UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
X
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
JANUARY 31, 2004
OR
FOR THE TRANSITION PERIOD FROM
TO
COMMISSION FILE NUMBER: 0-31108
EL NINO VENTURES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
(TRANSLATION OF REGISTRANT’S NAME INTO ENGLISH)
BRITISH COLUMBIA, CANADA
(JURISDICTION OF INCORPORATION OR ORGANIZATION)
2303 WEST 41ST AVENUE, VANCOUVER, BRITISH COLUMBIA V6M 2A3
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT.
TITLE OF EACH CLASS
NAME ON EACH EXCHANGE ON WHICH REGISTERED
NONE
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT.
COMMON SHARES WITHOUT PAR VALUE
(TITLE OF CLASS)
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(D) OF THE ACT.
NONE
(TITLE OF CLASS)
INDICATE THE NUMBER OF OUTSTANDING SHARES OF EACH OF THE ISSUER’S CLASSES OF CAPITAL OR COMMON STOCK AS OF THE CLOSE OF THE PERIOD COVERED BY THE ANNUAL REPORT.
4,571,546COMMON SHARES
Indicate by Check Mark Whether the Registrant (1) has Filed All Reports Required To be Filed by Section 12 or 15(D) of the Securities Exchange Act of 1934 During the Preceding 12 Months (or for such shorter period that the registrant was required to file such reports), and (2) Has Been Subject to Such Filing Requirements for the Past 90 Days.
YES
NO
X
Indicate by Check Mark Which Financial Statement Item the Registrant Has Elected to Follow.
ITEM 17
X
ITEM 18
X
Indicate by Check Mark Whether the Registrant Has Filed All Documents and Reports Required to be Filed by Sections 12, 13 or 15(D) of the Securities Exchange Act of 1934 Subsequent to the Distribution of Securities Under a Plan Confirmed by a Court.
YES
NO
NOT APPLICABLE
X
TABLE OF CONTENTS
Page
Glossary of Mining Terms
6
PART I
ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
7
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
7
ITEM 3.
KEY INFORMATION
7
Selected Financial Data
7
Capitalization and Indebtedness
8
Reasons for the Offer and Use of Proceeds
8
Risk Factors
8
Exploration and Development Risks
9
Operating Hazards and Risks
10
Lack of Cash Flow and Non Availability of Additional Funds
10
Reserves
10
Title Risks
10
Uncertainty or Contestation of Contract Rights
10
Conflicts of Interest
10
Competition and Agreements with Other Parties
11
Fluctuating Mineral Prices
11
Shares Reserved for Future Issuance; Potential Dilution
11
Environmental Regulation
12
Canadian Jurisdictional and Enforceability of Judgements, Risks
12
Adequate Labor and Dependence Upon Key Personnel
13
Forward Looking Statements
13
ITEM 4.
INFORMATION ON THE COMPANY
13
History and Development of the Company
13
Business of the Company
14
Organizational Structure
14
Property, Plants, and Equipment
14
Sassy Property, Alaska, USA
14
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
17
Operating Results
17
Fiscal Year Ended January 31, 2004 compared to Fiscal Year Ended January 31, 2003
17
Fiscal Year Ended January 31, 2003 compared to Fiscal Year Ended January 31, 2002
18
Fiscal Year Ended January 31, 2002 compared to Fiscal Year Ended January 31, 2001
19
Liquidity and Capital Resources
19
January 31, 2004 compared to January 31, 2003
19
January 31, 2003 compared to January 31, 2002
19
January 31, 2002 compared to January 31, 2001
19
Research and Development, Patents and Licenses, etc.
20
Trend Information
20
Off-Balance Sheet Arrangements
20
Tabular Disclosure of Contractual Obligations
20
Safe Harbour
20
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
21
Directors and Senior Management
21
Compensation
22
Summary Compensation Table
22
Long Term Incentive Plan
23
Termination of Employment, Change in Responsibilities and Employment Contracts
23
Compensation Committee
23
Report on Executive Compensation
23
Compensation to Directors
23
Stock Options
23
Options and Stock Appreciation Rights Grants During Most Recently Completed
Financial Year
23
Options Granted To Directors, Non-Executive Insiders And Others in Financial Year
24
Options Exercised by Directors, Executive Officers, Non-Executive Insiders, and
Others in Financial Year
24
Options Cancelled by Directors, Executive Officers, Non-Executive Insiders, and
Others in Financial Year
24
Amendment to Stock Option Plan
24
Defined Benefit Plans
24
Board Practices
25
Employees
27
Share Ownership
27
Performance Shares and Escrowed Shares
27
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
28
Major Shareholders
28
Related Party Transactions
28
Interests of Experts and Counsel
28
ITEM 8.
FINANCIAL INFORMATION
28
Consolidated Statements and Other Financial Information
28
Significant Changes
28
ITEM 9.
THE OFFER AND LISTING
29
Offer and Listing Details
29
Plan of Distribution
30
Markets
30
Selling Shareholders
30
Dilution
30
Expenses of the Issue
30
ITEM 10.
ADDITIONAL INFORMATION
30
Share Capital
30
Memorandum and Articles of Association
30
Material Contracts
31
Exchange Controls
31
Taxation
31
Canadian Federal Income Tax Consequences
32
Dividends
32
Capital Gains
33
United States Federal Income Tax Consequences
34
US Holders
34
Distributions on Common Shares of the Company
34
Foreign Tax Credit
35
Disposition of Common Shares of the Company
35
Other Considerations for US Holders
36
Foreign Personal Holding Company
36
Foreign Investment Company
36
Passive Foreign Investment Company
36
Controlled Foreign Corporation
39
Dividends and Paying Agents
39
Statements by Experts
39
Documents on Display
39
Subsidiary Information
39
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
39
PART II
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
40
ITEM 13.
DEFAULTS, DIVIDEND ARREARS AND DELINQUENCIES
40
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
40
AND USE OF PROCEEDS
ITEM 15.
CONTROLS AND PROCEDURES
40
ITEM 16.
[ RESERVED ]
40
ITEM 16A.
AUDIT COMMITTEE FINANICAL EXPERT
40
ITEM 16B.
CODE OF ETHICS
40
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
43
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARES FOR AUDIT COMMITTEES
43
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
43
PART III
ITEM 17.
FINANCIAL STATEMENTS
43
ITEM 18.
FINANCIAL STATEMENTS
43
ITEM 19.
EXHIBITS
43
SIGNATURES
45
GLOSSARY
The following are abbreviations and definitions of terms commonly used in the mining industry and this
Annual Report.
Anglo
Anglo Alaska Gold Corp.
Ag
The chemical symbol for silver.
Airborne Mag-EM
Airborne magnetometer and electromagnetic geophysical surveys which measure the magnetic and electrical responses from the ground over which the survey is carried out.
Au
The chemical symbol for gold.
Geophysical Surveys
The use of one or more geophysical techniques in geophysical exploration.
Grab Samples
A sample of rock or sediment taken more or less indiscriminately at any place.
Gneisses
Layered granite like rock.
Gossans
An iron-oxide rich weathered product overlying a sulphide deposit.
gpt
Grams per tonne.
g/t Au
Grams of gold per tonne.
Km
A measure of distance known as a kilometre.
Max-Min EM
A specific type of electromagnetic geophysical survey.
Mineralization
The concentration of metals and their chemical compounds within a body of rock.
NSR
Net Smelter Returns.
Opt
Ounce per ton.
Oz
A measure of weight known as an ounce.
Ppm
Parts per million.
Pt
The chemical symbol for Platinum.
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 3.
KEY INFORMATION
A.
Selected Financial Data
The Company has a limited history of operations and has not generated any operating revenues in the pertinent. The following table sets forth, for the periods and the dates indicated, selected financial and operating data for the Company. This information should be read in conjunction with the Company's Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere herein. The selected financial data provided below are not necessarily indicative of the future results of operations or financial performance of the Company. To date the Company has not paid any dividends on the Common Shares and it does not expect to pay dividends in the foreseeable future.
The Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”). There are no material differences between Canadian GAAP and the accounting principles that are generally accepted in the United States (“U.S. GAAP”) as applied to the Company including disclosure items. For a comparison of these differences, refer to Note 10 to the Financial Statements.
SELECTED FINANCIAL DATA
CANADIAN GAAP
(IN CANADIAN DOLLARS)
Selected Financial Data for the Year Ended January 31
2004 | 2003 | 2002 | 2001 | 2000 | |
Cash | 31,818 | 28,485 | 67,974 | 73,402 | 156,437 |
Total Assets | 33,000 | 29,679 | 71,483 | 75,671 | 160,408 |
Current Liability | 19,673 | 52,838 | 33,097 | 49,105 | 36,793 |
Total Administrative Expenses | 124,491 | 81,714 | 66,937 | 75,362 | 84,872 |
Exploration Expenses | 2,539 | 4,831 | 382 | 61,687 | - |
Net Loss | 127,030 | 86,545 | 67,319 | 137,049 | 84,872 |
Deficit | 3,002,782 | 2,875,752 | 2,789,207 | 2,721,888 | 2,584,839 |
Weighted Avg # Shares | 3,535,930 | 3,071,546 | 2,679,416 | 2,664,611 | 1,227,944 |
Basic Earnings (loss) per share | (0.04) | (0.03) | (0.03) | (0.05) | (0.07) |
SELECTED FINANCIAL DATA
US GAAP
(IN CANADIAN DOLLARS)
Selected Financial Data for the Year Ended January 31
2004 | 2003 | 2002 | 2001 | 2000 | |
Cash | 31,818 | 28,485 | 67,974 | 73,402 | 156,437 |
Total Assets | 33,000 | 29,679 | 71,483 | 75,671 | 160,408 |
Current Liability | 19,673 | 52,838 | 33,097 | 49,105 | 36,793 |
Total Administrative Expenses | 124,491 | 81,714 | 66,937 | 75,362 | 84,872 |
Exploration Expenses | 2,539 | 4,831 | 382 | 61,687 | - |
Net Loss | 127,030 | 86,545 | 67,319 | 137,049 | 84,872 |
Deficit | 3,002,782 | 2,875,752 | 2,789,207 | 2,721,888 | 2,584,839 |
Weighted Avg # Shares | 3,535,930 | 3,071,546 | 2,679,416 | 2,664,611 | 1,227,944 |
Basic Earnings (loss) per share | (0.04) | (0.03) | (0.03) | (0.05) | (0.07) |
B.
Capitalization and Indebtedness
This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
C.
Reasons for the Offer and Use of Proceeds
This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
D.
Risk Factors
From time to time, the Company may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors including those set forth in this section entitled “Risk Factors of the Company’s Business” could cause the Company’s actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements.
Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection, the combination of which factors may result in the Company not receiving an adequate retur n of investment capital.
(i)
Exploration and Development Risks
Mineral exploration and development involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. There is no assurance that the Company’s mineral exploration activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company’s operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors.
Substantial expenditures are required to establish ore reserves through drilling, metallurgical processes to extract the metal from the ore and, in the case of new properties to build the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities and grades to justify commercial operations or that the funds required for further expansion can be obtained on a timely basis. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of ore ultimately mined may differ from th at indicated by drilling results. Short term factors relating to reserves, such as the need for orderly exploration of ore bodies or the processing of new or different grades, may also have an adverse effect on mining operations and on the results of operations. Material changes in ore reserves, grades, stripping ratios or recovery rates may affect the economic viability of any project. Reserves are reported as general indicators of mine life. Reserves should not be interpreted as assurances of mine life or of the profitability of current or future operations.
The Company's property is currently being explored or assessed for exploration and as a result, the Company has no source of operating cash flow. The Company has limited financial resources and there is no assurance that if additional funding were needed, that it would be available to all the Company on terms and conditions acceptable to it. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and the possible, partial or total loss of the Company's interest in current properties. The Company presently has sufficient financial resources to undertake all of its currently planned exploration programs. The exploration of any ore deposits found on the Company's exploration property depends upon the Company's ability to obtain financing through debt financing, equity financing or other means. There is no assurance that the Company will be successful in obtain ing the required financing. Failure to obtain additional financing on a timely basis could cause the Company to forfeit its interest in such property and reduce or terminate its operations.
None of the Company's property has commenced commercial production and the Company has no history of earnings or cash flow from its operations. As a result there can be no assurance that the Company will be able to generate any of its property profitably or that its activities will generate positive cash flow. The Company has not declared or paid dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. The only present source of funds available to the Company is through the sale of its Common Shares. Even if the results of exploration are encouraging, the Company may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially minable deposit exists on any property. While the Company may generate additional working capital through the operation, sale or possible joint venture expansion of its propert ies, there is no assurance that any such funds will be available for operations.
The foregoing would apply in the event that the Company has reserves at some point in the future.
(ii)
Operating Hazards and Risks
Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of gold and other metals, such as unusual or unexpected formations, cave-ins, pollution, all of which could result in work stoppages, damage to property, and possible environmental damage. The Company does not have general liability insurance covering its operations and does not presently intend to obtain liability insurance as to such hazards and liabilities. Payment of any liabilities as a result could have a materially adverse effect upon the Company's financial condition.
(iii)
Lack of Cash Flow and Non Availability of Additional Funds
The Company’s property has not commenced commercial production and the Company has no history of earnings or cash flow from its operations. As a result there can be no assurance that the Company will be able to generate any of its property profitably or that its activities will generate positive cash flow. The only present source of funds available to the Company is through the sale of its Common Shares. Even if the results of exploration are encouraging, the Company may not have sufficient funds to conduct the further exploration that may be necessary to determine whether or not a commercially mineable deposit exists on any property. While the Company may generate additional working capital through the operation, development, sale or possible joint venture development of its property, there is no assurance that any such funds will be available for operations.
(iv)
No Proven Reserves
All of the properties in which the Company holds an interest are considered to be in the exploration stage only and do not contain a known body of commercial ore.
(v)
Title Risks
Full investigation of legal title to the property has not been carried out at this time. The Company's properties consist of recorded mineral claims which have not been surveyed, and therefore the precise area and location of such claims is undefined.
While the Company has reviewed and is satisfied with the title for any claim in which it has a material interest and, to the best of its knowledge, such title is in good standing, there is no guarantee that title to such claim will not be challenged or impugned. The property may be subject to prior unregistered agreements of transfer or native land claims and title may be affected by undeeded claims.
(vi)
Uncertainty or Contestation of Contract Rights
The Company owns or has the right to earn interests in properties under contract with a number of individuals and corporations.
(vii)
Conflicts of Interest
Certain of the directors of the Company are directors of other mineral resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of the directors of the Company, a director who has such a conflict will abstain from voting for or against the approval of such a participation or such terms. In appropriate cases the Company will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participating in larger programs , permitting involvement in a greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In accordance with the laws of the Province of British Columbia, the directors of the Company are required to act honestly, in good faith and in the best interest of the Company. In determining whether the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the potential benefits to the Company, the degree of risk to which the Company may be exposed and its financial position at that time. Other than as indicated, the Company has no other procedures or mechanisms to deal with conflicts of interest. The Company is not aware of the existence of any conflict of interest as des cribed herein.
(viii)
Competition and Agreements with Other Parties
The mineral resources industry is intensely competitive and the Company competes with many companies that have greater financial resources and technical facilities than itself. Significant competition exists for the limited number of mineral acquisition opportunities available in the Company's sphere of operations. As a result of this competition, the Company's ability to acquire additional attractive mining properties on terms it considers acceptable may be adversely affected.
The Company may, in the future, be unable to meet its share of costs incurred under agreements to which it is a party and the Company may have its interests in the properties subject to such agreements reduced as a result. Furthermore, if other parties to such agreements do not meet their share of such costs, the Company may be unable to finance the costs required to complete the recommended programs.
(ix)
Fluctuating Mineral Prices
The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the sale of same. Factors beyond the control of the Company may affect the marketability of any minerals discovered. There is no assurance that commodity prices will remain at current levels; significant price movements over short periods of time may be affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the U.S. dollar relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. The effect of these factors on the price minerals and therefore the economic viability of any of t he Company's exploration projects cannot accurately be predicted. As the Company is in the exploration stage, the above factors have had no material impact on operations or income.
(x)
Shares Reserved for Future Issuance; Potential Dilution
As of January 31, 2004, the Company had reserved, 604,000 Common Shares for issuance upon the exercise of incentive stock options and 1,500,000 common shares for the issuance upon the exercise of warrants. Such common shares represent a potential equity dilution of approximately 32%, based upon the number of outstanding Common Shares at January 31, 2004, of 4,571,546. Furthermore, the Company may enter into commitments in the future which would require the issuance of additional Common Shares and may grant additional stock options and/or issue additional warrants. At January 31, 2004 the Company had 93,324,454 authorized but unissued and unreserved Common Shares. Issuance of additional shares would be subject to Exchange regulatory approval and compliance with applicable securities legislation. The Company currently has no plans to issue Common Shares other than for the purposes of raising funds for property a cquisition and general working capital requirements which issuance would be subject to Exchange approval.
(xi)
Environmental Regulation
All phases of the Company's operations in the United States are subject to environmental regulations. It is the Company's belief that if environmental legislation in the United States including but not limited to possible amendment to the Federal Land Policy and Management Act which prevents undue and unnecessary degradation of federal lands; the Clean Air Act (which sets air quality standards), the Federal Water Pollution Control Act (Clean Water Act) (which directs standards to be set for surface water quality and for controlling discharges to surface water), the Safe Drinking Water Act (which directs standards to be set for quality of drinking water to be supplied to the public - states are the primary authorities - and regulating underground injection operations, the Solid Water Disposal Act (which regulates generation, storage and disposal of hazardous ware and manage solid, non-hazardous waste), the Comprehensive Environmental Response, Compensation and Liability Act (which requires operators to report releases of hazardous substances to the environment and inventory chemicals handled), the Toxic Substance Control Act (requires regulation of chemicals that present risk to health or environment), the Endangered Species Act (plants and animals listed that are threatened; protection plans mandated), and the Migratory Bird Treaty Act (prohibits killing of virtually all bird species), evolve in require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. The cost of compliance therewith may substantially increase and thereby effect the Company's operations; however, the Company is not aware of any pending environmental litigation or amendments to existing environmental litigation which will affect the Company's current or prepared operat ions or which would otherwise have a material adverse effect on the Company or its operations. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company's operations.
(xii)
Canadian Jurisdictional and Enforceability of Judgments, Risks
The Registrant is a Canadian corporation. All of its directors and officers are residents of Canada except one who is a Panamanian resident. As a result, it may be difficult for shareholders resident in the United States to effect service within the United States upon the Registrant, and as such directors, officers or experts who are not residents of the United States, or to realize in the United States upon judgements of courts of the United States predicated upon civil liability of any of the Registrant, such directors or officers under the United States federal securities laws. The Registrant has been advised by its Canadian counsel, that there is substantial doubt as to whether Canadian courts would (i) enforce judgements of the United States courts of competent jurisdiction obtained against the Registrant, such directors, or officers predicated upon the civil liabilities provisions of such securities laws or (ii) imp ose liabilities in original actions against the Registrant or their respective directors and officers predicated solely upon such securities laws. Accordingly, United States shareholders may be forced to bring actions against the Registrant and its respective directors and officers under Canadian law and in Canadian courts in order to enforce any claims that they may have against the Registrant or its directors and officers. Subject to necessary registration under applicable provincial corporate statutes in the case of a corporate shareholder. Canadian courts do not restrict the ability of non-resident persons to sue in their courts.
(xiii)
Adequate Labor and Dependence Upon Key Personnel
The Company will depend upon recruiting and maintaining other qualified personnel to staff its operations. The Company believes that such personnel currently are available at reasonable salaries and wages in the geographic areas in which the Company intends to operate. There can be no assurance, however, that such personnel will always be available in the future. In addition, it cannot be predicted whether the labor staffing at any of the Company's projects will be unionized. The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its management. The loss of services of any of its management could have a material adverse effect on the Company.
(xiv)
Forward Looking Statements
This document contains forward looking statements concerning the Company's operations, economic performance and financial condition, including in particular, the likelihood of the Company's success in operating as an independent company and expanding its business. These statements are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect the Company's future results. All such forward looking statements are qualified by reference to matters discussed under this section entitled "Risk Factors of the Company's Business." See Item 5: “Operating and Financial Review and Prospects”.
ITEM 4.
INFORMATION ON THE COMPANY
A.
History and Development of the Company
El Nino Ventures Inc. ("ELN," or the "Company") was incorporated under the laws of the Province of British Columbia by registration of its Memorandum and Articles pursuant to the Company Act under the name Triple A Gold Mines Ltd. On February 16, 1989 the name was changed to Westwego Resources Ltd. and on October 2, 1995, the name of the Company was changed to Corum Resource Corp. On May 19, 1999, the shares of the Company were consolidated on a 12 old share for 1 new share basis. After consolidation the authorized number of shares was increased from 1,666,666 (post-consolidation) to 100,000,000 and the name was changed to El Nino Ventures Inc.
Its head office and registered and records office is located at 2303 West 41st Avenue, Vancouver, British Columbia V6M 2A3. The Company’s auditors are Smythe Ratcliffe, Chartered Accountants, Vancouver, British Columbia and the Registrar and Transfer Agent is Computershare Trust Company of Canada, 510 Burrard Street, Vancouver, British Columbia V6C 3B9.
Pursuant to a review performed by the TSX Venture Exchange it was determined that the Company fails to meet working capital and business activity requirements in terms of Tier 2 TMR as outlined in the Toronto Venture Exchange’s Policy 2.5.
The Company did not achieve the Tier 2 maintenance requirements on the Toronto Venture Exchange and consequently the Company was transferred to the NEX effective October 17, 2003.
In order for the Company to achieve a return to Tier 2 on the TSX it must prepare and be able to execute a comprehensive Business Plan in order to demonstrate to the TSX that it can meet the Tier 2 Maintenance Requirements.
The Company was also listed on the OTCBB since July 25, 2002 under the trading symbol “ELNOF.”
The Company is a junior exploration Company focusing on precious metal projects and gold. The Company is in the exploration stage and has not generated any revenues from operations.
B.
Business of the Company
All the mineral properties in which the Company has an interest are currently at the exploration stage. The Company's primary objective is to explore mineral properties. Its secondary objective is to locate, evaluate and acquire other mineral properties, and, to finance their exploration and, if warranted, expansion either through equity financing, by way of joint venture or option agreements or through a combination of both. There are currently no known quantifiable reserves of gold or PGEs on any of the Company's properties.
C.
Organizational Structure
The Company is not part of a group.
D.
Property, Plants, and Equipment
All the mineral properties in which the Company has an interest are currently at the exploration stage. The Company's primary objective is to explore mineral properties. Its secondary objective is to locate, evaluate and acquire other mineral properties, and, to finance their exploration and, if warranted, expansion either through equity financing, by way of joint venture or option agreements or through a combination of both. There are currently no known quantifiable reserves of gold or PGEs on any of the Company's properties.
SassyProperty, Alaska USA
Ownership
A Lease Purchase Option Agreement dated April 26, 2000 between the Company and Anglo Alaska Gold Corp. whereby the Company has acquired certain mineral claims located in the Fairbanks Recording District in Alaska. Consideration is as follows:
a)
Work Commitments of $10,000 in the year 2000;
b)
Work Commitments of $25,000 in the year 2001;
c)
Work commitments of $45,000 in the year 2002;
d)
Work commitments of $50,000 in 2003 and each succeeding year during which the agreement is in effect; and
e)
100,000 shares upon execution of the agreement (which shares have been issued); and
f)
100,000 shares upon completion of First Work Program with recommendation for future work.
During the term of the agreement, the Company will pay a production royalty equal to 3% of the Net Smelter Returns. The Company has the option to purchase 1% of the NSR for US $1,000,000 subject to further Exchange review and acceptance. El Nino can acquire 100% interest in the property for US$500,000 subject to a 3% NSR retained by the vendor
Under the agreement the Company was to make a cash payment to Anglo Alaska of $5000.00 US on each November 1st and March 1st until 2002. In 2002 the payments would increase to $10,000 March 1st and November 1st, 2002. In 2003, the payments would once again escalate to $20,000 each November and March 1st.
An amendment dated October 31st, 2000 was signed whereby the $5000.00 payment due March 1st was waived and the subsequent payments due were advanced by 6 months until March 1, 2003. A further amendment was made whereby should a third party enter into an agreement with the Company then the original payment dates shall stand and any monies that were due and payable under the original payment schedule shall become due within 30 days of the Company entering into such an agreement. On January 26th, 2001 correspondence was received from Anglo Alaska waiving the 2000 and 2001 work commitment. In early 2002, an amendment was signed and the payment due March 1st, 2002 was reduced to $2,500. The payment was made. Pursuant to an amendment dated February 3, 2003, between Anglo Alaska and the Company the advance royalty payments due on the Sassy Property were revised as follows:
March 1, 2003
$1,000
March 1, 2004
$1,000
March 1, 2005
$5,000
March 1, 2006 $5,000
March 1, 2007
$5,000
March 1, 2008
$5,000
Furthermore, Anglo Alaska also waived all existing work commitments on the property, and agrees that only the minimum amount of work to keep the property in good standing shall be conducted. The Property payment for 2004 was made.
Property Title
The Property consists of 66 State of Alaska mining claims covering 2,640 acres on the Sassy gold property in Interior Alaska’s Tintina Gold Belt. The property size was reduced in late 2001 to 6 claims, covering 240 acres. In 2000, Spectrum Resources Inc. was retained to write a compilation report on the Property. This compilation was based upon the most reliable and unpublished data that was available to the Spectrum Resources. The following italized sections are excerpted from the report by Spectrum Resources filed on SEDAR.
Property Description and Location
The Sassy claims are located approximately 140 km southeast of Fairbanks in the Big Delta and B2 and C2 quadrangles in Township 5 South, Range 14 East, Sections, 1,2, 1101 and inTownship 5 South, Range 15 Earst, Sections 5 –8. This region is referred to as the Yukon-Tanana uplands, and area of rolling hills and mountain north of the Alaska Range.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The claims are situated on the north shore of the Goodpastor River, approximately 1.6km east of Indian Creek. Elevations range from a low of approximately 1,500ft above sea level in the Goodpastor River Valley, along the southern margin of the claims, to a high of approximately 2,550 ft above sea level on ridges forming the northern portion of the claims. Three major north-south stream drainages dissect the claims and flow south into the Goodpastor River. The nearest road is a winter road which extends from the Richardson Highway to the Pogo gold deposit about 5km south of the Sassy claims. Access to the property is by helicopter, boat or walking. Large gravel bars along the south edge of the claims could be utilized to make an airstrip.
History
Previous work within the claims is very limited. Regional geological mapping was completed by the U.S. G. S. in the mid 1970’s (Weber, et al, 1978). Stream sediment samples were collected in the region as part of the NURE program in the late 1970’s (Hoffman and Buttleman, 1996). More detailed stream sediment sampling (at quarter mile spacing) was completed in 1999 during regional sampling. There is no known lode or placer claim production within the claims, nor has any geologic sampling of mapping been completed. Airborne geophysical data, including aeromagnetic, electromagnetic and radiometric data, was acquired by the Alaska Division of Geologic and Geophysical Surveys (Burns and Vincent, 2000; Burns and others , 2000).
Geological Setting
The Sassy prospect is almost entirely underlain by rocks of the Cretaceous Goodpastor Batholith, a Tombstone suite intrusive composed of rocks ranging from granite to diorite. The claims are situated on the south flank of the batholith, and cover a portion of the southwest contact zone. Rock sample geochemistry is not available and published geologic maps provide few details of the geology of the claims. A small amount of public sector stream sediment sample geochemistry is available which indicates detectable values for arsenic and base metals.
Mineralization
No mineralization of any type has been documented on the Sassy Claims. Exposure is poor and only limited, regional scale, mapping is available. Potential exists on the Sassy Claims for “Ft. Knox style ,“Pogo style”, and other types of mesothermal gold mineralization.
Exploration and Development
The Company’s independent geological consultant has recommended a Phase 1 exploration program consisting of detailed stream sediment sampling, grid-based power auger soil sampling and geologic mapping and rock sampling. The cost of such a Program is estimated to be in the order of $50,000US, however due to low metal prices this program has been deferred with the reduction in the size of the Property, the work program is currently under revision.
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A.
Operating Results
This discussion should be read in conjunction with the audited financial statements of the Company and related notes thereto included herein.
Twelve Months Ended January 31, 2004 Compared To Twelve Months Ended January 31, 2003
Overview
El Nino Ventures Inc. continues to evaluate precious metal projects for possible acquisition through out North America, and internationally. The Company has a strict acquisition criteria which includes significant potential economic value, combined with an excellent infrastructure in its vicinity. In light of its strict project criteria, El Nino is also considering potential acquisitions and mergers outside the mining spectrum.
The Company continues to hold its Sassy Gold Project, located in the Goodpaster Mining District of Alaska, located some 5 km to the north of the Teck Sumitomo 5.6 Moz Pogo gold deposit, where pre-construction activities are currently underway. Final permits for Pogo have now been received and as a result the Pogo area is once again receiving considerable attention.
Results of the Operation
The year ended January 31, 2004 resulted in a net loss of $127,030 which compares with a loss of $86,545 for the same period in 2003. General and administrative expenses for the year ending January 31, 2004 were $124,491, an increase of $42,777 over the same period in 2003. Consulting fees of $53,939 were recorded, which included $38,516 in stock option compensation costs. During the year, 354,000 stock options were granted with the fair value of these stock options using the Black-Scholes Option Pricing Model for non-employees and employees used to calculate the value of $38,516. During the year, $2,539 was spent on exploration expenditures compared to $4,831 the year before.
The Company did not carry out any investor relation activity during or subsequent to the year, save and except the directors and officers responding to questions of interested parties.
Move to NEX
Pursuant to a review performed by the TSX Venture Exchange it was determined that the Company fails to meet working capital and business activity requirements in terms of Tier 2 TMR as outlined in the Exchange’s Policy 2.5.
The company did not achieve the Tier 2 maintenance requirements and consequently the Company was transferred to the NEX effective October 17, 2003.
In order for the Company to achieve a return to Tier 2 on the TSX it must prepare and be able to execute a comprehensive Business Plan in order to demonstrate to the TSX that it can meet the Tier 2 Maintenance Requirements.
Twelve Months Ended January 31, 2003 Compared To Twelve Months Ended January 31, 2002
Overview
El Nino Ventures Inc. (“El Nino”) is well positioned to take advantage of a rally in the gold market. The Company continues to hold its interest in the Sassy Gold Project, located in the Goodpaster Mining District of Alaska, located some 5 km to the north of the Teck Sumitomo Pogo Deposit. The area around the Pogo deposit is receiving considerable additional attention, as Pogo deposit advances further, and El Nino is considering additional acquisitions within this area. In addition, El Nino continues to evaluate platinum group metal targets (primarily platinum, palladium and rhodium) for possible acquisition, and plans to continue its evaluation program until a suitable property with long term potential is found. Utilizing the following evaluation criteria of potential economic value, and an excellent infrastructure in its vicinity, El Nino is evaluating properties through out Canada the United States, notably Alaska, and internationally, wh ere it already has assets and experience.
Results of the Operation
The fiscal year ended ended January 31, 2003 resulted in a net loss of $86,545 which compares with a loss of $67,319 for the same period in 2002. General and administrative expenses for the period ending January 31, 2003 were $81,714, an increase of $14,777 over the same period in 2002. This increase was mainly due to increased travel and consulting fees for property investigations. During the year, $4,831 was spent on exploration acquisition costs compared to $382 the year before.
El Nino is not engaged in any investor relations contracts.
Twelve Months Ended January 31, 2002 Compared To Twelve Months Ended January 31, 2001
Overview
El Nino Ventures Ltd. is well positioned to take advantage of the rally in the gold market and continues to maintain it’s interest in the Sassy Gold Project in Pogo Mining District of Alaska. A number of other precious metals projects have also been evaluated, so far without any additional properties being acquired. This is an ongoing process and currently management and the company’s consultants have properties in Canada, Alaska and internationally in the valuation process. We hope to be in a position to move to a more definitive stage with one or more projects in the near future.
Results of the Operation
The year ending January 31, 2002 resulted in a net loss of $67,319 which compares with a loss of $137,049 for the same period in 2001. General and administrative expenses for the period ending January 31, 2002 were $66,937, a decrease of $8,425 over the same period in 2001. During the year, $382 was spent on exploration expenditures compared to $61,687 the year before.
B.
Liquidity and Capital Resources
Twelve Months Ended January 31, 2004 Compared to Twelve Months Ended January 31, 2003
Capital Resources and Liquidity
Working capital at January 31, 2004 was $12,947 compared to working capital deficit of ($23,702) at January 31 2003.
During the year ended January 31, 2004, the Company completed a 1.5 million unit private placement at a price of $0.10 per unit for gross proceeds of $150,000. Additional financing will be needed to continue operations.
Twelve Months Ended January 31, 2003 Compared to Twelve Months Ended January 31, 2002
Capital Resources and Liquidity
During the year ended January 31, 2003, the Company announced up to a 1 million unit private placement at a price of $0.15 per unit for gross proceeds of $150,000. As at January 31, 2003, $25,000 was subscribed for.
Working capital deficit at January 31, 2003 was ($23,702) compared to working capital of $37,610 at January 31, 2002. Additional financing will be needed to continue operations.
Twelve Months Ended January 31, 2002 Compared to Twelve Months Ended January 31, 2001
Capital Resources and Liquidity
During the year 417,590 shares of the Company were issued for $79,139 for a total issued and outstanding of 3,071,546 shares at January 31, 2002. The Company’s Janaury 31, 2002 working capital of $37,610 is sufficient to meet its general and administrative expenses over the next several months. Additional financing will be needed to continue operations.
C.
Research and Development, Patents and Licenses, etc.
As the Company is a mineral exploration company with no research and development, the information required by this section is inapplicable.
D.
Trend Information
As the Company is a mineral exploration company with no producing properties, the information required by this section is inapplicable.
E.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
F.
Tabular Disclosure of Contractual Obligations
Contractual Obligations(1) | Payments Due By Period | ||||
Total | Less than 1 yr | 1-3 yrs | 3-5 yrs | More than 5 yrs | |
Office Lease (2) | 22,480 | 15,868 | 6,612 | - | - |
$ 22,480 | $ 15,868 | $ 6,612 | $ - | $ - |
1)
No mineral property payments or exploration expenditures are included in the above table as they are considered option payments solely exercisable at the option of the Company.
1)
Included in the above rent is its estimated proportionate share of property taxes and operating costs.
G.
Safe Harbor
The Registration Statement includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be "forward looking statements". Such s tatements are included, among other places in this Registration Statement, in the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Description of Business" and "Description of Property"; and, in particular the section entitled the "Almaden Property" as they involve the assessment, based upon certain assumption, concerning future events and conditions that the resources described can be profitably produced. Forward-looking statements are based on expectations, estimated and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. These include, but are not limited to, the risks of mining industry (for example, operational risks of exploring for, developing and producing crude oil and natural gas, risks and uncertainties involving geology of mineral deposits, the un certainty of reserve estimates and estimates relating to production volumes, cost and expense projections, potential cost overruns and health, safety and environmental risks), risks relating to the Company's properties (for example, lack of operating history and transportation), fluctuations in mineral prices and exchange rates and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures (collectively "Cautionary Statements"). Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors, Senior Management and Employees
The names and municipalities of residence of the directors and officers of the Company, positions held by them with the Company. Following the table is a brief biographical summary and listing of their principal occupations for the past five years.
Name, Municipality of Residence and Position Held | Principal Occupation for the Past Five Years(1) | Director /Officer Since | Shares Beneficially Owned or Controlled(2) |
Harry Barr(3) Canada President CEO & Director | President, CEO, & Director of CanAlaska Ventures Ltd. (1985–present); President, CEO, & Director of Pacific North West Capital Corp. (1996–present); President and Director of Freegold Ventures Limited (1985-1999); and Chairman and Director of Freegold Ventures Limited. (1999–present). | 1999 | 1,750,299 |
Bernard Barlin(3) United Kingdom Director | Director of CanAlaska Ventures Ltd. (1989–present); Director of Freegold Ventures Limited (1989-present); and Director of Pacific North West Capital Corp. (2000–present). | 2004 | 0 |
Michael Philpot(3) Canada Director | Director of First Quantum Minerals Ltd. (1997-2001); and Officer of First Quantum Minerals Ltd. (2001-present). | 2004 | 0 |
Gordon Steblin Canada Officer | Chief Financial Officer of El Nino Ventures Inc. from (2002–present); Director of El Nino Ventures Inc. from (2003–2004); Chief Financial Officer of Freegold Ventures Limited from (2002-present); Director of Freegold Ventures Limited from (2003-2004); Chief Financial Officer of CanAlaska Ventures Ltd., from 2002-present; Chief Financial Officer of Pacific North West Capital Corp. from 2002-Present; and Director of Pacific North West Capital from (2003-present) | 2002 | 50,000 |
Taryn Downing Canada Officer | Corporate Secretary of El Nino Ventures Inc. (1998–present), Director of El Nino Ventures Inc. (2000–2004). Corporate Secretary of CanAlaska (1995-present); Director of CanAlaska (2002-2004); Corporate Secretary of Pacific North West Capital Corp. (1998–present); Director of Pacific North West Capital (2003-present); Corporate Secretary of Freegold Ventures Limited (1995-present) and Director of Freegold Ventures Limited (2003-2004). | 1998 | 50,000 |
(1)
The information as to principal occupation has been furnished by the respective individual.
(2)
The information as to shares beneficially owned or over which a director exercises control or direction has been furnished by the respective directors individually.
(3)
Denotes member of the audit committee.
B.
Compensation
Directors of the Company do not receive fees or other cash compensation in their capacity as directors. The directors may be reimbursed for actual expenses reasonably incurred in connection with the performance of their duties as directors. Directors are also eligible to receive incentive stock options to purchase common shares of the Company.
The following table details the compensation paid to the persons who held the position of Chief Executive Officer and the next most highest paid executive officer of the Company.
Summary Compensation Table
Annual Compensation | Long Term Compensation | |||||||
Awards | Payouts | |||||||
Name and Principal Position | Year | Salary | Bonus | Other Annual Compen-sation(1) | Securities Under Options/ SARs Granted | Restricted Shares or Restricted Share Units | LTIP Payouts | All Other Compen-sation |
(a) | (b) | ($) (c) | ($) (d) | ($) (e) | (#) (f) | ($) (g) | ($) (h) | ($) (i) |
Harry Barr | 2004 2003 2002 | Nil Nil Nil | Nil Nil Nil | 24,000 15,000 15,000 | 159,000 Nil Nil | Nil Nil Nil | Nil Nil Nil | Nil Nil Nil |
(1)
Consulting Fee
(2)
Of the 159,000 options, 79,500 were granted to Canadian Gravity Recovery Inc. a 100% owned Company of Harry Barr
Long Term Incentive Plan
The Company does not have a long-term incentive plan for its named Executive Officers.
Termination of Employment, Change in Responsibilities and Management Contracts
There are no management contracts at this time.
Compensation Committee
The Company does not have a Compensation Committee. During the financial year ended January 31, 2004 compensation matters were dealt with by the entire board of directors.
Report on Executive Compensation
The Company’s executive compensation program is administered by the board of directors and is designed to provide incentives for the enhancement of shareholder value. The overall objectives are to attract and retain qualified executives critical to the success of the Company, to provide fair and competitive compensation, to align the interest of management with those of shareholders and to reward corporate and individual performance. The compensation package has been structured so as to link shareholder return, measured by the change in the share price, with executive compensation through the use of stock options as the primary element of variable compensation. The Company does not currently offer long-term incentive plans or pension plans to its senior officers.
Compensation to Directors
Directors of the Company do not receive fees or other cash compensation in their capacity as directors. The Directors may be reimbursed for actual expenses reasonably incurred in connection with the performance of their duties as directors. Directors are also eligible to receive incentive stock options to purchase shares of the Company.
Stock Options
The following Options/SARs were granted to Named Executive Officers in the financial year ended January 31, 2004.
(a)
Options/SARs Grants During The Most Recently Completed Financial Year
Name | Securities Under Options/SARs Granted (#) | % of Total Options/SARs Granted to Employees in Financial Year | Exercise or Base Price ($/Security) | Market Value of Securities Underlying Options/SARs on the Date of Grant ($/Security) | Expiration Date |
Harry Barr | 79,500 | 22.5% | $0.15 | $0.14 | Sept 10/08 |
Canadian Gravity Recovery Inc.(1) | 79,500 | 22.5% | $0.15 | $0.14 | Sept 10/08 |
(1)
Canadian Gravity Recovery Inc. is a wholly-owned company of Harry Barr.
(b)
Options granted to Directors, non-executive insiders and others in the financial year:
Optionee | Number Of Shares Subject To Option | Date Of Grant | Exercise Price | Date of Expiry |
Directors / Officers | 80,000 | Sept 10/03 | $0.15 | Sept 10/08 |
Consultants | 115,000 | Sept 10/03 | $0.15 | Sept 10/08 |
(c)
Options/SARs exercised by Directors, executive officers, non-executive insiders and others in the financial year.
Optionee | Number Of Shares Exercised | Date Of Grant | Exercise Price | Date Of Expiry |
Nil |
(d)
Options/SARs cancelled by Directors, executive officers, non-executive insiders and others in the financial year.
Optionee | Number Of Shares Cancelled | Date Of Grant | Exercise Price | Date Of Expiry |
Nil |
Amendment to Stock Option Plan
Disinterested shareholders of the Company (being those shareholders who are not Insiders of the Company as that term is defined under the policies of the TSX) will be asked to approve, by simple majority of the disinterested shareholders, the amendment to the Company’s Stock Option Plan (the “Plan”) to increase the maximum number of shares of the Company which may be allocated for issuance pursuant to incentive stock options under the Plan from 614,309 to 914,309 shares. Insiders beneficially own 1,750,299 common shares of the Company which will be excluded for the purposes of the disinterested shareholder approval.
Upon receipt of disinterested shareholder approval to this amendment, the Company will seek approval to same from the TSX. Both shareholder approval and TSX approval are required before the amendment to the Plan may be implemented.
The Company believes that awards under the Plan are an effective means of rewarding corporate and individual performance. To provide the Company with the continued flexibility of granting such awards under the Plan, the Company is seeking approval from disinterested shareholders at the Meeting to increase the number of shares of the Company issuable under the Plan to a maximum of 914,309 shares, representing 20% of the issued and outstanding shares of the Company.
Defined Benefit Plans
The Company does not have, and at no time during its most recently completed financial year had, any defined benefit or actuarial plans in respect of which any of its executive officers were eligible to participate.
C.
Board Practices
Corporate governance relates to activities of the Board, the members of which are elected by and are accountable to the shareholders, and takes into account the role of the individual members of management who are appointed by the Board and who are charged with the day to day management of the Company. The Board is committed to sound corporate governance practices which are both in the interest of its shareholders and contribute to effective and efficient decision making. The Company’s general approach to corporate governance is summarized below. The Board is currently reviewing the guidelines for improved corporate governance in Canada adopted by the TSX (the”Exchange Guidelines”).
The Board is currently composed of threedirectors.
The Exchange Guidelines suggest that the board of directors of every listed company should be constituted with a majority of individuals who qualify as “unrelated” directors. An “unrelated” director is a director who is independent of management and is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act with a view to the best interests of the Company, other than interests and relationships arising from shareholding. In addition, where a company has a significant shareholder, the Exchange Guidelines suggest that the board of directors should include a number of directors who do not have interests in either the Company or the significant shareholder. Of the proposed nominees, two are considered by the Board to be “unrelated” within the meaning of the Exchange Guidelines.
Mandate of the Board of Directors
The mandate of the Board, as prescribed by theBusiness Corporations Act (British Columbia), is to manage or supervise the management of the business and affairs of the Company and to act with a view to the best interests of the Company. In doing so, the Board oversees the management of the Company’s affairs directly and through its committees. In fulfilling its mandate, the Board, among other matters, is responsible for reviewing and approving the Company’s overall business strategies and its annual business plan, reviewing and approving the annual corporate budget and forecast, reviewing and approving significant capital investments outside the approved budget; reviewing major strategic initiatives to ensure the Company’s proposed actions accord with shareholder objectives; reviewing succession planning; assessing management’s performance against approved business plans and industry standards; revie wing and approving the reports and other disclosure issued to shareholders; ensuring the effective operation of the Board; and safeguarding shareholders’ equity interests through the optimum utilization of the Company’s capital resources.
Meetings of the Board
The Board plans to meet at least quarterly to review, among other things, the performance of the Company. Results are compared and measured against a previously established plan and performance in prior years. The Board also holds a meeting each year to review and assess the Company’s financial budget and business plan for the ensuing year and its overall strategic objectives. This process establishes, among other things, benchmarks against which the Board may measure the performance of management. Other meetings of the Board are called to deal with special matters as circumstances require.
Committee Responsibilities and Activities
Committees of the Board are an integral part of the company’s governance structure. There are three standing committees (the“Committees”), established to devote the necessary expertise and resources to particular areas, and to enhance the quality of discussion at Board meetings. The Committees facilitate effective Board decision making by providing recommendations to the Board on matters within their respective responsibilities. The Board believes that the Committees assist in the effective functioning of the Board and that the composition of the Committees should ensure that the views of unrelated and independent directors are effectively represented.
A summary of the responsibilities and activities and the membership of each of the Committees is set out below:
Audit Committee
The Audit Committee is comprised of Harry Barr, Michael Philpot, and Bernard Barlin. Mr. Barr is a “related” Director, and Mr. Philpot and Mr. Barlin are “unrelated” Directors. The Exchange Guidelines recommend that an audit committee be comprised only of outside directors. The board believes that Mr. Barr brings valuable knowledge and experience to the Audit Committee and that the composition of the Committee is appropriate. The Audit Committee reviews and recommends to the Board for approval the annual financial statements and the annual report of the Company. The quarterly financial statements of the Company are reviewed by the Audit Committee and the Board. In addition, the Audit Committee is charged with the responsibility of monitoring the integrity of the Company internal controls and management information systems. For the purposes of performing these duties, the members of the Audit Committee have the right, at all times, to inspect all of the books and financial records of the Company and to discuss with management and the auditors of the Company any accounts, records and matters relating to the financial statements of the Company.
Compensation Committee
The Compensation Committee is comprised of Harry Barr, Michael Philpot and Bernard Barlin. Mr. Barr is a “related” Director and Mr. Philpot and Mr. Barlin are “unrelated” Directors. The Compensation Committee periodically reviews the compensation paid to Directors, management, and employees based on such factors as time commitment, comparative fee paid by other companies in the industry in North America and level of responsibility and the Company’s current position as an exploration company with limited operating revenue.
Corporate Governance Committee
The Corporate Governance Committee is responsible for reviewing matters relating to corporate governance and making recommendations to the Board with respect thereto.
This Committee meets at least once annually. Currently, the members are Harry Barr, Michael Philpot and Bernard Barlin who also constitute the Company’s Audit Committee.
Nomination and Assessment
The Board determines new nominees to the Board, although a process has not been adopted. The nominees are generally the result of recruitment efforts by the Board members, including both formal and informal discussions among Board members and the President and Chief Executive Officer. The Board monitors but does not formally assess the performance of individual Board members or committee members or their contributions.
Expectations of Management
The Board expects management to operate the business of the Company in a manner that enhances shareholder value and is consistent with the highest level of integrity. Management is expected to execute the Company’s business plan and to meet performance goals and objectives.
D.
Employees
During the fiscal year ended January 31, 2004, the Company had no employees.
E.
Share Ownership
The following table sets forth the share ownership of those persons listed in subsection 6.A above and includes details of all options and warrants to purchase shares of the Company held by such persons:
Name | # of common shares held at May 13, 2003 | # of Options and / or Warrants | Date of Grant | Exercise Price | Expiry Date |
Harry Barr | 1,750,299 | 100,000 (option) 159,000(option) (1) 1,100,000 (warrant) (2) | Mar 17/00 Sept 10/03 Oct 10/03 | $0.55 $0.15 $0.13 | Mar 17/05 Sept 10/08 Oct 10/05 |
Bernard Barlin | Nil | Nil | Nil | Nil | Nil |
Michael Philpot | Nil | Nil | Nil | Nil | Nil |
Taryn Downing | 50,000 50,000 | 10,000 (option) 40,000 (option) 50,000 (warrant) | Mar 17/00 Sept 10/03 Oct 10/03 | $0.55 $0.15 $0.13 | Mar 17/05 Sept 10/08 Oct 10/05 |
Gordon Steblin | 50,000 50,000 | 40,000 (option) 50,000 (warrant) | Sept 10/03 Oct 10/03 | $0.15 $0.13 | Sept 10/08 Oct 10/05 |
(1)
Of the 159,000 stock options beneficially owned by Harry Barr, 79,500 are owned directly and 79,500 are owned indirectly.
(2)
Of the 1,100,000 warrants beneficially owned by Harry Barr, 200,000 are owned directly and 900,000 are owned indirectly
Performance Shares and Escrowed Shares
62,500 common shares of the Company held in escrow by Computershare Trust Company of Canada (the “Escrow Shares”) were cancelled November 27, 2000. At the Company’s annual meeting held on May 19, 1999 shareholders of the Company approved the issuance of 375,000 additional post consolidated escrow shares, which shares will be issued on receipt of the acceptance of the TSX Venture Exchange. The escrow restrictions provide that the Escrow Shares may not be traded, dealt with or released in any manner whatsoever, nor may the Company, its transfer agent or escrow holder make any transfers or record any trading of the Escrow Shares without the consent of the Exchange.
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
The following table sets forth the share ownership of those persons holding greater than 5% of the Company’s common shares held by such persons as at May 12, 2004.
Name | Number of Shares | Percentage of Outstanding Shares |
CDS & Co. 25 The Esplanade PO Box 1038 Stn A Toronto, Ontario M5W 1G5 | 2,493,915 | 54.6% |
Harry Barr 2303 West 41st Avenue Vancouver, BC V6M 2A3 | 1,750,299 | 38.3% |
CanAlaska Ventures Ltd. 2303 West 41st Avenue Vancouver, BC V6M 2A3 | 260,131 | 5.7% |
The Company’s major shareholders all have the same voting rights.
B.
Related Party Transactions
There were no material transactions in the fiscal year ended January 31, 2004, or proposed material transactions between the Company other than that have not been disclosed in the financial statements.
C.
Interests of Experts and Counsel
This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.
ITEM 8.
FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
This Annual Report contains the consolidated financial statements for the Company for the fiscal year ended January 31, 2004 which contain an Audit Report dated April 25, 2004.
B.
Significant Changes
No significant change has occurred since the date of the annual financial statements included in this Annual Report on Form 20F.
ITEM 9.
THE OFFER AND LISTING
A.
Offer and Listing Details
The annual high and low market prices for the common shares of the Company on the TSX Venture Exchange for each of the last five full financial years are as follows:
January 31 | High (Cdn $) | Low (Cdn $) | Volume |
2004 | $0.42 | $0.105 | 786,684 |
2003 | $0.33 | $0.11 | 374,134 |
2002 | $0.28 | $0.09 | 238,543 |
2001 | $0.75 | $0.22 | 287,271 |
2000 | $0.35 | $0.01 | 1,047,368 |
The high and low market prices for the common shares of the Company on the TSX Venture Exchange for each of the two most recently completed financial year for each quarter are as follows:
January 31 | High (Cdn $) | Low (Cdn $) | Volume |
2004 | |||
First Quarter | $0.22 | $0.12 | 13,264 |
Second Quarter | $0.27 | $0.12 | 174,431 |
Third Quarter | $0.245 | $0.105 | 330,306 |
Fourth Quarter | $0.42 | $0.18 | 268,683 |
2003 | |||
First Quarter | $0.24 | $0.13 | 34,515 |
Second Quarter | $0.30 | $0.17 | 92,588 |
Third Quarter | $0.27 | $0.11 | 88,846 |
Fourth Quarter | $0.22 | $0.11 | 158,185 |
The high and low market prices for the common shares of the Company on the TSX Venture Exchange for the six most recently completed months are as follows:
January 31 | High (Cdn $) | Low (Cdn $) | Volume |
April 2004 | $0.235 | $0.20 | 31,917 |
March 2004 | $0.28 | $0.235 | 31,207 |
February 2004 | $0.40 | $0.31 | 78,596 |
January 2004 | $0.40 | $0.30 | 42,317 |
December 2003 | $0.42 | $0.315 | 58,486 |
November 2003 | $0.38 | $0.18 | 167,880 |
On January 31, 2004 the closing price of the Common Shares of the Company on the TSX Venture Exchange was $0.30 per share.
Total number of Registered Holders | Number of Registered US Holders | Number of Common Shares Held in the US | Percentage of Common Shares |
60 | 5 | 190,226 | 4.2% |
A substantial number of Common Shares are held in depositaries, brokerage firms and financial institutions in “street names”.
The computation of the number and percentage of Common Shares held in the United States is based upon the number of Common Shares held by record holders with United States addresses. United States residents may beneficially own Common Shares held of record by non-United States residents.
B.
Plan of Distribution
This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.
C.
Markets
The Company’s common shares have traded on the TSX Venture Exchange since August, 1999 under the trading symbol “ELN” and on the NEX Board under the trading symbol “ELN.H” since October 14, 2003.
D.
Selling Shareholders
This Form 20F is being filed as an Annual Report under the Exchange Act and as such, there is no requirement to provide any information under this section.
E.
Dilution
This Form 20F is being filed as an Annual Report under the Exchange Act as such, there is no requirement to provide any information under this section.
F.
Expenses of the Issue
This Form 20F is being filed as an Annual Report under the Exchange Act and as such, there is no requirement to provide any information under this section.
ITEM 10.
ADDITIONAL INFORMATION
A.
Share Capital
This Form 20F is being filed as an Annual Report under the Exchange Act and as such, there is no requirement to provide any information under this section.
B.
Memorandum and Articles of Association
El Nino Ventures Inc. ("ELN," or the "Company") was incorporated under the laws of the Province of British Columbia by registration of its Memorandum and Articles pursuant to the Company Act under the name Triple A Gold Mines Ltd. On February 16, 1989 the name was changed to Westwego Resources Ltd. and on October 2, 1995, the name of the Company was changed to Corum Resource Corp. On May 19, 1999, the shares of the Company were consolidated on a 12 old share for 1 new share basis. After consolidation the authorized number of shares was increased from 1,666,666 (post-consolidation) to 100,000,000 and the name was changed to El Nino Ventures Inc.
C.
Material Contracts
Mining Lease Agreement with option to purchase between the Company and Anglo Alaska Gold Corporation and the Company dated April 26, 2001. Amendment to the 26th of April, 2001 agreement amended October 31, 2000 dated as of the 26th day of February, 2002 and further amended February 3, 2003.
D.
Exchange Controls
There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of Common Shares, other than withholding tax requirements. See Item 7: "Taxation".
There is no limitation imposed by Canadian law or by the constituent documents of the Company on the right of a non-resident to hold or vote Common Shares, other than are provided in the Investment Canada Act (Canada). The following summarizes the material features of the Investment Canada Act (Canada).
The Investment Canada Act (Canada) requires certain "non-Canadian" individuals, governments, corporations or other entities who wish to acquire a "Canadian business" (as defined in the Investment Canada Act), or establish a "new Canadian business" (as defined in the Investment Canada Act) to file either a notification or an application for review with a governmental agency known as "Investment Canada". The Investment Canada Act requires that certain acquisitions of control by a Canadian business by a "non-Canadian" must be reviewed and approved by the Minister responsible for the Investment Canada Act on the basis that the Minister is satisfied that the acquisition is "likely to be of net benefit to Canada", having regard to criteria set forth in the Investment Canada Act. Only acquisitions of control are reviewable under the Investment Canada Act; however, the Investm ent Canada Act provides detailed rules for the determination of whether control has been acquired and, pursuant to those rules, the acquisition of one-third or more of the voting shares of a corporation may, in some circumstances, be
considered to constitute an acquisition of control. Certain reviewable acquisitions of control may not be implemented before being approved by the Minister; if the Minister does not ultimately approve a reviewable acquisition which has been completed, the acquired Canadian business be divested. Failure to comply with the review provisions of the Investment Canada Act could result in, among other things, an injunction or a court order directing disposition of assets or shares.
E.
Taxation
A brief description of certain provisions of the tax treaty between Canada and the United States is included below, together with a brief outline of the taxes, including withholding provisions to which United States security holders are subject under existing laws and regulations of Canada and the United States; the consequences, if any, of state and local taxes are not considered. The following information is general and security holders should seek the advice of their own tax advisors, tax counsel or accountants with respect to the applicability or effect on their own taxes. The Company has not paid dividends on the common shares in any of its last five fiscal years, and has no plans to pay dividends in the immediate future.
Canadian federal tax legislation would require a 25% withholding from any dividends paid or deemed to be paid to the Company's non-resident shareholders. However, individual shareholders resident in the United States would generally have this rate reduced to 5% through the tax treaty between Canada and the United States. The amount of stock dividends paid to non-residents of Canada would be subject to withholding tax at the same rate as cash dividends. The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the stated capital of the Company had increased by reason of the payment of such a dividend. Interest paid or deemed to be paid on the Company's debt securities held by non-Canadian residents may also be subject to Canadian withholding tax, depending upon the terms and provisions of such securities and any applicable tax treaty, provided that the U.S. shareholder has not resided in Canada in the ten years immediately preceding the disposition.
Under the present legislation in the United States, the Company is generally not subject to United States back-up withholding rules, which would require withholding at a rate of 20% on dividends and interest paid to certain United States persons who have not provided the Company with a taxpayer identification number, provided that the U.S. shareholder has not resided in Canada in the ten years immediately preceding the disposition.
Gains derived from a disposition of shares of the Company by a non-resident shareholder will be subject to tax in Canada only if not less than 25% of any class of shares of the Company was owned by the non-resident shareholder and/or persons with whom the non-resident did not deal at arm's length at any time during the five year period immediately preceding the disposition. In such cases, gains derived by a U.S. shareholder from a disposition of shares of the Company would likely be exempt from tax in Canada by virtue of the Canada-U.S. tax treaty, provided that the U.S. shareholder has not resided in Canada in the ten years immediately preceding the disposition.
This discussion is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company and no opinion or representation with respect to the United Sates federal income tax consequences to any such holder or prospective holder is made. Shareholders and prospective shareholders should therefore consult their own tax advisors with respect to the effect of these taxes in their particular circumstances.
Canadian Federal Income Tax Consequences
The following is a discussion of the material Canadian federal income tax consequences applicable to a holder of Common Shares who is a resident of the United States and who is not a resident of Canada and who does not use or hold, and is not deemed to use or hold, his Common Shares in connection with carrying on a business in Canada (a “non-resident holder”). Accordingly, shareholders and prospective investors should consult their own tax advisors for advice regarding their individual tax consequences.
This summary is based upon the current provisions of the Income Tax Act (Canada) (the “ITA”), the regulations thereunder (the “Regulations”), the current publicly announced administrative and assessing policies of Revenue Canada, Taxation, and all specific proposals (the “Tax Proposals”) to amend the ITA and Regulations announced by the Minister of Finance (Canada) prior to the date hereof. This summary assumes that the Tax Proposals will be enacted in their form as of the date of this Form 20-F Annual Report.
Dividends
Dividends paid on the Common Shares to a non-resident holder will be subject to withholding tax. The Canada-U.S. Income Tax Convention (1980) (the “Treaty”) provides that the normal 25% withholding tax rate under the ITA is reduced to 15% on dividends paid on shares of a corporation resident in Canada (such as the Company) to beneficial owners of the dividends who are residents of the United States, and also provides for a further reduction of this rate to 5% where the beneficial owner of the dividends is a corporation that is a resident of the United States which owns at least 10% of the voting shares of the corporation paying the dividend.
Capital Gains
Under the ITA, a taxpayer’s capital gain or capital loss from a disposition of a Common Share is the amount, if any, by which his proceeds of disposition exceed (or are exceeded by) the aggregate of his adjusted cost base of the share and reasonable expenses of disposition. Three-quarters of a capital gain (the “taxable capital gain”) is included in income, and three-quarters of a capital loss in a year (the “allowable capital loss”) is deductible from taxable capital gains realized in the same year. The amount by which a shareholder’s allowable capital loss exceeds his taxable capital gains in a year may be deducted from a taxable capital gain realized by the shareholder in the three previous or any subsequent year, subject to certain restrictions in the case of a corporate shareholder and subject to adjustment when the capital gains inclusion rate in the year of disposition differs from the inclu sion rate in the year the deduction is claimed.
A non-resident of Canada is not subject to tax under the ITA in respect of a capital gain realized upon the disposition of a share of a public corporation unless the share represents “taxable Canadian property” to the holder thereof. The Company is a public corporation for purposes of the ITA and a Common Share will be taxable Canadian property to a non-resident holder if, at any time during the period of five years immediately preceding the disposition, the non-resident holder, persons with whom the non-resident holder did not deal at arm’s length, or the non-resident holder and persons with whom he did not deal at arm’s length together owned not less than 25% of the issued shares of any class of shares of the Company.
Where a non-resident holder who is an individual ceased to be resident in Canada, and at the time he ceased to be a Canadian resident elected to have his Common Shares treated as taxable Canadian property, he will be subject to Canadian tax on any capital gain realized on disposition of the Common Shares, subject to the relieving provisions of the Treaty described below. The Common Shares may also be taxable Canadian property to a holder if the holder acquired them pursuant to certain “rollover” transactions. This would include transactions under Sections 85 and 87 of the ITA which apply to share for share and amalgamation transactions.
Where a U.S. resident holder realizes a capital gain on a disposition of Common Shares that constitute taxable Canadian property, the Treaty relieves the non-resident shareholder from liability for Canadian tax on such capital gains unless: the value of the shares is derived principally from “real property” in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production from natural resources; the non-resident holder is an individual who was resident in Canada for not less than 120 months during any period of 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him when he ceased to be resident in Canada or are property substituted for property that was owned at that time; or the shares formed part of the business property of a “permanent establishment” or pertaine d to a fixed base used for the purpose of performing independent personal services that the shareholder has or had in Canada within the 12 months preceding the disposition.
Notwithstanding the potential exemption from Canadian tax provided under the Treaty, where a non-resident of Canada disposes of Common Share that are taxable Canadian property, the non-resident is required to file a Canadian income tax return in respect of such dispositions.
United States Federal Income Tax Consequences
The following is a discussion of all material United States Federal income tax consequences, under current law, that may be applicable to a U.S. Holder (as defined below) of Common Shares of the Registrant. This discussion does not address all potentially relevant Federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of Federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. (See "Canadian Federal Income Tax Consequences" above.)
The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any future legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. Shareholders and prospective investors should consult their own tax advisors for advice regarding their individual tax consequences.
U.S. information reporting requirements may apply with respect to the payment of dividends to U.S. Holders of the Company's shares. Under Treasury regulations currently in effect, non-corporate holders may be subject to backup withholding at a 31% rate with respect to dividends when such holder (1) fails to furnish or certify a correct taxpayer identification number to the payor in the required manner; and (2) is notified by the IRS that it has failed to report payments of interest or dividends properly; or (3) fails, under certain circumstances, to certify that it has been notified by the IRS that it is subject to backup withholding for failure to report interest and dividend payments.
U.S. Holders
As used herein, a "U.S. Holder" is a holder of Common Shares of the Registrant who or which is a citizen or individual resident (or is treated as a citizen or individual resident) of the United States for federal income tax purposes, a corporation or partnership created or organized (or treated as created or organized for federal income tax purposes) in or under the laws of the United States or any political subdivision thereof, or a trust or estate the income of which is includable in its gross income for federal income tax purposes without regard to its source, if, (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more United States trustees have the authority to control all substantial decisions of the trust. For purposes of this discussion, a U.S. Holder does not include persons subject to special provisions of Federal income tax l aw, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers and Holders who acquired their stock through the exercise of employee stock options or otherwise as compensation.
Distributions on Common Shares of the Company
U.S. Holders receiving dividend distributions (including constructive dividends) with respect to Common Shares of the Registrant are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that the Registrant has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States Federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's United States Federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of the Registrant, they will be treated first as a return of capital up to the U. S. Holder's adjusted basis in the Common Shares and thereafter as gain from the sale or exchange of the Common Shares. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.
Dividends paid on the Common Shares of the Registrant will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Registrant (unless the Registrant qualifies as a "foreign personal holding company" or a "passive foreign investment company", as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Registrant. The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.
Foreign Tax Credit
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of Common Shares of the Registrant may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. It will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate shares of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its world-wide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are further limitations on the foreign tax credit for certain types of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of Common Shares of the Registrant should consult their own tax advisors regarding their individual circumstances.
Disposition of Common Shares of the Company
A U.S. Holder will recognize gain or loss upon the sale of Common Shares of the Registrant equal to the difference, if any, between the amount of cash plus the fair market value of any property received, and the Holder's tax basis in the Common Shares of the Registrant. This gain or loss will be capital gain or loss if the Common Shares are a capital asset in the hands of the U.S. Holder unless the Registrant were to become a controlled foreign corporation. For the effect on the Registrant of becoming a controlled corporation, see "Controlled Foreign Corporation Status" below. Any capital gain will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders which are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.
Other Considerations for U.S. Holders
In the following circumstances, the above sections of this discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of Common Shares of the Registrant:
Foreign Personal Holding Company
If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Registrant's outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 60% or more of the Registrant's gross income for such year was derived from certain passive sources (e.g., from dividends received from its subsidiaries), the Registrant would be treated as a "foreign personal holding company." In that event, U.S. Holders that hold Common Shares of the Registrant would be required to include in income for such year their allocable portion of the Registrant's passive income which would have been treated as a dividend had that passive income actually been distributed. To the best knowledge of the Registrant, it is not and has never been a Foreign Personal Holding Company.
Foreign Investment Company
If 50% or more of the combined voting power or total value of the Registrant's outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and the Registrant is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Registrant might be treated as a "foreign investment company" as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging Common Shares of the Registrant to be treated as ordinary income rather than capital gains. To the best knowledge of the Registrant, it is not and has never been a Foreign Investment Company.
Passive Foreign Investment Company
A U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a passive foreign investment company ("PFIC") is subject to U.S. federal income taxation of that foreign corporation under one of two alternative tax methods at the election of each such U.S. Holder. U.S. investors who invest in the Company will be subject to U.S. taxation at possibly adverse or higher rates and under a system that may be more complicated and unfamiliar to them. The directors of the Registrant believe that the Company has and does qualify as a Passive Foreign Investment Company for U.S. shareholders.
Section 1296 of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (i) 75% or more of its gross income is "passive income," which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by value (or, if the company is a controlled foreign corporation or makes an election, adjusted tax basis), of its assets that produce or are held for the production of "passive income" is 50% or more. For taxable years of U.S. persons beginning after December 31, 1997, and for tax years of foreign corporations ending with or within such tax years, the Taxpayer Relief Act of 1997 provides that publicly traded corporations must apply this test on a fair market value basis only. The Registrant believes that it is a PFIC.
As a PFIC, each U. S. Holder must determine under which of the alternative tax methods it wishes to be taxed. Under one method, a U.S. Holder who elects in a timely manner to treat the Registrant as a Qualified Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be subject, under Section 1293 of the Code, to current federal income tax for any taxable year in which the Registrant's qualifies as a PFIC on his pro-rata share of the Registrant's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in which (or with which) the Registrant taxable year ends, regardless of whether such amounts are actually distributed.
A QEF election also allows the Electing U.S. Holder to (i) treat any gain realized on the disposition of his Common Shares (or deemed to be realized on the pledge of his Common Shares) as capital gain; (ii) treat his share of the Registrant's net capital gain, if any, as long-term capital gain instead of ordinary income, and (iii) either avoid interest charges resulting from PFIC status altogether (see discussion of interest charge below), or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the Registrant's annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the Electing U.S. Holder is not a corporation, such an interest charge would be treated as "personal interest" that is not deductible at all in taxable years beginning after 1990.
The procedure a U.S. Holder must comply with in making an timely QEF election will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which the Registrant is a PFIC. If the U.S. Holder makes a QEF election in such first year, (sometimes referred to as a "Pedigreed QEF Election"), then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files its tax return for such first year. If, however, the Registrant qualified as a PFIC in a prior year, then in addition to filing documents, the U.S. Holder must also elect to recognize as an "excess distribution" (i) under the rules of Section 1291 (discussed below), any gain that he would otherwise recognize if the U.S. Holder sold his stock on the application date or (ii) if the Registrant is a controlled foreign corporation ("CFC"), the Holder's pro r ata share of the corporation's earnings and profits. (But see "Elimination of Overlap Between Subpart F Rules and PFIC Provisions"). Either the deemed sale election or the deemed dividend election will result in the U.S. Holder being deemed to have made a timely QEF election.
With respect to a situation in which a Pedigreed QEF election is made, if the Registrant no longer qualifies as a PFIC in a subsequent year, normal Code rules and not the PFIC rules will apply.
If a U.S. Holder has not made a QEF Election at any time(a "Non-electing U.S. Holder"), then special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reason of a pledge) of his Common Shares and (ii) certain "excess distributions", as specially defined, by the Registrant.
A Non-electing U.S. Holder would be required to pro-rate all gains realized on the disposition of his Common Shares and all excess distributions over the entire holding period for the Common Shares. All gains or excess distributions allocated to prior years of the U.S. Holder (other than years prior to the first taxable year of the Registrant during such U.S. Holder's holding period and beginning after January 1, 1987 for which it was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. The Non-electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-electing U.S. Holder that is not a corporation must treat this interest charge as "personal interest" which, as discussed above, is wholly non-deductible. The bala nce of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.
If the Registrant is a PFIC for any taxable year during which a Non-electing U.S. Holder holds Common Shares, then the Registrant will continue to be treated as a PFIC with respect to such Common Shares, even if it is no longer by definition a PFIC. A Non-electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such Common Shares had been sold on the last day of the last taxable year for which it was a PFIC.
Under Section 1291(f) of the Code, the Department of the Treasury has issued proposed regulations that would treat as taxable certain transfers of PFIC stock by Non-electing U.S. Holders that are not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death.
If a U.S. Holder makes a QEF Election that is not a Pedigreed Election (i.e., it is made after the first year during which the Registrant is a PFIC and the U.S. Holder holds shares of the Registrant) (a "Non-Pedigreed Election"), the QEF rules apply prospectively but do not apply to years prior to the year in which the QEF first becomes effective. U.S. Holders should consult their tax advisors regarding the specific consequences of making a Non-Pedigreed QEF Election.
Certain special adverse rules will apply with respect to the Common Shares while the Registrant is a PFIC whether or not it is treated as a QEF. For example under Section 1297(b)(6) of the Code (as in effect prior to the Taxpayer Relief Act of 1997), a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such stock.
The foregoing discussion is based on currently effective provisions of the Code, existing and proposed regulations thereunder, and current administrative rulings and court decisions, all of which are subject to change. Any such change could affect the validity of this discussion. In addition, the implementation of certain aspects of the PFIC rules requires the issuance of regulations which in many instances have not been promulgated and which may have retroactive effect. There can be no assurance that any of these proposals will be enacted or promulgated, and if so, the form they will take or the effect that they may have on this discussion. Accordingly, and due to the complexity of the PFIC rules, U.S. Holders of the Registrant are strongly urged to consult their own tax advisors concerning the impact of these rules on their investment in the Registrant. For a discussion of the impact of the Taxpayer Relief A ct of 1997 on a U.S. Holder of a PFIC, see "Mark-to-Market Election For PFIC Stock Under the Taxpayer Relief Act of 1997" and "Elimination of Overlap Between Subpart F Rules and PFIC Provisions" below.
Controlled Foreign Corporation Status
If more than 50% of the voting power of all classes of stock or the total value of the stock of the Registrant is owned, directly or indirectly, by U.S. Holders, each of whom own 10% or more of the total combined voting power of all classes of stock of the Registrant, the Registrant would be treated as a "controlled foreign corporation" or "CFC" under Subpart F of the Code. This classification would bring into effect many complex results including the required inclusion by such 10% U.S. Holders in income of their pro rata shares of "Subpart F income" (as defined by the Code) of the Registrant and the Registrant's earnings invested in "U.S. property" (as defined by the Code). In addition, under Section 1248 of the Code, gain from the sale or exchange of Common Shares of the Registrant by such a 10% U.S. Holder of Registrant at any time during the five year period ending with the sale or ex change is treated as ordinary dividend income to the extent of earnings and profits of the Registrant attributable to the stock sold or exchanged. Because of the complexity of Subpart F, and because the Registrant may never be a CFC, a more detailed review of these rules is beyond of the scope of this discussion.
F.
Dividends and Paying Agents
This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.
G.
Statements by Experts
This Form 20F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.
H.
Documents on Display
Any documents referred to in this Annual Report may be inspected at the head office of the Company, 2303 West 41st Avenue, Vancouver, British Columbia V6M 2A3, during normal business hours.
I.
Subsidiary Information
There is no information relating to the Company’s subsidiaries which must be provided in Canada and which is not otherwise called for by the body of generally accepted accounting principles used in preparing the financial statements. The Company does not have any subsidiaries.
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company anticipates its primary market risk, if any, to be related to fluctuations in exchange rates. Exchange rate risk may arise if the Company is required to use different currencies for various aspects of its operations. At present, the functional currency for the Company is the Canadian dollar. Based on the Company’s overall exchange rate risk as at October 31, 2000, the Company believes that a ten percent change in exchange rates would not have a material adverse effect on its financial position, results of operations, or changes in financial position. The Company intends to monitor its exchange rate risk and take reasonable steps to reduce its exposure. The Company does not intend to purchase or sell derivative instruments for speculative purposes.
PART II
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 13.
DEFAULTS, DIVIDEND ARREARS AND DELINQUENCIES
There has not been a material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within thirty days, relating to indebtedness of the Company or any of its significant subsidiaries. There are no payments of dividends by the Company in arrears, nor has there been any other material delinquency relating to any class of preference shares of the Company.
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
This Form 20F is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this item.
ITEM 15.
CONTROLS AND PROCEDURES
ITEM 16.
[Reserved]
ITEM 16A.
AUDIT COMMITTEE FINANCIAL REPORT
The Board of Directors has determined that the Company does not have an audit committee financial expert.
ITEM 16B:
CODE OF ETHICS
The Company has adopted a code of ethics that applies to the Company’s principal executive officer and principal financial officer and will provide to any person without charge, upon request by mail but may also be made by telephone, telecopier or other electronic means of communication, a copy of such code of ethics.
CERTIFICATE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER
AND THE CHIEF FINANCIAL OFFICER
In my role as Chief Executive Officer (“CEO”) or Chief Financial Officer (“CFO”) of El Nino Ventures Inc. (the “Company”), I have adhered to and advocated to the best of my knowledge and ability the following principles and responsibilities governing professional conduct and ethics:
1.
Act with honesty and integrity, handling in an ethical manner any actual or apparent conflicts of interest between personal and professional relationships. A “conflict of interest” exists when an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company.
2.
Provide constituents with information that is accurate, complete, objective, relevant, timely and understandable. If I am the CEO or CFO, I shall review the Company’s annual reports before certifying and filing them with the SEC.
3.
Comply with all applicable laws, rules and regulations of federal, provincial, territorial, state and local governments, and other appropriate private and public regulatory agencies.
4.
Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgment to be subordinated.
5.
Respect the confidentiality of information acquired in the course of business except when authorized or otherwise legally obligated to disclose the information. I acknowledge that confidential information acquired in the course of business is not to be used for personal advantage.
6.
Promote ethical behavior among employees at the Company and as a responsible partner with industry peers and associates.
7.
Maintain control over and responsibly manage all assets and resources employed or entrusted to me by the Company.
8.
Report illegal or unethical conduct by any director, officer or employee that has occurred, is occurring or may occur, including any potential violations of the Company’s Code of Business Conduct and Ethics (the “Code”). Such report shall be made to the Audit Committee of the Board of Directors and shall include conduct of a financial or non-financial nature.
9.
Comply with the Code. I understand that if I violate any part of the Code, I will be subject to disciplinary action.
I understand that the Code is subject to all applicable laws, rules and regulations.
I understand that there shall be no waiver of, modification of, or change to any part of the Code except by a vote of the Board of Directors or a designated Board committee. In the event that a waiver of, modification of, or a change to the Code is granted, then the notice of the waiver, modification and/or change shall be posted on the Company’s website within five business days of the Board of Directors’ or designated Board committee’s vote or shall be disclosed otherwise as required by applicable law or Stock Exchange or SEC rules. Notices posted on the Company website shall remain there for a period of 12 months and shall be retained in the Company’s files as required by law.
“Harry Barr”
Harry Barr
Chief Executive Officer
“Gordon Steblin”
Gordon Steblin
Chief Financial Officer
May 24, 2004
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
PART III
ITEM 17.
FINANCIAL STATEMENTS
See the Financial Statements and Exhibits listed in Item 9 hereof and filed as part of this Annual Report.
ITEM 18.
FINANCIAL STATEMENTS
Not applicable
ITEM 19.
EXHIBITS
1.
a)
Material Contracts
i)
Mining Lease with Option to Purchase dated April 26, 2000.
i)
Amendment, dated October 31, 2000, to the Mining Lease dated April 26, 2000.
ii)
Amended dated February 3, 2003.
(b)
Exhibits
The following exhibits are filed as part of this Annual Report.
Amendment dated February 3, 2003to the Mining Lease with Option to Purchase dated April 26, 2000 as Amended October 31, 2000 and February 26, 2002.
*All listed Exhibits have been previously filed:
Amendment dated February 26, 2002 to the Mining Lease with Option to Purchase dated April 26, 2000 as Amended October 31, 2000.
Consent of Author to the Geologic Report on the Sassy Claims, Goodpaster Mining District, Alaska, prepared by David D. Adams, B.S., M.S., CPG dated July 23, 2001.
Geologic Report on the Sassy Claims, Goodpaster Mining District, Alaska, prepared by David D. Adams, B.S., M.S., CPG dated June 1, 2000.
Mining Lease with Option to Purchase dated April 26, 2000.
Certificate of Name Change dated August 19, 1999 from Corum Resource Corp. to El Nino Ventures Inc.
Special Resolution dated May 19, 1999 and filed with the Registrar of Companies August 19, 1999.
Certificate of Name Change dated October 2, 1995 from Westwego Resources Ltd. to Corum Resource Corp.
Special Resolution dated July 31, 1995 and filed with the Registrar of Companies October 2, 1995.
Certificate of Name Change dated February 16, 1989 from Triple A Gold Mines Ltd. to Westwego Resources Ltd.
Special Resolution dated January 20, 1989 and filed with the Registrar of Companies February 2, 1989.
Certificate of Incorporation of Triple A Gold Mines Ltd. dated February 19, 1988.
Articles of Incorporation
2.
a)
Financial Statements
i)
Consent of Independent Auditors
ii)
Cover page and index to financial statements for the period ending January 31, 2004 and 2003.
iii)
Independent Auditors’ Report to the Shareholders dated April 25, 2004.
iv)
Balance Sheet
v)
Statement of Operations and Deficit for the period from February 19, 1988 to January 31, 2004.
vi)
Statement of Stockholders’ Equity for the period from February 19, 1988 to January 31, 2004.
vii)
Statement of Cash Flows for the period from February 19, 1988 to January 31, 2004.
viii)
Notes to the Financial Statements for the period from February 19, 1988 to January 31, 2004.
SIGNATURES
The Company hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
El Nino Ventures Inc.
The Company
“Harry Barr”
Harry Barr, President
“Gordon Steblin”
Gordon Steblin, Chief Financial Officer
Date: May 24, 2004
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CERTIFICATION OF C.E.O AND C.F.O PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 20F of El Nino Ventures Inc. for the year ending January 31, 2004, as filed with the Securities and Exchange Commission on the date hereof, the undersigned, in the capacity and date indicated below, hereby certifies that:
1.
I have reviewed this annual report on Form 20F of El Nino Ventures Inc.;
2.
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this annual report.
4.
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
1.
The company’s other certifying officer(s) and I have disclosed, based on our more recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date:
May 24, 2004
EL NINO VENTURES INC.
Per:
“Harry Barr”
Harry Barr
Chief Executive Officer
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CERTIFICATION OF C.E.O AND C.F.O PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 20F of El Nino Ventures Inc. for the year ending January 31, 2004, as filed with the Securities and Exchange Commission on the date hereof, the undersigned, in the capacity and date indicated below, hereby certifies that:
1.
I have reviewed this annual report on Form 20F of El Nino Ventures Inc.;
2.
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this annual report.
4.
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c )
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
5.
The company’s other certifying officer(s) and I have disclosed, based on our more recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date:
May 24, 2004
EL NINO VENTURES INC.
Per:
“Gordon Steblin”
Gordon Steblin
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of El Nino Ventures Inc. (the “Company”) on Form 20F for the period ended January 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harry Barr, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
the Report fully complies with the requirements of section 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and result of the operations of the Company.
Harry Barr
“Harry Barr”
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of El Nino Ventures Inc. (the “Company”) on Form 20F for the period ended January 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gordon Steblin, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
the Report fully complies with the requirements of section 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and result of the operations of the Company.
Gordon Steblin
“Gordon Steblin”
Chief Financial Officer
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