-----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, SKMG8JKSkjn/6VPnla++dKX0UDY6qKLd6lLsLs1io5GPD05wO0gifZ9Z3ZDANOio SaSSNjeiQeOOxZBi01vSpQ== 0001144204-04-001264.txt : 20040212 0001144204-04-001264.hdr.sgml : 20040212 20040212110436 ACCESSION NUMBER: 0001144204-04-001264 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040206 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITS BASIN PRECIOUS MINERALS INC CENTRAL INDEX KEY: 0000912875 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841236619 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12401 FILM NUMBER: 04588870 BUSINESS ADDRESS: STREET 1: 800 NICOLLET MALL STREET 2: SUITE 2690 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: (612)664-0570 MAIL ADDRESS: STREET 1: 800 NICOLLET MALL STREET 2: SUITE 2690 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: ACTIVE IQ TECHNOLOGIES INC DATE OF NAME CHANGE: 20010702 FORMER COMPANY: FORMER CONFORMED NAME: METEOR INDUSTRIES INC DATE OF NAME CHANGE: 19960313 8-K 1 form8k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 6, 2004 WITS BASIN PRECIOUS MINERALS INC. (Exact Name of Registrant as Specified in Charter) Minnesota 1-12401 84-1236619 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 800 Nicollet Mall, Suite 2690 Minneapolis, Minnesota 55402 (Address of Principal Executive Offices) (Zip Code) 612.664.0570 (Registrant's telephone number, including area code) (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. Pursuant to a Quota Purchase Agreement dated February 6, 2004 (the "Quota Agreement"), by and between Wits Basin Precious Minerals Inc., (the "Registrant") and Argyle Securities Limited, a corporation formed under the laws of Saint Vincent ("Seller"), the Registrant purchased all of the outstanding quota stock of Brazmin Ltda., ("Brazmin") a limited liability company formed under the laws of Brazil, effective as of February 6, 2004. Brazil uses Quota shares as its form of capital stock. Prior to the date of the Quota Agreement, there was no relationship between Brazmin or the Seller and the Registrant or its affiliates, officers and directors or any of its associates. Brazmin's only assets are the mineral exploration rights of four distinct regions located within the South American country of Brazil. Brazmin has never had any revenues, as its activities have been solely to search out and acquire exploration rights on properties that possess specific criteria relating to base minerals and precious minerals. A third party operator and/or financier would be engaged to begin explorations on any of the properties. Brazmin will be operated as a wholly owned subsidiary of the Registrant. Pursuant to the Quota Agreement, in exchange for their quota shares of Brazmin, the Seller received (a) a $50,000 cash payment, (b) 700,000 shares of our common stock (the "Common Shares"), valued at $686,000 based on the closing sale price of our common stock, as quoted on the OTCBB, February 6, 2004; (c) a 5-year warrant to purchase 150,000 shares of our common stock, with an exercise price of $1.50 per share (the "Warrant Shares"), valued at $147,000 using the Black-Scholes option pricing model; (d) reimbursement of certain out-of-pocket expenses, estimated to be less than $20,000; and (e) two consulting agreements with two of the principals of Brazmin for continued services. The consulting agreements would be for a period of six months, with monthly aggregate payments of $4,000 and an option package yet to be determined. The consulting agreements will be renewable for additional six month terms should the need exist. Pursuant to the Quota Agreement, the Registrant is required to file a registration statement covering the Common Shares and use its best efforts to have the Common Shares registered for resale under the Securities Act no later than July 5, 2004. In the event that the Common Shares are not registered by July 5, 2004, the Seller will have the sole right (exercisable within ten (10) days thereafter) to terminate the Quota Agreement. In the event of termination, the Seller is required to return the Common Shares and the Warrant Shares to the Registrant, but is entitled to retain the $50,000 cash payment and any reimbursed out-of-pocket expenses received or owed by the Registrant. The foregoing is qualified in its entirety by reference to the Quota Agreement, which is being filed as Exhibit 10.1 to this Current Report on Form 8-K; and such exhibit is incorporated herein by reference. In addition, the Registrant is attaching as Exhibit 99.1 a Press Release dated February 9, 2004, with respect to the acquisition of Brazmin, which is incorporated herein by reference. Item 5. Other Events The Registrant filed a current report on Form 8-K on October 31, 2003 to announce that it had completed a private placement of units of its securities, each unit consisting of one share of the Registrant's common stock and a one-year warrant to purchase one-half share of common stock at an exercise price of $0.75 per share. The Registrant sold an aggregate of 10,190,000 units, resulting in aggregate gross proceeds of approximately $2,547,500. Pursuant to the terms of the private placement, the Registrant agreed to file a "resale" registration statement (the "Registration Statement") with the United States Securities and Exchange Commission ("SEC"), and to use its best efforts to cause the Registration Statement to become effective within one hundred and twenty (120) days from the date that the private placement was completed. In the event the Registration Statement has not been declared effective by the SEC within one hundred twenty (120) days, the Registrant shall be obligated to pay a penalty equal to 1/5 of a share of common stock for each unit purchased. The Registrant has a Registration Statement currently under review with the SEC and will not be in compliance within the one hundred and twenty day requirement, therefore the Registrant will be issuing an additional 2,038,000 shares of its common stock forthwith. 2 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Not required (b) Not required (c) Exhibits Exhibit Description of Document - ------- ----------------------- 10.1 Quota Purchase Agreement by and between Wits Basin Precious Minerals Inc. and Argyle Securities Limited dated February 6, 2004 99.1 Press release dated February 9, 2004 3 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Wits Basin Precious Minerals Inc. Date: February 12, 2004 By: /s/ Mark D. Dacko ----------------------------- Mark D. Dacko Chief Financial Officer 4 EXHIBIT INDEX Exhibit Description of Document - ------- ----------------------- 10.1 Quota Purchase Agreement by and between Wits Basin Precious Minerals Inc. and Argyle Securities Limited dated February 6, 2004. 99.1 Press release dated February 9, 2004. 5 EX-10 3 ex10_1.txt Exhibit 10.1 QUOTA PURCHASE AGREEMENT THIS AGREEMENT made as of the 6th day of February, BETWEEN: ARGYLE SECURITIES LIMITED of Trust House 112, Bonadie Street, Kingstown, Saint Vincent OF THE FIRST PART. -and - WITS BASIN PRECIOUS MINERALS INC. of 800 Nicollet Mall, Suite 2690, Minneapolis, MN 55402, USA OF THE SECOND PART. THIS AGREEMENT is made and entered into this 6th day of February 2004, ("Effective Date") by and between ARGYLE SECURITIES LIMITED, a corporation organized under the laws of Saint Vincent ("Seller"), and WITS BASIN PRECIOUS MINERALS INC, a Minnesota corporation ("Purchaser"); WHEREAS, the Seller is the record owner and holder of 9,999 (nine thousand, nine hundred and ninety-nine) Quotas in the issued Quotas of the capital of BRAZMIN LTDA, ("Company"), a limited liability company incorporated in the City of Rio de Janeiro, Brazil, which Company has issued Quotas of 10,000 Quotas of R1.00 (1 real) per Quota; and WHEREAS, the Purchaser desires to purchase the Seller's Quotas and the Seller desires to sell said Quotas, upon the terms and subject to the conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and in order to consummate the purchase and the sale of the Company's Quotas aforementioned, it is hereby agreed as follows: 1. PURCHASE AND SALE: Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated hereby, the Seller shall sell, convey, transfer, and deliver to the Purchaser, certificates representing such Quotas, and the Purchaser shall purchase from the Seller the Company's Quotas in consideration of the purchase price set forth in this Agreement. The certificates representing the Company's Quotas shall be duly endorsed for transfer or accompanied by appropriate Quotas transfer powers duly executed in blank, and shall have all the necessary documentary transfer tax stamps affixed thereto, if any. The closing of the transactions contemplated by this Agreement ("Closing"), shall be held at 800 Nicollet Mall, Suite 2690, Minneapolis, MN 55402, USA, on or as close to the Effective Date as is possible or such other place, date and time as the parties hereto may otherwise agree. 2. AMOUNT AND PAYMENT OF PURCHASE PRICE. As total consideration for the purchase and sale of the Quotas, pursuant to this Agreement, on Effective Date or as soon as is practical thereafter but by no later than February 15, 2004, the Purchaser shall pay, transfer, convey to the Seller or such other party/parties to be designated by the Seller, the following: (i) US$50,000.00 cash; and (ii) 700,000 restricted common shares of the Purchaser ("WITM Shares"). The WITM Shares shall be issued in the name of the Seller. The Purchaser acknowledges that, following the registration of the WITM Shares as contemplated by Paragraph (b) under "Purchaser Represents and Warrants" in Section 3, Seller will be free to transfer the WITM Shares as contemplated by such registration. The certificates representing the WITM Shares shall have all the necessary documentary transfer tax stamps affixed thereto, if any; and 2 (iii) 5-year warrant to purchase 150,000 common shares in the Purchaser ("WITM Warrant") at the greater of US$1.50 per share or the closing sale price of the common stock of the Purchaser as listed on the OTCBB at the Effective Date. The WITM Warrant shall be issued in the name of the Seller and will be in the form attached hereto as Exhibit A. (iv) In addition to the Purchase Price as described in Paragraphs 2(i),(ii),(iii), the Purchaser agrees to the repayment of reasonable disbursements and out of pocket expenses made by Tau Capital Corp or Seller with regard to the Company in acquiring, maintaining or securing existing or new projects for the Company subsequent to December 1, 2003 until closing, not to exceed US$20,000.00. 3. REPRESENTATIONS, WARRANTIES, AND INDEMNITIES OF SELLER AND PURCHASER. Seller hereby warrants and represents: (a) Organization and Standing. Company is a company duly organized, validly existing and in good standing under the laws of Brazil and has the corporate power and authority to carry on its business as it is now being conducted. (b) Restrictions on Quotas. i. The Seller is not a party to any agreement, written or oral, creating rights in respect to the Company's Quotas in any third person or relating to the voting of the Company's Quotas, other than what has been disclosed. ii. Seller is the lawful owner of the Quotas, free and clear of all security interests, liens, encumbrances, equities and other charges, other than what has been disclosed. iii. Neither the Company nor Seller has any existing warrants, options, Quotas purchase agreements, redemption agreements, restrictions of any nature, calls or rights to subscribe of any character relating to the Quotas, nor are there any securities convertible into such Quotas, other than what has been disclosed. (c) Accuracy of Information i. As far as the Seller is aware, all data delivered to the Purchaser by or on behalf of the Seller or the Company is accurate. ii. As far as the Seller is aware, the Company has all of the rights necessary to explore and exploit each of the properties identified in that certain memorandum from MPH Consulting to Purchaser dated January 14, 2004, a copy of which Seller acknowledges receiving. (d) Investment in WITM Shares and Warrant. 3 i. Seller recognizes that investment in the WITM Shares and the WITM Warrants (together with the shares of Purchaser common stock issuable upon exercise of the WITM Warrants, the "Securities") involves a high degree of risk, that such purchase may require be a long-term investment, that transferability and sale of the Securities, as well as the shares of common stock issuable upon conversion or exercise of the Securities, are restricted in many ways, and that Seller could sustain a total loss of its investment. ii. Seller represents and warrants that it is its intention to acquire the Securities for its own account for investment purposes and not with a view to resale in connection with any distribution thereof until registration of the WITM Shares as contemplated by Paragraph (b) under "Purchaser Represents and Warrants" in Section 3. Seller intends to receive and hold the Securities for its personal account. Seller represents and warrants that it is an "accredited investor" as defined by Rule 501(a) under the Securities Act. iii. Seller understands that: (i) the Securities have not been registered under the United States Securities Act of 1933, as amended (the "Securities Act") or any securities laws of any state or other jurisdiction, and may not be offered for sale, sold, transferred, pledged or otherwise assigned unless (A) subsequently registered thereunder, or (B) Seller shall have delivered to the Purchaser, at the expense of Seller or its transferee, an opinion of counsel reasonably satisfactory to the Purchaser, to the effect that such Securities to be sold, transferred, pledged or otherwise assigned may be sold, transferred, pledged or otherwise assigned pursuant to an exemption from such registration, and (ii) any sale of the Securities made in reliance on Rule 144 promulgated under the Securities Act or any successor rule thereto ("Rule 144") may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the United States Securities and Exchange Commission thereunder. iv. Until the Securities have been transferred pursuant to an effective registration statement, as contemplated by Paragraph (b) under "Purchaser Hereby Represents and Warrants" in this Section 3, or pursuant to an exemption to the securities laws reasonable acceptable to the Purchaser and its counsel, Seller understands that the certificates or other instruments representing the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such certificates or instruments): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED, PLEDGED OR OTHERWISE ASSIGNED UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR (B) EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE. AS A CONDITION TO PERMITTING ANY TRANSFER OF THESE SECURITIES, THE COMPANY MAY REQUIRE THAT IT BE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION OR QUALIFICATION IS LEGALLY REQUIRED FOR SUCH TRANSFER. 4 Purchaser hereby warrants and represents: (a) Authorization The Purchaser has received the prerequisite number of board members signatures to consummate this transaction. (b) Restrictions on Shares. i. The Purchaser is not a party to any agreement, written or oral, creating rights in respect to the WITM Shares in any third person or relating to the voting of the WITM Shares. ii. Purchaser has the authority to issue WITM Shares free and clear of all security interests, liens, encumbrances, equities and other charges. iii. The Purchaser will use its commercially reasonable best efforts to have the WITM Shares registered for resale under the Securities Act no later than July 5, 2004. In the event that such shares are not so registered by July 5, 2004, the Seller will have the sole right (exercisable within ten (10) days thereafter) to terminate this Agreement subject to the upholding and unconditional survival of Paragraph 2(i)and 2(iv) above. In the event that the Seller elects to terminate as described, the Seller shall return the WITM Shares and the WITM Warrant to Purchaser and agree to the cancellation of the Consultants Agreements, Purchaser shall return to Seller the Quotas and, thereafter, other than the fulfillment of the obligations in terms of Paragraph 2(i)and 2(iv) above, neither party shall have any further obligation to the other. Seller and Purchaser hereby represent and warrant: i. that there has been no act or omission by Seller, Purchaser or the Company which would give rise to any valid claim against any of the parties hereto for a brokerage commission, finder's fee, or other like payment in connection with the transactions contemplated hereby. ii. that they are entitled and authorized to do that which is required in order to give effect to this Agreement Indemnification: a. Indemnification by Seller. Seller shall indemnify, defend and hold harmless Purchaser and its directors, officers, employees, agents, consultants, representatives, successors, transferees and assigns (individually a "Purchaser Indemnified Party"; and collectively, the "Purchaser's Indemnified Parties"), promptly upon demand, at any time and from time to time, from, against, and in respect of any and all demands, claims, losses, damages, judgments, liabilities, assessments, suits, actions, proceedings, interest, penalties, and expenses (including, without limitation, legal expenses for investigating or defending any actions or threatened actions or for enforcing such rights of indemnity and defense) incurred or suffered by the Purchaser's Indemnified Parties, in connection with, arising out of or as a result of each and all of the following: 5 (i) any breach of any representation or warranty made by Seller in this Agreement or in any other document or instrument delivered by Seller to Purchaser or entered into as part of the transactions contemplated by this Agreement; (ii) the material breach of any covenant, agreement or obligation of Seller contained in this Agreement or any other document or instrument delivered by Seller to Purchaser or entered into as part of the transactions contemplated by this Agreement; and (iii) subject to paragraph 2(iv) above, any and all liabilities and obligations of Seller or the Company and any and all liabilities and obligations arising from ownership of the Quotas or operation of the Company on or prior to the Closing. b. Indemnification by Purchaser. Purchaser shall indemnify, defend and hold harmless Seller and its directors, officers, employees, agents, consultants, representatives, successors, transferees and assigns (individually a "Seller Indemnified Party"; and collectively, the "Seller's Indemnified Parties"), promptly upon demand, at any time and from time to time, from, against, and in respect of any and all demands, claims, losses, damages, judgments, liabilities, assessments, suits, actions, proceedings, interest, penalties, and expenses (including, without limitation, legal expenses for investigating or defending any actions or threatened actions or for enforcing such rights of indemnity and defense) incurred or suffered by the Seller's Indemnified Parties, in connection with, arising out of or as a result of each and all of the following: (i) any breach of any representation or warranty made by Purchaser in this Agreement or in any other document or instrument delivered by Purchaser to Seller or entered into as part of the transactions contemplated by this Agreement; (ii) the material breach of any covenant, agreement or obligation of Purchaser contained in this Agreement or any other document or instrument delivered by Purchaser to Seller or entered into as part of the transactions contemplated by this Agreement; and (iii) any and all liabilities and obligations arising from ownership of the Quotas or operation of the Company after the Closing. 6 Survival. The representations and warranties contained in this Agreement shall survive the Closing for a period of one (1) year. 4. CONSULTING AGREEMENTS The Purchaser agrees to cause the Company to enter into consulting agreements with Alan Friedman (Tau Capital Corp) and Luis Azevedo (the "Consultants") on such terms and conditions as would be negotiated and agreed by the Purchaser and the Consultants. The Consultants intend to offer services to the Company in connection with identifying, acquiring and commercializing gold exploration and mining opportunities in Brazil. In addition, the Consultants will assist the Company in connection with the exploration and, if warranted, the exploitation of the Company's current projects. Notwithstanding the foregoing, the terms of such consulting agreements shall make provision for consulting fees to both Consultants of not less than an aggregate of US$4,000 per month (such funds to be guaranteed by the Purchaser) and a 6-month term, subject to extensions upon the mutual agreement of the parties. The consulting agreements shall also provide for such other terms to be mutually agreed upon by the parties, including without limitation, provisions relating to incentive compensation, confidentiality, assignment to the Purchaser or Company of intellectual property rights in past and future work product and restrictions on competition, and a provision for automatic cancellation in the event this Agreement is terminated by Seller pursuant to Paragraph 3. 5. EXPENSES. The Purchaser agrees to pay expenses incident to this Agreement and the transactions contemplated thereby until Closing. 6. GENERAL PROVISIONS. (a) Entire Agreement. This Agreement constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. (b) Sections and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. (c) Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 7 (d) Governing Law. This agreement, and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of Minnesota. The parties herein agree to submit to the jurisdiction and venue of a court of subject matter jurisdiction located in Minneapolis, Minnesota, USA. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party's reasonable attorney's fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled. 8 SIGNED AT THIS DAY OF 2004. AS WITNESSES: 1. 2. /s/ Warren Newfield - ------------------------------------ ARGYLE SECURITIES LIMITED being duly authorized thereto SIGNED AT THIS 6th DAY OF February 2004. AS WITNESSES: 1. 2. /s/ H. Vance White - ------------------------------------- WITS BASIN PRECIOUS MINERALS INC. being duly authorized thereto 9 EXHIBIT "A" The Warrant and the securities issuable upon exercise of this Warrant (the "Securities") have not been registered under the Securities Act of 1933 (the "Securities Act") or under any state securities or Blue Sky laws ("Blue Sky Laws"). No transfer, sale, assignment, pledge, hypothecation or other disposition of this Warrant or the Securities or any interest therein may be made except (a) pursuant to an effective registration statement under the Securities Act and any applicable Blue Sky Laws or (b) if the Company has been furnished with both an opinion of counsel for the holder, which opinion and counsel shall be reasonably satisfactory to the Company, to the effect that no registration is required because of the availability of an exemption from registration under the Securities Act and applicable Blue Sky Laws, and assurances that the transfer, sale, assignment, pledge, hypothecation or other disposition will be made only in compliance with the conditions of any such registration or exemption. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF WITS BASIN PRECIOUS MINERALS INC. Warrant No. 2004-__ Minneapolis, Minnesota February __, 2004 This certifies that, for value received, Argyle Securities Limited, or its successors or assigns (the "Holder"), is entitled to purchase from Wits Basin Precious Minerals Inc., a Minnesota corporation (the "Company"), One Hundred Fifty Thousand (150,000) fully paid and nonassessable shares (the "Shares") of the Company's Common Stock, $.01 par value (the "Common Stock"), at an exercise price of $[____] per share (the "Exercise Price"), subject to adjustment as herein provided. This Warrant may be exercised by Holder at any time after the date hereof; provided, however, that, Holder shall in no event have the right to exercise this Warrant or any portion thereof after February __, 2009, at which time all of Holder's rights hereunder shall expire. This Warrant is subject to the following provisions, terms and conditions: 1. Exercise of Warrant. The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to a fractional share of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Company's principal office in Minneapolis, Minnesota, or such other office or agency of the Company as the Company may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company at any time within the period above named), and upon payment to it by certified check, bank draft or cash of the purchase price for such Shares. The Company agrees that the Shares so purchased shall have and are deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such Shares as aforesaid. Certificates for the Shares of Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding ten (10) days, after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time. The Company may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant. 2. Transferability of this Warrant. This Warrant is issued upon the following terms, to which Holder consents and agrees: (a) Until this Warrant is transferred on the books of the Company, the Company will treat the Holder of this Warrant registered as such on the books of the Company as the absolute owner hereof for all purposes without being affected by any notice to the contrary. (b) This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders. 10 (c) The Warrant may not be transferred, and the Shares underlying this Warrant may not be transferred, without the Holder obtaining an opinion of counsel satisfactory in form and substance to the Company's counsel stating that the proposed transaction will not result in a prohibited transaction under the Securities Act of 1933, as amended ("Securities Act"), and applicable Blue Sky laws. By accepting this Warrant, the Holder agrees to act in accordance with any conditions reasonably imposed on such transfer by such opinion of counsel. (d) Neither this issuance of this Warrant nor the issuance of the Shares underlying this Warrant have been registered under the Securities Act. 3. Certain Covenants of the Company. The Company covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or its property, and without limiting the generality of the foregoing, the Company covenants and agrees that it will from time to time take all such actions as may be requisite to assure that the par value per share of the Common Stock is at all times equal to or less than the effective purchase price per share of the Common Stock issuable pursuant to this Warrant. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved free of preemptive or other rights for the exclusive purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 4. Adjustment of Exercise Price and Number of Shares. The Exercise Price and number of Shares are subject to the following adjustments: (a) Adjustment of Exercise Price for Stock Dividend, Stock Split or Stock Combination. In the event that (i) any dividends on any class of stock of the Company payable in Common Stock or securities convertible into or exercisable for Common Stock ("Common Stock Equivalents") shall be paid by the Company, (ii) the Company shall subdivide its then outstanding shares of Common Stock into a greater number of shares, or (iii) the Company shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (a) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Exercise Price, by (b) the total number of shares of Common Stock outstanding immediately after such event, and the resulting quotient shall be the adjusted Exercise Price per share. No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.05 per share, but in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than $.05 per share. (b) Adjustment of Number of Shares Purchasable on Exercise of Warrants. Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Exercise Price in effect prior to such adjustment) by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. (c) Notice as to Adjustment. Upon any adjustment of the Exercise Price and any increase or decrease in the number of shares of Common Stock purchasable upon the exercise of the Warrant, then, and in each such case, the Company within thirty (30) days thereafter shall give written notice thereof, by first class mail, postage prepaid, addressed to each Holder as shown on the books of the Company, which notice shall state the adjusted Exercise Price and the increased or decreased number of shares purchasable upon the exercise of the Warrants, and shall set forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 11 (d) Effect of Reorganization, Reclassification, Merger, etc. If at any time while this Warrant is outstanding there should be (i) any capital reorganization of the capital stock of the Company (other than the issuance of any shares of Common Stock in subdivision of outstanding shares of Common Stock by reclassification or otherwise and other than a combination of shares provided for in Section 4(a) hereof), (ii) any consolidation or merger of the Company with another corporation, or any sale, conveyance, lease or other transfer by the Company of all or substantially all of its property to any other corporation, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities, or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of stock of the Company payable in stock of the Company of a different class, other securities of the Company, or other property of the Company (other than cash), then, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such consolidation or merger, or of the corporation to which the property of the Company has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer. In any such case, appropriate adjustments (as determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth in this Warrant (including the adjustment of the Exercise Price and the number of Shares issuable upon the exercise of the Warrant) to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger. The Company shall not effect any such capital reorganization, consolidation, merger or transfer unless, upon or prior to the consummation thereof, the successor corporation or the corporation to which the property of the Company has been sold, conveyed, leased or otherwise transferred shall assume by written instrument the obligation to deliver to the Holder such shares of stock, securities, cash or property as in accordance with the foregoing provisions such Holder shall be entitled to purchase. 5. No Rights as Shareholder. This Warrant shall not entitle the Holder as such to any voting rights or other rights as a shareholder of the Company. 6. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota. 7. Amendments and Waivers. The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Company agrees in writing and has obtained the written consent of the Holder. 8. Notices. All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing and if sent to the Holder shall be mailed, delivered, or telefaxed and confirmed to the Holder at his or her address set forth on the records of the Company; or if sent to the Company shall be mailed, delivered, or telefaxed and confirmed to Wits Basin Precious Minerals Inc., 800 Nicollet Mall, Suite 2690, Minneapolis, Minnesota 55402, facsimile number (612) 338-7332, or to such other address as the Company or the Holder shall notify the other as provided in this Section. IN WITNESS WHEREOF, Wits Basin Precious Minerals Inc. has caused this Warrant to be signed by its duly authorized officer in the date set forth above. WITS BASIN PRECIOUS MINERALS INC. By:_____________________________________ H. Vance White Chief Executive Officer 12 SUBSCRIPTION FORM To be signed only upon exercise of Warrant. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, ____________________ of the shares of Common Stock of Wits Basin Precious Minerals Inc. (the "Shares") to which such Warrant relates and herewith makes payment of $_____________ therefor in cash, certified check or bank draft and requests that a certificate evidencing the Shares be delivered to, ____________________________, the address for whom is set forth below the signature of the undersigned: Dated: ____________________ (Signature) (Address) [ ] [ ] [ ] ASSIGNMENT FORM To be signed only upon authorized transfer of Warrant. FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto _____________________________________ the right to purchase shares of Common Stock of Wits Basin Precious Minerals Inc. to which the within Warrant relates and appoints ____________________ attorney, to transfer said right on the books of _________________ with full power of substitution in the premises. Dated: ____________________ ------------------------------------ (Signature) ------------------------------------ (Address) 13 EX-99 4 ex99.txt Exhibit 99.1 Wits Basin Completes Acquisition of Minerals Exploration Company Located in South America Minneapolis, Minnesota, February 9, 2004 Wits Basin Precious Minerals Inc., (OTCBB: WITM) is pleased to announce that we have completed our due diligence review of Brazmin Ltda., ("Brazmin") a limited liability company located in Rio de Janeiro, Brazil and have acquired 99.99% of shares of quota capital of Brazmin. Brazil uses Quota shares as its form of capital stock. Furthermore, Brazilian law forbids 100% ownership by a foreign entity; therefore, one of the principals, a Brazilian resident, remains a quota holder. In exchange for the outstanding quota capital of Brazmin, we will pay $50,000 in cash; issue 700,000 shares of our common stock; issue a 5-year warrant to purchase 150,000 shares of our common stock at $1.50 per share; reimburse certain out-of-pocket expenses estimated to be less than $20,000; and enter into consulting agreements with two of the principals of Brazmin. The consulting agreements would be for a period of six months, with monthly aggregate payments of $4,000 and an option package yet to be determined. The consulting agreements will be renewable for additional six month terms should the need exist. Brazmin's current property portfolio consists of 4 assets, which are promising precious minerals projects in Brazil, having been assembled through very specific selection criteria. Since its inception in April 2001, Brazmin has analysed over 150 gold projects in Brazil, of which, only a fraction have been targeted for acquisition. Mr. Luis Azevedo, a principal of Brazmin and a mining lawyer and geologist, is well respected in the mining industry of Brazil and will continue to evaluate other high-quality projects in the region. Brazil Rio Maria Property - Para State, Brazil o Located in the highly prospective Carajas district of Brazil, exploration rights for this 27,431 ha property was acquired after Canyon Resources had spent US$2.0 million defining gold targets prior to withdrawing from Brazil after the Bre-X Minerals Ltd. gold scandal. o The early stage project has easy access and is located approximately 20 km from the town of Rio Maria, which is connected by paved highway to the state capital of Belem. o The geology of the Rio Maria Property is dominated by the highly prospective Andorinhas Greenstone Belt. o An estimated 15 tonnes of gold have been produced by information miners (garimpeiros) from alluvial and bedrock gold deposits within and adjacent to the Rio Maria property. o Exploration work of the prior operators was focused for gold with no analyses carried out for base metals. This work identified several high quality potential targets for gold, which requires additional exploration. o While there is potential for gold related to shear zones cutting greenstone rocks, the property has significant appeal due to its potential for large copper - gold mineralized systems of the iron oxide copper-gold (IOCG) family similar to those found elsewhere in the Carajas district. o Efforts will continue to locate and qualify a third party operator and funds source. Campo Grande, Minas Gerais State, Brazil o Campo Grande is an early stage exploration project previously owned by Barrick and Western Mining Corporation who had spent a total of US$100,000 on the property. o Brazmin has very recently successfully claimed exploration rights for 75% of the land title directly and the remaining 25% through an option with a group of Brazilian geologists, who have the respective title. o Brazmin proposes to carry out further geochemical sampling to confirm the previous work and also examine the area for extensions. Detailed follow-up would comprise geological mapping, geophysics (magnetics and IP), more trenches and finally several shallow diamond drill holes to provide systematic sampling. o According to Brazmin's consultants, Campo Grande is a good early stage epithermal gold opportunity, which could be substantial and should be relatively easy to test for ore-grade mineralization, thus providing a project with good upside potential. o Efforts will continue to locate and qualify a third party operator and funds source. SAO JULIAO, Piaui and Ceara States, Brazil o This project, located in Piaui and Ceara States in northeast Brazil, also targets IOCG deposits, in this instance following on work performed by a major in 2002-2003. o There is copper and gold mineralization known in the region, and the setting - alkali granites, Proterozoic age, extensional tectonics, and hematite-rich breccias with copper, fits an IOCG model. o The major's work included satellite imagery processing, rock chip sampling and airborne geophysics. o Three target areas remain to be investigated, all three have copper mineralization, some geophysical responses, and display varying levels of alteration. Brazmin is recommending gravity, magnetics, IP and scout drilling for detailed target definition. o Efforts will continue to locate and qualify a third party operator and funds source. Serrita, Pernambuco State, Brazil o The Serrita project is located in the Serrita gold district, an area known to host narrow high grade gold mineralized quartz veins, with and without associated polymetallic sulphides. o The Serrita project includes the Mineracao Serrita's concessions that were worked previously by CPRM. The latter found a number of high grade quartz veins of limited dimensions which they managed to lump into an "inferred geological resource" of ~344,000 t @ 11 g/t. o A number of the relatively shallow targets traced from surface to 50 meters in depth on the concessions had been drilled by CPRM returning grades up to 10.20 g/t over 1.6meters, 29.80 g/t over 0.80 meters and 206.0 g/t over 0.30 meters. o The Brazmin concessions cover several gold garimpos (artesinal workings), which were apparently catalogued by Western Mining in the past. The garimpos have quartz veins with visible gold with grades from chip samples reported up to 100g/t Au and 132 g/t Ag. With additional exploration, these zones may lead to the outlining of small tonnage high-grade deposits similar to Mineracao Serrita's. o Efforts will continue to locate and qualify a third party operator and funds source. Other Projects o Additional Brazilian exploration projects will be evaluated and should they possess the required technical integrity, Brazmin may be in a position to acquire them as well. Update to our FSC Project in South Africa The current range-finding drilling program on the FSC joint venture Project in South Africa is progressing and we have been advised by the operator, AfriOre Limited, that the drill hole is at 1630 meters. The target depth of this hole is estimated to be 2000 meters and is the first of an initial three drill-hole range-finding program. The initial program is anticipated to include some 6,200 meters of drilling and is aimed at establishing the presence of stratigraphic units related to Witwatersrand gold deposits, in the depth range of 1,200 to 1,500 meters. Previous drilling and geophysical mapping indicate that Witwatersrand rocks may be preserved under Mesozoic cover rocks in the project area. About Wits Basin Precious Minerals Inc. We are a precious minerals exploration company. We currently hold interests in two gold exploration projects. In one of these projects, which we commonly refer to as the "FSC Project," we are a passive investor. The FSC Project (140,000 ha) is located in South Africa adjacent to the major goldfields discovered at the Witwatersrand Basin. We have advanced $1.8M to Kwagga Gold (Propriety) Limited ("Kwagga"), a wholly-owned subsidiary of AfriOre International (Barbados) Ltd. ("AfriOre"). Kwagga holds the exploration and mining rights to the FSC Project. AfriOre is the operator of the FSC Project. We have an additional $300,000 payment due April 2004. We have a right to increase our equity ownership in Kwagga with a future advance of $1.4M. We also hold exploration rights to certain lands (304 ha) near Wawa, Ontario, Canada, which we refer to as the "Holdsworth Project." We have no current plans to conduct exploration activities on the Holdsworth Project. We anticipate partnering with a third party for exploration of the Holdsworth. Our common stock trades on the Over-the-Counter Bulletin Board under the symbol "WITM." Wits Basin is headquartered in Minneapolis, MN with offices in Toronto, ON. Risk Factors Except for historical information contained herein, this news release also includes forward-looking statements. All statements regarding potential mineralization and reserves, exploration results and future objectives of ours, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. We are under no obligation to, and expressly disclaim any such obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. The exploration for and development of mineral deposits involves significant financial risks, which even experience and knowledge may not eliminate, regardless of the amount of careful evaluation applied to a process. While the discovery of a mineral deposit may result in substantial rewards, few properties are ultimately developed into producing mines. Moreover, we cannot make any estimates regarding probable reserves and mineral resources in connection with any of our projects. Therefore, no assurance can be given that any size of reserves or grades of reserves will be realized. If a discovery is made, the mineral deposit discovered, and if recoverable, may differ from the reserves and mineral resources already discovered and recovered by others in the same region of the planned areas of exploration. The risks are numerous and detailed information regarding these risks may be found in filings by us with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q and reports on Form 8-K. Contact Information: Wits Basin Precious Minerals Inc. H. Vance White, CEO, 416.214.2250 or 866.214.WITM(9486); Mark D. Dacko, CFO, 612.664.0570 -----END PRIVACY-ENHANCED MESSAGE-----