-----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, Sf55fjhQAYFdV71SpLwXUovMcWUeCcxTIUdUCoG3CjoVgxYbwVjEMv0m0Es1K4oM VrYdE3VfGXd64pXmF52Dng== 0000908177-03-000005.txt : 20030616 0000908177-03-000005.hdr.sgml : 20030616 20030616135558 ACCESSION NUMBER: 0000908177-03-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STAR RESOURCES CORP CENTRAL INDEX KEY: 0000908177 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 760195574 FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21968 FILM NUMBER: 03745175 BUSINESS ADDRESS: STREET 1: 2000 S DAIRY ASHFORD STREET 2: STE 510 CITY: HOUSTON STATE: TX ZIP: 77077 BUSINESS PHONE: 2818709882 MAIL ADDRESS: STREET 1: 2000 S DAIRY ASHFORD STREET 2: STE 510 CITY: HOUSTON STATE: TX ZIP: 77077 FORMER COMPANY: FORMER CONFORMED NAME: TEXAS STAR RESOURCES CORP DATE OF NAME CHANGE: 19930624 10-Q 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 0-21968 STAR RESOURCES CORP. (Exact Name of Registrant as Specified in Its Charter) BRITISH COLUMBIA 76-0195574 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 2000 South Dairy Ashford, Suite 510 Houston, Texas 77077 (Address of Principal Executive Offices, including Zip Code) (281) 870-9882 (Registrant's Telephone Number, Including Area Code) The registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___________ Shares of Registrant's Common Stock outstanding as of June 9, 2003: 18,471,459
STAR RESOURCES CORP. FORM 10-Q TABLE OF CONTENTS PAGE PART I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - January 31, 2002 and April 30, 2003 (Unaudited) . . . . . . . . . . . . . . . . . . . . 1 Interim Consolidated Statements of Operations and Deficit Accumulated During the Exploration Stage - Three Months Ended April 30, 2003 and 2002 (Unaudited). . . . . . . . . . . . . . . . . . 2 Interim Consolidated Statements of Cash Flows - Three Months Ended April 30, 2003 and 2002 (Unaudited). . . . . . . . . . . . . . . 3 Notes to Interim Consolidated Financial Statements (Unaudited) - April 30, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. . . . . . . . . . . . . . . . . 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk. . . 11 Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . . 12 PART II. Other Information. Item 1. Legal Proceedings.. . . . . . . . . . . . . . . . . . . . . . . 12 Item 2. Changes in Securities and Use of Proceeds . . . . . . . . . . . 12 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . 12 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 12 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . 12 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 12 SIGNATURES 13
STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) CONSOLIDATED BALANCE SHEETS (UNAUDITED) April 30, 2003 January 31, 2003 ---------------- ------------------ (In Canadian Dollars) ASSETS Current assets: Cash $ 368,343 $ 22,734 Accounts receivable 14,702 38,962 ---------------- ------------------ Total current assets 383,045 61,696 Plant and equipment, at cost: Diamond sorting and recovery plant - 1,905,873 Equipment and other 70,818 101,853 Accumulated depreciation (52,470) (1,982,185) ---------------- ------------------ 18,348 25,541 Other assets 8,458 9,018 ---------------- ------------------ Total assets $ 409,851 $ 96,255 ================ ================== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued liabilities $ 165,789 $ 124,680 Debentures payable (Note 3) 1,278,595 - Interest payable (Note 3) 280,992 - ---------------- ------------------ Total current liabilities 1,725,376 124,680 Debentures payable (Note 3) - 1,278,595 Interest payable (Note 3) - 250,114 Commitments and contingencies (Note 6) Shareholders' deficit: Common share capital, no par value: Authorized shares - 100,000,000 Issued and outstanding shares - 18,471,459 (14,862,935 at January 31, 2002) (Note 5) 30,878,419 30,878,419 Deficit accumulated during the exploration stage (32,193,944) (32,435,553) ---------------- ------------------ Total shareholders' deficit (1,315,525) (1,557,134) ---------------- ------------------ Total liabilities and shareholders' deficit $ 409,851 $ 96,255 ================ ================== See accompanying notes.
1
STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE (UNAUDITED) Three Months Ended April 30, 2003 2002 (In Canadian Dollars) Revenues: Interest income $ 578 $ 412 Gains on sales of plant and equipment (Note 2) 446,647 - ------------- ------------- 447,225 412 Expenses: General and administrative (Note 7) 155,686 225,110 Finance charges 10,651 8,274 Interest expense 30,878 31,177 Translation losses 8,401 2,680 ------------- ------------- 205,616 267,241 ------------- ------------- Income (loss) before provision for income taxes 241,609 (266,829) Provision for income taxes - - ------------- ------------- Net income (loss) 241,609 (266,829) Deficit accumulated during the exploration stage at the beginning of the period (32,435,553) (28,125,418) ------------- ------------- Deficit accumulated during the exploration stage at the end of the period $(32,193,944) $(28,392,247) ============= ============= Net income (loss) per common share - basic and diluted $ 0.01 $ (0.02) Weighted-average common shares outstanding 18,471,459 14,953,876 ============= ============= See accompanying notes.
2
STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended April 30, 2003 2002 (In Canadian Dollars) OPERATING ACTIVITIES Net income (loss) $ 241,609 $ (266,829) Items not affecting cash: Depreciation 4,111 7,362 Interest expense 30,878 31,177 Reserve for leasehold reclamation costs (Note 2) 73,365 - Other 1,957 3,037 ----------- ------------ 351,920 (225,253) ----------- ------------ Changes in noncash working capital: Accounts receivable 24,260 (38,304) Accounts payable and accrued liabilities (30,571) 48,657 ----------- ------------ (6,311) 10,353 ----------- ------------ Net cash provided by (used) in operating activities 345,609 (214,900) INVESTING ACTIVITIES Property acquisition and exploration - (25,391) ----------- ------------ Net cash used in investing activities - (25,391) ----------- ------------ Increase (decrease) in cash and temporary cash investments 345,609 (240,291) Cash and temporary cash investments, beginning of period 22,734 493,305 ----------- ------------ Cash and temporary cash investments, end of period $ 368,343 $ 253,014 =========== ============ See accompanying notes.
3 STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2003 1. BASIS OF OPERATIONS The accompanying interim unaudited consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The consolidated financial statements are presented in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by Canadian and United States generally accepted accounting principles for complete financial statements. In the opinion of management all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month periods ended April 30, 2003 and 2002 are not necessarily indicative of the results that may be expected for the year ended January 31, 2004. SIGNIFICANT ESTIMATES The nature of the Company's operations result in significant expenditures for the acquisition and exploration of properties. None of the Company's properties have been proven to have economically recoverable reserves or proven reserves at the current stage of exploration. As discussed in Note 2, during the fourth quarter of fiscal 2003 the Company wrote off all costs capitalized as mineral properties and deferred expenditures based upon exploration results. Direct acquisitions, evaluation and exploration expenditures are capitalized, reduced by sundry income, to be amortized over the recoverable mineral reserves if a property becomes commercially developed. When an area is disproved or abandoned, the acquisition costs and related deferred expenditures are written off. Management's assessment of the net realizable value of mineral properties and deferred expenditures requires considerable judgment and estimates which could change significantly in the near term. All amounts are in Canadian dollars unless noted otherwise. For further information, refer to the consolidated financial statements and footnotes thereto. 2. MINERAL PROPERTIES AND DEFERRED EXPENDITURES ARKANSAS PROPERTIES Black Lick and Twin Knobs II Properties On February 5, 1999, the Company entered into an agreement with Potlatch Corporation to purchase the surface rights to approximately 480 acres in Pike County, Arkansas located adjacent to the Company's American Mine Property for a total of approximately $313,000 (U.S.). In December 1999, the Company entered into an agreement with a third party lessor to lease the undersurface rights below the 480 acres described above. The consideration paid for the lease was $50,000 (U.S.), 500,000 shares of the Company and the transfer to the lessor of the surface rights which the Company purchased from Potlatch Corporation as described above. The lease grants the rights to explore, develop and extract diamond bearing material lying below overburden and the upper 50 feet of diamond bearing material on those areas for which the surface rights have been acquired and transferred to the lessor. The primary term of the lease is five years plus two-year extensions and will continue so long as there is commercial production. Royalties include 2% of gross sales subject to a minimum of $48,000 (U.S.) per year after the first seven years. The Company has the right to use the surface for plant and other facilities for additional royalties. 4 STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2003 2. MINERAL PROPERTIES AND DEFERRED EXPENDITURES (CONTINUED) During fiscal 2001 through fiscal 2003, the Company conducted an exploration program to assess these prospects as well as the American Mine and Kimberlite Properties discussed below. Core samples totaling 14,374 feet were taken from 40 drilling locations on the Black Lick Property. Definition drilling commenced on the Twin Knobs II Property in the third fiscal quarter of 2001, and core samples totaling 1,211 feet were taken from five drilling locations. An analysis of a total of 238kg of lamproite from three different core samples from the American Mine Property and the Black Lick Property was performed and produced 14 microdiamonds and one macrodiamond. In July 2001 the Company excavated a bulk sample of approximately 10,000 tons on the Black Lick Property, and approximately 2,000 tons of the bulk sample was processed through the Company's diamond sampling plant. Three diamonds with a total carat weight of 0.38 were recovered, which was significantly less than the Company had anticipated. During fiscal 2003, the Company recovered several microdiamonds from drill core from the Black Lick and American Mine Properties, which were processed at the Diamond Recovery Plant. In May 2002 the Company drilled a total of 11 auger holes, each five feet in diameter, on the American Mine, Black Lick and Kimberlite Properties. Most of drilling was not successful as the holes were terminated short of their target depths by hard sandstone blocks, which could not be penetrated by the auger. In the third quarter of fiscal 2003 the Company completed eleven wide diameter holes on the American Mine and Black Lick Properties and bulk sampled approximately 900 tons of material. Bulk sampling revealed no macrodiamonds. In December 2002, based upon the cumulative exploration results obtained on the Arkansas Properties, the Company made the decision to cease exploration efforts in Arkansas. Accordingly, the capitalized costs related to the Black Lick and Twin Knobs II properties totaling $2,512,500 were written off in the third quarter of fiscal 2003. American Mine Property Pursuant to an agreement dated November 4, 1992, Diamond Exploration, Inc. ("DEI"), a wholly owned subsidiary of the Company, was granted a permit to explore a mineral property located in Pike County, Arkansas. The Company's Diamond Recovery Plant ("the Plant") is located on this leased property. In November 1996, the Company exercised its option to lease the property for 10 years upon the payment of $125,000 (U.S.). Yearly payments of $25,000 (U.S.) were required for each of the four years after the first year and $40,000 (U.S.) per year for the following five years, plus an additional $7,500 per year for surface rentals related to the Plant. Sampling was performed on the American Mine property in the first quarter of fiscal 1998. The Company excavated a 100-ton sample during fiscal 1998, and a total of 51 diamonds with a total carat weight of 9.591 were recovered, including two stones greater than one carat. During fiscal 2003 sampling was conducted on this property in conjunction with the sampling performed on the Black Lick Property as discussed above. The lease payment of $47,500(U.S.), due November 1, 2002, was not made by the Company. Due to the lease expiration and the exploration results discussed above, the capitalized costs related to the American Mine Property totaling $450,823 were written off in the third quarter of fiscal 2003. In March 2003 the Company sold the Plant to a third party for $350,000 (U.S.). In conjunction with the sale, the third party paid the lessor of the American Mine Property $47,500 (U.S.) on behalf of the Company in order to extend the Company's lease on the property through October 31, 2003. The Company recorded a reserve for leasehold reclamation costs of approximately $70,000, representing the estimated costs of the Company's obligations to restore the Arkansas properties to their original condition prior to lease expiration and to perform reclamation activities as required by Arkansas regulatory authorities. Kimberlite Mine Property In November 1998, the Company executed a lease on certain property in Pike County, Arkansas with a two-year term ending November 14, 2000 by payment of 5 STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2003 2. MINERAL PROPERTIES AND DEFERRED EXPENDITURES (CONTINUED) $15,000 (U.S.). The Company extended the lease to November 14, 2002 by payment of an additional $15,000 (U.S.) in November 2000. The Company allowed this lease to expire in November 2002, and the capitalized costs totaling $84,034 were written off in the third fiscal quarter of 2003. Southwest Properties In June 1994, the Company acquired from an unrelated company its rights under fifteen mineral leases located in the southwestern region of Arkansas covering approximately 2,000 acres. The original dates of the leases were from May 1992 to August 1992, with terms from 10 to 20 years. In fiscal 2002 and fiscal 2003 the Company elected not to renew selected leases, and, accordingly, write-downs representing all prior acquisition costs totaling $86,067 and $59,020, respectively, were recorded. The capitalized costs related to the remaining active leases totaling $35,349 were written off in the third quarter of fiscal 2003 based upon the Company's decision to cease exploration efforts in Arkansas as discussed above. 3. DEBENTURES In February 2002, the Company completed the issuance of $1,278,595 principal amount of 10% secured convertible debentures ("the Debentures"). The Debentures were convertible into 445,503 units at the rate of one unit for each $2.87 principal amount of Debenture until February 16, 2003. Each unit would consist of one common share of the Company and one share purchase warrant with an exercise price of $3.15, exercisable through August 16, 2003. The conversion and share purchase warrant prices above were adjusted to reflect the Company's seven for one share consolidation in November 2001. On February 11, 2003, the holders of the Debentures approved the amendment of the conversion price of the units to $0.30 and the extension of the maturity date of the Debentures to February 16, 2004. As amended, each of the 4,261,983 units would consist of one common share of the Company and one share purchase warrant with an exercise price of $0.30, exercisable through February 16, 2004. Upon conversion, $97,000 principal amount of 10% Debentures held by a director will be convertible only into common shares of the Company on the basis on one share for each $0.30 principal amount. Additionally, the terms of the Debenture were amended to include a mandatory conversion provision which will require conversion of all Debentures and exercise of all related warrants within 30 days after the closing price of the Company's common shares has exceeded $0.375 for ten consecutive trading days. Interest at the rate of 10% is payable on conversion or maturity in cash, or at the election of the Company, in common shares valued at the weighted average trading price of the common shares of the Company for the ten trading days preceding the interest payment date. The Debentures are secured by a general security interest in the Company's current and future assets and by the stock of Star U.S., Inc. ("Star"), a wholly owned subsidiary of the Company, and a wholly-owned subsidiary of Star. In the second quarter of fiscal 2004, several holders of the Debentures elected to convert a total of $197,000 principal amount and received 656,666 common shares and 656,666 share purchase warrants with exercise prices of $0.30. Additionally, during the second quarter of fiscal 2004, a total of approximately $43,000 of interest accrued on the principal amounts converted was paid via the issuance of a total of 239,781 shares, representing the conversion of the interest amounts at weighted average prices from $0.17 to $0.21 per share. 4. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") The consolidated financial statements have been prepared in accordance with Canadian GAAP which differs in some respects from United States GAAP. The material differences in respect to these financial statements between Canadian and United States GAAP, and their effect on the Company's financial statements, are summarized below. 6 STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2003 4. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (Continued) Mineral Properties and Deferred Expenditures Under United States GAAP, the preferred method for accounting for evaluation and exploration costs on properties without proven and probable reserves is to expense all costs incurred, other than acquisition costs, prior to the establishment of proven and probable reserves. The effect of the application of this method to the financial statements would be to increase net loss by $25,000 for the three months ended April 30, 2002. Foreign Currency Translation Under United States GAAP, shareholders' equity would reflect a foreign currency translation gain of approximately $144,000 at January 31, 2003 and a foreign currency translation loss of $7,000 at April 30, 2003. 5. SHARE CAPITAL On January 29, 2002 the Company completed a private placement of 5,691,376 units at a price of $0.20 per unit, each unit to consist of one common share and one share purchase warrant with an exercise price of $0.25 per unit. The share purchase warrants had an expiration date of January 29, 2003, which was extended during fiscal 2003 to January 29, 2004. The Company received a total of $1,138,275 during the third and fourth quarters of fiscal 2002 representing subscriptions for the private placement. Included in that amount was a total of $188,325 representing subscriptions for 941,625 units by three of the Company's directors. In March 2002 the Company issued a total of 218,750 common shares to three creditors to settle debts totaling $52,500. On September 18, 2002, the Company completed a private placement of 2,819,774 units at a price of $0.20 per unit, each unit consisting of one common share and one share purchase warrant with an exercise price of $0.25 per unit. The share purchase warrants have an expiration date of September 18, 2004. The Company received a total of $563,955 during fiscal 2003 representing subscriptions for the private placement. Included in that amount was a total of $85,240 representing subscriptions for 426,200 units by three of the Company's directors. In March 2003 the Company issued 1,000,000 common share options with a five-year term and an exercise price of $0.10 to an officer. As of April 30, 2003, the Company has a total of 2,946,429 common share options outstanding at prices ranging from $0.10 to $0.28. 6. COMMITMENTS AND CONTINGENCIES Except as described below, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject. On May 15, 1998, a legal action styled James Cairns and Stewart Jackson vs. ------------------------------------ Texas Star Resources Corporation d/b/a Diamond Star, Inc. was filed in the 215th ----------------------------------------------------- Judicial District Court of Harris County, Texas, Cause No. 9822760 wherein the Plaintiffs allege, among other things, that the Company breached contractual agreements and committed fraud by not timely releasing or causing to be released from an escrow account required by Canadian law certain shares of the Company to which Plaintiffs allege that they were entitled to receive in calendar 1995 and, as a result of the Company's alleged actions with respect to the release of such shares, the Plaintiffs sought monetary damages for losses in share value, attorney's fees, court costs, expenses, interest and exemplary damages. In 1999, the litigation against the Company in Houston, Harris County, Texas, was dismissed by the court with prejudice, leaving only the claims of James M. Cairns, Jr. pending in British Columbia which is generally described below. The legal action in Texas is similar to one filed against the Company in the Supreme Court of British Columbia, Canada, in August 1996 styled Cause No. 7 STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2003 6. COMMITMENTS AND CONTINGENCIES (continued) C96493; James M. Cairns, Jr. vs. Texas Star Resources Corporation. In January ---------------------------------------------------------- 1993, the Plaintiffs were issued common stock of the Company in escrow which shares were to be released based on exploration expenditures by the Company on certain of its properties in Arkansas. The escrow requirements were imposed by the Vancouver Stock Exchange. Plaintiffs requested that all of the shares be released in 1995. At that time the Company believed that the release of said shares when requested by the Plaintiffs was inappropriate due to legal requirements and regulatory concerns. The shares were subsequently released to the Plaintiffs. The Company intends to vigorously defend the allegations of the Plaintiffs in the pending litigation in British Columbia and in Texas (if the case is appealed or refiled) and believes it has meritorious defenses to such claims. No procedings in the action in British Columbia have been taken by the Plaintiff since March 30, 2000. However, the Company cannot provide any assurances that it will be successful, in whole or in part, with respect to its defense of the claims of the Plaintiffs. If the Company is not successful, any judgement obtained by Plaintiffs could have a material and adverse effect on its financial condition. 7. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses consisted of the following:
Three Months Ended April 30 --------------------------------- 2003 2002 --------------------------------- Consulting fees $ 2,415 $ 29,090 Depreciation expense 4,111 7,362 Entertainment 3,703 8,368 Insurance - 873 Office expenses 7,770 17,957 Professional fees 20,253 17,869 Rent 7,633 8,369 Repairs and maintenance 4,501 21,693 Salary 88,257 99,337 Shareholder relations 831 5,078 Travel 9,460 4,433 Utilities 6,752 4,681 ------------ ------------ Total $ 155,686 $ 225,110 ============ ============
8. SUBSEQUENT EVENT In May 2003 the Company entered into a letter of intent to acquire an option to purchase 4000 hectares of mineral exploration licenses in Brazil known as the Tocantinzinho Garimpo. The property is located in the Tapajos Gold District in the State of Para, Brazil. Subject to the completion of due diligence, the 8 STAR RESOURCES CORP. (AN EXPLORATION STAGE ENTERPRISE) NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2003 8. SUBSEQUENT EVENT (CONTINUED) preparation of a technical report, the execution of a formal agreement and approval of the TSX Venture Exchange, the Company will have an option to acquire a 100% interest in the Tocantinzinho Property for a four year period in consideration for aggregate payments totaling US$360,000 and aggregate issuances of a total of 2,400,000 shares of the Company, both to be distributed over four years. Additionally, the Company committed to expend at least US$1,000,000 on exploration, of which US$300,000 shall be expended prior to the first anniversary of the closing date of the formal agreement. The payments totaling US$360,000 discussed above will be included as exploration expenditures in meeting the exploration expenditure commitment of US$1,000,000 above. The optionors will be entitled to a sliding scale net smelter return royalty ranging from 2.5% to 3.5% which is tied to market gold prices. Royalties will be reduced by the amount of any royalties payable to underlying owners and the Government of Brazil. (This portion of the page is intentionally left blank.) 9 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Form 10-Q under "Part I - Item 1. Financial Information," "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," "Part II - Item 1. Legal Proceedings" and elsewhere constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; competition; success of operating initiatives; the success (or lack thereof) with respect to the Company's exploration and development operations on its properties; the Company's ability to raise capital and the terms thereof; the acquisition of additional mineral properties; changes in business strategy or development plans; exploration and other property writedowns; the continuity, experience and quality of the Company's management; changes in or failure to comply with government regulations or the lack of government authorization to continue certain projects; the outcome of litigation matters, and other factors referenced from time to time in the Company's filings with the Securities and Exchange Commission. The use in this Form 10-Q of such words as "believes", "plans", "anticipates", "expects", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. The success of the Company is dependent on the efforts of the Company, its employees and many other factors including, primarily, its ability to raise additional capital and establishing the economic viability of any of its exploration properties. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ----------------------------------------------------------------- RESULTS OF OPERATIONS ----------------------- Results of Operations - For the Three Month Periods Ended April 30, 2003 and 2002 All dollar amounts referred to herein are in Canadian Dollars unless otherwise stated. As of June 10, 2003, the exchange rate is $1.00 (Canadian) = $0.7327 (U.S.) The Company is in the exploration stage and has no revenues from operations other than rental income related to the Diamond Recovery Plant ("the Plant") totaling approximately $1,079,000 from inception and gains on sales of the Plant and equipment. None of its Properties have proven to be commercially developable to date and as a result the Company has not generated any revenue from these activities. The Company's existing properties are diamond prospects in Arkansas. As discussed in Note 2, the Company does not intend to continue exploration activities on the Arkansas Properties. The Company capitalizes expenditures associated with the direct acquisition, evaluation and exploration of mineral properties. When an area is disproved or abandoned, the acquisition costs and related deferred expenditures are written-off. The net capitalized cost of each mineral property is periodically compared to management's estimation of the net realizable value and a write-down is recorded if the net realizable value is less than the cumulative net capitalized costs. During fiscal 2003 the Company decided to cease exploration activities in Arkansas due to disappointing exploration results, and the total of $3,141,726 of accumulated capitalized costs related to the Arkansas leases were written off. The Company's revenues during the quarter ended April 30, 2003 are primarily comprised of the gain from the sale of the diamond sorting and recovery plant ("the Plant"). The Plant was sold to a third party for US$350,000 and was fully depreciated at disposal. As discussed in Note 2, the Plant is located on the American Mine Property. The Company recorded a reserve for leasehold reclamation of approximately US$50,000, which represents the estimated costs to return the leased property to its original condition and to complete environmental reclamation as required by the Arkansas regulatory authorities. During the quarter ended April 30, 2002 the Company's revenues were comprised entirely of interest income. The Company has not received any revenues from mining operations from inception. General and administrative expenses during the first quarter decreased by approximately $69,000, or 31%, from fiscal 2003 to fiscal 2004. The reduction 10 is due to the curtailment of exploration activities in Arkansas, which was effective in the fourth quarter of fiscal 2003. During the first quarter of 2004 the Company hired a new president and commenced the evaluation of several mineral prospects, principally gold prospects. These efforts resulted in the signing of a letter of intent to acquire an option to purchase 4000 hectares of mineral exploration licenses in Brazil known as the Tocantinzinho Garimpo. The Company anticipates that general and administrative expenses during fiscal 2004 will increase from the level experienced in the first quarter of fiscal 2004 as the Company incurs consulting and exploration expenditures related to the above prospect. FINANCIAL CONDITION; LIQUIDITY AND CAPITAL RESOURCES. As of April 30, 2003 and January 31, 2003, the Company had working capital deficits of $1,342,331 and $62,984, respectively. The increase in the working capital deficit from January 31, 2003 to April 30, 2003 is primarily due to the classification of the Debentures and related interest (totaling $1,599,587 and $1,528,709, respectively) as current at April 30, 2003 and long-term at January 31, 2003. At April 30, 2003, the Company had current assets of $383,045, including $368,343 in cash and $14,702 in accounts receivable compared to total current liabilities of $1,725,376. On February 11, 2003, the holders of the Debentures approved the amendment of the conversion price of the units to $0.30 and the extension of the maturity date of the Debentures to February 16, 2004. As amended, each of the 4,261,983 units would consist of one common share of the Company and one share purchase warrant with an exercise price of $0.30, exercisable through February 16, 2004. Upon conversion, $97,000 principal amount of 10% Debentures held by a director will be convertible only into common shares of the Company on the basis on one share for each $0.30 principal amount. Additionally, the terms of the Debenture were amended to include a mandatory conversion provision which will require conversion of all Debentures and exercise of all related warrants within 30 days after the closing price of the Company's common shares has exceeded $0.375 for ten consecutive trading days. The debenture financing was a private placement and was made pursuant to the private placement laws of Canada and pursuant to the exemptions provided by Section 4(2), Rule 506 of Regulation D, and Regulation S under the United States Securities Act of 1933. The Company has no properties that have proven to be commercially developable and has no revenues from mining operations other than the rentals received from the Plant and the proceeds from the sales of the Plant and related equipment. The rights and interests in the Arkansas Properties constitute the Company's current mineral holdings, and the Company does not intend to pursue exploration activities in Arkansas in the future. At this point in time, the Company cannot estimate with any degree of certainty either the time or the amount of funds that will be required to acquire and conduct exploration activities on new prospects, particularly the Toncantinzinho Property. The Company intends to seek additional equity financing during fiscal 2004, including the potential exercise or conversion of the 10% Debentures, warrants and outstanding options. The inability of the Company to raise further equity financing will adversely affect the Company's business plan, including its ability to acquire additional properties and perform exploration activities on such acquired properties. If additional equity is not available, the Company may seek additional debt financing or seek exploration partners to assist in funding acquisition or exploration efforts. Historically, the Company has been able to successfully raise capital as required for its business needs; however, no assurances are made by the Company that it can continue to raise debt or equity capital for a number of reasons including its history of losses and property writedowns, the decline in the price of its common stock, the number of shares outstanding and the Company's limited and speculative asset base of exploration properties and prospects. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. ----------------------------------------------------------------- Not applicable. 11 ITEM 4. CONTROLS AND PROCEDURES. --------------------------- (a) Evaluation of disclosure controls and procedures. The term "disclosure controls and procedures" (defined in SEC rule 13a-14(c)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within required time periods. The Company's Chairman, who also serves as the Company's principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days before the filing of this quarterly report, and he concluded that, as of such date, the Company's controls and procedures were effective. (b) Changes in internal controls. The Company maintains a system of internal accounting controls that are designed to provide reasonable assurance that its books and records accurately reflect its transactions and that established policies and procedures are followed. There were no significant changes to the Company's internal controls or in other factors that could significantly affect its internal controls subsequent to such evaluation. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. ------------------- Except as described in "Part I - Item 1 - Financial Information - Note 6 of Notes to Interim Consolidated Financial Statements (Unaudited)" which description is incorporated in its entirety by this reference into this part, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. ------------------------------------------------ Any issuances or sales of equity securities resulting in cash proceeds to the Company described in "Part 1. Item 2. Liquidity and Capital Resources", were made in reliance on exemptions from registration provided by Regulation D, Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. ----------------------------------- Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. ------------------------------------------------------------ Not applicable. ITEM 5. OTHER INFORMATION. ------------------- Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. -------------------------------------- (a) Exhibits. See Index of Exhibits. 12 (b) Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STAR RESOURCES CORP. (Registrant) Dated: June 16, 2003 By: /s/ Mark E. Jones, III -------------------------- MARK E. JONES, III Chairman (and principal financial officer) 13 CERTIFICATION ------------- I, Mark E. Jones, III, Chairman of Star Resources Corp., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Star Resources Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: June 16, 2003 /s/ Mark E. Jones, III -------------------------- Mark E. Jones, III Chairman (and principal financial officer) 14 INDEX OF EXHIBITS
Exhibit No. Description of Exhibits - ----------- ------------------------------------------------------------------------------------ 10.55 Second Supplemental Indenture between the Company and Computershare Trust Company of Canada dated February 11, 2003. 99 Certification of Chairman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15 EX-10.55 3 doc2.txt Exhibit 10.55 THIS SECOND SUPPLEMENTAL INDENTURE is dated as of FEBRUARY 11, 2003. BETWEEN: STAR RESOURCES CORP. having an address at 2000 South Dairy Ashford - ---------------------- Suite 510, Houston, Texas, USA, 77077 (the "CORPORATION") AND: COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company incorporated pursuant to - -------------------------------------- the laws of British Columbia, having an office at 4th Floor - 510 Burrard Street, Vancouver, British Columbia V6C 3B9 (the "TRUSTEE") WHEREAS: A. Pursuant to a trust indenture dated as of February 16, 2001 between the Corporation and Montreal Trust Corporation of Canada ("MONTREAL TRUST") as amended by supplemental indenture dated as of April 10, 2001 (together, the "TRUST INDENTURE"), the Corporation issued 10% Convertible Debentures in the aggregate principal amount of CAD$1,278,595; B. Pursuant to an Assignment Agreement dated effective July, 2002, the rights powers and duties of Montreal Trust under the Trust Indenture were assigned and transferred to and assumed by the Trustee; C. By extraordinary resolutions passed effective February 11, 2003 (the "EXTRAORDINARY RESOLUTIONS"), the Debentureholders approved, consented to and agreed to certain amendments set forth below (the "AMENDMENTS") to the Trust Indenture and authorized and directed the Trustee to execute a supplemental indenture (this "SECOND SUPPLEMENTAL INDENTURE"); D. The Corporation and the Trustee wish to amend the Trust Indenture on the terms specified in this Second Supplemental Indenture. NOW THEREFORE in consideration of the premises and the covenants of the parties, it is agreed and declared as follows: ARTICLE ONE INTERPRETATION 1.01 Definitions ----------- In this Supplemental Indenture, unless there is something in the subject matter or context inconsistent therewith, those terms having a meaning defined by the Trust Indenture shall have the same meaning when used in this Supplemental Indenture. ARTICLE TWO AMENDMENTS 2.01 The following definitions are added, in alphabetical order, to section 1.01 "Definitions" of the Trust Indenture: "AUTOMATIC CONVERSION DATE" means, in respect of any particular Debenture, the date which is the seventh (7th) day following the day which is the tenth (10th) of the Premium Trading Days. "PREMIUM TRADING DAYS" shall mean any ten (10) consecutive Trading Days during which the closing price of the Common Shares is CAD$0.375 or more; 2.02 The following definitions in Section 1.01 of the Trust Indenture are deleted in their entirety and the following substituted therefor: "CONVERSION PRICE" means CDN$0.30 per Unit or such other dollar amount for which Units may be issued from time to time upon the conversion of the Debentures in accordance with the provisions of Article Five; "DEBENTURES" means the 10% convertible redeemable secured debentures of the Corporation issued and certified under this Trust Indenture as such may be amended by the terms of any supplemental indenture entered into pursuant to the terms of Article 10 of this Trust Indenture; "MATURITY" means February 16, 2004, provided that in the event such date is not a Business Day, then on the next succeeding day that is a Business Day; "TRADING DAY" means any day on which the Common Shares are listed and posted for trading on the TSX Venture Exchange or, if not listed and posted for trading on such exchange, on a Recognized Stock Exchange, and on which no cease trading or similar order is in effect with respect to Common Shares; "WARRANTS" means the up to 4,261,983 non-transferable common share purchase warrants of the Corporation which may be issued on conversion of Debentures to Debentureholders who were arm's length to the Corporation at the time of issuance of the Debentures, each Warrant exercisable into one Common Share at a price of CDN$0.30 per share in substantially the form attached as Schedule "A"; "WEIGHTED AVERAGE PRICE" means the price calculated by dividing that number which represents the aggregate trading prices of all board lot sales of the Common Shares on the TSX Venture Exchange or, if not listed and posted for trading on such exchange, on a Recognized Stock Exchange, during the 20 Trading Days ending 5 Trading Days immediately prior to Maturity, the date on which notice of redemption of a Debenture is given or deemed to be given under the terms of this Indenture, the Date of Conversion, the Automatic Conversion Date or the date which is the record date of any event referred to in Section 5.07(as renumbered), as the case may be, by the number which represents the aggregate number of Common Shares sold in such board lot sales during such period; provided that for the purposes of this definition, no Trading Day shall be included if on such Trading Date the Corporation or any insider of the Corporation (within the meaning of the Securities Act (British Columbia)) effects a trade in Common Shares and the foregoing reference to 20 Trading Days shall be to 20 Trading Days in which there is no such Corporation or insider trade; 2.03 Section 2.02 of the Trust Indenture is deleted in its entirety and the following substituted therefor: "SECTION 2.02 - DATE, MATURITY AND INTEREST Each Debenture shall (a) be dated as of February 16, 2001, (b) mature on February 16, 2004, at which time subject to earlier conversion or redemption pursuant to the terms hereof, the Corporation shall pay to the holders of Debentures then outstanding an amount equal to 100% of the then outstanding principal amount of such Debentures plus all accrued but unpaid interest on such Debentures, and (c) bear interest on the principal amount of Debentures from but excluding February 16, 2001, to and including the date of Maturity (subject to earlier redemption or conversion pursuant to the terms hereof, in which case interest shall cease to accrue on the date of redemption or conversion, as applicable) at the rate of 10% per annum both before and after maturity and default (including, in case of default, interest at the same rate on all amounts overdue) calculated and payable on the date of Maturity." 2.04 The title of Article 5 of the Trust Indenture be amended to read "CONVERSION OF DEBENTURES", and the following Section be added to Article 5 as Section 5.02: "SECTION 5.02 - AUTOMATIC CONVERSION OF DEBENTURES (1) The entire principal amount of the Debentures shall and shall be deemed to be automatically converted into Units at the Conversion Price on the Automatic Conversion Date and on that date the holders of all Debentures, regardless of their respective dates of issue shall be deemed to have surrendered and converted 100% of the principal amount of such Debentures without any further action on their part and the Common Shares and Warrants issuable in respect thereof shall be deemed to be issued at such time. (2) At the Close of Business on the Automatic Conversion Date, all rights under the Debentures will wholly cease and terminate and the certificates for the Debentures therefor will be void and of no effect and be deemed to have been surrendered and cancelled at that time except for the right of the holders of Debentures to receive the Common Shares and Warrants comprising the Units to which they are entitled hereunder and accrued interest payable pursuant to Section 5.04 (renumbered) hereof. (3) The Corporation shall notify the Trustee of the occurrence of the Automatic Conversion Date, in the manner provided in Section 13.01." 2.05 Sections 5.02 through Section 5.13 of Article 5 are renumbered as Section 5.03 through 5.14, consecutively, and all cross-references to Sections 5.02 through 5.13 elsewhere in the Trust Indenture be deemed to be renumbered accordingly. 2.06 Subsection (2) of former Section 5.02 (now renumbered 5.03) is deleted in its entirety and replaced with the following: "(2) As promptly as possible after the Date of Conversion the Corporation shall issue or cause to be issued and deliver or cause to be delivered to the holder whose Debenture is so surrendered, or upon his written order, certificates in the name or names of the person or persons specified in the "Election of Conversion Privilege" portion of the Debenture evidencing the number of Common Shares and the number of Warrants deliverable upon the conversion of such Debenture, or the specified portion thereof, as the case may be, and any cash which may be payable in accordance with Sections 5.04 and 5.06 hereof. In the event of an automatic conversion of the Debentures pursuant to Section 5.02, as promptly as possible after the Automatic Conversion Date the Corporation shall issue or cause to be issued and deliver or cause to be delivered to the holders of record of Debentures on the Automatic Conversion Date as recorded on the register of Debentureholders maintained by the Trustee the number of Common Shares and the number of Warrants deliverable upon the conversion of such Debenture and any cash which may be payable in accordance with Sections 5.04 and 5.06 hereof. Such conversion shall be deemed to have been effected immediately prior to the Close of Business on the Date of Conversion or Automatic Conversion Date, as applicable, and at such time the rights of the holder of such Debentures as such holder shall cease to the extent of the portion of the principal amount of the Debenture so converted (which shall be the entire principal amount in the case of an automatic conversion) and the person or persons in whose name or names any certificates for Common Shares and Warrants shall be deliverable upon such conversion shall be deemed to have become on such date the holder or holders of record of the Common Shares and Warrants represented thereby; provided, however, that no such surrender on any date when the share transfer registers for Common Shares and Warrants of the Corporation shall be closed shall be effective to constitute the person or persons entitled to receive Common Shares and Warrants upon such conversion as the holder or holders of record of such Common Shares and Warrants on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such Common Shares and Warrants as the holder or holders of record thereof for all purposes at the Close of Business on the next succeeding day on which such share transfer registers are open and such conversion shall be at the Conversion Price in effect on the Date of Conversion." 2.07 References elsewhere to "DATE OF CONVERSION" in the Trust Indenture shall be deemed amended to read "DATE OF CONVERSION OR AUTOMATIC CONVERSION DATE, AS APPLICABLE". 2.08 The form of certificate evidencing the Debentures set forth in Section 12.01 - "Form of Debenture" and as issued to the holders of Debentures (the "CERTIFICATES") be and they are deemed to be amended to accord with the amendments to the Trust Indenture made by this Second Supplemental Indenture and all such amendments be and they are hereby deemed incorporated in the Certificates. 2.09 The form of certificate evidencing the Warrants set forth as Schedule "A" of the Trust Indenture is deleted in its entirety and replaced with the form of certificate attached as Schedule "A" to this Second Supplemental Indenture. ARTICLE THREE GENERAL 3.01 Effect of Amendments ---------------------- The parties confirm that the Trust Indenture, as amended by this Second Supplemental Indenture, remains in full force and effect. From the date hereof, the Trust Indenture and this Second Supplemental Indenture shall be read together to the extent reasonably possible as though all of the terms of both documents were contained in one instrument. 3.02 Counterparts and Formal Date ------------------------------- This Second Supplemental Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and the counterparts together shall constitute one and the same instrument and, notwithstanding the date of their execution, shall be deemed to be the date first above written. IN WITNESS WHEREOF the parties have hereto executed these presents under the hands of their proper officers in that behalf. STAR RESOURCES CORP. Per: -------------------------------- Authorized Signatory COMPUTERSHARE TRUST COMPANY OF CANADA Per: ------------------------------- Authorized Signatory Per: -------------------------------- Authorized Signatory SCHEDULE "A" WARRANT NO.: ______________________ WARRANT TO PURCHASE COMMON SHARES OF STAR RESOURCES CORP. (Incorporated under the laws of the Province of British Columbia) THIS IS TO CERTIFY THAT, for value received, _________________________________________, the Holder of this Warrant, is entitled to purchase: ________________________________ (______________________________________) non-assessable common shares of Star Resources Corp. (hereinafter called the "CORPORATION") as such shares were constituted on January 16, 2003 at any time up to 4:30 p.m. local time at the City of Vancouver, Province of British Columbia, on the earlier of (the "EXPIRY DATE"): a) February 16, 2004, and b) the day which is the 36th day following the tenth of the Premium Trading Days (as hereinafter defined), at and for a price of $0.30 per share of lawful money of Canada, upon and subject to the terms and conditions attached hereto. This Warrant may not be transferred by the holder. This Warrant and the common shares to be issued upon its exercise have not been registered under the United States Securities Act of 1933, as amended ("the Act") or the securities laws of any state of the United States. This Warrant may not be exercised by or on behalf of any U.S. person, directly or indirectly, or in the United States, unless (i) the common shares are registered under the Act and the applicable laws of any such state, or, (ii) an exemption from such registration requirements is available. "United States" and "U.S. person" are as defined by Rule 901 of Regulation S under the Act. This Warrant may be exercised only at the offices of the Corporation, 2000 South Dairy Ashford, Suite 510, Houston, Texas, 77077. STAR RESOURCES CORP. Per: ------------------------- Director DATE: ------------------------- NOTE: Any share certificates issued upon exercise of this warrant bearing the legend set forth in Section 5.13 of the Trust Indenture dated February 16, 2001 will be printed with a legend as follows: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), AND ARE NON-TRANSFERABLE. ANY OTHER REFERENCE TO THE U.S. SECURITIES ACT APPEARING ON THIS CERTIFICATE, AND THE REQUIREMENT ON THE SUBSCRIPTION FORM TO CHECK ONE OF THE BOXES CERTIFYING AS TO WHETHER THE HOLDER IS WITHIN THE UNITED STATES, DO NOT APPLY TO THE HOLDER OF A CERTIFICATE BEARING THIS LEGEND." TERMS, CONDITIONS AND INSTRUCTIONS 1. For the purposes of this Warrant "PREMIUM TRADING DAYS" shall mean any ten (10) consecutive trading days during which the closing price of the Common Shares of the Corporation on the TSX Venture Exchange or any other recognized exchange, is CAD$0.375 or more; 2. The holder of this warrant may subscribe for the number of shares of the Corporation indicated on the face hereof. 3. For each share purchased pursuant to this warrant on or before the Expiry Date, payment must be made in the amount of $0.30 per share. All payments must be made in Canadian Funds, in cash or by certified cheque, bank draft or money order payable, at par, in Vancouver, British Columbia. If payment is made by way of an uncertified cheque, the Corporation reserves the right to deem that the payment has not been received until the cheque has cleared the account upon which it has been drawn. 4. To exercise the rights evidenced by this warrant, this warrant with the following Subscription Form completed, must be delivered or mailed to the Corporation 2000 South Dairy Ashford, Suite 510, Houston, Texas, 77077 and received by the Corporation. 5. The rights evidenced by this warrant expire at 4:30 p.m. local time in Vancouver, British Columbia, on the Expiry Date. 6. The rights evidenced by this warrant may not be transferred. 7. If this warrant or the purchase price are forwarded by mail it is suggested that registered mail be used as the Corporation will not be responsible for any losses which occur through the use of mails. 8. The rights evidenced by this warrant are to purchase common shares in the capital stock of the Corporation as they were constituted on January 16, 2003. If there shall, prior to the exercise of any of the rights evidenced hereby, be any reorganization of the authorized capital of the Corporation by way of consolidation, merger, sub-division, amalgamation or otherwise, or the payment of any stock dividends, then there shall automatically be an adjustment in either or both the number of shares of the Corporation which may be purchased pursuant hereto or the price at which such shares may be purchased, by corresponding amounts, so that the right evidenced hereby shall thereafter be as reasonably as possible equivalent to those originally granted hereby. The Corporation shall have the sole and exclusive power to make adjustments as it considers necessary and desirable. SUBSCRIPTION FORM The Undersigned, holder of the within warrant, hereby subscribes for _______________________ common shares of Star Resources Corp. If the number of shares purchased hereby does not exercise all of the rights evidenced by this warrant, the holder requests issuance and delivery to it at the following address of a new warrant evidencing the unused rights. The Undersigned directs that the shares hereby subscribed for be issued and delivered to it as follows:
NAME ADDRESS NO. OF SHARES - --------------- ------------------- ------------------- - --------------- ------------------- ------------------- - --------------- ------------------- ------------------- - --------------- ------------------- -------------------
DATED this ____ day of _______________________________, 200__. ____________________________ Signature ____________________________ Name (Please print) ____________________________ Address EX-99 4 doc3.txt EXHIBIT 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the accompanying Quarterly Report of Star Resources Corp. (the "Company") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark E. Jones, III, Chairman of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Dated: June 16, 2003 /s/ Mark E. Jones, III -------------------------- Mark E. Jones, III Chairman (and principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----