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TABLE OF CONTENTS
As filed with the Securities and Exchange Commission on December 2, 2011AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 2018
Registration No.REGISTRATION NO. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington,WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MCEWEN MINING INC.
(Exact name of registrant as specified in its charter)
Colorado | ||||
(State or other jurisdiction of incorporation or organization) | 0611 (Primary Standard Industrial Classification Code Number) | 84-0796160 (I.R.S. Employer Identification |
181 Bay150 King StreetBay Wellington Tower
West, Suite 4750, P.O. Box 7922800
Toronto, Ontario ON
Canada M5J 2T3M5H 1J9
(866) 441-0690
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Corporate SecretaryAndrew Elinesky, Senior Vice President and Chief Financial Officer181 BayMcEwen Mining Inc.
150 King StreetBay Wellington Tower
West, Suite 4750, P.O. Box 7922800
Toronto, Ontario ON
Canada M5J 2T3M5H 1J9
(866) 441-0690
(Name, address, including zip code, and telephone number, including area code, of agent for service)
With Copies to:To
George A. Hagerty, Esq.
Hogan Lovells US LLP1200 Seventeenth Street,1601 Wewatta St. Suite 1500900
Denver, Colorado 80202
Telephone: (303) 899-7300
Facsimile: (303) 899-7333
Approximate date of commencement of proposed sale of the securities to the public:
From time to time after the effective date of this registration statement becomes effective.Registration Statement.
If the securities being registered on this Formform are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this Formform is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Formform is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer"filer," "smaller reporting company," and "smaller reporting"emerging growth company" in Rule 12b-2 of the Exchange Act.Act:
Large accelerated filer | Accelerated filer | Non-accelerated filero ( smaller reporting company) | Smaller reporting company o Emerging growth companyo |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered | Amount to be registered | Proposed maximum offering price per unit | Proposed maximum aggregate offering price | Amount of registration fee | ||||||||||||
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Title Of Each Class Of Securities To Be Registered | Amount To Be Registered(1) | Proposed Maximum Offering Price Per Share(2) | Proposed Maximum Aggregate Offering Price(2) | Amount of Registration Fee | ||||||||||||
Common Stock, no par value | 127,326,984(1) | $4.10(2) | $522,040,634(2) | $59,825.86 | 45,000,000 | $2.11 | $94,950,0000 | $11,822 | ||||||||
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The registrantRegistrant hereby amends this registration statementRegistration Statement on such date or dates as may be necessary to delay its effective date until the registrantRegistrant shall file a further amendment which specifically states that this registration statementRegistration Statement shall thereafter become effective in accordance with sectionSection 8(a) of the Securities Act of 1933 or until the registration statementRegistration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said sectionSection 8(a), may determine.
The information in this prospectus is not complete and may be change.changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdictionstate where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 2, 2011AUGUST 15, 2018
PROSPECTUS
MCEWEN MINING INC.
US GOLD CORPORATIONOFFER TO EXCHANGEUp to 127,326,984 Shares of US Gold Corporation Common Stock for allIssued and Outstanding Exchangeable Shares of McEwen Mining—Minera Andes Acquisition Corp.on a One-for-One Basis
45,000,000 SHARES OF COMMON STOCK
US Gold Corporation ("US Gold," "we," "us" or "our") is offering,This prospectus relates to 45,000,000 shares of common stock that may be offered and issued from time to time in connection with acquisitions of businesses, assets, properties or securities.
The amount and upontype of consideration we will offer and the other specific terms and subject toof each acquisition will be determined by negotiations with the conditions set forth in this prospectus, shares of US Gold common stock upon exchangeowners or redemptioncontrolling persons of the outstanding exchangeable sharesbusinesses, assets, properties or securities to be acquired. We may structure business acquisitions in a variety of McEwen Mining—Minera Andes Acquisition Corp., an indirect, wholly-owned Canadian subsidiary of US Gold that we refer to in this prospectus as "Canadian Exchange Co." We refer to the exchangeable shares of Canadian Exchange Co. as the "exchangeable shares."
The exchangeable shares are exchangeable on a one-for-one basis for shares of US Gold commonways, including acquiring stock, at any time at the optionother equity interests or assets or properties of the holder. Any exchangeable shares not previously exchanged will, uponacquired business or merging the directionacquired business with us or one of Canadian Exchange Co.'s boardour subsidiaries. The consideration for any business acquisitions may consist of directors, be redeemed for shares of US Gold common stock on any date that is on or after the tenth year anniversary of the date on which exchangeable shares are first issued, subject to applicable law, unless Canadian Exchange Co. redeems them earlier upon the occurrence of certain events, as described in this prospectus. See the section entitled "The Exchange Offer" of this prospectus for more information regarding the exchange. The exchange offer will terminate at such time as all of the exchangeable shares are exchanged or redeemed for shares of US Gold common stock.
Because the shares of our common stock offered by thisor a combination of common stock, cash, notes, assumption of liabilities or other consideration. Unless otherwise indicated in any prospectus will be issued only in exchange for the exchangeable shares,supplement, we willdo not expect to receive any cash proceeds from the sale of shares of common stock issued pursuant to this prospectus. We may be required to provide further information by means of a post-effective amendment to the registration statement or a supplement to this prospectus once we know the actual information concerning a specific acquisition.
We will pay all expenses of this offering. We are paying all expenses of registration incurredwill not pay underwriting discounts or commissions in connection with this offering.issuing these shares, although we may pay finder's fees in specific acquisitions. Any person receiving a finder's fee may be deemed an underwriter within the meaning of the Securities Act of 1933, as amended (the "Securities Act").
US Gold'sOur common stock is tradedlisted on both the New York Stock Exchange (NYSE)(the "NYSE") and the Toronto Stock Exchange (TSX)(the "TSX"), both under the symbol "UXG."MUX." On December 1, 2011,August 14, 2018, the closinglast reported sale price of our common stock on the NYSE and the TSX was $3.96. The mailing address of our principal executive offices is 181 Bay Street, Bay Wellington Tower, Suite 4750, P.O. Box 792, Toronto, Ontario Canada M5J 2T3$2.08 per share and our telephone number is (866) 441-0690.
There will be no record date for determining holders of Canadian Exchange Co. exchangeable shares entitled to participate in the exchange.C$2.72 per share, respectively.
Investing in the shares of our securitiescommon stock involves risks. See "Risk Factors" beginning on page 152 of this prospectus andto read about risks that you should consider before buying shares of our common stock. You should carefully read this prospectus, together with the documents we incorporate by reference, before you invest in the documents US Gold files with the Securities and Exchange Commission that are incorporated in this prospectus by reference for certain risks and uncertainties relating to an investment inshares of our securities.common stock.
Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission hasregulators have approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2011.2018.
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No person has been authorized
ABOUT THIS PROSPECTUS
In this prospectus, we use the terms "McEwen Mining," the "Company," "we," "us" and "our" to give any information or make any representationsrefer to McEwen Mining Inc. and its subsidiaries. This prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by McEwen Mining, constitutes a prospectus of McEwen Mining, Inc. under Section 5 of the Securities Act, with respect to the shares of common stock of McEwen Mining to be issued from time to time in connection with acquisitions of businesses, assets, properties or securities.
This prospectus incorporates documents containing important business and financial information about the Company by reference that are not presented or delivered with this offering otherprospectus. Copies of these documents are available without charge, upon written or oral request by a person to whom this prospectus has been delivered. Requests should be made to: McEwen Mining Inc., at 150 King Street West, Suite 2800, P.O. Box 24, Toronto, ON Canada M5H 1J9, (866) 441-0690.To ensure timely delivery of the documents, requests should be made no later than thosefive business days prior to the date on which a final investment decision is to be made.
We are responsible for the information contained orand incorporated by reference in this prospectus, in connectionany post-effective amendment or any prospectus supplement. We have not and have not authorized anyone to provide you with different information, and we do not take any responsibility for any other information that others may give you. Readers should assume that the offering describedinformation appearing in this prospectus, any post-effective amendment or any prospectus supplement is accurate only as of the date on its respective cover, and if given or made, suchthat any information or representations must not be relied uponincorporated by reference is accurate only as having been authorizedof the date of the document incorporated by us.reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus shalland prospectus supplement do not constitute an offer to sell or a solicitation of an offer to buy offeredany securities in any jurisdiction in which itwhere the offer or solicitation is unlawful for such person to make such an offeringnot permitted.
Unless we have indicated otherwise, or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances imply that the
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information contained or incorporated by referencecontext otherwise requires, references in this prospectus is correct as of any date subsequentto "$" or "dollar" are to the datelawful currency of this prospectus.the United States. We refer to Canadian dollars as C$.
This prospectus incorporates important business and financial information about US Gold Corporation that is not included in or delivered with this document. This information is available, without charge, upon written or oral request to Corporate Secretary, US Gold Corporation, 181 Bay Street, Bay Wellington Tower, Suite 4750, P.O. Box 792, Toronto, Ontario, Canada M5J 2T3, telephone: 866-441-0690.
To obtain timely delivery, you must request the information no later than five business days before the date you exchange your exchangeable shares.
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EXPLANATORYSPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
On September 22, 2011, US Gold entered into an arrangement agreement (the "Arrangement Agreement") with McEwen Mining—Minera Andes Acquisition Corp., an indirect wholly-owned subsidiary of US Gold ("Canadian Exchange Co."), and Minera Andes Inc. ("Minera Andes"), pursuant to which US Gold, through Canadian Exchange Co., will acquire all issued and outstanding common shares of Minera Andes in exchange for exchangeable shares of Canadian Exchange Co., at an exchange ratio of 0.45 of an exchangeable share of Canadian Exchange Co. for each outstanding common share of Minera Andes (the "Arrangement"). The Arrangement will take place pursuant to a court-approved plan of arrangement under theBusiness Corporations Act (Alberta) (the "ABCA"). The exchangeable shares of Canadian Exchange Co. to be issued in the Arrangement are being issued in reliance upon the exemption from registration under Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act"). In anticipation of the completion of the Arrangement, we are filing this registration statement with the Securities and Exchange Commission (the "SEC") in order to register under the Securities Act the issuance, from time to time following the Arrangement, of shares of our common stock in exchange for the exchangeable shares of Canadian Exchange Co. issued in the Arrangement. We intend to cause such registration statement to become effective immediately prior to the completion of the Arrangement.
This registration statement has been draftedprospectus, any accompanying prospectus supplement and prepared on the basisdocuments incorporated herein by reference contain or will contain certain references to future expectations and other forward-looking statements and information relating to our financial condition, results of operations and business. These statements include, among others:
These statements may be made expressly in this registration statement will only become effective if the Arrangement is completed. Atdocument or near the completion of the Arrangement,may be incorporated by reference to other documents that we will file an amendmentwith the SEC. You can find many of these statements by looking for words such as "believes", "expects", "anticipates", "estimates", "will", "may", "contemplate", "intend", "could", "plan", "shall", "can" or similar expressions used in this prospectus, any accompanying prospectus supplement and the documents incorporated herein by reference.
Forward-looking statements and information are based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to this registration statement priorsignificant business, economic and competitive uncertainties, risks and contingencies, not all of which are known to this registration statement becoming effective.us. There can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information.
The arrangement is subjectimportant factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, conditions to closing asthose set forth in the Arrangement Agreement, including obtaining"Risk Factors" section in our report on Form 10-K and the requisitefollowing:
If the Arrangement is completed,current and US Gold receives requisite approval from its shareholders, US Gold will change its name to McEwen Mining Inc. In connection with the change of the name of US Gold to McEwen Mining Inc., the trading symbol for US Gold common stock on the NYSE and TSX will be changed from "UXG" to "MUX".future exploration activities;
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This document is called a "prospectus" and it provides you with a general description of our common stock. We have filed a registration statement (of which this prospectus forms a part) with the SEC under the Securities Act using a shelf registration process. Under this shelf registration process, we may issue from time to time shares of US Gold common stock upon exchange or redemption of the outstanding exchangeable shares.
When acquiring our common stock, you should rely only on the information provided in this prospectus, including any information incorporated herein by reference. No one is authorized to provide you with information different from that which is contained, or deemed to be contained, in this prospectus. We are not offering our common stock in any state where the offer is prohibited. You should not assume that the information in this prospectus or any document incorporated by reference is truthful or complete as of any date other than the date indicated on the cover page of this document.
This prospectus contains and incorporates by reference forward-looking statements. Such forward-looking statements should be considered together with the cautionary statements and important factors
included
We caution you not to put undue reliance on these statements, which speak only as of the date on which it is made. Further, the information contained in this prospectus, andany accompanying prospectus supplement or the documents incorporated herein by reference. See "Cautionary Statement Regarding Forward-Looking Information" in this prospectus for more information. You should also carefully consider the various risk factors incorporated by reference into this prospectus from our SEC filings, which risk factors may cause our actual results to differ materially from those indicated. You should not place undue reliance on our forward-looking statements.
In this prospectus, references to the terms "US Gold", "the Company", "we", "us", "our" and similar terms, refer to US Gold Corporation and its wholly-owned subsidiaries onis a consolidated basis, unless we state or the context implies otherwise. Canadian Exchange Co. is an indirect wholly-owned subsidiary of US Gold, and has outstanding a class of exchangeable shares which we refer to as the "exchangeable shares" in this prospectus. In connection with the Arrangement, Minera Andes shareholders received exchangeable shares. Each exchangeable share is exchangeable or redeemable, as the case may be, for one share of US Gold common stock in accordance with the terms of the provisions governing the exchangeable shares. The registration statement of which this prospectus forms a part relates to shares of our common stock issuable upon exchangepresent intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or redemption of the exchangeable shares following the completion of the Arrangement.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
As a reporting company,assumptions. Except as required by law, we are subjectnot obligated to, the informational requirementsand do not undertake to, update any forward-looking statements made herein.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" in this prospectus certain information we file with the SEC, which means that we may disclose important information in this prospectus by referring you to the document that contains the information. The information incorporated by reference is considered to be a part of this prospectus, and the information we file later with the SEC will automatically update and supersede the information filed earlier. The followingWe incorporate by reference the documents listed below and any filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the date of the initial filing of the registration statement that contains this prospectus and prior to the effectiveness of the registration statement and all such documents that we file with the SEC after the date of this prospectus and before the termination of the offering of the securities covered by this prospectus;provided, however, that we are not incorporating by reference any additional documents or information furnished and not filed with the SEC, other than any portions of the respective filings that were furnished, rather than filed, pursuant to Item 2.02 or Item 7.01 of Current Reports on Form 8-K (including exhibits related thereto) or other applicable SEC rules, are incorporated by reference into this prospectus:SEC:
Whenever US Gold files reports or documents under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this prospectus until the termination of the offering, those reportsAugust 13, 2018 (except that, in each case, any portions thereof which are furnished and documents will be deemed to automatically be incorporated into and become a part of this prospectus; provided that no information that US Gold furnishes, rather than files, pursuant to Items 2.02 or 7.01 of Form 8-K (including exhibits related thereto) or other applicable SEC rules will be incorporated into this prospectus. Any information contained in such subsequentlynot filed reports that updates, modifies, supplements or replaces information contained in this prospectus automatically shall supersede and replace such information. Any information that is modified or superseded by a subsequently filed report or document shall not be deemed except as so modifiedincorporated); and
You may obtain copies of any of these filings free of charge by contacting us at the address and telephone number indicated below or by contacting the SEC as described above. You may request a copy of these filings, and any exhibits we have specifically incorporated by reference as an exhibit in this prospectus, at no cost, by writing or telephoning to:
US Gold CorporationMcEwen Mining Inc.181 Bay150 King StreetBay Wellington Tower West
Suite 4750,2800, P.O. Box 79224
Toronto, ON
Canada M5J 2T3M5H 1J9
Attn: Investor Relations
(866) 441-0690
Readers should rely only on the information provided or incorporated by reference in this prospectus or in any applicable supplement to this prospectus. Readers should not assume that the information in this prospectus, any post-effective amendment and any applicable supplement is accurate as of any date other than the date on the front cover of the document.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKINGWHERE YOU CAN FIND MORE INFORMATION
Some ofWe file annual, quarterly and current reports, proxy statements and other information with the information included in or incorporated by reference into this prospectusSEC. You may read and certain other documents filed or to becopy materials we have filed with the SEC by US Gold (as well asat the SEC's public reference room at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information included in other statements made by US Gold oron the operation of its representatives, and information about Minera Andes or its business), may contain forward-looking statements thatpublic reference room. Our SEC filings also are intendedavailable to be covered by the safe harbor provided in the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts, often will be phrased in the future-tense, and may include the words "may," "could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "plan" or other words or expressions of similar meaning. Forward-looking statements that relate to US Gold or its business are based on US Gold's current beliefs and expectations about future events, and include statements that reflect US Gold's management's beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to the Arrangement and US Gold's financial condition, results of operations, future performance and business, including statements relating to US Gold's business strategy and US Gold's current and future development plans.
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Uncertainties that could affect the accuracy of forward-looking statements, besides the specific risk factors regarding the exchange offer identified in "Risk Factors" beginning on page 15 and the various risk factors incorporated by reference into this prospectus, include:
Although US Gold believesThis prospectus and any prospectus supplement are part of a registration statement that we filed with the expectations reflected in its forward-looking statements are reasonable, any orSEC and do not contain all of the forward-looking statements containedinformation in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in US Gold's public reports and securities filings may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors relatingall respects by reference to the exchange offer described in this prospectus anddocument to which it refers. You should refer to the Arrangement described in US Gold's Definitive Proxy Statement on Schedule 14A filed with the SEC on December , 2011 and incorporated by reference into this prospectus, some of which are beyond US Gold's control, will be important in determining US Gold's future performance if anyactual documents for a more complete description of the businesses or assets of US Gold or Minera Andes are combined. Consequently, actual resultsrelevant matters. You may differ materially from those predicted in or that might be anticipated from forward-looking statements. Therefore, holdersinspect a copy of the exchangeable shares should not regard such forward-looking statementsregistration statement at the SEC's Public Reference Room in Washington, D.C. or through the SEC's website, as a representation that the predictions or expectations reflected in the forward-looking statements will be achieved, and should not place undue reliance on such forward-looking statements.provided above.
US Gold undertakes no obligation to publicly update or revise any information in this prospectus, whether as a result of new information, future events or otherwise, other than to reflect a material change in the information previously disclosed, as required by applicable law. Holders of exchangeable shares should review US Gold's subsequent reports filed from time to time with the SEC on Forms 10-K, 10-Q and 8-K, and any amendments thereto. As noted in "Incorporation of Certain Information by Reference", several such reports are incorporated by reference into this prospectus.v
The following summaryWe are a mining and minerals production and exploration company focused on precious and base metals in Argentina, Mexico, Canada and the United States.
Our principal executive office is qualifiedlocated at 150 King Street West, Suite 2800, Toronto, Ontario, Canada M5H 1J9 and our telephone number is (866) 441-0690. We also maintain offices in its entirety by,San Juan, Argentina; Guamuchil, Mexico, Elko, Nevada (U.S.), and should be read in conjunction with,Matheson, Canada. Our website is www.mcewenmining.com. We make available our periodic reports and news releases and certain of our corporate governance documents, including our Code of Ethics, on our website. Our common stock is listed on the NYSE and on the TSX under the symbol "MUX".
For more detailed information included elsewhere or incorporated by reference in this prospectus. Because this is a summary, it may not contain allabout the information you should consider before deciding whether to participate in the exchange offer. Before making an investment decision, you should read the entire prospectus carefully, including the section entitled "Risk Factors", beginningCompany, see "The Company" on page 15, and the information incorporated by reference in this prospectus.
SELECTED HISTORICAL FINANCIAL DATA OF US GOLDThe Offering
The followingWe are selected consolidated financial data for US Gold for eachoffering shares of our common stock that we may issue from time to time in connection with acquisitions by us of other businesses, assets, properties or securities. We expect the amount and type of consideration we will offer and the other specific terms of any acquisition will be determined by negotiations with the owners or controlling persons of the yearsbusinesses, assets or securities to be acquired after taking into account the current and anticipated future value of such businesses, assets, properties or securities, along with all other relevant factors.
When we issue common stock under the registration statement we may provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in the five-year period ended December 31, 2010 and for the nine-month periods ended September 30, 2011 and 2010. The information with respect each of the years in the five-year period ended December 31, 2010 has been derived from andthis prospectus. You should be read in conjunction with the audited consolidated financial statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the SEC on March 14, 2011 and incorporated by reference inboth this prospectus and Annual Report on Form 10-K forany prospectus supplement together with additional information described under the fiscal year ended December 31, 2009, filed with the SEC on March 16, 2010. The information with respect to the nine-month periods ended September 30, 2011 and 2010 has been derived from and should be read in conjunction with the unaudited consolidated financial statements and related notes included in US Gold's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed with the SEC on November 3, 2011 and incorporated by reference in this prospectus. The information with respect to each of the years in the three-year period ended December 31, 2008 has been derived from audited consolidated financials not included in this prospectus. All historical financial data presented with respect to US Gold is in accordance with US GAAP. Historical results are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year.
US Gold Historical Financial Data
| Nine Months Ended September 30, | Year Ended December 31, | |||||||||||||||||||||
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(in thousands, except per share) | 2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Operating data | |||||||||||||||||||||||
Net loss from operations(1)(2)(3)(4) | $ | (44,124 | ) | $ | (28,151 | ) | $ | (35,783 | ) | $ | (35,759 | ) | $ | (130,384 | ) | $ | (32,293 | ) | $ | (75,178 | ) | ||
Other (expenses) income | (1,444 | ) | 401 | 694 | 1,685 | (1,573 | ) | 3,426 | 2,528 | ||||||||||||||
Net loss(1)(2)(3)(4) | (45,568 | ) | (25,751 | ) | (33,091 | ) | (27,698 | ) | (131,111 | ) | (28,546 | ) | (72,650 | ) | |||||||||
Basic and diluted loss per share | $ | (0.33 | ) | $ | (0.21 | ) | $ | (0.27 | ) | $ | (0.25 | ) | $ | (1.36 | ) | $ | (0.35 | ) | $ | (1.82 | ) | ||
Weighted average number of shares | 136,134 | 121,944 | 121,987 | 112,224 | 96,641 | 81,955 | 39,891 | ||||||||||||||||
Balance sheet data | |||||||||||||||||||||||
Cash and cash equivalents | $ | 32,807 | $ | 17,415 | $ | 6,818 | $ | 27,690 | $ | 10,300 | $ | 30,929 | $ | 50,922 | |||||||||
Marketable securities | 2,248 | 1,497 | 4,576 | 11 | 13 | 287 | — | ||||||||||||||||
Short-term investments | — | 972 | — | 12,946 | — | — | — | ||||||||||||||||
Gold and silver bullion | 26,613 | 4,569 | 4,569 | 2,760 | — | — | — | ||||||||||||||||
Property and equipment, net | 11,715 | 4,155 | 4,391 | 2,888 | 5,187 | 5,547 | 1,520 | ||||||||||||||||
Mineral property interests | 245,453 | 233,981 | 235,153 | 239,858 | 255,813 | 258,121 | 3,300 | ||||||||||||||||
Goodwill | — | — | — | — | — | 107,017 | — | ||||||||||||||||
Other assets | 8,250 | 4,856 | 6,118 | 5,826 | 6,364 | 6,768 | 3,657 | ||||||||||||||||
Total assets | $ | 327,086 | $ | 267,445 | $ | 261,625 | $ | 291,979 | $ | 277,677 | $ | 408,669 | $ | 59,399 | |||||||||
Current liabilities | $ | 6,768 | $ | 3,657 | $ | 3,680 | $ | 1,849 | $ | 1,278 | $ | 987 | $ | 3,403 | |||||||||
Deferred income tax liability | 78,573 | 78,573 | 78,573 | 80,572 | 87,341 | 88,187 | — | ||||||||||||||||
Other long-term liabilities and deferred gain | 6,135 | 6,459 | 6,092 | 6,332 | 5,864 | 5,574 | 3,511 | ||||||||||||||||
Shareholders' equity | 235,610 | 178,756 | 173,280 | 203,226 | 183,194 | 313,921 | 52,485 | ||||||||||||||||
Total liabilities and shareholders' equity | $ | 327,086 | $ | 267,445 | $ | 261,625 | $ | 291,979 | $ | 277,677 | $ | 408,669 | $ | 59,399 | |||||||||
SELECTED HISTORICAL FINANCIAL DATA OF CANADIAN EXCHANGE CO.
The following table presents selected historical financial data of Canadian Exchange Co. from its formation on September 19, 2011 to September 30, 2011. Canadian Exchange Co. was formed for the sole purpose of facilitating the Arrangement as the issuer of the exchangeable shares. Canadian Exchange Co. has not carried on any active business operations since its incorporation other than in connection with its role as a party to the Arrangement. Canadian Exchange Co. did not generate any revenues and incurred only nominal expenses during the period from the date of its incorporation through September 30, 2011. Canadian Exchange Co. has only nominal assets and incurred only nominal liabilities prior to the completion of the acquisition of Minera Andes.
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COMPARATIVE PER SHARE DATA (UNAUDITED)
The following table presents, for the nine months ended September 30, 2011 and for the year ended December 31, 2010, selected historical, unaudited pro forma and pro forma equivalent per share data. The historical per share information of US Gold below is derived from the audited financial statements of US Gold as of, and for the year ended, December 31, 2010 and the unaudited interim financial statements for the three and nine months ended September 30, 2011 which are incorporated herein by reference.
The unaudited pro forma combined per share information of US Gold and Canadian Exchange Co. below gives effect to the Arrangement and the exchange offer and assumes that one share of US Gold common stock was issued in exchange for each outstanding exchangeable share. The unaudited pro forma combined per share data assume that the Arrangement and the exchange offer were completed as of January 1, 2010 and represents a current preliminary estimate based on available information and certain assumptions that US Gold management believes are reasonable. See the section titled "Unaudited Pro Forma Financial Information" for more information. The unaudited pro forma combined per share information of US Gold is derived from the unaudited pro forma combined income statement for the year ended December 31, 2010 and the nine month period ended September 30, 2011 and unaudited pro forma combined balance sheet as of September 30, 2011. The unaudited pro forma combined per share information is provided for informational purposes only and does not purport to represent the actual results of operations that US Gold would have achieved had the exchange offer been completed during these periods or to project the future results of operations that US Gold may achieve after the exchange offer.
You should read the following information in conjunction with the selected historical financial information of US Gold and Canadian Exchange Co. included elsewhere in this prospectus and the historical financial statements of US Gold incorporated into this prospectus by reference. See "Selected Historical Financial Data of US Gold," "Selected Historical Financial Data of Canadian Exchange Co.," andheading "Where You Can Find More Information".Information."
| Nine Months Ended September 30, 2011 | Year Ended December 31, 2010 | ||||||
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Net Income (loss) per share: | ||||||||
US Gold historical basic and diluted | $ | (0.33 | ) | $ | (0.27 | ) | ||
Canadian Exchange Co. historical basic and diluted(1) | N/A | N/A | ||||||
Pro Forma combined | $ | (0.13 | ) | $ | (0.21 | ) | ||
Equivalent Pro Forma combined | $ | (0.29 | ) | $ | (0.28 | ) | ||
Dividends Per Share | ||||||||
US Gold historical | $ | — | $ | — | ||||
Canadian Exchange Co. historical(1) | N/A | N/A | ||||||
Pro Forma combined | $ | — | $ | — | ||||
Equivalent Pro Forma combined | $ | — | $ | — | ||||
Book Value Per Share at Period End | ||||||||
US Gold historical | $ | 1.69 | $ | 1.42 | ||||
Canadian Exchange Co. historical(1) | N/A | N/A | ||||||
Pro Forma combined | $ | 2.74 | N/A | |||||
Equivalent Pro Forma combined | $ | 1.90 | N/A |
its role as a party to the Arrangement Agreement. Canadian Exchange Co. did not generate any revenues and incurred only nominal expenses during the period from the date of its incorporation through September 30, 2011. Canadian Exchange Co. has only nominal assets and incurred only nominal liabilities prior to the completion of the acquisition of Minera Andes.
The information set forth below sets forth risks and uncertainties relatingAn investment in our securities involves a high degree of risk. You should carefully consider the risk factors incorporated by reference to the exchange offer described in this prospectus. This information should be read in conjunction with US Gold'sour most recent Annual Report on Form 10-K, for the year ended December 31, 2010Quarterly Reports on Form 10-Q and Definitive Proxy StatementCurrent Reports on Schedule 14AForm 8-K we filed with the SEC, on December , 2011, which areand all other information contained or incorporated by reference hereininto this prospectus, as updated by our subsequent filings under the Exchange Act, and set forth additional importantthe risk factors and other information contained in the applicable prospectus supplement before acquiring any of such securities. The occurrence of any of these risks and uncertainties that could materially adversely affect US Gold's business, financial condition and/might cause you to lose all or operating results. Additional riskspart of your investment in the offered securities.
This summary below highlights selected information about our company. This summary is not complete and uncertainties that US Gold does not presently knowcontain all of the information that may be important to you. For a more complete understanding of us you should read carefully this entire prospectus, including the "Risk Factors" section and the other documents we refer to and incorporate by reference. In particular, we incorporate important business and financial information in this prospectus by reference.
We were organized under the laws of the State of Colorado on July 24, 1979. We are engaged in the exploration for, development of, production and sale of gold and silver and, with the acquisition of the Los Azules project in 2012, exploration for copper. On January 24, 2012, we changed the name of the Company from U.S. Gold Corporation to McEwen Mining Inc. after the completion of the acquisition of Minera Andes Inc. by way of a statutory plan of arrangement under the laws of the Province of Alberta, Canada.
We operate in Argentina, Mexico, Canada and the United States. We own a 49% interest in Minera Santa Cruz S.A. ("MSC"), owner of the producing San José silver-gold mine in Santa Cruz, Argentina, which is operated by the joint venture majority owner, Hochschild Mining plc. We also own and operate the El Gallo 1 mine in Sinaloa, Mexico and the Black Fox mine in Ontario, Canada. In addition, we own the Los Azules copper deposit in San Juan, Argentina, the El Gallo 2 project in Sinaloa, Mexico, the Gold Bar project in Nevada in the United States, and a portfolio of exploration properties in Argentina, Mexico, Nevada, and Timmins, Ontario in Canada.
On October 6, 2017, we acquired certain assets and liabilities from Primero Mining Corp., a British Columbia corporation ("Primero"). The assets we acquired from Primero (collectively, the "Assets") include the Black Fox Complex, an operating underground precious metal mine, associated mining claims and equipment located in the Township of Black River-Matheson, Ontario, Canada and the Grey Fox and Froome projects, exploration properties located near the Black Fox Complex. All of the Black Fox Complex, the Grey Fox and Froome projects are located in the historic Timmins mining district in Ontario where we already owned a number of exploration properties. We paid a purchase price of $35 million for the Assets, which included adjustments for the replacement of certain cash collateral securing reclamation obligations, and in addition, we assumed certain liabilities, including accounts payable and environmental liabilities.
Our objective is to increase the value of our shares through the exploration and extraction of gold, silver and other valuable minerals. Other than the San José mine in Argentina, we generally conduct our exploration activities as the sole operator, but we may enter into arrangements with other companies through joint venture or similar agreements in an effort to achieve our strategic objectives. We hold our mineral interests and property and operate our business through various subsidiary companies, and except for MSC, each of which is owned entirely, directly, or indirectly, by us.
Our principal executive office is located at 150 King Street West, Suite 2800, P.O. Box 24, Toronto, Ontario, Canada M5H 1J9 and our telephone number is (866) 441-0690. We also maintain offices in San Juan, Argentina; Guamuchil, Mexico; Elko and Reno, Nevada. Our website is
www.mcewenmining.com. We make available our periodic reports and news releases on our website. Our common stock is listed on both the NYSE and the TSX under the symbol "MUX".
The information contained in, or that US Gold currently deems immaterialcan be accessed through, our website is not a part of, and is not incorporated into, this prospectus, and you should not consider it part of this prospectus or part of any prospectus supplement.
We are offering shares of our common stock that we may issue from time to time in connection with acquisitions by us of other businesses, assets, properties or securities. We expect the amount and type of consideration we will offer and the other specific terms of any acquisition will be determined by negotiations with the owners or controlling persons of the businesses, assets or securities to be acquired after taking into account the current and anticipated future value of such businesses, assets, properties or securities, along with all other relevant factors.
The shares of our common stock to be issued in connection with any acquisition made pursuant to this prospectus will be registered under the Securities Act and will be freely transferable under the Securities Act, except for shares of our common stock issued to any person who is deemed to be an "affiliate" of ours following the consummation of the applicable acquisition.
When we issue common stock under the registration statement we may provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also impair US Gold's business operationsadd, update or adversely affectchange information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the holders of the exchangeable shares who participate in the exchange offering.heading "Where You Can Find More Information."
Holders of exchangeable shares We will experience a delay in receiving shares of US Goldbe offering and issuing our common stock from the date they request an exchange, which may affect the valuetime to time in connection with acquisitions of the shares the holder receivesbusinesses, assets, properties or securities. Unless otherwise indicated in an exchange.
Holders of exchangeable shares who requestany prospectus supplement, we do not expect to receive US Gold common stock in exchange for their exchangeable shares will not receive US Gold common stock until approximately five business days after the applicable request is received. During this period, the market price of US Gold common stock may increase or decrease. Any such increase or decrease would affect the value of the consideration to be received by such a holder of exchangeable shares upon a subsequent sale of the US Gold common stock received in the exchange.
The exchange of your exchangeable shares is generally taxable in Canada.
Based on the tax laws as of the date of this prospectus, the exchange of exchangeable shares for shares of US Gold common stock is generally a taxable event in Canada. A holder's tax consequences can vary depending on a number of factors, including the residency of the holder, the method of the exchange and the length of time that the exchangeable shares were held prior to the exchange. Canadian income tax consequences will vary depending on your particular circumstances. See "Material Canadian Federal Income Tax Consequences" for a summary of certain material Canadian federal income tax consequences relating to the exchangeable shares. We strongly urge you to consult your tax advisor as to the tax consequences of exchanging your exchangeable shares for US Gold common stock.
The exchange of your exchangeable shares may be taxable in the U.S.
The U.S. federal income tax consequences of an exchange of exchangeable shares for shares of US Gold depend on whether the exchangeable shares are treated for U.S. federal income tax purposes as shares of Canadian Exchange Co. or as shares of US Gold common stock. There is no direct authority under existing United States federal income tax law concerning whether the exchangeable shares should be treated as shares of Canadian Exchange Co. or shares of US Gold common stock. Neither Minera Andes, US Gold nor Canadian Exchange Co. has requested, or intends to request, a rulingany cash proceeds from the Internal Revenue Service or an opinion of counsel regarding the status of the exchangeable shares for United States federal income tax purposes. The discussion under the heading "Material United States Federal Income Tax Consequences" includes a discussion of the alternative United States federal income tax consequences of the exchange of exchangeable shares depending on whether the exchangeable shares are treated as either (i) shares of US Gold common stock or (ii) shares of Canadian Exchange Co. Generally, for United States federal income tax purposes, a U.S. Holder's (and in certain circumstances a Non-U.S. Holder's) exchange of exchangeable shares for shares of US Gold common stock will be a taxable sale in which the holder will recognize gain or loss if the exchangeable shares are treated as shares of Canadian Exchange Co. and not as shares of US Gold common stock. Holders of exchangeable shares should consider that the United States federal income tax consequences of an exchange of exchangeable shares may be adverse to the holder based on the holder's particular circumstances. Holders should take into account the possibility that the Internal Revenue Service may assert and prevail with a position on the status of the exchangeable shares that is contrary to the position taken by the holder.these offerings.
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATIONDESCRIPTION OF COMMON STOCK
The table below sets forth the closing sale price of US Gold common stock as reported on the NYSE on June 13, 2011, the last trading day prior to the public announcement of the Arrangement, and on December 1, 2011, the most recent practicable trading day prior to the date of this prospectus. The exchangeable shares are not currently listed for trading on any exchange and had no established market price as of June 13, 2011 and December 1, 2011. However, the TSX has conditionally approved the listing of the exchangeable shares, to be listed the trading symbol "MAQ" once the Arrangement is completed.
| US Gold Common Stock | Canadian Exchange Co. Exchangeable Shares | |||||
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June 13, 2011 | $ | 5.50 | N/A(1 | ) | |||
December 1, 2011 | $ | 3.96 | N/A(1 | ) |
The Exchange Offer
The purpose of the exchange offer is to exchange any and all outstanding exchangeable shares for shares of US Gold common stock, so that following completion of the exchange offer all of the holders of exchangeable shares shall have received shares of US Gold common stock.
We are filing this registration statement on Form S-4, of which this prospectus is a part, with the SEC in order to register under the Securities Act the issuance from time to time of shares of our common stock upon exchange of the exchangeable shares. Each exchangeable share is substantially the economic and voting equivalent of a share of US Gold common stock and is exchangeable on a one-for-one basis for a share of US Gold common stock at any time, at the option of the holder. Any exchangeable shares not previously exchanged will, upon the direction of Canadian Exchange Co.'s board of directors, be redeemed for shares of US Gold common stock on any date that is on or after the tenth year anniversary of the date on which exchangeable shares are first issued, subject to applicable law and the due exercise by either us or Callco of our or its redemption call right, unless Canadian Exchange Co. redeems them earlier upon the occurrence of certain events.
Terms of the Exchange Offer
US Gold is offering, upon the terms and subject to the conditions described in this prospectus, to exchange shares of US Gold common stock for the outstanding exchangeable shares of Canadian Exchange Co. A description of how a holder may exchange the exchangeable shares, and of US Gold's or Callco's redemption rights, is provided below in the section entitled "Description of Capital Stock of US Gold—Exchangeable Shares". The rights of the holders of exchangeable shares, including exchange rights, are described in greater detail in the Plan of Arrangement which is included as Exhibit 2.1 to the registration statement, of which this prospectus is a part.
Withholding Rights
Each of US Gold, Callco, Canadian Exchange Co. and Canadian Exchange Co.'s transfer agent will be entitled to deduct and withhold from any consideration otherwise payable to any holder of exchangeable shares such amounts as each of US Gold, Callco, Canadian Exchange Co. or Canadian Exchange Co.'s transfer agent is required to deduct and withhold with respect to such payment under theIncome Tax Act (Canada), the Code or any provision of federal, provincial, state, territorial, local or foreign tax law.
To the extent that amounts are so withheld, such withheld amounts will be treated for all purposes as having been paid to the holder of the exchangeable shares in respect of which the deduction and withholding was made, provided, that the withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, US Gold, Callco, Canadian Exchange Co. and Canadian Exchange Co.'s transfer agent are authorized to sell or otherwise dispose of the portion of the consideration necessaryissue up to provide sufficient funds to US Gold, Callco, Canadian Exchange Co. or, Canadian Exchange Co.'s transfer agent, as the case may be, to enable it to comply with the deduction or withholding requirement and US Gold, Callco, Canadian Exchange Co. or Canadian Exchange Co.'s transfer agent, as the case may be, will notify the holder and remit to the holder any unapplied balance of the net proceeds of such sale.
ACCOUNTING TREATMENT OF THE EXCHANGE
The exchangeable shares are currently accounted for as outstanding capital stock of Canadian Exchange Co. The value of the shares of common stock of US Gold to be issued upon exchange are included in the outstanding capital stock. Accordingly, each issued and outstanding exchangeable share is treated as an issued and outstanding US Gold common share for purposes of calculating earnings per common share for US Gold.
Because the shares of our common stock offered by this prospectus will be issued only in exchange for the exchangeable shares, we will not receive any cash proceeds from this offering.
The shares of US Gold common stock offered in this prospectus will be issued in exchange for exchangeable shares as described in the terms of our Plan of Arrangement with Minera Andes, which is included as Exhibit A to the Arrangement Agreement which is included as Exhibit 2.1 to the registration statement of which this prospectus is a part. No broker, dealer or underwriter has been engaged in connection with this offering.
MATERIAL CONTRACTS BETWEEN US GOLD AND CANADIAN EXCHANGE CO.
In connection with and concurrently with the closing of the Arrangement, US Gold and Canadian Exchange Co. are entering into the Voting and Exchange Trust Agreement among US Gold Corporation, Callco, Canadian Exchange Co. and Computershare Trust Company of Canada (the "Voting and Exchange Trust Agreement") and the Exchangeable Share Support Agreement among US Gold, Callco, and Canadian Exchange Co. (the "Support Agreement") solely for the purpose of ensuring that each exchangeable share is substantially the economic and voting equivalent of a share of US Gold common stock and is exchangeable on a one-for-one basis for a share of US Gold common stock at any time at the option of the holder or, in certain circumstances, by Canadian Exchange Co., US Gold or Callco. Together, the Voting and Exchange Trust Agreement and the Support Agreement set forth the terms governing the exchangeable shares. See the section entitled "Description of Capital Stock of US Gold—Exchangeable Shares" for more information. Through the Voting and Exchange Trust Agreement and the issuance by US Gold to the trustee of one share of Series B Special Voting Preferred Stock, each holder of an exchangeable share effectively has the ability to cast votes along with holders of US Gold common stock. In addition, the Voting and Exchange Trust Agreement grants exchange rights upon an event of insolvency of Canadian Exchange Co. or the liquidation, dissolution or winding up of US Gold. The Support Agreement provides that the exchangeable shares have the same dividend and distribution rights as US Gold common stock and any change to the rights, privileges or other terms of US Gold common stock will be simultaneously made to the exchangeable shares.
This description of the Voting and Exchange Trust Agreement and the Support Agreement is qualified in its entirety by reference to such agreements, which are included as Exhibit 10.1 and Exhibit 10.2, respectively, to the registration statement of which this prospectus is a part and are incorporated herein by reference.
MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF HOLDERS OF US GOLD COMMON STOCK AND HOLDERS OF EXCHANGEABLE SHARES
Holders of the exchangeable shares have essentially the same voting rights with respect to US Gold and the same economic interests as holders of US Gold common stock. While the rights and privileges of shareholders of an Alberta corporation are, in many instances, comparable to those of shareholders of a Colorado corporation, there are certain differences. These differences arise from differences between Alberta and Colorado law, and between the Canadian Exchange Co. articles of incorporation and bylaws and the US Gold articles of incorporation and bylaws. The following is a summary of some of the most significant differences in shareholder rights between Canadian Exchange Co. and US Gold. This summary is not intended to be complete and is qualified in its entirety by reference to the ABCA, the Colorado Act and the governing corporate instruments of Canadian Exchange Co. and US Gold.
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DESCRIPTION OF CAPITAL STOCK OF US GOLD
Following shareholder approval at a special meeting in connection with the Arrangement, our authorized capital will consist of 500,000,000 shares of common stock, no par value, and 2 shares of preferred stock, no par value. As of , 2012,August 14, 2018, there were a total of 337,276,381 shares of our common stock and two shares of preferred stock, one designated as Series A Special Voting Preferred Stock (the "Series A Preferred Share") and the other designated Series B Special Voting Preferred Stock (the "Series B Preferred Share"), issued and outstanding.
The following discussion summarizes the rights and privileges of our outstanding capital stock and certain securities that may be convertible into our capitalcommon stock and is qualified by reference to the relevant provisions of the laws of the State of Colorado law and US Gold'sour Amended and Restated Articles of Incorporation (the "US Gold Articles(our "Articles of Incorporation") and Bylaws which have been filed with the SEC and are included as Exhibits 3.1 and 3.2, respectively, toincorporated by reference into the registration statement of which this prospectus is a part and are incorporated herein by reference.
Common Stockpart.
The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders, including the election of directors. Cumulative voting for directors is not permitted. Subject to preferences that may be applicable to any then outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any, as may be declared by our board of directors (the "Board") out of legally available funds. Upon our liquidation, dissolution or winding up, the holders of common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities of our Company, subject to the prior rights of any preferred stock then outstanding. Holders of common stock have no preemptive or conversion rights or other subscription rights and there are no redemption or sinking funds provisions applicable to the common stock. The US Gold ArticlesThere are no restrictions on the alienability of Incorporationour common stock and there are no provisions discriminating against any existing or prospective holder of our Bylaws do not include any provisioncommon stock as a result of such holder owning a substantial amount of the Company's securities. We refer you to the "Anti-Takeover Provisions" subsection below for information regarding provisions that would delay, defer or prevent a change in control of our Company. However,
Anti-Takeover Provisions
Our Articles of Incorporation and our Bylaws include certain provisions that could delay, defer or prevent a change in control of our Company. Among other things, our Articles of Incorporation and Bylaws:
Moreover, pursuant to the laws of the State of Colorado, certain significant transactions would require the affirmative vote of a majority of the shares eligible to vote at a meeting of shareholders, which requirement could result in delays to or greater cost associated with a change in control of US Gold.McEwen Mining.
Preferred StockExchange Listings
OfOur common stock is listed on the two shares of preferred stock authorizedNYSE and on the TSX, each under the US Gold Articles of Incorporation, one share is designated as Series A Preferred Shares and one share is designated as Series B Preferred Share, both of which are issued and outstanding. The US Gold Articles of Incorporation do not include authorization for an undesignated class or "blank check" preferred stock, and any issuance of preferred stock would require shareholder approval.
Series A Special Voting Preferred Stock
The Series A Preferred Share was created by us and issued in connection with the acquisition of White Knight Resources Ltd., Nevada Pacific Gold Ltd. and Tone Resources Limited (the "Acquired Companies") in 2007 to facilitate the issuance of exchangeable shares (the "2007 Exchangeable Shares") of our wholly-owned indirect subsidiary, US Gold Canadian Acquisition Corporation ("2007 Acquisition Co.symbol "MUX."). The Series A Preferred Share is held by a trustee under a voting and exchange trust agreement and will be outstanding so long as any of the 2007 Exchangeable Shares are outstanding, excluding any shares owned by US Gold or its subsidiaries.
The Series A Preferred Share entitles the holder thereof to an aggregate number of votes equal to the number of the 2007 Exchangeable Shares issued and outstanding from time to time and which are
not owned by US Gold or its subsidiaries. As of , 2012, the Series A Preferred Share was entitled to votes, based upon 2007 Exchangeable Shares outstanding on such date, which are not owned by US Gold or its subsidiaries. Except as otherwise provided herein or by law, the holder of the Series A Preferred Share, the holder of the Series B Preferred Share and the holders of our common stock vote together as one class on all matters submitted to a vote of our shareholders. The holder of the Series A Preferred Share have no special voting rights, and its consent is not required, except to the extent it is entitled to vote with the holders of shares of our common stock, for taking any corporate action.
At such time as (a) the Series A Preferred Share entitles its holder to a number of votes equal to zero because there are no 2007 Exchangeable Shares issued and outstanding that are not owned by US Gold and its subsidiaries, and (b) there is no share of stock, debt, option or other agreement, obligation or commitment of 2007 Acquisition Co. which could by its terms require 2007 Acquisition Co. to issue any 2007 Exchangeable Shares to any person other than us, then the Series A Preferred Share will thereupon be retired and cancelled promptly thereafter.
If the Series A Preferred Share should be purchased or otherwise acquired by us in any manner whatsoever, then such Series A Preferred Share will be retired and cancelled promptly after the acquisition thereof. Such Series A Preferred Share will upon its cancellation, and upon the taking of any action required by applicable law, become an authorized but unissued share of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance under applicable law or set forth in the US Gold Articles of Incorporation or US Gold's Bylaws.
The holder of the Series A Preferred Share is not entitled to receive any portion of any dividend or distribution at any time. The Series A Preferred Share is not redeemable.
Upon any liquidation, dissolution or winding up of US Gold, the holder of the Series A Preferred Share will not be entitled to any portion of any related distribution.
2007 Exchangeable Shares
The 2007 Exchangeable Shares were issued by our subsidiary, 2007 Acquisition Co., in connection with the acquisition of the Acquired Companies. As of , 2012, there were approximately 2007 Exchangeable Shares outstanding that were not held by US Gold or its subsidiaries. The 2007 Exchangeable Shares are exchangeable on a one-for-one basis at any time at the option of the holder of the 2007 Exchangeable Shares into shares of our common stock.
Retraction of Exchangeable Shares by Holders
Subject to the retraction call right described below and applicable law, holders of the 2007 Exchangeable Shares will be entitled at any time to retract (i.e., to require 2007 Acquisition Co. to redeem) any or all 2007 Exchangeable Shares held by them and to receive the retraction price per 2007 Exchangeable Share to be satisfied by issuance of one share of common stock of US Gold, plus the dividend amount, which is the full amount of all declared and unpaid dividends on the 2007 Exchangeable Shares and all dividends and distributions declared on a share of common stock of US Gold that have not yet been declared on the 2007 Exchangeable Shares. Holders of the 2007 Exchangeable Shares may effect a retraction by presenting to 2007 Acquisition Co. or its transfer agent the certificate(s) representing the 2007 Exchangeable Shares the holder desires to have 2007 Acquisition Co. redeem, together with such other documents and instruments as may be required under the ABCA, the Articles of Incorporation of 2007 Acquisition Co. or by its transfer agent, and a duly executed retraction request specifying that the holder desires to have the number of retracted shares specified therein redeemed by 2007 Acquisition Co.
A holder of retracted shares may withdraw its retraction request, by written notice to 2007 Acquisition Co., before the close of business on the business day immediately preceding the retraction date, in which case the retraction request will be null and void and the revocable offer will be deemed to have been revoked.
If, as a result of solvency provisions of applicable law, 2007 Acquisition Co. is not permitted to redeem all 2007 Exchangeable Shares tendered by a retracting holder and neither we nor U.S. Gold Alberta ULC, our wholly-owned indirect subsidiary ("Alberta ULC") has exercised its retraction call right, 2007 Acquisition Co. will redeem up to the maximum permissible number of the 2007 Exchangeable Shares tendered by the holder. US Gold or Alberta ULC will be required to purchase any 2007 Exchangeable Shares not redeemed by 2007 Acquisition Co. in exchange for shares of our common stock on the retraction date under the optional exchange right described below.
Distribution on Liquidation of 2007 Acquisition Co.
Subject to applicable law, in the event of the liquidation, dissolution or winding up of 2007 Acquisition Co. or any other distribution of its assets among its shareholders for the purpose of winding up its affairs, holders of the 2007 Exchangeable Shares are entitled, subject to applicable law, to receive from the assets of 2007 Acquisition��Co., a liquidation payment that will be satisfied by the issuance of one share of our common stock plus the dividend amount, if any, for each 2007 Exchangeable Share. This liquidation amount will be paid to the holders of the 2007 Exchangeable Shares before any distribution of assets of 2007 Acquisition Co. is made to the holders of the common shares or any other shares of 2007 Acquisition Co. ranking junior to the 2007 Exchangeable Shares, and is subject to the exercise by US Gold or Alberta ULC of its liquidation call right described in the section entitled "—Liquidation Call Right" below.
Automatic Exchange Upon Liquidation of US Gold
In the event of US Gold's liquidation, all of the then outstanding 2007 Exchangeable Shares will be automatically exchanged for shares of US Gold common stock. To effect an automatic exchange, US Gold, or at US Gold's option, Alberta ULC, will purchase all of the 2007 Exchangeable Shares from the holders on the fifth business day prior to the effective date of a liquidation. The purchase price payable for each 2007 Exchangeable Share purchased in a liquidation of US Gold will be satisfied by the issuance of one share of US Gold common stock plus the dividend amount, if any.
Redemption of 2007 Exchangeable Shares by 2007 Acquisition Co.
Subject to applicable law and the due exercise by either US Gold or Alberta ULC of its redemption call right, 2007 Acquisition Co. will redeem all of the then outstanding 2007 Exchangeable Shares on the date, if any, established by the board of directors of 2007 Acquisition Co., which date may not be before the earlier of: (a) March 28, 2014; and (b) any date established by the board of directors of 2007 Acquisition Co. for the redemption of the 2007 Exchangeable Shares at such time as there are fewer than 4,296,883 2007 Exchangeable Shares outstanding. The redemption price per 2007 Exchangeable Share will be satisfied by delivering to the holder one share of US Gold common stock plus the dividend amount, if any.
Retraction Call Right
Each of US Gold and Alberta ULC has an overriding retraction call right to acquire all but not less than all of the 2007 Exchangeable Shares that a holder of the 2007 Exchangeable Shares requests 2007 Acquisition Co. to redeem. The purchase price payable for each 2007 Exchangeable Share will be satisfied by delivering to the holder one share of US Gold common stock plus the dividend amount, if any.
Liquidation Call RightTransfer Agent
Each of US Gold and Alberta ULC has an overriding liquidation call right, in the event of and notwithstanding a proposed liquidation, dissolution or winding up of 2007 Acquisition Co., to acquire all but not less than all of the 2007 Exchangeable Shares then outstanding. The purchase price payable for each 2007 Exchangeable Share will be satisfied by delivering to the holder one share of US Gold common stock plus the dividend amount, if any. Upon the exercise by US Gold or Alberta ULC of the liquidation call right, the holders will be obligated to transfer their 2007 Exchangeable Shares to US Gold or Alberta ULC, as applicable. The acquisition by US Gold or Alberta ULC of all of the outstanding 2007 Exchangeable Shares upon the exercise of the liquidation call right will occur on the effective date of the voluntary or involuntary liquidation, dissolution or winding up of 2007 Acquisition Co.
Redemption Call Right
Each of US Gold and Alberta ULC has an overriding redemption call right, notwithstanding the proposed automatic redemption of the 2007 Exchangeable Shares by 2007 Acquisition Co. in the share provisions, to acquire all but not less than all of the 2007 Exchangeable Shares then outstanding. The purchase price payable for each 2007 Exchangeable Share will be satisfied by delivering to the holder one share of US Gold common stock plus the dividend amount, if any. Upon the exercise by US Gold or Alberta ULC of the redemption call right, the holders will be obligated to transfer their 2007 Exchangeable Shares to US Gold or Alberta ULC, as applicable.
If US Gold or Alberta ULC exercises one or more of its call rights, shares of US Gold common stock will be directly issued to holders of the 2007 Exchangeable Shares and US Gold or Alberta ULC, as applicable, will become the holder of the 2007 Exchangeable Shares. US Gold and Alberta ULC will not be entitled to exercise any voting rights attached to the 2007 Exchangeable Shares that are acquired from the holders.
Voting Rights
Under the voting and exchange trust agreement US Gold has entered into with 2007 Acquisition Co. and Computershare Trust Company, of Canada, holders of the 2007 Exchangeable Shares will be entitled to receive notice of and attend any meeting of US Gold shareholders and to vote at any such meetings.
Dividends
Holders of the 2007 Exchangeable Shares will be entitled to receive dividends equivalent to the dividends, if any, paid from time to time by US Gold on shares of its common stock. The declaration date, record date and payment date for dividends on the 2007 Exchangeable Shares will be the same as that for any corresponding dividends on shares of US Gold common stock.
Amendment and Approval
Any approval required to be given by the holders of the 2007 Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the 2007 Exchangeable Shares or any other matter requiring the approval or consent of the holders of the 2007 Exchangeable Shares in accordance with applicable law will be deemed to have been sufficiently given if it has been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by a resolution passed by not less than "662/3%" of the votes cast on such resolution at a meeting of holders of the 2007 Exchangeable Shares duly called and held, excluding the 2007 Exchangeable Shares beneficially owned by US Gold or its subsidiaries.
Series B Special Voting Preferred Stock
The Series B Preferred Share was created by us and issued in connection with the Arrangement to facilitate the issuance of the exchangeable shares of Canadian Exchange Co. The Series B Preferred ShareN.A. is held by a trustee under the Voting and Exchange Trust Agreement and will be outstanding so long as any of the exchangeable shares are outstanding, excluding any shares owned by US Gold or its subsidiaries.
The Series B Preferred Share entitles the holder thereof to an aggregate number of votes equal to the number of the exchangeable shares issued and outstanding from time to time and which are not owned by US Gold or its subsidiaries. As of the date on which the exchangeable shares are issued in the Arrangement, the Series B Preferred Share will be entitled to 127,326,984 votes, based upon 127,326,984 exchangeable shares outstanding on such date, which are not owned by US Gold or its subsidiaries. Except as otherwise provided herein or by law, the holder of the Series B Preferred Share, the holder of the Series A Preferred Share and the holders of our common stock vote together as one class on all matters submitted to a vote of our shareholders. The holder of the Series B Preferred Share have no special voting rights, and its consent is not required, except to the extent it is entitled to vote with the holders of shares of our common stock, for taking any corporate action.
At such time as (a) the Series B Preferred Share entitles its holder to a number of votes equal to zero because there are no exchangeable shares issued and outstanding that are not owned by US Gold and its subsidiaries, and (b) there is no share of stock, debt, option or other agreement, obligation or commitment of Canadian Exchange Co. which could by its terms require Canadian Exchange Co. to issue any exchangeable shares to any person other than us, then the Series B Preferred Share will thereupon be retired and cancelled promptly thereafter. Such Series B Preferred Share will upon its cancellation, and upon the taking of any action required by applicable law, become an authorized but unissued share of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance under applicable law or set forth in the US Gold Articles of Incorporation or US Gold's Bylaws.
If the Series B Preferred Share should be purchased or otherwise acquired by us in any manner whatsoever, then such Series B Preferred Share will be retired and cancelled promptly after the acquisition thereof. Such share will upon its cancellation, and upon the taking of any action required by applicable law, become an authorized but unissued share of preferred stock and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board, subject to the conditions and restrictions on issuance under applicable law or set forth in the US Gold Articles of Incorporation or US Gold's Bylaws.
The holder of the Series B Preferred Share is not entitled to receive any portion of any dividend or distribution at any time. The Series B Preferred Share is not redeemable.
Upon any liquidation, dissolution or winding up of US Gold, the holder of the Series B Preferred Share will not be entitled to any portion of any related distribution.
Exchangeable Shares
The exchangeable shares were issued by our subsidiary, Canadian Exchange Co., in connection with the Arrangement. As of the date on which the exchangeable shares are issued in the Arrangement, there will be approximately 127,326,984 exchangeable shares outstanding that were not held by US Gold or its subsidiaries. The exchangeable shares are exchangeable on a one-for-one basis at any time at the option of the holder of the exchangeable shares into shares of US Gold common stock. The following is a summary description of the material provisions of the rights, privileges, restrictions and conditions attaching to the exchangeable shares.
Retraction of Exchangeable Shares by Holders
Subject to applicable law and the due exercise by either us or Callco of our or its retraction call right, holders of the exchangeable shares will be entitled at any time to retract (i.e., to require Canadian Exchange Co. to redeem) any or all exchangeable shares held by them and to receive in exchange for each exchangeable share, one share of common stock of US Gold, plus the dividend amount, which is equal to any cash dividends declared and payable but not yet paid on the exchangeable shares, any dividends declared and payable or paid on shares of our common stock that have not yet been declared or paid on the exchangeable shares and an amount representing the value of any non-cash dividends declared and payable but not yet paid on the exchangeable shares. Holders of exchangeable shares may effect a retraction by presenting to Canadian Exchange Co. or its transfer agent the certificate(s) representing the exchangeable shares the holder desires to be redeemed by Canadian Exchange Co. or the equivalent thereof, if any, together with such other documents and instruments as may be required under the ABCA, the Articles of Incorporation of Canadian Exchange Co. or by its transfer agent, and a duly executed retraction request specifying that the holder desires to have the number of retracted shares specified therein redeemed by Canadian Exchange Co. A holder of retracted shares may withdraw its retraction request, by written notice to Canadian Exchange Co., before the close of business on the business day immediately preceding the retraction date, in which case the retraction request will be null and void and the revocable offer constituted by the retraction request will be deemed to have been revoked.
Upon receipt by Canadian Exchange Co. or its transfer agent of a retraction request and certificate(s) representing the exchangeable shares to be redeemed or the equivalent thereof, if any, Canadian Exchange Co. will immediately provide notice of such request to us and Callco. Instead of Canadian Exchange Co. redeeming the retracted shares, and provided that the retraction request is not revoked by the holder of exchangeable shares, we will have the right to purchase, and to the extent the right is not exercised by us, Callco will have the right to purchase, all but not less than all of the shares covered by the retraction request, which we refer to as our retraction call right. See the section entitled "Retraction Call Right" below.
If, as a result of solvency requirement provisions or other provisions of applicable law, Canadian Exchange Co. is not permitted to redeem all exchangeable shares tendered by a retracting holder and neither we nor Callco has exercised its retraction call right, Canadian Exchange Co. will redeem up to the maximum permissible number of exchangeable shares tendered by the holder. We or Callco will be required to purchase any exchangeable shares not redeemed by Canadian Exchange Co. in exchange for shares of our common stock on the retraction date under the optional exchange right described below.
Distribution on Liquidation of Canadian Exchange Co.
Subject to applicable law and the exercise by either us or Callco of our or its liquidation call right, in the event of the liquidation, dissolution or winding up of Canadian Exchange Co. or any other distribution of its assets among its shareholders for the purpose of winding up its affairs, holders of exchangeable shares shall be entitled to receive from the assets of Canadian Exchange Co. a liquidation payment that will be satisfied by the issuance of one share of our common stock plus the dividend amount, if any, for each outstanding exchangeable share. This liquidation amount will be paid to the holders of exchangeable shares before any distribution of assets of Canadian Exchange Co. is made to the holders of the common shares or any other shares of Canadian Exchange Co. ranking junior to the exchangeable shares and is subject to the exercise by us or Callco of our or its liquidation call right described in the section entitled "—Liquidation Call Right" below.
Automatic Exchange Upon Liquidation of US Gold
Under the Voting and Exchange Trust Agreement, in the event of our liquidation, all of the then outstanding exchangeable shares will be automatically exchanged for shares of our common stock. To effect an automatic exchange, we will purchase all of the exchangeable shares from the holders on the last business day prior to the effective date of a liquidation. The purchase price payable for each exchangeable share purchased in a liquidation of US Gold will be satisfied by the issuance of one share of our common stock plus the dividend amount, if any.
Redemption of Exchangeable Shares by Canadian Exchange Co.
Subject to applicable law and the due exercise by either us or Callco of our or its redemption call right, Canadian Exchange Co. will, on the redemption date, redeem all of the then outstanding exchangeable shares for a purchase price equal to one share of our common stock for each outstanding exchangeable share plus the dividend amount, if any. The redemption date for the exchangeable shares will be the date, if any, established by the board of directors of Canadian Exchange Co. for the redemption by Canadian Exchange Co. of all but not less than all of the outstanding exchangeable shares, which date will be no earlier than the tenth anniversary of the effectiveness of the Arrangement, unless one of the conditions described in the paragraphs below is met.
Subject to applicable law, and provided that neither we nor Callco have exercised the redemption call right, Canadian Exchange Co. will redeem all of the outstanding exchangeable shares upon at least 30 days prior notice to the holders of the exchangeable shares.
The board of directors of Canadian Exchange Co. may accelerate the redemption date in the event that:
Exchange Co. has determined that it is not reasonably practicable to accomplish the business purpose intended by the matter on which the shareholders are entitled to vote, which business purpose must be bona fide and not for the primary purpose of causing the redemption date acceleration, in a commercially reasonable manner that does not result in such a vote; or
Purchase for Cancellation
Subject to applicable law and the Articles of Incorporation of Canadian Exchange Co., Canadian Exchange Co. may at any time purchase for cancellation all or any part of the outstanding exchangeable shares by private agreement with any holder of such exchangeable shares or by tender to all holders of record of the exchangeable shares or through the facilities of any stock exchange on which the exchangeable shares are listed or quoted at any price per share together with the dividend amount for which the record date has occurred prior to the date of purchase.
Call Rights
As further described below, we and Callco will have certain overriding rights to acquire exchangeable shares from the holders. In each case, we have the initial call right and to the extent we do not exercise our right, Callco may exercise its right. A holder of exchangeable shares will be subject to different Canadian federal income tax consequences depending upon whether the call rights are exercised and by which entity and whether the relevant exchangeable shares are redeemed by Canadian Exchange Co. if the call rights are not exercised.
Change of Law Call Right
Each of we and Callco have an overriding change of law call right to purchase (or to cause Callco to purchase) from all but not less than all of the holders of exchangeable shares (other than US Gold and its subsidiaries) all but not less than all of the exchangeable shares held by each such holder in the event of any amendment to theIncome Tax Act (Canada) and other applicable provincial income tax laws that permits holders of exchangeable shares who (a) are resident in Canada; (b) hold their exchangeable shares as capital property; and (c) deal at arm's length with us or Canadian Exchange Co., to exchange their exchangeable shares without requiring such holders to recognize any gain or loss or any actual or deemed dividend in respect of such exchange for the purposes of theIncome Tax Act (Canada) or applicable provincial income tax laws. The purchase price under the change of law call right is satisfied by delivering to the holder of exchangeable shares one share of our common stock for each exchangeable share purchased plus the dividend amount, if any. In the event of the exercise of the change of law call right by us or Callco, as the case may be, each holder of exchangeable shares shall be obligated to sell all the exchangeable shares held by such holder to us or Callco, as the case may be, on the change of law call date upon payment by us to such holder of the purchase price for each such exchangeable share. To exercise the change of law call right, we or Callco must notify the transfer agent of our or its intention to exercise such right at least 45 days before the date on which we or Callco intend to acquire the exchangeable shares. The transfer agent will notify the holders of exchangeable shares as to whether we or Callco have exercised the change of law call right forthwith after receiving notice from us or Callco.
Notwithstanding the foregoing, neither we nor Callco shall be entitled to exercise the change of law call right if more than 5% of the exchangeable shares are held by US residents.
Retraction Call Right
Under the share provisions, each of we and Callco have an overriding retraction call right to acquire all but not less than all of the exchangeable shares that a holder of exchangeable shares requests Canadian Exchange Co. to redeem on the retraction date. Callco is only entitled to exercise its retraction call right with respect to those holders of exchangeable shares, if any, for which we have not exercised our retraction call right. The purchase price under the retraction call right is satisfied by delivering to the holder of exchangeable shares one share of our common stock for each exchangeable share purchased plus the dividend amount, if any.
At the time of a retraction request by a holder of exchangeable shares, Canadian Exchange Co. will immediately notify us and Callco and either we or Callco must then advise Canadian Exchange Co. within five business days if we choose to exercise the retraction call right. If we or Callco do not advise Canadian Exchange Co. within the five-business day period, Canadian Exchange Co. will notify the holder as soon as possible thereafter that neither of us will exercise the retraction call right. Unless the holder revokes his or her retraction request, on the retraction date the exchangeable shares that the holder has requested Canadian Exchange Co. to redeem will be acquired by us or Callco (assuming either we or Callco exercise the retraction call right) or redeemed by Canadian Exchange Co., as the case may be, in each case for the retraction call purchase price as described in the preceding paragraph.
Liquidation Call Right
Under the share provisions, each of we and Callco have an overriding liquidation call right, in the event of and notwithstanding a proposed liquidation, dissolution or winding up of Canadian Exchange Co., to acquire all but not less than all of the exchangeable shares then outstanding (other than exchangeable shares held by us or our subsidiaries). Callco is only entitled to exercise its liquidation call right with respect to those holders of exchangeable shares, if any, for which we have not exercised our liquidation call right. The purchase price under the liquidation call right is satisfied by delivering to the holder of exchangeable shares one share of our common stock for each exchangeable share purchased plus the dividend amount, if any. Upon the exercise by us or Callco of the liquidation call right, the holders will be obligated to transfer their exchangeable shares to us or Callco, as the case may be, for the purchase price described above. The acquisition by us or Callco of all of the outstanding exchangeable shares upon the exercise of the liquidation call right will occur on the effective date of the voluntary or involuntary liquidation, dissolution or winding up of Canadian Exchange Co.
To exercise the liquidation call right, we or Callco must notify Canadian Exchange Co.'s transfer agent in writing, as agent for the holders of the exchangeable shares, the trustee and Canadian Exchange Co. of our or Callco's intention to exercise this right at least 30 days before the liquidation date in the case of a voluntary liquidation, dissolution or winding up of Canadian Exchange Co. and at least five business days before the liquidation date in the case of an involuntary liquidation, dissolution or winding up of Canadian Exchange Co. The transfer agent will notify the holders of exchangeable shares as to whether or not we or Callco have exercised the liquidation call right after the earlier of (a) the date notice of exercise has been provided to the transfer agent and (b) the expiry of the date by which the same may be exercised by us or Callco. If we or Callco exercise the liquidation call right on the liquidation date, we or Callco will purchase and the holders will sell all of the exchangeable shares for an amount equal to the liquidation call exercise price as described in the preceding paragraph.
Redemption Call Right
Under the share provisions, we and Callco have an overriding redemption call right, notwithstanding any proposed redemption of the exchangeable shares by Canadian Exchange Co., to acquire all but not less than all of the exchangeable shares then outstanding (other than exchangeable shares held by us or our subsidiaries). Callco is only entitled to exercise its redemption call right with respect to those holders of exchangeable shares, if any, for which we have not exercised our redemption call right. The purchase price under the redemption call right will be satisfied by delivering to the holder one share of our common stock plus the dividend amount, if any. In the event of the exercise of the redemption call right by us or Callco, as the case may be, each holder of exchangeable shares will be obligated to sell all their exchangeable shares to us or Callco, as the case may be, on the redemption date upon payment by us or Callco, as the case may be, to such holder of the purchase price for such exchangeable shares.
To exercise the redemption call right, we or Callco must notify Canadian Exchange Co.'s transfer agent in writing, as agent for the holders of the exchangeable shares, and Canadian Exchange Co. of our or Callco's intention to exercise this right at least 30 days before the redemption date (other than in the case of an accelerated redemption date described above, in which case we or Callco, as the case may be, must notify the transfer agent and Canadian Exchange Co. on or before the redemption date). The transfer agent will notify the holders of exchangeable shares as to whether or not we or Callco exercised the redemption call right after the earlier of (a) the date notice of exercise has been provided to the transfer agent and (b) the expiry of the date by which the same may be exercised by us or Callco. If we or Callco exercise the redemption call right on the redemption date, we or Callco will purchase and the holders will sell all of the exchangeable shares for an amount equal to the redemption call purchase price as described in the preceding paragraph.
Effect of Call Rights Exercise
If US Gold or Callco exercise one or more of its call rights, shares of our common stock will be directly issued to holders of exchangeable shares and we or Callco, as the case may be, will become the holder of the exchangeable shares. We or Callco will not be entitled to exercise any voting rights attached to the exchangeable shares that are acquired from the holders. If we or Callco decline to exercise the call rights when applicable, we will be required, under the Support Agreement, to issue shares of our common stock to the holders of exchangeable shares.
Voting Rights
The number of directors of Canadian Exchange Co. will be fixed at three and the rights attaching to the exchangeable shares will entitle holders of exchangeable shares a limited right to vote on the election or appointment of one director but such holders will have no right to vote on the election of the remaining two directors. In addition, the holders of the exchangeable shares are entitled to receive notice of any meeting of the shareholders of Canadian Exchange Co. and to attend and vote thereat, except those meetings where only holders of a specified class or particular series of shares are entitled to vote, and each holder of exchangeable shares is entitled to one vote per exchangeable share in person or by proxy.
Ranking
Holders of exchangeable shares will be entitled to a preference over holders of any common shares of Canadian Exchange Co. and any other shares ranking junior to the exchangeable shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding up of Canadian Exchange Co., whether voluntary or involuntary, or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs.
Dividends
Holders of exchangeable shares will be entitled to receive dividends equivalent to the dividends, if any, paid from time to time by us on shares of our common stock. The declaration date, record dateprincipal office of Computershare Trust Company, N.A. is located at 250 Royall Street, Canton, MA 02021 and payment date for dividends on the exchangeable shares will be the same as that for any corresponding dividends on shares of our common stock.
Certain Restrictions
Except with the approval of the holders of the exchangeable shares, Canadian Exchange Co. will not be permitted to:
unless, in the case of the first three bullet points above, all dividends and distributions on the outstanding exchangeable shares corresponding to dividends and distributions declared and paid to date on the shares of our common stock have been declared and paid in full on the exchangeable shares.
Amendment and Approval
The rights, privileges, restrictions and conditions attaching to the exchangeable shares may be added to, changed or removed only with the approval of the holders of the exchangeable shares. Any approval required to be given by the holders of the exchangeable shares to add to, change or remove any right, privilege, restriction or condition attaching to the exchangeable shares or any other matter requiring the approval or consent of the holders of the exchangeable shares as a separate class (other than the election of a single director) shall be deemed to have been sufficiently given if it has been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by a resolution passed by not less than 662/3% of the votes cast on such resolution, excluding exchangeable shares beneficially owned by us or any of our subsidiaries, at a meeting of holders of exchangeable shares duly called and held at which the holders of at least 10% of the outstanding exchangeable shares at that time are present or represented by proxy.telephone number is (303) 262-0600.
INTERESTSPLAN OF CERTAIN PERSONS IN THE ACQUISITION
Beneficial Ownership of and Trading in Exchangeable Shares
Mr. McEwen, our Chairman, Chief Executive Officer and largest shareholder, beneficially owns 38,725,714 exchangeable shares of Canadian Exchange Co., which means that Mr. McEwen beneficially owns approximately 30% of the issued and outstanding exchangeable shares. Like the other holders of exchangeable shares, Mr. McEwen is entitled at any time at his option to exchange his exchangeable shares into shares of US Gold common stock on a one-for-one basis.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT OF US GOLDDISTRIBUTION
As of December 1, 2011, there were a total of 136,559,845 shares of ourThe common stock and one share of our Series A Preferred Share issued and outstanding. Computershare Trust Company of Canadacovered by this prospectus is the holder of the one share of Series A Preferred Share as trusteeavailable for and on behalf of the registered holders of the 2007 Exchangeable Shares. The 2007 Exchangeable Shares were issueduse in connection with acquisitions by us of other businesses, assets, properties or securities.
The amount and type of consideration we will offer and the other specific terms of any acquisition will be determined by negotiations with the owners or controlling persons of the Acquired Companiesbusinesses, assets, properties or securities to be acquired. We may structure business acquisitions in 2007. Asa variety of December 1, 2011, there were a total of 3,192,874 2007 Exchangeable Shares issued and outstanding (exclusive of shares owned by US Gold and its subsidiaries).
Computershare Trust Company of Canada is entitled to allways, including acquiring stock, other equity interests or assets or properties of the voting rights, includingacquired business or merging the right to vote in personacquired business with us or by proxy, attaching to the one share of Series A Preferred Share on all matters that may properly come before our shareholders at a meeting of shareholders. The share of Series A Preferred Share is entitled to that number of votes, which may be cast by the Computershare Trust Company of Canada at any meeting at which our shareholders are entitled to vote, equal to the number of issued and outstanding 2007 Exchangeable Shares (other than shares held by US Gold or its subsidiaries). The holders of our common stock and the holders of the 2007 Exchangeable Shares vote together as a single class.subsidiaries. The 2007 Exchangeable Shares are exchangeableconsideration for shares of our common stock at any time on a one-for-one basis.
The following table describes the beneficial ownership of our voting securities as of December 1, 2011 by: (i) each of our directors and "named executive officers" (as defined below); (ii) all of our officers and directors as a group; and (iii) each shareholder known to us to own beneficially more than 5% of our common stock (assuming for such purposes that the 2007 Exchangeable Shares owned by such persons, if any, constitute outstanding shares of our common stock). For purposes of providing the calculations below, we have assumed that the total numberbusiness acquisitions may consist of shares of our common stock outstanding is 139,752,719 (which assumes that the 3,192,874 2007 Exchangeable Shares constitute outstanding sharesor a combination of our common stock, but does not include any shares issuable upon exercisecash, notes, assumption of outstanding options except as set forth in the table). In calculating the percentage ownership for each shareholder, we assumed that any options owned by an individual and exercisable within 60 days are exercised, but not the options owned by anyliabilities or other individual. As of December 1, 2011, there were outstanding options to acquire 4,264,260 shares of our common stock, some of which are not exercisable within 60 days of the date of this prospectus. Unless otherwise stated, all ownership is direct and the address of each
individual is the address of our executive office, 181 Bay Street, Bay Wellington Tower, Suite 4750, P.O. Box 792, Toronto, Ontario, Canada M5J 2T3.
| Shares Beneficially Owned | ||||
---|---|---|---|---|---|
Name and Address of Beneficial Owners | Number | Percentage | |||
2190303 Ontario Inc.(1) | 28,477,527 | 20.4% | |||
Robert R. McEwen(2) | 29,477,527 | (3)(4) | 21.1% | ||
Peter Bojtos(2) | 255,000 | (5) | * | ||
Declan J. Costelloe(2) | 145,000 | (5) | * | ||
Michele L. Ashby(2) | 135,000 | (6) | * | ||
Leanne M. Baker(2) | 158,000 | (7) | * | ||
Perry Y. Ing(2) | 153,500 | (8) | * | ||
Ian Ball(2) | 274,000 | (9) | * | ||
Stefan Spears(2) | 226,000 | (10) | * | ||
Nils Engelstad(2) | 10,000 | (11) | * | ||
All officers and directors as a group (nine individuals) | 30,834,027 | (3)(4)(5)(6)(7)(8)(9)(10)(11) | 22.1% |
This prospectus may be supplemented to furnish the information necessary for a particular negotiated transaction, and the registration statement of which this prospectus is a part will be amended or supplemented, where appropriate, to supply information concerning an acquisition.
All expenses of this prospectus.
Changesregistration will be paid by us. It is not expected that underwriting discounts or commissions will be paid by us in Control
On , 2012, we completed the Arrangement and acquired Minera Andes. We acquired Minera Andes in exchange for exchangeable shares of Canadian Exchange Co. which are exchangeable for shares of our common stock. In connection with the consummationissuances of the Arrangement, we issued 127,326,984 exchangeable shares of Canadian Exchange Co., which are exchangeable for 127,326,984 shares of our common stock. An additional 1,897,650 shares of US Gold common stock will be reserved for issuance upon exercise of Minera Andes options, which, together with the shares of US Gold issuable upon exchange of exchangeable shares of Canadian Exchange Co., represents approximately 47% of the voting power of US Gold on a fully diluted basis.
We know of no other arrangement or events, the happening of which may result in a change in control.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OFCANADIAN EXCHANGE CO.
As of , 2012, there was a total of 150,001,000 shares of common stock of Canadian Exchange Co. and 127,326,984 exchangeable shares of Canadian Exchange Co. (exclusive of shares owned by US Gold and its subsidiaries) issued and outstanding. Callco is the sole owner of the issued and outstanding common stock of Canadian Exchange Co. The exchangeable shares were issuedunder this prospectus. However, finders' or similar fees may be paid from time to time in connection with the Arrangement.
The number of directors of Canadian Exchange Co. is fixed at three. The holder of the common stock is entitled to annually elect two directorsspecific acquisitions, and the holders offees may be paid through the exchangeable shares are entitled to annually elect one director. In all other matters, the holder of the common stock and the holders of the exchangeable shares vote together, except for those matters where only holders of a specified class or particular series of shares are entitled to vote. The holder of the common stock is entitled to one vote per shareissuance of common stock of Canadian Exchange Co. and each holder of exchangeable shares is entitled to one vote per exchangeable share.
In addition, holders of exchangeable shares, through the Series B Preferred Share, are entitled to vote together with the holders of our common stock and the holder of the Series A Preferred Share ascovered by this prospectus. Any person receiving a single class on all matters submitted to the shareholders of US Gold. The exchangeable shares are exchangeable for shares of US Gold common stock at any time on a one-for-one basis. All rights of a holder of exchangeable shares to exercise votes with the shareholders of US Gold or the shareholders of Canadian Exchange Co. will cease upon the exchange of that holder's exchangeable shares for shares of US Gold common stock.
The following table describes the beneficial ownership of Canadian Exchange Co.'s voting securities as of , 2012 by: (i) each of its officers and directors; (ii) all of its officers and directors as a group; and (iii) each shareholder known to us to own beneficially more than 5% of Canadian Exchange Co.'s voting stock. As of , 2012, there were no outstanding options to acquire shares of Canadian Exchange Co.'s common stock or exchangeable shares. Unless otherwise stated, all ownership is direct and the address of each individual is the address of US Gold's, 181 Bay Street, Bay Wellington Tower, Suite 4750, P.O. Box 792, Toronto, Ontario Canada M5J 2T3.
| | Shares Beneficially Owned | |||||||
---|---|---|---|---|---|---|---|---|---|
Title of Class | Name and Address of Beneficial Owners | Number | Percentage of Class | ||||||
Common Stock | McEwen Mining (Alberta) ULC | 1 | 100 | % | |||||
Exchangeable Shares | Robert R. McEwen | 38,725,714 | 30.4 | % | |||||
Exchangeable Shares | Perry Ing | 13,500 | * | ||||||
Exchangeable Shares | Ian Ball | 1,845 | * | ||||||
Exchangeable Shares | All officers and directors as a group (three individuals) | 86,091,243 | 30.4 | % |
Changes in Control
On , 2012, we completed the Arrangement and acquired Minera Andes. In connection with the consummation of the Arrangement, Canadian Exchange Co. issued 127,326,984 exchangeable shares which represents 99.9% of the capital stock with certain voting rights of Canadian Exchange Co.
We know of no other arrangement or events, the happening of which may result in a change in control.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Hogan Lovells US LLP, special counsel to US Gold, the following are, as of the date of this Prospectus, the material United States federal income tax considerations applicable, respectively, to U.S. Holders (as defined below) and Non-U.S. Holders (as defined below, and together with U.S. Holders, "Holders") with respect to the redemption, retraction or exchange of exchangeable shares for US Gold common stock.The following discussion does not address the United States federal income tax consequences or other tax consequences of the receipt of exchangeable shares by shareholders of Minera Andes in exchange for their shares of Minera Andes stock.
This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the related Treasury Regulations, judicial decisions, and administrative determinations as of the date of this document. Those authoritiesfee may be changed, perhaps retroactively, so that the United States federal income tax consequences may be different from those discussed below. This discussion is included for general information purposes only and does not purportdeemed to be a complete technical analysis or listing of all potential U.S. tax consequences that may be relevant to a Holder. Further, this summary does not address any tax consequences arising under the income or other tax laws of any state, local or foreign jurisdiction or any tax treaties that may be relevant to a Holder in light of its particular circumstances. It is not intended to be, nor should it be construed as being, legal or tax advice. The discussion herein is not binding on the Internal Revenue Service or the courts, and no assurance can be given that the discussion of tax consequences set forth herein will be sustained if challenged by the Internal Revenue Service.
Except where noted, this discussion deals only with Holders who hold their exchangeable shares and US Gold common stock as capital assetsan underwriter within the meaning of Section 1221the Securities Act. We may also pay certain financial advisory or similar fees or reimburse certain expenses of the Code, and does not address the United States federal income tax consequences applicableinvestment banking firms that advise us from time to you if you are subject to special treatment under the United States federal income tax laws, including, for example, if you are:
If a partnership holds exchangeable shares that are exchanged for shares of US Gold common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding exchangeable shares that are exchanged for shares of US Gold common stock, you are urged to consult your tax advisor.
As discussed below, there are substantial uncertainties regarding the United States federal income tax treatment of exchangeable shares and of the exchange of exchangeable shares for shares of US Gold common stock. You are strongly urged to consult your own tax advisor regarding the United States federal tax consequences applicable to the redemption, retraction or exchange of exchangeable shares and your ownership and disposition of US Gold common stock in light of your particular circumstances. In addition, you should also consult your tax advisor regarding any foreign, state, local, provincial, or other taxes or tax treaties that may be applicable to you.
For purposes of this discussion, a "U.S. Holder" means a beneficial owner of exchangeable shares that is for U.S. federal income tax purposes:
For purposes of this disclosure, you are a "Non-U.S. Holder" if you are not a U.S. Holder.
Consequences of a Redemption, Retraction or Exchange of Exchangeable Shares
The United States federal income tax consequences of a redemption, retraction or exchange of exchangeable shares depend, in part, on whether the exchangeable shares are treated for United States federal income tax purposes as shares of Canadian Exchange Co. or as shares of US Gold common stock. There is, however, no direct authority under current United States federal income tax law concerning whether the exchangeable shares should be treated as shares of US Gold common stock or shares of Canadian Exchange Co., and the classification for tax purposes of such exchangeable shares as shares of US Gold common stock or shares of Canadian Exchange Co. is therefore uncertain. Accordingly, the following discussion addresses the United States federal income tax consequences of aspecific acquisition.
redemption, retraction or exchange of exchangeable shares under each of two alternative characterizations of the exchangeable shares: (1) based on the treatment of the exchangeable shares as shares of US Gold common stock, and (2) based on the treatment of the exchangeable shares as shares of Canadian Exchange Co. The discussion does not address the United States federal income tax consequences of any payments for accrued and unpaid dividends on the exchangeable shares.
The following discussion is not binding on the Internal Revenue Service or the courts. There can be no assurance that the Internal Revenue Service will not assert and prevail with respect to a position that is adverse or contrary to a position taken by a U.S. Holder on such U.S. Holder's tax returns. Accordingly, it may be prudent for a U.S. Holder to assume the least favorable United States federal income consequences. Moreover, neither US Gold, Minera Andes, nor Canadian Exchange Co. has requested or intends to request a ruling from the Internal Revenue Service or an opinion of counsel with respect to whether the exchangeable shares should be treated as shares of US Gold common stock or shares of Canadian Exchange Co. In addition, no ruling has been or will be sought from the Internal Revenue Service as to the United States federal income tax consequences of a retraction, redemption, or exchange of exchangeable shares for shares of US Gold common stock.
Consequences if the Exchangeable Shares are Treated as Shares of US Gold Common Stock
U.S. Holders and Non-U.S. Holders
If the exchangeable shares are treated as shares of US Gold common stock, the redemption, retraction or exchange of exchangeable shares for shares of US Gold common stock should not be a taxable event to a U.S. Holder or a Non-U.S. Holder. In that case, a Holder's holding period for the US Gold common stock received should include such Holder's holding period for the exchangeable shares that were exchanged for such shares of US Gold common stock, and the Holder's tax basis for such US Gold common stock should equal the Holder's tax basis for the exchangeable shares that were exchanged for such stock.
Consequences if the Exchangeable Shares are not Treated as Shares of US Gold Common Stock
U.S. Holders
Subject to the discussion below entitled "Passive Foreign Investment Companies," if the exchangeable shares are not treated as shares of US Gold for United States federal income tax purposes, the redemption, retraction or exchange of exchangeable shares for shares of US Gold common stock should be treated as a fully taxable exchange for United States federal income tax purposes. Consequently, upon the exchange of a U.S. Holder's exchangeable shares, a U.S. Holder should recognize gain or loss, if any, equal to the difference between (i) the sum of the fair market value, as of the exchange date, of the shares of US Gold common stock received in the exchange and (ii) the U.S. Holder's tax basis in the exchangeable shares surrendered. Any such gain or loss on the exchange will generally be capital gain or loss. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation, currently at 15% for dispositions on or prior to December 31, 2012, and 20% thereafter. The deductibility of capital losses is subject to limitations. A U.S. Holder's tax basis in shares of US Gold common stock received in the exchange will equal the fair market value of those shares as of the exchange date. A U.S. Holder's holding period for the US Gold common stock received will begin on the day after the exchange.
In determining whether the exchangeable shares are shares of Canadian Exchange Co. or shares of US Gold common stock, U.S. Holders of exchangeable shares should consider that the Internal Revenue Service may assert and prevail with respect to a position that is adverse to the position taken by a U.S. Holder. It may be prudent for a U.S. Holder with gain inherent in the exchangeable shares to assume that the redemption, retraction or exchange will be a taxable event. Conversely, it may be
prudent for a U.S. Holder with loss inherent in the exchangeable shares to assume that the redemption, retraction or exchange will be treated as a non-taxable event so that no loss will be recognized. In either event, such a U.S. Holder should consult its own tax advisor regarding the filing of a refund claim.
Non-U.S. Holders
If the exchangeable shares are not treated as shares of US Gold for U.S. federal income tax purposes, a Non-U.S. Holder generally will not be subject to United States federal income tax on any gain realized on the exchange of exchangeable shares for shares of US Gold common stock unless:
(i) the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States or, if a tax treaty applies, the gain is attributable to a permanent establishment of the Non-U.S. Holder in the United States; or
(ii) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and certain other conditions set forth in the Code are met, unless an applicable income tax treaty provides otherwise.
If a Non-U.S. Holder is described in clause (i) above, the Non-U.S. Holder generally will be subject to the rules discussed above under the heading "—Consequences if the Exchangeable Shares are not Treated as Shares of US Gold Common Stock—U.S. Holders." In addition, if a corporate Non-U.S. Holder is described under clause (i) above, it may be subject to an additional branch profits tax on effectively connected income at a 30% rate (or lower applicable treaty rate). If an individual Non-U.S. Holder is described in clause (ii) above, the individual generally will be subject to a flat 30% tax (or lower applicable treaty rate) on the gain derived from a sale or exchange, which may be offset by certain United States capital losses.
Passive Foreign Investment Companies
In general, if exchangeable shares held by a U.S. Holder are treated as shares of Canadian Exchange Co. and Canadian Exchange Co. is treated for United States federal income tax purposes as a "passive foreign investment company" ("PFIC"), gain recognized on the retraction, redemption or exchange of exchangeable shares will be taxed under the passive foreign investment company "excess distribution regime," unless the U.S. Holder has made a timely "qualified electing fund" election or "mark-to-market" election. The passive foreign investment company rules are extremely complex and could, if they apply to exchangeable shares owned by a U.S. Holder, have a significant adverse effect on the taxation of gain recognized by a U.S. Holder. However, we do not expect that the exchangeable shares would be treated as PFIC shares with respect to a U.S. Holder if none of the Minera Andes shares that such U.S. Holder exchanged for such exchangeable shares were treated as PFIC shares in the hands of such U.S. Holder. We understand from the management of Minera Andes that Minera Andes was a PFIC prior to January 1, 2007 but that it has not been a PFIC since that date. We have not independently verified this information. Based on such information received from Minera Andes, exchangeable shares may be treated as shares of a PFIC with respect to any U.S. Holder who held stock of Minera Andes prior to January 1, 2007, and such U.S. Holders are therefore urged to consult their own tax advisors to determine the potential applicability of the PFIC rules to their particular circumstance and any available elections.
Consequences of Ownership and Disposition of Shares of US Gold Common Stock
Receipt of Distributions on US Gold Common Stock
U.S. Holders
Distributions, if any, received with respect to shares of US Gold common stock out of US Gold's current or accumulated earnings and profits, as determined for United States federal income tax purposes, will be taxable as dividend income to U.S. Holders. In the case of non-corporate U.S. Holders, dividend income is currently (through December 31, 2012) subject to tax at the same preferential rates as net capital gains if certain requirements are satisfied; after December 31, 2012, such dividends will be taxable at the rates generally applicable to ordinary income. To the extent that the amount of any distribution exceeds US Gold's current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital to the extent of the U.S. Holder's tax basis, and any excess will be treated as gain from the disposition of the common stock (discussed below under the heading "—Gain or Loss on Disposition of US Gold Common Stock—U.S. Holders").
Non-U.S. Holders
Distributions, if any, received with respect to shares of US Gold common stock out of US Gold's current or accumulated earnings and profits, as determined for United States federal income tax purposes, will be subject to a withholding tax as discussed below. Any portion of a distribution that exceeds US Gold's current and accumulated earnings and profits will first be applied to reduce the Non-U.S. Holder's basis in the common stock, and, to the extent such portion exceeds the Non-U.S. Holder's basis, the excess will be treated as gain from the disposition of the common stock, the treatment of which is discussed below under "—Gain or Loss on Disposition of US Gold Common Stock—Non-U.S. Holders." In addition, if US Gold is a United States real property holding corporation or "USRPHC," as discussed below, and if any distribution exceeds its current and accumulated earnings and profits, US Gold will need to choose to satisfy its withholding tax requirement either by treating the entire distribution as a dividend, subject to the withholding tax under the following paragraph (and withhold at a minimum rate of 10% or such lower rate as may be specified by an applicable income tax treaty for distributions from an USRPHC), or by treating only the amount of the distribution equal to its reasonable estimate of its current and accumulated earnings and profits as a dividend, subject to the withholding tax rules in the following paragraph, with the excess portion of the distribution subject to withholding at a rate of 10% or such lower rate as may be specified by an applicable income tax treaty as if such excess were the result of a sale of shares in a USRPHC (discussed below under the heading "—Gain or Loss on Disposition of US Gold Common Stock—Non-U.S. Holders") with a credit generally allowed against the Non-U.S. Holder's United States federal income tax liability in an amount equal to the amount withheld from such excess.
Dividends paid to a Non-U.S. Holder of US Gold common stock will generally be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. In addition, a Non-U.S. Holder will be taxed in the same manner as a U.S. Holder on dividends received that are effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States or, if a tax treaty applies, are attributable to a permanent establishment of the Non-U.S. Holder in the United States. In addition, a corporate Non-U.S. Holder may also be subject to an additional branch profits tax at a 30% rate (or lower applicable treaty rate) on dividend income that is effectively connected with a U.S. trade or business. A Non-U.S. Holder will be required to satisfy certification and disclosure requirements (including completing Internal Revenue Service Form W-8BEN, W-8ECI, or other applicable form) to claim treaty benefits or otherwise claim a reduction of, or exemption from, the U.S. withholding tax described above.
Gain or Loss on Disposition of US Gold Common Stock
U.S. Holders
A U.S. Holder will generally recognize gain or loss on any sale, exchange or other disposition of US Gold common stock equal to the difference between the U.S. Holder's adjusted tax basis in the US Gold common stock and the amount realized from the sale, exchange or other disposition. Gain or loss will generally be long-term capital gain or loss if the U.S. Holder's holding period is more than one year. In the case of non-corporate U.S. Holders, any long-term capital gain will generally be taxed at preferential United States federal income tax rates, currently at 15% for dispositions on or prior to December 31, 2012, and 20% thereafter. The deductibility of losses may be subject to limitations.
Non-U.S. Holders
Any gain realized by a Non-U.S. Holder on the sale, exchange, or other disposition of US Gold common stock will generally not be subject to United States federal income tax unless:
(i) the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States or, if a tax treaty applies, the gain is attributable to a permanent establishment of the Non-U.S. Holder in the United States;
(ii) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and certain other conditions set forth in the Code are met, unless an applicable income tax treaty provides otherwise; or
(iii) US Gold is or has been a "United States real property holding corporation," or "USRPHC," as defined for United States federal income tax purposesand, as described below, the Non-U.S. Holder owns or is deemed to own more than 5% of US Gold's outstanding common stock.
Under theForeign Investment in Real Property Tax Act of 1980 ("FIRPTA"), with respect to a Non-U.S. Holder's disposition of US Gold common stock, US Gold will be treated as a USRPHC if at any time during the shorter of (x) the five-year period ending on the date of disposition of shares of US Gold common stock or (y) the period during which a Non-U.S. Holder held shares of US Gold common stock, the fair market value of US Gold's "U.S. real property interests" equals or exceeds 50% of the sum of the fair market values of all of its interests in real property and all of its other assets used or held for use in a trade or business (as defined in applicable Treasury Regulations). Because US Gold owns substantial interests in real estate in the United States, US Gold believes that it may have been a USRPHC. Notwithstanding the foregoing, so long as the common stock of US Gold is regularly traded on an established securities market, as defined under applicable Treasury Regulations, Non-U.S. Holders who have never beneficially owned (or been deemed to own under certain attribution rules) more than 5% of the common stock of US Gold will generally not be subjected to United States federal income tax on gain realized on the sale, exchange or redemption of common stock solely because US Gold is or has been a USRPHC. US Gold believes that its common stock is currently treated as regularly traded on an established securities market.
If a Non-U.S. Holder falls under clause (i) or (iii) above, the Non-U.S. Holder will generally be subject to the rules discussed above in the discussion titled "—Gain or Loss on Disposition of US Gold Common Stock—U.S. Holders", and, in the case of clause (iii) above, will generally be subject to a 10% withholding tax applied to the gross amount realized on the disposition. Any amount so withheld may be applied as a credit against the Non-U.S. Holder's United States federal income tax liability. If an individual Non-U.S. Holder falls under clause (ii) above, such individual generally will be subject to a flat 30% (or lower applicable treaty rate) tax on the gain derived from a sale, which may be offset by certain United States capital losses. In addition, if a corporate Non-U.S. Holder falls under clause (i)
above, it may be subject to an additional branch profits tax on effectively connected income at a 30% rate (or lower applicable treaty rate).
The foregoing summary of the possible application of the FIRPTA rules to Non-U.S. Holders is only a summary of certain material aspects of these rules. Because the U.S. federal income tax consequences to a Non-U.S. Holder under FIRPTA may be significant and are complex and subject to uncertainty, Non-U.S. Holders are urged to discuss those consequences with their tax advisors.
Information Reporting and Backup Withholding
U.S. Holders
Information reporting and backup withholding may apply with respect to payments of dividends on US Gold common stock and to certain payments of proceeds on the sale or other disposition of our common stock. Certain non-corporate U.S. Holders may be subject to U.S. backup withholding (currently at a rate of 28%) on payments of dividends on our common stock and certain payments of proceeds on the sale or other disposition of our common stock unless the beneficial owner of such common stock furnishes US Gold or its agent with a taxpayer identification number, certified under penalties of perjury, and certain other information, or otherwise establishes, in the manner prescribed by law, an exemption from backup withholding.
U.S. backup withholding tax is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a U.S. Holder's U.S. federal income tax liability, which may entitle the U.S. Holder to a refund, provided the U.S. Holder timely furnishes the required information to the Internal Revenue Service.
Non-U.S. Holders
US Gold must report annually to the Internal Revenue Service and to each Non-U.S. Holder the amount of dividends paid to such Non-U.S. Holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under the provisions of an applicable income tax treaty.
A Non-U.S. Holder will not be subject to backup withholding on dividends paid to such Non-U.S. Holder, or on the proceeds received by a Non-U.S. Holder from a sale or other disposition of US Gold common stock, as long as such Non-U.S. Holder certifies under penalty of perjury that it is a Non-U.S. Holder (and the payor does not have actual knowledge or reason to know that such Non-U.S. Holder is a United States person as defined under the Code), or such Non-U.S. Holder otherwise establishes an exemption.
U.S. backup withholding tax is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder's United States federal income tax liability provided the required information is timely furnished to the Internal Revenue Service.
Recently Enacted Legislation Relating to Foreign Owners
Beginning with payments made after December 31, 2012, recently enacted legislation will impose a 30% withholding tax on dividends on US Gold common stock and the gross proceeds of a disposition of US Gold common stock paid to: (i) a foreign financial institution (as that term is defined in Section 1471(d)(4) of the Code) unless that foreign financial institution enters into an agreement with the U.S. Treasury Department to collect and disclose information regarding U.S. account holders of that foreign financial institution (including certain account holders that are foreign entities that have U.S. owners) and satisfies other requirements; and (ii) a foreign entity that is not a financial institution
unless such entity certifies that it does not have any substantial U.S. owners or provides the name, address and taxpayer identification number of each substantial U.S. owner and such entity satisfies other specified requirements. Non-U.S. Holders should consult their own tax advisors regarding the application of this legislation to them.
THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT LEGAL ADVICE. EACH SHAREHOLDER IS ENCOURAGED TO CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND NON-U.S. TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS.
MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Fraser Milner Casgrain LLP, Canadian counsel to US Gold, the following is a summary of the material Canadian federal income tax consequences pursuant to theIncome Tax Act (Canada) (the "Tax Act") generally applicable to holders of exchangeable shares who (i) have acquired exchangeable shares pursuant to the Arrangement Agreement, (ii) have exchanged their exchangeable shares for shares of US Gold common stock in a retraction (a voluntary exchange initiated by a holder of exchangeable shares), redemption (an exchange initiated by Canadian Exchange Co. to redeem the exchangeable shares) or purchase (including a purchase of the exchangeable shares by Callco or US Gold, or a purchase of exchangeable shares by Canadian Exchange Co for cancellation) pursuant to the terms set forth in the exchangeable share provisions (attached to the Plan of Arrangement, and also included in the Articles of Incorporation of Canadian Exchange Co.), and (iii), at all relevant times for the purposes of the Tax Act (a) are, for the purposes of the Tax Act and any applicable income tax treaty or convention, resident or deemed to be resident in Canada, (b) hold such shares as capital property, and (c) deal at arm's length with, and are not affiliated with, each of Canadian Exchange Co. and US Gold ("Resident Shareholders"). Generally, such shares will constitute capital property to a Resident Shareholder thereof unless such securities are held in the course of carrying on a business of trading or dealing in securities or were acquired in one or more transactions considered to be an adventure or concern in the nature of trade. Resident Shareholders who do not hold their exchangeable shares or US Gold common stock as capital property, as the case may be, should consult their own tax advisors with respect to their particular circumstances.
This summary is not applicable to a Resident Shareholder (i) that is a "financial institution" for purposes of the mark-to-market rules contained in the Tax Act, (ii) that is a "specified financial institution" as defined in the Tax Act, (iii) an interest in which is a "tax shelter" or a "tax shelter investment" as defined in the Tax Act, (iv) with respect to whom US Gold is a "foreign affiliate", as defined in the Tax Act, (v) who is exempt from paying tax under Part I of the Tax Act, or (vi) who reports their Canadian tax results for purposes of the Tax Act in a currency of a country other than Canada. Any such Resident Shareholders should consult their own tax advisors.
This summary is based on the facts and assumptions set out in this document, the current provisions of the Tax Act and the regulations thereunder, counsel's understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency ("CRA") publicly available prior to the date of this document. This summary takes into account all proposed amendments to the Tax Act and the regulations thereunder that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof ("Proposed Amendments") and assumes that such Proposed Amendments will be enacted substantially as proposed. However, no assurance can be given that such Proposed Amendments will be enacted in the form proposed, or at all.
This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to the holding of US Gold Shares or Exchangeable Shares. Except for the Proposed Amendments, this summary does not take into account or anticipate any other changes in law or any changes in the CRA's administrative policies and assessing practices, whether by judicial, governmental or legislative action or decision, nor does it take into account other federal or any provincial, territorial or foreign tax legislation or considerations, which may differ from the Canadian federal income tax considerations described herein
This summary is of a general nature only and is not, is not intended to be, and should not be construed to be, legal, business or tax advice to any particular Resident Shareholder. Resident Shareholders should consult their own tax advisors as to the tax consequences to them from the holding and disposition of exchangeable shares or US Gold common stock.
This summary does not address any tax consequences to holders that are not resident (or deemed resident) in Canada, such as U.S. residents.
All holders of exchangeable shares should consult their own tax advisors having regard to their particular circumstances.
For purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of US Gold common stock, including the receipt of dividends and the calculation of any adjusted cost base amounts and proceeds of disposition, must be converted into Canadian dollars generally based on the Bank of Canada noon spot exchange rate on the date such amounts arise.
Redemption, Retraction or Purchase of Exchangeable Shares
On a redemption (including a retraction) or purchase of an exchangeable share by Canadian Exchange Co., a Resident Shareholder will be deemed to have received a dividend equal to the amount, if any, by which the "redemption proceeds" exceed the paid-up capital (for purposes of the Tax Act) of the exchangeable share at the time of redemption. For these purposes, the "redemption proceeds" will be the fair market value at the time of the redemption, retraction or purchase, as the case may be, of the US Gold common stock received upon the redemption, retraction or purchase plus any other amount received by the Canadian Shareholder as part of the consideration other than amounts required to be included in income as a dividend. On the redemption or purchase, the Resident Shareholder will also be considered to have disposed of the exchangeable share for proceeds of disposition equal to the "redemption proceeds" less the amount of such deemed dividend. The Resident Shareholder will generally realize a capital gain (or a capital loss) equal to the amount by which such proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder. In the case of a Resident Shareholder that is a corporation, in some circumstances the amount of any deemed dividend arising on the redemption of exchangeable shares may be treated as proceeds of disposition and not as a deemed dividend in accordance with specific rules in the Tax Act. Such Resident Shareholders should consult their own tax advisors concerning this possibility. For a description of the tax treatment of capital gains and losses, see "Material Canadian Federal Income Tax Consequences—Taxation of Capital Gains and Losses", below.
Dividends on Exchangeable Shares
In the case of a Resident Shareholder who is an individual (other than certain trusts), dividends received or deemed to be received on the exchangeable shares will be included in computing a Resident Shareholder's income and will be subject to the gross-up and dividend tax credit rules that apply to taxable dividends received from taxable Canadian corporations. Provided that appropriate designations are made by Canadian Exchange Co. at the time the dividend is paid or is deemed to be paid, such dividend will be treated as an "eligible dividend" for the purposes of the Tax Act and a Resident Shareholder who is an individual will be entitled to an enhanced dividend tax credit in respect of such dividend. There are limitations on the ability of a corporation to designate dividends and deemed dividends as eligible dividends.
In the case of a Resident Shareholder that is a corporation, dividends received or deemed to be received on the exchangeable shares will generally be required to be included in computing the corporation's income for the taxation year in which such dividends are received and such dividends will generally be deductible in computing the corporation's taxable income (subject to the discussion above under the heading "Material Canadian Federal Income Tax Consequences—Redemption, Retraction or Purchase of Exchangeable Shares").
Corporate shareholders should consult their own tax advisors for advice with respect to the potential application of these provisions.
A Resident Shareholder that is a "private corporation" (as defined in the Tax Act) or any other corporation resident in Canada and controlled or deemed to be controlled by or for the benefit of an individual or a related group of individuals may be liable under Part IV of the Tax Act to pay a refundable tax of 331/3% on dividends received or deemed to be received on the exchangeable shares to the extent that such dividends are deductible in computing the Resident Shareholder's taxable income. A Resident Shareholder that, throughout the relevant taxation year, is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay an additional refundable tax of 62/3% on its "aggregate investment income" (as defined in the Tax Act), including any dividends that are not deductible in computing taxable income.
Exchange of Exchangeable Shares with US Gold or Callco
On the exchange of an exchangeable share by the Resident Shareholder with US Gold or Callco for US Gold common stock, a Resident Shareholder will generally realize a capital gain (or a capital loss) to the extent the proceeds of disposition of the exchangeable share, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder of the exchangeable share immediately before the exchange. For these purposes, the proceeds of disposition will be the fair market value at the time of the exchange of the US Gold common stock received upon exchange plus any other amount received by the Resident Shareholder from US Gold, Callco or any other subsidiary of US Gold as part of the exchange consideration other than amounts required to be included in income as a dividend. For a description of the tax treatment of capital gains and losses, see "Material Canadian Federal Income Tax Consequences—Taxation of Capital Gains or Capital Losses" below. The acquisition by US Gold or Callco of an exchangeable share from the Resident Shareholder thereof will not result in a deemed dividend to the Resident Shareholder.
Disposition of Exchangeable Shares other than on Redemption, Retraction or Exchange
A disposition or deemed disposition of an exchangeable share by a Resident Shareholder, other than on the redemption, retraction or exchange of the shares, will generally result in a capital gain (or a capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder of such exchangeable shares immediately before the disposition. For a description of the tax treatment of capital gains and losses, see "Material Canadian Federal Income Tax Consequences—Taxation of Capital Gains or Capital Losses" below.
Dividends on US Gold Common Stock
Dividends on US Gold common stock will be included in the recipient's income for the purposes of the Tax Act. Such dividends received by a Resident Shareholder who is an individual will not be subject to the gross-up and dividend tax credit rules in the Tax Act. A Resident Shareholder that is a corporation must include such dividends in computing its income and will not be entitled to deduct the amount of the dividends in computing its taxable income.
A Resident Shareholder of US Gold common stock that, throughout the relevant taxation year, is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay a refundable tax of 62/3% on its "aggregate investment income" (as defined in the Tax Act), including dividends received on US Gold shares that are not deductible in computing taxable income.
A Resident Shareholder of US Gold common stock may be entitled to a foreign tax credit or deduction for any United States non-resident withholding tax paid on dividends received on US Gold common stock to the extent and under the circumstances provided in the Tax Act.
Acquisition and Disposition of US Gold Common Stock
The cost of US Gold common stock received on the retraction, redemption or exchange of an exchangeable share will be equal to the fair market value of such US Gold common stock at the time of such event and will generally be averaged with the adjusted cost base of any other US Gold common stock held at that time by the Resident Shareholder as capital property for the purpose of determining the Resident Shareholder's adjusted cost base of such US Gold common stock.
A disposition or deemed disposition of US Gold common stock by a Resident Shareholder will generally result in a capital gain (or capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder of the US Gold common stock immediately before the disposition. For a description of the tax treatment of capital gains and losses, see "Material Canadian Federal Income Tax Consequences—Taxation of Capital Gains or Capital Losses" below.
Taxation of Capital Gains or Capital Losses
Generally, one-half of any capital gain (a "taxable capital gain") realized by a Resident Shareholder in a taxation year must be included in the Resident Shareholder's income for the year, and one-half of any capital loss (an "allowable capital loss") realized by a Resident Shareholder in a taxation year must be deducted from taxable capital gains realized by the Resident Shareholder in that year (subject to and in accordance with rules contained in the Tax Act). Allowable capital losses for a taxation year in excess of taxable capital gains for that year generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the Tax Act.
A Resident Shareholder that, throughout the relevant taxation year, is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay a refundable tax of 62/3% on its "aggregate investment income" (as defined in the Tax Act), including any taxable capital gains.
If the Resident Shareholder is a corporation, the amount of any capital loss realized on a disposition or deemed disposition of such share may be reduced by the amount of dividends received or deemed to have been received by it on such share (and in certain circumstances a share exchanged for such share) to the extent and under circumstances prescribed by the Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns such shares or where a trust or partnership of which a corporation is a beneficiary or a member is a member of a partnership or a beneficiary of a trust that owns any such shares. Resident Shareholder to whom these rules may be relevant should consult their own tax advisors.
Alternative Minimum Tax
Individuals and certain trusts that receive or are deemed to receive taxable dividends on exchangeable shares or US Gold common stock, or realize a capital gain on the disposition or deemed disposition of exchangeable shares or US Gold common stock, may realize an increase in their liability for alternative minimum tax under the Tax Act.
Foreign Property Information Reporting
In general, a "specified Canadian entity" for a taxation year or fiscal period whose total cost amount of "specified foreign property" (both as defined in the Tax Act) at any time in the year or fiscal period exceeds C$100,000, is required to file an information return for the year or period disclosing prescribed information, including the cost amount, any dividends received in the year, and any gains or losses realized in the year in respect of such property. On March 4, 2010, Proposed
Amendments to expand existing reporting requirements with respect to specified foreign property to require more detailed information were announced. As of the date hereof, no detailed legislative proposals or revised administrative policies with respect to such amended reporting requirements have been made public. Subject to certain exceptions, a Resident Shareholder will be a specified Canadian entity.
Specified foreign property is defined in the Tax Act to include shares of the capital stock of a non-resident corporation and property that, under the terms or conditions thereof or any agreement related thereto, is convertible into, exchangeable for or confers a right to acquire, property that is a share of the capital stock of a non-resident corporation. As such, exchangeable shares and US Gold common stock are specified foreign property to a Resident Shareholder. Accordingly, Resident Shareholders of exchangeable shares or US Gold common stock should consult their own tax advisors regarding compliance with these rules.
Offshore Investment Fund Property
The Tax Act contains rules which, in certain circumstances, may require a Resident Shareholder of US Gold common stock to include in income in each taxation year an amount in respect of the acquisition and holding of interests in "offshore investment fund property". Both of the following conditions must be satisfied in order for these rules to apply in respect of US Gold common stock held by a resident of Canada:
If applicable, these rules would generally require a Resident Shareholder of US Gold common to include in income for each taxation year in which such Resident Shareholder holds the US Gold common stock, the amount, if any, by which (i) an imputed return for the taxation year computed on a monthly basis and calculated as the product obtained when the Resident Shareholder's "designated cost" (as defined in the Tax Act) of the US Gold common stock at the end of the month is multiplied by 1/12th of the applicable prescribed rate for the period that includes such month; exceeds (ii) the Resident Shareholder's income, including dividends received, from the US Gold common stock for the year (other than capital gains) determined without reference to these rules.
On August 27, 2010, Proposed Amendments to the rules governing the taxation of investments in "offshore investment fund property", which included a proposed increase in the applicable prescribed rate, were released. Any amount required to be included in computing a shareholder's income in respect of US Gold common stock under these rules would be added to the adjusted cost base to the Resident Shareholder of such share.
These rules are complex and their application depends, to a large extent, on the reasons for acquiring or holding US Gold common stock. Resident Shareholders are urged to consult their own tax advisors regarding the application and consequences of these rules.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial data should be read in conjunction with (i) "Management's Discussion and Analysis of Financial Condition and Results of Operations" from our annual report on Form 10-K for the fiscal year ended December 31, 2010; (ii) our consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2010; (iii) "Management's Discussion and Analysis of Financial Condition and Results of Operations" from our quarterly report on Form 10-Q for the quarterly period ended September 30, 2011; and (iv) our consolidated financial statements and the notes thereto included in our quarterly report on Form 10-Q for the quarterly period ended September 30, 2011, each of which is incorporated into the prospectus by reference.
The following unaudited pro forma consolidated financial data are derived from our consolidated financial statements and certain historical financial data in respect of various assets acquired by us. The unaudited pro forma consolidated balance sheet as of September 30, 2011 has been prepared assuming the Arrangement and all necessary ancillary transactions and the exchange offer had been consummated on September 30, 2011. The unaudited pro forma consolidated income statement for the nine months ended September 30, 2011 and the year ended December 31, 2010 have been prepared assuming the Arrangement and all necessary ancillary transactions and the exchange offer had been consummated as of January 1, 2010. The pro forma consolidated financial data set forth on the attached unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated income statement reflect the Arrangement and the issuance of our common stock in exchange for the exchangeable shares upon completion of the exchange offer as if they occurred on the dates hereinabove set forth.
The historical consolidated financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give effect to the pro forma events that are: (1) directly attributable to the Arrangement; (2) factually supportable; (3) utilizing reconciliations from Canadian generally accepted accounting principles ("Canadian GAAP") to United States generally accepted accounting principles ("US GAAP") contained in the notes to the Minera Andes audited financial statements for the fiscal year ended December 31, 2010; and (4) reconciliations from International Financial Reporting Standards ("IFRS") to US GAAP, presented in Minera Andes' interim financial statements for the period ended September 30, 2011.
The unaudited pro forma consolidated financial statements do not reflect any cost savings (or associated costs to achieve such savings) from operating efficiencies or other restructuring that could result from the Arrangement. Further, the unaudited pro forma consolidated financial statements do not reflect the effect of any regulatory actions that may impact the unaudited pro forma consolidated financial statements when the Arrangement is completed.
Transaction costs related to the Arrangement and exchange offer have been and will continue to be recorded as expenses in the periods in which these costs are incurred. The unaudited pro forma consolidated income statement for the nine months ended September 30, 2011 reflects such expenses incurred through September 30, 2011.
The acquisition of Minera Andes' common stock by US Gold in the Arrangement will be accounted for in accordance with the acquisition method of accounting and the regulations of the Securities Exchange Commission. The purchase price will be determined on the basis of the fair value on the acquisition date of the shares of US Gold's common stock issued in the Arrangement. The purchase price for the unaudited pro forma consolidated financial statements is based on the closing share price of US Gold common stock on the NYSE on November 23, 2011, of $3.89 and the exchange of Minera Andes' outstanding shares of common stock for the right to receive 0.45 of a share of US Gold common stock.
Assumptions and estimates underlying the unaudited pro forma consolidated financial statements are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated financial statements. Since the unaudited pro forma consolidated financial statements have been prepared based on preliminary estimates, the final amounts recorded at the date of the Arrangement may differ materially from the information presented. These estimates are subject to change pending further review of the assets acquired and liabilities assumed.
The unaudited pro forma consolidated financial data is not indicative of our financial position or our results of operations which would actually have occurred if the Arrangement and exchange offer had occurred at the dates presented or which may be obtained in the future. In addition, future results may vary significantly from the results reflected in such statements.
The unaudited pro forma consolidated financial data include financial information received from Minera Andes and such financial information has been accepted and incorporated as presented without independent verification of such financial information.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE (LOSS) INCOMEFor the nine month period ended September 30, 2011(in thousands)
| US Gold US GAAP | Minera Andes IFRS | Adjustments US GAAP | Note | Minera Andes US GAAP | Acquisition Adjustments | Note | Pro forma Consolidated | Pro Forma Adjustment for the Consummation of the Exchange Offer (note 6) | Combined Pro Forma for the Arrangement and the Exchange Offer | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| a | b | c | | d=b+c | e | | f=a+d+e | g | h=f+g | ||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||
Income on investment in Minera Santa Cruz S.A. | $ | — | $ | 37,252 | $ | 1,871 | 4(b) | $ | 39,123 | $ | (21,797 | ) | 4(o) | $ | 17,326 | $ | — | $ | 17,326 | |||||||||||||
Less amortization of deferred costs | — | (1,226 | ) | — | (1,226 | ) | — | (1,226 | ) | — | (1,226 | ) | ||||||||||||||||||||
— | 36,026 | 1,871 | 37,897 | (21,797 | ) | 16,100 | — | 16,100 | ||||||||||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||||
General and administrative | 5,059 | 5,076 | — | 5,076 | — | 10,135 | — | 10,135 | ||||||||||||||||||||||||
Property holding costs | 3,470 | — | 88 | 4(a) | 88 | — | 3,558 | — | 3,558 | |||||||||||||||||||||||
Exploration costs | 32,650 | — | 11,341 | 4(a) | 11,341 | — | 43,991 | — | 43,991 | |||||||||||||||||||||||
Transaction costs | 2,128 | 1,739 | — | 1,739 | — | 4(e)(n) | 3,867 | — | 3,867 | |||||||||||||||||||||||
Accretion of asset retirement obligation | 400 | — | — | — | — | 400 | — | 400 | ||||||||||||||||||||||||
Depreciation | 438 | 24 | — | 24 | — | 462 | — | 462 | ||||||||||||||||||||||||
Gain on sale of assets | (21 | ) | — | — | — | — | (21 | ) | — | (21 | ) | |||||||||||||||||||||
Total costs and expenses | 44,124 | 6,839 | 11,429 | 18,268 | — | 62,392 | — | 62,392 | ||||||||||||||||||||||||
Operating (loss) income | $ | (44,124 | ) | $ | 29,187 | $ | (9,558 | ) | $ | 19,629 | $ | (21,797 | ) | $ | (46,292 | ) | $ | — | $ | (46,292 | ) | |||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||||||||||||||
Interest income | 50 | 96 | — | 96 | — | 146 | — | 146 | ||||||||||||||||||||||||
Interest expense | 29 | — | — | — | — | 29 | — | 29 | ||||||||||||||||||||||||
Gain on sale of gold and silver bullion | 1,667 | — | — | — | — | 1,667 | — | 1,667 | ||||||||||||||||||||||||
Unrealized loss on silver bullion | (2,139 | ) | — | — | — | — | (2,139 | ) | — | (2,139 | ) | |||||||||||||||||||||
Gain on sale of marketable equity securities | 19 | — | — | — | — | 19 | — | 19 | ||||||||||||||||||||||||
Project loan interest expense | — | (1,691 | ) | — | (1,691 | ) | — | (1,691 | ) | — | (1,691 | ) | ||||||||||||||||||||
Project loan interest income | — | 1,691 | — | 1,691 | — | 1,691 | — | 1,691 | ||||||||||||||||||||||||
Unrealized gain on fair value of derivative liability | — | 6,119 | — | 6,119 | — | 6,119 | — | 6,119 | ||||||||||||||||||||||||
Foreign currency loss | (1,070 | ) | (371 | ) | — | (371 | ) | — | (1,441 | ) | — | (1,441 | ) | |||||||||||||||||||
Total other (expense) income | (1,444 | ) | 5,844 | — | 5,844 | — | 4,400 | — | 4,400 | |||||||||||||||||||||||
(Loss) income before income tax | (45,568 | ) | 35,031 | (9,558 | ) | 25,473 | (21,797 | ) | (41,892 | ) | — | (41,892 | ) | |||||||||||||||||||
Income tax (expense) recovery | — | (523 | ) | 523 | 4(c) | — | 7,629 | 4(o) | 7,629 | — | 7,629 | |||||||||||||||||||||
Net (loss) income | (45,568 | ) | 34,508 | $ | (9,035 | ) | $ | 25,473 | (14,168 | ) | (34,263 | ) | — | (34,263 | ) | |||||||||||||||||
COMPREHENSIVE (LOSS) INCOME: | ||||||||||||||||||||||||||||||||
Unrealized loss on available-for-sale securities | (777 | ) | — | — | — | — | (777 | ) | — | (777 | ) | |||||||||||||||||||||
Comprehensive (loss) income | $ | (46,345 | ) | 34,508 | $ | (9,035 | ) | $ | 25,473 | $ | (14,168 | ) | $ | (35,040 | ) | $ | — | $ | (35,040 | ) | ||||||||||||
Basic and diluted per share data: | ||||||||||||||||||||||||||||||||
Net (loss) income | $ | (0.33 | ) | $ | 0.12 | $ | (0.13 | ) | $ | — | $ | (0.13 | ) | |||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||||||||
—basic (note 5) | 136,134 | 281,167 | 263,461 | — | 263,461 | |||||||||||||||||||||||||||
—diluted (note 5) | 136,134 | 284,357 | 263,461 | — | 263,461 | |||||||||||||||||||||||||||
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOMEFor the year ended December 31, 2010(in thousands)
| US Gold US GAAP | Minera Andes Canadian GAAP | Adjustments US GAAP | Note | Minera Andes US GAAP | Acquisition Adjustments | Note | Pro forma Consolidated | Pro Forma Adjustment for the Consummation of the Exchange Offer (note 6) | Combined Pro Forma for the Arrangement and the Exchange Offer | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| a | b | c | | d=b+c | e | | f=a+d+e | g | h=f+g | ||||||||||||||||||||||
REVENUE | ||||||||||||||||||||||||||||||||
Income on investment in Minera Santa Cruz S.A. | $ | — | $ | 26,134 | $ | 11,211 | 4 | (b) | $ | 37,345 | $ | (23,307 | ) | 4 | (o) | $ | 14,038 | $ | — | $ | 14,038 | |||||||||||
Less amortization of deferred costs | — | (1,673 | ) | — | (1,673 | ) | — | (1,673 | ) | — | (1,673 | ) | ||||||||||||||||||||
— | 24,461 | 11,211 | 35,672 | (23,307 | ) | 12,365 | — | 12,365 | ||||||||||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||||
General and administrative | 5,397 | 5,435 | — | 5,435 | — | 10,832 | — | 10,832 | ||||||||||||||||||||||||
Property holding costs | 4,358 | — | 1,301 | 4 | (a) | 1,301 | — | 5,659 | — | 5,659 | ||||||||||||||||||||||
Exploration costs | 19,210 | — | 12,137 | 4 | (a) | 12,137 | — | 31,347 | — | 31,347 | ||||||||||||||||||||||
Accretion of asset retirement obligation | 515 | — | — | — | — | 515 | — | 515 | ||||||||||||||||||||||||
Depreciation | 454 | 19 | — | 19 | — | 473 | — | 473 | ||||||||||||||||||||||||
Gain on sale of assets | (29 | ) | — | — | — | — | (29 | ) | — | (29 | ) | |||||||||||||||||||||
Write-off of mineral property interests | 5,878 | 13 | (13 | ) | 4 | (a) | — | — | 5,878 | — | 5,878 | |||||||||||||||||||||
Total costs and expenses | 35,783 | 5,467 | 13,425 | 18,892 | — | 54,675 | — | 54,675 | ||||||||||||||||||||||||
Operating (loss) income | $ | (35,783 | ) | $ | 18,994 | $ | (2,214 | ) | $ | 16,780 | $ | (23,307 | ) | $ | (42,310 | ) | $ | — | $ | (42,310 | ) | |||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||||||||||||||
Interest income | 112 | 17 | — | 17 | — | 129 | — | 129 | ||||||||||||||||||||||||
Interest expense | (15 | ) | — | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||||||||
Project loan interest expense | — | (2,514 | ) | — | (2,514 | ) | — | (2,514 | ) | — | (2,514 | ) | ||||||||||||||||||||
Project loan interest income | — | 2,514 | — | 2,514 | — | 2,514 | — | 2,514 | ||||||||||||||||||||||||
Unrealized loss on fair value of derivative liability | — | — | (20,283 | ) | 4 | (d) | (20,283 | ) | — | (20,283 | ) | — | (20,283 | ) | ||||||||||||||||||
Foreign currency gain | 597 | 462 | — | 462 | — | 1,059 | — | 1,059 | ||||||||||||||||||||||||
Total other income (expense) | 694 | 479 | (20,283 | ) | (19,804 | ) | — | (19,110 | ) | — | (19,110 | ) | ||||||||||||||||||||
(Loss) income before income tax | (35,089 | ) | 19,473 | (22,497 | ) | (3,024 | ) | (23,307 | ) | (61,420 | ) | (61,420 | ) | |||||||||||||||||||
Income tax recovery | 1,998 | — | — | — | 8,157 | 4 | (o) | 10,155 | — | 10,155 | ||||||||||||||||||||||
Net (loss) income | (33,091 | ) | 19,473 | (22,497 | ) | (3,024 | ) | (15,150 | ) | (51,265 | ) | — | (51,265 | ) | ||||||||||||||||||
COMPREHENSIVE (LOSS) INCOME: | ||||||||||||||||||||||||||||||||
Unrealized gain on available-for-sale securities | 542 | — | — | — | — | 542 | — | 542 | ||||||||||||||||||||||||
Comprehensive (loss) income | $ | (32,549 | ) | $ | 19,473 | $ | (22,497 | ) | $ | (3,024 | ) | $ | (15,150 | ) | $ | (50,723 | ) | $ | — | $ | (50,723 | ) | ||||||||||
Basic and diluted per share data: | ||||||||||||||||||||||||||||||||
Net (loss) income | $ | (0.27 | ) | $ | 0.07 | $ | (0.21 | ) | $ | — | $ | (0.21 | ) | |||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||||||||
—basic (note 5) | 121,987 | 264,570 | 249,314 | — | 249,314 | |||||||||||||||||||||||||||
—diluted (note 5) | 121,987 | 269,891 | 249,314 | — | 249,314 | |||||||||||||||||||||||||||
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETAs at September 30, 2011(in thousands)
| US Gold US GAAP | Minera Andes IFRS | Adjustments US GAAP | Note | Minera Andes US GAAP | Acquisition Adjustments | Note | Pro forma Consolidated | Pro Forma Adjustment for the Consummation of the Exchange Offer (note 6) | Combined Pro Forma for the Arrangement and the Exchange Offer | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| a | b | c | | d=b+c | e | | f=a+d+e | g | h= f+g | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalent | $ | 32,807 | $ | 36,443 | $ | — | $ | 36,443 | $ | — | $ | 69,250 | $ | — | $ | 69,250 | |||||||||||||||
Short-term investments | — | 8,586 | — | 8,586 | — | 8,586 | — | 8,586 | |||||||||||||||||||||||
Marketable equity securities | 2,248 | — | — | — | — | 2,248 | — | 2,248 | |||||||||||||||||||||||
Gold and silver bullion | 26,613 | — | — | — | — | 26,613 | — | 26,613 | |||||||||||||||||||||||
Other current assets | 3,054 | 702 | — | 702 | — | 3,756 | — | 3,756 | |||||||||||||||||||||||
Total current assets | 64,722 | 45,731 | — | 45,731 | — | 110,453 | — | 110,453 | |||||||||||||||||||||||
Mineral property interests | 245,453 | — | — | — | 329,825 | 4(f) | 575,278 | — | 575,278 | ||||||||||||||||||||||
Restrictive time deposits for reclamation bonding | 5,190 | — | — | — | — | 5,190 | — | 5,190 | |||||||||||||||||||||||
Exploration and evaluation assets | — | 44,109 | (44,109 | ) | 4(a) | — | — | — | — | ||||||||||||||||||||||
Investment in Minera Santa Cruz S.A. | — | 109,646 | (16,818 | ) | 4(b) | 92,828 | 196,232 | 4(g) | 289,060 | — | 289,060 | ||||||||||||||||||||
Property and equipment | 11,715 | 321 | — | 321 | — | 12,036 | — | 12,036 | |||||||||||||||||||||||
Other assets | 6 | — | — | — | — | 6 | — | 6 | |||||||||||||||||||||||
TOTAL ASSETS | $ | 327,086 | $ | 199,807 | $ | (60,927 | ) | $ | 138,880 | $ | 526,057 | $ | 992,023 | $ | — | $ | 992,023 | ||||||||||||||
LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 5,673 | $ | 2,733 | $ | — | $ | 2,733 | $ | 2,066 | 4(e)(n) | $ | 10,472 | $ | — | $ | 10,472 | ||||||||||||||
Current portion of asset retirement obligation | 624 | — | — | — | — | 624 | — | 624 | |||||||||||||||||||||||
Current deferred income tax liability | 393 | — | — | — | — | 393 | — | 393 | |||||||||||||||||||||||
Other current liabilities | 78 | — | — | — | — | 78 | — | 78 | |||||||||||||||||||||||
Total current liabilities | 6,768 | 2,733 | — | 2,733 | 2,066 | 11,567 | — | 11,567 | |||||||||||||||||||||||
Asset retirement obligation, less current portion | 5,735 | — | — | — | — | 5,735 | — | 5,735 | |||||||||||||||||||||||
Deferred income tax liability | 78,573 | 2,079 | (2,079 | ) | 4(c) | — | 162,796 | 4(h) | 241,369 | — | 241,369 | ||||||||||||||||||||
Other liabilities | 400 | — | — | — | — | 400 | — | 400 | |||||||||||||||||||||||
Total liabilities | $ | 91,476 | $ | 4,812 | $ | (2,079 | ) | $ | 2,733 | $ | 164,862 | $ | 259,071 | $ | — | $ | 259,071 | ||||||||||||||
Shareholders' Equity | |||||||||||||||||||||||||||||||
Common stock | $ | 613,064 | $ | 195,001 | $ | — | $ | 195,001 | $ | 303,419 | 4(i)(j)(k) | $ | 1,111,484 | $ | — | $ | 1,111,484 | ||||||||||||||
Contributed surplus | — | 14,156 | — | 14,156 | (14,156 | ) | 4(l) | — | — | — | |||||||||||||||||||||
Accumulated deficit | (376,934 | ) | (14,162 | ) | (58,848 | ) | 4(a)(b)(c) | (73,010 | ) | 71,932 | 4(m)(n) | (378,012 | ) | — | (378,012 | ) | |||||||||||||||
Accumulated other comprehensive loss | (520 | ) | — | — | — | — | (520 | ) | — | (520 | ) | ||||||||||||||||||||
Total shareholders' equity | $ | 235,610 | $ | 194,995 | $ | (58,848 | ) | $ | 136,147 | $ | 361,195 | $ | 732,952 | $ | — | $ | 732,952 | ||||||||||||||
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 327,086 | $ | 199,807 | $ | (60,927 | ) | $ | 138,880 | $ | 526,057 | $ | 992,023 | $ | — | $ | 992,023 | ||||||||||||||
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTSAs at September 30, 2011
1. BASIS OF PRESENTATION
The Pro Forma Statement of Operations for the nine month period ended September 30, 2011 and the year ended December 31, 2010 give effect to the Arrangement as if it were completed on January 1, 2010 and to the exchange offer as if it were completed on January 1, 2010. The Pro Forma Balance Sheet as at September 30, 2011 gives effect to the Arrangement as if it were completed on September 30, 2011 and to the exchange offer as if it were completed on September 30, 2011.
The Pro Forma Financial Statements have been derived from the historical consolidated financial statements of US Gold and Minera Andes, which are included or incorporated by reference in this registration statement. Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the Pro Forma Financial Statements. Since the Pro Forma Financial Statements have been prepared based upon preliminary estimates, the final amounts recorded at the date of the Arrangement may differ materially from the information presented. These estimates are subject to change pending further review of the assets acquired and liabilities assumed.
The Arrangement is reflected in the Pro Forma Financial Statements as being accounted for based on the acquisition method in accordance with ASC Topic 805, Business Combinations. Under the acquisition method, the total estimated purchase price is calculated as described in Note 3 to the Pro Forma Financial Statements. In accordance with the accounting guidance for business combinations, the assets acquired and liabilities assumed have been measured at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurements utilize estimates based on key assumptions of the Arrangement, including prior acquisition experience, benchmarking of similar acquisitions and historical and current market data. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analysis is performed. The final fair value of assets acquired and liabilities assumed will be determined after the Arrangement is complete, which may differ materially from the information presented.
The Pro Forma Financial Statements do not reflect cost savings (or associated costs to achieve such savings) from operating efficiencies, synergies or other restructuring that could result from the Arrangement. Further, the Pro Forma Financial Statements do not reflect the effect of any regulatory actions that may impact the Pro Forma Financial Statements when the Arrangement is completed.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies used in the preparation of these Pro Forma Financial Statements are those set out in US Gold's audited consolidated financial statements for the year ended December 31, 2010. Minera Andes follows IFRS, as outlined in Minera Andes' financial statements as at September 30, 2011. As a result, in preparation of the Pro Forma Financial Statements, several adjustments were made to the Minera Andes' financial statements to conform to US GAAP. Further accounting policy differences may be identified after consummation and integration of the proposed acquisition.
3. BUSINESS ACQUISITION
On September 22, 2011, US Gold entered into an Arrangement Agreement (the "Arrangement Agreement") among US Gold, McEwen Mining—Minera Andes Acquisition Corp., a newly-formed corporation wholly-owned by US Gold and incorporated under the Business Corporations Act (Alberta) ("Canadian Exchange Co."), and Minera Andes, a corporation incorporated under the Business
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTSAs at September 30, 2011 (Continued)
3. BUSINESS ACQUISITION (Continued)
Corporations Act (Alberta), pursuant to which US Gold through Canadian Exchange Co. will acquire all of the issued and outstanding common shares of Minera Andes (the "Arrangement"). The Arrangement will be implemented by way of the plan of arrangement under Alberta, Canada law and is subject to approval by the Court of Queen's Bench of Alberta (the "Court"). The effect of the Arrangement will result in Minera Andes becoming a wholly-owned indirect subsidiary of US Gold.
Pursuant to, and subject to the terms and conditions of, the Arrangement Agreement and the Plan of Arrangement, US Gold will acquire, through Canadian Exchange Co., all of the outstanding shares of Minera Andes' common shares (the "Minera Andes Shares") in exchange for exchangeable shares of Canadian Exchange Co. (the "Exchangeable Shares") at a ratio of 0.45 of an Exchangeable Share for each outstanding Minera Andes Share. In addition, all outstanding options to acquire Minera Andes shares will be converted into options to purchase shares of common stock of US Gold at a ratio of 0.45 of a share of US Gold's common stock for each Minera Andes Share underlying each such Minera Andes option. The exchange ratio of 0.45 will not be adjusted for any subsequent changes in market prices of the Minera Andes Shares or US Gold's common stock prior to the closing of the Arrangement. The Exchangeable Shares will be exchangeable on a one-for-one basis for shares of US Gold's common stock at any time at the option of the holder. Each Exchangeable Share will be substantially the economic and voting equivalent of a share of common stock of US Gold. Any Exchangeable Shares not previously exchanged will, upon the direction of Canadian Exchange Co.'s board of directors, be exchanged for shares of common stock of US Gold on any date that is on or after the tenth year anniversary of the date on which exchangeable share are first issued, subject to applicable law, unless Canadian Exchange Co. exchanges them earlier upon the occurrence of certain events.
As a result of the Arrangement Agreement, the combined company will be held approximately 52% by existing US Gold shareholders and 48% by existing Minera Andes shareholders. On a diluted basis, the combined company will be held approximately 53% by existing US Gold shareholders and 47% by existing Minera Andes shareholders. Each Minera Andes stock option will be exchanged for 0.45 of a US Gold stock option, with the strike price divided by 0.45. The option life and vesting period of the US Gold replacement stock option will not change from the option life granted under the Minera Andes option plan.
These Pro Forma Financial Statements assume the cost of the acquisition will include the fair value of the US Gold common shares issued, based on the deemed issuance of 127.3 million US Gold common shares at a price of $3.89 per share and the issuance of replacement stock options valued at $3.1 million, totaling $498.4 million.
The price of the US Gold common share was calculated using the November 23, 2011 NYSE closing share price of $3.89. The actual purchase price will fluctuate with the market price of US Gold's common stock until the Arrangement is completed. An increase or decrease of 25% in US Gold's common stock price would increase or decrease the consideration transferred by approximately $121 million, which would be reflected as an increase or decrease to the purchase price of Minera Andes. The increase or decrease in US Gold's common stock price by as much as 25% is reasonably possible based upon the recent history of US Gold's common stock price.
The US Gold replacement stock options have been valued using the Black-Scholes option pricing model. The assumptions used in the Black-Scholes option pricing model are as follows: share price:
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTSAs at September 30, 2011 (Continued)
3. BUSINESS ACQUISITION (Continued)
$3.89, strike price: $1.40—$3.20, dividend yield: 0%, years to maturity: 0.09—3.47, volatility: 62%—81%, and forfeiture rate: 6.93%.
US Gold has completed a preliminary estimate of the fair value of all identifiable assets acquired and liabilities assumed and the portion of the purchase price attributable to goodwill. The fair value of the assets acquired and liabilities assumed will ultimately be determined after the closing of the Arrangement. Therefore, it is likely that the fair value of the assets acquired and liabilities assumed will vary from those shown below, and the differences may be material.
Purchase Price | ||||
Value of US Gold's common shares issued on acquisition | $ | 495,302 | ||
Fair value of US Gold replacement stock options | 3,118 | |||
$ | 498,420 | |||
Net Assets Acquired as at September 30, 2011 | Fair Value | ||||
---|---|---|---|---|---|
Cash and cash equivalents | $ | 36,443 | |||
Short term investments | 8,586 | ||||
Other current assets | 702 | ||||
Exploration and evaluative assets | |||||
Los Azules | 280,378 | ||||
Santa Cruz | 49,447 | ||||
Investment in Minera Santa Cruz | 289,060 | ||||
Equipment | 321 | ||||
Accounts payable | (3,721 | ) | |||
Deferred income tax liability (on acquisition) | (162,796 | ) | |||
$ | 498,420 | ||||
4. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS
Differences resulting from US GAAP to IFRS and US GAAP to Canadian GAAP:
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTSAs at September 30, 2011 (Continued)
4. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS (Continued)
liability for Minera Andes under IFRS. Such revaluation is prohibited under ASC 740-10-25-3(f), and as a result, this deferred tax liability has been removed from the Pro Forma Financial Statements.
Differences resulting from purchase price allocation:
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTSAs at September 30, 2011 (Continued)
5. PRO FORMA EARNINGS PER SHARE
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6. ADJUSTMENT FOR THE CONSUMMATION OF THE EXCHANGE OFFER
There are no adjustments resulting from the consummation of the exchange offer to the unaudited pro forma consolidated statements of operations and comprehensive (loss) income for the nine month period ended September 30, 2011 or the year ended December 31, 2010 or to the unaudited pro forma consolidated balance sheet as at September 30, 2011.
INFORMATION ABOUT THE COMPANIES
About US Gold
US Gold is a precious metals exploration stage company engaged in the business of acquiring, exploring, and developing mineral properties in the U.S. and Mexico. US Gold was organized under the laws of the State of Colorado on July 24, 1979 under the name Silver State Mining Corporation. On June 21, 1988, US Gold changed its name to U.S. Gold Corporation and on March 16, 2007, US Gold changed its name to US Gold Corporation. US Gold presently holds an interest in numerous properties in Nevada and Mexico, jurisdictions that have been historically favorable to mining. US Gold is currently in the exploration stage and has not generated revenue from operations since 1990.
US Gold holds interests in approximately 1,525 square miles of mineral concessions in west central Mexico. Its primary property in Mexico is the El Gallo Complex, located in Sinaloa state on the Sierra Madre Trend, a geological area of significant gold and silver mineralization. In 2010, US Gold completed two estimates of mineralized material on the El Gallo Complex and in February 2011, US Gold completed a Preliminary Economic Assessment. US Gold intends to complete a feasibility study at the El Gallo Complex by mid 2012 and on August 31, 2011 announced the commencement of work towards the first phase of production on the property. Over the next two years, US Gold estimates it will spend approximately $150 million on development and exploration at the El Gallo Complex, which will mainly consist of infrastructure related to production and exploration drilling.
US Gold holds interests in approximately 254 square miles in Nevada, United States. The majority of US Gold's Nevada properties, including its interests in the Tonkin Complex and Gold Bar Project, are located along the Cortez Trend, in north central Nevada. US Gold also owns property, including the Limo Project, on the southern end of the Carlin Trend. Both the Cortez Trend and Carlin Trend are geological areas of significant gold discoveries. In 2006, US Gold commenced comprehensive exploration of its Tonkin property in an effort to identify additional mineralized material. From 2008 through 2009, US Gold drilled various targets on US Gold's Gold Bar and Limo Projects, as well as expanded the quantity of estimated mineralized material at the Gold Bar Project in updated technical reports. In 2010, US Gold completed a Preliminary Economic Assessment for the Gold Bar Project and expects to complete a pre-feasibility study on the property during the last quarter of 2011. Over the next two years, US Gold estimates it will spend approximately $20 million on exploration on the Gold Bar Project, Limo Project and at other targets in Nevada.
US Gold's common stock is listed on the TSX and the NYSE under the symbol "UXG." US Gold plans to, and has received requisite shareholder approve to, change its name to McEwen Mining Inc. and the trading symbol of US Gold common stock on the NYSE and the TSX will be changed to "MUX." As of market close on the record date, December 12, 2011, the closing price of US Gold common stock on the NYSE was $ and there was a total of shares of US Gold common stock outstanding.
US Gold's principal executive offices are located at 181 Bay Street, Bay Wellington Tower, Suite 4750, P.O. Box 792, Toronto, Ontario, Canada M5J 2T3 and its telephone number is (866) 441-0690. US Gold's website is www.usgold.com. Information contained on the website is not incorporated by reference into this prospectus and you should not consider information contained on the website as part of this prospectus. US Gold is subject to the reporting requirements of the Exchange Act and, as such, it files or furnishes reports and other information with the SEC from time to time. More information about US Gold is available and incorporated by reference into this prospectus as described in the sections above entitled "Where You Can Find Additional Information" and "Incorporation of Certain Information by Reference".
About Canadian Exchange Co.
Canadian Exchange Co. is an indirect subsidiary of US Gold incorporated under the ABCA on September 19, 2011 for the sole purpose facilitating the Arrangement as the issuer of the exchangeable shares. Canadian Exchange Co. has no significant assets and has not engaged in any business operations to date and will not engage in any business operations or activities other than as contemplated by the Arrangement. In connection with the Arrangement, among other things, Canadian Exchange Co. obtained the benefit of the Support Agreement with US Gold, acquired all the common shares of Minera Andes and incurred certain liabilities.
Canadian Exchange Co.'s principal executive offices are located at 181 Bay Street, Bay Wellington Tower, Suite 4750, P.O. Box 792, Toronto, Ontario, Canada M5J 2T3 and its telephone number is (866) 441-0690.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Canadian Exchange Co. has had no active business operations since its incorporation and is not expected to undertake any active business operations in the future. The only activities Canadian Exchange Co. has engaged in since its incorporation have been in connection with its role as a party to the Arrangement Agreement, pursuant to which it acquired all the issued and outstanding common shares of Minera Andes and issued the exchangeable shares. We anticipate that the only activities that Canadian Exchange Co. will undertake will be in connection with its role as a holding company for Minera Andes and the issuer of the exchangeable shares. In addition, Canadian Exchange Co. had only nominal assets and incurred only nominal liabilities prior to the completion of the acquisition of Minera Andes.
Dividends on Canadian Exchange Co. Stock
Canadian Exchange Co. has never declared or paid any dividends on its common shares or exchangeable shares and does not expect to declare or pay any in the future, except as may be required with respect to the exchangeable shares due to a dividend by US Gold on shares of US Gold common stock.
Market Information
As of the date of this prospectus, there are 1,000 common shares of Canadian Exchange Co. issued and outstanding and, upon the closing of the Arrangement, there will be 127,326,984 exchangeable shares issued in connection with the Arrangement issued and outstanding. Canadian Exchange Co. common shares are not listed for trading on any exchange. There is no established public market for the trading of Canadian Exchange Co. common shares and it is not expected that any such markets will develop. Callco is the sole holder of all of Canadian Exchange Co.'s common stock. As of the date of this prospectus, there is no established market price for the exchangeable shares but the TSX has conditionally approved the listing of exchangeable shares, to be listed under the symbol "MAQ" once the Arrangement is completed.
Quantitative and Qualitative Disclosures About Market Risk
Canadian Exchange Co. is not exposed to market risk, including risks associated with commodity prices, interest rates, foreign currency exchange and equity price, as it does not conduct operations and does not have significant assets or liabilities.
Changes in or Disagreements with Accountants
There have been no changes in or disagreement with Canadian Exchange Co.'s accountants concerning accounting and financial disclosure since Canadian Exchange Co.'s incorporation.
Equity Compensation Plans
Canadian Exchange Co. has not adopted any equity compensation plans.
OurErnst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements as of December 31, 20102017 and December 31, 2016 and for each of the years then ended, included in our annual report on Form 10-K for the three-year periodyear ended December 31, 2010,2017, and management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 20102017, as set forth in their reports, which are incorporated by reference in this prospectus and elsewhere in the registration statement. Such financial statements are incorporated by reference in reliance upon Ernst & Young LLP's reports, given on their authority as experts in accounting and auditing.
The consolidated financial statements of McEwen Mining Inc. and its subsidiaries for the year ended December 31, 2015, comprising the consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity and cash flows for the year ended December 31, 2015, and the audited carve-out financial statements of the Black Fox Complex as of and for the year ended December 31, 2016, have been audited by KPMG LLP as set forth in their reports, which are incorporated by reference in this prospectus and elsewhere in the registration statement. Such financial statements are incorporated by reference in reliance upon KPMG LLP's reports given on their authority as experts in accounting and auditing.
The financial statements of Minera Santa Cruz S.A. appearing in McEwen Mining Inc.'s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2017 have been audited by Pistrelli, Henry Martin y Asociados S.R.L., member of Ernst & Young Global, independent auditors, as set forth in their report thereon, included therein, and incorporated herein by reference. Such financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Estimates of reserves for Minera Santa Cruz S.A. have been incorporated by reference in this prospectus in reliance upon the reportsreport of KPMG LLP, Toronto, Canada, independent registered public accounting firm, whichP&E Mining Consultants Inc. Such estimates and related information have been incorporated by reference hereinso included in reliance upon the authority of said firmP&E Mining Consultants Inc. as experts in accounting and auditing.
The consolidated balance sheets of Minera Andes as at December 31, 2010 and December 31, 2009 and the related consolidated statements of operations and comprehensive income, shareholders' equity and cash flows for each of the years in the two-year period ended December 31, 2010 have been incorporated in this prospectus by reference to our Preliminary Proxy Statement on Schedule 14A, filed with the SEC on October 7, 2011, in reliance upon the reports of KPMG LLP, Toronto, Canada, independent registered public accounting firm, which have been incorporated by reference herein upon the authority of said firm as experts in accounting and auditing.such matters.
The validitylegality of the issuance of the securities being offered by this registration statement will be passed upon for us by Hogan Lovells US LLP. Certain federal U.S. and Canadian tax matters will behereby is being passed upon by Hogan Lovells US LLP, and Fraser Milner Casgrain LLP, respectively, as set forth under "Material United States Federal Income Tax Consequences" and "Material Canadian Federal Income Tax Consequences."Denver, Colorado.
45,000,000 SHARES OF COMMON STOCK
MCEWEN MINING INC.
PROSPECTUS
, 2018
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
We have entered into indemnification agreements with each of our executive officers and directors which provide that we must indemnify, to the fullest extent permitted by the laws of the State of Colorado, but subject to certain exceptions, any of our directors or officers who are made or threatened to be made a party to a proceeding, by reason of the person serving or having served in their capacity as an executive officer or director with us. We may also be required to advance expenses of defending any proceeding brought against them while serving in such capacity.
Our Articles of Incorporation and Bylaws provide that we must indemnify, to the fullest extent permitted by the laws of the State of Colorado, any of our directors, officers, employees or agents made or threatened to be made a party to a proceeding, by reason of the person serving or having served in a capacity as such, against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met.
The Colorado Business Corporation Act ("CBCA") allows indemnification of directors, officers, employees and agents of a company against liabilities incurred in any proceeding in which an individual is made a party because he or she was a director, officer, employee or agent of the company if such person conducted himself in good faith and reasonably believed his actions were in, or not opposed to, the best interests of the company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A person must be found to be entitled to indemnification under this statutory standard by procedures designed to assure that disinterested members of the board of directors have approved indemnification or that, absent the ability to obtain sufficient numbers of disinterested directors, independent counsel or shareholders have approved the indemnification based on a finding that the person has met the standard. Indemnification is limited to reasonable expenses.
Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by the CBCA. Specifically, our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for:
Liability under federal securities law is not limited by our Articles of Incorporation.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the United States Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being
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registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question, whether such indemnification by itsit is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.SCHEDULES
The Exhibit Index filed herewith and appearing immediately before(a)
(b) financial statement schedules
Schedules for which provision is made in the exhibits heretoapplicable accounting regulations of the SEC are either not required under the related instructions, are inapplicable or not material, or the information called for thereby is otherwise included in the financial statements incorporated by reference.reference and therefore has been omitted.
(a)
(1)
(i)
(ii)
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in the registration statement.Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
(iii)
(2)
(3)
(4)
(i)
(ii)
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securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which thatthe prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5)
(i)
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(ii)
(iii)
(iv)
(b)
(c)
(1) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrantRegistrant pursuant to the foregoing provisions or otherwise, the registrantRegistrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrantRegistrant of expenses incurred or paid by a director, officer or controlling person of the registrantRegistrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrantRegistrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
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(f) The undersigned registrantRegistrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statementRegistration Statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4 and has duly caused this registration statementRegistration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, StateToronto, Province of Colorado,Ontario, on December 2, 2011.August 15, 2018.
By: | /s/ ROBERT R. MCEWEN |
EachKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Perry Y. Ing,Robert R. McEwen as his or her true and lawful attorney-in-factattorneys-in-fact and agent,agents, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign (i) any orand all amendments, orincluding post-effective amendments, to this registration statement or anyand (ii) a registration statement, forand any and all amendments thereto, relating to the same offering that is to be effective upon filingcovered hereby filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, (the "Act"), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and to execute, deliver and file any other documents and instruments in the undersigned's name or on the undersigned's behalf which said attorneys-in-fact and agents, or either of them, may determine to be necessary or advisable to comply with the Act and any rules or regulations promulgated thereunder, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in connection with such matters andperson, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or eitherany of them or their substitute or substitutes may lawfully do or cause to be done by virtue of the power of attorney granted hereby.hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed as of December 2, 2011 by the following persons in the capacities indicatedand on the dates indicated.
Signature | Title | Date | ||
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/s/ ROBERT R. MCEWEN Robert R. McEwen | Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) | August 15, 2018 | ||
/s/ | Senior Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) | August 15, 2018 | ||
/s/ ALLEN V. AMBROSE Allen V. Ambrose | Director | August 15, 2018 |
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Signature | Title | Date | ||
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/s/ MICHELE L. ASHBY Michele L. Ashby | Director | August 15, 2018 | ||
/s/ LEANNE M. BAKER Leanne M. Baker | Director | August 15, 2018 | ||
/s/ | Director | August 15, 2018 | ||
/s/ GREGORY P. FAUQUIER | Director | August 15, 2018 | ||
/s/ DONALD R. M. QUICK Donald R. M. Quick | Director | August 15, 2018 | ||
/s/ MICHAEL L. STEIN Michael L. Stein | Director | August 15, 2018 | ||
/s/ ROBIN DUNBAR Robin Dunbar | Director | August 15, 2018 |
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