepared for the first alternative projected a positive cash flow of $92,804 after taking into account depreciation, depletion, and amortization. The second alternative identified in the Business Plan would extend the decline in the White Caps Mine to the 565-foot level, rehabilitate any mine old workings in the Consolidated Manhattan Mine, drift and mine a new area near the drill hole which was intercepted by the decline formed during the 1993 program, mine the 565-foot level only in the White Caps Mine, and conduct underground sampling in the White Caps Mine in the 670-foot through 1,300-foot levels. The Business Plan identifies the major advantage to this alternative to be significantly reduced capital costs combined with the opportunity to sample underground the White Caps Mine without rehabilitating the White Caps shaft. The disadvantages of this alternative are that mining access to the lower portions of the White Caps Mine may not be completed and it is still not known whether access can be obtained to each of the levels below the 560-foot level. A cash analysis pertaining to the second alternative projected capital costs during the first year of operations to be $605,840, operating costs of $1,046,063 and production of 4,568 ounces of gold resulting in 17 23 revenues of $1,772,539. As a result, the cash analysis prepared for this second alternative projected a positive cash flow of $425,326 after taking into account depreciation, depletion, and amortization. The Business Plan concludes by recommending the second alternative as the preferable alternative for the Company to follow. In June 1996, the Company initiated the second alternative by contracting with Harrison Western Mining and Construction Company, Lakeland, Colorado, to execute this plan. The Company has begun to establish near-surface gold deposits. Initial exploration of this nature has revealed two near-surface targets showing commercial grades and quantities. These are now being developed for processing and the Company has established an ongoing exploration plan of this nature due to this success. All permits for this operation have been issued and the Company is in compliance with all state, federal, and environmental regulations to the best of its knowledge and belief. THE INDONESIAN PROPERTY In August 1996, the Company acquired an undivided fifty-one percent (51%) interest in a gold exploration property comprising 10,000 ectares (25,000 acres) located in Kutai County, Long Bagun District, East Kalimantan, Indonesia (the "Indonesian Property"). Ownership of the Indonesian Property will be assigned by the Company to a new wholly-owned subsidiary formed under the laws of the British Virgin Islands and known as "Kalimantan Resources." Mineralization of Kalimantan occurred as a result of magmatic "arcing" of the earth's crust at the ocean floor. There are approximately fifteen known "arcs" comprising all of Indonesia. Six of these arcs contain all of the gold and copper deposits currently discovered in Indonesia. The Central Kalimantan Arc is the area which has evidenced the majority of recent attention of mineral exploration efforts, and is the area in which the Indonesian Property is located. Located in the same general area is the Kelian Mine which has reportedly yielded production of gold ore of approximately 95 tonnes (metric tons) grading 1.85 ounces of gold per tonne (i.e. 5.8 million ounces) from two main ore bodies and four satellite zones. This mine is Indonesia's primary gold deposit and is located approximately eighty-five kilometers to the south of the Indonesian Property. Further south is Mt. Muro which has reportedly yielded 10 million tonnes grading .38 ounces per tonne, or 1.2 million ounces of gold. At present, it is impossible to predict whether the Indonesian Property possesses any recoverable reserves of gold ore or whether the yields noted in the above-described mines will be indicative of the yields to be established on the Indonesian Property. The Company acquired its interest in the Indonesian Property pursuant to a document entitled "Principles of Agreement" dated August 19, 1996. The parties to this agreement are Maxwells Energy and Metals Technology Ltd., a Bahamian company ("Maxwells") and the Company. In exchange for a fifty-one percent (51%) working interest in the Indonesian Property, the Company agreed to convey to Maxwells Four Hundred Thousand (400,000) shares of its Common Stock. In addition, the Company must issue an additional Four Million (4,000,000) shares of its Common Stock to Maxwells should an investment banker confirm by independent appraisal that the Indonesian Property is valued to be at least Twelve Million Dollars ($12,000,000 U.S.) and/or such investment banker provides financing to the Company based upon an evaluation of at least Twelve Million Dollars ($12,000,000 U.S.) or upon the appreciation of the Common Stock in an aggregate amount exceeding Twelve Million Dollars ($12,000,000) within ninety (90) days of an announcement by the Company of its acquisition of the Indonesian Property. As of the date of this Prospectus, Four Hundred Thousand (400,000) shares have been issued to Maxwells and have been registered pursuant to the Form BD filed in connection with this Prospectus. While the Company was entitled to defer exploration activities for six (6) months, exploration activities were commenced in October 1996. If the Indonesian Property achieves the required appraised mineral value, the Company will have the further obligation to register with the Securities and Exchange Commission a total of One Million (1,000,000) shares of the Common Stock issued to Maxwells. In addition, if the shares of Common Stock reach a "strike" price of $10 per share for a period of at least thirty (30) days, Maxwells will be entitled to the issuance of a total of One Million Four Hundred Thousand (1,400,000) shares regardless of the valuation of the Indonesian Property. 18 24 Under the agreement with Maxwells, the Company is responsible for one hundred percent (100%) of all exploration and operating expenses relating to the Indonesian Property. Maxwells also enjoys antidilution rights with respect to the Common Stock to be issued under the agreement provided exploration activities result in a valuation evidencing a yield of at least two million (2,000,000) ounces of gold. Maxwells has agreed to provide a voting trust in favor of existing management. Maxwells is not, however, required to vote its shares with existing management in connection with the registration of Common Stock issued or to be issued to Maxwells. Maxwells' consent is also required in the case of any issuance of the Company's capital stock exceeding Two Hundred Fifty Thousand Dollars ($250,000). Maxwells has consented to the issuance of 1,500,000 shares of Common Stock by the Company pursuant to this offering. The Company has only recently acquired its interest in the Indonesian Property. As a result, it has not developed as detailed a business plan for exploration and development as compared to the Nevada Property. The Company has undertaken efforts to confirm the chain of title which it believes to exist with respect to the Indonesian Property. The Company has entered into an agreement with Behre Dolbear & Company, Inc. ("Behre Dolbear"), an internationally recognized mining consulting firm. Behre Dolbear will be responsible for providing independent technical advisory services to the Company as more particularly outlined in the agreement. A more thorough description of this agreement is described in the Section of the Prospectus "MANAGEMENT." USE OF PROCEEDS The gross proceeds from the sale of the Common Stock by the Company will range from a minimum of $1,500,000 to a maximum of $9,000,000. The Company expects the proceeds derived from the sale of the Common Stock to be expended as follows:
MINIMUM MAXIMUM SUBSCRIPTIONS SUBSCRIPTIONS ------------- ------------- Subscriptions(1)................................. $ 1,500,000 $ 9,000,000 Sales and Underwriting Commissions(2)............ 180,000 1,080,000 Legal and Accounting Fees........................ 80,000 120,000 NET PROCEEDS TO COMPANY.......................... 1,240,000 7,800,000 ========== ========== Payment to Anthony C. Selig, et al.(3)........... $ 100,000 $ 384,800 Expansion of Mine, Exploration and Development of Nevada Property, and Mill Expansion(4)......... 500,000 1,500,000 Exploration Activities on Indonesian Property(5).................................... 500,000 4,915,200 General and Administrative Expenses(6)........... 240,000 1,000,000 ========== ==========
- --------------- (1) A minimum of 250,000 shares and a maximum of 1,500,000 shares of Common Stock will be sold at a price of $6.00 per share. (2) The Company has allocated up to $1,080,000 from the sale of the Common Stock for sales and underwriting commissions. The Company anticipates that as a result of the financial advisory services agreement which it has recently entered into with Rhone Finance SA, Geneva, Switzerland, it may enter into Underwriting Agreements with broker-dealers who are members in good standing with the National Association of Securities Dealers, Inc. Under the terms of these agreements, the Company will pay up to ten percent in sales commissions and an additional two percent for "due diligence" fees and expenses. (3) Under that certain Mining Agreement dated April 4, 1987, as amended, the Company is required to pay up to $384,800 in principal and accrued interest payments to release the deed of trust securing the Company's obligations to Anthony C. Selig and related entities (the "Selig Entities"). If the Company is successful in selling at least 250,000 shares of the Common Stock, the entire principal balance due under the Mining Agreement, as amended, including all interest which has accrued thereon, may be paid to the Selig Entities in full whereupon the deed of trust securing the Property will be released. 19 25 (4) The Company anticipates expending up to $1,500,000 to expand mining operations on the Nevada Property consistent with the Business Plan as more fully described in the Section of the Prospectus entitled "DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY." Such expansions would include extending the existing decline to the White Caps Mine at the 565-foot level, rehabilitation and mining old workings in the White Caps Mine, drifting and mining a new area near a drill hole which was intercepted by the decline formed during the 1993 drilling program, rehabilitation of the White Caps Shaft, and mining the 565-foot level, 670-foot level, 800-foot level, 910-foot level, 1120-foot level, 1200-foot level, and 1300-foot level of the White Caps Mine. If only the minimum number of Subscriptions are raised pursuant to this Offering, the Company will continue with its present course of business and use revenues derived from ongoing operations to finance and execute the above-described expansion. The Company has also been engaged in discussions with the owner of the mill, New Concept Mining, Inc., concerning the acquisition of up to a fifty percent interest in the mill currently adjacent to the Nevada Property. To date, no definitive agreement has been reached. The Company anticipates that if such an agreement is reached, the Company intends to expend up to $250,000 in consideration of acquiring up to a fifty percent interest in the mill. In the alternative, the Company will utilize such amount to help finance the construction of its own mill on the Nevada Property. (5) The Company anticipates that up to $4,915,200 will be expended on data collection, reconnaissance surveying, reporting, field work, sampling, data processing, laboratory analyses, prospect evaluation, mineralization mapping, additional acquisitions, and exploration drilling activities. All of these activities will be undertaken subject to the advice and independent consulting services provided to the Company by Behre Dolbear & Company, Inc. ("Behre Dolbear"), pursuant to a Consulting Services Agreement dated October 7, 1996, and more particularly described elsewhere in this Prospectus. The actual work on the Indonesian Property will be performed by Five Engineering Consultants, Bandung, Indonesia, under the supervision of Behre Dolbear. (6) The Company currently expends approximately $60,000 per month in general and administrative expenses. These expenses include salaries of all employees (including its executive officers and directors), rent, health insurance, travel and entertainment expenses, postage and courier and stock transfer expenses. It is anticipated that once exploration and development occurs on the Properties, general and administrative expenses may be paid from such operations. To the extent that the Company does not utilize all funds allocated for general and administrative expenses, such excess will be retained by the Company as additional working capital. 20 26 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The Company's Bylaws authorize the creation of the offices of President, Treasurer (Chief Financial Officer), one or more Vice Presidents, Secretary, and one or more Assistant Secretaries and Assistant Treasurers as the Board of Directors deems proper. The Bylaws also provide for not less than three directors and not more than seven directors who shall hold office until the following annual meeting of the shareholders. The Bylaws further provide that the number of directors may be increased by the affirmative vote of the Board of Directors or a majority in interest of the shareholders at an annual or special meeting. The executive officers and directors of the Company are as follows:
NAME AGE POSITION - ------------------------ ---- ----------------------------------------------- Christopher D. Michaels 52 President and Chairman of the Board Jeffrey S. Kramer 42 Senior Vice President, Chief Financial Officer and Director Stanley J. Mohr 61 Vice President of Shareholder Relations and Director Edna Pollock 60 Director Joseph Rude III, M.D. 52 Director William Michaels 79 Vice President of Client Relations
CHRISTOPHER D. MICHAELS cofounded the Company in June 1986. Since then he has served as President, Chief Executive Officer, and Chairman of the Board and is entitled to retain his positions with the Company until the next annual meeting of the Company's shareholders. Mr. Michaels received a bachelor of arts degree from Alfred University located in New York. After graduation, he accepted a post with the United States government overseas in the Peace Corps. Since 1980, Mr. Michaels has acted in sales and management positions in corporations whose primary business consists of mining and minerals. Mr. Michaels has extensive background and experience in international relations and has spent considerable time at the Company's Bolivian mine site (closed in 1992) as well as on the Nevada Property. Mr. Michaels is a party and is subject to the permanent injunction more particularly described in the Section of the Prospectus entitled "LEGAL MATTERS, AUDITORS, AND PENDING LEGAL PROCEEDINGS." Mr. Michaels has also been and is subject to a cease and desist order issued by the Pennsylvania Securities Commission issued February 27, 1989 prohibiting the Company, Mr. Michaels and other executive officers from violating Section 201 of the Pennsylvania Securities Act of 1972 relating to the sale of unregistered "penny stocks." JEFFREY S. KRAMER, Senior Vice President, Chief Financial Officer, Secretary-Treasurer, and Director, has held these positions since 1989 and is entitled to retain these positions with the Company until the next annual meeting of the Company's shareholders. He has held management positions with Continental Cafes. As Chief Financial Officer, Mr. Kramer's responsibilities include business affairs, contract administration, public relations, broker and shareholder relations. Mr. Kramer is a party and is subject the regulatory proceedings described in the Section of the Prospectus entitled "LEGAL MATTERS, AUDITORS, AND PENDING LEGAL PROCEEDINGS" and the action taken by the Pennsylvania Securities Commission detailed above with respect to Mr. Michaels. STANLEY J. MOHR, has been Vice President Client Relations with Nevada Manhattan since 1986. Mr. Mohr became a Director in 1992 and is entitled to retain his current positions with the Company until the next annual meeting of the Company's shareholders. Mr. Mohr has been employed as a marketing executive with several mining and mineral related companies and has gained extensive experience in many phases of operations in the mining industry. Mr. Mohr held a real estate license issued by the state of Nevada from 1976 to 1984. Mr. Mohr was a party and is subject to the regulatory proceedings more particularly described in the Section of the Prospectus entitled "LEGAL MATTERS, AUDITORS, AND LEGAL PROCEEDINGS." 21 27 EDNA POLLOCK was elected to the Board of Directors on April 3, 1995 and is entitled to retain her position as director until the next annual meeting of the Company's shareholders. Ms. Pollock is a court reporter in North Carolina and has been a shareholder of record since 1989. She has been an active member of the Shareholders' Advisory Committee for several years representing shareholders at Director's meetings. Ms. Pollock is a graduate of Columbia University, New York, New York, having received her bachelor of arts degree in Journalism. She spent twenty-eight years as a freelance reporter for both the federal and state courts in North Carolina and acted in her official capacity as a court reporter at numerous depositions, arbitrations, hearings, and conventions. DR. JOE RUDE' III was elected to the Board of Directors on April 3, 1995 and is entitled to retain his position as a director until the next annual meeting of the Company's shareholders. Dr. Rude' is a radiologist and has been practicing his medical specialty since 1977 Georgia. Dr. Rude' has been a shareholder of record since 1989 and has been an active member of the Shareholders' Advisory Committee for several years representing shareholders at Director's meetings. Since 1995, Dr. Rude' has been a diagnostic radiologist at Quantum Radiology, Atlanta, Georgia. From 1977 to 1995, he was associated with Cobb Radiology Associates, Austell, Georgia, which merged with Quantum Radiology in 1995. Dr. Rude' is a graduate of the University of Texas, Austin, Texas, where he received his bachelor of arts degree in 1966. In 1970, he was awarded a medical degree from the University of Texas Southwestern Medical School, Dallas, Texas. Dr. Rude' is board certified in radiology and served in the United States Air Force as a flight medical officer from 1971 to 1973. WILLIAM MICHAELS, Vice President of Client Relations, has served in such capacity or in other capacities since the Company's inception. Mr. Michaels is the father of Christopher D. Michaels, the Company's President and Chairman of the Board. Mr. Michaels is a party and is subject to the regulatory proceedings more particularly described in the Section of the Prospectus entitled "LEGAL MATTERS, AUDITORS AND PENDING LEGAL PROCEEDINGS." SIGNIFICANT EMPLOYEES AND CONSULTANTS The Company has entered into employment agreements dated January 1, 1995, with Christopher D. Michaels and Jeffery S. Kramer relating to their respective positions as executive officers and directors of the Company. Under the terms and conditions of these employment agreements, both Mr. Michaels and Mr. Kramer are required to devote substantially all of their business time and effort during normal business hours to the Company through December 31, 1997. As compensation for the services rendered and to be rendered to the Company, Mr. Michaels is entitled to receive annual salaries equal to One Hundred Forty-Eight Thousand Seven Hundred Twenty-Seven Dollars ($148,727) per annum which Mr. Kramer is entitled to a salary of One Hundred Thirty-Seven Thousand Two Hundred Twelve Dollars ($137,212) per annum. Both the salaries of Mr. Michaels and Mr. Kramer are to be reviewed on each anniversary date of the Agreement by the board of directors for the purposes of either increasing or decreasing such base salary. The Board, however, may not reduce the base salary of either Mr. Michaels or Mr. Kramer by more than twenty percent (20%) of the base salary for the immediately preceding year. In addition, both Mr. Michaels and Mr. Kramer have each received 900,000 shares of the Company's Common Stock as part of their compensation under the terms of their employment agreements. In addition to the base salaries and stock options, both Mr. Michaels and Mr. Kramer are entitled to receive reimbursement on a monthly basis for all reasonable expenses incurred in connection with the performance of their duties under the employment agreement. Mr. Michaels and Mr. Kramer are also entitled to certain fringe benefits (including but not limited to paid vacation and participation in medical insurance plans and employee benefit plans) which now are or may thereafter become available to all executive officers of the Company and such other benefits (if any) as may be authorized from time to time by the board of directors of the Company. The employment agreements also authorize these officers to receive a "merit bonus" ranging between twenty-five percent (25%) and seventy-five percent (75%) of such officer's base salary in the event the Company experiences operating cash flow for a fiscal year equal to not less than One Million Dollars ($1,000,000). Specifically, if the Company's operating cash flow for any fiscal year ranges between One Million Dollars ($1,000,000) and Two Million Dollars ($2,000,000), both Mr. Michaels and 22 28 Mr. Kramer will be entitled to a "merit bonus" equal to twenty-five percent(25%) of his base salary; if the operating cash flow is between Two Million Dollars ($2,000,000) and Three Million Dollars ($3,000,000) for any fiscal year, the "merit bonus" will be equal to fifty percent (50%) of such officer's base pay; and if the Company's operating cash flow is over Three Million Dollars ($3,000,000) or more during any fiscal year, during the term of the Agreement, such officer's "merit bonus" will be equal to seventy-five percent (75%) of such officer's base salary. In the event of termination of the employment agreement by the Company for cause or by such officer without cause, the "merit bonus" is not required to be paid. In the event of termination for any other reason, the "merit bonus" will be prorated for the fiscal year in which termination occurs. The employment agreements with Messrs. Michaels and Kramer contain a covenant prohibiting such officer from engaging directly or indirectly as a principal partner or director or officer of any business competitive with the Company. However, such officer may hold up to a five percent (5%) equity interest in any entity engaged in a business competitive with the Company without violating such covenant. The agreements contain provisions for termination in the event of such officer's permanent disability, death, or for cause. In addition, the agreements provide for severance compensation equal to such officer's highest monthly base salary times thirty-six. Both Mr. Michaels and Mr. Kramer also possess an option to acquire up to twenty-five percent (25%) of the number of then outstanding shares of the Company's capital stock at a price of five cents per share in the event of an occurrence of a "Change in Control." For the purposes of such employment agreements, the term "Change in Control" shall be deemed to have occurred if the Company sells substantially all of its assets to a single purchaser or to a group of associated purchasers in a single transaction or series of related transactions; shares of the Company's outstanding capital stock constituting more than twenty percent (20%) of the voting power of the Company's outstanding capital stock are sold, exchanged, or otherwise disposed of in one transaction or in a series of related transactions; or the Company is a party to a merger or consolidation in which the Company is not the surviving entity or the Company's shareholders receive shares of capital stock of the new or continuing corporation constituting less than 80 percent of the voting power of the new or continuing corporation. The Company has engaged the services of Arthur J. Mendenhall to act as project geologist for the Nevada Property. His duties include acting as the on-site representative of the Company and to provide geological exploration and mining grade control of the Nevada Property on a daily basis. Mr. Mendenhall is an experienced mining geologist. He received his bachelor of science degree in 1971 and his master of science degree in geology from Utah State University, Logan, Utah. Mr. Mendenhall's work experience includes roles supervising and monitoring the work of senior geologists in the coring and sampling of ore; working as senior geologist in the sampling and mapping of tertiary volcanic rock formations in gold exploration projects; collecting cuttings and core samples for geochemical analyses; drafting drill hole cross sections; and supervised drilling operations for bentonite and iron ore. Mr. Mendenhall has completed the Occupational & Safety Hazard Agency ("OSHA") forty-hour hazardous waste site training course and OSHA'S refresher course, and has attended other geological seminars and courses relevant mining. Mr. Mendenhall is a registered geologist in the Commonwealth of Pennsylvania and a member of the Geological Society of America. AGREEMENT WITH GOLD KING MINES CORPORATION On April 1, 1995, the Company entered into an Agreement with Gold King Mines Corporation ("Gold King"), Denver, Colorado. Under the terms of this Agreement, Gold King has agreed to provide the services of William R. Wilson on a consulting basis at the rate of $400 per day. The initial term of the consulting agreement was through December 31, 1995, and extended for one-year periods upon mutual agreement between Gold King and the Company. Gold King and the Company have extended this consulting agreement for two years. Mr. Wilson has provided various services to the Company including the preparation of the Business Plan. Mr. Wilson possesses a professional degree in metallurgical engineering from the Colorado School of Mines, Golden, Colorado, and has been awarded a Master's in Business Administration from the University of Southern California, Los Angeles, California. In his more than thirty years of experience, Mr. Wilson has, for 23 29 the past fifteen years served in various seniority executive capacities with engineering, construction, and consulting firms, many of such capacities as president or the chief executive officer of mining companies operating in the United States and internationally. Mr. Wilson is the past chairman of the Colorado Mining Association. Gold King is a subsidiary of Sheridan Reserve Corporation, a publicly-traded resource company based in Toronto, Canada. Mr. Wilson's primary responsibility to the Company has been and will be to act as project manager for the Nevada Property and to act as the Company's representative to Harrison Western Mining & Construction Company, the mining contractor for the Nevada Property. Mr. Wilson will also provide technical and managerial consulting to the Company on the Indonesian Property. AGREEMENT WITH BEHRE DOLBEAR & COMPANY The Company entered into a Consulting Services Agreement (the "Consulting Agreement") with Behre Dolbear & Company ("Behre Dolbear"), an internationally recognized mining consulting firm. Under the terms of the Consulting Agreement, Behre Dolbear will be responsible for providing independent technical advisory services relating to the Indonesian Property. Such services initially require Behre Dolbear to advise and validate the exploration program contemplated by the Company, and would include related technical input for other aspects of project development. The term of the Consulting Agreement is for six months or upon satisfactory completion of the consulting services contemplated prior to such expiration date. The Company has agreed to pay Behre Dolbear the hourly rate of $137.50 up to a maximum of $1,100 per diem for the services contemplated under the Consulting Agreement and has to committed to utilize Behre Dolbear a minimum of two days per month. Unused days will accrue under the Consulting Agreement but will be forfeited if not prior to the expiration of the term of the agreement. The Company must also reimburse Behre Dolbear for any travel; reasonable and necessary lodging expenses (including meals); telegram, cable, telex charges; a 2.5% "flat" labor charge in lieu of actual telephone charges; printing, copies, reproduction, and fax charges; postage, courier, express, and freight charges; use of personal automobiles; royalties on computer software; professional liability insurance (assessed on a 1.5% flat fee basis); clerical fees at the rate of $35 per hour; and other costs and expenses incurred by Behre Dolbear and/or its personnel in performing the services contemplated by the Consulting Agreement. AGREEMENT WITH RHONE FINANCE SA The Company entered into a Financial Advisory Services Agreement with Rhone Finance SA ("Rhone") on November 26, 1996. Under the terms of this agreement, the Company agreed to pay Rhone a monthly retainer of $7,500 plus expenses in consideration of Rhone's agreement to introduce the Company to financial and institutional investors and to secure appropriate sponsorship by retail and institutional investment concerns. Should such services prove to be successful, the Company and Rhone have agreed to negotiate a contract whereby Rhone will be paid a fee based upon successful funding of the Offering as well as the issuance of warrants, the amount and exercise price to be negotiated by the parties. 24 30 EXECUTIVE COMPENSATION The table set forth below identifies the compensation paid to the Company's executive officers for the last three completed fiscal years (i.e. fiscal years ending May 31, 1994; May 31, 1995; and May 31, 1996): SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ----------------------------------------------------- AWARDS PAYOUTS ANNUAL COMPENSATION ------------------------- ----------------------- ------------------------------------------------ RESTRICTED SECURITIES ALL NAME AND OTHER STOCK UNDERLYING LTIP OTHER PRINCIPAL ANNUAL AWARD(S) OPTIONAL/ PAYOUTS COMPENSATION POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) ($) SARS(#) ($) ($) -------- ---- --------- -------- ------------------ ---------- ---------- -------- ------------ Christopher Michaels, President and Chairman of the Board........... 1996 $100,449 -- $6,316.00 $225,000(2) 10,000(3) -- -- 1995 $148,727 -- $5,712.00 -- 10,000 -- -- 1994 $137,222 -- $5,712.00 -- 10,000 -- -- Jeffrey Kramer, Senior Vice President and 1996 $117,791 -- $7,658.00 $225,000(4) 10,000(5) -- -- Director............... 1995 $137,212 -- $6,564.00 -- 10,000 -- -- 1994 $135,117 -- $6,564.00 -- 10,000 -- --
- --------------- (1) The Company incurs the annual cost of health insurance for Messrs. Michaels and Kramer and their respective dependents. (2) The Company granted Messrs. Michaels and Kramer the option to purchase 900,000 shares of Common Stock each at an average price of $1.50 per share. These options were exercised during the year ended May 31, 1996, at which time the Company's board of directors agreed to issue these shares for services rendered. The Company has valued these restricted securities to be worth twenty-five cents ($.25) per share. (3) The Company has granted stock options to all members of its board of directors in the amount of 10,000 shares per full year of service as an active member of the board. These options may be exercised at $1.00 per share of Common Stock. Options may not be exercised after the expiration of 10 years from the date of the grant and are nontransferable other than by inheritance. As of the date of this Prospectus, the Company has granted options aggregating 100,000 shares to Mr. Michaels and 70,000 shares to Mr. Kramer. (4) See Footnote 2. (5) See Footnote 3. OPTIONS AND STOCK APPRECIATION RIGHTS The table set forth below provides certain information concerning individual grants of stock options and stock appreciation rights (whether granted in connection with stock options or as "freestanding" rights made during the last fiscal year of the Company ending May 31, 1996) to each of the named executive officers noted below: OPTION/SAR GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS
NUMBER % OF TOTAL SECURITIES OPTIONS/ UNDERLYING SARS OPTIONS/ GRANTED TO EXPIRATION SARS EMPLOYEES OR BASE EXPIRATION NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH) DATE ---- ---------- -------------- ----------- ----------- Christopher Michaels................ 100,000 10% $1.00 Various(1) Jeffrey Kramer...................... 70,000 14% $1.00 Various(2) Stanley Mohr........................ 40,000 25% $1.00 Various(3) Edna Pollock........................ 10,000 100% $1.00 May 31, '06 Joe Rude' III....................... 10,000 100% $1.00 May 31, '06
25 31 - --------------- (1) The Company has granted stock options to all members of its board of directors pursuant to Stock Option Agreements executed at various times. Under the terms of these agreements, each director has been granted options to purchase 10,000 shares of Common Stock per full year of service. The exercise price for such options is $1.00 per share. The years in which stock options were initially granted to each respective board member are as follows: Christopher Michaels, 1986; Jeffrey Kramer, 1989; Stanley Mohr, 1993; Edna Pollock, 1996; Joe Rude' III, 1996. Options may not be exercised after expiration of ten years from the date of grant and are nontransferable other than by inheritance. (2) See Footnote 1. (3) See Footnote 1. LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY The Company's Bylaws do not contain a provision entitling any director or executive officer to indemnification against liability under the Securities Act of 1933 (the " '33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes allow a company to indemnify its officers, directors, employees, and agents from any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith and in a manner which such person believed to be in the best interests of the company. A determination made be made by the shareholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit, or proceeding does not exist. Provided the terms and conditions of these provisions under Nevada law are met, officers, directors, employees, and agents of the Company may be indemnified against any cost, loss, or expense arising out of any liability under the '33 Act. Insofar as indemnification for liabilities arising under the '33 Act may be permitted to directors, officers and controlling persons of the Company, the Company has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and is, therefore, unenforceable. 26 32 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is a development-stage company, with corporate offices in Calabasas, California, and with interest(s) is certain mining properties located in the (1) Manhattan Mining District, Nye County, Nevada, (the "Nevada Property") and (2) in the Indonesian Gold Belt, Kalimantan, Indonesia (the "Indonesian Property"). The Company maintains that it owns an undivided fifty percent (50%) interest in the Nevada Property which it currently operates. The Nevada Property has historically produced 500,000 ounces of gold. The Nevada Property consists of 28 patented claims and 65 unpatented claims comprising approximately 1,800 acres which included, included, the White Caps Mine, Union Mine, Consolidated Mine, Earle Mine, Bath Mine, and other assorted mines and claims which are located in Township 8 North, Range 44, Sections 20, 21, 28, 29, and 30 in the Manhattan Mining District, approximately 75 kilometers north of Tonopah, Nevada. Subsequent to extensive exploration activities on the Nevada Property which included mapping, sampling, drilling, geochemistry, geophysics and trenching, the Company and its joint venture partners constructed a 1,200-foot decline completed in 1994 in order to commence gold ore production and subsequent cash flow. In 1995, the Company prepared a plan of operation under the direction of William Wilson. Mr. Wilson has a degree in metallurgical Engineering from the Colorado School of Mines and a degree in business from USC. The Company is currently operating this plan of development which includes ore production from the Consolidated Mine and from the area of drill hole WC 49 drilled by Freeport mining in 1982 showing 40 feet of .82 ounces per ton gold. As well, the program includes the continuation of the decline an additional 800 feet in order to intersect the White Caps Mine at the 565-foot level. The White Caps Mine had a total depth of 1,300 feet. The White Caps Mine was historically the largest gold producer in the district with total production exceeding 150,000 ounces. It was shut by an act of government in 1942 in support of World War II. In 1958, the White Caps Mine was reactivated and production was to commence in 1962 when a pumping subcontractor started a fire and the mine burned. Prior to the fire, extensive exploration and development was conducted which delineated several ore bodies below the 300-foot level. The most attractive was the drilling performed on the 1,300-foot level which intersected 30 feet averaging 2.73 ounces per ton gold. The present plan of operation for the next 12 months includes ore production from the Consolidated Mine, WC 49 and other targets intersected during the ramping towards the White Caps Mine which should also have significant remaining ore for production. Once at the 1,300-foot level of the White Caps mine, the Company plans to produce high grade ore from this level and the upper levels and to explore underground to establish a larger deposit. The Company has contracted with Harrison Western Mining & Construction Company (Lakeland, Colorado), a well respected mine contractor for this operation. As well, on the Nevada Property, the Company has begun to establish near-surface gold deposits. Initial exploration of this nature has revealed two near-surface targets showing commercial grades and quantities. These are now being developed for processing and the Company has established an ongoing exploration plan of this nature due to this success. Milling of the initial ore produced by the Company from the Nevada Property will be transported less than one mile to a 250-ton-per-day facility just completed by New Concept Mining (Monrovia, California). The Company has an agreement with New Concept Mining to use a portion of the mills capacity and may, in the future, elect to purchase an interest in this facility or build a larger facility on its own property as larger ore reserves are established. All permits for this operation have been issued and the Company is in compliance with all state, federal, and environmental regulations to the best of its knowledge and belief. 27 33 With the recent development of the near surface targets described on the Nevada Property as stated above, the Company should be able to increase the current flow of gold ore from the mine to the mill substantially during the current phased ramping to the 565-foot level of the White Caps Mine. It is estimated that the near term increases could be as much as 20,000 to 25,000 tons running an average grade of .20 ounces per ton gold. There can be no assurance that these increased surface trends will be able to be expanded beyond these initial areas, but initial exploration related to these additional trends on other targets is encouraging. The cost impact of exploring these additional targets should not increase the exploration capital expenditures now projected for the Nevada Property. If these near surface trends continue, it could significantly increase the potential of the Nevada Property. The Company has obtained confirmation from the Nevada Department of Environmental Protection ("NDEP") for the commencement of the exploration and development of these first near surface targets which fall under the boundaries of the initial permits. It is anticipated that the first ore derived from these surface targets could be delivered to the mill by December 1996/January 1997. The Company has an undivided 51% interest in a gold exploration property comprised of 10,000 hectares (25,000 acres) located in Kutai County, Long Bagun District, East Kalimantan, Indonesia and known as the Indonesian Property. The Company has designated this property as the "Abubakar Property" and formed a wholly-owned British Virgin Islands subsidiary, "Kalimantan Resources," in order to comply with contractual obligations for the Company's beneficial interest of this property. The Company will act as operator. The Company acquired its interest in the Abubakar property from Maxwells Energy and Metals Technology Ltd. ("Maxwells"), a Singapore-based Bahamian company, in August 1996. Maxwells acquired its interest in this property from Mr. Abubakar Sidik in July 1996. Mr. Abubakar Sidik resides in Bandung, Indonesia and has had this property interest since July 1988. The Abubakar property lies in the northeasterly trending Kalimantan gold belt which includes the important gold deposits of Busang (over 40 million ounces gold indicated resource), Kelian (produced 450,000 ounces of gold with 5.8million ounces indicated resource) and Mt. Muro (produced 200,000 ounces of gold with 1.3 million ounces resource indicated). In October 1996, the Company reached an agreement with Behre Dolbear & Company, Inc., internationally renowned mining consultants to provide technical advisory and third party validation services to the Company with respect to the exploration and development program now under way on the Abubakar property. The current ongoing work plan for the Abubakar property consists of data collection, reconnaissance survey and reporting. Completion for this first phase is scheduled for January 1997. Immediately following, the second phase will commence and consist of field work, sampling, data processing, laboratory results, evaluation of prospected area and reporting. It is estimated that this program should be completed in March/April 1997. Following the completion of the second phase, the Company plans to prepare a detailed mineralization map followed by drilling for the purpose of preparing a reserve study with an economic evaluation. Work is being performed by Five Engineering Consultants (Bandung, Indonesia) with independent technical advisory services being provided by Behre Dolbear & Company, Inc. In initial information gathering activities, the Company has received unconfirmed reports of tertiary-age plugs mapped along the northern boundary of the property. Gold mineralization elsewhere in east Kalimantan is related to similar intrusive plugs. Reports of small-scale alluvial prospects reported are likely related to load mineralization generally associated with the series of tertiary intrusive plugs. Stream sediment and soil sampling previously performed suggested an unconfirmed 1,000-meter by 200-meter gold geochem anomaly inside the northern boundary of the property. Argillic alteration and pyritization of the sediments is apparently widespread. Confirmation of these items will be performed through the ongoing work program. The Company is in the early stages of information gathering for the purpose of expanding its exploration property holdings in the Indonesian Gold Belt. Three additional acquisitions are now under consideration. Costs incurred for these potential exploration/acquisition targets relating to these additional properties will be factored into the overall costs associated with the use of Net Proceeds found elsewhere in this Prospectus with minimal impact. Should the Company desire to advance its holdings in the region through the confirmation of 28 34 the research data, it is estimated that an additional $600,000 may be required in the early stages of exploration/development and acquisition of these potential properties. No assurances can be given that these funds will be available when needed, but the Company feels confident it should be able to fulfill these needs through this offering and/or additional fund-raising activities. If the Company is successful in its fund-raising related to this Offering, funds will be expended generally in the following manner: $4,915,200 for Kalimantan Indonesia Property exploration and development; $1,500,000 for further development of the Nevada Property; and $1,000,000 in working capital. If the Company does not receive sufficient distribution of the securities offered hereby, it may not be able to complete the work described above which could result in the loss of the prospective investors funds. Gold mining and exploration is a highly speculative business and investors should be aware that proceeds form this Offering, if fully distributed, will be sufficient to complete the work described above, but the Company may require additional capital in the development stage. The Company makes no representation that it can obtain such additional capital. The Company contracts a great deal of the work to take place during the next twelve months as described above and, therefore, expects little, if any, changes in the number of employees. PRINCIPAL AND SELLING SHAREHOLDERS The following tables set forth certain information as of August 31, 1996, regarding the record and beneficial ownership of the Common Stock and Preferred Stock with respect to: (i) the Selling Shareholders; (ii) any individual or group of affiliated individuals or persons owning, of record or beneficially, five percent (5%) or more of the outstanding shares of the Common Stock or the Preferred Stock; (iii) the amount of shares of Common Stock or Preferred Stock owned by each executive officer and director of the Company; and (iv) the number of shares of Common Stock and/or Preferred Stock owned, of record or beneficially, by the directors of the Company as a group. Except as otherwise indicated, the Company believes that the beneficial owners listed below, based upon information provided by such owners, have sole voting and investment power with respect to such shares. PRINCIPAL SHAREHOLDERS
NAME AND ADDRESS AMOUNT AND NATURE TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER PERCENT OF CLASS - -------------- ------------------------------- ------------------- ---------------- Common Christopher D. Michaels 1,294,510(1) 12.3% 876 Ballina Court Newbury Park, California 91320 Common Jeffrey S. Kramer 1,180,000(2) 11.2% 6053 Paseo Canyon Drive Malibu, California 90265 Common Joseph C. Rude' III, M.D. 663,150(3) 8.5% 3065 River N. Pkwy. Atlanta, Georgia 30328 Common David Weissberg et al 1,780,000(4) 15.6%(5) 29 Blair Drive Huntington, New York 11743 Common John Holsten 600,000(6) 5.3%(7) P.O. Box 456 Drexel Hill, PA 19026 Common All Officers and 3,361,410(8) 31.5% Directors as a Group (6 persons)
- --------------- (1) Includes options to purchase up to 100,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Prospectus. (2) Includes options to purchase up to 70,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Prospectus. 29 35 (3) Includes options to purchase up to 10,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Prospectus. (4) Includes 779,000 shares which are to be issued pursuant to the term and conditions of an agreement dated March 25 , 1996 and amended May 13, 1996. (5) For the purposes of the above percentage, 779,000 shares have been added to the number of shares of Common Stock outstanding as of August 31, 1996, plus the conversion (on a one-to-ten basis) of all Preferred Stock outstanding as of August 31, 1996, plus the inclusion of 400,000 shares of Common Stock to be issued to Maxwell Energy and Metals Technology Ltd. ("Maxwells") and the shareholders of the Company who agreed to loan shares to the Company to issue to Maxwells. (6) On September 25, 1996, the Company entered into an agreement with Mr. Holsten whereby it agreed to issue 600,000 shares of Common Stock in exchange for a loan of $200,000 in the event said loan was not repaid within 90 days. In addition, Mr. Holsten was granted the right to purchase up to an additional 100,000 shares of Common Stock at a price of $1.50 per share. This right may be exercised within 18 months of the date on which the 600,000 shares of Common Stock are issued. (7) The percentage noted includes the anticipated issuance of 600,000 shares of Common Stock to Mr. Holsten thereby bringing the total number of shares outstanding to 11,263,905. (8) Includes options to purchase up to 230,000 shares of Common Stock which may be issued within 60 days of the date of this Prospectus pursuant to options granted to various directors. See "Management -- Options and Stock Appreciation Rights." SELLING SHAREHOLDERS
SHARES BENEFICIALLY OWNED PRIOR TO NUMBER OF SHARES BENEFICIALLY OFFERING SHARES OWNED AFTER OFFERING ------------------------ BEING --------------------- NAME NUMBER PERCENT(1) OFFERED NUMBER PERCENT - ------------------------------- --------- ---------- --------- --------- ------- Christopher D. Michaels 876 Ballina Court Newbury Park, CA 91320 1,294,510(2) 12.2%(3) 290,000 1,004,510 9.4% Jeffrey S. Kramer 6053 Paseo Canyon Drive Malibu, CA 90625 1,180,000(4) 11.1%(5) 205,000 975,000 9.1% John Holsten P.O. Box 456 Drexel Hill, PA 19026 600,000(6) 5.3%(7) 600,000 0 0% David Weissberg, et al. 29 Blair Drive Huntington, NY 11743 1,780,000(8) 15.6%(9) 1,780,000 0 0% Maxwells Energy & Metals Technology 1901 Avenue of the Stars Suite 1925 Los Angeles, CA 90067 400,000(10) 3.8% 200,000 200,000(11) 1.9% Bruce and Ivone Jackson 23414 Main Street San Luis, AZ 85349 72,215 .67% 72,215 0 0% William E. Wilson 1819 E. Brainard Street Pensacola, FL 32503 63,650 .60% 44,000 19,650 .2% Robert E. Anderson(12) Box 441 Camp Mineola Road East Mattituck, NY 11952 80,500 .75% 41,690 38,810 .36%
30 36
SHARES BENEFICIALLY OWNED PRIOR TO NUMBER OF SHARES BENEFICIALLY OFFERING SHARES OWNED AFTER OFFERING ------------------------ BEING --------------------- NAME NUMBER PERCENT(1) OFFERED NUMBER PERCENT - ------------------------------- --------- ---------- --------- --------- ------- Edward F. Abrams 150 So. Commonwealth Ave. #107 Los Angeles, CA 90004 85,050 .79% 28,215 56,835 .53% Irwin Renneisen 660 Newtown Yardley Road Newtown, PA 18940 100,000 .93% 22,000 78,000 .73% Financial Stock Marketing 9107 Wilshire Boulevard Suite 625 Beverly Hills, CA 90210 5,000 .05% 5,000 0 0%
- --------------- (1) Except where otherwise described in these footnotes, the percentages noted in this column represent the ratio that a shareholder's beneficial ownership bears to the total number of shares outstanding and issued as of August 31, 1996 (8,676,155), plus the conversion of all Preferred Stock issued and outstanding as of August 31, 1996, into the Common Stock on a ten-to-one basis (1,357,350 shares of Common Stock) plus the number of stock options issued and outstanding to the Company's board as of August 31, 1996 (230,000 shares) plus the issuance of an additional 400,000 shares to Maxwells and those shareholders who loaned shares of Common Stock to the Company to issue shares of Common Stock to Maxwells. (2) Includes options to purchase up to 100,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Prospectus. (3) For the purposes of calculating the percentage of shares beneficially owned, it has been assumed that Mr. Michaels has exercised all of his options and 100,000 shares of Common Stock have been issued pursuant to the exercise of such options. No other options have been considered to be exercised for the purposes of this percentage calculation. (4) Includes options to purchase up to 70,000 shares of Common Stock which may be exercised within 60 days of the date of this Prospectus. (5) For the purposes of calculating the percentage of shares beneficially owned, it has been assumed that Mr. Kramer has exercised all of his options and 70,000 shares of Common Stock have been issued pursuant to the exercise of such options. No other options have been considered to be exercised for the purposes of this percentage calculation. (6) On September 25, 1996, the Company entered into an agreement with Mr. Holsten whereby it agreed to issue 600,000 shares of Common Stock in exchange for a loan of $200,000 in the event said loan was not repaid within 90 days. In addition, Mr. Holsten was granted the right to purchase up to an additional 100,000 shares of Common Stock at a price of $1.50 per share. This right may be exercised within 18 months of the date on which the 600,000 shares of Common Stock are issued. (7) The percentage noted includes the anticipated issuance of 600,000 shares of Common Stock to Mr. Holsten thereby bringing the total number of shares outstanding to 11,263,905. (8) On March 25, 1996, the Company entered into an agreement with Dr. David Weissberg, et al. (the "Weissberg Group"), whereby the Weissberg Group was entitled to receive 86,500 shares of Preferred Stock. This amount was thereafter increased to 101,000 shares of Preferred Stock. The Weissberg Group subsequently converted the Preferred Stock into 1,001,000 shares of Common Stock. In addition, the Company also granted the Weissberg Group the right to subscribe to an additional 779,000 shares of Common Stock by virtue of a right of first refusal contained within the agreement. For the purposes of this table, it has been assumed that all 1,780,000 shares of Common Stock have been issued to the Weissberg Group. 31 37 (9) The percentage noted in this column includes the anticipated issuance of 779,000 shares of Common Stock to be made to the Weissberg Group but does not include the issuance of 600,000 shares to Mr. Holsten. The total number of shares issued and outstanding for the purposes of the above percentage calculation has therefore been set at 11,442,905. (10) Does not include the right to receive an additional 4,000,000 shares of Common Stock pursuant to the Principles of Agreement dated August 19, 1996. Such right is contingent upon events which have not presently occurred. (11) See Footnote 10. (12) Majority of shares held by Mr. Anderson are via a living trust created February 10, 1992. 32 38 DESCRIPTION OF SECURITIES BEING OFFERED The authorized capital stock of the Company consists of 50,000,000 shares of which 49,750,000 shares are Common Stock with a par value of one cent ($.01) per share and 250,000 shares of Series A Preferred Stock with a par value of $1.00 per share and convertible into Common Stock on the terms and conditions hereinbelow described. As of August 31, 1996, there were 8,676,155 shares of the Company's Common Stock issued and outstanding and 135,735 shares of the Preferred Stock issued and outstanding. The average price paid per share for the Common Stock to date has been approximately $2.00 per share while the price per share paid for the Preferred Stock has been $10.00 per share, with an effective conversion price (determined on the basis of one-for-ten conversion rights accorded the Preferred Stock shareholders) to be $1.00 per share. The following description of the capital stock of the Company and certain provisions of the Company's Amended Articles of Incorporation and Certificate of Determination of Preferences of Series A Preferred Stock is a summary and is qualified in its entirety by the provisions of those documents which have been filed as exhibits to the Company's Registration Statement of which this Prospectus is a part. COMMON STOCK The issued and outstanding shares of Common Stock, including the shares being offered hereby, are validly issued, fully paid and nonassessable. Subject to the rights of holders of Preferred Stock, the holders of outstanding shares of the Common Stock are entitled to receive dividends out of assets legally available therefor at such time and at such amounts as the board of directors may, from time to time, determine. See "Dividend Policy." The shares of Common Stock are neither redeemable nor convertible and the holders thereof have no preemptive or subscription rights to purchase any securities of the Company. Upon liquidation, dissolution, or winding up of the Company, the holders of the Common Stock are entitled to receive, pro rata, the assets of the Company which are legally available for distribution after payment of all debts and other liabilities and subject to the rights of any holders of the Preferred Stock then outstanding. Before declaring any dividends, the board of directors may set apart out of any funds of the Company available for dividends such sum or sums as they may, from time to time, deem in their discretion to be proper working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the Company. Each outstanding share of the Common Stock is entitled to one vote on all matters submitted to a vote of stockholders if there is no cumulative voting in the election of directors. PREFERRED STOCK The Company's Amended Articles of Incorporation and its Certificate of Determination of Preferences of Series A Preferred Stock authorized the Company to issue up to 250,000 shares of the Preferred Stock. The holders of the Preferred Stock are entitled to receive dividends at the rate of eight percent per annum of the original issue price per share out of any funds legally viable therefor payable on each January 1, April 1, July 1, and October 1 after the issuance of the Preferred Stock. Dividends on the Preferred Stock are cumulative so that if the full dividends in respect of any preference dividend is not paid, the deficiency will be fully paid or declared and set apart for such shares (without interest) before any dividend or other distribution is paid on or declared or set apart for any other class or series of the Common Stock or preferred shares of the Company. The Company enjoys the right to pay any dividend on the Preferred Stock in cash or through the issuance of additional shares of Preferred Stock or Common Stock having an issue price equal to the amount of the dividend or through a combination of cash and stock. In the event of any liquidation, dissolution, or winding up of the Company, either voluntarily or involuntarily, the holders of the Preferred Stock will be entitled to receive prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Common Stock or any other class of preferred shares of the Company an amount equal to $10 per share plus a further amount equal to any dividends declared but unpaid on such shares. In the event of any consolidation or merger of the Company, or a sale of all or substantially all of the assets of the Company, or a series of related instructions in which more than fifty percent of the voting power of the Company is disposed of, holders of the Preferred Stock will not be entitled to treat such event as a liquidation, dissolution, or winding up of the Company. Holders of the Preferred Stock enjoy the right to convert each share of Preferred 33 39 Stock into 10 shares of the fully paid and nonassessable shares of the Common Stock through December 31, 1997. After such date, holders of the Preferred Stock will not be entitled to convert shares of Preferred Stock into shares of the Common Stock. DIVIDEND POLICY The Company has established a policy of not paying dividends on the Common Stock and anticipates that this policy shall remain in effect until further notice. To date, the Company has not paid any dividends in cash or in stock on the Preferred Stock. Management of the Company is currently planning and arranging for payment of all cumulative dividends on the Preferred Stock through the issuance of shares of Common Stock after giving effect to the conversion of Preferred stock to Common Stock on a ten-for-one basis. DILUTION The net tangible book value of the Company at August 31, 1996, was approximately forty-eight cents ($.48) per share. After taking into consideration the conversion rights of the shareholders holding Preferred Stock as of August 31, 1996 (but exclusive of any dividends paid in stock), the total number of shares of Common Stock outstanding as of August 31, 1996, and assuming all 1,500,000 shares of the Company's Common stock are sold pursuant to this Offering, the net tangible book value of the Common Stock immediately after the Offering (after deducting $1,080,000 for Organization and Offering Expenses) will be approximately One Dollar and Nine Cents ($1.09) per share of Common Stock. Investors who subscribe to shares of the Common Stock under circumstances whereby all 1,500,000 shares of Common Stock are sold pursuant to this Offering will therefore realize an immediate dilution of Four Dollars Ninety-One Cents ($4.91) per share of Common Stock. The following table illustrates this per share dilution: Offering price per share........................................ $6.00 Net tangible book value before Offering(1)...................... $.48 Increase attributable to new Investors.......................... $.61 Pro forma net tangible book value after Offering................ $1.09 ----- Dilution to new Investors(2).................................... $4.91 -----
- --------------- (1) Determined by dividing the tangible net worth of the Company at August 31, 1996 by the number of shares outstanding as of that date (after taking into consideration the conversion rights of Preferred Shareholders). (2) The difference between the Subscription price of the Common Stock and the net tangible book value per share of Common Stock after the Offering, assuming all 1,500,000 shares are sold pursuant to the Offering. By contrast, the net tangible book value of the Common Stock immediately after the Offering (after deducting $180,000 in Organization and Offering Expenses) will be approximately sixty cents ($.60) per share of Common Stock. Investors who subscribe to Common Stock under these circumstances will therefore realize an immediate dilution of Five Dollars Forty Cents ($5.40) per share of Common Stock. The following table illustrates this per share dilution: Offering price per share........................................ $6.00 Net tangible book value before Offering(3)...................... $.48 Increase attributable to new Investors.......................... $.12 Pro forma net tangible book value after Offering................ $ .60 ----- Dilution to new Investors(4).................................... $5.40 -----
- --------------- (3) See Footnote 2 above. 34 40 (4) The difference between the Subscription price of the Common Stock and the net tangible book value per share of Common Stock after the Offering, assuming only 250,000 shares are sold pursuant to the Offering. The Offering price for the Common Stock offered pursuant to this Offering must be compared to the prices paid by and options granted to certain of the Company's executive officers and the Selling Shareholders. In the case of all options to purchase Common Stock, each recipient has the right to purchase shares for a period of ten (10) years from the date of the grant as described in further detail in the section of this Prospectus entitled "MANAGEMENT -- Executive Compensation" and "MANAGEMENT -- Options and Stock Appreciation Rights." In the case of the sale of Common Stock, Messrs. Michaels and Kramer have paid, on the average, $2.53 and $2.03 per share, respectively, while the Selling Shareholders have paid between $.25 and $2.00 per share for the Common Stock. REGISTRATION RIGHTS The Company has entered into agreements with various shareholders (the "Selling Shareholders") to attempt to effect registration of their shares of Common Stock. The Company has obtained registration of all persons who are Selling Shareholders pursuant to Form BD filed in connection with this Offering. The Selling Shareholders and their relation to the Company are more particularly described in Form BD and in the section of the Prospectus entitled "PRINCIPAL AND SELLING SHAREHOLDERS". TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock and the Preferred Stock is US Stock Transfer Corporation, Glendale, California. LEGAL MATTERS, AUDITORS, AND LEGAL PROCEEDINGS COUNSEL Reinstein, Pantell & Calkins has acted as Special Counsel. As such Special Counsel has assisted the Company in the preparation of this Prospectus and the registration statement. As required by applicable federal and state securities laws, Special Counsel has rendered an opinion to the effect that, when issued, the Common Stock shall be duly and validly issued in accordance with applicable law. AUDITORS The Company has retained Jackson and Rhodes, P.C., Dallas, Texas, to serve at Company's accountants for calendar year 1996. The financial statements accompanying this Prospectus have been audited by such firm. LEGAL PROCEEDINGS In May 1989, the Company received notice that the Securities and Exchange Commission (the "Commission") had commenced an informal investigation into the Company's compliance with the registration and disclosure requirements of the Securities Act of 1933 (the "'33 Act") and the Securities Exchange Act of 1934 (the "'34 Act"). Thereafter the Commission commenced an extensive review of the Company's books and records relating to the Company's business and mining operations, its capital raising activities, and its financial condition and history. Through all stages of the investigation, the Company cooperated with the Commission. The Commission and the Company agreed to terminate the Commission's investigation by the entry of a consent judgment against the Company and certain of the Company's past and present key employees. These 35 41 key employees include Christopher D. Michaels, Jeffrey Kramer and Stanley Mohr. The term and conditions of the consent judgment can be summarized as follows: 1. The Company neither admitted nor denied any of the allegations alleged by the Commission; 2. The Company and its officers, agents, servants, employees, and others receiving actual notice of the consent judgment are permanently restrained and enjoined from selling securities in interstate commerce unless and until a registration statement is in effect or the security or transaction is exempt from the registration provisions of the '33 Act and/or '34 Act; 3. The Company and its officers, agents, servants, employees, and others receiving actual notice of the consent judgment are permanently restrained from engaging in any transaction, practice, or course of conduct, employing any course of conduct, or obtaining any money or property by means of an untrue statement of a material fact, or any omission to state a material fact, necessary to make the statements made in light of the circumstances under which they were made not misleading. On April 7, 1994, the Company and the Commission entered into a stipulation regarding the resolution of all outstanding issues which then existed, which stipulation was entered as an order by the United States District Court for the Central District of California. Such stipulation contained an acknowledgement that the Company and its executive officers had received no ill-gotten gains as a result of prior activities by the Company in offering and selling its securities, and that the consent judgment resolved once and for all, all issues raised by the Commission as a result of the Company's prior activities. The Company was not required to pay any fines or required to disgorge any monies previously received by it in connection with its securities. On November 4, 1996, the Company filed a complaint (the "Action") in Nye County, Nevada against Marlowe Harvey, Maran Holdings Inc., Calais Resources Inc., and Argus Resources, Inc. (the "Harvey Entities"). The complaint in the Action alleges, amongst other things, that the Harvey Entities breached their obligations under various agreements (including the October 20, 1995 amendment to the Joint Venture Agreement discussed in further detail in the Section of this Prospectus entitled "DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY -- The Nevada Property"). The Action seeks to require the Harvey Entities to specifically perform their obligations to convey a 1% interest in the joint venture Nevada Property to the officers of the Company (namely Messrs. Michaels and Kramer) and a 52% interest in the outstanding and issued stock in Argus Resources, Inc. The Action also seeks damages of approximately $4,000,000 resulting from the actions or inactions of the defendants. It is unknown at the present time whether the Harvey Entities have the ability to transfer the required 52% interest in Argus Resources, Inc. as required under the Amended Joint Venture Agreement, whether the Harvey Entities have substantive defenses which would prevent the Company from obtaining specific performance, or whether the remaining shareholders of Argus Resources, Inc. have approved and/or ratified the Amended Joint Venture Agreement at any time. If the Company is successful in obtaining specific performance of the agreements alleged in the Action, it will effectively continue to own or control an undivided 50% interest in the Nevada Property. To date the complaint has been served on all defendants. Responsive pleadings from the defendants so served are due on or about December 16, 1996. The Company anticipates that the Harvey Entities will vigorously defend the Action. DEFINITIONS "Accredited Investor" shall mean any Investor who meets one or more of the categories defined by Rule 501(a) of Regulation D and who also is excluded from the number of purchasers for the purposes of California Corporations Code Section 25102(f)(1). "Affiliate" shall mean (i) any person who directly or indirectly controls or is controlled by or under a common control with, a person or entity; (ii) a person owning or controlling ten percent (10%) or more of the outstanding voting securities of the entity to which said definition relates; and (iii) any officer or director of such entity. 36 42 "Business Plan" shall mean the report prepared by William R. Wilson dated as of July 1995 and entitled "Nevada Manhattan Mining, Inc., Manhattan Mine Project Review and Business Plan." "Company" shall mean Nevada Manhattan Mining, Inc., a Nevada corporation. "Deed of Trust" shall mean the encumbrance currently affecting the Nevada Property and created in favor of Anthony C. Selig & Associates, Dixie Exploration, and Anthony C. Selig by virtue of the Nevada Property Agreement. "Indonesian Property" shall mean the exploration prospect located in Kalimantan, Indonesia comprising 10,000 hectares and more particularly described in this Prospectus. "Investors" shall mean such persons and/or any authorized and qualified successors who consider an investment in the Company as described in the Prospectus and who submit completed and executed subscription documents to the Company. "Net Proceeds" shall mean those proceeds after deduction of Organization and Offering Expenses which shall be applied in furtherance of the Company's business plan in accordance with this Offering. "Nevada Property" shall mean the 28 patented and 65 unpatented mining claims comprising approximately 1,800 acres and located in Nye County, Nevada near the town of Manhattan as more particularly described in this Prospectus. "Nevada Property Agreement" shall mean the Mining Agreement dated April 4, 1987 by and among the Company and Anthony C. Selig, Anthony C. Selig & Associates, and Dixie Exploration as amended by subsequent agreements. "Offering" shall mean the offer of the Common Stock pursuant to the terms and conditions specified in the Prospectus. "Offering Termination Date" shall mean the date on which the Company shall issue, it at all, at least 250,000 shares of Common Stock pursuant to the Offering. At present, such Date is set for April 30, 1997. In no event shall the Offering Termination Date extend beyond December 31, 1997. "Organization and Offering Expenses" shall mean all costs and expenses incurred on behalf of the Company for professional fees (legal and accounting), printing expenses, regulatory compliance, and all other costs associated with the offer and sale of Common Stock. The amount of One Hundred Twenty Thousand Dollars ($120,000) has been allocated for such expenses. "Properties" shall mean the Nevada Property and the Indonesian Property. "Prospectus" shall mean the offering materials dated , 1996 describing the terms and conditions of the Offering. "Registration Statement" shall mean Form BD and all amendments thereto filed with the Securities and Exchange Commission and relating to the offer and sale of Common Stock pursuant to this Offering. "Special Counsel" shall mean Reinstein, Pantell & Calkins, a partnership comprised of professional law corporations. "Subscription" shall mean the number of shares of Common Stock which a prospective Investor agrees to purchase in the Company or the purchase price for such purchase of shares as the context requires. "Transfer Agent" shall mean U.S. Stock Transfer Corporation which shall be authorized to accept Subscriptions, deposit Subscription funds into the Bank, instruct the Bank to invest Subscriptions prior to the Offering Termination Date, and to issue the Common Stock, all in accordance with this Offering. "Underwriting Agreement" shall mean the agreement entered into between the Company and broker-dealers who are members in good standing with the National Association of Securities Dealers, Inc. and who agree to use their "best efforts" to effect sales of the Common Stock pursuant to this Offering. 37 43 FURTHER INFORMATION The Company is not currently a reporting company within the meaning of Section 12(g) of the Securities Exchange Act of 1934, but anticipates that it will become a reporting company on or before the Offering Completion Date. The Company has contemporaneously herewith applied for listing on the NASDAQ "Small Cap" Market. If approved for listing, certain reports and information not necessarily contained in this Prospectus will be available for inspection through the NASDAQ Stock Market, Inc., 1735 K Street, N.W. 2006-1500. The Company has and intends to continue to furnish its shareholders annual reports containing financial statements examined by an independent accounting firm and quarterly reports for the first three fiscal quarters of each fiscal year containing interim unaudited financial information. The Company has filed with the Securities and Exchange Commission (the "Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2 under the Securities Act of 1933, as amended, with respect to the Common Stock offered pursuant to this Offering. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules accompanying the Registration Statement. For further information with respect to the Company and such the common Stock offered hereby, reference is made to the Registration Statement and the exhibits and schedules accompanying the Registration Statement. Copies of the Registration Statement and such exhibits and schedules may be inspected, without charge, at the public reference facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can also be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N. W., Washington, D. C. 20549. Until , 1997, all dealers effecting transactions in the Common Stock registered pursuant to the Registration Statement, whether or not participating in this distribution, may be required to deliver a Prospectus. This is in addition to the obligation of dealers to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or Subscriptions. 38 44 NEVADA MANHATTAN MINING INCORPORATED INDEX TO FINANCIAL STATEMENTS
PAGE ---- Independent Auditors' Report.......................................................... F-2 Balance Sheet at August 31, 1996 (Unaudited) and May 31, 1996 and 1995................ F-3 Statements of Operations for the Three Months Ended August 31, 1996 and 1995 (Unaudited) and the Years Ended May 31, 1996 and 1995............................... F-4 Statements of Changes in Stockholders' Equity for the Three Months Ended August 31, 1996 and 1995 (Unaudited) and the Years Ended May 31, 1996 and 1995................. F-5 Statements of Cash Flows for the Three Months Ended August 31, 1996 and 1995 (Unaudited) and the Years Ended May 31, 1996 and 1995............................... F-6 Notes to Financial Statements......................................................... F-7
F-1 45 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Nevada Manhattan Mining Incorporated (A Development Stage Company) We have audited the accompanying balance sheets of Nevada Manhattan Mining Incorporated (a development stage company) as of May 31, 1996 and 1995, and the related statements of operations, changes in stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nevada Manhattan Mining Incorporated as of May 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from its development stage activities and has a net working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. JACKSON & RHODES P.C. -------------------------------------- Jackson & Rhodes P.C. Dallas, Texas July 10, 1996 (except as to Note 7, which is as of October 8, 1996) F-2 46 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS ASSETS
MAY 31, --------------------------- AUGUST 31, 1996 1996 1995 --------------- ----------- ----------- (UNAUDITED) Current assets: Cash........................................... $ 38,428 $ 233,981 $ -- Accounts receivable............................ -- -- 1,846 Prepaid expenses............................... 8,820 -- 2,545 ------------ ------------ ------------ Total current assets................... 47,248 233,981 4,391 ------------ ------------ ------------ Property and equipment (Note 2): Domestic mining properties and equipment....... 4,302,741 3,961,047 3,696,295 Indonesian mining property (Note 7)............ 1,200,000 -- -- Furniture and fixtures......................... 68,953 63,842 64,046 Less accumulated depreciation............... (60,567) (59,067) (52,867) ------------ ------------ ------------ 5,511,127 3,965,822 3,707,474 ------------ ------------ ------------ $ 5,558,375 $ 4,199,803 $ 3,711,865 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable............................... $ 84,451 $ 88,226 $ 124,983 Accrued liabilities............................ 132,905 181,162 283,169 Notes payable to stockholders.................. 140,394 136,751 93,182 Current portion of long-term debt (Note 3)..... 44,318 44,388 23,278 ------------ ------------ ------------ Total current liabilities.............. 402,068 450,527 524,612 Long-term debt (Note 3).......................... 117,022 115,723 105,919 ------------ ------------ ------------ Total liabilities...................... 519,090 566,250 630,531 ------------ ------------ ------------ Commitments and contingencies (Note 4)........... -- -- -- Stockholders' equity (Note 5): Common stock to be issued (Notes 5 and 7)...... 1,852,759 -- 495,000 Preferred stock to be issued, $1 par value, 250,000 shares authorized................... -- -- 737,327 Stock subscriptions receivable................. -- -- (50,500) Preferred stock, $1 par, 250,000 shares authorized, 135,735 issued.................. 135,735 132,510 -- Common stock, $.01 par; 49,750,000 shares authorized; 8,353,881, 8,353,881 and 4,658,481 shares issued at each period...... 83,539 83,539 46,585 Additional paid-in capital..................... 15,079,460 15,079,460 12,305,772 Deficit accumulated during the development stage....................................... (12,112,208) (11,661,956) (10,452,850) ------------ ------------ ------------ Total stockholders' equity............. 5,039,285 3,633,553 3,081,334 ------------ ------------ ------------ $ 5,558,375 $ 4,199,803 $ 3,711,865 ============ ============ ============
See accompanying notes to financial statements. F-3 47 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
THREE MONTHS PERIOD FROM ENDED AUGUST 31, YEARS ENDED MAY 31, INCEPTION ----------------------- ------------------------- (JUNE 10, 1985) TO 1996 1995 1996 1995 AUGUST 31, 1996 --------- --------- ----------- --------- ------------------ (UNAUDITED) (UNAUDITED) Expenses: Costs and expenses of development stage activities.......... $ 447,602 $ 137,208 $ 1,198,506 $ 605,482 $ 11,932,184 Interest............... -- -- -- 5,591 5,591 Loss on disposition of mining properties... -- -- -- -- 161,183 --------- --------- ----------- --------- ------------ 447,602 137,208 1,198,506 611,073 12,098,958 --------- --------- ----------- --------- ------------ Net loss................. (447,602) (137,208) (1,198,506) (611,073) $(12,098,958) ============ Cumulative preferred dividends.............. (2,650) -- (10,600) -- --------- --------- ----------- --------- Net loss attributable to common shareholders.... $(450,252) $(137,208) $(1,209,106) $(611,073) ========= ========= =========== ========= Net loss per common share.................. $ (0.05) $ (0.03) $ (0.16) $ (0.12) ========= ========= =========== ========= Weighted average shares outstanding............ 8,702,364 5,257,281 7,428,081 5,021,801 ========= ========= =========== =========
See accompanying notes to financial statements. F-4 48 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
DEFICIT ACCUMULATED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL DURING THE STOCK SUBSCRIPTIONS ------------------ ------------------- PAID-IN DEVELOPMENT TO BE ISSUED RECEIVABLE SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE TOTAL ------------ ------------- ------- -------- --------- ------- ----------- ------------ ----------- Stock issued from inception (June 10, 1985) to May 31, 1993 (unaudited): For cash... $ -- $ -- -- $ -- 3,605,685 $36,057 $11,983,819 $ -- $12,019,876 For services... -- -- -- -- 219,016 2,190 113,545 -- 115,735 For property... -- -- -- -- 140,000 1,400 -- -- 1,400 Shares borrowed from officers (Note 6)... -- -- -- -- -- -- (495,000) -- (495,000) Losses from inception to May 31, 1993 (unaudited).. -- -- -- -- -- -- -- (9,841,777) (9,841,777) ----------- -------- ------- -------- --------- ------- ----------- ------------ ----------- Balance, May 31, 1994... -- -- -- -- 3,964,701 39,647 11,602,364 (9,841,777) 1,800,234 Shares to be issued to officers (Note 6)... 495,000 -- -- -- -- -- 495,000 Shares issued for cash (Note 5)... 131,500 (50,500) -- -- 647,213 6,472 638,541 -- 726,013 Shares issued in settlement of claims (Note 5)... -- -- -- -- 32,500 325 32,175 -- 32,500 Shares issued as conversion of debt (Note 5)... 605,827 -- 14,067 141 32,692 -- 638,660 Net loss..... -- -- -- -- -- (611,073) (611,073) ----------- -------- ------- -------- --------- ------- ----------- ------------ ----------- Balance, May 31, 1995... 1,232,327 (50,500) -- -- 4,658,481 46,585 12,305,772 (10,452,850) 3,081,334 Issuance of stock -- previously purchased... (1,232,327 ) -- 13,150 13,150 554,400 5,544 1,213,633 -- -- Cash received from stock subscriptions... -- 50,500 -- -- -- -- -- -- 50,500 Shares issued for cash... -- -- 119,360 119,360 1,001,000 10,010 1,075,455 -- 1,204,825 Shares issued for services (Note 5)... -- -- -- -- 1,940,000 19,400 465,600 -- 485,000 Shares issued in connection with shareholder loan....... -- -- -- -- 200,000 2,000 19,000 -- 21,000 Cumulative preferred dividend... -- -- -- -- -- -- -- (10,600) (10,600) Net loss..... -- -- -- -- -- -- -- (1,198,506) (1,198,506) ----------- -------- ------- -------- --------- ------- ----------- ------------ ----------- Balance, May 31, 1996... -- 132,510 132,510 8,353,881 83,539 15,079,460 (11,661,956) 3,633,553 Shares to be issued for property (Note 7)... 1,200,000 -- -- -- -- -- -- -- 1,200,000 Shares issued for cash... 412,759 -- 3,225 3,225 -- -- -- -- 415,984 Shares issued for services... 240,000 -- -- -- -- -- -- -- 240,000 Cumulative preferred dividend... -- -- -- -- -- -- -- (2,650) (2,650) Net loss..... -- -- -- -- -- -- -- (447,602) (447,602) ----------- -------- ------- -------- --------- ------- ----------- ------------ ----------- Balance, August 31, 1996 (unaudited)... $ 1,852,759 $ -- 135,735 $135,735 8,353,881 $83,539 $15,079,460 $(12,112,208) $ 5,039,285 =========== ======== ======= ======== ========= ======= =========== ============ ===========
See accompanying notes to financial statements. F-5 49 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS
THREE MONTHS PERIOD FROM ENDED AUGUST 31, YEARS ENDED MAY 31, INCEPTION --------------------- ---------------------- (JUNE 10, 1985) TO 1996 1995 1996 1995 AUGUST 31, 1996 --------- --------- ---------- --------- ------------------ (UNAUDITED) (UNAUDITED) Cash flows from developmental activities: Net loss....................... $(447,602) $(137,208) $(1,198,506) $(611,073) $(12,098,958) Adjustments to reconcile net loss to net cash used in developmental activities: Common stock issued for services.................. 240,000 -- 485,000 -- 725,000 Loss on disposition of property.................. -- -- -- -- 156,183 Settlement of claim with debt...................... -- -- -- 32,500 97,265 Depreciation................ 1,500 1,550 6,200 9,150 60,567 Accounts receivable......... -- -- 1,846 (1,846) -- Prepaid expenses............ (8,820) -- 2,545 -- (8,820) Accounts payable and accrued liabilities............... (47,810) (23,063) (149,364) (44,744) 210,978 --------- --------- ----------- --------- ------------ Net cash used in developmental activities........... (262,732) (158,721) (852,279) (616,013) (10,857,785) --------- --------- ----------- --------- ------------ Cash flows from investing activities: Purchase of property and equipment................... (346,805) (45,979) (187,481) (146,496) (4,450,811) --------- --------- ----------- --------- ------------ Cash flows from financing activities: Additions to long-term debt.... -- -- -- -- 198,319 Payments on long-term debt..... (2,000) (1,000) (46,153) (42,117) (182,040) Net change in notes payable to stockholders................ -- 50,000 64,569 -- 157,751 Proceeds from issuance of stock and stock to be issued...... 415,984 155,700 1,255,325 726,013 15,172,994 --------- --------- ----------- --------- ------------ Net cash provided by financing activities........... 413,984 204,700 1,273,741 683,896 15,347,024 --------- --------- ----------- --------- ------------ Net increase (decrease) in cash and cash equivalents........... (195,553) -- 233,981 (78,613) 38,428 Cash and cash equivalents: Beginning of period............ 233,981 -- -- 78,613 -- --------- --------- ----------- --------- ------------ End of period.................. $ 38,428 $ -- $ 233,981 $ -- $ 38,428 ========= ========= =========== ========= ============ Supplemental cash flow information: Cash paid during the period for interest.................... $ -- $ -- $ 9,647 $ 12,701 ========= ========= =========== =========
Non-cash transactions: During the year ended May 31, 1995, the Company issued stock for conversion of notes payable (see Note 5). During the year ended May 31, 1996, the Company issued 200,000 shares of common stock, valued at $21,000 in connection with a loan from a shareholder. Also during the year ended May 31, 1996, the Company assumed $77,067 in debt in connection with acquiring an additional interest in the mine (Note 2). During the period ended August 31, 1996, the Company borrowed 400,000 shares of common stock from certain officers to issue the shares in connection with the Indonesian mining property acquisition (Note 7). See accompanying notes to financial statements. F-6 50 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 1996 AND 1995 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Nevada Manhattan Mining Incorporated was organized under the Laws of the State of Nevada on June 10, 1985, to acquire, explore, develop, finance and sell mining rights and properties. As of May 31, 1996 the Company is in the development stage, in that planned principal operations have not commenced. The Company has to date acquired properties and begun exploration and development. Preparation of the Company's financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Basis of Presentation The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is reporting a net loss of $1,198,506 and $611,073 for the years ended May 31, 1996 and 1995 and $447,602 for the period ended August 31, 1996 and net cash resources were used in developmental activities for each year and for the period then ended. The following is a summary of managements' plan to raise capital and generate additional operating funds. Management has reached an agreement to have gold ore milled adjacent to the property by a third party, reducing capital requirements of the Company. The Company and its joint venture partners have constructed a 1400 foot decline (tunnel) to enhance exploration and facilitate the extraction of gold ore. The Company has negotiated an agreement with Harrison Western Mining and Construction Company to begin production in July 1996. Management will attempt to raise additional capital through a private or public sale of common stock or by loans. Though the Company has been able to raise funds from private placement of its equity securities in recent years, there is no assurance of future availability of funds from these sources. Statement of Cash Flows For statement of cash flow purposes, the Company considers short-term investments with original maturities of three months or less to be cash equivalents. Property and Equipment Mining properties acquisition, exploration and development costs are capitalized as incurred and will be amortized on the units-of-production method based on economically recoverable mineral reserves. The Company assesses impairment of mineral properties on an area-by-area basis which aggregates contiguous areas. Estimated site restoration and closure costs in which the Company has reclamation responsibilities are charged against operating earnings on the units-of-production method over the expected economic life of the mines. Other property and equipment are carried at cost. Depreciation of other property and equipment is provided using the straight-line method over the seven year estimated useful lives of the related assets. Maintenance and repairs are charged to operations as incurred and expenditures for major improvements are capitalized. Gains and losses from retirement or replacement of property and equipment are included in operations. F-7 51 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Company accounts for income taxes pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) which requires a change from the deferred method to the asset and liability method of computing deferred income taxes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Net Loss Per Common Share Per share amounts have been computed on the weighted average number of common shares and common stock equivalents outstanding for each period. All share and per share amounts have been restated to retroactively reflect the reverse stock split explained in Note 5. 2. MINING PROPERTIES AND EQUIPMENT The Company previously owned a 24.5 percent undivided interest in a mining property in the Manhattan Mining District, Nye County, Nevada. The property consists of 28 patented (fee) and 65 unpatented mine claims which include the Whitecaps Mine, Union Mine, Consolidated Mine, Earl Mine, Bath Mine and other assorted mines and claims which cover approximately 1200 acres. Under contractual understandings reached during October 1995, which are in the final stages of confirmation, the Company has increased its interest to 50 percent and has assumed an additional $77,067 in debt (Note 3) in connection therewith. The remaining 50 percent undivided interest in the property is held by Marlowe Harvey, et al. The Company is committed to paying 50 percent of the remaining note left on the property (see Note 3). Management of the Company is active in the supervision of work taking place, plus future planning of all aspects of operations. The operating permits for the Manhattan Gold Mine were issued to the Company by the State of Nevada during April 1996. The Company has negotiated an agreement with Harrison Western Mining and Construction Company for the beginning of production in July 1996. Previously, the Company had an interest in a gold producing property in Bolivia, South America and mining claims in British Columbia, Canada. The management, directors and stockholders voted to release these properties as they felt they were not economical to the Company and the future exploration and development of the Nevada and Indonesian properties would offer the greatest return to the Company (see Note 7). 3. LONG-TERM DEBT AND NOTES PAYABLE Notes payable to stockholders accrue interest at rates from 9 percent to 12 percent, are due on demand and are guaranteed by certain Company officers. F-8 52 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. LONG-TERM DEBT AND NOTES PAYABLE (CONTINUED) Long-term debt consisted of the following:
MAY 31, AUGUST 31, --------------------- 1996 1996 1995 ----------- -------- -------- (UNAUDITED) Obligation to a stockholder as a result of a lawsuit settlement, interest imputed at 9%, payable $1,000 per month until April 2001....... $ 49,980 $ 50,770 $ 52,330 10% note payable to an individual under terms of a joint venture agreement, payable $50,000 per year including interest......................... 111,360 109,341 76,867 -------- -------- -------- 161,340 160,111 129,197 Current portion................................... 44,318 44,388 23,278 -------- -------- -------- Long-term debt.................................... $ 117,022 $115,723 $105,919 ======== ======== ========
Maturities of long-term debt are as follows for the years ending May 31: 1997....................................... $44,388 1998....................................... 48,925 1999....................................... 40,978 2000....................................... 10,267 2001....................................... 15,553
The Company has capitalized $26,693, $34,242 and $6,871 of interest into the mining properties during the years ended May 31, 1996 and 1995 and for the period ended August 31, 1996, respectively. 4. COMMITMENTS AND CONTINGENCIES Lease The Company leases office space under terms of an operating lease expiring on February 28, 1997. Future minimum lease payments for the year ending May 31, 1997 are $20,394. Rent expense amounted to $20,726, $20,394 and $4,997 for the years ended May 31, 1996 and 1995, and the period ended August 31, 1996, respectively. Securities and Exchange Commission During May 1989, the Company received notice that the Securities and Exchange Commission ("Commission") had commenced an investigation into the Company's business activities. In 1993, the Board of Directors of the Company determined that the entry of a proposed consent judgment and the termination of the investigation was in the best interest of the Company and received confirmation that the investigation has been completed. On March 19, 1994, the Company received the following "Stipulation Regarding Resolution of Outstanding Issues" from the Commission closing out the investigation and all related issues: "Whereas the disposition of funds analysis conducted pursuant to the Judgment of Permanent Injunction and Other Relief against Defendant Nevada Manhattan Mining Incorporated entered on August 3, 1993 has revealed no ill-gotten gains received by any defendant, the undersigned parties hereby stipulate that all outstanding issues in this action have been resolved, including disgorgement, and that the judgment entered against the defendants are final." F-9 53 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. COMMITMENTS AND CONTINGENCIES (CONTINUED) While the Company believes that it was in the best interests of the Company and its stockholders to enter the consent judgment, the entry of the judgment may impose certain burdens on the Company with respect to its future activities. The more significant of such burdens are as follows: (i) The Company may not be able to utilize the exemptions from registration available under Regulation A and Rule 701 under the 1933 Act. (ii) The Company may not be able to rely on the private placement exemptions provided in various state securities laws in connection with the offer and sale of securities in a transaction which qualifies as an exempt sale of securities under the 1933 Securities Act. In such case, the Company would be required to qualify the transaction under the state securities laws which may not be available. This qualification would increase the cost of, and extend the time for completing, such private placement of securities. Other Contingencies In January 1995, a group of stockholders and creditors asserted a claim in regards to a January 1988 settlement agreement. The Company has not been formally served or any legal process initiated by the stockholders and creditors in asserting this claim. Management does not believe the ultimate outcome of this contingency will have a material effect on financial position or results of operations. 5. STOCKHOLDERS' EQUITY Stock Options The Company has granted stock options to all members of the Board of Directors in the amount of 10,000 shares per full year of service as an active member of the Board of Directors. The exercise price of options granted is $1.00 per share of common stock. Options may not be exercised after expiration of ten (10) years from the date of grant and are non-transferable other than by will or inheritance. These options are the only compensation received for service as Director. The following table sets forth information regarding options for the periods ended:
MAY 31, AUGUST 31, ------------------- 1996 1996 1995 ----------- ------- ------- (UNAUDITED) Outstanding at beginning of period.......... 240,000 190,000 160,000 Granted..................................... -- 50,000 30,000 ------- ------- ------- Outstanding at end of period................ 240,000 240,000 190,000 ======= ======= =======
In connection with their employment contracts, the Company also granted two officers the right to purchase 900,000 common shares each at an average price of $1.50 per share. The officers exercised these options during the year ended May 31, 1996 and the Company's Board of Directors then agreed to give the officers the shares for services rendered. These shares have been valued at $.25 per share ($450,000) in the accompanying financial statements. F-10 54 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. STOCKHOLDERS' EQUITY (CONTINUED) Reverse Split In February 1995, the Company's stockholders approved a one-for-ten reverse split of the Company's common stock. The stated par value per share was not changed. All share and per share amounts herein have been retroactively restated to reflect the reverse split. Stock to be Issued and Stock Subscriptions Receivable The Company sold 647,213 shares of common stock and 13,150 shares of Series A Preferred Stock in separate private placements during the year ended May 31, 1995. The preferred stock had not been formally issued as of May 31, 1995, but was issued during the year ended May 31, 1996. The Company raised $776,513 in the private placements of which $50,500 was still receivable at May 31, 1995 and has been reflected as an offsetting amount in stockholders' equity at that date. During the year ended May 31, 1995, the Company also agreed to issue 73,467 shares of common stock in exchange for conversion of $638,660 of notes payable to certain individuals. During the year ended May 31, 1995, the Company also agreed to issue 32,500 shares of common stock to certain individuals to settle certain claims made by the individuals. The $32,500 value of the shares was charged to general and administrative expense. The preferred stock has a $1 par value, a $10 liquidation preference and an 8 percent cumulative dividend payable in cash or kind. Each share is convertible to ten common shares for a period of thirty months. During 1988, two Company officers loaned 495,000 (post-reverse split) common shares to the Company as treasury stock in return for the Company's promise to return the shares when common shares became available as a result of a reverse split or an increase in authorized shares. The shares were reissued to the officers in November 1995. The Company has accounted for the shares, valued at the market price of the shares when they were loaned to the Company, as a long-term obligation in the financial statements until the year ended May 31, 1995, when the reverse split occurred and the shares became available for issuance. At that time, the obligation was considered as common stock to be issued and included in stockholders' equity. Warrants In connection with the private placement of common stock, in October 1994, the Company also issued warrants to purchase 50,300 shares of common stock at $1.00 per share. None of these warrants, which expire in October 1996, have been exercised as of May 31, 1996. 6. INCOME TAXES The Company has recorded no income tax benefit, nor has deferred taxes in any year due to a net operating loss carryforward amounting to approximately $10,000,000 at May 31, 1996, which will expire, if not utilized, from 2002 to 2011. 7. SUBSEQUENT EVENTS On August 19, 1996, the Company entered into an agreement to acquire a 51% interest in a metals/minerals mining property in Kalimantan, Indonesia. Consideration for the purchase consisted of 400,000 shares of common stock due upon the signing of the agreement and an additional 4,000,000 shares to be released dependent upon the value of an independent valuation of the property. The Company has valued the 400,000 shares, approximately 200,000 of which were borrowed from shareholders of the Company, at F-11 55 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. SUBSEQUENT EVENTS (CONTINUED) $1,200,000 and has recorded the transaction as shares to be issued in the accompanying balance sheet at August 31, 1996. The Company intends to return the shares to the stockholders upon the completion of a prospective public offering of shares. On October 8, 1996, the Company borrowed $200,000 from an individual on a ninety-day note. The loan bears interest at 12% per annum and is secured by 300,000 common shares in the Company. Should the Company default on the loan, the amount of shares will be increased to a total of 600,000 common shares with piggy-back registration rights. Additionally, the individual was issued warrants to purchase 100,000 shares of common stock in the Company at a price of $1.50 per share for a period of 18 months. F-12 56 ================================================================================ NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. ------------------ TABLE OF CONTENTS PAGE ---- Summary of the Offering................ 1 Risk Factors and Special Material Considerations....................... 3 Terms of the Offering.................. 10 Plan of Distribution................... 12 Description of Company's Business and Property............................. 12 Use of Proceeds........................ 19 Management............................. 21 Management's Discussion and Analysis of Financial Condition.................. 27 Principal and Selling Shareholders..... 29 Description of Securities Being Offered.............................. 33 Legal Matters, Auditors, and Pending Legal Proceedings.................... 35 Definitions............................ 36 Further Information.................... 38 Financial Statements of Company........ F-1 ================================================================================ ================================================================================ [LOGO] 4,888,120 SHARES NEVADA MANHATTAN MINING, INC. MINING DEVELOPMENT EXPLORATION COMMON STOCK --------------------------- PROSPECTUS --------------------------- , 1996 ================================================================================ 57 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company's Bylaws do not contain a provision entitling any director or executive officer to indemnification against liability under the Securities Act of 1933 (the " '33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes allow a company to indemnify its officers, directors, employees, and agents from any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee, or agent acted in good faith and in a manner which such person believed to be in the best interests of the company. A determination made be made by the shareholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit, or proceeding does not exist. Provided the terms and conditions of these provisions under Nevada law are met, officers, directors, employees, and agents of the Company may be indemnified against any cost, loss, or expense arising out of any liability under the '33 Act. Insofar as indemnification for liabilities arising under the '33 Act may be permitted to directors, officers and controlling persons of the Company, the Company has been advised that in the opinion of the Securities and Exchange Commission, such indemnification for violations of the '33 Act is against public policy and is, therefore, unenforceable. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the costs and expenses payable by the Company in connection with the sale of Common Stock being registered. All amounts are estimates except the registration fee and the NASD fee.
AMOUNT TO BE PAID --------- Registration fee.................................................. $ 8,888 NASD fee.......................................................... $ 10,000 Printing and engraving............................................ $ 60,000 Legal fees and expenses........................................... $ 70,000 Accounting fees and expenses...................................... $ 50,000 Blue sky fees and expenses........................................ $ 10,000 Transfer agent fees............................................... $ 2,500 Miscellaneous..................................................... $ 5,000 ------- Total................................................... $ 216,388 =======
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. From the period September 1, 1993 through August 31, 1996, the Company sold a total of 2,803,438 shares of its Common Stock and 135,735 shares of Preferred Stock at an aggregate offering price of $2,906,307. Sales of both the Common Stock and the Preferred Stock were effected through the executive officers of the Company to existing shareholders. No underwriters were employed in connection with the offer and sale of the aforementioned securities. Thus no underwriting discounts or commissions were paid. II-1 58 All of the above-referenced sales were made by the Company in reliance upon the exemptions from registration contained in Section 4(2) of the Securities Act of 1933 and Regulation D promulgated pursuant to such exemption. ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ---------- ------------------------------------------------------------------------ 3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10, 1985 3.(ii) Certificate of Amendment to Articles of Incorporation of Epic Enterprises, Ltd., Filed September 11, 1987 3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada Manhattan Mining Incorporated Filed October 26, 1987 3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada Manhattan Mining Incorporated Filed August 31, 1995 3.(v) Certificate of Determination of Preferences of Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995 3.(vi) Bylaws of Epic Enterprises, Ltd. 4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd. 4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995 5 Opinion on Legality 10.(i) Mining Agreement Dated April 4, 1987 10.(ii) Amendment to Mining Agreement Dated December 9, 1987 10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989 10.(iv) Corporation Quitclaim Deed Filed March 9, 1989 10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989 10.(vi) Joint Venture Agreement Dated June 1993 10.(vii) Letter Agreement Dated August 10, 1995 10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995 10.(ix) Contract Between Nevada Manhattan Mining, Inc, and Harrison Western Construction Corp. 10.(x) Principles of Agreement Dated August 19, 1996 10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D. Michaels 10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer 10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1, 1995 10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear & Company, Inc. 10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D. 10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D. 10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten 10.(xviii) Financial Advisory Agreement with Rhone Finance SA dated November 26, 1996 21 Subsidiaries of Small Business Issuer 23.(i) Consent of Jackson & Rhodes P.C.
II-2 59
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ---------- ------------------------------------------------------------------------ 23.(ii) Consent of William R. Wilson 23.(iii) Consent of Behre Dolbear & Company 27 Financial Data Schedule 99 Business Plan Dated July 1995
(B) FINANCIAL STATEMENT SCHEDULES. Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto. ITEM 28. UNDERTAKINGS. The Company hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective Registration Statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Company pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The Company hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the provisions described in the II-3 60 Prospectus or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. The Company hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed a part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 61 SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Calabasas, State of California on December 5, 1996. NEVADA MANHATTAN MINING INCORPORATED By /s/ CHRISTOPHER D. MICHAELS ------------------------------------ Christopher D. Michaels President In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated.
SIGNATURE TITLE DATE - --------------------------------------------- ---------------------------- ------------------ /s/ CHRISTOPHER D. MICHAELS President and Director December 5, 1996 - --------------------------------------------- CHRISTOPHER D. MICHAELS /s/ JEFFREY S. KRAMER Senior Vice President December 5, 1996 - --------------------------------------------- Chief Financial Officer JEFFREY S. KRAMER /s/ STANLEY J. MOHR Director December 5, 1996 - --------------------------------------------- STANLEY J. MOHR
II-5 62 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - ---------- ------------------------------------------------------------------------ ------------ 3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10, 1985.................................................................... 3.(ii) Certificate of Amendment to Articles of Incorporation of Epic Enterprises, Ltd., Filed September 11, 1987............................. 3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada Manhattan Mining Incorporated Filed October 26, 1987.................... 3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada Manhattan Mining Incorporated Filed August 31, 1995..................... 3.(v) Certificate of Determination of Preferences of Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995.......... 3.(vi) Bylaws of Epic Enterprises, Ltd......................................... 4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd............. 4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995........................................................ 5 Opinion on Legality..................................................... 10.(i) Mining Agreement Dated April 4, 1987.................................... 10.(ii) Amendment to Mining Agreement Dated December 9, 1987.................... 10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989................. 10.(iv) Corporation Quitclaim Deed Filed March 9, 1989.......................... 10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989............ 10.(vi) Joint Venture Agreement Dated June 1993................................. 10.(vii) Letter Agreement Dated August 10, 1995.................................. 10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995............. 10.(ix) Contract Between Nevada Manhattan Mining, Inc. and Harrison Western Construction Corp....................................................... 10.(x) Principles of Agreement Dated August 19, 1996........................... 10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D. Michaels................................................................ 10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer.......... 10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1, 1995.................................................................... 10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear & Company, Inc. .......................................................... 10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D......... 10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D. ......... 10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten......... 10.(xviii) Financial Advisory Agreement with Rhone Finance SA dated November 26, 1996 21 Subsidiaries of Small Business Issuer................................... 23.(i) Consent of Jackson & Rhodes P.C. ....................................... 23.(ii) Consent of William R. Wilson............................................ 23.(iii) Consent of Behre Dolbear & Company...................................... 27 Financial Data Schedule................................................. 99 Business Plan Dated July 1995...........................................
EX-3.(I) 2 EXHIBIT 3.(I) 1 Exhibit 3.(i) FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA JUN 10 1985 WM. SWACAYAME SECRETARY OF STATE ARTICLES OF INCORPORATION OF EPIC ENTERPRISES LTD. The undersigned incorporators, desiring to form a corporation (hereinafter referred to as the "Corporation"), pursuant to the provisions of the Nevada General Corporation Act as amended (hereinafter referred to as the "Act"), execute the following Articles of Incorporation. ARTICLE I The name of the corporation is EPIC ENTERPRISES LTD. ARTICLE II The purpose for which the Corporation is formed is to engage in any lawful act or activity for which a corporation may be organized under the Act, as amended, other than the banking business, the trust company business or the practice of a profession permitted to be incorporated under the laws of the State of Nevada and the United States of America. ARTICLE III The period during which the Corporation shall continue is perpetual. ARTICLE IV The name and post office address of the Corporation's Resident Agent for Service of Process is: All-State Registered Agents - 892 East William Street, Carson City, Nevada 89701. The Principal Office of the Corporation in the State of Nevada is: 892 East William Street, Carson City, Nevada 89701. ARTICLE V The total number of shares which the Corporation is to have the authority to issue is 2,500. The number of authorized shares which the Corporation designates as Without Par Value is 2,500 and each such share shall be one of class known as COMMON. ARTICLE VI The Corporation will not commence business until the consideration of the value of at least $750.00, including incorporation and registered agent costs, has been received for the Issuance of Shares. ARTICLE VII The initial Board of Directors of the Corporation is composed of 3 members. The number of Directors may be from time to time fixed by the By-Laws of the Corporation at any number. In the absence of a By-Law fixing the number of Directors, the number shall be 7. The names and post office addresses of the Initial Board of Directors are: Albert B. Carson 892 East William Street, Carson City, Nevada 89701 Kurt Shrager 892 East William Street, Carson City, Nevada 89701 John Gulden 892 East William Street, Carson City, Nevada 89701 ARTICLE VIII The Directors shall have the power to make, amend or alter the By-Laws of the Corporation from time to time in the manner they deem proper and in the best interests of the Corporation. The Directors shall also have the power to amend, alter or repeal any provision of these Articles of Incorporation and to add to these Articles in any manner now or hereinafter prescribed by the statutes and law of the State of Nevada and the rights of all shareholders are subject to this reservation. ARTICLE IX The names and post office addresses of this Corporation's Incorporators are: Albert B. Carson 892 East William Street, Carson City, Nevada 89701 Kurt Shrager 892 East William Street, Carson City, Nevada 89701 John Gulden 892 East William Street, Carson City, Nevada 89701 WE HEREBY VERIFY subject to penalties of perjury that the facts contained herein are true and IN WITNESS WHEREOF we have hereunto set our hands this 23 day of MAY 1985. Albert B. Carson X /s/ ALBERT B. CARSON ------------------------------------------------------ Kurt Shrager X /s/ KURT SHRAGER ------------------------------------------------------ John Gulden X /s/ JOHN GULDEN ------------------------------------------------------ [SEAL] [SEAL] OFFICIAL SEAL MARION CURTIS STATE OF CALIFORNIA NOTARY PUBLIC - CALIFORNIA COUNTY OF LOS ANGELES PRINCIPAL OFFICE IN LOS ANGELES COUNTY MY COMMISSION EXPIRES SEPTEMBER 7, 1988 I, Marion Curtis, a notary public, hereby certify that on the 23 day of MAY 1985 personally appeared before one Albert B. Carson, Kurt Shrager and John Gulden who being by me first duly sworn, severally declared that they are the person who signed the foregoing instrument as Incorporators, and that the statements therein contained are true. /s/ MARION CURTIS --------------------------------------- Marion Curtis EX-3.(II) 3 EXHIBIT 3.(II) 1 Exhibit 3.(ii) FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA SEP 11 1987 FRANKIE SUE DEL PAPA SECRETARY OF STATE /s/ Frankie Sue Del Papa ------------------------ No. 3947-85 CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF EPIC ENTERPRISES, LTD. We the undersigned as President and Secretary of Epic Enterprises, Ltd., do hereby certify: That the Board of Directors of said corporation at a meeting duly convened and held on the 19th day of August, 1987, adopted a resolution to amend the original Articles as follows: Article I shall be amended to read as follows: "The name of the corporation EPIC ENTERPRISES, LTD., shall be changed to the corporate name of NEVADA MANHATTAN MINING INCORPORATED." The number of shares of the corporation outstanding and entitled to vote on an amendment to the Articles of Incorporation is 10 million shares, one cent par value; that the said change and amendment has been consented to and approved by a majority vote of the stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon. /s/ CHRIS MICHAELS ----------------------------------- CHRIS MICHAELS, President /s/ DREW LAMBO ----------------------------------- DREW LAMBO, Secretary 2 STATE OF NEVADA DEPARTMENT OF STATE -------------------- CERTIFICATE OF CORPORATE STATUS I, FRANKIE SUE DEL PAPA, the duly elected, qualified and acting Secretary of State of the State of Nevada, do hereby certify that I am, by the laws of said State, the custodian of the records relating to corporations organized under the laws thereof; the revocation or suspension of their corporate charters, and their right to transact and carry on their corporate business; and am the proper officer to execute this certificate. I further certify that, at the date of this certificate, EPIC ENTERPRISES LTD. is a corporation duly organized and existing under and by virtue of the laws of the State of Nevada, having fully complied therewith; is entitled to exercise therein all the corporate powers and functions recited in its charter or articles of incorporation, and is in good standing in this State as a subsisting corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of the State at my office in Carson City, Nevada, this 5TH day of MARCH, A.D., 1987 /s/ FRANKIE SUE DEL PAPA ----------------------------------- Secretary of State By [SIG] ----------------------------------- Deputy EX-3.(III) 4 EXHIBIT 3.(III) 1 Exhibit 3.(iii) FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA OCT 26, 1987 FRANKIE SUE DEL PAPA SECRETARY OF STATE /s/ Frankie Sue Del Papa ------------------------ No. 3947-85 CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION OF NEVADA MANHATTAN MINING INCORPORATED We the undersigned as President and Secretary of Nevada Manhattan Mining Incorporated, do hereby certify: That the Board of Directors of said corporation at a meeting duly convened and held on the 6th day of October, 1987, adopted a resolution to amend the original Articles as follows: Article V shall be amended to read as follows: "The total number of shares which the Corporation is to have the authority to issue is 50,000,000. The number of authorized shares which the Corporation designates as one cent per share par value is 50,000,000 and each such share shall be one of class known as COMMON." The number of shares of the corporation outstanding and entitled to vote on an amendment to the Articles of Incorporation is 10,000,000 shares, one cent per share par value; that the said change and amendment has been consented to and approved by a majority vote of the stockholders holding at least a majority of each class of stock outstanding and entitled to vote thereon. /s/ CHRIS MICHAELS ----------------------------------- CHRIS MICHAELS, President /s/ DREW LAMBO ----------------------------------- DREW LAMBO, Secretary 2 STATE OF NEVADA ) ) SS: COUNTY OF CLARK ) On this 22nd day of October, 1987, personally appeared before me a Notary Public, Chris Michaels who acknowledged that he executed the above instrument. SEAL SUSAN L. ALCORN Notary Public-State of Nevada Clark County My Appointment Expires July 5, 1988 /s/ SUSAN L. ALCORN ---------------------------------- NOTARY PUBLIC STATE OF NEVADA ) ) SS: COUNTY OF CLARK ) On this 22nd day of October, 1987, personally appeared before me a Notary Public, Drew Lambo who acknowledged that he executed the above instrument. SEAL SUSAN L. ALCORN Notary Public-State of Nevada Clark County My Appointment Expires July 5, 1988 /s/ SUSAN L. ALCORN ---------------------------------- NOTARY PUBLIC EX-3.(IV) 5 EXHIBIT 3.(IV) 1 Exhibit 3.(iv) FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA AUG 31 1995 No. 3947-85 /s/ Dean Heller --------------- DEAN HELLER, SECRETARY OF STATE CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF NEVADA MANHATTAN MINING, INCORPORATED Christopher D. Michaels and Jeffrey Kramer hereby certify that: A: They are the President and Secretary, respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation. B. Article V of the Articles of Incorporation of this corporation is amended to read in its entirety as follows: "ARTICLE V This corporation is authorized to issue two classes of stock to be designated, respectively, 'Common Stock' and 'Preferred Stock.' The total number of shares which the corporation is authorized to issue is 50,000,000 shares, of which 49,750,000 shares shall be Common Stock, par value of $.01 per share, and 250,000 shares shall be Preferred Stock, par value of $1.00 per share. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized, within the limitations and restrictions stated herein, to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon wholly unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decease the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series should be so decreased, the shares constituting such decease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series." 2 C. The foregoing amendment of the Articles of Incorporation has been duly approved by the Board of Directors. D. The foregoing amendment of the Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section NRS 78.390 of the Corporations Code. The total number of outstanding shares of Common Stock of the corporation is 4,658,481. The number of shares required for such approval was more than fifty percent (50%) of the Common Stock. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The undersigned further declare under penalty of perjury under the laws of the State of Nevada that the matters set forth in this certificate are true and correct of their own knowledge. Dated: August 23, 1995 /s/ CHRISTOPHER D. MICHAELS ----------------------------------- Christopher D. Michaels, President /s/ JEFFREY S. KRAMER ----------------------------------- Jeffrey S. Kramer, Sr. Vice President 3 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT ================================================================================ State of CALIFORNIA --------------------------- County of LOS ANGELES -------------------------- On August 30, 1995 before me, R.M. Knippenberg, --------------- ----------------------------------------------------- DATE NAME, TITLE OF OFFICER-E.G. "JANE DOE, NOTARY PUBLIC" personally appeared CHRISTOPHER D. MICHAELS / JEFFREY S. KRAMER ------------------------------------------- NAME(S) OF SIGNER(S) [X] personally known to me - OR - [ ] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. R.M. Knippenberg ------------------------------------------- SIGNATURE OF NOTARY ================================ OPTIONAL ======================================= Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT [ ] INDIVIDUAL AMEND ART. OF INCORP. [X] CORPORATE OFFICER PREFERRED STOCK -------------------------------- PRESIDENT / SR. VICE PRES. TITLE OR TYPE OF DOCUMENT ----------------------------------- TITLE(S) [ ] PARTNER(S) [ ] LIMITED [ ] GENERAL -------------------------------- NUMBER OF PAGES [ ] ATTORNEY-IN-FACT [ ] TRUSTEE(S) [ ] GUARDIAN/CONSERVATOR 8-23-95 [ ] OTHER: -------------------------------- ----------------------------- DATE OF DOCUMENT ----------------------------------- ----------------------------------- SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(IES) NONE NEVADA MANHATTAN MINING -------------------------------- ----------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
================================================================================ EX-3.(V) 6 EXHIBIT 3.(V) 1 Exhibit 3.(v) FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA OCT 25 1995 No. 3947-85 Dean Heller DEAN HELLER, SECRETARY OF STATE CERTIFICATE OF DETERMINATION OF PREFERENCES OF SERIES A PREFERRED STOCK OF NEVADA MANHATTAN MINING INCORPORATED a Nevada Corporation Christopher. D. Michaels and Jeffrey Kramer hereby certify that: A. They are the duly elected and acting President and Secretary, respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation. B. Pursuant to authority given by said corporation's Articles of Incorporation, the Board of Directors of said corporation has duly adopted the following recitals and resolutions: WHEREAS: The Articles of Incorporation of this corporation provide for a class of shares known as Preferred Stock, issuable from time to time in one or more series; and WHEREAS: The Board of Directors of this corporation is authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, to fix the number of shares constituting any such series, and to determine the designation thereof, or any of them; and WHEREAS: This corporation has not issued a series of Preferred Stock, and the Board of Directors of this corporation desires, pursuant to its authority as aforesaid, to determine and fix the rights, preferences, privileges and restrictions relating to a series of said Preferred Stock and the number of shares constituting the designation of said series; NOW, THEREFORE, BE IT RESOLVED: That the Board of Directors hereby fixes and determines the designation of, the number of shares constituting, and the rights, preferences, privileges and restrictions relating to, said series of Preferred Stock as follows: -1- 2 (1) Designation of Preferred Shares. The corporation shall have a series of Preferred Stock which shall be designated "Series A Preferred Stock" (the "Series A Preferred Stock") . (The Series A Preferred Stock is hereinafter sometimes referred to as the "Preferred Stock.") (2) Number of Preferred Shares. The number of shares constituting the Series A Preferred Stock shall be 250,000. (3) Dividends. The Holders of the Series A Preferred- Stock shall be entitled to receive dividends at the rate of eight percent (8%) per annum of the original issue price per share of Series A Preferred Stock, out of any funds legally available therefor, payable on each January 1, April 1, July 1 and October 1 after the issuance of the Series A Preferred and so long as any shares of Series A Preferred Stock shall be outstanding. Such dividends shall be cumulative, so that if the full dividends in respect of any previous dividend period shall not have been paid on the Series A Preferred Stock at the time outstanding, whether or not earned, whether or not funds of the corporation are legally available therefor and whether or not declared by the Board, the deficiency shall be fully paid or declared and set apart for such shares (without interest) before any dividend or other distribution shall be paid on or declared or set apart for any other class or series of Common Stock or Preferred Stock of the corporation, whether now or hereafter authorized, and before any redemption, retirement, purchase or other acquisition of any other class or series of Common Stock or Preferred Stock of the corporation, whether now or hereafter authorized. The Company may pay the dividend on the Series A Preferred Stock in cash, or through the issuance of additional shares of Series A Preferred Stock having an issue price equal to the amount of the dividend, or through a combination of the foregoing. (4) Liquidation Preference. a. Preference on Series A Preferred Stock. In the event of any liquidation, dissolution or winding up of the corporation, either voluntarily or involuntarily, the holders of shares of Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the corporation to the holders of shares of any other class or series of Common Stock or Preferred Stock of the corporation, an amount equal to Ten Dollars ($10.00) per share plus a further amount equal to any dividends declared but unpaid on such shares, as either such amount may be adjusted from time to time to give effect to stock splits, stock dividends and similar transactions affecting the Series A Preferred Stock. All of the preferential amounts to be paid to the holders of shares of Series A Preferred Stock under this -2- 3 Section shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any assets of the corporation to, the holders of shares of Common Stock in connection with such liquidation, dissolution or winding up. After the payment or the setting apart for payment to the holders of the Series A Preferred Stock of the preferential amount so payable to them, the holders of shares of Common Stock shall be entitled to receive all remaining assets of the corporation. If, upon such liquidation, dissolution or winding up of the corporation, the assets of the corporation available for distribution are insufficient to provide for the payment of the full preferential amount for each share of Series A Preferred Stock outstanding, such assets as are available shall be distributed ratably among the holders of shares of Series A Preferred Stock. b. Consolidation or Merger. A consolidation or merger of the corporation with or into any other corporation or corporations, or a sale of all or substantially all of the assets of the corporation, or a series of related transactions in which more than fifty percent (50%) of the voting power of the corporation is disposed of, shall not be deemed to be a liquidation, dissolution or winding up within the meaning of this Section (4). c. Noncash Distributions. If any of the assets of the corporation are to be distributed other than in cash under this Section (4), then the Board of Directors of the corporation shall promptly engage independent competent appraisers to determine the value of the assets to be distributed to the holders of shares of Series A Preferred Stock or Common Stock. The corporation shall, upon receipt of such appraiser's valuation, give prompt written notice to each holder of shares of Series A Preferred Stock and Common Stock of the appraiser's valuation. d. Consent for Certain Repurchase. Each holder of an outstanding share of Series A Preferred Stock shall be deemed to have consented, for purposes of Chapter 5 of the California General Corporation Law, to distributions made by the corporation in connection with the repurchase of shares of Common Stock issued to or held by employees or consultants upon termination of their employment or services pursuant to agreements providing for the right of said repurchase between the corporation and such persons. (5) Conversion. The holders of the shares of Series A Preferred Stock shall have the following conversion rights (the "Conversion Rights"). -3- 4 a. Right to Convert. Each share of Series A Preferred Stock initially shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share and on or before 5:00 p.m. California time on December 31, 1997, at the office of the corporation or any transfer agent for the Series A Preferred Stock into ten (10) fully paid and nonassessable shares of Common Stock of the corporation (the "Conversion Ratio"). After December 31, 1997, the shares of Series A Preferred Stock shall not be convertible into shares of Common Stock or any other, securities of the corporation. b. Adjustments to Conversion Ratio. (i) Stock Dividends and Subdivisions. If, after the date of the first issuance of shares of Series A Preferred Stock, the corporation shall issue additional shares of Common Stock, by reason of the declaration or payment of any dividend on the Common Stock payable in Common Stock or by reason of a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock) without a corresponding subdivision or dividend with respect to the Series A Preferred Stock, the Conversion Ratio of the Series A Preferred Stock in effect immediately prior to such declaration or subdivision shall, concurrently with the effectiveness of such declaration or subdivision, be proportionately increased. (ii) Adjustments for Combinations or Consolidation of Common Stock. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock without a corresponding combination or consolidation with respect to the Series A Preferred Stock, the Conversion Ratio of the Series A Preferred Stock in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately decreased. (iii) Adjustment for Merger, Reorganization, etc. In the case of any merger of the corporation with or into another corporation or the transfer of all or substantially all of the assets of the corporation to another corporation in which the shareholders of the corporation are to receive cash, securities or other consideration for their shares, each share of Series A Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the corporation deliverable upon conversion of the shares of Series A Preferred Stock would have been entitled upon such merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board -4- 5 of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of shares of Series A Preferred Stock, to the end that the provisions set forth herein (including all provisions with respect to changes in and other adjustments of the Conversion Ratio) shall thereafter be applicable as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of Series A Preferred Stock. c. Automatic Conversion. (i) Public Offering. Each share of Series A Preferred Stock automatically shall be converted into shares of Common Stock at the then effective Conversion Ratio on the earlier of (A) 5:00 p.m. California time on December 31, 1997 and (B) the closing of a public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the corporation to the public providing gross proceeds to the corporation of not less than Five Million Dollars ($5,000,000). (ii) Procedure. In the event of such automatic conversion, the person(s) entitled to receive shares of Common Stock issuable upon such automatic conversion of the shares of Series A Preferred Stock shall not be deemed to have converted such shares of Series A Preferred Stock until immediately prior to the event giving rise to such conversion. Upon the occurrence of such event, the outstanding shares of Series A Preferred Stock shall be converted automatically and without further action by the holders of said shares and whether or not the certificates representing said shares are surrendered to the corporation or its transfer agent; provided that the corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of any shares of Series A Preferred Stock unless certificates evidencing such shares of Series A Preferred Stock are either delivered to the corporation or any transfer agent as hereinafter provided, or the holder notifies the corporation that said certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the corporation to indemnify the corporation for any loss incurred by it in connection therewith. Upon the occurrence of the automatic conversion of any shares of Series A Preferred Stock, the holders of the shares of Series A Preferred Stock shall surrender the certificates representing said shares at the office of the corporation or of any transfer agent for Series A Preferred Stock. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in such holder's name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of Series A -5- 6 Preferred Stock surrendered were convertible on the date on which the event effecting the automatic conversion occurred. d. Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon conversion of any shares of Series A Preferred Stock and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Any conversion of shares of Series A Preferred Stock pursuant to this Section (5) by any holder shall be done on an aggregate basis taking into account all shares of Series A Preferred Stock held by such holder (i.e.,. such holder shall have no more than one fractional share of Series A Preferred Stock upon such conversion). Before any holder of shares of Series A Preferred Stock shall be entitled to convert the same into full shares of Common Stock, other than by reason of the automatic conversion provided in Section (5) (c) above, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the corporation or of any transfer agent for Series A Preferred Stock, and shall give written notice to the corporation at such office that the holder elects to convert the same, and shall state therein the holder's name or the name or names of the nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued. The corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of shares of Series A Preferred Stock, or to his nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid. Except as set forth in this Section (5) such conversion shall be deemed to have been made immediately prior to the close of business on the day of such surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. Upon conversion of only a portion of the number of shares of Series A Preferred Stock represented by a certificate so surrendered for conversion, the corporation shall issue and deliver to, or upon the written order of, the holder of the certificate so surrendered for conversion, at the expense of the corporation, a new certificate covering the number of shares of Series A Preferred Stock representing the unconverted portion of the certificate so surrendered. e. Transfer Costs. The corporation shall pay any and all documentary stamp and other transactional taxes attributable to the issuance or delivery of shares of Common Stock of the corporation upon conversion of any shares of Series A Preferred Stock. f. No Impairment. The corporation will not, without the approval of the requisite number of shares of Series A -6- 7 Preferred Stock by amendment of its Articles of Incorporation or this Certificate of Determination or through any reorganization, transfer of assets, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section (5) and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of shares of Series A Preferred Stock against impairment. g. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Ratio for any shares of Series A Preferred Stock pursuant to this Section (5) the corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and shall furnish to each holder of shares of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The corporation shall, upon the written request at any time of any holder of shares of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Ratio at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the shares of Series A Preferred Stock held by such holder. h. Common Reserved. The corporation shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of all of the outstanding shares of the Series A Preferred Stock. i. Registration. If any shares of Common Stock to be reserved for the purpose of conversion of shares of Series A Preferred Stock require registration or listing with, or approval of, any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise, before such shares may be validly issued or delivered upon conversion, the corporation will, in good faith and as expeditiously as possible, at its expense, endeavor to secure such registration, listing or approval, as the case may be. j. Status of Shares. All shares of Common Stock which may be issued upon conversion of the shares of Series A Preferred Stock will upon issuance by the corporation be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof. -7- 8 k. Cancellation of the Shares. Upon conversion of any shares of Series A Preferred Stock into Common Stock, said converted shares of Series A Preferred Stock shall resume the status of authorized and unissued shares of Series A Preferred Stock of the corporation. l. Notices of Record Date. In the event of any taking by the corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the corporation shall mail to each holder of shares of Series A Preferred Stock, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. m. Notices. Any notice required by the provisions of this Section (5) to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the corporation. (6) Voting Rights. Except as otherwise required by law or by the Articles of Incorporation of the corporation, the shares of Series A Preferred Stock and Common Stock shall be voted together as a single class at any annual or special meeting of shareholders of the corporation, or, may act by written consent in the same manner as the corporation's Common Stock, upon the following basis: each share of Series A Preferred Stock issued and outstanding shall have that number of votes equal to the number of shares of Common Stock into which each share of Series A Preferred Stock is then convertible, except that fractional shares shall not be permitted, and any fractional voting rights resulting from this formula (after aggregating all shares of Common Stock into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). (7) Protective Provisions. So long as any shares of Series A Preferred Stock shall be outstanding the corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least fifty percent (50%) of the outstanding shares of Series A Preferred Stock: a. Change of Rights. Alter or change the rights, preferences, or privileges of the Series A Preferred Stock so -8- 9 as materially and adversely to affect the Series A Preferred Stock; or b. Authorized Number. Increase the authorized number of shares of Series A Preferred Stock; or c. Create New Class. Create any new class or series of shares having preferences over, or being on a parity with, Series A Preferred Stock then outstanding. RESOLVED FURTHER: That the Chairman of the Board, the President or any Vice President, and the Secretary, Chief Financial Officer, the Treasurer, or any Assistant Secretary or Assistant Treasurer of this corporation are each authorized to execute, verify and file a certificate of determination of preferences in accordance with Nevada law. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of October 20, 1995. /s/ CHRISTOPHER D. MICHAELS ----------------------------------- Christopher D. Michaels, President /s/ JEFFREY KRAMER ----------------------------------- Jeffrey Kramer, Secretary The undersigned, Christopher D. Michaels and Jeffrey Kramer, the President and Secretary, respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation, declare under penalty of perjury that the matters set out in the foregoing Certificate of Determination of Preferences of Series A Preferred Stock are true of their own knowledge. EXECUTED at Los Angeles, California, on October 20, 1995. /s/ CHRISTOPHER D. MICHAELS ----------------------------------- Christopher D. Michaels /s/ JEFFREY KRAMER ----------------------------------- Jeffrey Kramer -9- 10 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT ================================================================================ State of CALIFORNIA --------------------------- County of LOS ANGELES -------------------------- On Oct. 20, 1995 before me, R.M. Knippenberg, ------------- ----------------------------------------------------- DATE NAME, TITLE OF OFFICER-E.G. "JANE DOE, NOTARY PUBLIC" personally appeared CHRISTOPHER D. MICHAELS and JEFFREY S. KRAMER --------------------------------------------- NAME(S) OF SIGNER(S) [X] personally known to me - OR - [ ] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) [SEAL] is/are subscribed to the within instrument R.M. Knippenberg and acknowledged to me that he/she/they Comm #1059760 executed the same in his/her/their authorized NOTARY PUBLIC CALIFORNIA capacity(ies), and that by his/her/their LOS ANGELES COUNTY signature(s) on the instrument the person(s), Comm Exp. May 25, 1999 or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. R.M. Knippenberg ------------------------------------------- SIGNATURE OF NOTARY ================================ OPTIONAL ======================================= Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT [ ] INDIVIDUAL CERT. OF DETERMINATION OF [X] CORPORATE OFFICER PREF. of SERIES A PREF. STOCK -------------------------------- PRESIDENT & SR. VICE PRESIDENT TITLE OR TYPE OF DOCUMENT ----------------------------------- TITLE(S) [ ] PARTNER(S) [ ] LIMITED TEN (10) [ ] GENERAL -------------------------------- NUMBER OF PAGES [ ] ATTORNEY-IN-FACT [ ] TRUSTEE(S) [ ] GUARDIAN/CONSERVATOR Oct. 20, 1995 [ ] OTHER: -------------------------------- ----------------------------- DATE OF DOCUMENT ----------------------------------- ----------------------------------- SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(IES) NONE NV. MANHATTAN MINING -------------------------------- ----------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE
================================================================================ EX-3.(VI) 7 EXHIBIT 3.(VI) 1 Exhibit 3.(vi) BY-LAWS OF EPIC ENTERPRISES LTD. - ------------------------------------------------------------------------------- ARTICLE I-OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of the resident agent. SECTION 2. OTHER OFFICES. The corporation may have other offices, either within or without the State of Nevada, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II-MEETING OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of directors and for such business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Nevada, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Nevada on: The first Monday which occurs after the annual anniversary of the date upon which the corporation's Articles of Incorporation were certified by the Secretary of State of Nevada. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held an the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other than the election of Directors may be held at such time and place, within or without the State of Nevada, as shall be stated in the notice of the meeting. SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the terms and provisions of the Articles of Incorporation and these By-Laws shall be entitled to one vote, in person or by proxy, from each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Articles of Incorporation or the laws of the State of Nevada. SECTION 4. STOCKHOLDER LIST. The Officer who has charge of the stock ledger of the corporation shall at least 10 days before each meeting of stockholders prepare a completely alphabetically addressed list of the stockholders entitled to 2 vote at the ensuing election, with the number of shares held by each. Said list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall be available for inspection at the meeting. SECTION 5. QUORUM. Except as otherwise required by law, by the Articles of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a meeting. A majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 6. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of the Directors or stockholders entitled to vote. Such request shall state the purpose of the proposed meeting. SECTION 7. NOTICE OF MEETINGS. Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than 10 nor more than 50 days before the date of the meeting. SECTION 8. BUSINESS TRANSACTED. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat. SECTION 9. ACTION WITHOUT MEETING. Except as otherwise provided by the Articles of Incorporation, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or the Articles of Incorporation or of these By-Laws, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III-DIRECTORS SECTION 1. NUMBER AND TERM. The number of Directors shall be not more than 7. The Directors shall be elected at the annual meeting of stockholders and each Director shall be elected to serve until his successor shall be elected and shall qualify. The number of Directors may not be less than 3 except that where all the shares of the corporation are owned beneficially and of record by either one or two stockholders, the number of Directors may be less than 3 but not less than the number of stockholders. 2 3 SECTION 2. RESIGNATIONS. Any Director, member of a committee or other Officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3. VACANCIES. If the office of any Director, member of a committee or other Officer becomes vacant, the remaining Directors in office, though less than a quorum, by a majority vote may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL. Any Director or Directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote. SECTION 5. INCREASE IN NUMBER. The number of Directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the Directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional Directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. SECTION 6. COMPENSATION. Directors shall not receive any stated salary for their services as Directors or as members of committees, but by resolution of the Board a fixed fee and expenses of attendance my be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an Officer, Agent, or otherwise, and receiving compensation therefor. SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. ARTICLE IV-OFFICERS SECTION 1. OFFICERS. The Officers of the corporation shall consist a a President, a Treasurer, and a Secretary, and shall be elected by the Board of Directors and shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents, and such Assistant Secretaries and Assistant Treasurers as it may deem proper. None of the Officers of the corporation need be Directors. The Officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such Officers and Agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such power and perform such duties as shall be determined from time to time by the Board of Directors. 3 4 SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT. The President shall be the Chief Executive Officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the Office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some manner, he shall execute bonds, mortgages, and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assist- and Treasurer. SECTION 5. VICE-PRESIDENT. Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the Directors. SECTION 6. TREASURER. The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe. SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect to do so, any such notice may be given by any person thereunto directed by the President, or by the Directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation's stockholders and Directors in a book to be kept for that prupose, and shall affix the seal to all instruments requiring it, when authorized by the Directors or the President, and attest the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Directors. ARTICLE V-STOCK SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice-President, and the Treasurer or Assistant Treasurer, or the Secretary or Assistant Secretary of the corporation, certifying the number of shares owned by 4 5 him in the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof, and the qualifications, limitations, or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in the General Corporation Law of Nevada, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preference and/or rights. Where a certificate is countersigned (1) by a Transfer Agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, the signatures of such persons may be facsimiles. SECTION 2. LOST CERTIFICATES. New certificates of stock my be issued in the place of any certificate therefore issued by the corporation, alleged to have been lost or destroyed, and the Directors may, in their discretion, require the owner of the lost or destroyed certificate or his legal representatives, to give the corporation a bond, in such sum as they my direct, not exceeding double the value of the stock, to indemnify the corporation against it on account of the alleged loss of any new certificate. SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other persons as the Directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 50 nor less than 10 days before the day of such meeting, nor more than 50 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of Incorporation the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividends there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the Directors from time to time in their discretion deem proper working 5 6 capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Directors shall deem conducive to the interests of the corporation. SECTION 6. SEAL. The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL NEVADA." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors. SECTION 8. CHECKS. All checks, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by an Officer or Officers, or Agent or Agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly stated, and any notice so required shall be deemed, to be sufficient if given by depositing the same in the United States Postal System, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Articles of Incorporation of the corporation or these By-Laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed proper notice. ARTICLE VI-AMENDMENTS These By-Laws may be altered and repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice thereof is contained in the notice of such special meeting by the affirmative vote of a majority of the stock issued and outstanding or entitled to vote thereat, or by the regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice thereof is contained in the notice of such special meetings. (SEAL) 6 EX-4.(I) 8 EXHIBIT 4.(I) 1 Exhibit 4.(i) BY-LAWS OF EPIC ENTERPRISES LTD. - -------------------------------------------------------------------------------- ARTICLE I-OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of the resident agent. SECTION 2. OTHER OFFICES. The corporation may have other offices, either within or without the State of Nevada, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II-MEETING OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of directors and for such business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Nevada, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Nevada on: The first Monday which occurs after the annual anniversary of the date upon which the corporation's Article of Incorporation were certified by the Secretary of State of Nevada. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other than the election of Directors may be held at such time and place, within or without the State of Nevada, as shall be stated in the notice of the meeting. SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the terms and provisions of the Articles of Incorporation and these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for Directors shall be decided by majority vote except as otherwise provided by the Articles of Incorporation or the laws of the State of Nevada. SECTION 4. STOCKHOLDER LIST. The Officer who has charge of the stock ledger of the corporation shall at least 10 days before each meeting of stockholders prepare a completely alphabetically addressed list of the stockholders entitled to 2 SECTION 2. RESIGNATIONS. Any Director, member of a committee or other Officer my resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3. VACANCIES. If the office of any Director, member of a committee or other Officer becomes vacant, the remaining Directors in office, though less than a quorum, by a majority vote may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL. Any Director or Directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote. SECTION 5. INCREASE IN NUMBER. The number of Directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the Directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional Directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. SECTION 6. COMPENSATION. Directors shall not receive any stated salary for their services as Directors or as members of committees, but by resolution of the Board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an Officer, Agent, or otherwise, and receiving compensation therefor. SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. ARTICLE IV-OFFICERS SECTION 1. OFFICERS. The Officers of the corporation shall consist a a President, a Treasurer, and a Secretary, and shall be elected by the Board of Directors and shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice-Presidents, and such Assistant Secretaries and Assistant Treasurers as it may deem proper. None of the Officers of the corporation need be Directors. The Officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such Officers and Agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such power and perform such duties as shall be determined from time to time by the Board of Directors. 2 3 SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT. The President shall be the Chief Executive Officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the Office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some manner, he shall execute bonds, mortgages, and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal. shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assist- and Treasurer. SECTION 5. VICE-PRESIDENT. Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the Directors. SECTION 6. TREASURER. The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe. SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect to do so, any such notice may be given by any person thereunto directed by the President, or by the Directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation's stockholders and Directors in a book to be kept for that purpose, and shall affix the seal to all instruments requiring it, when authorized by the Directors or the President, and attest the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Directors. ARTICLE V-STOCK SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice-President, and the Treasurer or Assistant Treasurer, or the Secretary or Assistant Secretary of the corporation, certifying the number of shares owned by 3 4 him in the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof, and the qualifications, limitations, or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in the General Corporation Law of Nevada, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preference and/or rights. Where a certificate is countersigned (1) by a Transfer Agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, the signatures of such persons may be facsimiles. SECTION 2. LOST CERTIFICATES. New certificates of stock may be issued in the place of any certificate therefore issued by the corporation, alleged to have been lost or destroyed, and the Directors may, in their discretion, require the owner of the lost or destroyed certificate or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against it on account of the alleged loss of any new certificate. SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other persons as the Directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 50 nor less than 10 days before the day of such meeting, nor more than 50 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors nay fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of Incorporation the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividends there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the Directors from time to time in their discretion deem proper working 4 EX-4.(II) 9 EXHIBIT 4.(II) 1 EXHIBIT 4.(ii) FILED IN THE OFFICE OF THE SECRETARY OF STATE OF THE STATE OF NEVADA OCT 25 1995 NO. 3947-85 /s/ DEAN HELLER ------------------------------- DEAN HELLER, SECRETARY OF STATE CERTIFICATE OF DETERMINATION OF PREFERENCES OF SERIES A PREFERRED STOCK OF NEVADA MANHATTAN MINING INCORPORATED a Nevada Corporation Christopher D. Michaels and Jeffrey Kramer hereby certify that: A. They are the duly elected and acting President and Secretary, respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation. B. Pursuant to authority given by said corporation's Articles of Incorporation, the Board of Directors of said corporation has duly adopted the following recitals and resolutions: WHEREAS: The Articles of Incorporation of this corporation provide for a class of shares known as Preferred Stock, issuable from time to time in one or more series; and WHEREAS: The Board of Directors of this corporation is authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, to fix the number of shares constituting any such series, and to determine the designation thereof, or any of them; and WHEREAS: This corporation has not issued a series of Preferred Stock, and the Board of Directors of this corporation desires, pursuant to its authority as aforesaid, to determine and fix the rights, preferences, privileges and restrictions relating to a series of said Preferred Stock and the number of shares constituting the designation of said series; NOW, THEREFORE, BE IT RESOLVED: That the Board of Directors hereby fixes and determines the designation of, the number of shares constituting, and the rights, preferences, privileges and restrictions relating to, said series of Preferred Stock as follows: -1- 2 (1) Designation of Preferred Shares. The corporation shall have a series of Preferred Stock which shall be designated "Series A Preferred Stock" (the "Series A Preferred Stock"). (The Series A Preferred Stock is hereinafter sometimes referred to as the "Preferred Stock.") (2) Number of Preferred Shares. The number of shares constituting the Series A Preferred Stock shall be 250,000. (3) Dividends. The Holders of the Series A Preferred Stock shall be entitled to receive dividends at the rate of eight percent (8%) per annum of the original issue price per share of Series A Preferred Stock, out of any funds legally available therefor, payable on each January 1, April 1, July 1 and October 1 after the issuance of the Series A Preferred and so long as any shares of Series A Preferred Stock shall be outstanding. Such dividends shall be cumulative, so that if the full dividends in respect of any previous dividend period shall not have been paid on the Series A Preferred Stock at the time outstanding, whether or not earned, whether or not funds of the corporation are legally available therefor and whether or not declared by the Board, the deficiency shall be fully paid or declared and set apart for such shares (without interest) before any dividend or other distribution shall be paid on or declared or set apart for any other class or series of Common Stock or Preferred Stock of the corporation, whether now or hereafter authorized, and before any redemption, retirement, purchase or other acquisition of any other class or series of Common Stock or Preferred Stock of the corporation, whether now or hereafter authorized. The Company may pay the dividend on the Series A Preferred Stock in cash, or through the issuance of additional shares of Series A Preferred Stock having an issue price equal to the amount of the dividend, or through a combination of the foregoing. (4) Liquidation Preference. a. Preference on Series A Preferred Stock. In the event of any liquidation, dissolution or winding up of the corporation, either voluntarily or involuntarily, the holders of shares of Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the corporation to the holders of shares of any other class or series of Common Stock or Preferred Stock of the corporation, an amount equal to Ten Dollars ($10.00) per share plus a further amount equal to any dividends declared but unpaid on such shares, as either such amount may be adjusted from time to time to give effect to stock splits, stock dividends and similar transactions affecting the Series A Preferred Stock. All of the preferential amounts to be paid to the holders of shares of Series A Preferred Stock under this -2- 3 Section shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any assets of the corporation to, the holders of shares of Common Stock in connection with such liquidation, dissolution or winding up. After the payment or the setting apart for payment to the holders of the Series A Preferred Stock of the preferential amount so payable to them, the holders of shares of Common Stock shall be entitled to receive all remaining assets of the corporation. If, upon such liquidation, dissolution or winding up of the corporation, the assets of the corporation available for distribution are insufficient to provide for the payment of the full preferential amount for each share of Series A Preferred Stock outstanding, such assets as are available shall be distributed ratably among the holders of shares of Series A Preferred Stock. b. Consolidation or Merger. A consolidation or merger of the corporation with or into any other corporation or corporations, or a sale of all or substantially all of the assets of the corporation, or a series of related transactions in which more than fifty percent (50%) of the voting power of the corporation is disposed of, shall not be deemed to be a liquidation, dissolution or winding up within the meaning of this Section (4). c. Noncash Distributions. If any of the assets of the corporation are to be distributed other than in cash under this Section (4), then the Board of Directors of the corporation shall promptly engage independent competent appraisers to determine the value of the assets to be distributed to the holders of shares of Series A Preferred Stock or Common Stock. The corporation shall, upon receipt of such appraiser's valuation, give prompt written notice to each holder of shares of Series A Preferred Stock and Common Stock of the appraiser's valuation. d. Consent for Certain Repurchase. Each holder of an outstanding share of Series A Preferred Stock shall be deemed to have consented, for purposes of Chapter 5 of the California General Corporation Law, to distributions made by the corporation in connection with the repurchase of shares of Common Stock issued to or held by employees or consultants upon termination of their employment or services pursuant to agreements providing for the right of said repurchase between the corporation and such persons. (5) Conversion. The holders of the shares of Series A Preferred Stock shall have the following conversion rights (the "Conversion Rights"). -3- 4 a. Right to Convert. Each share of Series A Preferred Stock initially shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share and on or before 5:00 p.m. California time on December 31, 1997, at the office of the corporation or any transfer agent for the Series A Preferred Stock into ten (10) fully paid and nonassessable shares of Common Stock of the corporation (the "Conversion Ratio"). After December 31, 1997, the shares of Series A Preferred Stock shall not be convertible into shares of Common Stock or any other securities of the corporation. b. Adjustments to Conversion Ratio. (i) Stock Dividends and Subdivisions. If, after the date of the first issuance of shares of Series A Preferred Stock, the corporation shall issue additional shares of Common Stock, by reason of the declaration or payment of any dividend on the Common Stock payable in Common Stock or by reason of a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock) without a corresponding subdivision or dividend with respect to the Series A Preferred Stock, the Conversion Ratio of the Series A Preferred Stock in effect immediately prior to such declaration or subdivision shall, concurrently with the effectiveness of such declaration or subdivision, be proportionately increased. (ii) Adjustments for Combinations or Consolidation of Common Stock. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock without a corresponding combination or consolidation with respect to the Series A Preferred Stock, the Conversion Ratio of the Series A Preferred Stock in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately decreased. (iii) Adjustment for Merger, Reorganization, etc. In the case of any merger of the corporation with or into another corporation or the transfer of all or substantially all of the assets of the corporation to another corporation in which the shareholders of the corporation are to receive cash, securities or other consideration for their shares, each share of Series A Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the corporation deliverable upon conversion of the shares of Series A Preferred Stock would have been entitled upon such merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board -4- 5 of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of shares of Series A Preferred Stock, to the end that the provisions set forth herein (including all provisions with respect to changes in and other adjustments of the Conversion Ratio) shall thereafter be applicable as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of Series A Preferred Stock. c. Automatic Conversion. (i) Public Offering. Each share of Series A Preferred Stock automatically shall be converted into shares of Common Stock at the then effective Conversion Ratio on the earlier of (A) 5:00 p.m. California time on December 31, 1997 and (B) the closing of a public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the corporation to the public providing gross proceeds to the corporation of not less than Five Million Dollars ($5,000,000). (ii) Procedure. In the event of such automatic conversion, the person(s) entitled to receive shares of Common Stock issuable upon such automatic conversion of the shares of Series A Preferred Stock shall not be deemed to have converted such shares of Series A Preferred Stock until immediately prior to the event giving rise to such conversion. Upon the occurrence of such event, the outstanding shares of Series A Preferred Stock shall be converted automatically and without further action by the holders of said shares and whether or not the certificates representing said shares are surrendered to the corporation or its transfer agent; provided that the corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of any shares of Series A Preferred Stock unless certificates evidencing such shares of Series A Preferred Stock are either delivered to the corporation or any transfer agent as hereinafter provided, or the holder notifies the corporation that said certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the corporation to indemnify the corporation for any loss incurred by it in connection therewith. Upon the occurrence of the automatic conversion of any shares of Series A Preferred Stock, the holders of the shares of Series A Preferred Stock shall surrender the certificates representing said shares at the office of the corporation or of any transfer agent for Series A Preferred Stock. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in such holder's name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of Series A -5- 6 Preferred Stock surrendered were convertible on the date on which the event effecting the automatic conversion occurred. d. Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon conversion of any shares of Series A Preferred Stock and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Any conversion of shares of Series A Preferred Stock pursuant to this Section (5) by any holder shall be done on an aggregate basis taking into account all shares of Series A Preferred Stock held by such holder (i.e., such holder shall have no more than one fractional share of Series A Preferred Stock upon such conversion). Before any holder of shares of Series A Preferred Stock shall be entitled to convert the same into full shares of Common Stock, other than by reason of the automatic conversion provided in Section (5) (c) above, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the corporation or of any transfer agent for Series A Preferred Stock, and shall give written notice to the corporation at such office that the holder elects to convert the same, and shall state therein the holder's name or the name or names of the nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued. The corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of shares of Series A Preferred stock, or to his nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid. Except as set forth in this Section (5) such conversion shall be deemed to have been made immediately prior to the close of business on the day of such surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. Upon conversion of only a portion of the number of shares of Series A Preferred Stock represented by a certificate so surrendered for conversion, the corporation shall issue and deliver to, or upon the written order of, the holder of the certificate so surrendered for conversion, at the expense of the corporation, a new certificate covering the number of shares of Series A Preferred Stock representing the unconverted portion of the certificate so surrendered. e. Transfer Costs. The corporation shall pay any and all documentary stamp and other transactional taxes attributable to the issuance or delivery of shares of Common Stock of the corporation upon conversion of any shares of Series A Preferred Stock. f. No Impairment. The corporation will not, without the approval of the requisite number of shares of Series A -6- 7 Preferred Stock by amendment of its Articles of Incorporation or this Certificate of Determination or through any reorganization, transfer of assets, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section (5) and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of shares of Series A, Preferred Stock against impairment. g. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Ratio for any shares of Series A Preferred Stock pursuant to this Section (5) the corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and shall furnish to each holder of shares of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The corporation shall, upon the written request at any time of any holder of shares of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Ratio at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the shares of Series A Preferred Stock held by such holder. h. Common Reserved. The corporation shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of all of the outstanding shares of the Series A Preferred Stock. i. Registration. If any shares of Common Stock to be reserved for the purpose of conversion of shares of Series A Preferred Stock require registration or listing with, or approval of, any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise, before such shares may be validly issued or delivered upon conversion, the corporation will, in good faith and as expeditiously as possible, at its expense, endeavor to secure such registration, listing or approval, as the case may be. j. Status of Shares. All shares of Common Stock which may be issued upon conversion of the shares of Series A Preferred Stock will upon issuance by the corporation be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof. -7- 8 k. Cancellation of the Shares. Upon conversion of any shares of Series A Preferred Stock into Common Stock, said converted shares of Series A Preferred Stock shall resume the status of authorized and unissued shares of Series A Preferred Stock of the corporation. l. Notices of Record Date. In the event of any taking by the corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the corporation shall mail to each holder of shares of Series A Preferred Stock, at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. m. Notices. Any notice required by the provisions of this Section (5) to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the corporation. (6) Voting Rights. Except as otherwise required by law or by the Articles of Incorporation of the corporation, the shares of Series A Preferred Stock and Common Stock shall be voted together as a single class at any annual or special meeting of shareholders of the corporation, or, may act by written consent in the same manner as the corporation's Common Stock, upon the following basis: each share of Series A Preferred Stock issued and outstanding shall have that number of votes equal to the number of shares of Common Stock into which each share of Series A Preferred Stock is then convertible, except that fractional shares shall not be permitted, and any fractional voting rights resulting from this formula (after aggregating all shares of Common Stock into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). (7) Protective Provisions. So long as any shares of Series A Preferred Stock shall be outstanding the corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least fifty percent (50%) of the outstanding shares of Series A Preferred Stock: a. Change of Rights. Alter or change the rights, preferences, or privileges of the Series A Preferred Stock so -8- 9 as materially and adversely to affect the Series A Preferred Stock; or b. Authorized Number. Increase the authorized number of shares of Series A Preferred Stock; or c. Create New Class. Create any new class or series of shares having preferences over, or being on a parity with, Series A Preferred Stock then outstanding. RESOLVED FURTHER: That the Chairman of the Board, the President or any Vice President, and the Secretary, Chief Financial Officer, the Treasurer, or any Assistant Secretary or Assistant Treasurer of this corporation are each authorized to execute, verify and file a certificate of determination of preferences in accordance with Nevada law. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of October 20, 1995. /s/ CHRISTOPHER D. MICHAELS ------------------------------------- Christopher D. Michaels President /s/ JEFFREY KRAMER ------------------------------------- Jeffrey Kramer Secretary The undersigned, Christopher D. Michaels and Jeffrey Kramer, the President and Secretary, respectively, of Nevada Manhattan Mining Incorporated, a Nevada corporation, declare under penalty of perjury that the matters set out in the foregoing Certificate of Determination of Preferences of Series A Preferred Stock are true of their own knowledge. EXECUTED at Los Angeles, California, on October 20, 1995. /s/ CHRISTOPHER D. MICHAELS ------------------------------------- Christopher D. Michaels /s/ JEFFREY KRAMER ------------------------------------- Jeffrey Kramer -9- EX-5 10 EXHIBIT 5 1 EXHIBIT 5 [LETTERHEAD REINSTEIN, PANTELL & CALKINS] December 4, 1996 FILE NO ___________ NEVADA MANHATTAN MINING INCORPORATED 5038 North Parkway Calabasas Suite 100 Calabasas, California 91302 Re: Proposed sale of Common Stock in Nevada Manhattan Mining Incorporated; Our File No. NE6042M.01 Gentlemen: We have acted as Special Counsel to Nevada Manhattan Mining Incorporated (the "Company") in connection with the Company's proposed offer and sale of Common Stock to be registered pursuant to Form SB-2 dated November 29, 1996, and the exhibits thereto attached. Capitalized terms not otherwise defined herein have the same meaning as set forth in the Prospectus which is appended to Form SB-2. In rendering the opinion hereinafter expressed, we have examined such documents, instruments, and matters of law as we have deemed appropriate including the following documents (collectively referred to herein as the "Related Documents"): 1. Form SB-2; 2. The Prospectus; 3. The exhibits accompanying Form SB-2; and 4. Such other documents including the Company's articles of incorporation, bylaws, minutes of directors meetings and other documents pertinent to the opinion herein expressed. In conducting our examination, we have assumed: (i) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies; (ii) the accuracy of the representations and warranties of factual matters made by the Company in any certificates delivered to us for our examination in the Related Documents; and (iii) other than the Related Documents, there are no documents between the Company and other parties which would limit, expand, 2 REINSTEIN, PANTELL & CALKINS ATTORNEYS AT LAW or otherwise modify the respective rights and obligations of the Company other than those set forth in the Related Documents or which would have an effect on the opinion herein rendered. As to questions of fact material to certain matters set forth in this opinion except as otherwise provided herein, we have relied solely upon a certificate of the Company duly executed by a person authorized to execute such certificates. Based on and subject to the foregoing and the limitations set forth herein and based on our examination of such questions of law as we have deemed appropriate under the circumstances, we are of the opinion that the Common Stock when sold pursuant to the terms and conditions outlined in the Prospectus will be legally issued, fully paid, and non-assessable. We are qualified to practice law in the state of California and we do not purport to express any opinion herein concerning any law other than the laws of the state of California and the federal law of the United States of America. This opinion is limited to the matters expressly set forth herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. This opinion is as of the date shown above. We have not undertaken and hereby disclaim any obligation to advise you of any change in any matter after the date hereof which is otherwise stated in this opinion. Very truly yours, REINSTEIN, PANTELL & CALKINS EX-10.(I) 11 EXHIBIT 10.(I) 1 Exhibit 10.(i) MINING AGREEMENT ---------------------------------- THIS MINING AGREEMENT, made and effected this 4th day of April, 1987 is by and between: ----- Anthony C. Selig (owner/seller) & where applicable; Dixie Exploration Corporation a Nevada Corporation, and Anthony C. Selig and Associates, 2805 S. Red Rock Street Las Vegas, Nevada 89180-5359, party of the first part, herein after referred to as 'Seller', and TWA ASSOCIATES T. W. Anderson (Agent & Individually) 540 Lake Terrace Drive Boulder City, Nevada 89005 party of the second part, herein after referred to as 'Buyer', and EPIC ENTERPRISES, LTD. a Nevada Corporation Christopher D. Michaels, President 1771 E. Flamingo Avenue, Suite 200 Las Vegas, Nevada 89109 party of the third part, herein after referred to as 'Assignee'. WITNESSETH: For and in consideration of the premises and the covenants and agreements of the respective parties hereto, herein set forth, it is mutually covenanted and agreed by and between the parties hereto as follows: 1. DEFINITIONS. It is hereby agreed that certain words and phrases used throughout this agreement shall be defined and construed as follows: A. 'MINING CLAIMS', as used herein, means only those mining claims, or portions or fractions thereof, as named and listed in Exhibit #1 attached hereto and incorporated herein by reference as though fully set forth, that Seller owns or Seller has under lease/option in the Manhattan Mining District, Nye County, Nevada, (Township BN, Range 44E, Sections 20, 21, 22, 27, 28, 29,) together with all unmined ore, timber, dips, spurs, and angles situated thereon or therein, water rights, or appurtenances - 1 - 2 thereto, except those dumps, tailings and materials which are excluded per Exhibit #1 and further delineated by the map named Exhibit #6 attached hereto and incorporated herein by reference as though fully set forth, of the Earl, Bath, and Consolidated shafts area. B. 'ADVANCED PAYMENT', as used herein means the amount required to be paid by Buyer to Seller on a date or dates specified herein, in anticipation of production payment to guarantee a specific monthly and specific yearly return to Seller. Advance payment shall be payable in the specified amount where no production payment has accrued during the preceding calendar month; where production payment during the preceding calendar month equals or exceeds the advanced payment, no advance payment shall be due or payable. C. 'PRODUCTION PAYMENT', as use herein, means the compensation or portion of proceeds becoming payable, by the Buyer to the Seller, or to be credited against advanced payments, arising from mining operations upon the said mining claims. D. 'MINING OPERATIONS', as used herein, includes any and every type of operation upon said mining claims, whereby materials are extracted or taken or mined therefrom, whether by mining or milling, or by any other method or means or any nature, kind or type. E. 'PRODUCTION', as used herein, means the mining and reduction of products into a marketable form or condition, and, if any product is mined in such condition that it can be marketed without further beneficiation, and is so marketed without further beneficiation, such shall be deemed to be production. F. 'PRODUCTS', as used herein, means, but is not limited to, any and all cinnabar, antimony, gold, silver, minerals, metals, values, sands, gravels, rare earths, rare metals, ores, chrome ores, aggregates, and any and all other materials of every kind and nature removed for purposes of sale, trade or transfer by the Buyer from, on, in or under the mining claims. G. 'PROCESSING', as used herein, means. but is not limited to, mining, milling, collecting, saving, separating, sizing, jigging, reducing, smelting, or otherwise beneficiating any products to such an extent as may be necessary to prepare the same in final condition for marketing. H. 'NET SMELTER RETURNS', as used herein, and upon which production payments are to be paid by the Buyer, means the net amount of money, in whatever form received, including any and all bonuses, premiums and rewards, directly and indirectly received from the sale, trade or transfer by Buyer of any products removed by the said Buyer from the mining claims, or any part thereof exclusive of haulage and smelting costs; however, for the purpose of -2- 3 computing production payments payable to Seller hereunder, such gross amount of money shall be computed on the basis of the London Gold Exchange pm (afternoon) fixed price on the day of sale or on the actual selling price for such products, whichever shall be the higher. No part of the cost or expense of mining or milling ore shall be deducted before production payments are computed. I. 'CAPITAL IMPROVEMENTS AND EQUIPMENT COSTS', as used herein, is the amount Buyer expends from time to time to explore, develope and mine the subject mine claims. Such expenditures by Buyer shall be allocated or written down over their useful life in accordance with usually accepted accounting practices for mining companies. J. 'ROYALTY PAYMENTS'. All payments herein provided shall be in U.S. Dollars, or gold or silver bullion where Buyer and Seller agree, upon thirty (30) days written notice. 2. 'GRANT OF POSSESSION'. The Seller, for and in consideration or the, covenants, conditions and agreements hereinafter reserved and set forth, and by the Buyer to be kept and preformed, has sold, and demised, and by these presents does hereby sell, and demise, unto the said Buyer, his and its executors, administrators, successors in title, and authorized assigns, all of the right, title , and interest of the mining claims described herein, the improvements thereon, water rights, and the appurtenances, for the purpose of exploring, sampling, mining, processing and any uses incidental thereto. 3. 'TERM'. The effective date of this MINING AGREEMENT is 4th day of APRIL, 1987 and shall, unless earlier terminated as provided herein, continue in full force and effect, subject to the terms and conditions herein contained until February 15, 1996. 4. 'INDEMNITY; HOLD HARMLESS'. Seller shall immediatedly record in the office of the county recorder of the county in which the mining claims are located a notice in compliance with the requirements of Section 108.234 of the Nevada Revised Statutues. Seller hereby agrees to indemnify and hold harmless Buyer from any and all liability or responsibility from any mining operations of Seller or his representatives, agents, contractors, emloyees, successors in title, or assignees upon the mine and/or mill tailings or dumps as described in Exhibit #1, attached hereto and incorporated herein. Buyer hereby agrees to indemnify and hold harmless Seller from and any all liabliity or responsibility from any mining operations of Buyer or his representatives, agents, contractors, employees, successors in title, or assingees upon the said mining claims as descirbed in Exhibit #1, and incorporated herein. 5. 'NOTICES TO MINE INSPECTOR'. Buyer covenants with -3- 4 the Seller to mail to the State Inspector of Mines. at Carson City, Nevada, with a like copy of such to Seller, prior to the commencement of mining operations, and not later than June 1 in each year during the term hereof, a written, detailed report, in compliance with Section 512.160, Nevada Revised Statutes. 6. 'COMPLIANCE WITH LABOR LAWS'. Buyer shall promptly pay when due all wages for work done and shall comply with all laws; federal, state and local pertaining to mining and milling operations, including, but not limited to, the carrying and maintaining of State Industrial Insurance System (SIIS) insurance on all employees, casual or otherwise, and to provide written proof of such coverage to the Seller within thirty (30) days of the date hereof. Seller warrants to Buyer that he has no outstanding or pending labor claims or labor liens against the herein named property for any work performed by Seller to this date, and agrees to indemnify Buyer for same. 7. 'POSSESSION: INSPECTION'. During the term of this agreement, and so long as Buyer performs all of the terms and conditions required herein, Buyer shall have the right to exclusive possession and quiet enjoyment of the said mining claims and appurtenances, subject however, to the permission hereby granted to the Seller, his agents or representatives, to have access to said mining claims at any and all reasonable times for the purpose of inspecting or examining the same, such entry and inspection to be made and conducted at the sole risk of the Seller and so as not to interfere with Buyer's operations or production. Seller shall give Buyer seven (7) days written notice of such intent to inspect. B. 'PLACE OF PAYMENT'. Buyer shall pay to the Seller a payment of nine percent (9%) of the net smelter returns on all products mined, milled or extracted from said mining claims including all ores or other materials, all such payments to apply towards the Purchase Price balance. Upon proper completion of a vertical mine shaft on the property to a depth of 650 feet, the herein specified net smelter return payment percentage shall decrease from nine percent (9%) to seven percent (7%). The Purchase Price for Seller's equity in the herein said mining claims and appurtenances thereto is Two Million Two Hundred Thousand dollars ($2,200,000.00). All minimum monthly payments, minimum semi-annual payments, and production payments shall apply towards the Purchase Price. There shall be no penalty for prepayment. Buyer shall pay to Seller the sum of Two Thousand Five Hundred dollars ($2,500.00) beginning on April 4, 1987, and shall pay the same for each and every consecutive month thereafter on the FOURTH (4th) thereof, for the term of this Mining Agreement, such payments to credited to the Purchase Price, however if the payment of the production payment -4- 5 as provided for herein, shall exceed the minimum month payment of $2,500.00, then the production payment shall suffice as payment for that particular month. Additionally, the Buyer shall pay to Seller the following semi-annual payments which shall be credited to the Purchase Price, however said semi-annual payments shall not be offset by the regular minimum monthly payments previously paid or becoming due on the FOURTH (4th) of each month. Buyer shall be allowed a credit towards the following semi-annual payments for production payments previously paid where and for the amount of such production payment that exceeds the minimum monthly payment due: August 15, 1987 $ 27,500.00 February 15, 1988 $ 25,000.00 August 15, 1988 $ 50,000.00 February 15, 1989 $ 50,000.00 August 15, 1989 $ 75,000.00 February 15, 1990 $ 75,000.00 August 15, 1990 $ 100,000.00 February 15, 1991 $ 100,000.00 August 15, 1991 $ 125,000.00 February 15, 1992 $ 125,000.00 August 15, 1992 $ 147,500.00 February 15, 1993 $ 147,500.00 August 15, 1993 $ 147,500.00 February 15, 1994 $ 147,500.00 August 15, 1994 $ 147,500.00 February 15, 1995 $ 147,500.00 August 15, 1995 $ 147,500.00 February 15, 1996 $ 147,500.00
Said Purchase Price shall include all appurtenances and improvements as hererinabove described. Upon payment of the Purchase Price, each party shall be requireed to comply with all applicable State laws with regard to the conveyance thereof and the Seller shall convey and transfer said mining claims to Buyer by a good and sufficient Quitclaim Deed. All payments required to be made hereunder shall be paid to the Seller at the address as provided herein, unless and until the Seller shall give written notice of a change of address by certified mail, return receipt requested, mailed at least -5- 6 thirty (30) days prior to the effective date of the change of address. If an escrow is established as hereinafter provided all payments shall be paid to the Escrow Agent for the benefit of the Seller. If Buyer defaults as herein provided for in his preformance of any of the convenants or terms herein provided or of the payments to by made on a monthly basis, semi-annual basis, or production royalty basis, then in such event all sums previously paid by Buyer to Seller shall be retained by Seller. In the event of termination of this Mining Agreement as a result of breach or default by Buyer, Buyer shall not be entitled to compensation for any additional improvements or additions attached on the property, and said improvements or additions attached on the property shall be the sole property of Seller. All operations, improvements and additions of Buyer shall be done at his sole expense and Buyer further agrees that any improvement, including buildings fixtures, or equipment attached on the property shall be fully paid for and in no way shall encumber the property or the Seller. 9. 'RECORDS OF PRODUCTION'. It is understood and agreed between the parties hereto that copies of original settlement invoices on all products processed and sold from said mining claims shall be filed quarterly by the Buyer with the Seller on or before the 15th day after each quarter relating to all processed products from the said mining claims for the preceding calendar quarter, accompainied in each case by check in payment of the production royalties accrued as a result of said production. Buyer shall implement and install standard industry procedures for sampling the head ore and tailings discharge. 10. 'FORCE MAJEURE'. None of the parties hereto shall be liable to the other for failure to perform the work required to be performed hereunder for such period of time as failure of performance is caused by strikes, weather, acts of God or national war emergency. This provision shall not, however, relieve the Buyer of his obligation to make payments as required hereunder. 11. 'ASSESSMENT WORK AND TAXES'. Buyer shall pay all taxes and perform all annual assessment work required by law in order to hold the mining claims for each assessment year, during the entire term of this Agreement or any extentions thereof, and shall record in the office of the county recorder of the county in which said minimg claims are situated, proper proof, in affidavit form, of the completion of the same, both the performance of work and the recording to be completed by the Buyer at his sole expense at least forty five (45) days prior to the date required by law for such recordation annually. It is provided, however, that, if this agreement is terminated or abandoned on or before the first day of July in any such -6- 7 assessment year, the Buyer shall be under no obligation to perform the assessment work for such assessment year or thereafter. If this agreement is terminated or abandoned after the first day of July in any assessment year, Seller shall have the right to enter upon said mining claims at any time or times during the remainder of the assessment year for the purpose of performing or completing the above required assessment work for said assessment year. 12. 'PROGRESS REPORTS'. Buyer shall furnish to the Seller at least quarterly, a written progress report reciting in detail any engineering data, assay reports, drill reports and logs and other information pertinent to the exploration and development of said mining claims. 13. 'IMPROVEMENTS'. At the termination of this agreement by lapse of time, forfeiture or otherewise, the Buyer agrees to deliver up to said Seller the said mining claims, allowing for the mining and develpement thereon by the Buyer. In the event of the abandonmnet, termination or cancellation of the interest of the Buyer herein, as hereinafter set forth, it is understood and agreed that all improvements, including rail in place, made in or about the said property by the Buyer and affixed to the realty and constituting a part thereof, together with copies of operational maps, assays, and reports, shall become the property of the Seller at no additional expense; but all property of a personal nature including machinery, tools, and equipment, or those things not affixed in place can be removed, upon 72 hours notice in writing by Buyer to Seller of Buyer's intent to enter upon said property including from underground, provided such removal is done in a safe and workmanlike manner by the Buyer within one hundred twenty (120) days (weather permitting) from the date of such abandonment, cancellation or termination, failing which the same shall revert to the Seller permanently at no additional expense. Any and all water rights, applications or certificates or appropriation which are acquired by the Buyer, from this date forward in connection with the mining operations contemplated herein shall be expressly subject to this provision. 14. 'TERMINATION'. In the event that the Buyer shall fail to make any payment or payments as herein provided or shall fail to perform each and every covenant, term and condition as herein provide, the Seller may, after thirty (30) days notice in writing given to Buyer within which to cure said default or breach, and provided said default or breach has not been corrected during said 30-day period, declare said Mining Agreement forfeited, cancelled and terminated, and enter and repossess all of the subject property herein described, with or without process of law. In the event of a breach or default herein occuring, other than the payment of the minimum monthly, semi-annual, or production payments, and after notice said breach or default, -7- 8 that cannot be remedied by the payment of monies, Buyer shall immediately commence proceedings to cure such breach or default by appropriate performance and prosecute the same to completion without undue delay. 15. 'NON-PARTNERSHIP'. This agreement shall not constitute or be construed to constitute a partnership, mining partnership, joint venture or joint operation. The full control and determination as to manner, extent and character of mining operations, subject only to the restrictions herein provided, shall be determined by Buyer without interference from Seller. 16. 'BANKRUPTCY; INSOLVENCY'. It is agreed that the filing of a Chapter 7 petition in bankruptcy by the Buyer, or the adjudication that the Buyer is bankrupt, or an assignment for the benefit of creditors, or the levy of an execution against the interest of Buyer in said mining claims to enforce or satisfy any judgement against Buyer not stayed within thirty (30) days by an appeal bond shall permit the Seller to cancel this agreement, and Buyer shall forfeit all his rights to the possession of the mining claims, and neither this agreement nor any of Buyer's rights hereunder shall ever be an asset of the estate of the Buyer in the event that he is bankrupt of files a petition in bankruptcy under the bankruptcy laws of the United States, or makes an assignment for the benefit of creditors. It is further agreed that the filing of a Chapter 11 shall be cured within a ninety (90) days of filing thereof. 17. 'TIME OF ESSENCE; INUREMENT'. Time is of the essence of this agreement, and the same shall be binding upon and inure to the benefit of all of the heirs, administrators, executors, successors and assign of the parities hereto. No waiver by Seller of any breach by Buyer, or any extension of the due date of any payment hereunder granted at Seller's option in writing, or the acceptance by Seller of a payment after its due date, shall in any manner operate as a waiver of any subsequent breach or default of Buyer thereafter occurring; and any uncured breach or default shall not affect the right of Seller to accelerate the balance of the purchase price or declare a forfeiture hereunder and pursue any other remedy afforded to him by the terms of this contract, or at law, by reason on any subsequent act or omission of Buyer. 18. 'NOTICES'. Any notice required or permitted to by given hereunder shall be deemed properly given upon delivering the same personally to the party to be notified, or upon mailing such notice, by registered or certified mail, return receipt requested, postage prepaid, to the party to be notified, at the address herein above set forth on the first page of this Mining Agreement, or such other address as the party to be notified may have designated thirty (30) days prior thereto by written notice to the other. The date on which the receiving party signs the -8- 9 mailing certificate shall constitute the date of delivery, however, not to exceed forty eight (48) hours from the date of mailing. 19. 'INTERPRETATION; CONSTRUCTION'. The paragraph captions or headings in this agreement are inserted for convenience only, and shall not be considered a part of this agreement, or used in its interpretation. Such captions in no way define, limit or describe the scope or intent of this mining purchase agreement, and are for reference only. Whenever used, the singular number shall include the plural, and the plural the singular and the use on any gender shall include all other genders. This agreement shall be governed by laws of the State of Nevada and by laws of the United States of America applicable to the location and possession of, and title to, the said mining claims. In the event litigation is instituted as a result of this agreement, then the prevailing party thereof shall be also entitled to all court costs, travel expenses, and attorneys fees incurred therein. It is understood and agreed by the parties hereto that if any part, term or provision of this contract is by the courts held to be illegal or in conflict with any law of the State of Nevada, or the United States, the validity of the remaining portions or provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if the contract did not contain the particular part, term or provisions held to be invalid. 20. 'RECORDS; CONFIDENTIALITY'. All Seller's records and reports, drill logs, testings, and maps shall be made available to Buyer to copy, use, refer to, and study upon request for same as said records are available and all such information and material shall be treated as strictly confidential and made available to no one else by Buyer. 21. 'BUYER'S OPERATIONS'. All Buyer's operation shall be conducted so as to fully comply with the laws of the State of Nevada in every respect and with all present or future rules, regulations and requirements promulgated by Federal, State or Local authorities. Buyer shall furnish to Seller copies of all licenses and permits as may be required of him and Seller agrees to assist Buyer, where possible, to obtain any such permits or licenses, however, Buyer shall not be held liable for any agencies' failure to issue any licenses or permits. Buyer agrees to erect, where necessary, and maintain a fence in order to secure any areas where toxic or hazardous materials may be used or stored. Buyer agrees not to move nor alter any of the present fixtures, buildings, or equipment without the express written consent of Seller which consent shall not be unreasonably withheld. It is agreed that Buyer has examined the property and knows the extent, -9- 10 and limitations thereof and purchases everything pertaining hereto in an "as is" condition and understands Seller extends no limited or implied warranty of any kind whatsoever and Seller expressly makes no representations regarding any mineral or ore values upon, in, or under said mining claims herein named. 22. 'BUYER'S MANAGEMENT DUTIES'. Buyer shall promptly pay for any and all labor performed and materials and supplies furnished in connection with the subject property, and in the event liens of any kind or description are filed against the mine claims described herein, to forthwith post a bond, or otherwise keep said property free and clear from any and all encumbrances. Failure to so do is sufficient cause for Seller to terminated this agreement. 23. 'BUYER'S INSURANCE REQUIREMENTS'. During the life of this agreement and until full payment of the Purchase Price hereunder, Buyer shall secure, maintain and pay the premiums for insurance covering the buildings, and other insurable improvements of the property, together with that personal property and replacements thereof, such insurance to include coverage against general and personal liability and property damage, and which coverage shall expressly and name as additional insured Anthony C. Selig and Dixie Exploration Corporation from any and all liability while Buyer is in possession or under contract and said coverage shall not be for less than Five Hundred Thousand ($500,000.00) dollars. Such insurance shall be written by sound and reputable insurance companies. All premiums for such insurance shall be paid by Buyer when due, and prior to delinquency. The policies shall be deposited with Buyer and copies thereof shall be deposited with Seller. Such policies shall provide that in the event of delinquency, Seller shall be notified thereof and Seller shall have the right to pay any delinquencies and be reimbursed therefore as further provided herein. If Buyer fails to pay any installment of tax or assessment against the property, any premium for insurance, or fails to make any filings as required by law when due, Seller may make such filings and may either pay Such sum together with interest and penalties thereon, if any, and cost of reinstatement, including attorneys' fees, if any, and add the amount thereof to the principal due from Buyer, and charge interest at the prevailing rate from the date of payment; demand repayment of such amounts and sue for the same if not promptly received from Buyer; or treat the failure of Buyer to make such payments or filings as a breach or default of this contract and pursue any remedy available to Seller on breach or default thereof. 24. 'RIGHT TO USE OF SURFACE'. Seller agrees that Buyer shall have the right to alter any of the surface of said mining claims to the extent that may be necessary to mine, process, and carry -10- 11 away said ores or other metals, as provided in this agreement, and shall have the right to remove any trees or shrubs or other plants, except those protected by law, that may be in the way of mining the said ores or other metals by stripping or tunneling; and Buyer shall have the right to construct a road or roads over said premises for the purpose of delivering said ores and minerals, mining equipment, and other times pertaining to the mining operation onto or from the roads presently existing in the area. 25. 'WARRANTIES AND REPRESENTATIONS'. Seller hereby sells all said mining claims and warrants that they have been duly located and that Seller has the right to possession of said mining claims and the right to sell his interest therein and that the assessment work for the unpatented claims named herein have been properly performed and filed accordingly and all taxes of patented claims have been paid to date. Seller warrants that he has not encumbered the herein named claims. Buyer, with or without Seller, shall have full right to take any action necessary, including judicial proceedings, to cure any defect in Seller's title to the mining claims named herein and the ground covered thereby and Seller and Buyer agree to cooperate and assist each other in every way in actions taken and to execute all documents and to take such other action as may be reasonably necessary to assist each other. Buyer may recover from semi-annual payments thereafter to become due to Seller all reasonable costs and expenses, including attorney's fees, incurred by Buyer in curing any defects in Seller's title. If the United States or any third person attacks the validity of any of the mining claims herein described, Buyer, with or without Seller, may choose to defend their validity, and in such event, Buyer may recover form all semi-annual payments thereafter to become due to Seller all reasonable costs and expenses including attorney's fees incurred by Buyer in defending the validity of such claims. Seller agrees to promptly give Buyer notice of any such problems to which it has knowledge and assist Buyer, and Buyer shall assist Seller, in every way as may be necessary to defend the validity of said claims. 26. 'ASSIGNMENT; ASSIGNS'. All assignments are void without prior written consent of Seller, such consent not to be unreasonably withheld. Any such request for assignment by Buyer shall be by written notice. Notice of Seller's decision shall be received by Buyer within ten (10) days of receipt of Buyer's request and in the event of no written response or decision from Seller within ten (10) day, Buyer may assume consent has been given by Seller to Buyer. Buyer herein agrees to incorporate in and make a part of any agreement, contract, lease, or understanding wherein any rights, or interests herein are assigned or transferred in any -11- 12 way to another or others, that in the event of Buyer's default or termination, that said assignees may take all action necessary to remedy or cure Buyer's breaches or defaults. In the event of termination of Buyer's rights contained herein, Assignee agrees that in the event it assigns any rights, title, and interest to said mining claims to anyone else, any contract thereto will contain a clause that acknowledges that the rights that the sub-assignee has are only those that belong to the Assignee pursuant to the instant contract. Buyer shall make no representations or warranties inconsistent with the Underlying Agreements hereto and shall cause any and all authorized assignees to ratify and acknowledge this Mining Agreement with its Underlying Agreements. 27. 'UNDERLYING AGREEMENTS - ARGUS RESOURCES, INC.' Buyer agrees to fully assume that certain 'Lease and Option to Purchase Agreement' by and between Argus Resources, Inc. and Anthony C. Selig, (& Dixie Exploration Corporation and Anthony C. Selig & Associates) dated November 15, 1982, attached hereto as Exhibit #2, with its Exhibits; #1, #2, and 'A', and incorporated herein by reference as though fully set forth. Any payments paid by Buyer to Argus per the payment schedules of Exhibit #2 shall in no way or manner apply toward or act as an offset of the Purchase Price of this Mining Agreement or against any payments due hereunder. Buyer shall pay the payments due under Exhibit #2 directly to Argus Resources, Inc. and Buyer shall furnish immediatley evidence to Seller of every such payment made to Argus. Any agreements or understandings, written or oral, by and between Buyer/Assignee and Argus Resources, Inc. that effects the rights of Seller as regards the 'Lease and Option to Purchase Agreement' (Exhibit #2) shall be provided to Seller. 28. 'RELEASE; TWA ASSOCIATES MANHATTAN PROPERTIES AGREEMENT'. In full and total consideration of the Promissory Note dated December 09, 1985 (Exhibit #8 of the TWA Associates Manhattan Properties Agreement of June 4 and December 9, 1985) in the amount of $22,822.25, with interest thereon, TWA Associates and T. W. Anderson hereby agree to forever relinquish, release, transfer and convey all thier rights, title and interest to Anthony C. Selig and Dixie Exploration Corporation in that certain equipment per that Bill of Sale dated October 06, 1986, said equipment stored in Manhattan, Nevada and more exactly listed below: (1) Adams Motor Grader (1) 5 x 6 glasslined pfaudler tank (1) app. 10 x 50 House/Office trailer (1) 2" Galigher vac seal pump (1) lot first aid stretchers -12- 13 (1) mini pulverizer for sampling TWA Associates & T. W. Anderson and Anthony C. Selig (& Dixie Exploration Corporation and Anthony C. Selig & Associates) hereby fully and completely release one and each other in every way of every term, covenant, and condition of the Manhattan Properties Agreement, dated June 04, 1985 and December 09, 1985, together with all its Addendums, Amendments, and Exhibits #1 - #9 by and between themselves. TWA Associates, T. W. Anderson and Seller agree that this Mining Agreement shall replace and supercede any and all prior agreements, whether written or oral, concerning the Manhattan mining properties and that no further considerations of any kind or manner pertinent thereto are due each other. TWA Associates, T. W. Anderson, and Anthony C. Selig and Dixie Exploration shall separately execute an Equipment and Property release, as described above, for the purposes of recordation with the State of Nevada and County of Nye. In the event that Seller is sued because of any acts or ommissions by Buyer or Assignee, prior to or after execution of this Mining Agreement, then Buyer/Assignee shall be fully liable to Seller for any and all costs incurred by Seller and his representatives in defense of any such actions or litigations, including but not limited to attorneys fees, court costs, and travel costs. 29. 'UNDERLYING AGREEMENTS - MIDCONTINENT MINING LEASE'. Simultaneous with the execution of this Mining Agreement, TWA Associates and T. W. Anderson does assign, transfer, and convey all their rights, title and interest in that certain Mining Lease dated December 07, 1985 by and between TWA Associates & T. W. Anderson and Mid-Continent Mining & Exploration, Inc., said Mining Agreement attached hereto as Exhibit #4 and incorporated herein by reference as though fully set forth, to Anthony C. Selig. It is understood that assignment of said Mid-Continent Mining Agreement, in total, to Selig does hereby, forthwith and henceforth terminate any contractual obligations between TWA Associates and T. W. Anderson and Mid-Continent Mining & Exploration, Inc. and that no further considerations of any kind or nature are due each other nor are any other considerations due from Selig to TWA Associates and T. W. Anderson in regard for such assignment. Mid-Continent Mining & Exploration, Inc. does hereby acknowledge and accept such assignment of said contract to Anthony C. Selig by written evidence of acceptance attached hereto as Exhibit #5, and incorporated herein by reference as though fully set forth. 30. 'ASSIGNMENT/ASSUMPTION - EPIC ENTERPRISES, LTD'. Simultaneous with the execution of this Mining Agreement, TWA Associates and T. W. Anderson, their assignees, -13- 14 representatives, associates, successors, and heirs do, for good and valuable consideration hereby acknowledged, do assign, transfer, convey, and relinquish forever all their rights, title, and interest in this Mining Agreement to Assignee, Epic Enterprises, Ltd.; and TWA Associates and T. W. Anderson expressly releases, in every manner and form whatsoever, and does hold harmless Anthony C. Selig, Dixie Exploration Corporation, Selig's associates and representatives, and Epic Enterprises, Ltd., its associates and representatives, with regard to the assignment, conveyance, and transfer of this Mining Agreement, in total, to Epic Enterprises, Ltd. Epic Enterprises, Ltd., its representative, associates, successors, heirs, and authorized assignees does hereby agree to assume in total, perform. follow, observe, obey, and abide by each and every term, condition, convenant, agreement, and payment schedule as herein outlined in this Mining Agreement as well as assume Seller's contractual obligations to Argus Resources, Inc. as set forth in that certain 'Lease and Option to Purchase Agreement' (Exhibit #2). This Mining Agreement sets forth the entire understanding between the parties hereto. This Mining Agreement shall inure to the benefit of and shall be binding upon the respective, heirs, executors, legal representatives, administrators, successors in interest and authorized assigns of the parties hereto. Any modifications or admendments must be executed in writing and signed by the applicable respective parties hereto. 31. 'OTHER DOCUMENTS'. All parties hereto agree to execute and deliver to the appropriate party hereto any and all instruments, agreements, permits, documents, or other writings made necessary by the instant agreement. 33. EXHIBITS: I. Exhibit #1: List of Mining Claims included in this Mining Agreement, with exclusions. II. Exhibit #2: 'Lease and Option to Purchase' by and between Argus Resources, Inc. and Anthony C. Selig (& Dixie Exploration Corporation & Anthony C. Selig & Associates), dated November 15, 1982. III. Exhibit #3: 'Mining Lease' by and between TWA Associates & T. W. Anderson and Mid-Continent Mining & Exploration, Inc., dated December 07, 1985. VI. Exhibit #4: Mid-Continent Mining & Exploration, Inc. Acknowledgement of Assignment. V. Exhibit #5: Map delineating Earl, Bath, and Consolidated mine shafts and mine dump areas. -14- 15 IN WITNESS WHEREOF, the parties hereto have executed this Mining Agreement this 4th day of April , 1987, in triplicate. ----- --------- SELLER: BUYER: /s/ ANTHONY C. SELIG /s/ T. W. ANDERSON - ---------------------------------- ---------------------------------- Anthony C. Selig, Individually T. W. Anderson, Individually DIXIE EXPLORATION CORPORATION TWA ASSOCIATES by /s/ ANTHONY C. SELIG by /s/ T. W. ANDERSON -------------------------------- -------------------------------- Anthony C. Selig, President T. W. Anderson, Agent ANTHONY C. SELIG & ASSOCIATES ASSIGNEE: EPIC ENTERPRISES, LTD. by /s/ ANTHONY C. SELIG -------------------------------- Anthony C. Selig, Trustee by /s/ DREW LAMBO -------------------------------- Drew Lambo, Board Director Senior Vice President STATE OF NEVADA ) ) ss. COUNTY OF CLARK ) On this 4th day of April , 1987, personally appeared before me, ----- ---------- a notary public, Anthony C. Selig, who acknowledged and before me executed the foregoing Mining Agreement, on behalf of himself, as President of Dixie Exploration Corporation, and as Trustee of Anthony C. Selig and Associates. /s/ MICHAEL THEODORODIS [SEAL] Michael Theodorodis - ---------------------------------- OFFICIAL SEAL Notary Public NOTARY PUBLIC-NEVADA CLARK COUNTY STATE OF NEVADA ) My Appt. Expires Apr. 19, 1987 ) ss. COUNTY OF CLARK ) On this 4th day of April , 1987, personally appeared before me, ----- ---------- a notary public, T. W. Anderson, who on behalf of himself (and as Agent for TWA Associates) acknowledged - 15 - 16 and before me executed the foregoing Mining Agreement. /s/ LELAND E. LUTFY [SEAL] LELAND E. LUTFY - ---------------------------------- Notary Public-State of Nevada Notary Public CLARK COUNTY My Appointment Expires Nov. 12, 1989 STATE OF NEVADA ) ) ss. COUNTY OF CLARK ) On this 4th day of April , 1987, personally appeared before me, ------- ---------- a Notary Public, Drew Lambo who acknowledged and before me executed the foregoing Mining Agreement as Senior Vice President of Epic Enterprises, Ltd. /s/ LELAND E. LUTFY [SEAL] LELAND E. LUTFY - ---------------------------------- Notary Public-State of Nevada Notary Public CLARK COUNTY My Appointment Expires Nov. 12, 1989 - 16 - EX-10.(II) 12 EXHIBIT 10.(II) 1 Exhibit 10.(ii) AMENDMENT AND AGREEMENT ----------------------- For TEN DOLLARS ($10.00) and other valuable consideration, the receipt of which is hereby acknowledged, Anthony C. Selig, Dixie Exploration Corporation, and Anthony C. Selig and Associates (hereinafter referred to as "Selig"); and Nevada Manhattan Mining Incorporated, (formerly Epic Enterprises, Ltd.), (hereinafter referred to as "Nevada"), agree to modify, in part, the Mining Agreement dated April 4, 1987, by and between Anthony C. Selig, Dixie Exploration Corporation, a Nevada corporation, Anthony C. Selig and Associates, and TWA Associates, and, Epic Enterprises, Ltd., and attachments thereto including without limitation Exhibit "2", as amended, and attachments and exhibits thereto; a two page AGREEMENT, dated April 4, 1987, by and between Anthony C. Selig, et al., and Epic Enterprises, Ltd., relative to the so called WC mining claims; and the "Amendment and Agreement", dated October 16, 1987, by and between Selig, Argus Resources, Inc., and Nevada, and acknowledge and agree to the additional agreements between the parties hereto as set forth herein. It is understood and agreed between the parties hereto that the instant Amendment and Agreement is not meant to, nor does it abrogate, any other rights, duties, obligations or interests of the parties hereto in the aforesaid documents not specifically enunciated in the instant Amendment and Agreement. 1. There is presently pending the U. S. District Court for the District of Nevada, Case No.: CV-LV 86-491, HDM, entitled Tannis Atkinson, et. al., Plaintiffs, vs. Anthony Selig, et. al., 1 2 Defendants. Selig is in no way desirous of settling this lawsuit or any other matters with the Plaintiffs, their associates or assigns; however, Nevada is desirous of having this lawsuit settled in order to effectuate the consummation of its Mining Agreement with Selig. Accordingly, Nevada promises to successfully negotiate a settlement of the said lawsuit so that no liability is fixed against the said Defendants, and to get the said Plaintiffs to execute a Stipulation for dismissal of the lawsuit with Prejudice and to get the Plaintiffs and the partners of Manhattan Mines, Ltd., Manhattan Mines, Ltd., II, and their successors and assigns to execute a General Release in favor of said Defendants and Selig which forever releases Selig and the Defendants from any and all acts of Selig and the Defendants whether related to the lawsuit or anything else; the Release and Stipulation shall also contain a statement that the Defendants and Selig do not admit any liability as a result of the said lawsuit or any other previous dealings with the Plaintiffs and the partners of Manhattan Mines, Ltd., Manhattan Mines Ltd., II, and their successors and assigns. This Agreement does not constitute an admission of fault or liability by the Defendants as related to said lawsuit. 2. It is agreed that on condition that the Plaintiffs in the aforesaid lawsuit execute a dismissal with prejudice of the aforesaid lawsuit on the basis of an agreement with Nevada, inconsideration of such dismissal and release, Selig agrees to reduce the purchase price of certain mining claims as set forth 2 3 in the Mining Agreement dated April 4, 1987, aforesaid contained in Paragraph 8 thereof from a purchase price of $2,100,000.00 reduced to $600,000.00 pursuant to the schedule set forth hereinafter. There shall be no penalty for prepayment. 3. The schedule of semi-annual payments due from Nevada or its successors or assigns to Selig pursuant to the April 4, 1987, AGREEMENT is amended as follows:
DATE PAYMENT ---- ------- 2/15/88 $25,000.00 8/15/88 $50,000.00 2/15/89 $50,000.00 8/15/89 $50,000.00 2/15/90 $50,000.00 8/15/90 $50,000.00 2/15/91 $50,000.00 8/15/91 $75,000.00
4. All negotiations, between the parties are merged in this Amendment and Agreement, and the documents specified herein, and there are no understandings or agreements between the parties hereto with respect to the transactions contemplated herein, other than those incorporated herein. This Amendment may not be modified, except by an instrument in writing duly executed by the applicable respective parties. 5. This Amendment and the other documents, referenced herein is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of their terms. 6. The parties hereto agree that this document shall be executed in duplicate originals and that until the above referenced Dismissal and Release Agreements are executed by all 3 4 parties, no copies of this document shall be made, the originals of this document shall be kept in the offices of JOSEPH AND DANIEL FOLEY ASSOCIATES and LELAND E. LUTFY, and the terms of this Agreement shall not be divulged to any third parties by any of the parties hereto, their attorneys, representatives, or employees. DATED this 9th day of December, 1987. /s/ ANTHONY C. SELIG ------------------------------------ ANTHONY C. SELIG, Individually SUBSCRIBED and SWORN to before me this 9th day of December, 1987. [SEAL] Notary Public-State of Nevada COUNTY OF CLARK DARLENE POPE My Appointment Expires July 30, 1991 /s/ DARLENE POPE - ------------------------------------------ NOTARY PUBLIC in and for said COUNTY and STATE /s/ ANTHONY C. SELIG ------------------------------------ DIXIE EXPLORATION CORPORATION, a Nevada Corporation (President) SUBSCRIBED and SWORN to before me this 9th day of December, 1987. [SEAL] Notary Public-State of Nevada COUNTY OF CLARK DARLENE POPE My Appointment Expires July 30, 1991 /s/ DARLENE POPE - ------------------------------------------ NOTARY PUBLIC in and for said COUNTY and STATE 4 5 /s/ ANTHONY C. SELIG --------------------------- ANTHONY C. SELIG AND ASSOCIATES SUBSCRIBED and SWORN to before me this 9th day of December, 1987. /s/ DARLENE POPE - --------------------------------- NOTARY PUBLIC in and for said COUNTY and STATE /s/ DREW LAMBO --------------------------- NEVADA MANHATTAN MINING INCORPORATED DREW LAMBO VP SUBSCRIBED and SWORN to before me this 9th day of December, 1987. /s/ DARLENE POPE - ------------------------------- NOTARY PUBLIC in and for said COUNTY and STATE 5 EX-10.(III) 13 EXHIBIT 10.(III) 1 Exhibit 10. (iii) MANHATTAN MINING PROPERTY AGREEMENT This Agreement is entered into this second day of March, 1989, by and between Argus Resources, Inc., a Nevada corporation, Argus Mines, Inc., a Nevada corporation, hereinafter referred to collectively as "Argus," and Nevada Manhattan Mining, Incorporated (formerly Epic Enterprises Ltd.), a Nevada corporation, hereinafter referred to as "Manhattan." WHEREAS, "Argus" is the owner in fee simple of certain mining claims which have been located within the Manhattan Mining District and as further specified in the "Lease and Option to Purchase Agreement" executed November 15, 1982, as shown in Exhibit 2 of the "Mining Agreement" dated April 4, 1987, and as amended on February 1, 1983; and WHEREAS, "Argus" has leased said mining claims with an option to purchase to Anthony C. Selig, Anthony C. Selig as Trustee of Anthony C. Selig and Associates, and Dixie Exploration Corporation, hereinafter referred to collectively as "Selig"; and WHEREAS, "Selig" has sub-leased the property and assigned the option to purchase to "Manhattan;" and WHEREAS, additional disputes have arisen between the parties pursuant to the terms of the lease agreement; and WHEREAS, the parties are desirous of resolving said disputes; NOW THEREFORE, in mutual consideration of the promises of the parties and other valuable consideration, receipt of which is hereby acknowledged, "Argus" and "Manhattan" hereby agree as follows: 1. "Manhattan" shall pay to "Argus" the sum of $25,000.00 concurrent with the execution of this Agreement. 2. "Manhattan" shall pay to "Argus" the additional sum of $165,000.00 at nine percent (9%) interest per annum in equal monthly installments of $7,500.00 or more per month until the entire remaining balance is paid in full; all payments are due on or before the fifteenth day of each month beginning with the payment due on April 15, 1989. 3. Payment date is the date by which payment must be received by "Argus." There shall be a five (5) day grace period before any payment is considered to be late and in default per Paragraph 4, below. 4. Providing there is no default in the payment of any installment due, there will be no late fee; however, in the event of a default in the payment of any installment due, a $375.00 late fee shall be charged for each and any payment that is late from the date of this Agreement until the remaining balance is paid in full. 5. "Manhattan" hereby warrants that its total number of outstanding shares of stock is less than 15.6 million shares and further warrants that there are no more than 50 million shares presently authorized. 6. "Manhattan" further warrants that of the about 15.6 million shares that are presently outstanding, no more than 1.5 million of said shares are free trading. 7. "Manhattan" shall further cause the issuance of one (1) million shares of restricted stock of "Manhattan" within ten (10) calendar days of the execution of this Agreement to be issued to Argus 2 working days after "Manhattan's" merger is completed. 8. Upon receipt of all sums of money set forth in Paragraph 1, above, together with the stock described in Paragraph 7, above, and the written agreement set forth in Paragraph 14, below, "Argus" shall cause an undivided Forty percent (40%) interest in the claims presently shown in the above referenced "Lease and Option to Purchase Agreement" executed on November 15, 1982, as amended on February 1, 1983, and any and all claims listed in the "Mining Agreement" of April 4, 1987 to which "Argus" has any rights or interest to be deeded to "Manhattan." 9. "Manhattan" agrees to accept title of the property by Corporation Quit Claim deed subject to any exceptions to marketable title which exist as of the interim binder issued by First American Title Company of Nevada dated February 19, 1988; "Manhattan" further acknowledges that it is accepting title to the said property in an "as is" condition except as set forth in Paragraph 10, below. 10. "Argus" warrants that "Argus" will deliver marketable title when the property is conveyed to "Manhattan" of all the claims listed in the "Lease and Option to Purchase Agreement" executed on November 15, 1982, as amended on February 1, 1983, and all other claims to which it has any rights or interest as described herein. 11. "Argus" and "Manhattan" further acknowledge that "Manhattan" may wish to purchase title insurance at "Manhattan's" expense upon a portion of said claims in order to insure their interest in the title to said claims. 12. "Manhattan" shall convey to "Argus" a security interest through a Note and Deed of Trust in said mining claims conveyed to "Manhattan" by "Argus" to secure payment of the remaining balance due to the sums set forth above by "Manhattan" to "Argus" and said Deed of Trust and shall be recorded immediately following the recordation of the Corporation Quit Claim deed transferring the property by "Argus" to "Manhattan." The trustee for this Deed of Trust shall be First American Title Company of Nevada. 13. "Argus" further acknowledges that "Manhattan" has certain financial obligations to "Selig" and others pursuant to the terms of the "Mining Agreement" dated April 4, 1987, which Argus ratified; "Argus" grants to "Manhattan" the authority to collaterally assign its interest in fee title to "Selig" to secure any payments due and owing to him. 14. "Manhattan" further agrees that it will cause "Selig" or any assignee to release in writing any interest he has pursuant to the terms of the existing "Lease and Option to Purchase Agreement" dated November 15, 1982, and any amendments thereto. 15. Within forty eight (48) months from the date of this Agreement, "Manhattan" shall invest and/or cause to be invested by an operator a minimum of $1,000,000.00 in the exploration and development of the property described herein by reference upon the following minimum investment schedule: A. $100,000 within the first twelve (12) month period including a geo-magnetic survey upon said property; "Manhattan" further covenants that all surveys and assays shall be conducted by licensed and certified surveyors and assayers. B. $250,000 within the second twelve (12) month period. C. $250,000 within the third twelve (12) month period. D. The balance, a maximum of $400,000 within the fourth twelve (12) month period. 16. "Manhattan" is responsible for all annual assessment work and property taxes on the mining claims, and this expense may be included in the investment required in Paragraph 15, above. Further, said minimum investment schedule shall be governed by Paragraph 20, below. 17. "Manhattan" shall be the operator of the above described and referenced property for a period of 3 not less than four (4) years from the date of this Agreement providing said property is operated and put in production as those terms are used in the industry, pursuant to specific programs and guidelines to be jointly agreed upon by "Argus" and "Manhattan." 18. "Manhattan" shall be responsible for causing the payment of all installments on the note, initial drilling, exploration and development costs until this project is in production or, alternatively, until it ceases to be the operator. Once in production, normal operating costs will be deducted from gross receipts before division of revenues by the parties. 19. "Argus" shall be entitled to receive sixty percent (60%) of the operating income from the property and "Manhattan" shall be entitled to receive forty percent (40%) of the operating income from the property. In the event of a joint venture with a mining company/operator, both "Argus" and "Manhattan" agree that if a reduction in their percentage ownership interests is necessary, both parties will reduce their holdings proportionately. Both parties agree to negotiate such a situation in good faith and in a timely manner. If both parties cannot agree, they shall pick a mutually agreeable third party, or arbitrator, to negotiate same within thirty (30) days thereafter. 20. The parties further acknowledge that in the event of a default by "Manhattan" in the payments due to "Argus" under the terms of this Agreement, "Argus" shall immediately instruct the trustee to institute foreclosure proceedings against "Manhattan" per Nevada statutes. 21. Upon execution of this Agreement, "Argus" and "Manhattan" hereby mutually release all of their officers, directors, shareholders and assigns from any and all claims against the other, whether known or unknown; it is the express intention and understanding of "Argus" and "Manhattan" to resolve all past disputes between them pursuant to the terms of the Agreement set forth herein and for the consideration set forth herein. 22. "Manhattan" agrees that at such time as it may obtain rights and title to any or all of the mining claims which it is purchasing from "Selig" pursuant to the "Mining Agreement" dated April 4, 1987, it shall deed a sixty percent (60%) undivided interest in said claims to "Argus" by Corporation Quit Claim Deed. 23. "Argus" and "Manhattan" expressly agree that the total of monies due and payable to "Argus" by "Manhattan" under the terms of this Agreement are all of the monies owed to "Argus." 24. The parties expressly declare that time is of the essence for all payments due and owing from "Manhattan" to "Argus" under the terms of this Agreement. 25. This Agreement shall be interpreted and construed under and by virtue of the laws of the State of Nevada. 26. Any modification to this Agreement shall only be made by a writing executed by "Argus" and "Manhattan." 27. The contents of this Agreement may not be disclosed to any third party until such time as "Manhattan" has complied with Paragraph 14, above. 28. In the event suit is necessary to enforce any provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys fees. 29. Any notices sent pursuant to the terms of this Agreement shall be sent to "Argus" at 1500 East Tropicana Avenue, Suite 110, Las Vegas, Nevada 89119, with a copy to GIBBONS, BERMAN & WOLFSON, 501 South Rancho Drive, Suite G-46, Las Vegas, Nevada 89106. 30. Any notices sent pursuant to the terms of this Agreement shall be sent to "Manhattan" at 24007 4 30. Any notices sent pursuant to the terms of this Agreement shall be sent to "Manhattan" at 24007 Ventura Boulevard, Suite 260, Calabasas, California, 91302, with a copy to JIMERSON & DAVIS, 701 East Bridger Avenue, Suite 600, Las Vegas, Nevada, 89101. 31. The signatories to this Agreement acknowledge that they have the full coporate authority to execute this Agreement on behalf of "Argus" and "Manhattan" and further agree to submit certified copies of resolutions of the respective boards of directors approving the terms of this Agreement within three (3) days of the date of execution of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the year and date set forth above. ARGUS RESOURCES, INC. /s/ BARRY BROWN --------------- Barry Brown President ARGUS MINES, INC. /s/ HANS KRUSE -------------- Hans Kruse President NEVADA MANHATTAN MINING INCORPORATED /s/ DREW LAMBO -------------- Drew Lambo Vice-President EX-10.(IV) 14 EXHIBIT 10.(IV) 1 Exhibit 10.(iv) | DOCUMENTARY TRANSFER TAX $192.50/xx | | X COMPUTED ON FULL VALUE OF PROPERTY CONVEYED. | --- | | OR COMPUTED ON FULL VALUE LESS LIENS AND | ENCUMBRANCES REMAINING AT TIME OF TRANSFER. | --- | UNDER PENALTY OF PERJURY. | | | /s/ BARRY SCHREIBER | ---------------------------------------------------------- | SIGNATURE OF DECLARANT OR AGENT DETERMINING TAX. FIRM NAME -------------------------------------------------------------- CORPORATION QUIT CLAIM DEED Argus Mines, Inc., a subsidiary of Argus Resources, Inc., both being duly organized corporations, and existing under and by virtue of the laws of the State of Nevada, and having its principal place of business in the City of Las Vegas, County of Clark and State of Nevada. FOR AND IN CONSIDERATION OF THE SUM OF Ten Dollars ($10.00) and other good and valuable consideration, the receipt whereof is hereby acknowledged, has remised, released and forever quitclaimed, and by these presents does remise, release and forever quitclaim unto Nevada Manhattan Mining, Incorporated, a Nevada corporation, whose principal place of business in Nevada is 1120-A Telegraph Street, Reno, Nevada, a Forty Percent (40%) undivided interest in that Real Property, described as follows, to-wit: PATENTED CLAIMS Claim Name Mineral Survey Number Patent Number White Cap #1 2579 46176 White Cap 2579 46176 Pine Nut #2 4073 552989 Muleskinner 2882 123980 Morning Glory 4073 552989 Union 2625 46616 Union #1 2625 46616 Ivanhoe 2773 46617 Uno 2695 98424 Annie Laurie 2874 441202 Snow Drift 2764 459615 Earl 2544 375993 Eva 3667 537035 Flying Cloud 3667 537035 Snowman 3667 537035 Union #2 2552 114749 Union #3 2553 32959 Union #4 2554 46332 Union #5 2555 94281 Dexter #7 2602 46212 White Cap Extension 4335 734331 White Cap Extension #1 4335 734331 Woopee Fraction 2694 46320 Katie #1 2651 46321 Keystone 2692 555879 Red Roy (Red Boy) 2693 676958 Silver Pick #1 2528 674983 BOOK 677 PAGE 20 2 UNPATENTED CLAIMS Nye County Claim Name Location Date Book Page BLM Serial No. - ---------- ------------- ---- ---- --- ---------- Mable A 7-5-79 246 251 NMC 93107 Lillie Frac 7-5-79 246 253 NMC 93108 Little Johnnie Frac 7-6-79 246 252 NMC 93109 Pandora Frac 7-7-79 246 255 NMC 93110 Turtle Dove Frac 7-12-79 246 250 NMC 93111 Granny Frac 9-4-70 136 468 NMC 93113 Yellow Horse Frac 9-4-70 136 469 NMC 93114 Little Joe #1 6-10-68 113 183 NMC 93115 Little Joe #2 6-10-68 113 184 NMC 93116 Little Joe #3 6-10-68 113 185 NMC 93117 Little Joe #4 6-10-68 113 186 NMC 93118 Little Joe #5 6-10-68 113 187 NMC 93119 Little Joe #6 6-10-68 113 188 NMC 93120 Little Joe #7 6-10-68 113 189 NMC 93121 Little Joe #8 6-12-68 113 190 NMC 93122 Little Frac #21 7-16-68 113 205 NMC 93135 Granny Lode Frac 11-10-87 602 228 NMC pending Any interest Argus may have in the following lode mining claims: JMD Union Fraction Ivanhoe Fraction Wolftone Millsite AM Ex AM Ex #1 AM Ex #2 AM Ex #3 Baseball Bell Bell #1 Bluebird Big Mogul Friday Gold Coin Fraction Gold Point Fraction Hill Top Hill Top Extension Last Chance Little Joe Fraction #9 Granny / / / / / / / BOOK 677 PAGE 21 3 To Have and to Hold the said grantee its heirs and assigns forever. IN WITNESS WHEREOF, The said party of the first part has caused its corporate name and seal to be affixed by its President and Secretary thereunto, duly authorized this first day of March, Nineteen hundred and eighty nine. ARGUS MINES,INC. By: /s/ HANS KRUSE --------------------------- Hans Kruse President By: /s/ HANS KRUSE --------------------------- Hans Kruse Secretary State of Nevada ) ) ss. County of Clark ) On March 8, 1989, before me, the undersigned, a Notary Public in and for said State, personally appeared Hans Kruse known to me to be the corporate President and the corporate Secretary of Argus Mines, Inc., the corporation that executed the within Instrument, known to me to be the person who executed the within Instrument, on behalf of the corporation herein named, and acknowledged to me that such corporation executed the same. Proved to me on the basis of satisfactory evidence to be the person who executed the within instrument. /s/ EDDIE LaRUE ----------------------------------- Notary Public In and for said State This document consists of 3 pages. Eddie LaRue [SEAL] Notary Public-State of Nevada Clark County My Appointment Expires March 15, 1989 OFFICIAL RECORDS NYE, CO. NEV. RECORD REQUESTED BY ARGUS RESOURCES '89 MAR-9 P3:15 230734 NAOMA LYDON RECORDER FEE 7.00 DEP BB BOOK 677 PAGE 22 4 Nevada Manhattan Mining, Incorporated By: /s/ CHRIS MICHAELS -------------------------------- Chris Michaels President By: /s/ JEFFREY KRAMER ------------------------------- Vice President
- ----------------------------------------------------------------------------------------------------------------------- State of California On this the 8th day of March 1989, before me, -------------- County of Los Angeles ss. Christina C. Crompvoetz------------------------------- -------------- ------------------------------------------------------------------- the undesigned Notary Public, personally appeared Christopher D. Michaels & Jeffrey S. Kramer, ------------------------------------------------------------------ [ ] personally known to me [SEAL] [x] proved to me on the basis of satisfactory evidence to be the person(s) who executed the within instrument as President & Vice-President or on behalf of the corporation therein -------------------------- named, and acknowledged to me that the corporation executed it. WITNESS my hand and official seal. /s/ Christina C. Crompvoetz ------------------------------------------------------------------ Notary's Signature - -----------------------------------------------------------------------------------------------------------------------
BOOK 677 PAGE 26 5 EXHIBIT A
PATENTED CLAIMS Claim Name Mineral Survey Number Patent Number - ---------- --------------------- ------------- White Cap #1 2579 46176 White Cap 2579 46176 Pine Nut #2 4073 552989 Muleskinner 2882 123980 Morning Glory 4073 552989 Union 2625 46616 Union #1 2625 46616 Ivanhoe 2773 46617 Uno 2695 98424 Annie Laurie 2874 441202 Snow Drift 2764 459615 Earl 2544 375993 Eva 3667 537035 Flying Cloud 3667 537035 Snowman 3667 537035 Union #2 2552 114749 Union #3 2553 32959 Union #4 2554 46332 Union #5 2555 94281 Dexter #7 2602 46212 White Cap Extension 4335 734331 White Cap Extension #1 4335 734331 Whoopee Fraction 2694 46320 Katie #1 2651 46321 Keystone 2692 555879 Red Roy (Red Boy) 2693 676958 Silver Pick #1 2528 674983
Page 1 of 2 pages BOOK 677 PAGE 27 6 UNPATENTED CLAIMS Nys County
Claim Name Location Date Book Page BLM Serial No. ---------- ------------- ---- ---- --- ---------- Mable A 7-5-79 246 251 NMC 93107 Lillie Frac 7-5-79 246 253 NMC 93108 Little Johnnie Frac 7-6-79 246 252 NMC 93109 Pandora Frac 7-7-79 246 255 NMC 93110 Turtle Dove Frac 7-12-79 246 250 NMC 93111 Granny Frac 9-4-70 136 468 NMC 93113 Yellow Horse Frac 9-4-70 136 469 NMC 93114 Little Joe #1 6-10-68 113 183 NMC 93115 Little Joe #2 6-10-68 113 184 NMC 93116 Little Joe #3 6-10-68 113 185 NMC 93117 Little Joe #4 6-10-68 113 186 NMC 93118 Little Joe #5 6-10-68 113 187 NMC 93119 Little Joe #6 6-10-68 113 188 NMC 93120 Little Joe #7 6-10-68 113 189 NMC 93121 Little Joe #8 6-12-68 113 190 NMC 93122 Little Joe #21 7-16-68 113 205 NMC 93135 Granny Lode Frac 11-10-87 602 228 NMC pending
Any interest Argus may have in the following lode mining claims: JMD Union Fraction Ivanhoe Fraction Wolftone Millsite AM Ex AM Ex #1 AM Ex #2 AM Ex #3 Baseball Bell Bell #1 Bluebird Big Mogul Friday Gold Coin Fraction Gold Point Fraction Hill Top Hill Top Extension Last Chance Little Joe Fraction #9 Granny Page 2 of 2 Pages BOOK 667 PAGE 28 EX-10.(V) 15 EXHIBIT 10.(V) 1 Exhibit 10.(v) OFFICIAL RECORDS RECORDING REQUESTED BY NYE. CO. NEV. RECORD REQUESTED BY Argus Resources WHEN RECORDED MAIL TO '89 MAR-9 P3:15 230735 NAME Argus Resources, Inc. NAOMA LYDON STREET 1500 East Tropicana RECORDER ADDRESS FEE 10.00 DEP BB CITY Suite 110 ------- ---- STATE ZIP Las Vegas, NV 89119 - -----------------------------------(SPACE ABOVE THIS LINE FOR RECORDER'S USE)--- DEED OF TRUST AND ASSIGNMENT OF RENTS THIS DEED OF TRUST, made this Eighth day of March , 1989 ----------------- ----------------- -- BETWEEN Nevada Manhattan Mining, Incorporated, a Nevada corporation ----------------------------------------------------------------------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ , herein called Trustor. - ------------------------------------------------------ whose address is 24007 Ventura Boulevard, Suite 260, Calabasas, CA 91302 -------------------------------------------------------------- (Number and Street) (City) (State) (Zip Code) First American Title Company of Nevada, a Nevada corporation , herein called Trustee, and - ------------------------------------------------- Argus Resources, Inc., a Nevada corporation - ----------------------------------------------------------------------------- , herein called Beneficiary. - ------------------------------------------------- Trustor irrevocably grants, transfers and assigns to Trustee, in trust, with power of sale, all that real property in the Manhattan Mining District, County of Nye, State of Nevada, described as: - ------------------------- --- See Exhibit A attached hereto, and by this reference made a part hereof TOGETHER with all the rights, privileges, title and interest which Trustor now has or may hereafter acquire in or to said property, including, without limitation, the rents, issues and profits thereof, and with the appurtenances and all buildings and improvements now or hereafter placed thereon, it being understood and agreed that all classes of property, attached or unattached, used in connection therewith shall be deemed fixtures and subject to the property above described; SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary hereinbelow to collect and apply such rents, issues and profits; (For the purposes of this instrument all of the foregoing described real property, property rights and interests shall be referred to as "the property.") BOOK 677 PAGE 23 2 TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: (1) To keep the property in good condition and repair; not to remove, substantially alter or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting the property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon the property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of the property may be reasonably necessary, the specific enumerations herein not excluding the general. (2) To provide, maintain and deliver to Beneficiary fire, and if required by Beneficiary, other insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to the extent permitted by law, to pay all costs and expenses, including the cost of evidence of title and attorney's fees, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust or enforce the rights of Beneficiary or Trustee hereunder. (4) To pay: at least ten days before delinquency all taxes and assessments affecting the property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on the property or any part thereof, which appear to be prior or superior hereto; and all costs, fees and expenses of this Trust to the extent permitted by law. (5) Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation to do so, and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Beneficiary or Trustee being authorized to enter upon the property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. (6) To pay immediately and without demand all sums expended by Beneficiary or Trustee pursuant to the terms of this Deed of Trust, with interest from date of expenditure at the rate set forth in the aforesaid promissory note. (7) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (8) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure to pay. (9) That at any time, or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust [COPY CUTS OFF AND IS NOT READABLE] BOOK 677 PAGE 24 3 (10) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and [ILLEGIBLE] Trustee for cancellation and retention and upon repayment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." (11) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of the property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of the property or any part thereof, in his own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of the property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (12) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold the property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, said promissory note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust to the extent permitted by law, including the cost of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the rate set forth in the aforesaid promissory note; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. Immediately after such sale, Trustor shall surrender possession of the property to the purchaser, in the event possession has not previously been surrendered by Trustor, and upon failure to vacate the property, Trustor shall pay to the purchaser the reasonable rental value of the property, and/or at purchaser's option, may be dispossessed in accordance with the law applicable to tenant's holding over. (13) That Trustor, or if the property shall have been transferred, the then record owner, together with Beneficiary, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by each and recorded in the office of the recorder of the county or counties where the property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded, the name and address of the new Trustee, and such other matters as may be required by law. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument of substitution. The procedure herein provided for substitution of Trustees shall be exclusive of all other provisions for substitution, statutory or otherwise, to the extent permitted by law. (14) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the promissory note secured hereby, whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural, and all obligations of each Trustor hereunder are joint and several. (15) That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. (16) Without affecting the liability of Trustee or of any other party now or hereafter bound by the terms hereof for any obligation secured hereby, Beneficiary may, from time to time and with or without notice as he shall determine, release any person now or hereafter liable for the performance of such obligation, extend the time for payment or performance, accept additional security, and alter, substitute or release any security. (17) Trustee or Beneficiary may enter upon and inspect the premises at any reasonable time. (18) No remedy hereby given to Beneficiary or Trustee is exclusive of any other remedy hereunder or under any present or future law. No delay on the part of Trustee or Beneficiary in enforcing their respective rights or remedies hereunder shall constitute a waiver thereof. (19) Trustor waives the right to assert at any time any statute of limitations as a bar to any action brought to enforce any obligation hereby secured. (20) Should Trustor, without Beneficiary's written consent, voluntarily sell, transfer or convey his interest in the property or any part thereof, or if by operation of law, it be sold, transferred or conveyed, then Beneficiary may, at its option, declare all sums secured hereby immediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require such consent to future or successive transactions. (21) The invalidity or unenforceability of any provision herein shall not affect the validity and enforceability of any other provision. EACH UNDERSIGNED TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE HEREUNDER SHALL BE MAILED TO HIM AT THE ADDRESS HEREINABOVE SET FORTH. BOOK 677 PAGE 25 4 ----------------- DO NOT RECORD ---------------- REQUEST FOR FULL RECONVEYANCE To be used only when note has been paid. To _____________________________ Trustee Dated ____________________________ The undersigned is the legal owner and holder of all indebtedness secured by the within Deed of Trust. All sums secured by said Deed of Trust have been fully paid and satisfied, and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, the estate now held by you thereunder. MAIL RECONVEYANCE TO: - -------------------------------------- -------------------------------------- - -------------------------------------- -------------------------------------- Do not lose or destroy this Deed or Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made. EX-10.(VI) 16 EXHIBIT 10.(VI) 1 Exhibit 10.(vi) JOINT VENTURE AGREEMENT Argus Resources, Inc., a Nevada corporation (hereinafter "Argus") and Nevada Manhattan Mining Incorporated, a Nevada corporation (hereinafter "Nevada"), propose that a joint venture be made between Argus, Nevada and Marlowe Harvey (hereinafter "Harvey"), with respect to the Manhattan Property under the following general terms and conditions: 1. The note made by Nevada in favor of Anthony C. Selig (hereinafter "Selig"), with an approximate remaining balance of $532,000.00, plus interest accruing at 10% per annum, purchased or being purchased by Harvey, shall entitle Harvey to a 51% interest in the Manhattan Property, and Argus and Nevada shall retain a 49% interest in the property. The Manhattan Property contains all of the rights and interests of Argus and Nevada in the Manhattan Mining District, Nye County, Nevada. Argus shall pay the note and deed of trust in favor of Alfred Colella affecting this property on or before its due date. Title to the 13 claims to which Colella holds a first position per his deed of trust shall be subject to this lien. 2. Argus and Nevada shall pay, pro rata, their portion of the note payment due on January 15, 1993, in the approximate amount of $49,000.00 plus interest as follows: Nevada shall pay $24,500.00 plus accrued interest on or before August 15, 1993, and Argus shall pay approximately $24,500.00 plus accrued interest on or before November 15, 1993. Further, Argus and Nevada shall pay, pro rata 2 their portion of the note payment due on January 1994 as follows Argus and Nevada shall pay the approximate amount of $49,000.00 on or before January 20, 1994. Also Argus and Nevada shall pay their pro rata share of each and every succeeding payment until said note in favor of Selig is paid in full. Each party shall pay, pro-rata, its share of property taxes when due. 3. Argus and Nevada shall pay their pro rata share of the planned $200,000.00 development program for the Manhattan Property not to exceed the following amounts: Nevada shall pay $49,000.00 on or before June 15, 1993, and Argus shall pay $49,000.00 on or before September 1, 1993. There will be a four member property management committee consisting of one member from Argus, one member from Nevada and two members from Harvey. Harvey will be designated as the operator of the Manhattan Property. The committee will be consulted on all suggested property related work, expenses or distribution of revenues (including any offers to buy or joint venture the property or sale of product). Invoices will be submitted to the committee for verification. 4. Any payment on the note or development program more than fifteen (15) days late during the first twelve (12) months of this joint venture shall be deemed as non-participation by the non-paying party(ies). The respective non-paying party(ies) shall thereupon quit claim its (their) pro-rata share of the foregoing interest in the property to the other party(ies). 3 5. After the initial twelve (12) month period, in the event of non-payment or partial payment, the non-paying or partially-paying party's interests shall be reduced pro-rata. 6. This joint venture agreement is subject to the review and approval of Selig, as evidenced by his signature appended hereto. 7. The shareholders of Argus voted at their annual meeting on March 26, 1993, to enter into a joint venture agreement with Harvey under the terms and conditions approximately in conformance with the draft of this document dated March 12, 1993, and gave the board of directors full power to sign and enter into a joint venture agreement with Harvey. 8. Upon ratification of this agreement by Argus and Nevada, Argus shall petition the U.S. Bankruptcy Court to withdraw its Chapter 11 Reorganization filing based upon its agreement with Nevada and the ratification of the joint venture with Harvey. 9. Argus and Nevada shall deed the interests of Argus and Nevada secured by Selig's note and deed of trust, referenced in Section 1, above, to Selig immediately after acceptance by all parties and the ratification of a joint venture agreement. 10. This agreement shall be interpreted and construed under and by virtue of the laws of the State of Nevada. 4 11. Any modification to this agreement shall be executed in writing by all parties to this agreement. 12. In the event suit is necessary to enforce any provision of this agreement, the prevailing party shall be entitled to reasonable court costs and attorney fees. 13. Each of the parties to this agreement acknowledges that they had an opportunity to review this agreement with their own independent counsel prior to the execution and that this agreement has been executed freely and voluntarily and without any duress or undue influence. ARGUS RESOURCES, INC. By: /s/ ALFRED S. COLELLA June 9, 1993 ---------------------------------------------- ------------------ Alfred S. Colella, President & Chairman DATE NEVADA MANHATTAN MINING INCORPORATED By: /s/ CHRISTOPHER MICHAELS June 01, 1993 ---------------------------------------------- ------------------ Christopher Michaels, President & Chairman DATE MARLOWE HARVEY, AN INDIVIDUAL By: /s/ MARLOWE HARVEY June 13, 1993 ---------------------------------------------- ------------------ Marlowe Harvey DATE ANTHONY C. SELIG, AN INDIVIDUAL By: ---------------------------------------------- ------------------ Anthony C. Selig DATE 5 [DIXIE EXPLORATION CORP. LETTERHEAD] May 4, 1993 Argus Resources Corp. 4620 Polaris Ave. Suite A Las Vegas, NV. 89103 Nevada Manhattan 5038 N Parkway Calabasas, CA. 91302 Marlowe Harvey 101-9482 Williams St. Chillawall, BC Canada V20-SG1 To Whom It May Concern: By initiating and approving the joint venture between and among Argus REsources, Nevada Manhattan, and Marlowe Harvey, I, Anthony C. Selig, and/or Dixie Exploration Crop., do not become or promise to become a partner or joint venture or investor with any of the aforementioned companies or parties. Sincerely, /s/ ANTHONY C. SELIG ------------------------------- Anthony C. Selig ACS:ss OFFICIAL RECORDS NYE CO. NEV. RECORD REQUESTED BY Nevada Manhattan Mining '95 DEC 28 P2:26 0 386629 NAOMA LYDON RECORDER FEE 11.00 DEP tp ------- ---- EX-10.(VII) 17 EXHIBIT 10.(VII) 1 Exhibit 10.(vii) [LETTERHEAD] NEVADA MANHATTAN MINING, INC. ---------------------------------- Mining # Development # Exploration August 10, 1995 Anthony C. Selig Dixie Exploration Corporation 3430 Westwind Road Las Vegas, Nevada 89102 Re: Agreement, Manhattan Property Dear Tony: This Agreement will confirm our understanding with respect to the "Property" more particularly described as the patented and unpatented mining claims attached as exhibit A, with any and all rights title and related (mineral, other) interests located in the Manhattan Mining District, Nye County, Nevada, (Township 8N, Range 44E, Sections 20, 21, 22, 27, 28, 29). The parties to this Agreement are Anthony C. Selig, Dixie Exploration Corporation (hereinafter "Selig") and Nevada Manhattan Mining, Inc. (hereinafter "Nevada"). The parties agree to the following general terms and conditions as they may, or may not relate to prior agreements between the parties including the agreement dated April 4, 1987 between Selig and Nevada, the agreement dated August 22, 1989 between Selig, Nevada and Argus Resources (hereinafter "Argus"), and the agreement dated April 16, 1993 between Nevada (24.5% interest), Argus (24.5% interest) and Marlowe Harvey (hereinafter "Harvey", 51% interest and project operator). Whereas, Selig entered into a Purchase Agreement with Harvey dated March 22, 1993 for the "Property", the terms of which are subject to non-disclosure language and cannot be divulged. Whereas Harvey allowed Nevada and Argus to participate per the terms and conditions of the April 16, 1993 Agreement which also designated Harvey as the Operator of the Property. Selig was aware of this agreement. Whereas, Nevada has defaulted Harvey under Nevada Law as it relates to the April 16, 1993 Agreement. Whereas, Selig has provided Harvey notice of default and subsequent termination (August 7, 1995) pursuant to the terms and conditions of the Purchase Agreement, dated March 22, 1993 between Selig and Harvey. 2 Mr. Harvey failed to respond, in any fashion, to the above referenced default notices and has been terminated. Said actions also jeopardized the interests of Nevada and Argus which may carry damages not related to this Agreement. With these facts confirmed, Selig and Nevada desire to enter into this Agreement under the same general terms and conditions as the previous Agreements between the parties. Therefore: Selig hereby agrees to sell to Nevada any and all rights title and interest in the "Property" (patented and unpatented claims, exhibit A) for the remaining balance on the "Note And Deed Of Trust" in favor of Selig with an approximate remaining balance of $232,000 plus accrued interest for the patented claims and an additional $75,000 for the unpatented claims with the terms to be negotiated in good faith. Selig hereby agrees to allow Nevada to pay any and all applicable BLM fees on the unpatented claims due and payable during 1995 by August 17, 1995 in order to maintain the "good standing" of the unpatented claims and the Property. Nevada hereby agrees to pay the approximate sum of $232,000 plus accrued interest to Selig remaining on the Note And Deed Of Trust in favor of Selig bearing an interest of 10% per annum. Payments of $100,000 per year will made to Selig on the Note And Deed Of Trust commencing January 1996 in accordance with the previous agreements. Nevada agrees to allow Argus to participate under the same general terms and conditions as their participation under the April 16, 1993 Agreement if they so elect. Argus will have sixty days to notify Nevada of their election to participate from the date of this Agreement. This constitutes the entire agreement between the parties and it is understood that if necessary, the parties will prepare and execute a more detailed agreement with similar provisions as the previous agreements between the parties. Sincerely, /s/ JEFFREY KRAMER Jeffrey Kramer Sr. Vice President Agreed: /s/ ANTHONY C. SELIG - ------------------------------------ Anthony C. Selig Date Dixie Exploration Corporation /s/ ANTHONY C. SELIG Pres. OFFICIAL RECORDS NYE CO. NEV. RECORD REQUESTED BY Nevada Manhattan Mining '95 DEC 28 P2:26 0 386630 NAOMA LYDON RECORDER FEE 8.00 DEP tp ------ ---- EX-10.(VIII) 18 EXHIBIT 10.(VIII) 1 Exhibit 10.(viii) JOINT VENTURE AGREEMENT Nevada Manhattan Mining Incorporated, a Nevada Corporation (hereinafter "Nevada"), and Marlowe Harvey/ Maran Holdings Inc., a Vancouver B.C. company (hereinafter "Harvey"); and Argus Resources, a Nevada Corporation (hereinafter "Argus"), propose that the joint venture agreement executed by and on behalf of the aforementioned parties in June 1993 with respect to the Manhattan Property (hereinafter "Property" or "Manhattan Property" attached as exhibit A) be modified under the following general terms and conditions: 1. The promissory note executed by Nevada and Argus in favor of Anthony C. Selig (hereinafter "Selig"), with an approximate remaining balance of $222,000 plus interest accruing at 10% per annum, purchased or being purchased by Harvey, shall entitle Harvey to a 50% interest in the Manhattan Property. Argus (24.5%) and Nevada (24.5%) shall retain a 49% interest in the Manhattan property with the remaining 1% held by the Nevada Management (Jeffrey Kramer/Christopher Michaels) in effect creating a fifty-fifty (50%-50%) joint venture between Harvey (50%) and Nevada/Argus (50%). Payment in the amount of $47,000 for the 1% conveyed by this agreement to Nevada Management (Jeffrey Kramer/Christopher Michaels) from Marlowe Harvey/Calais Resources will be paid out of Argus' portion of the net proceeds from gold production from the Manhattan Property and secured by common stock in Nevada at fair market value with a payment schedule to be negotiated in good faith. 2. Harvey/Maran currently owns 52% of Argus' stock and therefore controls Argus and represents 12.74% interest in the Manhattan Property. Nevada desires to purchase, and Harvey/Maran desires to sell this 52% ownership of Argus to Nevada. Payment in the amount of $147,000 will be made to Harvey in the future from a percentage of Argus' net proceeds from gold production from the Manhattan Property. A payment schedule will be negotiated in good faith between Harvey and Nevada. Said $147,000 payment will be secured by 1,235,429 shares of common stock in Nevada at fair market Value with "piggy back" registration rights and will be tendered by Nevada 1 2 to Harvey in two years should the $147,000 debt not be retired (pro-rated should a portion of the debt be retired). (Any sale of registered common stock in Nevada, whether for debt, equity, security, etc., will be subject to underwriter approval as per applicable U.S. securities laws.) Further, Nevada shall issue 1,186,981 shares of common stock to Maran with the same registration rights. Nevada warrants that it currently has outstanding 4,658,480 shares of common stock as of the date of this Agreement and the 1,186,981 shares in Nevada represent the amount of equity ownership in the Manhattan Property which Maran controls minus the $147,000 payment described above which represents the balance of the Property interest. Harvey/Maran will tender their 52% ownership of Argus stock to Nevada within ten days of the execution of this Agreement and Nevada will tender the 1,186,981 shares at the same time. Should Harvey/Maran be unable to deliver full title to their 52% interest in the Manhattan Property ("Exhibit A"), all shares and payments to Harvey/Maran for their 52% will be adjusted on a pro-rata basis. 3. Nevada and Argus shall pay, pro-rata, their portion (in total 50%) of all property payments and Harvey shall pay the other 50% of all property payments ($100,000 per annum) under the note and deed of trust in favor of Selig on or before the due date each year (January 20) until said note in favor of Selig is paid in full. Each party shall pay, pro-rata, its share of property taxes and/or BLM management or other applicable fees thirty days prior to due date. In the event of any joint venture partners non-payment of any property payment, the other parties to the Agreement will have the first right to make such payment and acquire the interest of the non-paying party after sixty (60) days is granted to the non-paying party to cure the default. 4. Nevada and Harvey shall jointly operate the property with Harvey being designated as the operator of the current exploration program including any related development from this plan, and Nevada designated as the operator for the current development and production plan. As the current property operator, Harvey warrants that no debts, liens or encumbrances exist on the property with the exception of any monies due to Ednuk Mining, or its subcontracted parties which are currently outstanding(1). Both Harvey and Nevada will consult and gain the approval of the other party with respect to their ongoing programs prior to work commencement. Such approval will not be unreasonably withheld and (1) This also includes a xxxxx cost and xxxxx cost of the January's drill program of approximately $2,000 of which Harvey is contesting payable to Justice Drilling. 2 3 should there be a deadlock on any issue, the decision of a mutually acceptable third party will prevail. All pro-rata work program payments will be made by Nevada, Argus and Harvey. Any pro-rata work program payments not made by Nevada, Argus or Harvey for approved work, will be recouped by the party advancing the funds in first position prior to any distribution of net proceeds (including any offers to buy or joint venture the property). Appropriate accountings (ie. invoices and/or statements) will be submitted for verification. 5. Subsequent to Nevada's acquisition of 52% of Argus stock owned by Harvey/Maran, Nevada will attempt to acquire the remaining interest in Argus to consolidate Argus and Nevada. Argus shall pay, in first position, the note and deed of trust in favor of Alfred Colella affecting Argus's interest in this property through a percentage of Argus' portion of the net proceeds of gold production from the subject property targeted for commencement in 1996 with a payment schedule to be negotiated in good faith. Argus, it's current officers and directors, will be required to disclose any outstanding debts prior to the closing which were incurred during the current tenure of the existing management, including but not limited to Alfred Colella's note and deed of trust effecting Argus' portion of 13 claims to which Colella holds a first position, and the outstanding balance owed to Mark Gibbons Esq., Argus' resident agent as well as any other debt(s) that would encumber Argus' position in the joint venture. Nevada will designate a percentage of Argus' portion of any net proceeds due out of production due to Argus (24.5%) to first pay Alfred Colella (?), Mark Gibbons (?), Marlowe Harvey ($147,000) and any other approved debtor. Colella will suspend any foreclosure and/or legal action for a period of two years and upon satisfaction of his note(s) and deed(s) of trust, will deliver back to Argus any rights title or interest he may have in said notes and deeds of trust. The Nevada acquisition of Argus will be subject to the approval by a majority of Argus shareholders. 6. This joint venture agreement is subject to the review and approval of Selig and upon Selig's ratification of this agreement, Selig agrees to withdraw a default notice issued to Harvey on or about August 7, 1995 with respect to all properties covered in this Agreement. Selig has expressed his desire to correspond exclusively with Nevada with respect to any subsequent events related to this joint venture. 3 4 7. This agreement shall be construed and interpreted under and by virtue of the laws of the state of Nevada in conjunction with the Standard Mining Venture Agreement (Form 5). 8. Any modification to this agreement shall be executed in writing by the officers and/or directors of the companies which are party to this agreement. 9. In the event legal action is necessary to enforce any provision of this agreement, the prevailing party shall be entitled to reasonable court costs and attorney fees. 10. Each of the above mentioned parties to this agreement acknowledges that they had the opportunity to review this agreement with their own independent counsel prior to the execution and that this agreement has been executed freely and voluntarily and without any duress or undue influence. Each signatory warrants that they have the full legal authority and capacity to execute this Agreement. By: /s/ CHRISTOPHER MICHAELS 10/30/95 ----------------------------------------------------------------------------- Christopher Michaels, President, Nevada Manhattan, Date By: /s/ MARLOWE HARVEY 10/23/95 ----------------------------------------------------------------------------- Marlowe Harvey as an individual and for Maran Date Holdings and Argus Resources By: ----------------------------------------------------------------------------- Alfred Colella Date By: ----------------------------------------------------------------------------- Mark Gibbons Date As witness only: By: ----------------------------------------------------------------------------- Anthony Selig Date [STAMP] 4 5 Exhibit A
Unpatented (29) Claims Mable A #93107 Lillie Fraction #93108 Little Johnnie Fraction #03109 Pandora Fraction #93110 Turtle Dove Fraction #93111 Combination #93112 Granny Fraction #93113 Yellow Horse Fraction #93114 Little Joe 1-18 #93115-93132 Little Joe Fraction 19-21 #93133-93135 (formally SM 2-7)
Patented (28) Claims Mineral Survey Number Patent Number Snow Drift #2674 #459615 Annie Laurie #2874 #441202 Uno #2695 #98424 Dexter 7 #2602 #46212 Dexter 8 (?) (?) Eva #3667 #537035 Flying Cloud #3667 #537035 Snowman #3667 #537035 Union 2 #2552 #114749 Union 3 #2553 #32959 Union 4 #2554 #46332 Union 5 #2555 #94281 Silver Pick #2528 #674983 Earl #2544 #375993 Whoopie Fraction #2694 #46320 Katie 1 #2651 #46321 Pine Nut 2 #4073 #552989 Keystone #2692 #555879 Red Roy (Red Boy) #2693 #676958 White Cap #2579 #46176 White Cap 1 #2579 #46176 Morning Glory #4073 #552989 White Cap Ext. 1 #4335 #734331 White Cap Ext. 2 #4335 #734331 Muleskinner #2882 #123980 Ivanhoe #2773 #46617 Union #2625 #46616 Union 1 #2625 #46616
Any additional claims which will become necessary to the joint venture project, controlled by Nevada, Argus or Harvey will be subject to good faith negotiations, however this does not imply any contractual obligation by either party 5 6 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California --------------------- County of Los Angeles --------------------- On Oct. 20, 1995 before me, /s/ R. M. KNIPPENBERG --------------- ------------------------------------------ DATE NAME, TITLE OF OFFICER - E.G. "JANE DOE, NOTARY PUBLIC" personally appeared Christopher D. Michaels ---------------------------------------------------- NAME(S) OF SIGNER(S) [X] personally known to me - OR - [ ] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their [SEAL] signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. /s/ R.M. KNIPPENBERG ------------------------------------------------------ SIGNATURE OF NOTARY - ----------------------------------- OPTIONAL ----------------------------------- Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT [ ] INDIVIDUAL [X] CORPORATE OFFICER JOINT VENTURE AGR. President W/ M. HARVEY ------------------------------ ------------------------------------ TITLE(S) TITLE OR TYPE OF DOCUMENT [ ] PARTNERS [ ] LIMITED [ ] GENERAL FIVE (5) [ ] ATTORNEY-IN-FACT ------------------------------------ [ ] TRUSTEE(S) NUMBER OF PAGES [ ] GUARDIAN/CONSERVATOR [ ] OTHER: 10/20/95 ------------------------ ------------------------------------ ------------------------------ DATE OF DOCUMENT ------------------------------ SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(IES) NV. MANHATTAN MINING N/A - ---------------------------------- ------------------------------------ - ---------------------------------- SIGNER(S) OTHER THAN NAMED ABOVE 6 7 Anthony C. Selig PO Box 80263 Las Vegas, Nevada 89180 (702)871-6984 Fax: (702)871-6975 November 14, 1995 Jeffrey Kramer Nevada Manhattan Mining 5038 N. Parkway Calabasas Calabasas, CA 91302 Dear Mr. Kramer: With respect to your joint venture agreement, more specifically paragraph number six, executed on or about 10/23/95, between Nevada Manhattan and Marlowe Harvey, I will allow Nevada Manhattan to proceed with the current development plan on the claims outlined in exhibit A of said agreement. Nevada Manhattan hereby has my authorization to proceed under the terms of said agreement subject to the note and deed of trust and any monies owed under said note and deed of trust. Sincerely, /s/ ANTHONY C. SELIG - ------------------------------ Anthony C. Selig 7 EX-10.(IX) 19 EXHIBIT 10.(IX) 1 Exhibit 10.(ix) CONTRACT BETWEEN NEVADA MANHATTAN MINING, INC. AND HARRISON WESTERN CONSTRUCTION CORPORATION DATED 6/12/96 ----------------------------- 2 INDEX - -------------------------------------------------------------------------------- ARTICLE ONE DEFINITIONS 1.1 Contract Documents 1.2 Other Contractor 1.3 Owner's Representative 1.4 Owner's Representative's Decision 1.5 Subcontractor 1.6 Work ARTICLE TWO TIME OF COMPLETION ARTICLE THREE SCOPE OF WORK 3.1 Scope 3.2 Generalization of Description 3.3 Site Location 3.4 Variations, Additions or Deletions ARTICLE FOUR AGREEMENTS OF CONTRACTOR 4.1 Observance of Laws 4.2 Contractor's Understanding 4.3 Oral Modifications 4.4 Contractor's Organization 4.5 Progress Charts 4.6 Employees 4.7 Job Assignments and Classification 4.8 Personnel Policies 4.9 Project Manager 4.10 Performance 4.11 Defective Work 4.12 Inspection of Work 4.13 Equipment Requirements 4.14 Building Maintenance 4.15 Work Correlation 4.16 Permits 4.17 Qualification 4.18 Liens 4.19 Contractor's Responsibility ARTICLE FOUR AGREEMENTS OF CONTRACTOR 4.20 Hand Tools 4.21 Protection of Work and Property 3 4.22 Subcontracts 4.23 Subcontractor's Compliance 4.24 Wage Rates 4.25 Use of Premises 4.26 Temporary Buildings 4.27 Temporary Roads 4.28 Construction Facilities 4.29 Cleaning Up 4.30 Purchasing Services ARTICLE FIVE AGREEMENTS OF OWNERS 5.1 Observance of Laws 5.2 Permits 5.3 Owner's Representative 5.4 Timely Approvals ARTICLE SIX REIMBURSEMENT OF COSTS 6.1 Reimbursable Costs 6.2 Non-Reimbursable Costs 6.3 Advance of Funds 6.4 Availability of Records ARTICLE SEVEN PAYMENT 7.1 Contractor's Fee ARTICLE EIGHT INSURANCE 8.1 Workmen's Compensation 8.2 Commercial General Liability 8.3 Business Auto Policy 8.4 Umbrella Liability 8.5 Insurance Coverage 8.6 Additional Insured 8.7 Insurance Certificates 8.8 Bond 8.9 Subcontractors' Insurance ARTICLE NINE TAXES 4 ARTICLE TEN GENERAL 10.1 Notices 10.2 Ownership of Data 10.3 Drawings and Specifications 10.4 Continuance of Work 10.5 Assignment 10.6 Waiver 10.7 Captions 10.8 The Owner's Right To Do Work 10.9 Use of Completed Portions 10.10 Law Governing 10.11 Third Party Beneficiary 10.12 Force Majeure 10.13 Warranty ARTICLE ELEVEN TERMINATION - SUSPENSION ARTICLE TWELVE COMPLETION OF WORK ARTICLE THIRTEEN ARBITRATION ARTICLE FOURTEEN EQUAL EMPLOYMENT OPPORTUNITY ARTICLE FIFTEEN WITHDRAWAL OF WORK APPENDICES LABOR COSTS EQUIPMENT RENTAL RATES 5 THIS CONTRACT, made as of this 6th day of June 1996, by and between Nevada Manhattan Mining, Inc., a Nevada corporation (being and hereinafter called "Owner") and Harrison Western Construction Corporation, a Colorado corporation (being and hereinafter called "Contractor"). WITNESSETH: That, in consideration of the mutual agreements hereinafter contained, Owner and Contractor agree as follows: ARTICLE ONE DEFINITIONS The terms defined in this ARTICLE ONE, wherever used in this Contract, shall, unless the context shall otherwise require, have the respective meanings hereinafter specified in this ARTICLE ONE. 1.1 The "Contract Documents" consist of: a. This Contract and appropriate appendices. The Contract supersedes all previous negotiations and constitutes the entire agreement between the parties. 1.2 "Other Contractor" shall mean an individual, partnership, or corporation having a direct contract with the Owner for work involved in the Owner's general project, but outside the scope of this Contract, and shall include any Subcontractor of any Other Contractor. 1.3 "Owner's Representative" means the person from time to time designated, by written notice to Contractor, by Owner as Owner's Representative. 1.4 "Owner's Representative's Decision" or any like terms appearing in the Contract -1- 6 shall at all times be the decision of a reasonable and prudent man. 1.5 "Subcontractor" shall mean an individual, partnership, or corporation having a direct contract with the contractor for the performance of any part of the Work to be performed under this Contract. 1.6 "Work" includes all labor, superintendency, materials, supplies, equipment, and all other items necessary to perform this Contract, and the furnishing of all material or equipment required for either temporary or permanent use in connection with such performance. 1.7 "Contractor's Representative" means the person from time to time designated, by written notice to Owner, by Contractor as Contractor's Representative. ARTICLE TWO TIME OF COMPLETION 2.1 Work shall be commenced on a date mutually agreed to by the parties. Contractor agrees that it will use its best efforts to complete the Work in a timely, cost efficient manner. ARTICLE THREE SCOPE OF THE WORK 3.1 SCOPE OF WORK -- The Work to be performed hereunder shall include - Rehabilitation of an existing decline. - Rehabilitation of underground workings of the Manhattan Consolidated Mine. - Extension of a decline and related drifting to the WC-49 area and White Caps Shaft. -2- 7 - Mining of ore from Manhattan Consolidated workings, WC-49 area and other locations designated by the Owner. Delivery of ore to locations designated by Owner. - From time to time the Owner may elect to add other Works subject to a written change order. Under mutual agreement, the Work scope may be expanded to include: - Rehabilitation of the White Caps Shaft. - Mining White Caps Mine. - Conversion of contract form to unit price for mining. 3.2 GENERALIZATION OF DESCRIPTION -- The itemization appearing in the foregoing does not purport to be a complete description of the features and details of the required construction work and all such items are subject to change and development as hereinafter provided. 3.3 SITE LOCATION -- The site of the Work is Manhattan, Nevada. 3.4 VARIATIONS, ADDITIONS, OR DELETIONS -- Owner may at any time and from time to time by written notice to Contractor make variations, additions, or deletions to the definitive scope of the Work to be performed under this ARTICLE THREE. ARTICLE FOUR AGREEMENTS OF CONTRACTOR In addition to and without restricting the agreements and undertakings of Contractor set forth elsewhere in this Contract: 4.1 OBSERVANCE OF LAWS -- Contractor agrees that it will observe and abide by all applicable laws, rules, regulations, and ordinances of the United States and the State of Nevada and of any subdivision of and of any Federal or State governmental agency in -3- 8 the performance of the Work. Contractor will ensure that its Subcontractors and their employees observe all such laws, rules, regulations, and ordinances. 4.2 CONTRACTOR'S UNDERSTANDING -- Contractor has by careful examination, informed itself as to (a) the amount, nature, and location of the Work, (b) the nature of the water and the ground conditions at the site of the Work, (c) the conditions of adjoining properties, roads, and structures, (d) the character, quality, and quantity of materials to be encountered, (e) the character of the equipment and facilities needed preliminary to and during the prosecution of the Work, (f) the availability of labor for the Work (g) the availability of facilities for housing and feeding employees, (h) the availability of transportation to the sites of the Work, and (i) other general and local conditions which can in any way affect the Work. 4.3 ORAL MODIFICATIONS -- Any oral agreements or conversation by Contractor with any officer, agent, or employee of Owner, either before or after the execution of this Contract, shall not affect or modify any of the terms or obligations contained herein. 4.4 CONTRACTOR'S ORGANIZATION -- Contractor represents and warrants that it has available to it the key organization, financial means and experience required for, and that it is skilled in, the performance of the Work hereunder. 4.5 PROGRESS CHARTS -- Contractor shall furnish to the Owner a progress schedule. The Contractor also shall prepare a progress chart made in the form of a plan, at suitable scale, which shall indicate the salient features of the Work, with symbols to indicate the progress. All Work under this Contract shall be done in such order and by such method as shall produce the maximum economy, safety, and speed, and as shall be approved by the Owner's Representative. Further, the Contractor shall submit such other reports as Owner may reasonably request bearing on the performance of the Work and the cost of any changes in the Work or Extra Work. -4- 9 4.6 EMPLOYEES -- Excepting as in this Contract otherwise expressly provided, Contractor agrees that it will employ in its own name and furnish and supply at the time and in the manner hereinafter set forth, all labor, supervision, superintendency, and like services required in connection with the construction of the shafts and entries. Contractor shall at all times enforce strict discipline and good order among its employees, and shall not employ on the Work any unfit person or anyone not skilled in the Work assigned to him. Whenever the Owner's Representative shall notify the Contractor, in writing, that any man on the Work is, in his opinion, incompetent, unfaithful, disorderly, or otherwise unsatisfactory, such man shall be discharged from the Work and shall not again be employed in it, except with the consent of the Owner's Representative. Neither party to this Contract shall employ or hire any employee or former employee of the other party or Other Contractors without the consent of the other party and neither party will proselytize any employees of the other party during the life of this Contract. The Contractor shall comply with all provisions of the Workmens' Compensation Act and other laws of the State of Nevada relating to or affecting the employment of labor. 4.7 JOB ASSIGNMENTS AND CLASSIFICATION -- Contractor shall furnish a complete list of the employees, exclusive of manual employees, which it contemplates will work entirely or part time on the Work for written approval of Owner, which written approval shall not be unreasonably withheld. Such list shall be revised from time to time as conditions may require, such revisions to be subject to Owner's written approval. Contractor shall not be entitled to reimbursement for wages and salaries paid to employees disapproved by Owner, nor shall Contractor be entitled to reimbursement for the portion of wages and salaries which are in excess of those approved by Owner. The foregoing list, as revised from time to time, shall include the names of the individual employees, their respective wage rates and job classifications. Any changes or -5- 10 additions to the aforementioned list, including job reclassifications, shall be subject to the approval of Owner in writing. A Salary Range Schedule will be submitted for the approval of the Owner, defining classifications of hourly rated employees and respective hourly rates and fringe benefits. Changes in said Salary Range Schedule or any part thereof, shall be subject to Owner's prior written approval. 4.8 PERSONNEL POLICIES -- Contractor will promptly submit to Owner a statement outlining its personnel policies with respect to manual and supervisory employees, including without being limited to, recruiting, reimbursement for travel, hours of work, term of employment, and rates of employees' pay. Contractor agrees that it will not charge wages in excess of the rates prescribed in such schedules or change other provisions of its personnel policy without first submitting such changes to Owner sufficiently in advance to allow for consideration, discussion, and approval by Owner. 4.9 PROJECT MANAGER -- Contractor designates Robert Martin as Project Manager for Contractor's operations who shall be responsible for carrying out Contractor's obligations hereunder and upon or to whom all requests and notices from Owner to Contractor may be served or delivered as provided in ARTICLE TEN hereof. Contractor may designate such assistants to the Project Manager as may be suitable. Whenever Contractor shall employ workers at the site of the Work, such Project Manager, or his designee, shall at all times be available at the site of the work. The Project Manager so designated by Contractor shall not be changed except with the written consent of Owner, unless the Project Manager shall prove to be unsatisfactory to the Contractor or shall cease to be in its employ. 4.10 PERFORMANCE -- Contractor agrees that it will perform all Work in a good workmanlike manner to the end that the Work may be completed properly and as expeditiously as possible, that the Work shall be done in the manner required by plans -6- 11 and specifications approved by Owner and the same shall be subject at all times to the inspection and written approval of Owner's Representative. 4.11 DEFECTIVE WORK -- At Owner's request, in writing, any time within one (1) year following Owner's acceptance of each major segment of the Work, Contractor agrees to repair, replace, or correct any defective workmanship performed or furnished by Contractor, as the case may be, under this Contract, relative to such segment. For any such repair, replacement or correction work, Contractor shall be paid its costs of such work determined in accordance with the reimbursement of costs provisions of this Contract. If and to the extent that any defects or deficiencies in contract work, or in equipment, machinery, or materials, are due to the willful or negligent acts or omissions of Contractor or any of its subcontractors, the remedial work shall be performed at Contractor's expense, without reimbursement by Owner. 4.12 INSPECTION OF WORK -- The Owner's Representative shall at all times have access to the work wherever it is in preparation or progress, and the Contractor shall provide facilities for such access and for inspection. All Work and materials done or furnished by the Contractor hereunder shall be of the kind and quality described in said Specifications and shall be first-class throughout. Full opportunity shall be given the Owner's Representative to make such inspection as he may desire at the site of the Work, and/or in the case of materials manufactured by or for the Contractor at the works of the manufacturer thereof. The decision of the Owner's Representative that any materials or workmanship are not of the proper quality or do not comply with the Drawings and Specifications and with the provisions hereof shall be final and conclusive upon the Contractor and the Contractor shall promptly remove any such material or Work and replace it with material and Work of the proper quality, or correct any such defects in such other manner as the Owner's Representative may direct. Any failure on the part of the Owner's Representative or the Owner to inspect any material or -7- 12 workmanship at any time or to reject the same shall not be deemed to be an acceptance of any defective material or workmanship, and shall not prevent subsequent inspection and rejection thereof. The Contractor further agrees that in case any defects appear in the Work within one year after the date of final completion and acceptance, which defects in the opinion of the Owner's Representative are due to or caused by defective material or workmanship or by failure of the Contractor to perform the Work in accordance with the Drawings and Specifications of this Contract, the Contractor will replace the defective Work with Work of the proper quality or otherwise remedy such defects as the Owner's Representative may direct. For the correction of any such defective work performed or furnished by Contractor, Contractor shall be paid its cost of such Work determined in accordance with the reimbursement provisions of this Contract, without fee or profit, for or account of such Work. Defects in any Work performed by a Subcontractor will be corrected by such Subcontractor pursuant to the terms and conditions of its subcontract. In the event of a failure by a Subcontractor to correct the defective Work for which it is responsible, Contractor will correct such defective Work under the terms and conditions of this Contract and take such legal action against the Subcontractor for the benefit of Owner as Owner shall reasonably determine. 4.13 EQUIPMENT REQUIREMENTS -- Contractor shall prior to performing any Work hereunder, advise Owner of the types and numbers of various pieces of construction equipment needed to complete the Work and the rental rates therefor (Attachment Equipment Rental Rates). Contractor will furnish the equipment needed; however, no equipment is to be purchased or rented by Contractor without Owner's prior knowledge and written approval, and such purchase or rental shall be made in accordance with Section 4.30 hereof. -8- 13 4.14 BUILDING MAINTENANCE -- Contractor will maintain and keep in good repair all buildings that may be supplied to it by Owner, and upon demand of Owner will return the same to Owner in as good condition as when received, ordinary wear and tear and loss, damage, or destruction for which Contractor is not responsible under Section 4.19 hereof excepted. Contractor shall maintain, staff, and operate all Contractor shops and offices necessary in connection with the Work. 4.15 WORK CORRELATION -- Contractor recognizes that the Work to be performed by it may be done on the Project in part at the same time as the performance of other work by Other Contractors, or by Subcontractors, or by Owner, and Contractor agrees that it will cooperate with such Other Contractors and Subcontractors and Owner in the correlation of all such Work and in the maximum elimination of all interference among those concerned. 4.16 PERMITS -- Contractor shall procure all necessary permits, licenses, consents, and authority which normally may be required of a Contractor from public or private interests in connection with and necessary for the performance of the Work, and shall cooperate with Owner in procuring any such permits, licenses, consents, and authority required by Owner. 4.17 QUALIFICATION -- Contractor agrees to take all necessary steps to qualify itself or maintain its qualification to do business in the State of Nevada. 4.18 LIENS -- The Contract retainage of ten percent (10%) of the average of the last twelve (12) monthly invoices shall not become due until the Contractor, if required, shall have delivered to the Owner a complete release of all liens arising from the performance of the Work under this Contract, or receipts in full in lieu thereof and, if required in either case, an affidavit that so far as the Contractor has knowledge or information the release and receipts include and cover all bills for labor or material for which a lien could be filed; - 9 - 14 but the Contractor may, if any Subcontractor shall refuse to furnish a release or receipt in full, furnish a bond satisfactory to the owner to indemnify the Owner against any lien. The Contractor shall promptly pay all just claims for labor, material or other costs in and about the performance of the Work, and the Contractor expressly covenants and agrees that no lien shall be filed either by the Contractor or by any Subcontractor, workman, or materialman against the property of the Owner for any Work done or materials furnished in or for the performance of the Work. The Contractor further agrees that if, notwithstanding the foregoing covenant, any liens should be filed by any Subcontractor, workman, or materialman against the property of the Owner or any part thereof or in case any attachment, mesne, or otherwise should be levied by any such Subcontractor, workman, or materialman against any moneys then due or to become due to the Contractor from the Owner under this Contract, the Contractor will promptly discharge by bond or otherwise such lien or attachment and will indemnify and protect the Owner against any loss or expense in connection therewith, including in such expense counsel fees which the Owner may reasonably incur for its protection. And as further protection to the Owner, the Contractor agrees that in case the Owner shall at any time have reason to believe that the Contractor has not paid or is not paying all proper claims for labor, service, and material done or furnished in or about the performance of the Work, which claims might under any law or statute form the basis of a lien against the property of the Owner, the Owner may at its option withhold all or any part of any moneys then or thereafter due the Contractor hereunder until it shall have been furnished with a certificate from the proper public officials that there are not any such liens undischarged of record and reasonably convincing proof that there are no unsettled claims which may become liens. In case the Contractor shall fail to pay such claims within thirty (30) days after payment of the same shall be due, the Owner at its option may pay out of the moneys so retained the amount of such claims and the - 10 - 15 amount so paid shall be considered as payment on account of moneys due or to become due the Contractor hereunder. 4.19 CONTRACTOR'S RESPONSIBILITY -- The Contractor shall be an independent Contractor and not an agent or representative of the Owner. The Contractor shall assume all responsibility for the Work under its control and supervision and take all reasonable precautions to prevent injuries to persons and property on or adjacent to the Work. The mention of any specific duty or liability of the Contractor in any part of this Contract shall not be construed as a limitation or restriction upon any general liability or duty imposed on the Contractor by this Contract or by Law. The Contractor shall be solely responsible for the safety of the Work under its control and supervision and of all equipment and materials to be used in connection therewith until final completion thereof and shall promptly repair any damage thereto, however caused, with the cost of such damage to be borne by Owner. Contractor hereby agrees to indemnify and hold harmless the Owner against and from all losses, damages, injuries, and deaths (including losses or damage to property of the Owner occupied, used by or in the care, custody, or control of the Contractor or in proximity to the site of said Work and including injuries or deaths sustained by any employee, workman, servant, or agent of Contractor or any of its Subcontractors), and all claims and liabilities therefore, arising out of said Work caused in whole or in part by any act or omission, negligent or otherwise, of Contractor or any of its Subcontractors or of any employee, workman, servant, or agent of Contractor or any of its Subcontractors, to the extent that such losses, damages, injuries, or deaths are covered by insurance policies obtained by Contractor or its Subcontractors pursuant to ARTICLE EIGHT hereof or otherwise provided in this Contract. 4.20 HAND TOOLS -- Contractor shall, in accordance with Section 4.30, purchase all hand tools to be used in the performance of the Work. Contractor agrees to exercise - 11 - 16 due care in the maintenance and control of the hand tools with the objective of delivering the Owner at the completion of the Work, all such hand tools, reasonable loss through normal wear and tear and normal hazards excepted. Contractor's control procedure for hand tools shall be subject to Owner's approval. Owner, at its discretion, may, by written notice to Contractor modify this procedure with respect to the furnishing of tools to the extent of furnishing all or part of the hand tools to be furnished by Contractor. 4.21 PROTECTION OF WORK AND PROPERTY -- The Contractor shall perform the Work in such a manner as to maintain adequate protection from damage from all causes whatsoever. It shall protect the Owner's property from damage or loss arising in connection with this Contract. It shall adequately protect adjacent property and roads as provided by laws and this Contract. It shall provide and maintain all passageways, guard fences, lights, watchmen, and other facilities for protection required by public authority or local conditions. The Contractor shall take all reasonable precautions in the performance of the Work to protect the health and safety of its employees, the employees of Other Contractors and Subcontractors, and of members of the public, and to minimize the danger from all hazards to life and property, and shall comply with the health, safety, inspection, and fire protection laws and regulations of the United Sates and the State of Nevada and all political subdivisions having jurisdiction in the premises, and all regulations and requirements thereto prescribed by Owner. In any emergency affecting the safety of life or risk of loss or of damage to the Work or adjoining property, the Contractor, without special instruction or authorization, shall act to prevent such threatened loss or damage or injury. Any compensation claimed by the Contractor on account of such emergency work shall be determined by agreement between the Owner and the Contractor. - 12 - 17 4.22 SUBCONTRACTS -- The Contractor shall as soon as practicable notify the Owner in writing of the name of any subcontractors it proposes to employ. The Contractor shall not employ any Subcontractors except with the prior written approval of the Owner as to the identity and competency of the Subcontractor and the form of the proposed subcontract, it being understood that each Subcontractor shall be obligated to comply with each provision hereof in the performance of Work thereunder in the same manner as the Contractor itself would have been. Each such Subcontract shall contain provisions not inconsistent with the provisions of this Contract. The Contractor shall be responsible for the proper performance of subcontracted work. 4.23 SUBCONTRACTOR'S COMPLIANCE -- Contractor shall provide and pay, and require his Subcontractors if any, to provide and pay, and to secure payment of: a. Compensation for occupational diseases and for injuries sustained by or death resulting to employees of Contractor and its Subcontractors, as required by law. b. Contributions and payments with respect to employees of Contractor and its Subcontractors to unemployment compensation funds when and as required by applicable unemployment compensation laws. Contractor shall furnish to Owner's Representative satisfactory evidence that Contractor and its Subcontractors have complied fully with all of the requirements of law and shall save harmless owner from and against any and all actions, claims, damages, and costs resulting from their failure fully to comply with all such laws. 4.24 WAGE RATES -- Wage rates shall not be in excess of those normally in effect in this area and the Owner reserves the right to prior approval of wage rates and employment conditions (Appendix - Labor Costs). 4.25 USE OF PREMISES -- The Contractor shall confine its equipment, the storage of materials and the operations of workmen to limits indicated by law, ordinance or permits or directions of the Owner and of the Owner's Representative, and shall not unreasonably encumber the premises with its material and equipment. The Contractor -13- 18 shall confine its employees' parking to those areas that may be designated from time to time by the Owner's Representative. The Contractor shall enforce the Owner's instructions regarding signs, advertisements, fires, and smoking. 4.26 TEMPORARY BUILDINGS -- The Contractor shall provide such temporary buildings as may be needed for the execution of the Work. The location of all such buildings shall be subject to the approval of the Owner's Representative. 4.27 TEMPORARY ROADS -- Prior to constructing any lay-down areas, shop facilities, parking areas or temporary work roads into and at the site of the Work, Contractor shall prepare and submit to Owner's Representative for approval a plan for the location of such facilities. Contractor shall secure, also, Owner's Representative's approval for any additional temporary facilities that subsequently may have to be construed from time to time. If any facility is constructed without Owner's Representative's written approval, Owner's Representative may require its movement or removal at the Contractor's expense. Approvals of Owner's Representative to such plan and such additional temporary work roads shall not be unreasonably withheld. The Contractor assumes all responsibility for the maintenance of property and roads surrounding or adjoining the Work. 4.28 CONSTRUCTION FACILITIES -- The Contractor shall provide all light, heat, power, water, including potable water, office space, outdoor and indoor storage areas, sanitary facilities, equipment lay-down areas, and other temporary facilities as it may require in connection with the Work. 4.29 CLEANING UP -- The Contractor shall at all times keep the premises free from accumulation of waste material or rubbish caused by its employees or its operations, and at the completion of the Work shall remove from and about the site all rubbish produced in the Work and all the Contractor's tools, equipment, buildings, and surplus -14- 19 materials. Waste and rubbish shall not be disposed of in the rock stockpiles produced by disposal of excavated material. 4.30 PURCHASING SERVICES -- Contractor shall perform such purchasing services as may be requested by Owner in connection with the Work, subject to the following conditions: a. All orders, contracts, subcontracts and obligations placed by Contractor for the Work shall be in Contractor's name. Contractor will prepare and furnish to Owner's Representative copies of all requisitions, purchase orders, and contracts, including design and engineering specifications, for purchase of materials, supplies, machinery, and equipment to be obtained by Owner or Contractor. Contractor will obtain proposals or bids, analyze and evaluate proposals or bids and will make recommendations to Owner's Representative concerning purchase orders, subcontracts and contracts to be placed by Contractor or Owner, as Owner may determine. Contractor will work closely with Owner's Representative to ensure that all items to be purchased or procured is on a basis which is in the best interest of the Owner, taking into consideration cost, use, quality, specification requirements, delivery, and purchasing policies of Owner. Contractor will submit major purchase requisitions to the Owner's Representative for prior written approval of Owner before purchasing. b. Contractor will take all reasonable precautions to make payment on behalf of Owner for all materials in such fashion which will enable it to take advantage of all cash discounts of the suppliers of the materials. c. For the benefit of Owner, Contractor shall obtain from equipment and material vendors warranties of performance and against defects in materials and workmanship to the extent that such warranties are reasonably obtainable, and liability of Contractor therefore shall be limited to such warranties so obtained. ARTICLE FIVE AGREEMENTS OF OWNER In addition to and without restricting the agreements and undertakings of Owner set forth elsewhere in this Contract: 5.1 OBSERVANCE OF LAWS -- Owner agrees that it will observe and abide by all applicable laws, rules, regulations, and ordinances of the United States and the State of Nevada and of any subdivision of each of them in the performance of the Work. -15- 20 5.2 PERMITS -- Owner shall procure, and contractor will assist in obtaining, all necessary permits, licenses, consents and/or authority which may be required of Owner from public or private interests in connection with and necessary for the performance of the Work. 5.3 OWNER'S REPRESENTATIVE -- Owner will promptly designate the Owner's Representative and will give Contractor written notice of such appointment and of any changes therein from time to time. The Owner's Representative shall be the authorized representative of Owner in connection with performance of the Work. Contractor is authorized and directed to accept, rely upon and act upon any requests, information, advice, notices, and written approvals given by the Owner's Representative as if given by Owner itself; provided, however, that Contractor shall not rely upon or act upon any thereof which shall have the effect of waiving any of the provisions of, or requiring any change in this Contract or in the plans and Specifications approved by Owner, unless the same are given in writing. The Owner's Representative shall have general supervision and direction of the Work so far as may be necessary to insure that it shall be performed in accordance with this Contract. The Owner's Representative shall decide all matters relating to the acceptability, the execution and progress of the Work but such direction by the Owner's Representative shall not relieve the Contractor of its full responsibility under this Contract except as is otherwise set forth in this Contract. The Owner's Representative may delegate a portion of these responsibilities upon written notice to the Contractor. 5.4 TIMELY APPROVALS -- All approvals and authorizations to be given by Owner under and pursuant to the provisions hereof will be given in a timely manner. -16- 21 ARTICLE SIX REIMBURSEMENT OF COSTS 6.1 REIMBURSABLE COSTS -- Owner agrees that it will reimburse Contractor for the following costs and expenses incurred in connection with the Work. a. Salaries and wages of manual labor, workmen's compensation insurance premiums, employer's share of social security contributions, employer's share of unemployment compensation insurance contributions and other payroll taxes, and other charges against payroll in accordance with Appendix - Labor Cost. b. Salaries and wages of Contractor's field office staff incurred in the performance of the Work at the Manhattan, Nevada site, including, but not limited to, salaries and wages of supervisory employees, plus all other payroll costs and expenses in accordance with Appendix - Labor Cost. c. Cost of travel, subsistence, and other expenses directly chargeable to the Work, including living and traveling expenses of all officers or employees in visiting the mine site, and attending conferences. Reasonable moving, living, and traveling allowances of field supervisory and inspection staff in accordance with Contractor's standard practices, as approved by the Owner's Representative; provided, however, that reimbursement shall not be made to Contractor for costs which are reimbursed to Contractor by its other clients. d. Cost of all materials, machinery, hand tools, equipment, and supplies required in connection with the performance of the Work and the cost of purchase or rental of construction equipment in accordance with Section 4.13 hereof. e. All subcontracts made for the performance of the Work to the extent that such subcontracts have been approved in writing by Owner in accordance with Section 4.22 hereof. f. Long distance telephone calls and fax expenses associated with the Work. g. Cost of reproduction and computer services and the usage of electronic composing and related equipment in accordance with schedules approved by Owner in advance setting forth rates not to exceed current commercial rates, except for reproduction work in the field for which Contractor shall be reimbursed at actual costs. h. The cost of outside consultants providing the use thereof and the rates were first approved in writing by Owner, and incidental purchased labor and services. i. Such other items of direct cost reasonably and necessarily incurred by Contractor in the prosecution of the Work, including, but not limited to, the cost of incidental purchases, premiums on Owner-authorized insurance, labor, and services, to the extent such costs were paid or incurred pursuant to written approval of Owner. -17- 22 j. Such other items of indirect cost reasonably and necessarily incurred in the field in the performance of the Work as may be approved in writing by Owner, including, but not limited to, office supplies, furniture, and equipment, rent, light, heat, water, and local telephone services and accounting expenses. k. Such other items of indirect cost, if any, incurred in the performance of the Work not provided for elsewhere in this Contract as are specifically approved in writing by Owner. 6.2 NON-REIMBURSABLE COSTS -- It is understood that the reimbursable costs specified in Section 6.1 hereof, except for those items of indirect cost covered by paragraphs j and k of said Section 6.1, consist of direct out-of-pocket expenses and costs incurred by Contractor in the performance of the Work hereunder and shall not include indirect costs and expenses attributable to the Work in the home office of Contractor. Without limiting the generality of the foregoing, reimbursable costs shall not include: a. The cost of any item which, by the terms of the Contract, is expressly stated to be a non-reimbursable cost. b. Salaries of home office personnel unless assigned to the Work on a temporary basis. c. Interest on Contractor's capital. d. Depreciation or amortization of any kind by Contractor at locations other than the mine site. e. License fees ordinarily obtained by Contractor necessary to permit the engineering portion of the performance of the Work. f. Allowances for Contractor's profit. g. Royalties paid by Contractor for the use of any patented inventions in connection with the Work unless the use thereof shall have first been specified or approved by Owner. 6.3 ADVANCE OF FUNDS -- On or before the 20th day of each calendar month during the performance of the Work hereunder, Contractor will furnish Owner with its estimate of the expenditures to be incurred by Contractor in the next succeeding calendar month, whereupon Owner shall by the end of the month during which such -18- 23 estimate is forwarded, advance to Contractor the amount stated therein, adjusted as hereinafter set forth. The estimate so established shall be reviewed and approved by Owner. Not later than the 20th day of each calendar month after the effective date of this Contract, Contractor shall prepare and submit to Owner invoices for that portion of the Work performed by Contractor during the preceding month. Should the total amount, including all amounts reimbursable under ARTICLE SIX hereof set forth in such invoices be greater than the estimated amount advanced to Contractor for such month, Owner shall pay to Contractor the difference promptly after the receipt of such invoices. Should such total amount set forth on such invoices (with the exception above provided) be less than the estimated amount advanced to Contractor for such month, the difference shall be deducted from the next estimate to be forwarded to Owner. The invoices submitted by Contractor to Owner pursuant to this provision shall be certified and accompanied by such information as Owner may reasonably request. 6.4 AVAILABILITY OF RECORDS -- Contractor shall keep and maintain adequate records of all reimbursable costs to be paid under this ARTICLE SIX, which records shall be available in Contractor's home office and its office at the site of the Work for inspection and audit by Owner and Owner's firm of auditors at all reasonable times. In addition thereto, they shall have the right to inspect and audit any of the books, records, or original data of Contractor used by it in determining such reimbursable costs and also shall have access to the Work and may conduct spot checks in the field to determine the accuracy of such records and data. -19- 24 ARTICLE SEVEN PAYMENT 7.1 CONTRACTOR'S FEE -- Owner agrees that it will pay, and Contractor agrees that it will accept, as its sole compensation for the performance of the Work, as defined herein, other than reimbursement of costs as provided in article six hereof, a Fixed Monthly Fee in the amount of Fifteen Thousand Dollars ($15,000). Should the work proceed for a period in excess of twelve (12) months, the fee will become a subject for further negotiations. ARTICLE EIGHT INSURANCE Contractor shall provide and maintain at all times during the performance of this Contract, the following insurance policies: 8.1 WORKERS COMPENSATION. Through the State Industrial Insurance System for the State of Nevada -- with statutory limits. Employers liability will be maintained in the amount of $1,000,000. 8.2 COMMERCIAL GENERAL LIABILITY. Limits shall be: General Aggregate $2,000,000 Products/Comp Ops AGG. $2,000,000 Personal & Advertising Injury $1,000,000 Each Occurrence $1,000,000
Commercial general liability shall include personal injury including bodily injury and death, property damage, products completed, operations and contractual liability hereunder (including but not limited to all work performance and operation of automobiles, trucks and other vehicles) including explosion, collapse and underground hazards. -20- 25 8.3 BUSINESS AUTO POLICY. $1,000,000 combined single limit bodily injury and property damage including owned, hired and non-owned vehicles. 8.4 UMBRELLA LIABILITY. $5,000,000 each occurrence, $5,000,000 aggregate. 8.5 INSURANCE COVERAGE. Insurance shall be maintained in full force and effect in a company or companies satisfactory to the Owner, at Contractor's expense, and until performance in full hereof has been accomplished and final payment has been issued in evidence thereof. Such insurance shall be subject to the requirement that the Owner must be notified by thirty (30) days' written notice before cancellation of any such policy. Certificates of insurance as required must be filed with the Owner within thirty days of the date hereof. 8.6 ADDITIONAL INSURED. The owner and any other party required by the Owner to be indemnified under the Contract document shall be named as an additional insured on the contractor's policy. All such insurance shall be policies held by the Owner or any other additional insured. 8.7 INSURANCE CERTIFICATES -- Prior to commencement of Work, Contractor shall furnish to Owner certified copies of the securing and maintenance in force and payment of premiums on all coverage which it is obligated to furnish under the provisions hereof. Contractor may, at its own cost and expense, secure and maintain such additional insurance coverage as it shall regard as adequate for its purposes. If Contractor purchases such additional insurance, then Owner shall be included as a named insured. All insurance certificates to be provided by Contractor must be satisfactory to Owner as to insurance carriers covering the risks and must bear a cancellation clause providing at least thirty (30) days advance written notice to Owner. Contractor shall have all policies endorsed to include interest of Owner. Upon receiving approval from Owner that insurances to be secured by Contractor are satisfactory as to type and amount, all such costs of insurance, including all deductibles and premiums, shall be reimbursable under ARTICLE SIX hereof. -21- 26 8.8 BOND -- The Contractor and the Owner agree not to procure a bond in excess of the Contractor's License Bond. 8.9 SUBCONTRACTORS' INSURANCE -- Contractor shall require each of its Subcontractors to procure and maintain during the time any Work is being performed, the following insurance coverages: a. WORKERS COMPENSATION. Through the State Industrial Insurance System for the State of Nevada -- with statutory limits. Employers liability will be maintained in the amount of $1,000,000. b. COMMERCIAL GENERAL LIABILITY. Limits shall be: General Aggregate $1,000,000 Products/Comp Ops AGG. $1,000,000 Personal & Advertising Injury $1,000,000 Each Occurrence $1,000,000
Commercial general liability shall include personal injury including bodily injury and death, property damage, products completed, operations and contractual liability hereunder (including but not limited to all work performance and operation of automobiles, trucks and other vehicles) including explosion, collapse and underground hazards. c. BUSINESS AUTO POLICY. $1,000,000 combined single limit bodily injury and property damage including owned, hired and non-owned vehicles. -22- 27 ARTICLE NINE TAXES 9.2 All Federal, State and local taxes, except income taxes, shall be reimbursable under ARTICLE SIX, except as hereinafter provided. The Contractor will review all purchases and pay Nevada Sales and Use Tax only on those items not otherwise exempt under the provisions of the Nevada Sales and Use Tax Law. The Contractor will supply Owner with sufficient detail of purchases made to enable Owner to ascertain the correct application of the statutory Sales and Use Tax exemptions. Owner will reimburse the Contractor for any Nevada Sales and Use Tax properly assessed and paid by the Contractor for material purchase for the Work. ARTICLE TEN GENERAL 10.1 NOTICES -- Any notice required or permitted to be given pursuant hereto shall be given in writing and delivered personally or by registered or certified mail to the parties at the following respective addresses set forth below or at such other addresses as the parties may from time to time designate in writing: If to Owner: Chris Michaels Nevada Manhattan Mining Co. 5038 N. Parkway, Suite 100 Calabasas, California 91302 cc: William R. Wilson 410 - 17th Street, Suite 1375 Denver, Colorado 80203 If to Contractor: Robert J. Martin Harrison Western Construction Corporation 1208 Quail Street Lakewood, Colorado 80215 10.2 OWNERSHIP OF DATA -- All plans, drawings, specifications and the like relating to the Work (hereinafter called "data") furnished by or for Contractor and any inventions of Contractor conceived and first actually reduced to practice as a part of the Work, -23- 28 including patent rights thereon, shall be and remain the property of Owner. Upon completion, or upon any prior termination of the Contract, Contractor shall deliver to Owner a complete corrected set of original or duplicate tracings of the work as completed and such additional copies of drawings made therefrom as Owner may request. Provided, however, that Contractor may retain copies of all essential specifications, drawings, blueprints and engineering data necessary to constitute a record of the work done by Contractor and shall have the right, subject to the non-disclosure provisions of this Section 10.2, to freely use such data in connection with its business activities. In the event Owner shall request or otherwise advise Contractor to incorporate in the Work any invention of Owner the subject matter of which is covered by a valid patent under the laws of the United States, Canada or any other country, Contractor shall not utilize the subject matter of said invention without the written consent of Owner for any purpose other than performance of work under this Contract until such time as such patent shall have expired. In the event Owner shall desire Contractor to utilize any invention of Owner which is covered by a pending patent application, the parties agree to arrive at a mutually satisfactory agreement relative to disclosure of such invention to Contractor prior to any such disclosure. Owner agrees to defend and save Contractor harmless from and against any and all claims of infringement of proprietary rights of others, including patents, arising out of Contractor's use, in connection with the performance of this Contract, of technical information obtained from or through Owner in connection with the performance of this Contract. Contractor agrees that it will not divulge to third parties, without the written consent of Owner, any information obtained from or through Owner or any other Contractor of Owner in connection with the performance of this Contract unless, -24- 29 a. the information is known to Contractor prior to obtaining same from Owner, b. the information is, at the time of disclosure by Contractor, then in the public domain, or c. the information is obtained by Contractor from a third party who did not receive the same, directly or indirectly, from Owner. Contractor further agrees that it will not, without the prior written consent of Owner, disclose to any third party any information developed or obtained by Contractor in the performance of this Contract, except to the extent that said information falls within one of the categories described in a, b, or c above. This restriction as to disclosure of information set forth above shall terminate at the expiration of three (3) years from the date hereof. For purposes of this paragraph, Contractor shall have met its obligation if it notifies its employees, concerned with the Work, of the aforesaid non-disclosure obligation and requests such employees to prevent unauthorized publication or disclosure of said technical information and to this end ensures that each Contractor's employee, concerned with the Work, signs a Contractor's 'Secrecy Agreement' in which the employee protects the Owner and Contractor against non-disclosure of technical information. Owner shall advise Contractor of the form of title block to be used on all drawings and give such other reasonable directions regarding the preparation of drawings as Owner may determine from time to time. 10.3 DRAWINGS AND SPECIFICATIONS -- All design drawings and specifications will be in accordance with generally accepted procedures and practices common to this type of work and in compliance with all applicable Federal, State, and local regulations and guidelines. The Contractor shall be responsible for the professional and technical accuracy and the coordination of all designs, drawings, specifications, and other work or materials furnished by the Contractor under this Contract. The Contractor shall without additional cost or fee to the Owner correct or revise any errors or deficiencies in Contractor's drawings or specifications. -25- 30 10.4 CONTINUANCE OF WORK -- Notwithstanding any disagreement or disputes between the parties hereto as to any provisions hereof, there shall be no interruption of the Work during the continuance of any dispute or disagreement. 10.5 ASSIGNMENT -- The Contractor shall not assign this Contract or sublet the Work or any part thereof without the prior written consent of the Owner, and any such assignment or sub-letting with such consent shall not relieve the Contractor from its responsibility for the performance of the Work in accordance with the terms hereof or from its responsibility for the performance of any other obligations hereunder. The Contractor shall not assign any moneys due or to become due to it hereunder without the previous written consent of the Owner. 10.6 WAIVER -- No waiver, indulgence, or consent to depart from, or violation of, any provisions of this Contract, by either party shall be construed as continuing, nor shall it affect or constitute a waiver of any other rights, privilege, duty or obligations of either party hereto. 10.7 CAPTIONS -- The captions of the ARTICLES of this Contract are for ease of reference only and are to be disregarded in considering the meaning and intent hereof. 10.8 THE OWNER'S RIGHT TO DO WORK -- If the Contractor shall neglect to prosecute the Work properly or fail to perform any provision of the Contract, the Owner, after thirty (30) days' written notice to the Contractor may, without prejudice to any other remedy the Owner may have, make good such deficiencies. 10.9 USE OF COMPLETED PORTIONS -- The Owner shall have the right to take possession of and use any completed or partially completed portions of the Work, notwithstanding that the time for completing the entire Work or such portions may not have expired; such taking of possession and use shall be deemed an acceptance of any Work not completed in accordance with this Contract. 10.10 LAW GOVERNING -- This Contract shall be interpreted, construed and enforced in accordance with the laws of the State of Nevada. -26- 31 10.11 THIRD PARTY BENEFICIARY -- Nothing in this Contract, express or implied, is intended or shall be construed to confer upon, or to give to, any person other than the parties hereto, any right, remedy or claim under or by reason of this Contract or any covenant, condition or agreement hereof. The covenants, conditions and agreements in this Contract contained shall inure to the benefit of, and shall be for the sole and exclusive benefit of, the parties hereto and their respective successors and assigns, to the exclusion of the rights of any third party beneficiaries. 10.12 FORCE MAJEURE -- Any delays in or failure of performance by either party under this Contract shall not constitute default hereunder or give rise to any claim for damages which may be caused by circumstances reasonably beyond the control of the party concerned, including, but not limited to, decrees or orders of Government, acts of God, strikes, or other concerted actions of workmen, fires, floods, explosions, riots, war, rebellion and sabotage. 10.13 WARRANTY -- Contractor warrants all of the materials entering into the Project covered by the Specifications are to be first-class and new, unless otherwise specified, and shall conform to the Specifications. ARTICLE ELEVEN TERMINATION - SUSPENSION 11.1 Owner shall have the right at any time to terminate this Contract and at its sole discretion stop the Work hereunder for any reason whatsoever. Such right shall be exercised by giving the Contractor thirty (30) days' written notice of its intention to terminate, setting forth the date of such termination and the extent of the services to be performed by Contractor prior to such termination. In such case, Contractor shall be entitled forthwith upon the completion of such services as it may be required to perform under this Contract and such notices of termination to be paid in full for all legitimate -27- 32 claims arising under this Contract including: (i) Fee payable pursuant to ARTICLE SEVEN hereof, less any part of said Fee previously paid pursuant to ARTICLE SEVEN; (ii) any costs reimbursable under ARTICLE SIX hereof not previously paid by Owner; (iii) all reasonable costs incurred by Contractor in connection with the stoppage of the Work, if not for cause; and (iv) less any amounts advanced by Owner to Contractor pursuant to ARTICLE SIX and not previously credited against Contractor's invoices as therein provided. ARTICLE TWELVE COMPLETION OF WORK 12.1 Contractor shall use its best efforts to complete the Work expeditiously on or before the dates referred to in Section 2.1. When, in the opinion of Contractor, the Work under this Contract, or any individual unit thereof, has been completed, Contractor shall give the Owner's Representative notice in writing that said Work, or individual unit thereof, is ready for inspecting (and/or testing where applicable) preparatory to acceptance by Owner. Thereupon, the Owner's Representative shall within a reasonable time inspect the Work, or individual unit thereof, and at the Owner's Representative's option arrange for appropriate mechanical and operational tests to demonstrate that Contractor has performed satisfactorily its Work under this Contract. Upon successful completion of inspection and tests, the Owner's Representative shall promptly give notice to Contractor in writing of his acceptance of the Work, or individual unit thereof, as the case may be, or shall notify Contractor of Work to be done by Contractor prior to acceptance. Upon satisfactory performance by Contractor of work mentioned in said notice and successful completion of inspection and tests of such Work, the Work, or individual unit thereof, shall be deemed accepted by Owner and such acceptance shall be confirmed in writing. -28- 33 ARTICLE THIRTEEN ARBITRATION 13.1 All disputes under this Contract, whether as to its validity, interpretation, or performance, shall be subject to arbitration, and shall be submitted to arbitration at the request of either party to the dispute. The Contractor shall not cause a delay of the Work during an arbitration proceedings, except by agreement with the Owner. The arbitration proceedings shall be conducted pursuant to the applicable law of the State of Nevada and shall be commenced as follows: a. Either party may institute such arbitration by notice in writing to the other specifying the question or questions to be submitted to arbitration and naming a disinterested and qualified person to act as arbitrator. b. Within thirty (30) days after receipt of such written notice, the other party shall name a second disinterested and qualified person to act as arbitrator and shall give notice in writing thereof to the party instituting the arbitration. c. The first two arbitrators so named shall forthwith select a third disinterested and qualified arbitrator and shall give written notice to both parties informing them of the selection so made and fixing a date within a reasonable time at Los Angeles for the hearing of the question or questions submitted to arbitration. d. In case the party first notified of the institution of the arbitration shall neglect or refuse to name an arbitrator within the time hereinabove specified or in case the first two arbitrators chosen by any method shall fail to agree upon a third arbitrator within thirty (30) days after the appointment of the second arbitrator, then such second or third arbitrator or both, as the case may be, shall upon the application of either party be appointed by a Judge of the United States District Court, located in Nevada. e. The decision of the arbitrators shall be made in writing with reasonable promptness after completing the hearing or hearings thereon and a decision signed by a majority of the arbitrators shall be final and binding upon both parties. f. The expense of any such arbitration, including reasonable compensation for the arbitrators, shall be borne and paid equally by the parties or as the arbitrators otherwise direct. -29- 34 ARTICLE FOURTEEN EQUAL EMPLOYMENT OPPORTUNITY 14.1 The Contractor agrees that it will conform to all statutes and laws, both State, Federal and local, and any regulations thereunder, to provide equal employment opportunity for all individuals without regard to race, creed, color, national origin, religion, sex or age. ARTICLE FIFTEEN WITHDRAWAL OF WORK 15.1 Owner reserves for its own convenience the right to withdraw from the Work to be performed by Contractor any portion or portions thereof from time to time, and to do or perform such portion or portions of the Work for its own account, or to contract for the doing or performance of said Work by others. IN WITNESS WHEREOF, the Owner and the Contractor, respectively, have caused this Contract to be duly executed in duplicate by them and on their behalf as of the day and year first above written. -30- 35 OWNER: NEVADA MANHATTAN MINING, INC. By C.D. MICHAELS ---------------------------------- Attest JEFFREY S. KRAMER ------------------------------ CONTRACTOR: HARRISON WESTERN CONSTRUCTION CORPORATION By ROBERT J. MARTIN ---------------------------------- Attest JEFFREY S. KRAMER ------------------------------ -31- 36 APPENDIX LABOR COSTS SALARY RANGE SCHEDULE HOURLY EMPLOYEES
Classification Base Rate Health & Welfare ______________________________________________________________________________________ Shift Leader/Foreman $20.00 $1.35 Miner $18.00 $1.35 Mechanic $18.00 $1.35 Surface Laborer $12.00 $1.35 Payroll Burdens FICA & Medicaid 7.65% Federal Unemployment 0.08% State Unemployment 3.00% Workers Compensation 20.84%
SALARIED EMPLOYEES Project Superintendent $5,200/month $200/month Personnel utilized on an occasional basis will be charged at the following rates, which rates include burdens, fringes and salary: Project Manager (R. Martin) $60/hour Staff Engineer (D. Provost, S. Johnson) $48/hour Drafter (B. Hromyk) $40/hour Clerical/Secretarial (C. Thomas, K. Sims) $25/hour
-32- 37 APPENDIX EQUIPMENT RENTAL RATES 1. Company-Owned Equipment (bore rental maintenance, parts, fuel, lube and consumables NIC) Air Drills (jacklegs, stopers, sinkers) $100/month/each 2-cy LHD $2,400/month 1 cy LHD $1,800/month 10-ton underground truck $4,700/month Slusher $500/month 1050 cfm diesel compressor $3,600/month 13-hp pump $500/month 20-hp vent fan $540/month Air pump $180/month Cat 955 loader $4,800/month Shop van (parts van) $250/month 1-ton flat bed $600/month Pick-up truck $500/month Welder-diesel $230/month
Additional company-owned equipment will be charged at 85% of the unadjusted monthly rate contained in the current edition of the Rental Rate Blue Book published by DataQuest. 2. Thirty party equipment will be at invoice cost including delivery charges and taxes. -33- 38 [PRELIMINARY BUDGET SET NEW] 39 NEVADA MANHATTAN MINING, INC. PH. 818-591-4400 5038 N. PARKWAY CALABASAS #100 CALABASAS, CA 91302
EXPLANATION AMOUNT - ----------- ------ MINE PRODUCTION 90-3856-1222 CHECK AMOUNT $100,000.00 [LOGO]
PAY AMOUNT OF ONE HUNDRED THOUSAND DOLLARS
WITH US STATE CHECK DATE TO THE ORDER OF GROSS INC. TAX FICA INC. TAX SDI NUMBER - ----------------------------------------------------------------------------------------------------------------- 6-11-96 HARRISON WESTERN 17657 - ----------------------------------------------------------------------------------------------------------------- DESCRIPTION --------------------------------------------------------------------
CHARTER PACIFIC BANK AGOURA, CA 91301 EX-10.(X) 20 EXHIBIT 10.(X) 1 EXHIBIT 10.(x) MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. PRINCIPLES OF AGREEMENT Whereas this Principles of Agreement (POA) is made and entered into on this 19th day of August, 1996, by and between: 1. MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. (hereinafter referred to as "Maxwells"), a corporation organized under the laws of the Bahamas and having representative offices at 1901 Avenue of the Stars, Suite 1925, Los Angeles, CA 90067. Maxwells is represented in this transaction by William Chan (Chan); and, 2. NEVADA MANHATTAN MINING INCORPORATED (hereinafter referred to as "Nevada"), a corporation organized under the laws of the state of Nevada, and having offices at 5038 North Parkway Calabasas, Suite 100, Calabasas, CA 91302. Nevada is represented in the POA by Christopher Michaels (CDM) and Jeffrey Kramer JK). Maxwells and Nevada are hereinafter referred to the "Parties" to this POA. WITNESSETH I. Contractual Transactions Whereas Maxwells controls a potential gold and other metals/minerals mining property, known as Kalimantan Timur, in Kalimantan, Indonesia. Kalimantan Timur (hereinafter referred to as the "Property") consists of 5 contiguous properties, each comprising 2000 hectares of land for a total of 10,000 hectares. The geography and location of the Property are attached in Exhibit I. The Property is located in a potential gold mineralization zone, as indicated by the Government Reports which are shown in Exhibit I. The island of Kalimantan in Indonesia has become a significant gold exploration area and gold producing target for international companies. Exhibit II (Asian World Stock Report dated December 1995) explains the geology and potential of the gold mineralization zone as well as other major discoveries made. The Property is situated within this mineralized zone; and 1 2 Whereas Nevada operates gold mining properties in the state of Nevada and has the desire and interest to acquire, explore, and develop the Kalimantan Timur Property (hereinafter referred to as the "Transaction" II. Consideration for the Transaction Whereas Maxwells will merge 51% control and interest of the Property in Nevada for the following terms, conditions and considerations: 1. Nevada will issue shares of Nevada's Common Stock to Maxwells on the following basis: Four Hundred Thousand (400,000) shares of Common Stock will be issued to Maxwells upon the signing of this POA. 2. A total of 4 million shares of Common Stock will be issued to Maxwells upon the following events occurring: (a) These shares will be immediately released to Maxwells upon Nevada receiving independent valuation of a minimum of Twelve Million Dollars (US$12,000,000) worth of value in mineralization or other natural resources on the subject property in Kalimantan. Valuation of the Property will be appraised by an independent expert appraiser to be mutually chosen by the Parties. These shares can also be released to Maxwells in the event that an Investment Banker (to be mutually chosen by the Parties) values the Property at Twelve Million Dollars (US$12,000,000) and/or provides financing to Nevada based upon the US$12 million valuation of the Property or upon the intrinsic appreciation of Nevada's stock (post trading shares) following the public announcement of acquiring interest in the Property. For example, Nevada's present trading price is approximately US$3 per share. If after 90 days of the announcement Nevada's shares have appreciated to US$10 per share, the net intrinsic value of expectation is US$7 per share. With seven million (7,000,000) shares currently outstanding, the intrinsic value of the Company then becomes US$49 million, and the financing of the Company will have been accomplished. 2 3 (b) If the four million (4,000,000) shares have not been issued; Nevada must commence its exploration program within 6 months from the funding of the program but not later than 12 months from the execution of this POA. However, if Nevada fails to commence its exploration program in 12 months and no appraisal has been completed on the Property and the additional financing is not done, then the 51% control and interest in the Property immediately reverts back to Maxwells at no cost to Maxwells. However, if the shares appreciate to US$10 or above for a period of more than 30 days, then Maxwells is entitled to One Million (1,000,000) shares regardless of whether any financing commitments have been secured by Nevada or any appraisals have been done. (c) Immediate Registration with the Securities and Exchange Commission (SEC) will be performed by Nevada on One Million (1,000,000) of the above shares upon the release of the shares to Maxwells, only if Items 2(a) and 2(b) are operative. 3. Special Consideration: (a) If and when the Property yields a valuation of more than two (2) million ounces of gold, the Percentage ownership of Maxwells will become non-dilutive. Otherwise, additional shares are to be issued for any discoveries above 2 million ounces on a prorata basis as in Item 2(a). 4. Maxwells reserves the right to substitute or add another gold mining property and/or natural resources property or like potential value if the valuation of the Property is less than US$12 million or if the stock of Nevada does not appreciate above $3 per share after the announcement of the acquisition. 5. Voting Trust: Maxwells will vote its shares in favor of management as long as CDM and JK are executives of Nevada, except when any of Maxwell's shares are registered for sale. It is agreed that a mutual consent by both parties hereto is needed in 3 4 order to issue any capital stock in excess of Two Hundred and Fifty Thousand Dollars ($250,000), with the exception of raising capital for day-to-day operations. 6. Registration of Options in the Registration Statement with the Securities and Exchange Commission (SEC): A two million share option for Maxwells will be registered in the current Registration at a price of Three Dollars ($3.00) per share for a period of 18 months from the date herein. It is the intent of Nevada to seek an immediate Registration with the SEC. 7. Nevada will immediately form a 100% owned domestic subsidiary corporation in the State of Nevada to receive all of its gold mining assets in America. Nevada will also form a 100% owned Offshore subsidiary corporation to hold its interest in the Kalimantan Timur Property and others as appropriate (refer to Item 3) which, will be merged into the domestic subsidiary or remain a sub-subsidiary at a practical time or at any time the domestic subsidiary is spun out as an independent Public Company. Nevada will spin off the shares of the domestic subsidiary, inclusive of the international subsidiary, in a corporate reorganization plan for the benefit of all the shareholders of Nevada at a ratio of 1:1, including all of the share transactions of Maxwells at the appropriate time so that certain encumbrances and risk factors are minimized. 8. Default: a Cease and Desist order from the Securities and Exchange Commission (SEC) would be constituted as a default and the Kalimantan Timur Property asset will revert back to Maxwells at no cost. 9. All exploration, operating, and budgetary costs to effectuate the development of the Kalimantan Timur gold property will be 100% undertaken by Nevada. Upon signing this POA, Nevada will make a US$20,000 closing payment (which can be paid in monthly increments of US$5000) to Maxwells or an affiliate. This US$20,000 4 5 closing fee will be used to pay the local Indonesian partner who has been incurring operating fees for maintaining the Property. Receipts of payments to the Indonesian partner will be provided to Nevada. Maxwells also advises Nevada that an additional payment of US$80,000 (for taxes) remains to be paid for acquisition of the Property. 10. It is understood that this agreement and all compensation agreed hereto by both parties above holds true throughout any and all Nevada subsidiaries and spin-off public companies that may arise through any corporate structure reorganization. 11. Maxwells will use its best efforts and good faith to fully cooperate with Nevada to succeed in Indonesia. 12. Nevada recognizes that it must reach an Agreement with Dealmakers International/Garrett Krause for the following services and consideration: Investment Banking Services, Corporate and Public Relations, and a Compensation Package. This Agreement with Dealmakers International needs to be concluded within a 24 hour period otherwise this POA becomes null and void. 5 6 The execution of this POA is legal and binding on all Parties. SIGNATORIES Nevada Manhattan Mining Incorporated Maxwells Energy and Metals Technology Ltd. /s/ CHRISTOPHER MICHAELS /s/ WILLIAM CHAN - ------------------------------ ------------------------------ Name: Christopher Michaels Name: William Chan Title: CEO/President Title: President /s/ JEFFREY KRAMER - ------------------------------ Name: Jeffrey Kramer Title: Senior Vice President 6 7 MEMORANDUM OF UNDERSTANDING GOLD MINING PROJECT This Memorandum of Understanding (MOU) made and entered into on this 16th day of July 1996 by and between: MR. ABUBAKAR SIDDIQ, an Indonesian citizen having his address at Jl. Bandung, Indonesia c/o Andy Nitidisastro, Indonesia, and MR. ANDY T. NITIDISASTRO, an Indonesian citizen having his address at Jl. Bukit Pakar Timur No. 9, Bandung, Indonesia, and MAXWELLS ENERGY AND METALS TECHNOLOGY LTD., a Bahamas Corporation having its representative offices at 1901 Avenue of the Stars, Suite 1925, Los Angeles, California, 90067 USA. MR. ABUBAKAR SIDDIQ, MR. ANDY T. NITIDISASTRO, AND MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. are hereinafter referred to collectively as "THE PARTIES". WITNESSETH Whereas, the Government of Indonesia acting through its Ministry of Mines and Energy wishes to expand on its enhanced gold exploration during the next Sixth Development Plan (hereinafter referred to as "PROJECT"), and encourages participation on such development. Whereas, THE PARTIES desire to form a consortium by certain arrangement to obtain a license from the Government to explore GOLD MINING for both domestic needs and exports. Now, therefore, THE PARTIES, hereto agree as follows: 1. PURPOSES THE PARTIES agree to carry out the following purposes: 1.1 To obtain and implement the PROJECT on the conditions and terms set forth in the Consortium Agreement which will be prepared in detail in due time when the development scheme and conditions are granted. 1 8 1.2 To submit an application to the Ministry of Mines and Energy for the PROJECT hereinafter referred to as "APPLICATION") for the license(s) to engineer, to manufacture, to OEM technology/transfer, install, finance, and exploring gold as well as mining. 1.3 The Consortium is willing and able to support and complete the manufacturing and mining operation. 2. EXCLUSIVITY Except as otherwise provided for in this MOU, THE PARTIES warrant that they shall cooperate solely and exclusively with each other in connection with this Gold Mining PROJECT and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to the PROJECT without the prior written consent of the other Party and to keep this information at the highest confidentiality manner. THE PARTIES also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 3. SHAREHOLDING THE PARTIES hereby agree to shareholding of each PARTY as follows: MR. ABUBAKAR SIDDIQ 15% MR. ANDY T. NITIDISASTRO 10% MR. BASTARI MIRAI 5% MAXWELLS ENERGY AND METALS 70% TECHNOLOGY LTD. under the conditions that the capital required by the Consortium is provided by MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. 4. SPONSORING MR. ABUBAKAR SIDDIQ and others shall act as the main sponsor of the Consortium to obtain the license(s) and/or reaffirm any license(s) which are in existence. 2 9 5. INITIAL RESPONSIBILITIES THE PARTIES agree that their responsibilities shall be as follows: 5.1 Local partners will be primarily responsible for the organization of all appropriate political lobbying, in order to secure the license(s) and/or reaffirm any license(s) which are in existence, as well as responsible for the procurement of the Technology and coordinate all engineering presentation and procurement etc. and the Consortium liaison with the Government of Indonesia. They have submitted a prospective ????????? property in Kalimantan known as Kalimantan Timur (KT) consisting of 10,000 HA. KT is one of many other prospects which are known to the local partners. 5.2 MAXWELLS ENERGY AND METALS TECHNOLOGY LTD. will be responsible to provide and/or secure financing for the PROJECT, provide for all international technology transfers and provide a strategic operator(s) to gain the license(s) from the Government. 6. CONSORTIUM AGREEMENT When the Consortium is awarded these license(s) or reaffirmation(s). THE PARTIES will immediately execute the Detailed Consortium Agreement on the basis of this MOU or at a mutually agreeable time. 7. JURISDICTION 7.1 Any dispute or controversies which may arise out of this MOU shall be amicably settled by THE PARTIES, but in failure thereof, such disputes or controversies shall be referred to the arbitration by the Rules of International Chamber of Commerce in Indonesia. 7.2 This MOU as to its interpretation and application shall be governed by the Laws of Indonesia. 8. OTHER MATTERS Other matters not stipulated in this MOU shall be further discussed and decided later on through mutual discussion between THE PARTIES on the basis of this MOU. 3 10 In witness whereof THE PARTIES hereto have caused this MOU to be legal, binding and enforceable as well as executed in duplicate by their representatives herein who are so duly authorized, on the date and year first above written, each retaining one (1) copy thereof. Bandung, 16th day of July 1996. ---- ----- For: MR. ABUBAKAR SIDDIQ For: MR. ANDY T. NJTIDISASTRO /s/ ABUBAKAR SIDDIQ --------------------------- For: MAXWELLS ENERGY For: MR. BASTARIMIRAI AND METALS TECHNOLOGY /s/ W.H.B. CHAN --------------------------- Name: WHB Chan Title: President Director 4 11 In witness whereof THE PARTIES hereto have caused this MOU to be legal, binding and enforceable as well as executed in duplicate by their representatives herein who are so duly authorized, on the date and year first above written, each retaining one (1) copy thereof. Bandung, 16th day of July 1996. ---- ----- For: MR. ABUBAKAR SIDDIQ For: MR. ANDY T. NJTIDISASTRO /s/ ABUBAKAR SIDDIQ /s/ Andy T. Njtidisastro --------------------------- ----------------------------- For: MAXWELLS ENERGY For: MR. BASTARIMIRAI AND METALS TECHNOLOGY /s/ W.H.B. CHAN /s/ BASTARIMIRAI --------------------------- ----------------------------- Name: WHB Chan Title: President Director 12 EXHIBIT I 13 [INDONESIA - Geographical Map] [INDONESIA - Distribution of Mineralized Tertiary Magmatic Arcs] 14 EXHIBIT II 15 =============================================================================== [LOGO] ASIAN WORLD STOCK REPORT MONEY MAKING IDEAS FOR INVESTING IN ASIA THROUGH NORTH AMERICAN EQUITIES =============================================================================== DECEMBER, 1995 VOL. I NO. 3 (C)BRIAN FAGAN - ------------------------------------------------------------------------------- IN THIS ISSUE SIX BASIC CONSIDERATIONS FOR EVALUATING JUNIOR EXPLORATION COMPANIES A simple set of basic fundamentals that will identify companies with real value, excellent upside potential, trading at reasonable prices. INDONESIA The country, its geology and its mining law. What you see in the window is what you can expect to find in the store. THE AREA PLAY Centerspread map of Indonesia. See who is there early. The list of companies is growing daily. THOUGHTS & TRAVELS An investment conference you will enjoy and profit from. Current buy recommendations. NON-MINING TML FOODS INC. (TML - ASE) A new buy recommendation and non-mining section in Asian World Stock Report. BRE-X MINERALS LTD. Those that were looking, saw the potential. You can learn a lot by taking this chronological tour of the company's rise to prominence. WISHING YOU ALL THE VERY BEST FOR THE HOLIDAYS! Brian Fagan - ------------------------------------------------------------------------------- INDONESIA BRE-X MINERALS LTD. THE FIRST CANADIAN-ASIAN WORLD GOLD MINING STOCK AREA PLAY INDONESIA'S enormous mineral wealth--coupled with a major world class gold discovery by Calgary, Alberta based BRE-X Minerals Ltd.--has set the stage for "the first ever, Canadian-Asian World, Gold Mining Stock Area Play." I felt it was coming and am very pleased it came so soon and in such a significant fashion. People sometimes ask why I spend so much time researching mining stocks trading under ten and sometimes even under one dollar a share. The answer is that many of these stocks have the potential to double and triple in price, and once in a while one goes into orbit, as in the case of BRE-X. The story in this issue is not ancient history. It is happening right now. Many of you are or will be a lot richer because of it. BRE-X stock, trading at $3.00 in March 1995, rose to an all time high of $57.50 on November 2nd and closed December 6th at $53.00. This spectacular increase in value resulted from the company's discovery of an estimated 6-10 million ounces of gold, on one of its mineral exploration properties in Indonesia. The potential total gold reserve continues to expand. Major mineral discoveries like this one are the "shots heard round the world." They create enormous, instant, real value for the discovering company. And, because multiple mineral deposits often occur in proximity to each other, increased speculative value is also added to all companies owning or acquiring mineral rights in the discovery area. When exploration was the domain of the individual prospector what developed was a gold rush; now, in the age of companies, we call it an area play. Indonesia is about to experience an area play that will undoubtedly result in many more new discoveries. Financial institutions familiar with the rewards and risks of the business are actively seeking participation. With the availability of equity funding, junior exploration companies are acquiring known but undeveloped properties, as well as initiating grass-roots exploration programs in virgin areas. Many other Asian World countries are going to experience the same type of gold rush by North American companies, that is going on in Indonesia today. There will be no shortage of investment opportunities as this exciting phenomenon unfolds. 16 - -------------------------- ASIAN WORLD STOCK REPORT --------------------------- -------------------------------------------- INDONESIA THE COUNTRY -- THE GEOLOGY THE MINING LAW -------------------------------------------- HOW to develop confidence and an acceptable comfort level in Indonesian mining investments is the purpose of this article. From my seat I can see that numerous companies will soon be offering their stock to investors as a way to participate in what is sure to be a major North American mining stock play. Picking the companies most likely to succeed requires an understanding of the country, an assessment of the geologic terrain the company is exploring, and its ability to acquire secure title to its mineral interest. The potential for an enormous win has already been demonstrated. INDONESIA is located right on the equator, the land of the "trade winds." The climate is tropical with a easterly monsoon of less rain (May to September) and a westerly monsoon (December to March) that is considered the wet season. Humidity is high, with temperatures ranging from about 22 degrees to 30 degrees C. Consisting of 13,677 islands of which 3,000 are inhabited, the worlds largest archipelago stretches east to west some 5,000 kilometers, roughly the width of the United States. Supporting a population of 200 million, primarily Muslim, with 50% under the age of 20, it is the fifth most populous country in the world. Its capital Jakarta, located on the island of Java, is a vast, modern city with a population of 15 million. Formerly known as the Dutch East Indies and the Spice Islands, the region was controlled by the Dutch from the early 1600's until the Japanese occupation of 1942 - 1945. As the War in the Pacific ended, Indonesia declared its Independence in 1945, but then had to fight a four year War of Independence with the Dutch before it was recognized by the United Nations in 1949. After fifteen more years of internal conflict, present day leader President Suharto took control in 1965. Under his leadership, the country has experienced 30 years of political stability, spectacular economic growth, and social reform. Indonesia is now considered an excellent location for foreign investment and international business. GEOLOGY A review of the known deposits and styles of mineralization is the logical place to start. Don't get nervous; there is an order in nature that everyone can comprehend. One geologic term you need understand is "magmatic arcs." They are what Indonesia is made of. Look at the map on the next page. Do you notice all the lines with triangles on them labeled trenches? They are breaks in the earth's crust where molten rock is pouring out onto the ocean sea floor. Eventually enough lava pours out so that it piles up and breaks through the ocean surface forming a land mass. Over eons of time, these land masses move off the trench, then the whole process repeats itself. Arc after arc join up: that is why the shape of trenches reflect that of the land masses. Only certain arcs are mineralized, each in its unique style. There are 15 magmatic arcs in Indonesia extending over 15,000 kilometers, but nearly all the gold and copper production comes from the arcs on the map. That is a very simplistic explanation of magmatic arcs and how Indonesian-bound exploration companies know which terrain is the most productive. Armed with this knowledge and the map on page 9 you can examine the various mineral deposits found throughout the entire Indonesian archipelago. What you see in the window is what you can expect to find in the store. SUMATRA The Sunda-Banda Arc passes along the southwest margin of Sumatra through Java, Bali, Lombok, Sumbawa, Flores, to Wetar. The larger mineral deposits on Sumatra are of the epithermal gold-silver vein type. Epithermal mineral deposits are those formed when super-heated waters cause metals to be dissolved from the rocks that they travel through; then as the waters rise from unknown depths to the surface the metals are re-deposited in a wide range of geologic structures, environments, and rock types. The gold-silver vein deposits in the Lebong district contain some 3.0 million ounces of gold. The exhausted Lebong Donok mine, with an average grade of 14 g/t gold and 79 g/t silver, had the highest grades recorded for Indonesian gold production. Less significant gold-copper vein deposits ranging from 150,000 to 450,000 ounce gold occur on the island. JAVA The extension of the arc and the gold-silver deposits continue east across Java. In the Cikotok region the Gunung Pongkor deposit has a resource of 3.3 million ounces gold and 31.3 million ounces silver. Grades are 17 g/t gold and 162 g/t silver in veins extending 1 kilometer with widths from 2 to 10 meters. SUMBAWA Further east on the Island of Sumbawa the style of mineralization changes from epithermal vein type to porphyry copper-gold. This style of mineralization is characterized by large tonnage low grade deposits in which the copper minerals occur as discrete grains and veinlets disseminated throughout a large volume of rock. This is home for the Batu Hijau deposit of Newmont where a reserve of 600 million tonnes contains 12 million ounces of gold and 10 billion pounds of copper at grades of 0.8% copper and 0.7 g/t gold. WETAR The eastern-most known deposit in the Sudan - Banda Arc is Billiton's Lerokis-Kali Kuning gold-silver deposit. The resource here occurs in epithermal barite bodies up to 37 meters thick and contains about 5 million tonnes grading 4 g/t gold and 122 g/t silver. KALIMANTAN Kalimantan in the center of the map is the focus of today's area play in Indonesia and home of the recent BRE-X, Busang discovery. Looking at the other known deposits along the Central Kalimantan Arc, it is obvious why BRE-X would chose this location to search for new gold. The Kelian mine, 200 kilometers southwest with 97 million tonnes grading 1.85 g/t gold (5.8 million ounces) in two main orebodies and 4 satellite zones, is Indonesia's largest primary gold deposit. Mt. Muro, 100 kilometers further south, hosts 10 million tons grading 3.8 g/t gold (1.2 million ounces) and 95 g/t silver (30 million ounces) in 10 zones. 17 [INDONESIA - Geographic Map] [INDONESIA - Distribution of Mineralized Tertiary Magmatic Arcs] 18 - -------------------------- ASIAN WORLD STOCK REPORT --------------------------- [INDONESIA MAP--2 PAGE SPREAD] INDONESIA - LOCATION OF SIGNIFICANT MINERAL DEPOSITS PROPERTY LOCATIONS -------------------------------------------- INDONESIA - THE AREA PLAY -------------------------------------------- Speculation in the stocks of junior mineral exploration companies with Indonesian properties is accelerating on the Vancouver, Alberta and Toronto stock exchanges. Within the last few weeks, I have witnessed the price of several stocks double and triple on no more than a news announcement, stating that they were negotiating to acquire a property in Indonesia. To be sure, these are fortunate circumstances for the holders of these stocks and some nimble day traders, but offer little opportunity for value orientated investors. Keeping up with them on a daily basis is well beyond the scope and purpose of Asian World Stock Report. On the other hand, I believe that monitoring the results of Indonesian exploration programs will allow me to identify those companies with the potential for a significant discovery and make you aware of them early. The BRE-X story shows that there is plenty of time to buy into a real discovery. Short term trading in Indonesian area play stocks is a completely different endeavor than investing. With the ten percent high risk portion of my trading capital I am, and expect that you too are also, trying to buy and sell these moving targets at the right price and time. This type of trading is exciting and is what makes the junior mining stock market tick. Being up to date on the spec-side also increases your exposure to developing stories. Today, there are really two Indonesian area plays. The hot one is centered around the BRE-X, Busang deposit on Kalimantan. In the early stages of an area play, proximity is everything. The closer the company's property is to the new discovery - the more speculative price premium it will enjoy. As the play matures, more tangible factors will start to determine price. Eventually each property will have to stand on its own merit. We are in the very early stage of the Kalimantan play. The other play encompasses all the rest of the country. 19 - -------------------------- ASIAN WORLD STOCK REPORT --------------------------- [INDONESIA MAP--2 PAGE SPREAD] INDONESIA - LOCATION OF SIGNIFICANT MINERAL DEPOSITS PROPERTY LOCATIONS -------------------------------------------- Quite remarkable, considering that the distance east to west across Indonesia is roughly the same as Canada or the United States. This area play is happening because, almost without exception, all of the property acquisitions recently made by North American companies are near significant mineral deposits where the potential for new discoveries is considered excellent. Think about the size of the United States when someone says they have a property in Indonesia: Kalimantan is Denver, Irian Jaya is Los Angeles, and Sumatra is New York. Property locations for each listed company are shown on the above map. Indonesia is going to be generous to those investors that understand it. I suggest you get started by obtaining an information package from these far-sighted companies who got in early. (AWSR: NOT RATED) ???ch Mountain Minerals Inc. BRE-X Minerals Ltd. ??? Kalimantan #2 Kaliman, Sumatra, Sangihe, I.J. ??M - Alberta Stock Exchange BXM - Alberta Stock Exchange Contact: Douglas J. Rowe Contact: T. Stephen McAnulty ??? 262-1838 Tel. (403) 247-0707 Brett Resources Inc. Consolidated Valley Ventures Ltd. #3 Sumatra #4 Kalimantan BRN - Vancouver Stock Exchange CVL - Vancouver Stock Exchange Contact: Larry Nagy, L.L. Duffett Contact: Barbara Dunfield Tel. (604) 684-8725 Tel. (604) 685-6851 First Dynasty Mines Ltd. Gothic Resources Inc. #5 Irian Jaya #6 Kalimantan FDM - (TSE) - FDYMF (Nasdaq) GCR - (VSE) (ME) Stock Exchanges Contact: Leslie Young Contact: Tanya Gunther Tel. (303) 740-1209 Tel. (604) 683-6556 Indochina Goldfields, Ltd. International Skyline Gold Corp. #7 Kalimantan, Java #8 Irian Jaya Private - (TSE) listing planned ISC - (VSE) (TSE) Stock Exchanges Contact: R. Edward Flood Contact: Clifford A. Grandison Tel. (415) 693-3356 Tel. (604) 683-6865 Pacific Amber Resources Ltd. Pacific Wildcat Resources Corp. #9 Kalimantan #10 Sumatra, Sulawesi PCR - Vancouver Stock Exchange PAW - Vancouver Stock Exchange Contact: Hiro Ogata Contact: Gordon Fitzpatrick Tel. (604) 688-6681 Tel. (604) 688-9780 Scorpion Minerals Inc. South Pacific Resources Ltd. #11 Kalimantan, Sumatra #12 Kalimantan (TSE) listing pending SHF - Alberta Stock Exchange Contact: Michael A. Farrugia Contact: Robert F. Chase Tel. (416) 777-6671 Tel. (604) 687-???? 20 - --------------------------ASIAN WORLD STOCK REPORT---------------------------- There are other known smaller prospects along the arc in the 2 to 3 g/t gold, 50 to 80 g/t silver range. These will surely be tested for additional reserves in the months ahead. When you realize that the Busang deposit of BRE-X is well on its way to being the largest primary gold deposit in all of Indonesia, you can appreciate the attention this area is getting. SULAWESI The Sulawesi-East Mindanao Arc on the north arm of the island of Sulawesi is the host for a variety of deposit types. The numerous large to medium sized low grade porphyry copper-gold deposits in the Tombulilato area and Newmont's Mesel, epithermal (carlin type) gold deposit at Motomboto are of particular interest. One deposit in the Tombulilato area contains a total resource of 295 million tonnes grading 0.6% copper and 0.46 g/t gold in eight separate bodies. Mesel, with early 1996 production planned, has reserves of 2 million ounces contained in 12 million tonnes grading 5 g/t gold. It is interesting that as the Sulawesi-East Mindanao Arc continues north, it host the East Mindanao gold district in the Philippines which is experiencing an area play of its own by Canadian companies. IRIAN JAYA The most prospective area of Indonesia for finding world class porphyry and skarn copper-gold deposits is in the Medial Irian Jaya Arc which runs through the central spine of the highlands of Irian Jaya. This is the "land of the giants." Within the 1+ billion tonne ore reserve in the Grasberg/Ertsberg district, the arc contains over 75% of the country's copper and more than 60% of its gold. The gold reserve at Grasberg alone exceeds 80 million ounces, making it the single largest in the world. That completes the geologic tour of Indonesia. The arc continues east into Papua New Guinea where it hosts two additional giant deposits, but that is a new story I will share with you in a future issue. LAW If the company you have invested in loses title to its property -- you lose your money! Therefore, knowing how it holds its mineral interest in a foreign country is important. Indonesia will pass a new mining act within the next 6 months. It is anticipated that it will be favorable to foreign mining companies. Under the prevailing law, foreign companies can acquire mineral rights in three ways. Titles held under a Contract of Work (COW) or through a joint venture with P.T. Aneka Tambang, one of the State mining agencies, have the backing of the government and have never been challenged. However, title held under what is known as a KP are another matter. A foreigner cannot hold title to a local mining claim (KP) or the surface rights to it. KP's are worked through joint ventures, but the title to the property remains in the name of the local partner or his company. I expect that the majority of junior mineral exploration companies rushing to Indonesia are going to acquire their mineral interest under KP's. With the right local partner this should work out satisfactorily. However, if you have a substantial amount of money at risk, it is a consideration worth your attention. ************ - ------------------------------------------------------------------------------- BRE-X MINERALS LTD. THOSE LOOKING SAW THE POTENTIAL - ------------------------------------------------------------------------------- BRE-X, after an increase in share price from $3.00 to a high of $57.50 in less than 8 months is now a household word in the market place, but the BRE-X, Indonesian story starts way back in May of 1993. I want to tell the story as it unfolds through published company news releases and media reports which were available for us to see. It illustrates many of the points I've made about investing in junior mineral exploration stocks and will help you recognize the next golden opportunity early. At year end 1992 there is nothing to distinguish BRE-X from the other 2,000 like companies trading on the Vancouver, Calgary, and Toronto stock exchanges. BRE-X starts the year trading at ten cents a share, briefly going up to thirty five as the company searches for diamonds in the Canadian, Northwest Territory's, Lac de [??????] area play and closes out the year at fifteen. It also issues three news releases in 1992; one of them discloses that a related company Bresea Resources offered 50% of the then issued capital of 6,400,000 shares [???]. Companies in which the insiders hold large positions rarely disappear. 07 May 93 $0.51 BRE-X makes its first news release concerning its involvement in Indonesia with the acquisition of an 80% interest in the Busang property located on the island of Kalimantan. The property [????] three prime targets. There is a potential geologic resource on the most advanced of 1 million ounces of gold, inferred by 19 previous drill holes. Today, such a news release would attract immediate attention, but in early 1993 Indonesia was an unknown entity. 19 Jul. 93 $0.36 BRE-X repeats the May 7th release [and?] announces the completion of a financing the start [up??] physical work on the Busang property, and the acquisition of an additional Indonesian property located on the island of Sangihe in North Sulawesi. I like companies with more than one property under development. 03 Aug. 95 $0.40 BRE-X releases an update on [????] projects. The exploration program for diamonds in the Northwest Territories of Canada comes to a halt. 16 Aug. 93 $0.47 BRE-X reports the results of the drill holes on the Sangihe Island property. Two miss; a third gives enough encouragement to plan a second drilling program. 08 Sep. 93 $0.45 BRE-X announces the acquisition of a third Indonesian property. This time it is on the island of Sumatra. The company says various major mining companies and investment dealers in Canada are beginning to take an interest in its activities. This is probably the first time that independent information about the company is available. The stock will not trade below $0.50 again, but it will remain below $2.00 for almost another year. 21 [INDONESIA - Location of Significant Mineral Deposits] [Size and content of in-situ gold resources Indonesian gold and copper-gold deposits] 22 - --------------------------ASIAN WORLD STOCK REPORT---------------------------- 07 Oct. 93 $0.74 BRE-X reports that drilling has started on both the Busang and Sangihe properties. Two additional Indonesian properties are also acquired. 12 Dec. 93 $1.20 BRE-X reports the results from the first 4 drill holes on the Busang property. Drill holes 1 and 2 intersect weak, but continuous gold mineralization over 84 and 140 meters respectively. Hole 3 has 80 meters grading from 1.91 to 6.58 g/t gold. Hole 4 is terminated at 22.8 meters for technical reasons, but returns excellent grade mineralization. These initial results are enough to attract the attention of at least one major company, and I'm sure, more than a few savvy investors. 25 Jan. 94 $1.75 BRE-X receives a written offer from a major mining company to acquire an equity interest in the company and a joint venture interest in the property. It is always a good sign when the major companies take an interest in a developing property. 14 Feb. 94 $1.75 BRE-X turns down the offer on the table and says it can do better. Evidently management has a lot of faith in the results to date and the project's potential. 24 Mar. 94 $1.45 Dr. Paul Kavanagh, who had previously been president of Newmont Mining of Canada and senior vice president exploration of American Barrick Resources joins the board of directors of BRE-X. When someone with the reputation of Dr. Kavanagh joins a junior company, take notice. Always look for the good people. 13 Apr. 94 $1.55 Six more drill holes reported. One hole starting at surface returns 85 feet averaging 12 g/t gold. 03 May 94 $1.85 Lowen, Ondaatje, McCutcheon, a well respected investment dealer, finances BRE-X. They raise a total of $4,500,000 by selling 300,000 units (one share plus a half warrant at $1.75). Management place an additional 300,000 units at the same price. With this much cash investors can count on continued drilling. 28 Jun. 94 $2.20 BRE-X reports that two holes drilled in a new area return encouraging results (2 to 4 g/t gold over 5 meters) and announce that a 25 drill hole program is in progress on the main zone. The results from the two holes in the new zone are in fact really encouraging. This is the type of information you need to check out with a professional for interpretation. Dorothy Atkinson, Ph.D. and senior mining analyst at Pacific International Securities in Vancouver, BC is paying attention to all this and issues a "strong buy recommendation" for BRE-X at $2.40 on August 30/94. 24 Sep. 94 $2.25 BRE-X reports that of 31 holes drilled, 22 have hit significant mineralization and publishes the results. Management states that they are estimating a resource of 3 to 6 million ounces of gold on the property. This is a huge increase from the original expectation of 1 million ounces. Six million ounces would make it the biggest gold mine in Indonesia. [GRAPH HERE] 01 Nov. 94 $3.00 Special Report. Michael Schaefer, Editor of Global Gold Stock Report, Casper, WY, rates BRE-X as his strongest buy recommendation for a long term holding. 28 Nov. 94 $2.75 The Financial Post, a major financial newspaper in Canada, runs its first article on BRE-X. John Feldehof, P.Geol., who found the Busang property for BRE-X, becomes the company's exploration manager. More good people. 30 Dec. 94 $2.85 BRE-X announces the results from the latest 9 drill holes. Five of them have ore grade intersections. 19 Jan. 94 $2.80 BRE-X announces the results of six more holes and states its working capital position of $3,500,000. The holes are the highest grade reported to date and for the first time a drill hole location map is made available for the asking. Anyone looking at this map could see a significant deposit developing. J. Taylor, Editor of Gold & Gold Stocks was looking and issues a buy recommendation as the stock drifts down below the $2.50 level. 22 Feb. 95 $2.45 BRE-X announces an independent resource calculation of 1 million ounces for the Central Zone; three more high grade drill hole intersections, the start of a new drill program, and a working capital of $2,700,000. 06 Mar. 95 $2.20 BRE-X reports three more high grade drill holes. J. Taylor reiterates his buy signal and Doug Casey, editor of Crisis Investing, recommends the stock to all his subscribers at the perfect moment; the stock has just started to rise again, but is still below $2.50. This is a good example of why you need multiple sources of information. No analyst, financial advisor or letter writer can possibly see all the opportunities. This time it is Doug Casey, J. Taylor, Michael Shaefer, and Dorothy Atkinson. 12 Apr. 95 $2.80 BRE-X reports results from the first drill hole on the new Southeast Zone. It returns an impressive 196 meters at 3.03 g/t gold. The stock heads north. 10 May 95 $4.00 The first negative news in a long time. BRE-X reports that the next two holes on the new Southeast Zone intersect a weakly mineralized section of the deposit and publish the results. Actually the results are not that bad, just not as good as the market is expecting. The stock stalls in the $4.00 range. 15 May 95 $4.05 Financing. Lowen, Ondaatje, McCutcheon Limited, Nesbitt Burns Inc., Scotia McLeod Inc., and McLean McCarthy Limited place 1,350,000 shares at $3.75. BRE-X 23 management place 650,000 at the same price. Total proceeds $7,500,000. National brokerage houses, like the ones above, do not finance junior companies without doing a lot of due diligence. This stamp of approval is a signal that what BRE-X has been saying all along, has a lot of merit to it. Dorothy Atkinson is paying attention to these events and puts out a new buy recommendation on May 24th. Michael Schafer, Global Gold Stock Report, reiterates his buy recommendation. 20 Jun. 95 $6.00 BRE-X reports an updated reserve figure for the Central Zone of 2.3 million ounces. (1.3 indicated and 1.0 inferred). The Northern Miner publishes its first feature article on BRE-X. Levesque Beaubien and Company, Atkinson, and Casey like these numbers, relative to the stock price, and issue buy recommendations, respectively on June 20th, July 4th and July 9th. Casey says the stock will be over $20.00 by year end. 12 Jul. 95 $7.75 BRE-X reports significant results from three additional holes on the newly discovered Southeast Zone. Two of these holes are located 1.25 kilometers from the other. This is an enormous stepout, opening up the possibility for doubling the reserves on the Busang property. Analyst Dorothy Atkinson, Michael Fowler of Levesque Beaubien and Company, and Scotia McLeod Inc. put out buy recommendations. 19 Jul. 95 $12.25 The Calgary Herald, the cities major newspaper publishes its first article on BRE-X. 20 Jul. 95 $12.00 Dorothy Atkinson puts out a new buy recommendation with a target price of $20.00 which she expects to raise as development continues. 24 Jul. 95 $12.00 Northern Miner article. 28 Jul. 95 $14.25 Financial Post article. 01 Aug. 95 $13.75 Michael Schaefer, editor of Global Gold Stock Report, recommends the purchase of BRE-X. He says its hard to recommend BRE-X at today's price after having previously recommended it at $1.20 and $3.00, but now believes there is a chance of seeing a $40.00 price tag by year end. 14 Aug. 95 $13.25 There are now four drill rigs working on the Busang property. The company reports on three new drill holes from the Central Zone. All three holes look good. 15 Aug. 95 $14.00 Financial Post article. 18 Aug. 95 $15.50 The Globe and Mail, a major Canadian financial newspaper publishes its first article on BRE-X. 25 Aug. 95 $14.00 Michael Fowler, gold analyst at Levesque Beaubien, issues a strong speculative buy recommendation with a target price in excess of $21.00. 05 Sep. 95 $14.25 Egizio Bianchini, gold analyst at Nesbitt Burns Inc., initiates coverage of BRE-X with a target price of $21.00. 02 Oct. 95 $18.25 BRE-X reports results from seven more drill holes on the developing Southeast Zone. Five holes are impressive; two miss. By this time it is possible to put a pencil to BRE-X and come up with an estimated value. However, all the variables used in the value equation remain only estimates or guesstimates. Still, it is possible to establish parameters for upside and downside based on further results. The analysts are betting on the upside. 03 Oct. 95 $18.75 Financial Post article. 04 Oct. 95 $18.00 Michael Fowler comes out with a value price of $40.00. 06 Oct. 95 $18.25 Scotia McLeod comes out with a value estimate of $31.00. 09 Oct. 95 $18.25 Northern Miner article. 12 Oct. 95 $24.25 Levesque Beaubien comes out with a value estimate of $40.61. 17 Oct. 95 $29.75 BRE-X reports Kilborn Engineering's resource calculation covering an area 200m x 900m in the Central Zone. At a cutoff grade of 0.5 g/t, it contains a total of 2,750,000 ounces gold (measured 780,000, indicated 1,800,000, inferred 170,000). 17 Oct. 94 $29.25 BRE-X reports the results from three holes, two represent substantial step outs on the Southeast Zone Holes 61 and 62 contain respectively, 301 meters at 4.42 g/t gold and 137 meters at 5.71 g/t gold, plus several shorter and lower grade intersections. These holes mean the mineralization has now been intersected over a strike length of 2.75 kilometers. Although there are gaps in the pattern of drilling, the market beings to visualize a multi-million ounce deposit. FROM THIS DATE ON WE ARE TALKING ABOUT VERY SERIOUS MONEY. ANALYSTS ARE NOW FACED WITH A PROBLEM BECAUSE THE FUTURE VALUE OF BRE-X DEPENDS ON WHAT ADDITIONAL DRILL HOLES WILL REVEAL; NO ONE CAN SEE UNDERGROUND. THEREFORE, IT MUST BE POINTED OUT THAT, ALL SUBSEQUENT ANALYST'S PROJECTIONS AND OPINIONS ARE OF THE "WE CAN EXPECT THIS -- IF THIS HAPPENS AND THAT -- IF THAT HAPPENS" VARIETY. 17 Oct. 95 $29.25 Scotia McLeod, one year target $62.00. 17 Oct. 95 $29.25 Levesque Beaubien, target under review, but above $40.00. 17 Oct. 95 $29.25 Midland Walwyn, does not have a rating on the stock, but believes the current share price is reflecting a 10 - 12 million ounce gold resource. 17 Oct. 95 $29.75 Nesbitt Burns, one year target $50.00. 20 Oct. 95 $42.00 First Marathon, still considers BRE-X a speculative buy. No target price. 24 Oct. 95 $43.00 Levesque Beaubien Geoffrion, six month target $63.00. 20 Nov. 95 $51.25 BRE-X reports results from 8 additional drill holes on the Southeast Zone. Two miss; six return excellent results. Investors now need professional advice from those who are capable of, and are spending a great deal of time, evaluating the Busang deposit. In addition, they should be self-examining all available information. When you own a $50.00 stock that can go to $100.00 plus or give up 20% of its value, that is the time your multiple sources of information are invaluable. Analysts closest to the situation are calling today's results - outstanding. I admire analysts who don't hedge; Levesque Beaubien and Nessbit Burns state their opinions immediately. 20 Nov. 95 $51.25 Levesque Beaubien, says results above expectations, target price of $63.75 plus will be raised. - ------------------------------------------------------------------------------- Asian World Stock Report/December 1995 11 24 - --------------------------- Asian World Stock Report -------------------------- 20 Nov. 95 $50.00 Nesbitt Burns, says the current limits of the drilling demonstrate the potential for 30 million ounces and raises its target price to $70.00. 24 Nov. 95 $50.00 Eagle & Partners, Toronto, puts out a four page report that makes a strong case for a 15 million ounce deposit with considerable upside potential. The stock is considered a buy for risk tolerant investors; the 12 month target price is $75.00. 27 Nov. 95 $50.00 First Marathon Securities returns from a property examination and re-recommends the stock as a speculative buy, stating that volatility should provides opportunities to accumulate positions. 06 Dec. 95 Time to pause in the BRE-X story as I send this month's issue to the printer. The stock closed today at $53.00. The latest news release was on 23 Nov. 95 which reported the results from one additional drill hole on the most westerly step out line to date on the Southeast Zone. Each time the drill moves west and encounters mineralization, the size of the deposit increases. The latest hole returned an intersection of 319 meters (1,046 feet) at 2.45 g/t gold. I was attending a gold conference in San Francisco at the time, where analyst close to the situation, were busy calculating the importance of this, the third such long, comme??? grade intersection in this area. As speaker after speaker sang the praises of BRE-X from the podium it was very clear how important this Indonesian discovery was ?? the company, the industry in general and?? mining/exploration sector of the stock market. I purposely wrote the BRE-X story in an information format so that you can see how these situations actually evolve, rather than as an advisory service. However, the obvious question on everyone's mind is whether to buy or sell the stock now. To answer that question you need to know how BRE-X is valued in the market. There are numerous formulas and scenarios. The common consensus is that for every 10 million ounces of gold reserve that is inferred by the drilling, the market is assigning $25.00 to the stock price. Since those closest to the situation are talking a +30 million ounce deposit, the already long the stock have good reason to stay on boat for the upside potential. If you're in a position to buy a $50.00 stock, you should first get all the information available from those close to it, mentioned in this article. Start off by contacting the company: BRE-X Minerals Ltd., Mr. T. Stephen McAnulty, Vice President, P.O. Box 84026, Market Mall P.O., Calgary, Alberta, Canada, T3A 5C4 Tel. (403) 247-0707 Fax (403) 247-0329. - -------------------------------------------------------------------------------- ASIAN WORLD STOCK REPORT/COMPANY CLASSIFICATION AND STOCK RECOMMENDATION As indicated category is given for all companies mentioned in Asian World Stock Report. (R) / Rated - The Company has been extensive researched and analyzed; an opinion and/or recommendation is given. Reader contact with the Company is recommended. (NR) / Not Rated - Although no specific recommendation is given, the Company has been extensively researched and found to be of such interest that I encourage readers to contact the Company for full corporate information. (EC) / Editorial Comment - The Company has not been extensively researched and analyzed. It is mentioned because it is in some way similar or related to the subject being discussed. Interested readers may contact the Company. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Asian World Stock Report is written and published monthly by Brian Fagan. Readers are advised that this analysis report is issued solely for information purposes. Neither the information presented nor any statement or expression of opinion, or any other matter herein, directly or indirectly constitutes representation by the publisher nor a solicitation of the purchase or sale of any securities. The information contained herein, is based on sources which w?? believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. The owner, publisher, editor and their associates are not responsible for errors and omissions. They may from time to time have a position in the securities mentioned here and may increase or decrease such positions without notice. Any opinions expressed are subject to change without notice. Asian World Stock Report encourages readers and investors to supplement the information in these reports with independent research and other professional advice. It is a violation of the United States copyright laws to duplicate or reprint this publication in whole or in part in any quantity without permission. Parts of the newsletter may be extracted or reproduced in context for inclusion or review in other publications only if credit is given, along with the name and address of the publisher. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASIAN WORLD STOCK REPORT * Post Office Box 450 * Grayland, WA 98547 SUBSCRIPTION APPLICATION FORM [ ] Yes! Please enter my subscription to Call or Fax now and save $50.00 Asian World Stock Report Telephone/Fax (360) 267-5107 12 issues US$99.00 (normally US$149.00) [ ] Check Enclosed [ ] Please Bill Me RECEIVE 12 ISSUES FOR ONLY US$99.00. [ ] Master Card [ ] Visa Card This special offer is risk-free. You must be completely satisfied or Name ______________________________ receive a pro-rated refund at any Company ______________________________ time during your subscription. Suite/Dept. ______________________________ [ ] Master Card [ ] Visa Card Street ______________________________ Card Number ___________________ City _______________St./Prov.______ Expiration Date ___________________ Country _____________Postal Code______ Signature ___________________ Telephone _______________Fax____________ - -------------------------------------------------------------------------------- 25 DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor: 511.K/2013/DDJP/1988 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI (DU. 752 / KALTIM ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan Sdr. H. ABUBAKAR SIDIK tanggal 18 Pebruari 1987 Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sebagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967. 2. Peraturan Pemerintah No. 32 Tahun 1969. 3. Peraturan Pemerintah No. 27 Tahun 1980. 4. Keputusan Presiden R.I. No. 68/M Tahun 1984. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan tanggal 28 Maret 1988 Nomor 999/22/DPT 1988. M E M U T U S K A N Menatapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut: Kepada : Sdr. H. ABUBAKAR SIDIK Alamat : J1. Kelapa Kopyor Timur I BD2/20, Kelapa Gading Permai, atas sesuatu wilayah tertanda DU. 754 / Kaltim Jakarta. terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur seluas : 2.000 (Dua ribu) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan dan Peta Wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian "Emas, perak dan mineral pengikutnya" dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran Keputusan ini dan ketentuan peraturan perundang- undangan yang berlaku. KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan 26 pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan ketentuan apabila dikemudian hari terdapat kekeliruan akan diadakan pembetulan seperlunya. Ditetapkan di : J A K A R T A Pada tanggal : 6 Juli 1988 -------------------------------------- DIREKTUR JENDERAL PERTAMBANGAN UMUM [OFFICIAL SEAL] Drs.: SOETARYO SIGIT -------------------- NIP. 100000166 TEMBUSAN: - -------- 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, Jl. Diponegoro No. 57 di Bandung (dengan peta). 6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan peta). 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan Jl. Ir. H. Juanda No. 9 Bogor (dengan peta). 9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta). 12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta). 13. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan peta). 15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (dengan peta). 16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta). 27 Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 511.K 2013/DDJP/1988 Tanggal : 6 Juli 1988 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI D.U. 752 / Kaltim. - Sebelah Utara dan : masing-masing garis sejajar terletak Sebelah Selatan pada 500 meter disebelah Utara dan 4.500 meter disebelah Selatan titik P (X=115 degree 15' B.T.; Y=0 degree 45' L.U). - Sebelah Timur dan : masing-masing garis rembang terletak Sebelah Barat pada 4.000 meter dan 8.000 meter di- sebelah Barat titik tersebut diatas. Direktorat Teknik Pertambangan Direktur, [STAMP] [SIG] Tr. Mangara Simanjuntak. ------------------------ NIP. 100000373. 28 PROP. KALIMANTAN TIMUR [MAP] 29 Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum Nomor : 511.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota Propinsi Kalimantan Timur di Samarinda. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru dan/atau Kantor Penghubung kantor Wilayah Departemen Pertambangan dan Energi di Samarinda. III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar luran Tetap dan luran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.); b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang berlaku mengenai Pengawasan dan Lingkungan dibidang pertambangan umum; b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan umum; c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepaga petugas tersebut diatas untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi harus diajukan sebelum berakhirnya masa izin ini dengan disertai bukti-bukti kewajiban yang telah depenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan dan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan harus mengangkat keluar segala sesuatu yang menjadi miliknya, kecuali benda-benda/bangunan-bangunan yang dipergunakan untuk kepentingan umum. IX. [OFFICIAL SEAL] DIREKTUR JENDERAL PERTAMBANGAN UMUM /s/ SOETARYO SIGIT Drs: SOETARYO SIGIT 30 DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR: 512.K/2013/DDJP/1988 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI (DU. 753 / KALTIM ) DIREKTUR JENDERAL PERTAMBANGAN UMUM MEMBACA : Surat permohonan Sdr. H. ABUBAKAR SIDIK tanggal 18 Pebruari 1987 MENIMBANG : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. MENGINGAT : 1. Undang-undang No. 11 Tahun 1967. 2. Peraturan Pemerintah No. 32 Tahun 1969. 3. Peraturan Pemerintah No. 27 Tahun 1980. 4. Keputusan Presiden R.I. No. 68/M Tahun 1984. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986. MEMPERHATIKAN : Surat Direktur Direktorat Teknik Pertambangan tanggal 28 Maret 1988 Nomor 1000/22/DPT/1988. MEMUTUSKAN MENETAPKAN : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut: Kepada : Sdr. H. ABUBAKAR SIDIK Alamat : Jl. Kelapa Kopyor Timur I BD2/20, Kelapa Gading Permai, atas sesuatu wilayah tertanda DU. 753 / Kaltim Jakarta. terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur seluas : 2.000 (Dua ribu) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan dan Peta Wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian : "Emas, perak dan mineral pengikutnya" dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran Keputusan ini dan ketentuan peraturan perundang undangan yang berlaku. KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan keriasama dengan 31 pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan ketentuan apabila dikemudian hari terdapat kekeliruan akan diadakan pembetulan seperlunya. Ditetapkan di : JAKARTA Pada tanggal : 6 Juli 1988 ------------------------------------------- DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] [SIG] Drs: SOETARYO SIGIT ------------------- NIP. 100000166 TEMBUSAN : - -------- 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta). 6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan peta). 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan JI. Ir. H. Juanda No. 9 Bogor (dengan peta). 9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta). 12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta). 13. 14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan peta). 15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (dengan peta). 16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta). 32 Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 512.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI D.U. 753 / Kaltim. - Sebelah Utara dan : masing-masing garis sejajar terletak Sebelah Selatan pada 500 meter disebelah Utara dan 4.500 meter disebelah Selatan titik P (X=115 degrees 15' B.T; Y=0 degree 45' L.U). - Sebelah Timur dan : masing-masing garis rembang terletak Sebelah Barat melalui dan 4.000 meter disebelah Barat titik tersebut diatas. Direktorat Teknik Pertambangan Direktur, [SEAL] [SIG] Tr. Mangara Simanjuntak. ------------------------ NIP. 100000373. 33 PROP. KALIMANTAN TIMUR [MAP] 34 Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum Nomor : 512.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota Propinsi Kalimantan Timur di Samarinda. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru dan/atau Kantor Penghubung kantor Wilayah Departemen Pertambangan dan Energi di Samarinda. III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar luran Tetap dan luran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.); b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang berlaku mengenai Pengawasan dan Lingkungan dibidang pertambangan umum; b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan umum; c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepaga petugas tersebut diatas untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi harus diajukan sebelum berakhirnya masa izin ini dengan disertai bukti-bukti kewajiban yang telah dipenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan : 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihenti-kan dan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan harus memgangkat keluar segala sesuatu yang menjadi miliknya, kecuali benda-benda/bangunan-bangunan yang dipergunakan untuk kepentingan umum. IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [OFFICIAL SEAL] DIREKTUR JENDERAL PERTAMBANGAN UMUM Drs. SOETARYO SIGIT 35 DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR: 513.K/2013/DDJP/1988 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI (DU. 754 / KALTIM ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan Sdr. H ABUBAKAR SIDIK tanggal 18 Pebruari 1987. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967. 2. Peraturan Pemerintah No. 32 Tahun 1969. 3. Peraturan Pemerintah No. 27 Tahun 1980. 4. Keputusan Presiden R.I. No. 68/M Tahun 1984. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan tanggal 28 Maret 1988 Nomor 999/22/DPT/1988. MEMUTUSKAN Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut: Kepada : Sdr. H. ABUBAKAR SIDIK Alamat : J1. Kelapa Kopyor Timur I BD2/20, Kelapa Gading Permai, atas sesuatu wilayah tertanda DU. 754 / Kaltim Jakarta. terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur seluas : 2.000 (Dua ribu) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan dan Peta Wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian "Emas, perak dan mineral pengikutnya" dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran Keputusan ini dan ketentuan peraturan perundang-undangan yang berlaku. KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan 36 pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan ketentuan apabila dikemudian hari terdapat kekeliruan akan diadakan pembetulan seperlunya. Ditetapkan di : J A K A R T A Pada tanggal : 6 Juli 1988 ------------------------------------------- DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] [SIG] Drs: SOETARYO SIGIT ------------------- NIP. 100000166 TEMBUSAN : - -------- 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta). 6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan peta). 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan JI. lr. H. Juanda No. 9 Bogor (dengan peta). 9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta). 12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta). 13. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan peta). 15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (dengan peta). 16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta). 37 Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 513.K 2013/DDJP/1988 Tanggal : 6 Juli 1988 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI D.U. 754 / Kaltim. - Sebelah Utara dan : masing-masing garis sejajar terletak Sebelah Selatan pada 5.500 meter dan 500 meter disebelah Utara titik P (X=115 degree 15' B.T; Y=0 degree 45' L.U). - Sebelah Timur dan : masing-masing garis rembang terletak Sebelah Barat pada 4.000 meter disebelah Timur dan melalui titik tersebut diatas. Direktorat Teknik Pertambangan Direktur, [STAMP] [SIG] Tr. Mangara Simanjuntak. ------------------------ NIP. 100000373. 38 PROP. KALIMANTAN TIMUR [MAP] 39 Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum Nomor : 513.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota Propinsi Kalimantan Timur di Samarinda. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru dan/atau Kantor Penghubung kantor Wilayah Departemen Pertambangan dan Energi di Samarinda. III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar Iuran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.); b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang berlaku mengenai Pengawasan dan Lingkungan dibidang pertambangan umum; b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan umum; c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepaga petugas tersebut diatas untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi harus diajukan sebelum berakhirnya masa izin ini dengan disertai bukti-bukti kewajiban yang telah depenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan : 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihenti-kan dan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan harus mengangkat keluar segala sesuatu yang menjadi miliknya, kecuali benda-benda/bangunan-bangunan yang dipergunakan untuk kepentingan umum. IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [OFFICIAL SEAL] DIREKTUR JENDERAL PERTAMBANGAN UMUM Drs: SOETARYO SIGIT 40 DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor: 514.K/2013/DDJP/1988 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI (DU. 949 / KALTIM ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan Sdr. H. ABUBAKAR SIDIK tanggal 27 Maret 1987 Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967. 2. Peraturan Pemerintah No. 32 Tahun 1969. 3. Peraturan Pemerintah No. 27 Tahun 1980. 4. Keputusan Presiden R.I. No. 68/M Tahun 1984. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan tanggal 5 April 1988 Nomor 1074/22/DPT 1988. M E M U T U S K A N Menatapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut: Kepada : Sdr. H. ABUBAKAR SIDIK Alamat : Jl. Laksamana Madya Martadinata 10, Samarinda atas sesuatu wilayah tertanda DU. 949 / Kaltim. terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur seluas : 2.000 (Dua ribu) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan dan Peta Wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian "Emas, perak dan mineral pengikutnya" dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran Keputusan ini dan ketentuan peraturan perundang- undangan yang berlaku. KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan 41 pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan ketentuan apabila dikemudian hari terdapat kekeliruan akan diadakan pembetulan seperlunya. Ditetapkan di : JAKARTA Pada tanggal : 6 Juli 1988 ------------------------------------------- DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] [SIG] Drs: SOETARYO SIGIT ------------------- NIP. 100000166 TEMBUSAN : - -------- 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta). 6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan peta). 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan JI. lr. H. Juanda No. 9 Bogor (dengan peta). 9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta). 12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta). 13. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan peta). 15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (dengan peta). 16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta). 42 Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 514.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI D.U. 949 / Kaltim. - Sebelah Utara dan : masing-masing garis sejajar terletak Sebelah Selatan pada 5.500 meter dan 500 meter disebelah Utara titik P (X=115 degree 15' B.T; Y=0 degree 45' L.U). - Sebelah Timur dan : masing-masing garis rembang terletak Sebelah Barat melalui dan 4.000 meter disebelah Barat titik tersebut diatas. Direktorat Teknik Pertambangan Direktur, [STAMP] [SIG] Tr. Mangara Simanjuntak. ------------------------ NIP. 100000373. 43 PROP. KALIMANTAN TIMUR [MAP] 44 Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum Nomor : 514.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota Propinsi Kalimantan Timur di Samarinda. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru dan/atau Kantor Penghubung kantor Wilayah Departemen Pertambangan dan Energi di Samarinda. III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar luran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.); b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang berlaku mengenai Pengawasan dan Lingkungan dibidang pertambangan umum; b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan umum; c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepaga petugas tersebut diatas untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi harus diajukan sebelum berakhirnya masa izin ini dengan disertai bukti-bukti kewajiban yang telah depenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan : 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihenti-kan dan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan harus memgangkat keluar segala sesuatu yang menjadi miliknya, kecuali benda-benda/bangunan-bangunan yang dipergunakan untuk kepentingan umum. IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [OFFICIAL SEAL] DIREKTUR JENDERAL PERTAMBANGAN UMUM Drs. SOETARYO SIGIT 45 DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor: 515.K/2013/DDJP/1988 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI (DU. 950 / KALTIM ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan Sdr. H ABUBAKAR SIDIK tanggal 27 Maret 1987 Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967. 2. Peraturan Pemerintah No. 32 Tahun 1969. 3. Peraturan Pemerintah No. 27 Tahun 1980. 4. Keputusan Presiden R.I. No. 68/M Tahun 1984. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan tanggal 5 April 1988 Nomor 1074/22/DPT 1988. M E M U T U S K A N Menatapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut: Kepada : Sdr. H. ABUBAKAR SIDIK Alamat : Jl. Laksamana Madya Martadinata 10, Samarinda atas sesuatu wilayah tertanda DU. 950 / Kaltim. terletak di : Kabupaten Kutai, Propinsi Kalimantan Timur seluas : 2.000 (Dua ribu) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktyr Direktorat Teknik Pertambangan dan Peta Wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian "Emas, perak dan mineral pengikutnya" dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran Keputusan ini dan ketentuan peraturan perundang undangan yang berlaku. KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan 46 Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 515.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI D.U. 950 / Kaltim. - Sebelah Utara dan : masing-masing garis sejajar terletak Sebelah Selatan pada 5.500 meter dan 500 meter dise- belah Utara titik P (X=115 degree 15' B.T; Y=0 degree 45' L.U). - Sebelah Timur dan : masing-masing garis rembang terletak Sebelah Barat pada 4.000 meter dan 8.000 meter di- sebelah Barat titik tersebut diatas. Direktorat Teknik Pertambangan Direktur, [STAMP] [SIG] Tr. Mangara Simanjuntak. ------------------------ NIP. 100000373. 47 pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan ini mulai berlaku pada tanggal ditetapkan dengan ketentuan apabila dikemudian hari terdapat kekeliruan akan diadakan pembetulan seperlunya. Ditetapkan di : JAKARTA Pada tanggal : 6 Juli 1988 ------------------------------------------- DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] [SIG] Drs: SOETARYO SIGIT ------------------- NIP. 100000166 TEMBUSAN : - -------- 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 4. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 5. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, JI. Diponegoro No. 57 di Bandung (dengan peta). 6. Direktur Jenderal Agraria, Departemen Dalam Negeri di Jakarta (dengan peta). 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan JI. Ir. H. Juanda No. 9 Bogor (dengan peta). 9. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 11. Direktur Direktorat Teknik Pertambangan di Jakarta (dengan peta). 12. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta). 13. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 14. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur (dengan peta). 15. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (dengan peta). 16. Bupati Kepala Daerah Tingkat II Kabupaten Kutai (dengan peta). 48 PROP. KALIMANTAN TIMUR [MAP] 49 Lampiran III: Keputusan Direktur Jenderal Pertambangan Umum Nomor : 515.K/2013/DDJP/1988 Tanggal : 6 Juli 1988 KEWAJIBAN -- KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada Pengadilan Negeri yang berkedudukan di Ibukota Propinsi Kalimantan Timur di Samarinda. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru dan/atau Kantor Penghubung kantor Wilayah Departemen Pertambangan dan Energi di Samarinda. III. Hubungan antara Pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorasi diwajibkan membayar Iuran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus terlebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Banjarbaru (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.); b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang berlaku mengenai Pengawasan dan Lingkungan dibidang pertambangan umum; b. Pengawasan dalam pelaksanaan Kuasa Pertambangan dilakukan oleh Pejabat Inspeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan umum; c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepaga petugas tersebut diatas untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi harus diajukan sebelum berakhirnya masa izin ini dengan disertai bukti-bukti kewajiban yang telah depenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan dan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan harus mengangkat keluar segala sesuatu yang menjadi miliknya, kecuali benda-benda/bangunan-bangunan yang dipergunakan untuk kepentingan umum. IX. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [OFFICIAL SEAL] DIREKTUR JENDERAL PERTAMBANGAN UMUM Drs. SOETARYO SIGIT EX-10.(XI) 21 EXHIBIT 10.(XI) 1 EXHIBIT 10.(xi) EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made as of January 1, 1995 ("Effective Date"), by and between NEVADA MANHATTAN MINING INCORPORATED, a Nevada corporation doing business in California (the "Company"), and CHRISTOPHER D. MICHAELS, an individual residing in California (the "Employee"). 1. EMPLOYMENT The Company hereby employs Employee to render services subject to the terms, conditions and provisions of this Agreement. Employee shall serve in the position of and have the title "President". Employee shall render such services principally at such places in Calabasas, California and other applicable locations in the State of California deemed appropriate by the Board of Directors of the Company (the "Board"); Employee shall not be required to perform substantial services outside of the State of California without his consent. 2. ACCEPTANCE OF EMPLOYMENT Employee hereby accepts employment by the Company and agrees to render services as President of the Company subject to the terms, conditions and provisions of this Agreement. 3. TERM Notwithstanding the date on which this Agreement is actually executed by the Company and Employee or the date on which Employee is actually appointed President, the term of this Agreement shall begin as of the Effective Date, and shall continue until December 31, 1997 (the "End Date"), unless further extended or sooner terminated as herein provided. 4. DUTIES 4.1 DUTIES AND AUTHORITY. Employee shall perform such duties and have such authority as President of the Company as provided by the Articles of Incorporation and Bylaws of the Company and as may be determined from time to time by the Board consistent therewith and with such position and title. Employee shall report to the Board. 4.2 EMPLOYMENT. Employee shall devote substantially all of his business time and effort during normal business hours to the Company. For purposes of this Agreement, "business time" shall mean, on the average, forty (40) hours per week. 4.3 INSURANCE. Employee hereby grants the Company permission to buy "key man" life insurance on Employee's life. 1 2 5. COMPENSATION 5.1 SALARY; STOCK OPTION; EXPENSE REIMBURSEMENT; BENEFITS. In consideration for the services to be rendered by Employee and in complete discharge of the Company's salary obligations hereunder, the Company shall pay or grant to Employee, as the case may be, and Employee shall accept from the Company the following (subject to all withholding requirements which may be imposed by applicable federal, state or local authorities): 5.1.1 an annual salary equal to the existing annual salary now payable by the Company to Employee, payable in accordance with the Company's regular payroll schedule. On each anniversary of the Effective Date, the Board will review Employee's annual salary and decide on a potential salary increase, or, in the event of a significant decrease in cash flow of the Company, salary decrease, for the year following such anniversary; provided that in no event shall Employee's annual salary under this Section 5.1.1 be reduced for any year by an amount equal to more than twenty percent (20%) of such salary for the immediately preceding year; 5.1.2 the right to purchase Nine Hundred Thousand (900,000) shares of common stock in the Company (the "Shares") exercisable, in whole or in part, at any time during the term of this Agreement, as same may be modified or extended. The purchase price for the Shares shall be as follows: the first Three Hundred Thousand (300,000) Shares may be purchased at the price of One Dollar ($1.00) per Share; the next Three Hundred Thousand (300,000) Shares may be purchased at the price of One and 50/100 Dollars ($1.50) per Share; and the remaining Three Hundred Thousand (300,000) Shares may be purchased at the price of Two Dollars ($2.00) per Share. The options granted pursuant to this Section 5.1.2 shall be exercised, if at all, by written notice (the "Notice") given by Employee to the Company in the manner provided herein. The Notice shall state the number of Shares with respect to which the option is being exercised. The Notice shall specify a date which is not less than five (5) nor more than fifteen (15) days after the date of the Notice, on which date payment shall be made for the Shares being purchased. Employee shall pay the purchase price for the Shares either in cash or by the issuance of one or more promissory notes executed by Employee in favor of the Company payable over a period not to exceed five (5) years from the date of the Notice, with interest payable on the principal balance at the "applicable federal rate" (i.e., the lowest rate necessary to avoid the imputation of interest under applicable provisions of the Internal Revenue Code of 1986, as amended). Upon receipt of full payment for the Shares or Employee's promissory note(s), the Company shall deliver to Employee a certificate representing the number of Shares so purchased. The Company shall pay a cash bonus to Employee in an amount sufficient to pay or reimburse Employee for the amount of any income tax payable with respect to the issuance of the foregoing stock option or any exercise thereof; provided, however, that nothing in this Agreement shall obligate the Company to pay or reimburse Employee for all or any portion of any tax liability arising from Employee's sale, exchange or other disposition of any of the Shares. The options granted pursuant to this Section 5.1.2 are non-qualified options and are not intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. Upon the termination of Employee's employment with the Company, whether or not such employment is pursuant to this Agreement or an extension or modification of this Agreement, all unexercised options shall 2 3 be immediately forfeited; provided, however, if Employee's employment is terminated by the Company other than for cause, Employee or his legal representative may exercise the option to purchase the Shares as provided herein for a period of ninety (90) days following the date of such termination. 5.1.2.1 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; STOCK SPLITS AND SIMILAR EVENTS. Subject to any required action by the Board and the Company's shareholders and Section 26 hereof, the number of Shares covered by the option granted under Section 5.1.2 and the exercise price of such option shall be proportionately adjusted for any increase or decrease in the number of shares of common stock of the Company issued and outstanding between the effective date hereof and on the date of exercise of the option. 5.1.2.2 MERGERS AND ACQUISITIONS. Subject to any required action by the Board and the Company's shareholders, in the event of a merger or consolidation, the option granted under Section 5.1.2 shall pertain and apply to the securities to which a holder of the number of Shares subject to the unexercised portion of such option would have been entitled. 5.1.3 reimbursement on a monthly basis for all reasonable expenses incurred by Employee in connection with the performance of his duties under this Agreement, provided that such expenses are documented and approved by the Company in each instance, which approval shall not be unreasonably withheld; 5.1.4 such fringe benefits (including but not limited to paid vacations and participation in medical insurance plans and employee benefit plans) as now are, or hereafter may become, generally available to all executive officers of the Company; and 5.1.5 such other benefits (if any) as may be authorized from time to time by the Board. 5.2 BONUSES. Subject to the provisions and limitations of this Section 5.2, Employee shall be entitled to receive, in addition to the compensation and benefits set forth in Section 5.1 hereof, a merit bonus ("Merit Bonus") in the amount calculated under the formula and subject to the conditions and restrictions set forth in this Section. The amount of the Merit Bonus, if any, payable to Employee shall be calculated within fifteen (15) days after the preparation of the Company's financial statements for each fiscal year ending during the term of this Agreement and shall be paid to Employee within ten (10) days after the date of calculation of the amount of the Merit Bonus. 3 4 5.2.1 AMOUNT OF BONUS. The amount of the Merit Bonus shall be determined on the basis of the Company's operating cash flow for each fiscal year ending during the term of this Agreement. The amount of the Merit Bonus shall be determined as follows:
Amount of Cash Flow Amount of Merit Bonus $1,000,000, or more, and less than $2,000,000 25% of base salary $2,000,000, or more, and less than $3,000,000 50% of base salary $3,000,000 or more 75% of base salary
For purposes of calculating the amount of the Merit Bonus, the term "base salary" shall be the annual salary under Section 5.1.1 hereof for the fiscal year with respect to which the Merit Bonus is payable. 5.2.2 PRORATION. In the event of the termination of this Agreement other than by the Company for cause or by Employee without cause, the Company shall pay to Employee a Merit Bonus with respect to the portion of the fiscal year in which such termination occurs during which this Agreement was in effect. The amount of the Merit Bonus so payable shall be determined as follows: A. At the end of the fiscal year during which this Agreement is terminated, the Company shall calculate (i) its cash flow for such fiscal year and (ii) the amount of the Merit Bonus that would have been payable under Section 5.2.1 had the Agreement continued in effect during the entire fiscal year. For purposes of calculating such Merit Bonus, the base salary shall be deemed to be the base salary that would have been paid had the Agreement continued in effect during the entire fiscal year. B. The amount of the Merit Bonus payable under this Section shall be equal to the product obtained by multiplying the amount determined under Section 5.2.2.A by a fraction, the numerator of which is the whole number of weeks during such fiscal year prior to the termination of this Agreement, and the denominator of which is fifty-two (52). 5.2.3 PROCEDURE. The Company shall calculate its cash flow in accordance with generally accepted accounting principles consistently applied. The Company shall not take any action which would adversely affect the calculation or amount of the Merit Bonus. 6. COVENANT Employee shall not, at any time during the term of this Agreement engage, directly or indirectly, as a principal, partner, director or officer of, in any business competitive with the Company's Business (as that term is hereinafter defined); provided, however, notwithstanding the foregoing, Employee may hold up to five percent (5%) equity interest in an entity engaged in a business competitive with the Company's Business without violating the restrictions of this 4 5 Section merely by reason of such ownership. For purposes of this Agreement, the term "Company's Business" shall mean gold and other mineral mining, exploration and development as carried on by the Company during the term of this Agreement. 7. TERMINATION OF EMPLOYMENT 7.1 TERMINATION. Employee's employment under this Agreement may be terminated as follows: 7.1.1 PERMANENT DISABILITY OF EMPLOYEE. In the event of Employee's Permanent Disability, the Company may terminate Employee's employment under this Agreement by giving Employee written notice of the Board's resolution to do so. For purposes of this Agreement, "Permanent Disability" shall mean Employee's inability to substantially perform his usual and customary duties for the Company as a result of any physical or mental impairment, as medically determined by Employee's personal physician, which inability lasts for a continuous period of not less than four (4) consecutive months. Notwithstanding the Company's termination of Employee's employment pursuant to this Section 7.1.1, after such termination: (a) the Company shall be obligated to pay to Employee through and including the End Date (determined without regard to the Company's termination of Employee's employment pursuant to this Section 7.1.1), the salary otherwise payable to Employee pursuant to Section 5.1.1 hereof, except that the Company shall not reduce such salary for any reason, (b) through and including the End Date (determined without regard to the Company's termination of Employee's employment pursuant to this Section 7.1.1), the Company and Employee shall be subject to and bound by all of the terms and provisions of this Agreement excepting only Sections 4, 5.1.4, 5.1.5, 5.2, and 8, the parties' obligations and rights under which shall terminate simultaneously with such termination of employment. 7.1.2 TERMINATION FOR CAUSE. In the event "Cause" exists, the Company may terminate Employee's employment under this Agreement by giving Employee written notice of the Board's resolution to do so. For purposes of this Agreement, the Company shall be deemed to have "Cause" in the event that Employee (i) is convicted of or admits in writing to committing theft, fraud, or embezzlement against the Company, or (ii) substantially fails to reasonably perform his material duties required to be performed under Section 4.1 of this Agreement for a reason or reasons other than Employee's death or disability; provided, however, that prior to the Company's termination of Employee's employment pursuant to this subparagraph 7.1.2(ii), the Company shall have first given Employee written notice of such failure, describing in detail the nature thereof and all material related facts, and Employee shall have not substantially cured such failure within sixty (60) days following Employee's receipt of such written notice, and if not cured within such sixty-day period, the Company shall have given Employee a second written notice of such material breach and Employee shall have failed to substantially cure such failure within thirty (30) days following Employee's receipt of such second written notice; provided, however, that if it is not practicable to cure such failure, or if such failure is not reasonably susceptible of being cured, within such sixty-day or thirty-day period, as the case may be, then such time period shall be extended to the extent required. If Employee shall have cured such failure prior to the expiration of such sixty-day period, thirty-day period or extended period, as the case may be, then the Company shall not be entitled to 5 6 terminate Employee's employment hereunder on the basis thereof. Termination of Employee's employment pursuant to this Section 7.1.2 shall constitute a termination of this Agreement. 7.2 TERMINATION BY EMPLOYEE. Employee may terminate his employment hereunder and this Agreement at any time, with or without cause, by giving the Company ninety (90) days' prior written notice of Employee's intent to do so. At the end of such 90-day period the Company's obligations to Employee and Employee's obligations to the Company under this Agreement shall cease, except (i) as otherwise expressly provided elsewhere herein and (ii) with respect to amounts owed by the Company to Employee as of such ninetieth (90th) day. 7.3 TERMINATION UPON EMPLOYEE'S DEATH. This Agreement shall automatically terminate upon Employee's death and as of the date of such death the Company's obligations to Employee and Employee's obligations to the Company under this Agreement shall cease, except (i) as otherwise expressly provided elsewhere herein and (ii) with respect to amounts owed by the Company to Employee as of date. 8. SEVERANCE COMPENSATION 8.1 CASH COMPENSATION. In the event that, during the term of this Agreement, there is a Change in Control, as that term is defined in Section 9 hereof, and upon or within the twelve (12) months immediately subsequent to such Change in Control, (i) Employee's employment is terminated by the Company other than for Cause as that term is defined in Section 7.1.2 hereof, or (ii) Employee's compensation, duties, status, title, and/or reporting responsibilities are substantially modified and Employee terminates his employment pursuant to Section 7.2 hereof, then, the Company shall pay to Employee in cash within ten (10) days of such termination of employment, as severance compensation, an amount equal to the product determined by multiplying Employee's highest monthly salary, as established pursuant to Section 5.1.1 hereof during the term of this Agreement, by thirty-six (36). 8.2 OPTIONS. Employee is hereby granted an option to acquire, at any time on or within sixty (60) days after the occurrence of a Change in Control, as that term is defined in Section 9 hereof, up to that number of shares as equals, immediately prior to giving effect to the exercise of such option, twenty-five percent (25%) of the number of then outstanding shares of stock of the Company at a purchase price of five cents ($0.05) per share. The Company shall pay a cash bonus to Employee in an amount sufficient to pay or reimburse Employee for the amount of any income tax payable with respect to the issuance of the foregoing stock option or any exercise thereof; provided, however, that nothing in this Agreement shall obligate the Company to pay or reimburse Employee for all or any portion of any tax liability arising from Employee's sale, exchange or other disposition of any of the shares purchased upon exercise of said option. 9. CHANGE IN CONTROL A change in control of the Company shall be deemed to occur upon the happening of any of the following: 6 7 9.1 The Company sells substantially all of its assets to a single purchaser or to a group of associated purchasers in a single transaction or series of related transactions; 9.2 Shares of the Company's outstanding capital stock constituting more than twenty percent (20%) of the voting power of the Company's outstanding capital stock are sold, exchanged, or otherwise disposed of in one transaction or in a series of related transactions; or 9.3 The Company is a party to a merger or consolidation in which the Company is not the surviving entity or the Company's shareholders receive shares of capital stock of the new or continuing corporation constituting less than eighty percent (80%) of the voting power of the new or continuing corporation. The Change in Control shall be deemed to occur as of the date of the closing of the applicable transaction described above. 10. EFFECT OF TERMINATION Unless otherwise specifically provided in this Agreement, in the event of the termination of this Agreement, the Company and the Employee shall be released and discharged of any from all obligations under this Agreement except for the obligations of the Company (i) to pay to Employee monies due and owing to Employee (a) with respect to services performed prior to the date of termination of this Agreement and (b) pursuant to Sections 7 and 8 hereof, and (ii) to issue Shares to Employee upon the exercise of the options granted in Sections 5.1.2 and 8.2. 11. ASSIGNMENT 11.1 BY EMPLOYEE. Employee may assign his rights and delegate his duties hereunder to a corporation or other business entity in which Employee owns at least eighty percent (80%) of all voting and equity interests in such corporation or business entity with the prior consent of the Company, which consent shall not be unreasonably withheld. It shall be reasonable for the Company to require, as a condition to its consent, for Employee to guarantee the assignee corporation's or entity's performance of all of its duties under this Agreement. 11.2 BY THE COMPANY. The Company may assign this Agreement and grant its rights hereunder in whole or in part to any affiliate, subsidiary or parent of the Company, to its successor or successors, or to a corporation with which it may be merged, consolidated, or combined, or to a corporation which may acquire all or a major portion of the Company's assets; provided that no such assignment shall be effective unless and until any such assignee shall expressly assume all of the Company's obligations hereunder. 12. SUCCESSORS This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives. 7 8 13. CONFIDENTIALITY Employee shall not, either during the term of this Agreement or for a period of one (1) year thereafter, except in the course of his performance of services under this Agreement, use or divulge, publish or disclose to any person, firm or corporation whomsoever any confidential information of the Company or any of its subsidiaries or affiliates which he has heretofore received or obtained or hereafter receives or obtains during the term of this Agreement, in relation to (i) the earnings, profits, costs, expenses or other financial aspects of the Company or any of its subsidiaries or affiliates, (ii) the clients, customer lists, or marketing practices of the Company or any of its subsidiaries or affiliates, or (iii) any other confidential information of the Company or of any of its subsidiaries or affiliates. The term "confidential information" shall mean all that information which here or hereafter is not generally known and which is confidential or proprietary to the Company, any of its subsidiaries or affiliates. Immediately upon termination of his employment hereunder Employee shall return to the Company all records, files, documents and other materials (in whatever form or media) and all copies thereof, which contain any confidential information of the Company. 14. INJUNCTIVE RELIEF Employee hereby acknowledges and agrees that it would be difficult to fully compensate the Company for damages for a breach or threatened breach of any of the provisions of Sections 4.2, 6 or 13 hereof. Accordingly, Employee specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of Sections 4.2, 6 and 13 hereof and that such relief may be granted without the necessity of proving actual damages. The foregoing provision with respect to injunctive relief shall not, however, prohibit the Company from pursuing any other rights or remedies available to the Company for such breach or threatened breach, including, but not limited to, the recovery of damages from Employee or any third parties. 15. NOTICES Any notice given pursuant to this Agreement may be served personally on the party to be notified or may be mailed, with postage thereon fully prepaid, by certified or registered mail with return receipt requested, addressed as follows: If to the Company, to: Nevada Manhattan Mining Incorporated 5038 N. Parkway Calabasas, Suite 100 Calabasas, California 91302 Attn: Senior Vice President If to the Employee, to: Christopher D. Michaels ______________________________ ______________________________ 8 9 or at such other address as such party may from time to time designate in writing. Any notice shall be deemed delivered when given, if personally served, and five (5) business days after mailing, if mailed. 16. WAIVERS All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to limit or exclude any other rights or remedies which the parties hereto may have. Neither party hereto shall be deemed to waive any rights or remedies under this Agreement unless such waiver is in writing and signed by such party. No delay or omission on the part of either party hereto in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver of any right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any future occasion. 17. SEVERABILITY If any provision or portion thereof of this Agreement is held to be unenforceable or invalid, the remaining provisions and portions thereof shall nevertheless be given and continue in full force and effect. 18. SECTION HEADINGS Section headings contained in this Agreement are for convenience only and are not a part of this Agreement and do not in any way limit or modify the provisions of this Agreement. 19. SURVIVAL OF CERTAIN PROVISIONS Notwithstanding anything to the contrary contained herein, in the event of any termination of this Agreement, and not in limitation of the rights of the parties as provided elsewhere herein, it is expressly agreed that the Company shall retain all of its rights under Sections 6, 13 and 14 hereof, and Employee shall retain all of his rights under Sections 5.1.2, 5.2.2, 7.1.1, 8 and 10 hereof. 20. AUTHORIZED REPRESENTATIVE OF COMPANY Although Employee is an officer of the Company, any and all actions and decisions to be taken or made by the Company under this Agreement or with respect to the employment relationship described in this Agreement, and any and all consents, approvals and agreements permitted or required to be given or made on the part of the Company under this Agreement, shall be made and accomplished by the Company only through the actions taken, in writing, of its Senior Vice President or such other person or persons as the Board may from time to time designate. 9 10 21. ARBITRATION Any controversy or claim between the Company and Employee involving the construction or application of any of the terms, provisions or conditions of this Agreement shall be settled by arbitration conducted in the County of Los Angeles in accordance with, and by an arbitrator appointed pursuant to, the Rules of the American Arbitration Association in effect at the time, and judgment upon the award rendered pursuant thereto may be entered in any court having jurisdiction hereof, and all rights or remedies of the parties hereto to the contrary are hereby expressly waived. Prior arbitration pursuant to the provisions of this Section 21 and an award pursuant thereto shall be a condition precedent to the bringing of any action, suit or proceeding by any party subject to this Agreement. The cost of conducting the arbitration proceeding, including each party's attorneys' fees, shall be borne by the losing party or in such proportions as the arbitrator decides. 22. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties hereto, and supersedes any prior written or oral agreements between them respecting the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, either oral or written, between or among any of the parties relating to the subject matter of this Agreement which are not fully expressed herein. 23. AMENDMENT This Agreement may be amended only in writing duly executed by all of the parties hereto. 24. GOVERNING LAW All questions with respect to the construction of this Agreement and the rights and liabilities of the parties with respect thereto shall be governed by the laws of the State of California. 25. INTERPRETATION Each of the parties to this Agreement has been represented by independent legal counsel. Therefore, the nominal rule of construction that an agreement shall be interpreted against the drafting party shall not apply. All pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter and to the singular or plural, as the identity of the person or persons may require for proper interpretation of this Agreement. 26. SHARE REFERENCES All references in Section 5.1.2 of this Agreement to a number of shares of common stock of the Company, the price per share at which any shares of common stock of the Company are to be purchased, or the exercise price of any options or other rights to acquire any shares of common stock of the Company assume that the Company has completed the 1- 10 11 for-10 reverse stock split presently contemplated by the Company. In the event that the Company does not effect such reverse stock split or the reverse stock split is effected at a ratio other than 1-for-10, all such references to a number of shares of common stock, the purchase price per share and the exercise price per share shall be appropriately adjusted. IN WITNESS WHEREOF, the parties have entered into this Employment Agreement as of the day and year first above written. "COMPANY": "EMPLOYEE": __________ ___________ NEVADA MANHATTAN MINING INCORPORATED, a Nevada corporation By: /s/ JEFFREY KRAMER /s/ CHRISTOPHER D. MICHAELS --------------------------------- --------------------------------- Jeffrey Kramer, Senior Vice President Christopher D. Michaels 11 EX-10.(XII) 22 EXHIBIT 10.(XII) 1 EXHIBIT 10. (xii) EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made as of January 1, 1995 ("Effective Date"), by and between NEVADA MANHATTAN MINING INCORPORATED, a Nevada corporation doing business in California (the "Company"), and JEFFREY KRAMER, an individual residing in California (the "Employee"). 1. EMPLOYMENT The Company hereby employs Employee to render services subject to the terms, conditions and provisions of this Agreement. Employee shall serve in the position of and have the title "Senior Vice-President". Employee shall render such services principally at such places in Calabasas, California and other applicable locations in the State of California deemed appropriate by the Board of Directors of the Company (the "Board"); Employee shall not be required to perform substantial services outside of the State of California without his consent. 2. ACCEPTANCE OF EMPLOYMENT Employee hereby accepts employment by the Company and agrees to render services as Senior Vice-President of the Company subject to the terms, conditions and provisions of this Agreement. 3. TERM Notwithstanding the date on which this Agreement is actually executed by the Company and Employee or the date on which Employee is actually appointed Senior Vice President, the term of this Agreement shall begin as of the Effective Date, and shall continue until December 31, 1997 (the "End Date"), unless further extended or sooner terminated as herein provided. 4. DUTIES 4.1 DUTIES AND AUTHORITY. Employee shall perform such duties and have such authority as Senior Vice-President of the Company as provided by the Articles of Incorporation and Bylaws of the Company and as may be determined from time to time by the Board consistent therewith and with such position and title. Employee shall report to the President. 4.2 EMPLOYMENT. Employee shall devote substantially all of his business time and effort during normal business hours to the Company. For purposes of this Agreement, "business time" shall mean, on the average, forty (40) hours per week. 1 2 4.3 INSURANCE. Employee hereby grants the Company permission to buy "key man" life insurance on Employee's life. 5. COMPENSATION 5.1 SALARY; STOCK OPTION; EXPENSE REIMBURSEMENT; BENEFITS. In consideration for the services to be rendered by Employee and in complete discharge of the Company's salary obligations hereunder, the Company shall pay or grant to Employee, as the case may be, and Employee shall accept from the Company the following (subject to all withholding requirements which may be imposed by applicable federal, state or local authorities): 5.1.1 an annual salary equal to the existing annual salary now payable by the Company to Employee, payable in accordance with the Company's regular payroll schedule. On each anniversary of the Effective Date, the Board will review Employee's annual salary and decide on a potential salary increase, or, in the event of a significant decrease in cash flow of the Company, salary decrease, for the year following such anniversary; provided that in no event shall Employee's annual salary under this Section 5.1.1 be reduced for any year by an amount equal to more than twenty percent (20%) of such salary for the immediately preceding year; 5.1.2 the right to purchase Nine Hundred Thousand (900,000) shares of common stock in the Company (the "Shares") exercisable, in whole or in part, at any time during the term of this Agreement, as same may be modified or extended. The purchase price for the Shares shall be as follows: the first Three Hundred Thousand (300,000) Shares may be purchased at the price of One Dollar ($1.00) per Share; the next Three Hundred Thousand (300,000) Shares may be purchased at the price of One and 50/100 Dollars ($1.50) per Share; and the remaining Three Hundred Thousand (300,000) Shares may be purchased at the price of Two Dollars ($2.00) per Share. The options granted pursuant to this Section 5.1.2 shall be exercised, if at all, by written notice (the "Notice") given by Employee to the Company in the manner provided herein. The Notice shall state the number of Shares with respect to which the option is being exercised. The Notice shall specify a date which is not less than five (5) nor more than fifteen (15) days after the date of the Notice, on which date payment shall be made for the Shares being purchased. Employee shall pay the purchase price for the Shares either in cash or by the issuance of one or more promissory notes executed by Employee in favor of the Company payable over a period not to exceed five (5) years from the date of the Notice, with interest payable on the principal balance at the "applicable federal rate" (i.e., the lowest rate necessary to avoid the imputation of interest under applicable provisions of the Internal Revenue Code of 1986, as amended). Upon receipt of full payment for the Shares or Employee's promissory note(s), the Company shall deliver to Employee a certificate representing the number of Shares so purchased. The Company shall pay a cash bonus to Employee in an amount sufficient to pay or reimburse Employee for the amount of any income tax payable with respect to the issuance of the foregoing stock option or any exercise thereof; provided, however, that nothing in this Agreement shall obligate the Company to pay or reimburse Employee for all or any portion of any tax liability arising from Employee's sale, exchange or other disposition of any of the Shares. The options granted pursuant to this Section 5.1.2 are non-qualified options and are not intended to qualify as incentive stock options within the meaning of Section 422 of the 2 3 Internal Revenue Code of 1986, as amended. Upon the termination of Employee's employment with the Company, whether or not such employment is pursuant to this Agreement or an extension or modification of this Agreement, all unexercised options shall be immediately forfeited; provided, however, if Employee's employment is terminated by the Company other than for cause, Employee or his legal representative may exercise the option to purchase the Shares as provided herein for a period of ninety (90) days following the date of such termination. 5.1.2.1 Adjustments Upon Changes in Capitalization, Stock Splits and Similar Events. Subject to any required action by the Board and the Company's shareholders and Section 26 hereof, the number of Shares covered by the option granted under Section 5.1.2 and the exercise price of such option shall be proportionately adjusted for any increase or decrease in the number of shares of common stock of the Company issued and outstanding between the effective date hereof and on the date of exercise of the option. 5.1.2.2 Mergers and Acquisitions. Subject to any required action by the Board and the Company's shareholders, in the event of a merger or consolidation, the option granted under Section 5.1.2 shall pertain and apply to the securities to which a holder of the number of Shares subject to the unexercised portion of such option would have been entitled. 5.1.3 reimbursement on a monthly basis for all reasonable expenses incurred by Employee in connection with the performance of his duties under this Agreement, provided that such expenses are documented and approved by the Company in each instance, which approval shall not be unreasonably withheld; 5.1.4 such fringe benefits (including but not limited to paid vacations and participation in medical insurance plans and employee benefit plans) as now are, or hereafter may become, generally available to all executive officers of the Company; and 5.1.5 such other benefits (if any) as may be authorized from time to time by the Board. 5.2 Bonuses. Subject to the provisions and limitations of this Section 5.2, Employee shall be entitled to receive, in addition to the compensation and benefits set forth in Section 5.1 hereof, a merit bonus ("Merit Bonus") in the amount calculated under the formula and subject to the conditions and restrictions set forth in this Section. The amount of the Merit Bonus, if any, payable to Employee shall be calculated within fifteen (15) days after the preparation of the Company's financial statements for each fiscal year ending during the term of this Agreement and shall be paid to Employee within ten (10) days after the date of calculation of the amount of the Merit Bonus. 3 4 5.2.1 AMOUNT OF BONUS. The amount of the Merit Bonus shall be determined on the basis of the Company's operating cash flow for each fiscal year ending during the term of this Agreement. The amount of the Merit Bonus shall be determined as follows:
Amount of Cash Flow Amount of Merit Bonus $1,000,000, or more, and less than $2,000,000 25% of base salary $2,000,000, or more, and less than $3,000,000 50% of base salary $3,000,000 or more 75% of base salary
For purposes of calculating the amount of the Merit Bonus, the term "base salary" shall be the annual salary under Section 5.1.1 hereof for the fiscal year with respect to which the Merit Bonus is payable. 5.2.2 PRORATION. In the event of the termination of this Agreement other than by the Company for cause or by Employee without cause, the Company shall pay to Employee a Merit Bonus with respect to the portion of the fiscal year in which such termination occurs during which this Agreement was in effect. The amount of the Merit Bonus so payable shall be determined as follows: A. At the end of the fiscal year during which this Agreement is terminated, the Company shall calculate (i) its cash flow for such fiscal year and (ii) the amount of the Merit Bonus that would have been payable under Section 5.2.1 had the Agreement continued in effect during the entire fiscal year. For purposes of calculating such Merit Bonus, the base salary shall be deemed to be the base salary that would have been paid had the Agreement continued in effect during the entire fiscal year. B. The amount of the Merit Bonus payable under this Section shall be equal to the product obtained by multiplying the amount determined under Section 5.2.2.A by a fraction, the numerator of which is the whole number of weeks during such fiscal year prior to the termination of this Agreement, and the denominator of which is fifty-two (52). 5.2.3 PROCEDURE. The Company shall calculate its cash flow in accordance with generally accepted accounting principles consistently applied. The Company shall not take any action which would adversely affect the calculation or amount of the Merit Bonus. 6. COVENANT Employee shall not, at any time during the term of this Agreement engage, directly or indirectly, as a principal, partner, director or officer of, in any business competitive with the Company's Business (as that term is hereinafter defined); provided, however, notwithstanding the foregoing, Employee may hold up to five percent (5%) equity interest in an entity engaged in a business competitive with the Company's Business without violating the restrictions of this 4 5 Section merely by reason of such ownership. For purposes of this Agreement, the term "Company's Business" shall mean gold and other mineral mining, exploration and development as carried on by the Company during the term of this Agreement. 7. TERMINATION OF EMPLOYMENT 7.1 TERMINATION. Employee's employment under this Agreement may be terminated as follows: 7.1.1 PERMANENT DISABILITY OF EMPLOYEE. In the event of Employee's Permanent Disability, the Company may terminate Employee's employment under this Agreement by giving Employee written notice of the Board's resolution to do so. For purposes of this Agreement, "Permanent Disability" shall mean Employee's inability to substantially perform his usual and customary duties for the Company as a result of any physical or mental impairment, as medically determined by Employee's personal physician, which inability lasts for a continuous period of not less than four (4) consecutive months. Notwithstanding the Company's termination of Employee's employment pursuant to this Section 7.1.1, after such termination: (a) the Company shall be obligated to pay to Employee through and including the End Date (determined without regard to the Company's termination of Employee's employment pursuant to this Section 7.1.1), the salary otherwise payable to Employee pursuant to Section 5.1.1 hereof, except that the Company shall not reduce such salary for any reason, (b) through and including the End Date (determined without regard to the Company's termination of Employee's employment pursuant to this Section 7.1.1), the Company and Employee shall be subject to and bound by all of the terms and provisions of this Agreement excepting only Sections 4, 5.1.4, 5.1.5, 5.2, and 8, the parties' obligations and rights under which shall terminate simultaneously with such termination of employment. 7.1.2 TERMINATION FOR CAUSE. In the event "Cause" exists, the Company may terminate Employee's employment under this Agreement by giving Employee written notice of the Board's resolution to do so. For purposes of this Agreement, the Company shall be deemed to have "Cause" in the event that Employee (i) is convicted of or admits in writing to committing theft, fraud, or embezzlement against the Company, or (ii) substantially fails to reasonably perform his material duties required to be performed under Section 4.1 of this Agreement for a reason or reasons other than Employee's death or disability; provided, however, that prior to the Company's termination of Employee's employment pursuant to this subparagraph 7.1.2(ii), the Company shall have first given Employee written notice of such failure, describing in detail the nature thereof and all material related facts, and Employee shall have not substantially cured such failure within sixty (60) days following Employee's receipt of such written notice, and if not cured within such sixty-day period, the Company shall have given Employee a second written notice of such material breach and Employee shall have failed to substantially cure such failure within thirty (30) days following Employee's receipt of such second written notice; provided, however, that if it is not practicable to cure such failure, or if such failure is not reasonably susceptible of being cured, within such sixty-day or thirty-day period, as the case may be, then such time period shall be extended to the extent required. If Employee shall have cured such failure prior to the expiration of such sixty-day period, thirty day period or extended period, as the case may be, then the Company shall not be entitled to 5 6 terminate Employee's employment hereunder on the basis thereof. Termination of Employee's employment pursuant to this Section 7.1.2 shall constitute a termination of this Agreement. 7.2 TERMINATION BY EMPLOYEE. Employee may terminate his employment hereunder and this Agreement at any time, with or without cause, by giving the Company ninety (90) days' prior written notice of Employee's intent to do so. At the end of such 90-day period the Company's obligations to Employee and Employee's obligations to the Company under this Agreement shall cease, except (i) as otherwise expressly provided elsewhere herein and (ii) with respect to amounts owed by the Company to Employee as of such ninetieth (90th) day. 7.3 TERMINATION UPON EMPLOYEE'S DEATH. This Agreement shall automatically terminate upon Employee's death and as of the date of such death the Company's obligations to Employee and Employee's obligations to the Company under this Agreement shall cease, except (i) as otherwise expressly provided elsewhere herein and (ii) with respect to amounts owed by the Company to Employee as of date. 8. SEVERANCE COMPENSATION 8.1 CASH COMPENSATION. In the event that, during the term of this Agreement, there is a Change in Control, as that term is defined in Section 9 hereof, and upon or within the twelve (12) months immediately subsequent to such Change in Control, (i) Employee's employment is terminated by the Company other than for Cause as that term is defined in Section 7.1.2 hereof, or (ii) Employee's compensation, duties, status, title, and/or reporting responsibilities are substantially modified and Employee terminates his employment pursuant to Section 7.2 hereof, then, the Company shall pay to Employee in cash within ten (10) days of such termination of employment, as severance compensation, an amount equal to the product determined by multiplying Employee's highest monthly salary, as established pursuant to Section 5.1.1 hereof during the term of this Agreement, by thirty-six (36). 8.2 OPTIONS. Employee is hereby granted an option to acquire, at any time on or within sixty (60) days after the occurrence of a Change in Control, as that term is defined in Section 9 hereof, up to that number of shares as equals, immediately prior to giving effect to the exercise of such option, twenty-five percent (25%) of the number of then outstanding shares of stock of the Company at a purchase price of five cents ($0.05) per share. The Company shall pay a cash bonus to Employee in an amount sufficient to pay or reimburse Employee for the amount of any income tax payable with respect to the issuance of the foregoing stock option or any exercise thereof; provided, however, that nothing in this Agreement shall obligate the Company to pay or reimburse Employee for all or any portion of any tax liability arising from Employee's sale, exchange or other disposition of any of the shares purchased upon exercise of said option. 9. CHANGE IN CONTROL A change in control of the Company shall be deemed to occur upon the happening of any of the following: 6 7 9.1 The Company sells substantially all of its assets to a single purchaser or to a group of associated purchasers in a single transaction or series of related transactions; 9.2 Shares of the Company's outstanding capital stock constituting more than twenty percent (20%) of the voting power of the Company's outstanding capital stock are sold, exchanged, or otherwise disposed of in one transaction or in a series of related transactions; or 9.3 The Company is a party to a merger or consolidation in which the Company is not the surviving entity or the Company's shareholders receive shares of capital stock of the new or continuing corporation constituting less than eighty percent (80%) of the voting power of the new or continuing corporation. The Change in Control shall be deemed to occur as of the date of the closing of the applicable transaction described above. 10. EFFECT OF TERMINATION Unless otherwise specifically provided in this Agreement, in the event of the termination of this Agreement, the Company and the Employee shall be released and discharged of any from all obligations under this Agreement except for the obligations of the Company (i) to pay to Employee monies due and owing to Employee (a) with respect to services performed prior to the date of termination of this Agreement and (b) pursuant to Sections 7 and 8 hereof, and (ii) to issue Shares to Employee upon the exercise of the options granted in Sections 5.1.2 and 8.2. 11. ASSIGNMENT 11.1 BY EMPLOYEE. Employee may assign his rights and delegate his duties hereunder to a corporation or other business entity in which Employee owns at least eighty percent (80%) of all voting and equity interests in such corporation or business entity with the prior consent of the Company, which consent shall not be unreasonably withheld. It shall be reasonable for the Company to require, as a condition to its consent, for Employee to guarantee the assignee corporation's or entity's performance of all of its duties under this Agreement. 11.2 BY THE COMPANY. The Company may assign this Agreement and grant its rights hereunder in whole or in part to any affiliate, subsidiary or parent of the Company, to its successor or successors, or to a corporation with which it may be merged, consolidated, or combined, or to a corporation which may acquire all or a major portion of the Company's assets; provided that no such assignment shall be effective unless and until any such assignee shall expressly assume all of the Company's obligations hereunder. 12. SUCCESSORS This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives. 7 8 13. CONFIDENTIALITY Employee shall not, either during the term of this Agreement or for a period of one (1) year thereafter, except in the course of his performance of services under this Agreement, use or divulge, publish or disclose to any person, firm or corporation whomsoever any confidential information of the Company or any of its subsidiaries or affiliates which he has heretofore received or obtained or hereafter receives or obtains during the term of this Agreement, in relation to (i) the earnings, profits, costs, expenses or other financial aspects of the Company or any of its subsidiaries or affiliates, (ii) the clients, customer lists, or marketing practices of the Company or any of its subsidiaries or affiliates, or (iii) any other confidential information of the Company or of any of its subsidiaries or affiliates. The term "confidential information" shall mean all that information which here or hereafter is not generally known and which is confidential or proprietary to the Company, any of its subsidiaries or affiliates. Immediately upon termination of his employment hereunder Employee shall return to the Company all records, files, documents and other materials (in whatever form or media) and all copies thereof, which contain any confidential information of the Company. 14. INJUNCTIVE RELIEF Employee hereby acknowledges and agrees that it would be difficult to fully compensate the Company for damages for a breach or threatened breach of any of the provisions of Sections 4.2, 6 or 13 hereof. Accordingly, Employee specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of Sections 4.2, 6 and 13 hereof and that such relief may be granted without the necessity of proving actual damages. The foregoing provision with respect to injunctive relief shall not, however, prohibit the Company from pursuing any other rights or remedies available to the Company for such breach or threatened breach, including, but not limited to, the recovery of damages from Employee or any third parties. 15. NOTICES Any notice given pursuant to this Agreement may be served personally on the party to be notified or may be mailed, with postage thereon fully prepaid, by certified or registered mail with return receipt requested, addressed as follows: If to the Company, to: Nevada Manhattan Mining Incorporated 5038 N. Parkway Calabasas, Suite 100 Calabasas, California 91302 Attn: President If to the Employee, to: Jeffrey Kramer ______________________________ ______________________________ 8 9 or at such other address as such party may from time to time designate in writing. Any notice shall be deemed delivered when given, if personally served, and five (5) business days after mailing, if mailed. 16. WAIVERS All rights and remedies of the parties hereto are separate and cumulative, and no one of them, whether exercised or not, shall be deemed to limit or exclude any other rights or remedies which the parties hereto may have. Neither party hereto shall be deemed to waive any rights or remedies under this Agreement unless such waiver is in writing and signed by such party. No delay or omission on the part of either party hereto in exercising any right or remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver of any right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any future occasion. 17. SEVERABILITY If any provision or portion thereof of this Agreement is held to be unenforceable or invalid, the remaining provisions and portions thereof shall nevertheless be given and continue in full force and effect. 18. SECTION HEADINGS Section headings contained in this Agreement are for convenience only and are not a part of this Agreement and do not in any way limit or modify the provisions of this Agreement. 19. SURVIVAL OF CERTAIN PROVISIONS Notwithstanding anything to the contrary contained herein, in the event of any termination of this Agreement, and not in limitation of the rights of the parties as provided elsewhere herein, it is expressly agreed that the Company shall retain all of its rights under Sections 6, 13 and 14 hereof, and Employee shall retain all of his rights under Sections 5.1.2, 5.2.2, 7.1.1, 8 and 10 hereof. 20. AUTHORIZED REPRESENTATIVE OF COMPANY Although Employee is an officer of the Company, any and all actions and decisions to be taken or made by the Company under this Agreement or with respect to the employment relationship described in this Agreement, and any and all consents, approvals and agreements permitted or required to be given or made on the part of the Company under this Agreement, shall be made and accomplished by the Company only through the actions taken, in writing, of its President or such other person or persons as the Board may from time to time designate. 9 10 21. ARBITRATION Any controversy or claim between the Company and Employee involving the construction or application of any of the terms, provisions or conditions of this Agreement shall be settled by arbitration conducted in the County of Los Angeles in accordance with, and by an arbitrator appointed pursuant to, the Rules of the American Arbitration Association in effect at the time, and judgment upon the award rendered pursuant thereto may be entered in any court having jurisdiction hereof, and all rights or remedies of the parties hereto to the contrary are hereby expressly waived. Prior arbitration pursuant to the provisions of this Section 21 and an award pursuant thereto shall be a condition precedent to the bringing of any action, suit or proceeding by any party subject to this Agreement. The cost of conducting the arbitration proceeding, including each party's attorneys' fees, shall be borne by the losing party or in such proportions as the arbitrator decides. 22. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties hereto, and supersedes any prior written or oral agreements between them respecting the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, either oral or written, between or among any of the parties relating to the subject matter of this Agreement which are not fully expressed herein. 23. AMENDMENT This Agreement may be amended only in writing duly executed by all of the parties hereto. 24. GOVERNING LAW All questions with respect to the construction of this Agreement and the rights and liabilities of the parties with respect thereto shall be governed by the laws of the State of California. 25. INTERPRETATION Each of the parties to this Agreement has been represented by independent legal counsel. Therefore, the nominal rule of construction that an agreement shall be interpreted against the drafting party shall not apply. All pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter and to the singular or plural, as the identity of the person or persons may require for proper interpretation of this Agreement. 26. SHARE REFERENCES All references in Section 5.1.2 of this Agreement to a number of shares of common stock of the Company, the price per share at which any shares of common stock of the Company are to be purchased, or the exercise price of any options or other rights to acquire any shares of common stock of the Company assume that the Company has completed the 1- 10 11 for-10 reverse stock split presently contemplated by the Company. In the event that the Company does not effect such reverse stock split or the reverse stock split is effected at a ratio other than 1-for-10, all such references to a number of shares of common stock, the purchase price per share and the exercise price per share shall be appropriately adjusted. IN WITNESS WHEREOF, the parties have entered into this Employment Agreement as of the day and year first above written. "COMPANY": "EMPLOYEE": __________ ___________ NEVADA MANHATTAN MINING INCORPORATED, a Nevada corporation By: /s/ CHRISTOPHER D. MICHAELS /s/ JEFFREY KRAMER ------------------------------ ------------------------------- Christopher D. Michaels, President Jeffrey Kramer 11 EX-10.(XIII) 23 EXHIBIT 10.(XIII) 1 EXHIBIT 10.(xiii) GOLD KING CONSOLIDATED, Inc. ----------------------------- GOLD KING PETROLEUM CORPORATION GOLD KING MINES CORPORATION 410 17th Street Suite 1375 Denver, Colorado 80202 Phone (303)820-2840 Telefax (303)595-9717 April 1, 1995 Jeffrey S. Kramer Senior Vice President Nevada Manhattan Mining, Inc. 6038 N. Parkway Calabasas, Suite 1 00 Calabasas, California 91302 Dear Jeff: Gold King Mines Corporation ("GKMC") proposes to provide the consulting services of William R. Wilson to Nevada Manhattan Mining, Inc. ("NMMI") under the following terms: 1) All of William R. Wilson's consulting hours will be paid at a rate $400.00 per day, billed at the end of each month and payable upon receipt of an invoice unless mutually agreed upon between GKMC and NMMI. 2) All expenses related to the consulting services will be reimbursed at cost with no markups, billed and payable with the corresponding consulting fee invoice. 3) It is understood that GKMC and William R. Wilson are independent contractors and not employees of NMMI. 4) The term of this agreement is from April 1, 1995 to December 31, 1995 and can be extended for one year periods upon mutual agreement between GKCI and NMMI. If you are in general agreement with the terms of this proposal please so indicate below. Very truly yours, /s/ WILLIAM R. OLSON - ------------------------------------ William R. Olson President Gold King Min" Corporation 2 Jeffrey S. Kramer Page 2 April 1, 1995 /s/ JEFFREY S. KRAMER - ------------------------------- Jeffrey S. Kramer Sr. Vice President Nevada Manhattan Mining, Inc. 4/4/95 ____________________ Date EX-10.(XIV) 24 EXHIBIT 10.(XIV) 1 EXHIBIT 10(xiv) CONSULTING SERVICES AGREEMENT THIS AGREEMENT is entered into effective October 7, 1996, by and between Nevada Manhattan Mining Inc., a Nevada corporation (hereinafter "Company"), and Behre Dolbear & Company., Inc., a Delaware Corporation (hereinafter "Consultant). 1. THE SERVICES: Consultant shall perform for Company the consulting services (hereinafter the "Services") described in Section A of the attached Schedule, which Schedule by this reference is incorporated herein. 2. PERFORMANCE SCHEDULE: The Services shall be performed during the period mentioned in Section B of the Schedule. Company, however, may terminate this Agreement at any time without cause upon giving Consultant notice of termination. If Company terminates this Agreement, Company shall pay Consultant for all work performed and costs incurred by Consultant as a consequence of such termination. 3. COMPENSATION AND AUDIT: For performance of the Services, Company shall pay Consultant compensation in accordance with Section C of this Schedule. Consultant shall maintain records relating to the costs and expenses for which Consultant seeks reimbursement hereunder including the time spent in performing the Services. Consultant shall retain such records for a period of 6 months after the termination of this Agreement and Company may, upon request, audit such records or any other documentation pertaining to the Services; provided, however, Consultant may exclude its trade secrets from any such audit. Consultant shall ensure that any firm acting on its behalf in connection with the Services maintains and retains comparable records for the same period as required of the Consultant, and permits Company to conduct audits of such records. 4. INDEPENDENT CONTRACT: In performing the Services, Consultant shall operate as and have the status of an independent contractor and shall not act as or be an agent or employee of Company. As an independent contractor, Consultant will be solely responsible for determining the means, manner, and method for performing the Services. Company shall have no right to control or to exercise any supervision over Consultant as to how the Services will be accomplished. 5. COMPANY'S REPRESENTATIVE: Consultant shall make itself available at all reasonable times and places to consult with Company in connection with the Services. Consultant shall report to and consult with Company through a representative designated by Company (hereinafter "Company's Representative"). The name of the Company's Representative is set forth in Section E of the Schedule. 6. WARRANTY: Consultant warrants that its activities will follow accepted engineering standards. With respect to Consultant's report and the use thereof by Company, Company agrees to indemnify, and hold harmless Consultant and its stockholders, controlling persons, directors, officers, 1 2 employees, Associates and other independent contractors and agents against any and all losses, claims, damages, liabilities or actions to which they or any of them may become subject under the Securities Act of 1933, the Securities Exchange Act of 1934, or any other statute or common law, and to reimburse them on a current basis for any legal or other expenses incurred by them in connection with investigating any claims and defending any actions. Notwithstanding the above, Company will not be liable to Behre Dolbear if it shall be determined by a court that: A. Behre Dolbear did not follow accepted engineering standards, or B. With regards to securities law claims: (1) The Behre Dolbear report contains an untrue statement of a material fact or omits to state a material fact that is necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and (2) Such statement or omission was not made or omitted in reliance upon information furnished to the Behre Dolbear People by Company for use in connection with the preparation of the Behre Dolbear report. Any information furnished by Company is a representation or warranty by Company and Company is responsible for the accuracy and completeness of such information. 7. INSURANCE: All of the Consultant's activities hereunder shall be at its own risk, and Consultant shall not be entitled to Workers' Compensation or other insurance protection provided by Company, nor shall Consultant be entitled to the benefit of any other plans or programs intended for Company's employees. 8. INDEMNITY: Consultant shall defend, indemnify and save Company, its joint venturers, if any, and its affiliated entities and the directors, officers, employees, and agents of Company, its joint venturers, or its affiliated entities, harmless from and against any and all losses, claims. demands. liabilities, suits of actions (including all reasonable expenses and attorneys' fees) arising out of injuries to or the death of any person or persons, including the employees of each party hereto and the employees of those performing on their behalf, or arising out of loss of or damage to the property of any person or persons, including the property of Company, caused by or resulting from the acts or omissions of the Consultant or any one performing on its behalf, except that Consultant assumes no liability for the sole negligent acts or omissions of Company or another indemnified party. 9. CONFIDENTIALITY: All knowledge and information acquired or developed by or on behalf of Consultant hereunder shall be and remain the confidential and proprietary information of Company. All such information shall be turned over to Company at the termination of this Agreement. Consultant shall ensure that it and those performing on its behalf maintain strict security over all knowledge and information acquired or developed by it during the performance of this 2 3 Agreement and shall not divulge any such knowledge or information directly or indirectly to any person, other than the authorized representatives of Company, without the Company's prior written consent. 10. SUBCONTRACTS AND ASSIGNMENTS: Consultant's rights and obligations hereunder are deemed to be personal and may not be transferred or assigned, and any attempted assignment shall be void and of no effect. Consultant shall not subcontract for any part of the Services or obligations hereunder without the prior written consent of Company. This Agreement may be assigned by Company, and notice of such assignment shall be given to Consultant. This Agreement shall be binding upon and inure to the benefit of Company, its successors and assigns. 11. WAIVER: No change in, addition to, or waiver of any of the provisions of this Agreement shall be binding upon either party unless in writing signed by an authorized representative of each party. No waiver by either party of any breach by the other party of any of the provisions of this Agreement shall be construed as a waiver of any subsequent breach, whether of the same or of a different provision in this Agreement. 12. NOTICE: Any notice required or permitted hereunder shall be deemed to have been properly given when (1) delivered personally to the party for whom it is intended, (2) seventy-two (72) hours after deposit in the U.S. Mail (certified and return receipt requested) of an original or confirming copy, (3) twenty-four (24) hours after entrustment to a professional overnight courier service, or (4) upon receipt of transmission by facsimile, with all necessary postage or charges fully prepaid, addressed to the party for whom it is intended, at the addresses set forth in Section D of the Schedule. 13. SURVIVAL: Notwithstanding the termination of this Agreement, any duty or obligation which has been incurred and which has not been fully observed, performed, or discharged, and any right, unconditional or conditional, which has been created and has not been fully enjoyed, enforced, or observed, performed, or satisfied (including but not limited to the duties, obligation, and rights with respect to confidentiality) shall survive such expiration or termination until such duty or obligation has been fully observed, or discharged and such right has been enforced, enjoyed, or satisfied. 14. SEVERABILITY: In the event that any of the provisions, or portions or applications thereof, of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, Consultant and Company shall negotiate an equitable adjustment in the provisions of this Agreement with a view toward effecting the purpose of this Agreement and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby. 15. LIMIT OF LIABILITY: Notwithstanding any other provision of the Agreement, Consultant's aggregate limit of liability under this Agreement and Company's exclusive remedy for any eventuality shall not exceed the dollar value of consultant's billings for services, and neither 3 4 party shall be responsible or held liable to the other for indirect or consequential damages, including but not limited to loss of profit, loss of investment, loss of product or business interruption. The warranties, obligations, liabilities and remedies of the parties, as provided herein, are exclusive and in lieu of any others available at law, in equity or otherwise. 16. GOVERNING LAW: The provisions of this Agreement will be construed in accordance with the laws of the State of Colorado. The parties agree that any action concerning this Agreement must be brought in a court of competent jurisdiction in the City and County of Denver, State of Colorado, and they do hereby submit to the jurisdiction of such court regardless of their residence or where this Agreement may be executed. 17. ENTIRE AGREEMENT: This Agreement including the Schedule attached hereto sets forth the full and complete understanding of the parties hereto as of the date hereof relating to the subject matter hereof and supersedes any and all other agreements or representations, oral or written, made or dated prior thereto and may be amended only by a written statement signed by both parties. In witness whereof, the parties hereto have entered into the Agreement effective as of the date first above written. COMPANY: By: /s/ JEFFREY S. KRAMER -------------------------------- Jeffrey S. Kramer Senior Vice President CONTRACTOR: Behre Dolbear & Company, Inc. By: /s/ TA M. LI --------------------------------- Ta M. Li Vice President, Corporate Development Federal Tax ID #13-2848972 4 5 SCHEDULE SECTION A - SCOPE OF SERVICES 1. The Services to be performed by Consultant under this Agreement shall be generally as described in this Paragraph 1 below. The primary location for Consultant's performance of consulting Services shall be Denver, Colorado with supplemental consulting Services to be performed elsewhere as necessary and as approved in advance in writing by Company, 2. Scope of Services The Consultant will be responsible for providing independent technical advisory services related to the development of the Abubakar Gold Project, Kalimantan, Indonesia. Initially, that assignment constitutes advisory and validation services for geologic exploration program at the subject concession. Advisory services would also include related technical input for other aspects of potential project development. SECTION B - TERM OF THE AGREEMENT Unless sooner terminated by Company, the term of this Agreement shall commence as of October 7, 1996 and shall continue for an initial period of six months or upon satisfactory completion of the Services prior to such date. SECTION C - COMPENSATION 1. Consultant's fees are charged on a time basis at the maximum hourly rate of US$137.50, to a maximum of $1,100.00 per day. a. A minimum of two (2) days per month will be paid by the Company to the Consultant for the six month duration of this contract. Unused days will accrue until the end of the six month period, as which time, if not used will be forfeited by the Company. 2. In addition to payments for Services, Company will reimburse Consultant for the following expenses incurred in the performance of the Services under this Agreement: (a) Travel undertaken in the performance of Services hereunder; (b) Reasonable and necessary expenses incurred by Consultant for food and lodging associated with (a) above; 5 6 (c) Telegram, cable, and telex charges. In lieu of itemizing telephone charges, and to offset costs of computers, a flat 2.5% of labor fees will be assessed as usage charges; (d) Prints, reproductions, copies and facsimiles; (e) Postage, courier express, air express, and air freight charges; (f) Use of personal automobiles or vehicles at the rate established by Consultant; (g) Royalties on computer software; (h) Professional liability insurance. A fee of 1.5% of labor fees will be assessed to offset this cost; (i) Clerical fees at $35 per hour; and (j) Other costs and expenses incurred in the performance of Services hereunder, 3. Invoices will be sent to Company monthly and are due upon receipt. Invoices not paid within 30 days of the date of invoice are subject to a late fee of 1.5% per month. 4. If charges and reimbursable expenses are not paid when due and collection proceedings are required, Company agrees to pay all of Consultant's costs and collection including the actual legal fees incurred by Consultant. SECTION D - NOTICES Notices to Company shall be sent to: Jeffrey S. Kramer, Sr. Vice President Nevada Manhattan Mining, Inc. 5038 N. Parkway Calabasas, Suite 100 Calabasas, CA 91302 (818) 591-4400, (818) 591-4411 (fax) With a copy concurrently to: William R. Wilson Nevada Manhattan Mining, Inc. 410 17th Street, Suite 1375 Denver, Colorado 80202 (303) 820-2840, (303) 595-9717 6 7 Notices to Consultant shall be sent to: Ta M. Li Behre Dolbear Co., Inc. 1601 Blake Street, Suite 301 Denver, CO 80202 (303) 620-0020, (303) 620-0024 (fax) SECTION E - COMPANY'S REPRESENTATIVE Company's Representative is William R. Wilson or such party as may be designated in writing by the Company. 7 EX-10.(XV) 25 EXHIBIT 10.(XV) 1 EXHIBIT 10.(xv) March 25, 1996 Dr. David Weissberg, et al 29 Blair Drive Huntington, NY 11743 Dear David: As per our conversation of March 22, 1996 summarizing our stock transaction, I reiterate and state our agreement as follows: 1) That the bulk of the money, after having been deposited in our normal account, will be put in a (currently active) separate bank account for the specific use of mining the property. Our contractor is Harrison-Western of Colorado. 2) That the Nevada Manhattan Mining Series "A" Preferred Shares being issued, as per the Certificate of Determination which defines the shares, are immediately convertible at the shareholder's discretion to Nevada Manhattan Mining Common Shares at a ratio of 10 shares of Common Stock for 1 share of Preferred Stock. Subject to the customary underwriter's approval, these underlying Common Shares will be included in our forthcoming Registration Statement (SB-2). It is understood that Nevada Manhattan Mining will instruct the underwriter to register these shares and that the underwriter's consent will not be unreasonably withheld. 3) That mining operations on the Manhattan Property are reasonably slated to begin in the next sixty (60) days. 4) That, based on all current information we have at our disposal, and knowing we have no direct control over the mill, we feel it is reasonable for the mill to begin operations within the next sixty (60) days and be fully operational within one hundred and twenty (120) days. 2 We give your "investment group" the first right of refusal to purchase any additional shares under this Nevada Manhattan Mining Private Placement program the price of four (4) Preferred Shares per ten (10) dollar investment. The shares will be distributed as per your instructions in the following manner:
INVESTMENT NAME PREFERRED STOCK 1. $20,000 Richard Fleischer 6,000 Shares (Automotive Mgt. Group) 2. $5,000 Rosemarie Monticelli 1,500 Shares 3. $10,000 Lou Saslow 3,000 Shares 4. $25,000 Richard Radoccia 7,500 Shares 5. $15,000 Chris Olson 5,000 Shares 6. $160,000 David Weissberg Total = 63,500 Shares To be issued as follows: Kelly Potter 500 Kaitlin Potter 500 Tom Potter 500 Chris Potter 500 Andrew Weissberg 1000 William Weissberg 1000 David Weissberg 59,500 ------ Sub-Total 63,500 ____________ ____________ $235,000 TOTALS 86,500
Sincerely, C. D. Michaels President EX-10.(XVI) 26 EXHIBIT 10.(XVI) 1 EXHIBIT 10.(xvi) NEVADA MANHATTAN MINING, INC. Mining - Development - Exploration May 13,1996 Dr. David Weissberg, et al 29 Blair Drive Huntington, NY 11743 Re: Amendment to Agreement Letter Dated March 25, 1996 Dear David: As per our conversation of May 8, 1996 summarizing our mutual agreement to amend the Agreement Letter dated March 25, 1996, relevant to your investment group's Preferred Stock purchase and your subsequent purchase, I reiterate and state for the record the following: You and the members of your investment group have agreed to the issuance of Nevada Manhattan Mining Common Stock in exchange for the issuance of the previously agreed upon Preferred Stock in the Company. The Preferred Stock would have been convertible ten (10) shares of Common Stock for each share of Preferred Stock and carrying an 8% dividend rate. We will presently issue the Common Stock (at the convertible rate) and will issue the agreed upon dividends of 8% at the time dividends are issued to the Preferred stockholders to compensate your group for any loss of dividends. Your dividends will be based on your original number of Preferred shares. We anticipate Preferred dividends to be issued December of 1996. Your signature below will evidence your confirmation of the attached breakdown of the conversion from Preferred Stock to Common Stock based on the relevant funds which we have received to date. Please call if you have questions or comments. Sincerely, Approved and acknowledged, /s/ CHRISTOPHER D. MICHAELS /s/ DAVID WEISSBERG - ---------------------------------- ------------------------------ Christopher D. Michaels David Weissberg President 5038 N. PARKWAY CALABASAS, SUITE 100 - CALABASAS, CA. 91302 1818) 591-4400 - FAX (818) 591-4411 ________________________________________________________________________________ LOS ANGELES, CALIFORNIA - MANHATTAN, NEVADA 2 WEISSBERG INVESTMENT GROUP / NMM PREFERRED STOCK TO COMMON STOCK
NAME PREFERRED COMMON INVESTED INVEST $ DIVIDEND Richard Fleischer 6,000 60,000 $20,000.00 Rosemarie Monticelli 1,500 15,000 $5,000.00 Lou Saslow 3,000 30,000 $10,000.00 Richard Radoccia 7,500 75,000 $25,000.00 Christopher Olson 5,000 50,000 $15,000.00 David Weissberg 59,500 595,000 $149,921.10 Kelly Potter 500 5,000 Kaitlin Potter 500 5,000 $1,259.86 Tom Potter 500 5,000 $1,259.86 Chris Potter 500 5,000 $1,259.86 Andrew Weissberg 1,000 10,000 $2,519.73 William Weissberg 1,000 10,000 $2,519.73 Total $235,000.00 $235,000.00 David Weissberg 9,000 90,000 $22,500.00 Steven Weinberg 1,000 10,000 $2,500.00 Total $25,000.00 $25,000.00 Sandra Murer 600 6,000 1,500.00 Julie Potter 1,000 10,000 $2,500.00 Jane Zimmet 2,000 20,000 $5,000.00 Total $9,000.00 $9,000.00 TOTAL 100,100 1,001,000 $269,000.00
EX-10.(XVII) 27 EXHIBIT 10.(XVII) 1 EXHIBIT 10.(xvii) [LOGO] NEVADA MANHATTAN MINING, INC. ----------------------------- Mining - Development - Exploration September 25, 1996 Mr. John Holsten P.O. Box 456 Drexel Hill, PA 19026-0456 Dear Mr. Holsten: This letter will confirm our understanding with respect to your loan of $200,000 for a period of ninety (90) days to Nevada Manhattan Mining. The loan will bear an interest rate of twelve (12%) percent per annum and be secured by three hundred thousand (300,000) Common Shares in the Company. Should the Company default on said loan, the amount of shares will be increased to a total of six hundred thousand (600,000) Common Shares in the Company with piggy-back registration rights. The commencement date of the loan will be acknowledged upon receipt of good funds. Additionally, upon consummation of the terms above, you will be issued a subscription for warrants to purchase Common Stock in the Company in the amount of one hundred thousand (100,000) shares at a price of One Dollar and 50/100 ($1.50) per share for a period of eighteen (18) months from date of issue. Should the above terms be acceptable, please acknowledge where provided below. Sincerely Acknowledged and Accepted, John W Holster 10/3/96 ______________________________ Jeffrey S. Kramer John Holsten Date Sr. Vice President cc: Alan Hans First Colonial Securities 5038 N. Parkway Calabasas, Suite 100, Calabasas, California Office: (818) 591-4400 - fax: (818) 591-4411 _______________________________________________________________________________ Los Angeles, California a Manhattan. Nevada EX-10.(XVIII) 28 EXHIBIT 10.(XVIII) 1 RHONE FINANCE SA EXHIBIT 10.(xviii) PRIVATE & CONFIDENTIAL - ---------------------- Mr. Jeffrey Kramer Nevada Manhattan Mining, Inc. 5038 N. Parkway Calabasas Calabasas, CA 91302 U.S.A. Geneva, 26th November 1996 Dear Jeffrey, We were very pleased to meet with Chris Michaels and yourself during your recent visit to Geneva. We have reviewed the information package on Nevada Manhattan Mining, Inc.'s projects in Nevada and Kalimantan respectively and are pleased to present you with our proposal for funding these projects as discussed during your recent visit. Rhone Finance is pleased to enter into a financial advisory agreement with your Company in the form of the draft passed to you during your visit with us. By virtue of our relationships in the international investment banking community and our experiences in the mining finance sector, Rhone Finance is well equipped to substantially assist Nevada Manhattan Mining, Inc. by introducing the Company to sophisticated institutional investors and to secure appropriate sponsorship both retail and institutional. The principal constituent parts of the proposed financial advisory agreement are: 1) A monthly retainer against time billed for advisory financial services provided as per the agreement. We propose a fee of US$7,500 per month be paid initially with a review after three months against actual time accruing and adjustment thereto by mutual agreement if required. All disbursements and out of pocket expenses will be invoiced and settled on a monthly basis. 2) A fee linked to any successful funding completed on your behalf, payable by way of a percentage against funds raised. The fee will be negotiated on a transaction by transaction basis and may be paid part in cash and part in shares. This will be dealt with by appending a schedule to the financial advisory agreement indicating the specific terms. 3) The issuance of a certain number of share purchase warrants to Rhone Finance to be determined at the conclusion of the due diligence exercise at a price to be negotiated by the parties. 4) Reimbursement of out of pocket expenses. 5) All disbursements and out of pocket expenses will be invoiced with receipts where applicable and settled on a monthly basis. 2 2 6) The financial advisory agreement should be for an initial term of one year subject to three months notice by either party. 7) Both parties shall keep matters confidential arising out of the agreement and undertake not to make any public announcements without the prior consent of the other party in writing. Through our client Rare Earth Resources "REZ", we will arrange with their investment bankers for them to take down a private placement of shares in Nevada, substantially in the form of the draft offering document you left with us. The amount will be amended so as to provide funding for your Nevada project with an additional allocation toward working capital requirements. Separate arrangements will be made whereby REZ will commit to provide all funding requirements for one or more of your projects in Kalimantan in return for a major interest in the claims. The amount of funding to be allocated to these projects and the REZ interest will be mutually determined when we have made a full assessment of the projects. The foregoing will be subject to our completing a comprehensive due diligence programme which will include an on site visit by our consulting geologists and mining engineers of the Nevada mining property and the Company's corporate offices. It is assumed that full details of your projects in Kalimantan are available for review in Nevada, whereafter a determination will be made as to whether a visit to the Kalimantan properties is required. The due diligence programme will be conducted in parallel with discussions with REZ's investment bankers. Our objective with Management's co-operation, will be to complete the due diligence programme by year end and subject to the outcome thereof, to close off the first phase of the financing in the first quarter of 1997. We are sending this proposal by fax and by mail. Please signify your acceptance of the terms of this proposal by signing and returning a copy of this letter by fax and by mail to the undersigned by the end of the week whereafter, the financial advisory agreement can be exchanged, and the due diligence programme will commence. We look forward to a successful and rewarding relationship. Yours sincerely, /s/ ROGER A. LEOPARD Roger A. Leopard We hereby confirm our agreement to the terms and conditions described in this letter. Date: December 3, 1996 /s/ JEFFREY KRAMER ------------------------ ------------------------ Mr. Jeffrey Kramer EX-21 29 EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF SMALL BUSINESS ISSUER Applicant is the 70% owner of subsidiary company known as "Equitorial Resources." This entity was recently formed under the laws of the British Virgin Islands and will conduct business in Brazil and Central America and engage in the acquisition and development of timber and other resources. To date, this subsidiary has not been capitalized. Applicant has also recently formed a second British Virgin Islands company known as "Kalimantan Resources" which is wholly-owned by Applicant. The purpose of this subsidiary will be to engage in the mining activities contemplated by the Principles of Agreement dated August 19, 1996 with Maxwells Energy and Metals Technology, Inc. To date, this subsidiary has not been capitalized. EX-23.(I) 30 EXHIBIT 23.(I) 1 EXHIBIT 23.(i) The Board of Directors Nevada Manhattan Mining, Incorporated We consent to the use of our reports included herein and to the reference to our firm under the heading "Experts" in the prospectus and the Registration Statement on Form SB-2. Jackson & Rhodes P.C. Jackson & Rhodes P.C. Dallas, Texas December 5, 1996 EX-23.(II) 31 EXHIBIT 23.(II) 1 EXHIBIT 23.(ii) [[LOGO] GOLD KING CONSOLIDATED, Inc. ---------------------------- GOLD KING PETROLEUM CORPORATION GOLD KING MINES CORPORATION 410 17th Street Suite 1375 Denver, Colorado 80202 Phone (303) 820-2840 Telefax (303) 595-9717 November 19, 1996 Nevada Manhattan Mining, Inc. C/o Reinstein, Pantell & Calkins 10940 Wilshire Boulevard Suite 1550 Los Angeles, California 90024-3942 Attention : Lloyd S. Pantell RE: Registration Pursuant to Form BD Dear Sirs: This letter is intended to confirm that the undersigned has reviewed the draft prospectus to be filed in connection with the Company's Form BD registration statement and hereby consents to the use of this organization's name as disclosed in said draft. This letter shall also serve to confirm that the undersigned has received appropriate authorization to execute this letter, to provide the representation herein contained, and to authorize you to provide this letter to the Securities and Exchange Commission as evidence of same. Very truly yours, /s/ WILLIAM R. WILSON - ------------------------- William R. Wilson President Gold King Mines Corporation EX-23.(III) 32 EXHIBIT 23.(III) 1 EXHIBIT 23 (iii) BEHRE DOLBEAR & COMPANY, INC. Minerals Industry Consultants ================================================================================ 275 Madison Avenue TEL: (212)684-4150 New York, New York 10016 FAX: (212)684-4438 November 15, 1996 Nevada Manhattan Mining Inc. c/o Reinstein, Pantell & Calkins 10940 Wilshire Boulevard Suite 1550 Los Angeles, CA 90024-3942 RE: REGISTRATION PURSUANT TO FORM BD Dear Mr. Pantell: This letter is intended to confirm that the undersigned has reviewed the draft prospectus to be filed in connection with the Company's form BD registration statement and with the added comments, hereby consents to the use of this organization's name as disclosed in said draft. This letter shall also serve to confirm that the undersigned has received appropriate authorization from his organization to execute this letter, to provide the representation herein contained, and to authorize you to provide this letter to the Securities and Exchange Commission as evidence of same. Sincerely yours, /s/ TA M. LI ------------------------------------- Ta M. Li Vice President, Corporate Development cc: William R. Wilson - ------------------------------------------------------------------------------- Denver New York Toronto Guadalajara Santiago Sydney EX-27 33 EXHIBIT 27
5 YEAR MAY-31-1997 JUN-01-1996 AUG-31-1996 38,428 0 0 0 0 47,248 5,571,694 (60,567) 5,558,375 402,068 117,022 0 135,735 83,539 4,820,011 5,558,375 0 0 0 0 447,602 0 0 (447,602) 0 (447,602) 0 0 0 (447,602) (.05) (.05)
EX-99 34 EXHIBIT 99 1 EXHIBIT 99 NEVADA MANHATTAN MINING, INC. MANHATTAN MINE PROJECT REVIEW & BUSINESS PLAN By William R. Wilson July 1995 2 TABLE OF CONTENTS
PAGE INTRODUCTION 1 HISTORY AND OWNERSHIP OF PROPERTY 2 REGIONAL AND PROJECT GEOLOGY 2 MINERAL RESOURCE 3 DEVELOPMENT & MINING 4 PROCESSING 5 ENVIRONMENTAL SETTING AND PERMITS 6 PROJECT REVIEW 7 RECOMMENDED BUSINESS PLAN 8 SUMMARY 10 APPENDIX A - MAPS (POCKET) 11 APPENDIX B - FINANCIAL INFORMATION 12 APPENDIX C - MILL INFORMATION 13
3 NEVADA MANHATTAN MINING, INC. MANHATTAN MINE PROJECT REVIEW & BUSINESS PLAN By: William R. Wilson(1) INTRODUCTION William R. Wilson was engaged by Nevada Manhattan Mining, Inc. ("Nevada Manhattan") in May 1995 to prepare a project review and business plan for their mining properties in the Manhattan Mining District 45 miles northeast of Tonopah, Nevada, in which Nevada Manhattan has a 24.5% ownership. The purpose of the project review was to prepare a valuation of Nevada Manhattan's ownership. The purpose of the business plan was to present various options that would provide short-term cash flow for Nevada Manhattan and its joint venture partners in the properties through initial production. The business plan also presents a method to expand potential ore deposits in existing mine workings and establish access to deeper targets. Two alternative mining plans are examined that utilize the 1,200 foot long decline ("Decline") constructed by Nevada Manhattan and its joint venture partners in 1994. The first plan considers mining ore from the Consolidated Manhattan Mine accessed from the Decline; drifting to the area near the high grade WC 49 Drill Hole, drilled by Freeport in 1985 and mining ore in that area; extending the existing decline ("Decline") to the existing but caved White Caps shaft, rehabilitating the White Caps shaft to the 1,300' Level and mining high grade ore in all the levels connected to White Caps Shaft below the 565' Level. The second plan considers all of the same elements except stopping at the 565' Level; mining the remaining high grade ore in the 565' Level without rehabilitating the White Caps shaft below the 565' Level. The second alternative mining plan is recommended as this plan still allows continued exploration in the lower levels leading to additional ore development and requires less capital. Two milling alternatives were examined. The first alternative considered was being to purchase a used crushing plant and process plant and recover only free gold in a gravity circuit. The second alternative is to wait until New Concept Mining, Inc. completes the construction of the mill, scheduled to be completed in late 1995 and mill the ore in that new mill. The second alternative was the preferred option because of the mill's accessibility in a short period of time. (1) Wilson has a professional degree in metallurgical engineering from the Colorado School of Mines and an MBA from the University of Southern California. His more than thirty years of experience includes ten years in senior positions with engineering, construction and consulting firms and ten years as president of several mining companies operating in the United States and internationally. He is a part chairman of the Colorado Mining Association and currently is president of Gold King Mines Corporation, a subsidiary of Taylor Rand Incorporated, a publicly traded resource company based in Toronto, Ontario, Canada. 4 The work in this report was conducted primarily by William R. Wilson, President, Gold King Mines Corporation. He was assisted by Jeff Kramer, Senior Vice President, Nevada Manhattan and his staff; Marlowe Harvey, the project operator and president of Calais Resources and Argus Resources, Inc.; Robert Martin, Vice President, Construction of Harrison Western, a well known underground mining contracting company; Bill Foster, President and Dale Moore, Mill Superintendent of New Concept Mining, Inc., the owners of the new mill at Manhattan; and Bill Carlson, Manager, Process Design of Lynteck, Inc. a process metallurgical contracting company. HISTORY AND OWNERSHIP OF PROPERTY The historic mining in the Manhattan district extends from 1866 to present with the major activity in the late 1860's, between 1906 and 1921, and from the 1960's until present. Placer and lode mining took place principally in the Reliance, the White Caps Mine, the Union Amalgamated Mine, the Manhattan Consolidated mine, the Earle Mine, the Big Four Mine and the April Fool Mine. The United States Geological Survey reports historic production through 1959 of 280,000 ounces of lode gold and 206,000 ounces of placer gold mined in the district. since that time the more significant production was from the Echo Bay and Nevada Goldfields mines (bordering the subject property) totaling in excess of 500,000 ounces of gold. Several companies and individuals have owned part or all of the various mines currently shared in ownership by Nevada Manhattan (24.5%) with Argus Resources Inc. (24.5%) and Marlowe Harvey (51%). Included in the property are 28 patented and 83 unpatented claims totaling approximately 1,800 acres. REGIONAL AND PROJECT GEOLOGY The bedrock in the Manhattan district contains the Gold Hill Formation including quartzite, limestone and schist, phyllite and slate of the Cambrian age and chert, slate, quartzite and limestone of the Palmetto Formation of Ordovician age. The Gold Hill formation over thrusts the Palmetto Formation with gold production normally found in the hanging wall of the thrust fault, in limestones and quartzose schist of the Gold Hill Formation. Mineralization generally occurs as assemblages of pyrite, stibnite, realgar, orpiment, cinnabar and free gold associated with calcite, quartz, fluorite, sericite, leverrierite and sparse adularia. The most productive ore bodies have been in quartzose schist in networks of small quartz-adularia veins containing pyrite and free gold. Mineralization is generally theorized to be the result of epidermal deposition in the limestone and related to secondary replacement in the volcanic activity associated with the south margin of the Manhattan caldera. The Manhattan property lies in several shallow gullies at 7,500 to 7,800 feet elevation. Further, mineralization appears to be structurally controlled by a series of parallel east-northeast trending faults, dipping from 50 to 75 degrees southwest and with some cross or perpendicular faults. Geophysical studies indicate the structure contains magnetic highs and resistivity lows and geochemical studies indicate outcrops and mineralization associated with arsenic and mercury. Mineralization is consistent with the district and is 2 5 often in highly altered areas and in limestone with gold and silver found in quartz, quartz-carbonate including pyrite, arsenophyrite, stibnite and cinnabar. Veins tend to range in size from stringers of less than six inches to larger veins of seven feet. The deeper ores lie in the Consolidated Manhattan and White Caps mines while shallow ores in the area frequently contain disseminated, lower grade gold in larger ore bodies. MINERAL RESOURCE Several studies have been made to help quantify and delineate ore targets in the remaining portions of existing mines, the areas between the old mines and the un-mined areas to the south of the Consolidated Manhattan and White Caps mines. A summary of geologic investigations conducted by Nevada Manhattan and its joint venture partners of mineralized areas along the fault zone through the center of the property includes general surface sampling, underground sampling, production records, drilling (surface and underground), geochemical sampling and geophysics. Historic mining records and accounts add to the total picture but often lack completeness or substantiation in more recent times. As is often the case in epithermal, veined systems all information points toward more ore grade material, often of higher grade, and the potential for bonanza-type ore bodies. Satisfying the standards for reserve definition imposed by the Securities and Exchange Commission and other technical societies such as the Society for Mining, Metallurgy, and Exploration, Inc. is always difficult in this setting, i.e., small high grade vein systems with little widely disseminated mineralization. Therefore, this report does not include discussions relating to reserves in any category. The work in this report identified areas in and adjacent to the Decline constructed by Nevada Manhattan and its joint venture partners in 1994. The areas considered for mining include the Adit Level of the Consolidated Manhattan Mine, the area around the high grade intercept in Drill Hole WC49 (reported by Freeport to be twenty-five feet of 0.698 ounces per ton of gold) and the mined levels in the White Caps Mine from the 565' Level to the 1,300' Level. From the identification of mining targets, ore blocks were estimated on underground sampling, historic production, drill hole assays and level maps for the White Caps Mine (See Maps VII and VIII). These areas were then quantified using simple geometry, tonnage calculations and average grade. The average grade selected was based on the same information as the estimated ore blocks and was further defined by an average of 0.25 ounces per ton as a minable underground grade and a minimum cut off grade of 0.10 ounces per ton. The resulting estimated ore blocks were used in an economic model. The model further identified the capital required to initiate mining in the various areas, mill the ore at the New Concept Mining, Inc.'s mill, and an estimated cash flow and a NPV (net present value) analysis at 10% and 15% discount rates of the cash flow for the two alternate plans. The resulting analysis was intended to be used by Nevada Manhattan and its joint venture partners to determine the advisability of proceeding immediately with development and mining. The work included is not intended to be a reserve calculation of any type and no reference is made to proven, probable or possible reserves. However, initial investigations indicate commercial grade mineralization. Details of the calculations are shown in Appendix B, Schedules 1, 2 and 3 and can 3 6 be summarized as follows: 1. Mining on Adit Level of Manhattan Consolidated Mine (access from Decline). The total estimated ore block for this area is 4,293 tons. Using a 20 per cent dilution factor and average grade of 0.25 ounces per ton at a 0.10 ounces per ton cutoff, this block is estimated to contain 859 minable ounces. Additional tonnage may be quantified as a result of additional sampling and development in this area. 2. Drifting from an approximate depth on the Decline in the area of the high grade, intercept the WC49 drill hole. The total estimated ore block in this area is 1,555 tons. Using the same factors with an average grade of 0.50 ounces per ton, this block contains 1,555 minable ounces. Additional tonnage may be quantified as a result of additional sampling and development in this area. 3. Rehabilitating the White Caps shaft below the 565' Level and mining in the old workings on the 565', 670', 800', 910', 1,100', 1,200', 1,300' Levels. The total estimated ore block in the White Caps is 18,306 tons. Using the same factors but with a 0.75 ounce per ton average grade for the 1,300' Level, these blocks contain 7,420 minable ounces. Again, additional tonnage may be quantified as a result of additional sampling and development in this area. The total minable ounces in all the calculated blocks are 9,833 ounces of gold. Typically silver grades are about equal or less than the gold grade so no silver grades were calculated. The total estimated ore blocks total 26,487 tons is not an even number because areas of ore in the blocks were estimated by cubic footage and then converted to tons using a factor of 162 pounds per cubic foot for converting to tonnage. The higher grade ore shoots associated with the East Fault, the Morning Glory Fault, the White Caps Faults appear to be continuous and extend at least to the 1,300' Level. Grades, if anything, appear to increase with depth with a reported ore shoot on the 1,300' Level of 2.73 ounces of gold per ton (Reference - Map VIII). Because of limited drilling information below 450 feet, any confirmation of ore reserves in specific categories is not possible. Structural control may, however, continue below the 1,300' Level. The project operator intends to complete a surface geochemical survey coordinated with magnetic and resistivity geophysics. The project operator will then drill several targets to the south of the White Caps shaft as predicted by the recent geo-chemical survey and geophysical examinations. Upon completion of this work, a more accurate estimate of ore reserves should be possible. Several geological studies of the White Caps area have predicted bonanza-type ore bodies in the area but little has been quantified for a resource or reserves of this magnitude. See the section PROJECT REVIEW for more discussion of this subject. DEVELOPMENT & MINING The Manhattan District has experienced surface mining for placer gravels, shallow underground mining using shafts and drifts to bedrock for placer gravels, open pit mining for lower grade ores and underground mining in open stopes for higher grade ores. 4 7 Two alternate mining plans are considered in this report. The first plan includes: extending the Decline to the 565' Level of the White Caps Mine; mining remaining higher grade ore in the Consolidated Manhattan Mine; mining higher grade ore in a small but high grade area around the WC49 Drill intercept at approximately 300 foot depth and sixty feet from the existing Decline; rehabilitating the White Caps Shaft from the 565' Level to the 1,300' Level; and mining higher grade ore in the old workings of the White Caps Mine between the 565' Level and the 1,300' Level. The second plan includes all aspects of the first plan but the rehabilitation of the White Caps Shaft will not proceed until an extensive evaluation of the ore grades in the old workings of the White Caps mine is evaluated by detailed underground sampling. In both plans the rehabilitation of the White Caps shaft will be dependent on the condition of the shaft upon reaching the White Caps shaft on the Decline and evaluating the condition of the shaft. The safety of working in the White Caps shaft and the costs of the rehabilitation this shaft, depending on its condition, will be key elements in determining the acceptability of either plan. A raised bore for ventilation and access will also be considered. In other words, until the shaft can be accessed from the Decline, additional ore evaluated and the condition of the White Caps shaft and workings can be evaluated, much of the work and costs related to the two plans is preliminary in nature. Within the old workings of the Consolidated Manhattan Mine and the White Caps mine, the mining will be accomplished using a modified cut and fill or open stope method by drilling and blasting. The extension of the Decline down to the 565' Level of the White Caps Mine will also be drilled and blasted. Rehabilitation of the White Caps Shaft will be required to reach the lower levels of the mine and will consist of re-timbering and rock bolting where necessary. Depending on conditions encountered when the Decline is connected to the White Caps mine shaft, a ventilation and escape shaft may be required. Because of the uncertainty of the need for this shaft, no provision has been made in this report for the cost is its installation. It is further assumed that any ventilation and access will utilize the extended Decline. A charge of $1 per ton was added to the Harrison Western estimate to provide for pumping and ventilation using the Decline. Equipment includes underground Jumbo drills, jackleg drills, scoop trams, haul trams, fans and pumps. It is intended to use Harrison Western as a mining contractor for both development and mining. A summary of their estimated costs is included in the cash flow analyses. An allowance has been provided for the pumping and treatment of mine water. PROCESSING A preliminary investigation was made to ascertain the feasibility of "high grading" the old mine workings and then processing the free gold in a used portable gravity processing plant. This option would also require permitting because of the tailings produced from the gravity plant and possible discharge from process water. A used crushing plant priced at $36,000 was located. The unit included a 10 X 16 jaw crusher, a 16 inch roll crusher and a double deck screen that would size ore to -10 5 8 mesh. A used ball mill for crushing to -200 mesh costing $8,000 needed to be purchased. A used gravity processing plant was located that included 4 X 8 Double Deck Derrick Screens and thirty-eight MDL spirals were located for a price of $200,000. It was felt that a cash payment of $125,000 would satisfy the seller. The estimated cost of purchasing, shipping and installing this portable plant was $200,000. Other items such a power line or portable generator, electrical connections and controls, piping, conveyors, engineering and installation represent 50 per cent of the total installed cost and therefore, the portable facility was estimated to cost $400,000. The experience of the writer is that a hurried schedule almost always is extended beyond original estimates and milling equipment not specifically designed for the operation requires modification and recovery suffers. Considering these factors and the time to acquire and assemble to be at least sixty days or longer, and to secure a permit to be six months, the alternative of securing this portable equipment is not recommended. New Concept Mining, Inc. provided a proposed flow sheet and equipment list. (See Appendix C). The processing circuit includes crushing, grinding, gravity separation, cyanide leach, flotation and thickening. A finalized balanced flow sheet was not provided but a review of the proposed circuit and equipment indicates the mill should provide approximately 200 to 250 tons per day of production and the predicted 85 to 90 per cent recovery. Nevada Manhattan has an agreement to utilize up to 30 per cent of the milling capacity or approximately sixty tons per day. The ore to be mined contains free gold and gold associated with pyrite and arsenopyrite. The gold in the sulphides was assumed to be less than 10% as suggested by Dale Moore, Mill Superintendent for New Concept Mining. He also estimated ore recovery to be as high as 90 per cent. For purposes of this report a mill recovery of 81 per cent was used to account for the loss of gold in the sulphides. The mill flow sheet planned by New Concept Mining, Inc. will not include a flotation circuit until the mill has operated up to one year. (90% recovery times 90% gold from non-sulphide ore = 81% overall recovery.) Mr. Moore estimated ore milling costs will be $15 per milled ton after a two to three-month start up period when costs were expected to be $20 per milled ton. Because the mill may take up to six months to construct, this report assumes ore will be mined for six months, stockpiled and then milled. This causes a six-month delay in cash flow from gold mined. The report also assumes that the mill will produce Dore' cones that will be shipped to a refinery to be further refined to gold and silver at a $2.00 per gold ounce refinery charge. Since it is expected that less than one ounce of silver will be produced for each ounce of gold, no credits for silver are shown in the financial analyses. ENVIRONMENTAL SETTING AND PERMITS For purposes of this report, it was assumed all necessary permits are held or will be obtained by Nevada Manhattan. New Concept Mining, Inc. has applied for permits required for the milling operations including approval of an operational plan by the BLM. Nevada Manhattan will pump water internally in the underground mine but will not discharge water to the surface. No reclamation is required for the ore mined other than restoration of the 6 9 Decline portal area if the Decline is closed. Should Nevada Manhattan sometime in the future decide to discharge mine water to the surface a Point Source Discharge Permit will be required. Such a permit would take from six months to two years to secure. In the interim period it is recommended that Nevada Manhattan periodically (monthly) sample any running water on its property and sample underground water at several locations to establish a baseline for future operations. PROJECT REVIEW The auditing firm of Jackson & Rhodes has requested Nevada Manhattan to provide a valuation in conjunction of capitalized acquisition and development costs of the Manhattan property for the purposes of confirming the value carried on the Company's balance sheet. Without a detailed ore reserve available, an alternate method used by Gold king Mines Corporation in the past is to place a value on the various tangible assets of a company and the intangible assets that potentially can enhance the value of a company. For Nevada Manhattan the following assets should be considered: Acquisition Costs - Typically acquisition of a mining property of this type, size and potential in Nevada in the last five years has ranged in value between $2.5 million and $5 million. Nevada Manhattan has a capitalized acquisition and development cost of $3.2 million on its balance sheet. For the purposes of this report a conservative value for capitalized acquisition and development costs is $1,600,000. Manhattan Decline - The cost of construction of the Decline was a total of $465,000. This has added significant value to the Consolidated Manhattan Mine and potentially to the White Caps Mine and other potential mineralization. Full value should be assigned to this asset for those reasons. Nevada Manhattan's share of that cost is 24.5% or $114,000. Other Exploration and Development Costs - Total costs of exploration and development by Nevada Manhattan including drilling, surface sampling, geophysical work, assays and other development costs incurred by the Nevada Manhattan attributable to future ore reserves are $830,000 less the cost of the decline or a total of $710,000. Considering the specific plans of the project operator to complete his exploration program and the plan to achieve near-term production outlined in this report, these costs form a basis of value for the Nevada Manhattan. The full value of the accrued cost should be included in this valuation as the cost can lead to future potential production and additional reserves in the future. Access to Milling Capacity - Nevada Manhattan controls 30 per cent of the milling capacity in the New Concept Mining, Inc.'s mill approximately one mile from the Manhattan Decline portal. This mill, now under construction, will be rated at approximately 200 to 250 tons per day. Mills of this capacity and type are currently worth a minimum of $2,000,000. For Nevada Manhattan to permit and build their own mill including tailings disposal would cost at a minimum of $3,000,000. As the New Concept mill is under construction and the required permits are anticipated to 7 10 be in place by January 1, 1996, a value of Nevada Manhattan's interest in the mill can be established. A thirty per cent interest has a value of $900,000 but as the mill is not in place, a value of $450,000 is assigned to these mill rights. Minable Ore Blocks - As stated in the section on MINERAL RESOURCE, estimated ore blocks total 9,800 ounces of which 7,900 ounces may be recovered. As the recovery of these ounces is predicated on implementation of the proposed business plan, a conservative approach is to place a value of $15 per ounces on this projected production. This total value is therefore $118,500 of which $30,000 can be assigned to Nevada Manhattan. Other Mineral Value - The Hughes and Cameron report indicate a resource of 250,000 ounces in the lower levels of the White Caps mine. This was further substantiated by drilling in the 1960's on the 1,200 foot level. At $10 per ounce this has a value of $2,500,000 of which $600,000 can be assigned to Nevada Manhattan. The $15 and $10 values are frequently assigned to un-mined reserves and resources. In this case, the $15 value was assigned to the minable ore blocks. However, in the future, Nevada Manhattan may recover much higher value than the value assigned in this valuation. Infrastructure - The Manhattan property is approximately 45 miles from Tonapah, Nevada and approximately one mile from Manhattan, Nevada. As Tonapah has facilities for most mine supply requirements and available employees and community infrastructure, the Manhattan property requires minimal local infrastructure in the form of an office and a maintenance shop. Therefore, a value of $100,000 can be placed on infrastructure related to the Manhattan property and approximately $25,000 for Nevada Manhattan's portion. Based on the above assets valuation, the total value of Nevada Manhattan's portion of the Manhattan Property is $3,529,000. RECOMMENDED BUSINESS PLAN As described in the section, DEVELOPMENT AND MINING, two alternative plans are considered in this report. Plan 1 Work Item 1. Extend Decline to White Caps 565' Level Work Item 2: Rehabilitate and mine old workings in Consolidated Manhattan Mine Work Item 3: Drift and Mine new area near WC49 Work Item 4: Rehabilitate White Caps Shaft Work Item 5: In White Caps Mine, mine 565' Level, 670' Level, 800' Level, 910' Level, 1,120' Level, 1,200' Level and 1,300' Level The major advantage to this plan is that access would be improved considerably to 8 11 the lower levels of the White caps mine, very possibly into high grade ore and also provide access to the high grade ore anticipated as a result of the proposed deep drilling contemplated by the project operator. A cash analysis of this plan was prepared and is shown in Appendix B, Schedule 4A & 4B. The project schedule would involve a period of 24 months and include a capital cost of $1,463,290 and an operating cost of $1,719,699 with production of 7,960 ounces of gold resulting in revenues of $3,088,430. This plan results in a positive cash flow of $92,804. The expenditure of the $1.4 million in capital provides the access required for any deep ore bodies and the gold production offsets a large portion of the capital cost. The cash flow may be improved by encountering lower shaft rehabilitation costs in the White Caps shaft and possibly higher than projected ore grade in the old White Caps workings. Additionally, the possibility exists to increase the total tonnage of ore through the planned sampling program. Plan 2 Work Item 1. Extend Decline to White Caps 565' Level Work Item 2. Rehabilitate and mine old workings in Consolidated Manhattan Mine Work Item 3. Drift and Mine new area near WC49 Work Item 4. In White Caps Mine, mine the 565' Level only Work Item 5. Underground sampling in the 670' through 1,300' Levels The major advantage to this plan is the reduced cash cost and the opportunity to sample underground in the White Caps mine without rehabilitating the White Caps shaft. The disadvantages of this plans are that mining access to the lower portions of the White Cap Mine may not be completed and it is still not known whether access can be obtained to each of the levels below the 565' Level. This plan is a compromise plan that can be modified as the project proceeds. A cash analysis of this plan was prepared and is shown in Appendix B, Schedule 5. The project schedule would involve a period of 12 months and include a capital cost of $605,840 and an operating cost of $1,046,063 and production of 4,568 ounces of gold resulting in revenues of $1,772,539. This plan results in a positive cash flow of $425,326. As exploration continues in the lower White Caps mine, additional ventilation will be required and was included as an allowance in the capital cost. The underground sampling may prove successful to the point that the lower levels can be opened. Further study will be required at that point. The major advantages of this plan are less capital is required, access to the lower levels of the White Caps Mine are at least possibly accessed and positive cash flow is generated. Additionally, the possibility exists to increase the total tonnage of ore through the planned sampling program. A third plan would be to mine only the Consolidated Manhattan Mine and the WC49 Area. A cursory review of Schedule 5, would indicate that the capital costs of this would be approximately $300,000 producing 2,400 ounces of gold with some cash flow generated. Some additional ore may be located under this plan. The fourth plan will be to wait until the on-going drilling is completed and New 9 12 Concept Mining, Inc.'s mill is completed. This alternative is the lower risk but provides nothing to the prospects of Nevada Manhattan. No cash flow is possible for Nevada Manhattan. SUMMARY The mining industry and investment community recognizes that in essentially all start up mining operations, negative cash flow can be expected. Recognizing that the two principal plans presented in this report are subject to the preliminary nature of the financial analyses prepared, both plans do provide positive cash flow. The recommended Plan 2 provides the opportunity to access the White Caps mine, explore for additional ore, generate positive cash flow and with less capital than Plan 1. The value of Nevada Manhattan's 24.5% interest in the Manhattan property as determined in this report, based on the geology, work to date on the mine, ownership and factors related to future mining and revenue was determined to be $3,529,000. No proven and probable ore reserves were calculated but an estimated ore block related to the business plan presented indicated it may be possible to mine and recover as much as 7,960 ounces of gold should Nevada Manhattan proceed with the first business plan developed in this report. Further, some consideration was given to the resource reported by Hughes and Cameron of a total resource in the White Caps of approximately 250,000 ounces of gold. The two principal plans presented, one providing for full production in the Consolidated Manhattan Mine, the Drill Hole WC49 area and all of the lower workings of the White Caps mine and the second being partial mining down to and including the White Caps 565 Level each has advantages and disadvantages. Plan 1 requires a larger capital cost ($1.46 million capital and a $93,000 cash flow from 7,960 ounces of gold) over 24 months. Plan 2 requires less capital with less gold produced ($606,000 of capital and a cash flow of $425,000 with 4,500 ounces of gold) over 12 months. Assuming availability of capital funds, Plan 2 is the recommended plan based on risk. If funding is limited, a modified form of Plan 2 could be adopted by Nevada Manhattan. 10 13 APPENDIX A MAPS (POCKET) I CLAIM AND DRILL HOLE LOCATION MAP II GEOLOGY MAP - WHITE CAPS MINE III UNDERGROUND GEOLOGY AND SAMPLE LOCATION MAP - MANHATTAN CONSOLIDATED MINE IV DECLINE/WC 49 INTERSECTION MAP - MANHATTAN CONSOLIDATED MINE V DECLINE LOCATION MAP VI DECLINE LOCATION MAP - CROSS SECTION VII WHITE CAPS MINE LEVEL MAP - SURFACE, 210' LEVEL, 310' LEVEL, 565' LEVEL, 800' LEVEL, 1,200' LEVEL, 1,300' LEVEL VIII WHITE CAPS MINE LEVEL MAP - GEOLOGIC FEATURES - SURFACE, 310 LEVEL, 565 LEVEL, 800 LEVEL, 900 LEVEL, 1,100 LEVEL, 1,200 LEVEL, 1,300 LEVEL IX MANHATTAN MINE - PROSPECTIVE LEVEL PLAN 11 14 APPENDIX B FINANCIAL INFORMATION SCHEDULE 1 CUBIC FEET OF ESTIMATED ORE BLOCKS SCHEDULE 2 ESTIMATED ORE BLOCKS, TONNAGE AND OUNCES OF GOLD SCHEDULE 3 MINING SCHEDULE - SEQUENCE OF ESTIMATED ORE BLOCKS BY MONTH SCHEDULE 4A CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT - 1ST 12 MONTHS SCHEDULE 4B CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT - 2ND 12 MONTHS SCHEDULE 5 CASH FLOW ANALYSIS - MINE ESTIMATED ORE BLOCKS DOWN TO AND INCLUDING 565 LEVEL 12 15 NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 1 - CUBIC FEET OF ESTIMATED ORE BLOCKS
AREA BLOCK VOLUME TONS CUBIC FT. MANHATTAN CONSOLIDATED MINE 1 SLABBED OUT ADIT/DRIFT 700 FT. X 50 SQ. FT. 35,000 2,835 3 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458 BLOCK TOTAL 53,000 4,293 WC49 - 300 LEVEL 2 8 NEW STOPES 8 X 100 FT. X 6 FT. X 10 FT. 48,000 3,888 WHITE CAPS MINE 565 LEVEL 3 EAST FAULT AREA STOPE 160 FT. X 50 FT. X 10 FT. 80,000 6,480 4 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458 BLOCK TOTAL 98,000 7,938 WHITE CAPS MINE 670 LEVEL 4 EAST FAULT AREA STOPE 100 FT. X 40 FT. X 10 FT. 40,000 3,240 1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486 BLOCK TOTAL 46,000 3,726 WHITE CAPS MINE 800 LEVEL 5 3 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458 WHITE CAPS MINE 910 LEVEL 6 EAST FAULT AREA STOPE 80 FT. X 20 FT. X 10 FT. 16,000 1,296 1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486 BLOCK TOTAL 22,000 1,782 WHITE CAPS MINE 1,120 LEVEL 7 4 NEW STOPES 4 X 100 FT. X 6 FT. X 10 FT. 24,000 1,944 WHITE CAPS MINE 1,200 LEVEL 8 2 NEW STOPES 2 X 100 FT. X 6 FT. X 10 FT. 12,000 972 WHITE CAPS MINE 1,300 LEVEL 9 1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486 TOTAL 327,000 26,487
16 NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 2 - ESTIMATED ORE BLOCKS, TONNAGE AND OUNCES OF GOLD
AREA BLOCK TONS IN PLACE GRADE CUTOFF MINABLE OUNCES % % @ 20% DILUTION MANHATTAN CONSOLIDATED MINE 1 4,293 0.25 0.10 859 WC49 - 300 LEVEL 2 3,888 0.50 0.10 1,555 WHITE CAPS MINE 565 LEVEL 3 7,938 0.50 0.10 3,175 WHITE CAPS MINE 670 LEVEL 4 3,726 0.50 0.10 1,490 WHITE CAPS MINE 800 LEVEL 5 1,458 0.50 0.10 583 WHITE CAPS MINE 910 LEVEL 6 1,782 0.50 0.10 713 WHITE CAPS MINE 1,120 LEVEL 7 1,944 0.50 0.10 778 WHITE CAPS MINE 1,200 LEVEL 8 972 0.50 0.10 389 WHITE CAPS MINE 1,300 LEVEL (1) 9 486 0.75 0.10 292 26,487 9,833
(1) GRADE INCREASE TO 0.75 OPT GOLD BASED ON REPORTED ASSAYS ON THIS LEVEL IN EXCESS OF 2 OPT. 17 NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 3 - MINING SCHEDULE - SEQUENCE OF ESTIMATED ORE BLOCKS BY MONTH
MONTH PRODUCTION CUMLATIVE PRODUCTION BLOCK TONS - START TONS - END TONS TONS 1 800 800 1 4,293 3,493 2 800 1,600 1 3,493 2,693 3 1,600 3,200 1 2,693 1,093 4 1,600 4,800 1 1,093 0 2 3,888 3,381 5 1,600 6,400 2 3,381 1,781 6 1,600 8,000 2 1,781 181 7 1,600 9,600 2 181 0 3 7,938 6,519 8 1,600 11,200 3 6,519 4,919 9 1,600 12,800 3 4,919 3,319 10 1,600 14,400 3 3,319 1,719 11 1,600 16,000 3 1,719 119 12 1,600 17,600 3 119 0 4 3,726 2,245 13 1,600 19,200 4 2,245 645 14 1,600 20,800 4 645 0 5 1,458 503 15 1,600 22,400 5 503 0 6 1,782 685 16 1,600 24,000 6 685 0 7 1,944 1,029 17 1,600 25,600 7 1,029 0 8 972 401 18 887 26,487 8 401 0 9 486 0
NMMI/D 7/12/95 18 NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B
SCHEDULE 4A - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT - lST 12 MONTHS $390/oz Gold MONTH 1 2 3 4 5 6 7 =================================================================================================================================== CAPITAL COSTS Mine Contractor Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/slash corners in Consolidated Manhattan $20,200 Access to 1,300 Level Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 Rehab WC Shaft to 800 Level Rehab WC Shaft to 910 Level Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000 Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000 $44,000 $44,000 $44,000 Other contract work Underground sampling (140 days @$400/d) $4,000 $4,000 $2,000 $2,000 $2,000 $2,000 $2,000 Assays (140 days x 20/d x $15) $3,000 $3,000 $1,500 $1,500 $1,500 $1,500 $1,500 Engineering & Consulting $15,000 Working Capital $50,000 $50,000 $50,000 Contigency @ 10% Excl. Working Capital $12,740 $3,400 $3,550 $3,550 $4,750 $4,750 $4,750 ----------------------------------------------------------------------------- TOTAL CAPITAL REQUIRED $190,140 $87,400 $89,050 $39,050 $52,250 $52,250 $52,250 =================================================================================================================================== PRODUCTION Area/block CM/1 CM/1 CM/1 CM/1 WC49/2 WC49/2 WC49/2 WC49/2 WC565/3 Ore Production-tons/mo 800 800 1,600 1,600 1,600 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.40 0.40 0.40 Ounces of gold mined 160.00 160.00 320.00 480.00 640.00 640.00 640.00 Tons of ore milled 0 0 0 0 400 400 1000 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00 0.20 0.20 0.20 Ounces of gold milled (1) 0.00 0.00 0.00 0.00 80.00 80.00 200.00 Recovery (81%) 0.81 0.81 0.81 0.81 0.81 0.81 0.81 ----------------------------------------------------------------------------- Gold Production - Troy Oz 0 0 0 0 65 65 162 Average Gold Sales Price $/Troy Oz $0 $0 $0 $0 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 $2 $2 ----------------------------------------------------------------------------- NET SMELTER RECEIPTS $0 $0 $0 $0 $25,142 $25,142 $62,856 ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 $0 $0 $0 ----------------------------------------------------------------------------- INCOME AFTER ROYALTY $0 $0 $0 $0 $25,142 $25,142 $62,856 ============================================================================= OPERATING COSTS - $/TON Mining $43 $43 $43 $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 $1 $1 $1 Processing & tailings $0 $0 $0 $0 $20 $20 $15 G & A @ 10% $4 $4 $4 $4 $6 $6 $6 ----------------------------------------------------------------------------- Total Cost $/Ton $48 $48 $48 $48 $70 $70 $65 OPERATING COSTS $36,960 $36,960 $73,920 $73,920 $84,800 $84,800 $93,070 ============================================================================= DEDUCTIBLE EXPENSES Depreciation Base $211,400 $211,400 $211,400 $211,400 $720,900 $720,900 $720,900 *Depreciation $7,558 $7,558 $7,558 $7,558 $8,591 $8,591 $8,591 Deductible Exploration $4,900 $4,900 $2,450 $2,450 $2,450 $2,450 $2,450 Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $525 $525 $525 $525 $525 Local taxes 1% $0 $0 $0 $0 $251 $251 $629 ----------------------------------------------------------------------------- Deductible Expenses Before Depletion $13,508 $13,508 $10,533 $10,533 $11,817 $11,817 $12,194 ============================================================================= Taxable Income Before Depletion ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408) Maximum allowed depletion - 50% rule $0 $0 $0 $0 $0 $0 $0 Depletion at 15% $0 $0 $0 $0 $0 $0 $0 Depletion allowed $0 $0 $0 $0 $0 $0 $0 *Includes all startup costs ============================================================================= TAXES Taxable Income After Depletion ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408) Loss Carried Forward Credit $50,468 $50,468 $84,453 $84,453 $71,475 $71,475 $42,408 Loss Carried Forward Credit Applied $0 $0 $0 $0 $0 $0 $0 Federal Income Tax (2) 0.34 $0 $0 $0 $0 $0 $0 $0 State Income Tax (2) 0.05 $0 $0 $0 $0 $0 $0 $0 ----------------------------------------------------------------------------- Net Income After Tax ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408) Loss Carried Forward $0 $0 $0 $0 $0 $0 $0 Dep., Depl., & Amort. $8,608 $8,608 $8,083 $8,083 $9,116 $9,116 $9,116 Deductible Exploration $4,900 $4,900 $2,450 $2,450 $2,450 $2,450 $2,450 Capital expenditures ($190,140) ($87,400) ($89,050) ($39,050) ($52,250) ($52,250) ($52,250) Reclamation $0 $0 $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 $0 $0 ----------------------------------------------------------------------------- NET CASH FLOW ($227,100) ($124,360) ($162,970) ($112,970) ($112,159) ($112,159) ($83,093) CUMULATIVE CASH FLOW ($227,100) ($351,460) ($514,430) ($627,400) ($739,559) ($851,718) ($934,811) ==================================================================================
12-MONTH MONTH 8 9 10 11 12 TOTAL ========================================================================================================================= CAPITAL COSTS Mine Contractor Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $88,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/slash corners in Consolidated Manhattan $20,200 Access to 1,300 Level Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 $9,000 $10,500 $73,500 Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 $25,000 $25,000 $200,000 Rehab WC Shaft to 800 Level Rehab WC Shaft to 910 Level Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000 $110,000 Subtotal - Mine Contractor $44,400 $44,000 $44,000 $44,000 $45,500 $549,900 Other contract work Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000 $28,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500 $21,000 Engineering & Consulting $15,000 Working Capital $150,000 Contigency @ 10% Excl. Working Capital $4,750 $4,750 $4,750 $4,750 $4,900 $461,390 ------------------------------------------------------------------- TOTAL CAPITAL REQUIRED $52,250 $52,250 $52,250 $52,250 $53,900 $825,290 ========================================================================================================================= PRODUCTION Area/block WC565/3 WC565/3 WC565/3 WC565/3 WC565/3 WC670/4 Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600 17,600 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40 Ounces of gold mined 640.00 640.00 640.00 640.00 640.00 6,240 Tons of ore milled 1600 1600 1600 1600 1600 9,800 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.30 0.30 0.40 0.40 0.40 Ounces of gold milled (1) 480.00 480.00 640.00 640.00 640.00 3,240 Recovery (81%) 0.81 0.81 0.81 0.81 0.81 ------------------------------------------------------------------- Gold Production - Troy Oz 389 389 518 518 518 2,624 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 $2 ------------------------------------------------------------------- NET SMELTER RECEIPTS $150,854 $150,854 $201,139 $201,139 $201,139 $1,018,267 ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 $0 ------------------------------------------------------------------- INCOME AFTER ROYALTY $150,854 $150,854 $201,139 $201,139 $201,139 $1,018,267 =================================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 $1 Processing & tailings $15 $15 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 $6 ------------------------------------------------------------------- Total Cost $/Ton $65 $65 $65 $65 $65 OPERATING COSTS $103,840 $103,840 $104,000 $104,000 $104,000 $1,004,110 =================================================================== DEDUCTIBLE EXPENSES Depreciation Base $720,900 $720,900 $720,900 $720,900 $720,900 *Depreciation $8,591 $8,591 $8,591 $8,591 $8,591 $98,956 Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 $34,300 Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525 $7,350 Local taxes 1% $1,509 $1,509 $2,011 $2,011 $2,011 $10,183 ------------------------------------------------------------------- Deductible Expenses Before Depletion $13,074 $13,074 $13,577 $13,577 $13,577 $150,789 =================================================================== Taxable Income Before Depletion $33,940 $33,940 $83,562 $83,562 $83,562 ($136,631) Maximum allowed depletion - 50% rule $15,970 $16,970 $41,781 $41,781 $41,781 $159,283 Depletion at 15% $22,628 $22,628 $30,171 $30,171 $30,171 $135,769 Depletion allowed $15,970 $16,970 $30,171 $30,171 $30,171 $124,453 *Includes all startup costs =================================================================== TAXES Taxable Income After Depletion $16,970 $16,970 $53,391 $53,391 $53,391 ($261,084) Loss Carried Forward Credit $0 $0 $0 $0 $0 $455,198 Loss Carried Forward Credit Applied ($16,970) ($16,970) ($53,391) ($53,391) ($53,391) ($194,114) Federal Income Tax (2) 0.34 $0 $0 $0 $0 $0 $0 State Income Tax (2) 0.05 $849 $849 $2,670 $2,670 $2,670 $9,706 ------------------------------------------------------------------- Net Income After Tax $16,122 $16,122 $50,722 $50,722 $50,722 ($270,790) Loss Carried Forward $16,970 $16,970 $53,391 $53,391 $53,391 $194,114 Dep., Depl., & Amort. $26,086 $26,086 $39,287 $39,287 $39,287 $230,759 Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 $34,300 Capital expenditures ($52,250) ($52,250) ($52,250) ($52,250) ($53,900) ($825,290) Reclamation $0 $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 $0 ------------------------------------------------------------------- NET CASH FLOW $9,377 $9,377 $93,599 $93,599 $91,949 ($636,907) CUMULATIVE CASH FLOW ($925,433) ($916,056) ($822,456) ($728,857) ($636,907) ======================================================================== Total Net Cash Flow of The Project (24 mo.) $92,804 Net Present Value of The Project @ 15% (24 mo.) ($145,359) Net Present Value of The Project @ 10% (24 mo.) ($78,637)
(1) Milled ounces vary slightly from Schedule 2 due to rounding. (2) Taxes are calculated using existing federal tax credits. Tax credit base is 7% of $9.0 million or $630,000. 19
NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 4B - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT 2ND 12 MONTHS MONTH 13 14 15 !6 - -------------------------------------------------------------------------------------------------------------------- CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan Access to 1,300 Level Rehab WC Shaft to 670 Level Install headframe & hoist at 565 Level Rehab WC Shaft to 800 Level $29,000 $31,000 $31,000 Rehab WC Shaft to 910 Level $25,000 Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 Subtotal - Mine Contractor $39,000 $41,000 $41,000 $35,000 Other contract work Underground sampling (140 days @$400/d) $4,000 $2,000 $2,000 $4,000 Assays (140 days x 20/d x $15) $3,000 $1,500 $1,500 $3,000 ENGINEERING & CONSULTING WORKING CAPITAL CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,600 $4,450 $4,450 $4,200 --------------------------------------------------- TOTAL CAPITAL REQUIRED $50,600 $48,950 $48,950 $46,200 ==================================================================================================================== PRODUCTION Area/block WC670/4 WC670/4 WC800/5 WC910/6 WC800/5 WC910/6 WC1,120/7 Ore Production-tons/mo 1,600 1,600 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 Ounces of gold mined 640.00 640.00 640.00 640.00 Tons of ore milled 1600 1600 1600 1600 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 Ounces of gold milled (1) 640.00 640.00 640.00 640.00 Recovery (81%) 0.81 0.81 0.81 0.81 --------------------------------------------------- Gold Production - Troy Oz. 518 518 518 518 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 --------------------------------------------------- NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 ROYALTY ( % of NSR) 0.00% $0 $0 $0 $0 --------------------------------------------------- INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 =================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 Processing & tailings $15 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 --------------------------------------------------- Total Cost $/Ton $65 $65 $65 $65 OPERATING COSTS $104,000 $104,000 $104,000 $104,000 =================================================== DEDUCTIBLE EXPENSES Depreciation Base $720,900 $720,900 $720,900 $720,900 *Depreciation $8,591 $8,591 $8,591 $8,591 Deductible Exploration $4,900 $2,450 $2,450 $4,900 Amort. Non-deduct. Exp. & Dev. $1,050 $525 $525 $1,050 Local taxes 1% $2,011 $2,011 $2,011 $2,011 --------------------------------------------------- Deductible Expenses Before Depletion $16,552 $13,577 $13,577 $16,552 =================================================== Taxable Income Before Depletion $80,587 $83,562 $83,562 $80,587 Maximum allowed depletion - 50% rule $40,294 $41,781 $41,781 $40,294 Depletion at 15% $30,171 $30,171 $30,171 $30,171 Depletion allowed $30,171 $30,171 $30,171 $30,171 *Includes all mine development costs =================================================== TAXES Taxable Income After Depletion $50,416 $53,391 $53,391 $50,416 Loss Carried Forward Credit $0 $0 $0 $0 Loss Carried Forward Credit Applied ($50,416) ($53,391) ($53,391) ($50,416) Federal Income Tax (2) 0.34 $0 $0 $0 $0 State Income Tax (2) 0.05 $2,521 $2,670 $2,670 $2,521 --------------------------------------------------- Net Income After Tax $47,895 $50,722 $50,722 $47,895 Loss Carried Foreward $50,416 $53,391 $53,391 $50,416 Dep.,Depl.,& Amort. $39,812 $39,287 $39,287 $39,812 Deductible Exploration $4,900 $2,450 $2,450 $4,900 Capital expenditures ($50,600) ($48,950) ($48,950) ($46,200) Reclamation $0 $0 $0 $0 Salvage $0 $0 $0 $0 --------------------------------------------------- NET CASH FLOW $92,423 $96,899 $96,899 $96,823 CUMULATIVE CASH FLOW ($544,484) ($447,585) ($350,685) ($253,862) =============================================================== 17 18 19 20 21 - -------------------------------------------------------------------------------------------------------------------- CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan Access to 1,300 Level Rehab WC Shaft to 670 Level Install headframe & hoist at 565 Level Rehab WC Shaft to 800 Level Rehab WC Shaft to 910 Level $25,000 $27,000 Rehab WC Shaft to 1,300 Level $53,000 $55,000 $55,000 Contractor supervision, overhead & profit $10,000 $10,000 $5,000 $5,000 $5,000 Subtotal - Mine Contractor $35,000 $37,000 $58,000 $60,000 $60,000 Other contract work Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500 ENGINEERING & CONSULTING WORKING CAPITAL CONTIGENCY @ 10% EXCL. WORKING CAPITAL $3,850 $4,050 $6,150 $6,350 $6,350 --------------------------------------------------------------- TOTAL CAPITAL REQUIRED $42,350 $44,550 $67,650 $69,850 $69,850 ==================================================================================================================== PRODUCTION Area/block WC1,120/7 WC1,200/8 WC1,200/8 WC1,300/9 Ore Production-tons/mo 1,600 887 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.44 0.40 0.40 0.40 Ounces of gold mined 640.00 390.28 0.00 0.00 0.00 Tons of ore milled 1600 1600 1600 1600 1600 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40 Ounces of gold milled (1) 640.00 640.00 640.00 640.00 640.00 Recovery (81%) 0.81 0.81 0.81 0.81 0.81 --------------------------------------------------------------- Gold Production - Troy Oz. 518 518 518 518 518 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 --------------------------------------------------------------- NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 $201,139 ROYALTY ( % of NSR) $0 $0 $0 $0 $0 --------------------------------------------------------------- INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 $201,139 =============================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 $1 Processing & tailings $15 $15 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 $6 --------------------------------------------------------------- Total Cost $/Ton $65 $65 $65 $65 $65 OPERATING COSTS $104,000 $70,489 $28,800 $28,800 $28,800 =============================================================== DEDUCTIBLE EXPENSES Depreciation Base $1,095,900 $1,095,900 $1,095,900 $1,095,900 $1,095,900 *Depreciation $19,589 $19,589 $19,589 $19,589 $19,589 Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525 Local taxes $2,011 $2,011 $2,011 $2,011 $2,011 --------------------------------------------------------------- Deductible Expenses Before Depletion $24,576 $24,576 $24,576 $24,576 $24,576 =============================================================== Taxable Income Before Depletion $72,564 $106,075 $147,764 $147,764 $147,764 Maximum allowed depletion - 50% rule $36,282 $53,037 $73,882 $73,882 $73,882 Depletion at 15% $30,171 $30,171 $30,171 $30,171 $30,171 Depletion allowed $30,171 $30,171 $30,171 $30,171 $30,171 *Includes all mine development costs =============================================================== TAXES Taxable Income After Depletion $42,393 $75,904 $117,593 $117,593 $117,593 Loss Carried Forward Credit $0 $0 $0 $0 $0 Loss Carried Forward Credit Applied ($42,393) ($11,077) $0 $0 $0 Federal Income Tax (2) $0 $22,041 $39,982 $39,982 $39,982 State Income Tax (2) $2,120 $3,795 $5,880 $5,880 $5,880 --------------------------------------------------------------- Net Income After Tax $40,273 $50,067 $71,732 $71,732 $71,732 Loss Carried Foreward $42,393 $11,077 $0 $0 $0 Dep.,Depl.,& Amort. $50,285 $50,285 $50,285 $50,285 $50,285 Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 Capital expenditures ($42,350) ($44,550) ($67,650) ($69,850) ($69,850) Reclamation $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 --------------------------------------------------------------- NET CASH FLOW $93,051 $69,330 $56,817 $54,617 $54,617 CUMULATIVE CASH FLOW ($160,811) ($91,482) ($34,665) $19,952 $74,568 =============================================================== 12 MONTH GRAND 22 23 24 TOTAL TOTAL - -------------------------------------------------------------------------------------------------------------------- CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $88,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan $20,200 Access to 1,300 Level Rehab WC Shaft to 670 Level $73,500 Install headframe & hoist at 565 Level $200,000 Rehab WC Shaft to 800 Level $91,000 $91,000 Rehab WC Shaft to 910 Level $77,000 $77,000 Rehab WC Shaft to 1,300 Level $55,000 $55,000 $273,000 $273,000 Contractor supervision, overhead & profit $5,000 $5,000 $5,000 $90,000 $200,000 Subtotal - Mine Contractor $60,000 $60,000 $5,000 $531,000 $1,080,900 Other contract work Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $28,000 $56,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $21,000 $42,000 ENGINEERING & CONSULTING $15,000 WORKING CAPITAL $150,000 CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,350 $6,350 $850 $58,000 $119,390 --------------------------------------------------------------- TOTAL CAPITAL REQUIRED $69,850 $69,850 $9,350 $638,000 $1,463,290 ==================================================================================================================== PRODUCTION Area/block Ore Production-tons/mo 8,887 26,487 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.00 0.00 Ounces of gold mined 0.00 0.00 0.00 3,590 9,830 Tons of ore milled 1600 550 0 16,550 26,350 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.34 0.00 Ounces of gold milled (1) 640.00 187.00 0.00 6,587 9,827 Recovery (81%) 0.81 0.81 0.81 --------------------------------------------------------------- Gold Production - Troy Oz. 518 151 0 5,335 7,960 Average Gold Sales Price $/Troy Oz $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 --------------------------------------------------------------- NET SMELTER RECEIPTS $201,139 $58,770 $0 $2,070,162 $3,088,430 ROYALTY ( % of NSR) $0 $0 $0 $0 $0 --------------------------------------------------------------- INCOME AFTER ROYALTY $201,139 $58,770 $0 $2,070,162 $3,088,430 =============================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 Mine water treatment & pumping $1 $1 $1 Processing & tailings $15 $15 $15 G & A @ 10% $6 $6 $6 --------------------------------------------------------------- Total Cost $/Ton $65 $65 $65 OPERATING COSTS $28,800 $9,900 $0 $715,589 $1,719,699 =============================================================== DEDUCTIBLE EXPENSES Depreciation Base $1,095,900 $1,095,900 $1,095,900 *Depreciation $19,589 $19,589 $19,589 $191,077 $290,033 Deductible Exploration $2,450 $2,450 $2,450 $34,300 $68,600 Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $7,350 $14,700 Local taxes $2,011 $588 $0 $20,702 $30,884 --------------------------------------------------------------- Deductible Expenses Before Depletion $24,576 $23,152 $22,564 $253,428 $404,217 =============================================================== Taxable Income Before Depletion $147,764 $25,718 ($22,564) $1,101,145 $964,514 Maximum allowed depletion = 50% rule $73,882 $12,859 $0 $561,855 $721,138 Depletion at 15% $30,171 $8,816 $0 $310,524 $446,293 $0 $0 Depletion allowed $30,171 $8,816 $0 $310,524 $434,977 *Includes all mine development costs =============================================================== TAXES Taxable Income After Depletion $117,593 $16,903 ($22,564) $790,621 $529,537 Loss Carried Forward Credit $0 $0 $0 $0 $455,198 Loss Carried Forward Credit Applied $0 $0 $0 ($261,085) $455,198 Federal Income Tax (2) $39,982 $5,747 $0 $187,714 $187,714 State Income Tax (2) $5,880 $845 ($1,128) $39,531 $49,237 --------------------------------------------------------------- Net Income After Tax $71,732 $10,311 ($21,436) $563,376 $292,586 Loss Carried Foreward $0 $0 $0 $261,085 $455,198 Dep.,Depl.,& Amort. $50,285 $28,930 $20,114 $508,951 $739,710 Deductible Exploration $2,450 $2,450 $2,450 $34,300 $68,600 Capital expenditures ($69,850) ($69,850) ($9,350) ($638,000) ($1,463,290) Reclamation $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 --------------------------------------------------------------- NET CASH FLOW $54,617 ($28,159) ($8,222) $729,711 $92,804 CUMULATIVE CASH FLOW $129,185 $101,025 $92,804 ===============================================================
(1) Milled ounces vary slighty from Schedule 2 due to rounding. (2) Taxes are calculated using existing federal tax credits. Tax credit base is 7% of $9.0 mllion or $630,000. 20 NEVADA MANHATTAN MINING COMPANY,INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 4D - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT
$390/oz Gold MONTH 1 2 3 4 =================================================================================================================== CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan $20,200 Access to 1,300 Level Rehab WC Shaft to 670 Level Install headframe & hoist at 565 Level Rehab WC Shaft to 800 Level Rehab WC Shaft to 910 Level Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000 Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000 OTHER CONTRACT WORK Underground sampling (140 days @$400/d) $4,000 $4,000 $2,000 $2,000 Assays (140 days x 20/d x $15) $3,000 $3,000 $1,500 $1,500 ENGINEERING & CONSULTING $15,000 WORKING CAPITAL $50,000 $50,000 $50,000 CONTIGENCY @ 10% EXCL. WORKING CAPITAL $12,740 $3,400 $3,550 $3,550 ---------------------------------------------------- TOTAL CAPITAL REQUIRED $190,140 $87,400 $89,050 $39,050 =================================================================================================================== PRODUCTION Area/block CM/1 CM/1 CM/1 CM/1 WC49/2 Ore Production-tons/mo 800 800 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 Ounces of gold mined 160.00 160.00 320.00 480.00 Tons of ore milled 0 0 0 0 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00 Ounces of gold milled (1) 0.00 0.00 0.00 0.00 Recovery (81%) 0.81 0.81 0.81 0.81 ---------------------------------------------------- Gold Production - Troy Oz. 0 0 0 0 Average Gold Sales Price $/Troy Oz $0 $0 $0 $0 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 ---------------------------------------------------- NET SMELTER RECEIPTS $0 $0 $0 $0 ROYALTY ( % of NSR) 0.00% $0 $0 $0 $0 ---------------------------------------------------- INCOME AFTER ROYALTY $0 $0 $0 $0 ==================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 Processing & tailings $0 $0 $0 $0 G & A @ 10% $4 $4 $4 $4 ---------------------------------------------------- Total Cost $/Ton $48 $48 $48 $48 OPERATING COSTS $36,960 $36,960 $73,920 $73,920 ==================================================== DEDUCTIBLE EXPENSES Depreciation base $211,400 $211,400 $211,400 $211,400 *Depreciation $7,558 $7,558 $7,558 $7,558 Deductible Exploration $4,900 $4,900 $2,450 $2,450 Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $525 $525 Local taxes 1% $0 $0 $0 $0 ---------------------------------------------------- Deductible Expenses Before Depletion $13,508 $13,508 $10,533 $10,533 ==================================================== Taxable Income Before Depletion ($50,468) ($50,468) ($84,453) ($84,453) Maximum allowed depletion - 50% rule $0 $0 $0 $0 Depletion at 15% $0 $0 $0 $0 Depletion allowed $0 $0 $0 $0 *Includes all mine development costs ==================================================== TAXES Taxable Income After Depletion ($50,468) ($50,468) ($84,453) ($84,453) Loss Carried Forward Credit $50,468 $50,468 $84,453 $84,453 Loss Carried Forward Credit Applied $0 $0 $0 $0 Federal Income Tax (2) 0.34 $0 $0 $0 $0 State Income Tax (2) 0.05 $0 $0 $0 $0 ---------------------------------------------------- Net Income After Tax ($50,468) ($50,468) ($84,453) ($84,453) Loss Carried Foreward $0 $0 $0 $0 Dep.,Depl.,& Amort. $8,608 $8,608 $8,083 $8,083 Deductible Exploration $4,900 $4,900 $2,450 $2,450 Capital expenditures ($190,140) ($87,400) ($89,050) ($39,050) Reclamation $0 $0 $0 $0 Salvage $0 $0 $0 $0 ---------------------------------------------------- NET CASH FLOW ($227,100) ($124,360) ($162,970) ($112,970) CUMULATIVE CASH FLOW ($227,100) ($351,460) ($514,430) ($627,400) ================================================================= Total Net Cash Flow of The Project $92,804 Net Present Value of the Project @ 15% ($145,359) Net Present Value of the Project @ 10% ($78,637)
5 6 7 8 9 =================================================================================================================== CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan Access to 1,300 Level Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 $9,000 $9,000 Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 $25,000 $25,000 Rehab WC Shaft to 800 Level Rehab WC Shaft to 910 Level Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000 Subtotal - Mine Contractor $44,000 $44,000 $44,000 $44,000 $44,000 OTHER CONTRACT WORK Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500 ENGINEERING & CONSULTING WORKING CAPITAL CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,750 $4,750 $4,750 $4,750 $4,750 ----------------------------------------------------------------- TOTAL CAPITAL REQUIRED $52,250 $52,250 $52,250 $52,250 $52,250 =================================================================================================================== PRODUCTION Area/block WC49/2 WC49/2 WC49/2 WC565/3 WC565/3 WC565/3 Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40 Ounces of gold mined 640.00 640.00 640.00 640.00 640.00 Tons of ore milled 400 400 1000 1600 1600 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.30 Ounces of gold milled (1) 80.00 80.00 200.00 480.00 480.00 Recovery (81%) 0.81 0.81 0.81 0.81 0.81 ----------------------------------------------------------------- Gold Production - Troy Oz. 65 65 162 389 389 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 ----------------------------------------------------------------- NET SMELTER RECEIPTS $25,142 $25,142 $62,856 $150,854 $150,854 ROYALTY ( % of NSR) $0 $0 $0 $0 $0 ----------------------------------------------------------------- INCOME AFTER ROYALTY $25,142 $25,142 $62,856 $150,854 $150,854 ================================================================= OPERATING COSTS - $/TON Mining $43 $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 $1 Processing & tailings $20 $20 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 $6 ----------------------------------------------------------------- Total Cost $/Ton $70 $70 $65 $65 $65 OPERATING COSTS $84,800 $84,800 $93,070 $103,840 $103,840 ================================================================= DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $720,900 $720,900 $720,900 *Depreciation $8,591 $8,591 $8,591 $8,591 $8,591 Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525 Local taxes $251 $251 $629 $1,509 $1,509 ----------------------------------------------------------------- Deductible Expenses Before Depletion $11,817 $11,817 $12,194 $13,074 $13,074 ================================================================= Taxable Income Before Depletion ($71,475) ($71,475) ($42,408) $33,940 $33,940 Maximum allowed depletion - 50% rule $0 $0 $0 $16,970 $16,970 Depletion at 15% $0 $0 $0 $22,628 $22,628 Depletion allowed $0 $0 $0 $16,970 $16,970 *Includes all mine development costs ================================================================= TAXES Taxable Income After Depletion ($71,475) ($71,475) ($42,408) $16,970 $16,970 Loss Carried Forward Credit $71,475 $71,475 $42,408 $0 $0 Loss Carried Forward Credit Applied $0 $0 $0 ($16,970) ($16,970) Federal Income Tax (2) $0 $0 $0 $0 $0 State Income Tax (2) $0 $0 $0 $849 $849 ----------------------------------------------------------------- Net Income After Tax ($71,475) ($71,475) ($42,408) $16,122 $16,122 Loss Carried Foreward $0 $0 $0 $16,970 $16,970 Dep.,Depl.,& Amort. $9,116 $9,116 $9,116 $26,086 $26,086 Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 Capital expenditures ($52,250) ($52,250) ($52,250) ($52,250) ($52,250) Reclamation $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 ----------------------------------------------------------------- NET CASH FLOW ($112,159) ($112,159) ($83,093) $9,377 $9,377 CUMULATIVE CASH FLOW ($739,559) ($851,718) ($934,811) ($925,433) ($916,056) =================================================================
10 11 12 13 14 =================================================================================================================== CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan Access to 1,300 Level Rehab WC Shaft to 670 Level $9,000 $9,000 $10,500 Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 Rehab WC Shaft to 800 Level $29,000 $31,000 Rehab WC Shaft to 910 Level Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000 Subtotal - Mine Contractor $44,000 $44,000 $45,500 $39,000 $41,000 OTHER CONTRACT WORK Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $4,000 $2,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $3,000 $1,500 ENGINEERING & CONSULTING WORKING CAPITAL CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,750 $4,750 $4,900 $4,600 $4,450 ----------------------------------------------------------------- TOTAL CAPITAL REQUIRED $52,250 $52,250 $53,900 $50,600 $48,950 =================================================================================================================== PRODUCTION Area/block WC565/3 WC565/3 WC565/3 WC670/4 WC670/4 WC670/4 WC800/5 Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40 Ounces of gold mined 640.00 640.00 640.00 640.00 640.00 Tons of ore milled 1600 1600 1600 1600 1600 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40 Ounces of gold milled (1) 640.00 640.00 640.00 640.00 640.00 Recovery (81%) 0.81 0.81 0.81 0.81 0.81 ----------------------------------------------------------------- Gold Production - Troy Oz. 518 518 518 518 518 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 ----------------------------------------------------------------- NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 $201,139 ROYALTY ( % of NSR) $0 $0 $0 $0 $0 ----------------------------------------------------------------- INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 $201,139 ================================================================= OPERATING COSTS - $/TON Mining $43 $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 $1 Processing & tailings $15 $15 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 $6 ----------------------------------------------------------------- Total Cost $/Ton $65 $65 $65 $65 $65 OPERATING COSTS $104,000 $104,000 $104,000 $104,000 $104,000 ================================================================= DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $720,900 $720,900 $720,900 *Depreciation $8,591 $8,591 $8,591 $8,591 $8,591 Deductible Exploration $2,450 $2,450 $2,450 $4,900 $2,450 Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $1,050 $525 Local taxes $2,011 $2,011 $2,011 $2,011 $2,011 ----------------------------------------------------------------- Deductible Expenses Before Depletion $13,577 $13,577 $13,577 $16,552 $13,577 ================================================================= Taxable Income Before Depletion $83,562 $83,562 $83,562 $80,587 $83,562 Maximum allowed depletion - 50% rule $41,781 $41,781 $41,781 $40,294 $41,781 Depletion at 15% $30,171 $30,171 $30,171 $30,171 $30,171 Depletion allowed $30,171 $30,171 $30,171 $30,171 $30,171 *Includes all mine development costs ================================================================= TAXES Taxable Income After Depletion $53,391 $53,391 $53,391 $50,416 $53,391 Loss Carried Forward Credit $0 $0 $0 $0 $0 Loss Carried Forward Credit Applied ($53,391) ($53,391) ($53,391) ($50,416) ($53,391) Federal Income Tax (2) $0 $0 $0 $0 $0 State Income Tax (2) $2,670 $2,670 $2,670 $2,521 $2,670 ----------------------------------------------------------------- Net Income After Tax $50,722 $50,722 $50,722 $47,895 $50,722 Loss Carried Foreward $53,391 $53,391 $53,391 $50,416 $53,391 Dep.,Depl.,& Amort. $39,287 $39,287 $39,287 $39,812 $39,287 Deductible Exploration $2,450 $2,450 $2,450 $4,900 $2,450 Capital expenditures ($52,250) ($52,250) ($53,900) ($50,600) ($48,950) Reclamation $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 ----------------------------------------------------------------- NET CASH FLOW $93,599 $93,599 $91,949 $92,423 $96,899 CUMULATIVE CASH FLOW ($822,456) ($728,857) ($636,907) ($544,484) ($447,585) =================================================================
21 NEVADA MANHATTAN MINING COMPANY,INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 4D - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT (Continued)
15 16 17 18 ======================================================================================================= CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan Access to 1,300 Level Rehab WC Shaft to 670 Level Install headframe & hoist at 565 Level Rehab WC Shaft to 800 Level $31,000 Rehab WC Shaft to 910 Level $25,000 $25,000 $27,000 Rehab WC Shaft to 1,300 Level Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 Subtotal - Mine Contractor $41,000 $35,000 $35,000 $37,000 OTHER CONTRACT WORK Underground sampling (140 days @$400/d) $2,000 $4,000 $2,000 $2,000 Assays (140 days x 20/d x $15) $1,500 $3,000 $1,500 $1,500 ENGINEERING & CONSULTING WORKING CAPITAL CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,450 $4,200 $3,850 $4,050 ---------------------------------------------------- TOTAL CAPITAL REQUIRED $48,950 $46,200 $42,350 $44,550 ====================================================================================================== PRODUCTION Area/block WC800/5 WC910/6 WC1,120/7 WC1,200/8 WC910/6 WC1,120/7 WC1,200/8 WC1,300/9 Ore Production-tons/mo 1,600 1,600 1,600 887 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.44 Ounces of gold mined 640.00 640.00 640.00 390.28 Tons of ore milled 1600 1600 1600 1600 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 Ounces of gold milled (1) 640.00 640.00 640.00 640.00 Recovery (81%) 0.81 0.81 0.81 0.81 ---------------------------------------------------- Gold Production - Troy Oz. 518 518 518 518 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 ---------------------------------------------------- NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 ROYALTY ( % of NSR) $0 $0 $0 $0 ---------------------------------------------------- INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 ==================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 Processing & tailings $15 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 ---------------------------------------------------- Total Cost $/Ton $65 $65 $65 $65 OPERATING COSTS $104,000 $104,000 $104,000 $70,489 ==================================================== DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $1,095,900 $1,095,900 *Depreciation $8,591 $8,591 $19,589 $19,589 Deductible Exploration $2,450 $4,900 $2,450 $2,450 Amort. Non-deduct. Exp. & Dev. $525 $1,050 $525 $525 Local taxes $2,011 $2,011 $2,011 $2,011 ---------------------------------------------------- Deductible Expenses Before Depletion $13,577 $16,552 $24,576 $24,576 ==================================================== Taxable Income Before Depletion $83,562 $80,587 $72,564 $106,075 Maximum allowed depletion - 50% rule $41,781 $40,294 $36,282 $53,037 Depletion at 15% $30,171 $30,171 $30,171 $30,171 Depletion allowed $30,171 $30,171 $30,171 $30,171 *Includes all mine development costs ==================================================== TAXES Taxable Income After Depletion $53,391 $50,416 $42,393 $75,904 Loss Carried Forward Credit $0 $0 $0 $0 Loss Carried Forward Credit Applied ($53,391) ($50,416) ($42,393) ($11,077) Federal Income Tax (2) $0 $0 $0 $22,041 State Income Tax (2) $2,670 $2,521 $2,120 $3,795 ---------------------------------------------------- Net Income After Tax $50,722 $47,895 $40,273 $50,067 Loss Carried Foreward $53,391 $50,416 $42,393 $11,077 Dep.,Depl.,& Amort. $39,287 $39,812 $50,285 $50,285 Deductible Exploration $2,450 $4,900 $2,450 $2,450 Capital expenditures ($48,950) ($46,200) ($42,350) ($44,550) Reclamation $0 $0 $0 $0 Salvage $0 $0 $0 $0 ---------------------------------------------------- NET CASH FLOW $96,899 $96,823 $93,051 $69,330 CUMULATIVE CASH FLOW ($350,685) ($253,862) ($160,811) ($91,482) ====================================================
19 20 21 22 ====================================================================================================== CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan Access to 1,300 Level Rehab WC Shaft to 670 Level Install headframe & hoist at 565 Level Rehab WC Shaft to 800 Level Rehab WC Shaft to 910 Level Rehab WC Shaft to 1,300 Level $53,000 $55,000 $55,000 $55,000 Contractor supervision, overhead & profit $5,000 $5,000 $5,000 $5,000 Subtotal - Mine Contractor $58,000 $60,000 $60,000 $60,000 OTHER CONTRACT WORK Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 ENGINEERING & CONSULTING WORKING CAPITAL CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,150 $6,350 $6,350 $6,350 ---------------------------------------------------- TOTAL CAPITAL REQUIRED $67,650 $69,850 $69,850 $69,850 ====================================================================================================== PRODUCTION Area/block Ore Production-tons/mo Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 Ounces of gold mined 0.00 0.00 0.00 0.00 Tons of ore milled 1600 1600 1600 1600 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 Ounces of gold milled (1) 640.00 640.00 640.00 640.00 Recovery (81%) 0.81 0.81 0.81 0.81 ---------------------------------------------------- Gold Production - Troy Oz. 518 518 518 518 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 ---------------------------------------------------- NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 ROYALTY ( % of NSR) $0 $0 $0 $0 ---------------------------------------------------- INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 ==================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 Processing & tailings $15 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 ---------------------------------------------------- Total Cost $/Ton $65 $65 $65 $65 OPERATING COSTS $28,800 $28,800 $28,800 $28,800 ==================================================== DEDUCTIBLE EXPENSES Depreciation base $1,095,900 $1,095,900 $1,095,900 $1,095,900 *Depreciation $19,589 $19,589 $19,589 $19,589 Deductible Exploration $2,450 $2,450 $2,450 $2,450 Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 Local taxes $2,011 $2,011 $2,011 $2,011 ---------------------------------------------------- Deductible Expenses Before Depletion $24,576 $24,576 $24,576 $24,576 ==================================================== Taxable Income Before Depletion $147,764 $147,764 $147,764 $147,764 Maximum allowed depletion - 50% rule $73,882 $73,882 $73,882 $73,882 Depletion at 15% $30,171 $30,171 $30,171 $30,171 Depletion allowed $30,171 $30,171 $30,171 $30,171 *Includes all mine development costs ==================================================== TAXES Taxable Income After Depletion $117,593 $117,593 $117,593 $117,593 Loss Carried Forward Credit $0 $0 $0 $0 Loss Carried Forward Credit Applied $0 $0 $0 $0 Federal Income Tax (2) $39,982 $39,982 $39,982 $39,982 State Income Tax (2) $5,880 $5,880 $5,880 $5,880 ---------------------------------------------------- Net Income After Tax $71,732 $71,732 $71,732 $71,732 Loss Carried Foreward $0 $0 $0 $0 Dep.,Depl.,& Amort. $50,285 $50,285 $50,285 $50,285 Deductible Exploration $2,450 $2,450 $2,450 $2,450 Capital expenditures ($67,650) ($69,850) ($69,850) ($69,850) Reclamation $0 $0 $0 $0 Salvage $0 $0 $0 $0 ---------------------------------------------------- NET CASH FLOW $56,817 $54,617 $54,617 $54,617 CUMULATIVE CASH FLOW ($34,665) $19,952 $74,568 $129,185 ====================================================
23 24 TOTAL ========================================================================================= CAPITAL COSTS MINE CONTRACTOR Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $88,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/ slash corners in Consolidated Manhattan $20,200 Access to 1,300 Level Rehab WC Shaft to 670 Level $73,500 Install headframe & hoist at 565 Level $200,000 Rehab WC Shaft to 800 Level $91,000 Rehab WC Shaft to 910 Level $77,000 Rehab WC Shaft to 1,300 Level $55,000 $273,000 Contractor supervision, overhead & profit $5,000 $5,000 $200,000 Subtotal - Mine Contractor $60,000 $5,000 $1,080,900 OTHER CONTRACT WORK Underground sampling (140 days @$400/d) $2,000 $2,000 $56,000 Assays (140 days x 20/d x $15) $1,500 $1,500 $42,000 ENGINEERING & CONSULTING $15,000 WORKING CAPITAL $150,000 CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,350 $850 $119,390 --------------------------------------- TOTAL CAPITAL REQUIRED $69,850 $9,350 $1,463,290 ========================================================================================= PRODUCTION Area/block Ore Production-tons/mo 26,487 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.00 Ounces of gold mined 0.00 0.00 9,830 Tons of ore milled 550 0 26,350 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.34 0.00 Ounces of gold milled (1) 187.00 0.00 9,827 Recovery (81%) 0.81 0.81 --------------------------------------- Gold Production - Troy Oz. 151 0 7,960 Average Gold Sales Price $/Troy Oz $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 --------------------------------------- NET SMELTER RECEIPTS $58,770 $0 $3,088,430 ROYALTY ( % of NSR) $0 $0 $0 --------------------------------------- INCOME AFTER ROYALTY $58,770 $0 $3,088,430 ======================================= OPERATING COSTS - $/TON Mining $43 $43 Mine water treatment & pumping $1 $1 Processing & tailings $15 $15 G & A @ 10% $6 $6 --------------------------------------- Total Cost $/Ton $65 $65 OPERATING COSTS $9,900 $0 $1,719,699 ======================================= DEDUCTIBLE EXPENSES Depreciation base $1,095,900 $1,095,900 *Depreciation $19,589 $19,589 $290,033 Deductible Exploration $2,450 $2,450 $68,600 Amort. Non-deduct. Exp. & Dev. $525 $525 $14,700 Local taxes $588 $0 $30,884 --------------------------------------- Deductible Expenses Before Depletion $23,152 $22,564 $404,217 ======================================= Taxable Income Before Depletion $25,718 ($22,564) $964,514 Maximum allowed depletion - 50% rule $12,859 $0 $721,138 Depletion at 15% $8,816 $0 $446,293 Depletion allowed $8,816 $0 $434,977 *Includes all mine development costs ======================================= TAXES Taxable Income After Depletion $16,903 ($22,564) $529,537 Loss Carried Forward Credit $0 $0 $455,198 Loss Carried Forward Credit Applied $0 $0 $455,198 Federal Income Tax (2) $5,747 $0 $187,714 State Income Tax (2) $845 ($1,128) $49,237 --------------------------------------- Net Income After Tax $10,311 ($21,436) $292,586 Loss Carried Foreward $0 $0 $455,198 Dep., Depl.,& Amort. $28,930 $20,114 $739,710 Deductible Exploration $2,450 $2,450 $68,600 Capital Expenditures ($69,850) ($9,350) ($1,463,290) Reclamation $0 $0 $0 Salvage $0 $0 $0 --------------------------------------- NET CASH FLOW ($28,159) ($8,222) $92,804 CUMULATIVE CASH FLOW $101,025 $92,804 =======================================
(1) Milled ounces vary slightly from Schedule 2 due to rounding. (2) Taxes are calculated using existing federal tax credits. Tax credit base is 7% of $9.0 million or $630,000. 22
NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 5 - CASH FLOW ANALYSIS - MINE ESTIMATED ORE BLOCKS DOWN TO AND INCLUDING 565 LEVEL $390/oz Gold MONTH 1 2 3 4 =================================================================================================================== CAPITAL COSTS Mine Contractor Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/slash corners in Consolidated Manhattan $20,200 Provide add. ventilation for White Caps levels Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000 Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000 Other contract work Underground sampling (140 days @$400/d) $4,000 $4,000 $4,000 $2,000 Assays (140 days x 20/d x $15) $3,000 $3,000 $3,000 $1,500 Engineering & Consulting $15,000 Working Capital $50,000 $50,000 $50,000 Contigency @ 10% Excl. Working Capital $12,740 $3,400 $3,900 $3,550 ---------------------------------------------------- TOTAL CAPITAL REQUIRED $190,140 $87,400 $92,900 $39,050 =================================================================================================================== PRODUCTION Area/block CM/1 CM/1 CM/1 CM/1 WC49/2 Ore Production-tons/mo 800 800 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 Ounces of gold mined 160.00 160.00 320.00 480.00 Tons of ore milled 0 0 0 0 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00 Ounces of gold milled (1) 0.00 0.00 0.00 0.00 Recovery (81%) 0.81 0.81 0.81 0.81 ---------------------------------------------------- Gold Production - Troy Oz 0 0 0 0 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 ---------------------------------------------------- NET SMELTER RECEIPTS $0 $0 $0 $0 ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 ---------------------------------------------------- INCOME AFTER ROYALTY $0 $0 $0 $0 ==================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 Processing & tailings $0 $0 $0 $0 G & A @ 10% $4 $4 $4 $4 ---------------------------------------------------- Total Cost $/Ton $48 $48 $48 $48 ANNUAL OPERATING COSTS $36,960 $36,960 $73,920 $73,920 ==================================================== DEDUCTIBLE EXPENSES Depreciation Base $211,400 $211,400 $211,400 $211,400 *Depreciation $7,558 $7,558 $7,558 $7,558 Deductible Exploration $4,900 $4,900 $4,900 $2,450 Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $1,050 $525 Local taxes 1% $0 $0 $0 $0 ---------------------------------------------------- Deductible Expenses Before Depletion $13,508 $13,508 $13,508 $10,533 ==================================================== Taxable Income Before Depletion ($50,468) ($50,468) ($87,428) ($84,453) Maximum allowed depletion - percentage $0 $0 $0 $0 Depletion at 15% $0 $0 $0 $0 Depletion allowed $0 $0 $0 $0 *Includes all mine development costs ==================================================== TAXES Taxable Income After Depletion ($50,468) ($50,468) ($87,428) ($84,453) Loss Carried Forward Credit $50,468 $50,468 $87,428 $84,453 Loss Carried Forward Credit Applied $0 $0 $0 $0 Federal Income Tax (2) 0.34 $0 $0 $0 $0 State Income Tax (2) 0.05 $0 $0 $0 $0 ---------------------------------------------------- Net Income After Tax ($50,468) ($50,468) ($87,428) ($84,453) Loss Carried Forward $0 $0 $0 $0 Dep., Depl., & Amort. $8,608 $8,608 $8,608 $8,083 Deductible Exploration $4,900 $4,900 $4,900 $2,450 Capital expenditures ($190,140) ($87,400) ($92,900) ($39,050) Reclamation $0 $0 $0 $0 Salvage $0 $0 $0 $0 ---------------------------------------------------- NET CASH FLOW ($227,100) ($124,360) ($166,820) ($112,970) CUMULATIVE CASH FLOW ($227,100) ($351,460) ($518,280) ($631,250) ================================================================= Total Net Cash Flow of The Project $425,326 Net Present Value of The Project @ 15% $299,526 Net Present Value of The Project @ 10% $339,152
NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 5 - CASH FLOW ANALYSIS - MINE ESTIMATED ORE BLOCKS DOWN TO AND INCLUDING 565 LEVEL 5 6 7 8 9 =================================================================================================================== CAPITAL COSTS Mine Contractor Mobilization/Demobilization Clean-up, resupport Decline Slash entrance to Consolidated Manhattan Drive drift for access to WC49 300 Level (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) (10' x 12" Decline, 400 LF @220/ft) Clean up/slash corners in Consolidated Manhattan Provide add. ventilation for White Caps levels $25,000 Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000 Subtotal - Mine Contractor $35,000 $10,000 $10,000 $10,000 $10,000 Other contract work Underground sampling (140 days @$400/d) $2,000 $6,000 $6,000 $6,000 $6,000 Assays (140 days x 20/d x $15) $1,500 $4,500 $4,500 $4,500 $4,500 Engineering & Consulting Working Capital Contigency @ 10% Excl. Working Capital $3,850 $2,050 $2,050 $2,050 $2,050 ----------------------------------------------------------------- TOTAL CAPITAL REQUIRED $42,350 $22,550 $22,550 $22,550 $22,550 =================================================================================================================== PRODUCTION Area/block WC49/2 WC49/2 WC49/2 WC565/3 WC565/3 WC565/3 Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40 Ounces of gold mined 640.00 640.00 640.00 640.00 640.00 Tons of ore milled 400 400 1000 1600 2400 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.30 Ounces of gold milled (1) 80.00 80.00 200.00 480.00 720.00 Recovery (81%) 0.81 0.81 0.81 0.81 0.81 ----------------------------------------------------------------- Gold Production - Troy Oz 65 65 162 389 583 Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 ----------------------------------------------------------------- NET SMELTER RECEIPTS $25,142 $25,142 $62,856 $150,854 $226,282 ROYALTY (% of NSR) $0 $0 $0 $0 $0 ----------------------------------------------------------------- INCOME AFTER ROYALTY $25,142 $25,142 $62,856 $150,854 $226,282 ================================================================= OPERATING COSTS - $/TON Mining $43 $43 $43 $43 $43 Mine water treatment & pumping $1 $1 $1 $1 $1 Processing & tailings $20 $20 $15 $15 $15 G & A @ 10% $6 $6 $6 $6 $6 ----------------------------------------------------------------- Total Cost $/Ton $70 $70 $65 $65 $65 ANNUAL OPERATING COSTS $84,800 $84,800 $93,070 $103,840 $118,200 ================================================================= DEDUCTIBLE EXPENSES Depreciation Base $316,400 $316,400 $316,400 $316,400 $316,400 *Depreciation $5,656 $5,656 $5,656 $5,656 $5,656 Deductible Exploration $2,450 $7,350 $7,350 $7,350 $7,350 Amort. Non-deduct. Exp. & Dev. $525 $1,575 $1,575 $1,575 $1,575 Local taxes $251 $251 $629 $1,509 $2,263 ----------------------------------------------------------------- Deductible Expenses Before Depletion $8,882 $14,832 $15,209 $16,089 $16,843 ================================================================= Taxable Income Before Depletion ($68,540) ($74,490) ($45,423) $30,925 $91,238 Maximum allowed depletion - percentage $0 $0 $0 $15,463 $45,619 Depletion at 15% $0 $0 $0 $22,628 $33,942 Depletion allowed $0 $0 $0 $15,463 $45,619 *Includes all mine development costs ================================================================= TAXES Taxable Income After Depletion ($68,540) ($74,490) ($45,423) $15,463 $45,619 Loss Carried Forward Credit $68,540 $74,490 $45,324 $0 $0 Loss Carried Forward Credit Applied $0 $0 $0 ($15,463) ($45,619) Federal Income Tax (2) $0 $0 $0 $0 $0 State Income Tax (2) $0 $0 $0 $773 $2,281 ----------------------------------------------------------------- Net Income After Tax ($68,540) ($74,490) ($45,423) $14,689 $43,338 Loss Carried Forward $0 $0 $0 $15,463 $45,619 Dep., Depl., & Amort. $6,181 $7,231 $7,231 $22,693 $52,850 Deductible Exploration $2,450 $7,350 $7,350 $7,350 $7,350 Capital expenditures ($42,350) ($22,550) ($22,550) ($22,550) ($22,550) Reclamation $0 $0 $0 $0 $0 Salvage $0 $0 $0 $0 $0 ----------------------------------------------------------------- NET CASH FLOW ($102,259) ($82,459) ($53,393) $37,645 $126,607 CUMULATIVE CASH FLOW ($733,509) ($815,968) ($869,361) ($831,715) ($705,108) =================================================================
NEVADA MANHATTAN MINING, INC. PROJECT REVIEW & BUSINESS PLAN APPENDIX B SCHEDULE 5 - CASH FLOW ANALYSIS - MINE ESTIMATED ORE BLOCKS DOWN TO AND INCLUDING 565 LEVEL 10 11 12 TOTAL ====================================================================================================== CAPITAL COSTS Mine Contractor Mobilization/Demobilization $30,000 Clean-up, resupport Decline $16,400 Slash entrance to Consolidated Manhattan $2,200 Drive drift for access to WC49 300 Level $9,600 (10' x 10" drift, 60 LF @!60/ft) Drive drift for to White Caps shaft (565 Level) $88,000 (10' x 12" Decline, 400 LF @220/ft) Clean up/slash corners in Consolidated Manhattan $20,200 Provide add. ventilation for White Caps levels $25,000 Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $110,000 Subtotal - Mine Contractor $10,000 $10,000 $10,000 $301,400 Other contract work Underground sampling (140 days @$400/d) $6,000 $6,000 $4,000 $56,000 Assays (140 days x 20/d x $15) $4,500 $4,500 $3,000 $42,000 Engineering & Consulting $15,000 Working Capital $150,000 Contigency @ 10% Excl. Working Capital $2,050 $2,050 $1,700 $41,440 ---------------------------------------------------- TOTAL CAPITAL REQUIRED $22,550 $22,550 $18,700 $605,840 ====================================================================================================== PRODUCTION Area/block WC565/3 WC565/3 WC565/3 Ore Production-tons/mo 1,600 1,600 119 16,119 Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 Ounces of gold mined 640.00 640.00 47.60 5,648 Tons of ore milled 3000 3600 3600 16,000 Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 Ounces of gold milled (1) 1200.00 1440.00 1440.00 5,640 Recovery (81%) 0.81 0.81 0.81 ---------------------------------------------------- Gold Production - Troy Oz 972 1,166 1,166 4,568 Average Gold Sales Price $/Troy Oz $390 $390 $390 Ref. Chgs $/Troy Oz Au $2 $2 $2 ---------------------------------------------------- NET SMELTER RECEIPTS $377,136 $452,563 $452,563 $1,772,539 ROYALTY (% of NSR) $0 $0 $0 $0 ---------------------------------------------------- INCOME AFTER ROYALTY $377,136 $452,563 $452,563 $1,772,539 ==================================================== OPERATING COSTS - $/TON Mining $43 $43 $43 Mine water treatment & pumping $1 $1 $1 Processing & tailings $15 $15 $15 G & A @ 10% $6 $6 $6 ---------------------------------------------------- Total Cost $/Ton $65 $65 $65 ANNUAL OPERATING COSTS $129,200 $140,000 $70,393 $1,046,063 ==================================================== DEDUCTIBLE EXPENSES Depreciation Base $316,400 $316,400 $316,400 *Depreciation $5,656 $5,656 $5,656 $75,475 Deductible Exploration $7,350 $7,350 $4,900 $41,650 Amort. Non-deduct. Exp. & Dev. $1,575 $1,575 $1,050 $8,925 Local taxes $3,771 $4,526 $4,526 $17,725 ---------------------------------------------------- Deductible Expenses Before Depletion $18,352 $19,106 $16,131 $176,501 ==================================================== Taxable Income Before Depletion $229,584 $293,457 $366,039 $549,975 Maximum allowed depletion - percentage $114,792 $146,728 $183,019 $505,622 Depletion at 15% $56,570 $67,884 $67,884 $248,910 Depletion allowed $56,570 $67,884 $67,884 $253,421 *Includes all mine development costs ==================================================== TAXES Taxable Income After Depletion $173,014 $225,572 $298,154 $296,554 Loss Carried Forward Credit $0 $0 $0 $461,169 Loss Carried Forward Credit Applied ($173,014) ($225,572) ($1,501) $461,169 Federal Income Tax (2) $0 $0 $100,862 $100,862 State Income Tax (2) $8,651 $11,279 $14,908 $37,891 ---------------------------------------------------- Net Income After Tax $164,363 $214,294 $182,385 $157,801 Loss Carried Forward $173,014 $225,572 $1,501 $461,169 Dep., Depl., & Amort. $63,801 $75,115 $74,590 $343,596 Deductible Exploration $7,350 $7,350 $4,900 $68,600 Capital expenditures ($22,550) ($22,550) ($18,700) ($605,840) Reclamation $0 $0 $0 $0 Salvage $0 $0 $0 $0 ---------------------------------------------------- NET CASH FLOW $385,978 $499,781 $244,676 $425,326 CUMULATIVE CASH FLOW ($319,131) $180,651 $425,326 ====================================================
(1) Milled ounces vary slightly from Schedule 2 due to rounding. (2) Taxes are calculated using existing federal tax credits. Tax credit base is 7% of $9.0 million or $630,000. 23 APPENDIX C MILL INFORMATION June 21, 1995 letter from Dale Moore to Mr. Wilson regarding the proposed flow sheet for the New Concept Mining, Inc. mill. Undated equipment list for the New Concept Mining, Inc. mill. 13 24 June 21, 1995 Dear Mr. Wilson The Primary Crushing will be done at the mine site with a Portable Crusher, which consists of a 18"x 34" Jaw Crusher and a 24" Roll Crusher. The secondary crushing will be done at the Mill with a 3' short head Crusher. The Grinding Circuit will consist of 2 Ball Mills, one a 7'x9' Marcy for the Primary grind and a 4'x8' Marcy for the Regrind Mill. The underflow from the 8" Cyclones will go to a 2'x4' 2 cell Jig. The overflow will go to a 30' thickner. The Slurry will be thickened to 45 to 50% solids before it is pumped to the leach tanks. The first leach tank will be a Pachuca Tank. The Mids from the Jig will go to the tables (5-5'x7' Diester) product from the tables will go to the refinery. Tails from the leach circuit will go to the Floatation Cells (8 48" Denvers) product from the floats will go to a 12' thickner, then to a 2 Leaf Filter. It is impossible to design a balanced flow sheet when the equipment has not been purchased and the "Wheels" keep changing their minds as to what they want. The equipment list that I am sending to you is a bare minimum that will be needed and what I recommended that be purchased. The Strip Circuit and EW Cells are in storage in Las Vegas. All S.S. Steel and Custom made. I inspected this Circuit on June 16, 1995 and it is in very good condition and it is complete with EW Cells and Rectifiers. The water well will produce 50 gpm Fresh water usage in the Mill, will be approx. 20 gpm. The information that I am sending you is not exactly what you requested, but it is all that I have at this time and I hope it will be of some use to you. Sincerely, /s/ DALE MOORE ------------------------------------ Dale Moore 25 EQUIPMENT 1. PORTABLE CRUSHING PLANT (AT THE MINE SITE) 18" X 34" JAW CRUSHER 24" ROLL CRUSHER CONVEYORS (MILL SITE) 1. 3 FOOT SHORT HEAD KUE-KEN 100 H.P. 2. 100 TON FINE ORE STORAGE BIN 3. 18" X 6' BELT FEEDER 4. 24" X 34' FINE ORE CONVEYOR 5. BELT SCALES 6. 7' X 9' MARCY BALL MILL (INSTALLED IN MILL) ALREADY 7. 4" X 3" SLURRY PUMP & SUMP BOX 8. 4-8" CYCLONES & BOXES 9. 2' X 4' DECO JIG 10. 2" X 3" SLURRY PUMP 11. 30' THICKNER TANK 12. 6" O.D.s PUMP 13. 4- 12' X 18' LEACH TANKS WITH ADAPTER MECH ALREADY INSTALLED 14. 4' X 8' MARCY REGRIND MILL W/100 H.P. MOTOR & GEAR BOX 15. 5- 5' X 7' DIESTER TABLES 16. 2 X 3 SLURRY PUMP 17. AIR COMPRESSOR 18. NACN MIXING TANK (12,000 GAL) 19. LIME MIXING TANK (3,000 GAL) 20. LIME SLAKING MILL (2' X 2' BALL MILL) ? 21. NACN PUMP (POSITIVE DISPLACENT) 1" X 1 1/2" 22. REFINERY FURNACE (125 CRUCIBLE) 23. 2- RECTIFIERS (50 AMP) 110-220 24. STRIPPING PLANT SS STEEL, STRIP TANK, EW CELL CUSTOM MADE IN LAS VEGAS (USED) AVAILABLE 25. PUMPS FOR STRIPPING PLANT 1.5" X 1" SOLUTION PUMP 1" X 1" SOLUTION PUMP FEED TO E.W. CELLS 26. SECURITY SYSTEM FOR REFINERY 27. MISC. PIPING & PUMPS 28. PULP DENSITY SCALES 29. 25' CLARIFIER FOR ATG WASTE WATER TREATMENT SYSTEM 30. A.T.G. WASTE WATER SYSTEM 31. 3" GALIGER SUMP PUMP 32. 12 DENVER FLOAT CELLS (48") 33. 15' THICKNER TANK W/MECH 34. 2' LEAF FILTER W/BLOWER 26 LAB EQUIPMENT 1. RO-TAP AND SCREENS 2. CHIPMUNK LAB CRUSHER 3" X 6" 3. ROLL CRUSHER (6" X 8") 4. PULVERIZER 5. METTLER BALANCE 6. CAHN MICRO-BALANCE 7. HOT PLATES 8. LAB TABLES 9. VENT HOODS 10. CUPPLING FURNACE 11. CRUCIBLE FURNACE 12. MISC GLASS WARE -----END PRIVACY-ENHANCED MESSAGE-----