As filed with the Securities and Exchange Commission on October 4, 2002
Registration No. 333-92018
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------
AMENDMENT NO. 2 TO FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
BEARTOOTH PLATINUM CORPORATION
(formerly IDAHO CONSOLIDATED METALS CORP.)
(Name of small business issuer in its charter)
Yukon Territory, Canada 1041
(State or jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
82-0465571
(I.R.S. Employer Identification Number)
3rd Floor, 10190 - 152A Street
Surrey, British Columbia
Canada V3R 1J7, (604) 580-5907
(Address, including zip code, and telephone number,
including area code of registrant's
principal executive offices)
-------------------------------------------
JOHN ANDREWS
President and Chief Executive Officer
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
3rd Floor, 10190 - 152A Street
Surrey, British Columbia
Canada V3R 1J7, (604) 580-5907
(Name, address, including zip code and telephone number,
including area code, of agent for service)
Copies of communications to:
Jonathan C. Guest, Esq. Gareth Howells
PERKINS, SMITH & COHEN, LLP CAMPION & MACDONALD
One Beacon Street Suite 200 Financial Plaza,
204 Lambert Street
Boston, MA 02108 Whitehorse, YT, Canada Y1A 3T2
(617) 854-4000 (867) 667-7885
Approximate date of proposed sale of to the public: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Proposed Maximum Proposed Maximum
Each Class of Amount to be Offering Aggregate
Securities to Registered Price Offering Amount of
be Registered (1) Per Unit Price (4) Registration Fee
================================================================================
Common Shares 27,961,797 C $0.515 (2) $9,434,794 $868.00
- --------------------------------------------------------------------------------
Common Shares 16,519,931 C $0.648 (3) $7,013,638 $645.25
- --------------------------------------------------------------------------------
Totals 44,481,728 $16,591,812 $1,513.25 *
================================================================================
* Previously submitted.
(1) Total represents up to 27,961,797 already issued common shares of the
Registrant to be offered by selling security holders of the Registrant,
9,718,502 shares which may be issued to the selling security holders of
the Registrant under existing stock option and stock warrant agreements
and 6,801,429 shares which may be issued to a certain selling security
holder of the Registrant upon the conversion of an outstanding debenture
including the related stock purchase warrants. In the event of a stock
split, stock dividend or similar transaction involving the Common Stock
of the Registrant, in order to prevent dilution, the number of shares
registered shall be automatically increased to cover additional shares
in accordance with Rule 416(a) under the Securities Act.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act, on
the basis of the average high and low prices as reported by the TSX
Venture Exchange on July 2, 2002.
(3) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) under the Securities Act, on
the basis of the actual prices at which the options and warrants may be
exercised.
(4) The US $ amounts are based on the exchange rate of US $1.00 to C$1.5263,
the noon buying rate as reported by the Federal Reserve Bank of New York
on July 2, 2002 for all transfers in foreign currencies as certified for
customs purposes.
- --------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933,AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING SECURITY HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 4, 2002
BEARTOOTH PLATINUM CORPORATION
(formerly IDAHO CONSOLIDATED METALS CORP.)
44,481,728 Shares of Common Stock, no par value
This Prospectus covers the resale from time to time, by the selling
security holders identified in this prospectus, of up to 44,481,728 of our
common shares. The shares were issued by us in private placement transactions or
represent shares which may be issued to our selling security holders upon the
exercise of stock options and warrants and upon the conversion of convertible
securities. The selling security holders may sell all or a portion of their
shares through public or private transactions at prevailing market prices or at
privately negotiated prices. We will not receive any of the proceeds from the
sale of shares by the selling security holders.
Our shares are listed and quoted in the United States on the Pink Sheets
under the trading symbol BTPUF since July 24, 2002 (formerly IOCMF). Our shares
are listed and quoted in Canada on the TSX Venture Exchange under the trading
symbol BTP since July 24, 2002 (formerly IDO). See Market for Our Common Shares
beginning at page 7.
INVESTING IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 TO READ ABOUT CERTAIN RISKS YOU SHOULD CONSIDER
BEFORE BUYING OUR COMMON SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ____________________, 2002
TABLE OF CONTENTS
GLOSSARY.................................................................... iii
PROSPECTUS SUMMARY.......................................................... 1
THE OFFERING................................................................ 3
RISK FACTORS................................................................ 3
We are a mineral exploration company without operating history
We have incurred net losses to date and depend upon outside capital
We may not discover ore in commercial quantities
There may not be a ready market for the sale of platinum and palladium.
Mining is dangerous and we could face claims for personal injury or property
damage.
Our potential profitability is subject in part to matters over which we have no
control.
We may face substantial costs for compliance with existing and future
legislation, government controls and environmental controls.
Our properties may be subject to title disputes.
If we do not comply with applicable regulatory requirements, we may lose rights
to unpatented mining claims.
We depend on key technical personnel and may unable to hire or retain such
personnel or general labor.
We have no significant assets except our mining claims.
We may not remain in business without obtaining additional financing.
U.S. Investors may face potential tax risks due to our status as a Canadian
Corporation.
We are incorporated in a foreign country, which may affect the enforceability of
civil liabilities.
FORWARD-LOOKING STATEMENTS.................................................. 10
USE OF PROCEEDS............................................................. 10
MARKET FOR OUR COMMON SHARES................................................ 10
PLAN OF OPERATION........................................................... 11
CAPITALIZATION.............................................................. 13
SELECTED FINANCIAL DATA..................................................... 14
DESCRIPTION OF BUSINESS..................................................... 15
LEGAL PROCEEDINGS........................................................... 42
MANAGEMENT.................................................................. 42
EXECUTIVE COMPENSATION...................................................... 44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............. 47
SELLING SECURITY HOLDERS.................................................... 48
PLAN OF DISTRIBUTION........................................................ 58
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................. 60
DESCRIPTION OF SHARES....................................................... 62
ADDITIONAL INFORMATION...................................................... 63
LEGAL MATTERS............................................................... 67
EXPERTS 67
WHERE YOU CAN FIND MORE INFORMATION......................................... 68
Financial Statements........................................................ F-1
GLOSSARY
Adit An opening driven horizontally into the side of a
mountain or hill for providing access to a mineral
deposit.
Alteration Any physical or chemical change in a rock or
mineral subsequent to its formation. Milder and
more localized than metamorphism.
Anomalous
enrichment or
mineralization Minerals or elements in soils or rocks in greater
concentration than is normally encountered in those
specific rock types.
Assay A chemical test performed on a sample of ores or
minerals to determine the amount of valuable metals
contained.
Base Metal Any non-precious metal (e.g. copper, lead, zinc,
nickel, etc.).
Breccia A rock in which angular fragments are surrounded by
a mass of fine-grained minerals.
Conduits Zones that are more permeable than the surrounding
rock and allow the flow of water or solutions.
Country rocks Non-mineralized rock adjacent to rocks containing
mineralization.
Cretaceous-Tertiary
granitic rocks Rocks of granitic composition that are Cretaceous
or Tertiary in age.
Development Work carried out for the purpose of opening up a
mineral deposit and making the extraction of ore
possible.
Dip The angle at which a vein, structure or rock bed is
inclined from the horizontal as measured at right
angles to the strike.
Disseminated Ore Ore carrying small particles of valuable
minerals spread more or less uniformly through the
host rock.
Drill-Indicated
Reserves The size and quality of a potential ore-body as
suggested by widely spaced drill holes; more work
is required before reserves can be classified as
probable or proven.
Dykes A tabular body of igneous rock that cuts across the
structure of adjacent rocks or cuts massive rocks.
Exploration Work involved in searching for ore, usually by
drilling or driving a drift.
Ferromagnesian Containing iron and magnesium.
- - iii -
Gneisses A coarse-grained rock in which bands rich in
granular materials alternate with bands in which
schistose minerals predominate.
Grade The average assay of a ton of ore, reflecting metal
content.
Hematite An oxide mineral rich in iron.
Host Rock The rock surrounding an ore deposit.
Intrusive A body of igneous rock formed by the consolidation
of magma intruded into other rocks, in contrast to
lava, which is extruded upon the surface.
Igneous Formed by solidification from a molten or partially
molten state.
Lens Generally used to describe a body of ore that is
thick in the middle and tapers towards the ends.
Limontitic A group of brown amorphous naturally occurring
hydrous iron rich oxides.
Lode A mineral deposit in solid rock.
Mafic rocks Rocks rich in Iron or magnesium silicates.
Metamorphic rocks Rocks, which have undergone a change in
texture or composition as the result of heat and/or
pressure.
Mill A processing plant that produces a concentrate of
the valuable minerals or metals contained in an
ore. The concentrate must then be treated in some
other type of plant, such as a smelter, to affect
recovery of the pure metal.
Mineable Reserves Ore reserves that are known to be
extractable using a given mining plan.
Mineral A naturally occurring homogeneous substance having
definite physical properties and chemical
composition and, if formed under favourable
conditions, a definite crystal form.
Mineralized Material
or Deposit A mineralized body which has been delineated by
appropriate drilling and/or underground sampling to
support a sufficient tonnage and average grade of
metal(s). Under SEC standards, such a deposit does
not qualify as a reserve until a comprehensive
evaluation, based upon unit cost, grade,
recoveries, and other factors, conclude economic
feasibility.
Net Profit Interest A portion of the profit remaining
after all charges, including taxes and bookkeeping
charges (such as depreciation) have been deducted.
Net Smelter Return A share of the net revenues generated from the sale
of metal produced by a mine.
- iv -
Ore Material that can be mined and processed at a profit.
Participating
Interest An interest in a mine, which entitles the holder to
a certain percentage of profits in return for
putting up an equal percentage of the capital cost
of the project.
Patent The ultimate stage of holding a mineral claim in
the United States, after which no more assessment
work or claim rental fees are necessary because all
mineral rights have been earned.
Patented
Mining Claim A parcel of land originally located on
federal lands as an unpatented mining claim under
the General Mining Law, the title of which has been
conveyed from the federal government to a private
party pursuant to the patenting requirements of the
General Mining Law.
Porphyry Any igneous rock in which relatively large
crystals, called phenocrysts, are set in a
fine-grained groundmass.
Precambrian The oldest, most stable regions of the Earth's
crust, the largest of which is the Canadian Shield.
Prospect A mining property, the value of which has not been
determined by exploration.
Probable Reserves Reserves for which quantity and grade and/or
quality are computed from information similar to
that used for proven (measured) reserves, but the
sites for inspection, sampling and measurement are
farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower
than that for proven (measured) reserves, is high
enough to assume continuity between points of
observation.
Proven (Measured)
Reserves Reserves for which, quantity and grade are computed
from dimensions revealed in trenched outcrops,
workings or drill holes; and sampling and
measurement are spaced so closely and the geologic
character is so well defined that size, shape,
depth and mineral content of reserves are well
established.
Reclamation The restoration of a site after mining or
exploration activity is completed.
Reserves That part of a mineral deposit, which could be
economically and legally extracted or produced at
the time of the reserve determination.
Royalty An amount of money paid at regular intervals by the
lessee or operator of an exploration or mining
property to the owner of the ground. Generally
based on a certain amount per ton or a percentage
of the total production or profits. Also, the fee
paid for the right to use a patented process.
- v -
Sample A small portion of rock or a mineral deposit, taken
so that the metal content can be determined by
assaying.
Schists A medium or coarse-grained metamorphic rock with
sub-parallel orientation of the micaceous minerals,
which dominate its composition.
Sericite A fine-grained variety of mica occurring in small
scales, especially in schists.
Shear or Shearing The deformation of rocks by lateral
movement along innumerable parallel planes,
generally resulting from pressure and producing
such metamorphic structures as cleavage and
schistosity.
Siliceous Containing abundant quartz or silica.
Silicate A compound whose crystal structure contains Si-O
tetrahedral either isolated or joined together
through one or more of the oxygen atoms.
Sills An intrusive body of approximately uniform
thickness and relatively thin compared to its
lateral extent, which has been emplaced parallel to
the bedding or schistosity of intruded rocks.
Stratigraphy The description of bedded rock sequences; used
loosely, the sequence of bedded rocks in a
particular area.
Strike The direction, or bearing from true north, of a
vein or rock formation measured on a horizontal
surface.
Sulfide A compound of sulfur and some other element.
Trend The direction, in the horizontal plane, of a linear
geological feature (for example, an ore zone),
measured from true north.
Ultramafic rocks Igneous rocks containing less than 45% silica
and composed of ferromagnesian silicates, metallic
oxides and sulfides.
Unpatented Mining
Claim A parcel of property located on federal lands
pursuant to the General Mining Law and the
requirements of the state in which the unpatented
claim is located, the paramount title of which
remains with the federal government. The holder of
a valid, unpatented lode-mining claim is granted
certain rights including the right to explore and
mine such claim under the General Mining Law.
Vein A mineralized zone having a more or less regular
development in length, width and depth, which
clearly separates it from neighbouring rock.
Waste Barren rock in a mine, or mineralized material that
is too low in grade to be mined and milled at a
profit.
- vi -
PROSPECTUS SUMMARY
About This Prospectus
This prospectus is part of a registration statement we filed with the
U.S. Securities and Exchange Commission. You should rely only on the information
provided in this prospectus. Neither we, nor the selling security holders listed
in this prospectus, have authorized anyone to provide you with information
different from that contained in this prospectus. The selling security holders
are offering to sell, and seeking offers to buy, common shares only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of common shares.
Applicable SEC rules may require us to update this prospectus in the future.
This preliminary prospectus is subject to completion prior to this offering.
The information found on our Website at www.montanaplatinum.com is not
part of this Prospectus.
About Beartooth Platinum Corporation (formerly Idaho Consolidated Metals Corp.)
We are a mineral exploration company and are primarily engaged in the
acquisition, and exploration of precious metals properties. We are an
exploration stage company and there is no assurance that a commercially viable
mineral deposit or reserve exists in any of our properties until further
geological work is done and a final evaluation based upon the results obtained
conclude economic and legal feasibility. The principal precious metals targeted
by us are platinum group metals. From 1988 to 1996, we purchased, staked and
leased gold claims in Idaho. Beginning in 1998, we shifted our focus to claim
acquisitions and exploration for platinum group metals on the Stillwater Complex
located in the Park, Sweetgrass and Stillwater Counties, Montana, by staking
unpatented claims, and by obtaining leasehold interests in and/or options to
purchase, explore and develop certain patented and unpatented claims located
therein.
Subsequent to December 31, 2001 we sold all of our gold properties,
subject to regulatory approval currently being sought by the acquirer. We are
actively exploring our platinum group claims in Park County, Sweetgrass County
and Stillwater County, Montana. Accordingly, our current principal business does
not include further acquisition or exploration of our gold claims. (See Gold
Properties Description below).
At the end of 2001, we had no proven or probable reserves in any of our
claims. However, the area consisting of our Montana claims indicate anomalous
enrichment in the platinum group elements and we will conduct drilling,
sampling, trenching, assaying, geological and geophysical programs during the
year 2002. We will follow-up on results obtained during the 2001 exploration
program during the 2002 exploration field season.
Our basic strategy will be to concentrate our efforts on the claims,
which are wholly-owned by us and specifically on areas identified in the 2001
exploration program. Based on the 2001 results, we have prioritized our targets
and our 2002 and subsequent programs will concentrate on the higher priority
areas. We will seek through option, joint venture or other forms of exploration
agreements with third parties the lower priority areas in order to allow us to
concentrate our funds on the higher priority targets. Lower priority claims,
which cannot be optioned-out or joint-ventured may be dropped.
- 1 -
There is no assurance that the areas considered as favorable mineralized
targets within our claims, which have been selected based upon preliminary
geophysical results, contain commercially viable mineral deposits until close
systematic drilling and/or sampling and in depth results are evaluated and
conclude economic feasibility.
We face many risks and difficulties in the course of achieving our
strategy including the access to sufficient capital to complete our future
exploration plans and to fund general and administrative costs. We also have not
generated any revenues from operations to date and do not expect any revenues in
the foreseeable future.
Our December 31, 2001 financial statements contain in Note 1 the
following description related to our ability to continue as a going concern:
"These consolidated financial statements have been prepared assuming the Company
will continue as a going concern and be able to realize assets and liquidate
liabilities in the normal course of business. Since its inception, the Company
has incurred significant losses during the exploration stage and at December 31,
2001 has a net working capital deficiency of approximately $624,000. These
factors, along with the uncertainties regarding the Company's ability to obtain
necessary financing to develop its properties and to successfully develop
economic ore reserves on these properties and realize profitable production
levels or proceeds from their disposition, raise substantial doubt about the
Company's ability to continue as a going concern. These consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. Management of the Company continues to seek additional
sources of financing to fund its ongoing capital needs and mitigate its working
capital deficiency. The Company is presently considering additional funding
sources including the sale of its common stock. Additionally, the Company is
seeking additional joint venture partners to assist in the exploration and
development of certain of its other properties. There can be no assurance that
the Company will be successful in obtaining additional funds or in locating
suitable joint venture partners to assist in the exploration and development of
its mineral properties."
Further our auditors in their opinion dated February 22, 2002 added the
following comments for U.S. Readers on Canada - U.S. Reporting Conflict: "In the
United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant conditions and events that cast
substantial doubt on the company's ability to continue as a going concern, such
as those described in Note 1 to the consolidated financial statements. Our
report to the shareholders dated February 22, 2002 (except for note 11, which is
at March 7, 2002) is expressed in accordance with Canadian reporting standards
which do not permit a reference to such events and conditions in the auditors'
report when these are adequately disclosed in the financial statements."
For a further discussion of the risks associated with our business,
please see "Risk Factors" below.
Our selling shareholders received their shares through various private
placements, a short form prospectus filed under Canadian securities regulations,
a debt settlement, the conversion of convertible debt and related warrants, the
exercise of share purchase warrants and the exercise of share purchase options.
All funds are reported in U.S. dollars unless otherwise specified.
Canadian funds are designated by "C$".
- 2 -
Corporate Information
We were incorporated by registration of our memorandum and articles
under the laws of the Province of British Columbia on September 15, 1988 under
the name "Consolidated Idaho Platinum Resources Inc.". Subsequently we changed
our name from "Consolidated Idaho Platinum Resources Inc." to "Idaho
Consolidated Metals Corp." effective as of June 30, 1989. On August 17, 2001, we
were continued to the Yukon Territory under the Yukon Business Corporations Act.
On July 24, 2002, we changed our name to Beartooth Platinum Corporation. Our
head and principal office is located at 3rd Floor, 10190 - 152A Street, Surrey
B.C., Canada V3R 1J7 and its exploration office is located at 102 - Two Willow
Lane, Red Lodge, MT 59068, USA.
We have a wholly owned subsidiary, Idaho Consolidated Metals
International, Ltd., incorporated under the laws of the British Virgin Islands
on July 17, 1996. Its registered and records office is located at Craigmuir
Chambers, P.O. Box 71 Road Town, Tortola, British Virgin Islands and its
business address is located at Suite 225 - 4299 Canada Way, Burnaby, B.C.,
Canada V5G 1H3. Idaho Consolidated Metals International, Ltd. has never operated
any business.
THE OFFERING
Common shares offered by us: None
Common stock offered by the selling security holders: 44,481,728
Common shares currently outstanding (as of June 30, 2002): 44,021,930
Common shares currently outstanding, on a fully
diluted basis (as of June 30, 2002) 60,994,361 (1)
Use of Proceeds: We will not receive any proceeds from the
sale of shares by the selling security
holders.
(1) Includes 5,857,458 shares, which may be issued to the holders on
exercise of options outstanding at June 30, 2002. Includes 4,313,544
shares, which may be issued to the holders on exercise of share purchase
warrants outstanding at June 30, 2002. Includes 4,534,286 shares, which
may be issued to the holder on conversion of a convertible debenture.
Includes 2,267,143 shares, which may be issued on exercise of warrants
related to the convertible debenture. Does not include 2,376,928 shares,
which have been reserved for issuance upon the issuance of options not
yet granted under our stock option plan.
The proceeds from the initial sales of common shares to the selling
shareholders have been used to fund the exploration activities on the Montana
claims, the holding costs of the gold claims and our general and administrative
costs to date. The remaining proceeds from our early 2002 private placements and
the proceeds of the convertible debenture will be used to fund the balance of
exploration and general and administrative costs for the remainder of 2002.
RISK FACTORS
An investment in our common shares involves a high degree of risk. You
should carefully consider the risks described below and the other information
contained in this prospectus before deciding to invest in our common shares. The
risks described below are not the only ones facing us. Additional risks not
presently known to us, or which we currently consider immaterial may also
adversely affect our business. We have attempted to identify the major factors
under the heading "Risk Factors" that could cause differences between actual and
planned or expected results, but we cannot assure you that we have identified
all of those factors. If any of the following risks actually happen, our
business, financial condition and operating results could be materially
adversely affected.
- 3 -
We are a mineral exploration company without operating history.
We are in the business of exploring natural resource properties: a
highly speculative endeavor. Only persons who can afford the total loss of their
investment should make an investment in our securities. We have not had revenues
from operations to date, nor the provision of return on investment and there is
no assurance that we will produce revenue, operate profitably or provide a
return on investment in the future. All of our properties are in the
exploration-stage without a known body of ore. There is no guarantee that ore
will be found or that if it is found that it will be found in commercially
mineable quantities. Few properties, which are explored, are ultimately
developed into producing mines.
We have incurred net losses to date and depend upon outside capital.
Our financial statements are prepared using Canadian generally accepted
accounting principles ("GAAP") and so much of the disclosures and discussion
herein is based upon these accounting principles. Our December 31, 2001
financial statements contain a reconciliation of the significant differences
between Canadian GAAP and U.S. GAAP at Note 12.
As at December 31, 2001, under U.S. GAAP our accumulated deficit was
$16,941,273 (Canadian GAAP $12,808,244) and we had a working capital deficiency
of approximately $624,000. At June 30, 2002 our accumulated deficit was
$17,507,482 (Canadian GAAP $13,745,143) and we had working capital of
approximately $316,000.
We believe that we will require $1,000,000 for the 2002 exploration
season and approximately a cumulative $5,000,000 for the 2003 to 2005
exploration seasons to gain a sufficient level of understanding of our current
exploration targets. These estimates are based upon obtaining positive results,
which indicate that additional work is warranted. Subsequent to December 31,
2001 we raised approximately $866,500 in two private placements of our
securities and entered into a convertible debenture agreement for an additional
$1,000,000 to be drawn upon as funds are required for the 2002 exploration
program. Accordingly, we have sufficient funds available to complete our current
exploration plans for the 2002 season but will require additional funds for the
2003 through 2005 seasons. Our Montana property is very large and to adequately
explore the entire area is beyond our capability. Our plan is to concentrate on
the targets, which our aerial geophysics has identified and to look for other
parties to explore the other areas of the property through option agreements,
joint ventures or other exploration agreements. Claims, which cannot be
optioned-out or joint-ventured to other parties or claims, which are less
prospective may be dropped to reduce future holding costs.
Additional funds will have to be raised in order to finance further
exploration of our properties. We may be unable to raise this additional
financing other than through the sale of additional equity capital. If
additional financing is raised through the sale of equity capital, investors may
suffer a further dilution of their investment. The only alternative for the
financing of further exploration would be the offering by us of an interest in
the properties to be earned by another party or parties carrying out further
exploration thereof. This could result in a substantial dilution of our interest
in such property. There are no assurances that such sources of financing will be
available or, if available, that the terms thereof will be acceptable to us.
- 4 -
We may not discover ore in commercial quantities.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. There is no certainty that the expenditures to be made by us
in the exploration of the interests described herein will result in discoveries
of commercial quantities of ore. We currently have no reserves on our
properties.
Our claims in Montana were acquired mainly through a staking program.
Most of these claims were previously owned by the Stillwater Mining Company, a
company in platinum and palladium production. In October of 1993, Stillwater
Mining Company elected not to pay the claim rental fees for certain of its
staked claims and abandoned in excess of 1,346 claims. As a result, those claims
for which Stillwater Mining Company elected not to pay the required claim rental
fee were adjudicated by the BLM as relinquished.
There may not be a ready market for the sale of platinum and palladium.
There is no assurance that even if commercial quantities of ore are
discovered, a ready market will exist for its sale. Factors beyond our control
may affect the marketability of any platinum and palladium discovered.
In the event that the Company's exploration program is successful, the
profitability of any future operations, which may be brought into production on
claims owned or under the control of the Company, could be significantly
affected by changes in the market prices of platinum group metals (PGM). Prices
fluctuate widely and are influenced by numerous factors beyond the Company's
control, including such factors as expectations for inflation, currency exchange
fluctuations, particularly between the South African Rand and the US Dollar,
global and regional demand for PGM, consumption patterns, speculative
activities, international economic trends, political and economic conditions,
and production quantities and costs in the other PGM producing countries,
including the Republic of South Africa and Russia. Since some of the world
supply of platinum and palladium is a by-product of the mining of nickel and
copper, a portion of the worldwide production of platinum and palladium is
unrelated to the demand for such metals. Accordingly, ordinary market balancing
mechanisms may be less effective.
Approximately 50 percent of current world platinum demand is for
industrial and manufacturing processes, more than one-half of which is used by
the global auto industry in the manufacture of catalytic converters for emission
control on automobiles. Autocatalyst demand is dependent upon growth in new
vehicle sales in countries where legislation requires specific exhaust emission
standards; new vehicle sales are in turn dependent upon general economic
conditions. In addition to the United States, legislation requiring emission
control on automobiles has been enacted in many countries including Japan and
Europe and emission standards have become more stringent and comprehensive over
time. If a substitute material, which is more cost effective than PGM, can be
developed, tested and accepted by the regulatory authorities, the automobile
industry and the public then the demand for platinum could be significantly and
negatively impacted.
Approximately 50 percent of current world platinum demand is for the
production of jewelry, such as gem settings for rings and for investment /
collector coins. Historically, jewelry demand has been most significant in Japan
and China and, since 1998, in North America. A change in the attitude of
consumers in any of these markets could negatively impact the demand for and the
price of platinum.
- 5 -
Palladium, like platinum, has numerous industrial applications. In 2000,
approximately 60 percent of palladium consumption was in autocatalysts.
Approximately 25 percent of consumption was in the electronics industry. Dental,
chemical and jewelry consumption are also significant.
To some extent, platinum and palladium can be substituted for one
another in the autocatalysis application. The ability to substitute one metal
for the other should serve to keep the price of the two metals in equilibrium
over the medium term. However, if a substitute material, which is more cost
effective than PGM, can be developed, tested and accepted by the regulatory
authorities, the automobile industry and the public then the demand for
palladium could be significantly and negatively impacted.
In the electronics sector, the consumption of palladium particularly as
the conductive element in multi-layer ceramic capacitors peaked at about 2.6
million ounces in 1997. In 2000, consumption of palladium in the electronics
sector amounted to about 25 percent of demand. The intensity of use of palladium
in this sector has declined significantly during the last five years. However,
the number of capacitors required to support the expanding demand in electronic
applications has sustained the demand in the range 2 to 2.2 million ounces in
the years 1998 thru 2000. In low-end electronic applications, such as children's
toys, palladium is being substituted by base metals, copper and nickel. However,
in high-end applications, where reliability is a concern such as in automobile
and personal comupters, palladium is the metal of choice. If a substitute
material which is more cost effective than PGM can be developed, tested and
accepted by the electronics industry particularly for high-end applications,
then the demand for palladium could be significantly and negatively impacted.
The exact effect of these factors cannot be accurately predicted, but
the combination of these factors may result in us not receiving an adequate
return on invested capital.
Mining is dangerous and we could face claims for personal injury or property
damage.
Mining activities involve significant physical and environmental risk.
There are continuous hazards to mine workers arising from poor ventilation,
slides, cave-ins, the operation of heavy equipment below ground, and the use of
explosives and toxic chemicals in mining, processing and refining operations. We
are required to contribute to state industrial insurance and workman's
compensation plans. Our general liability insurance against claims for personal
injury or property damage is limited to $5,000,000(US) per person and
$5,000,000(US) per occurrence. We could be held liable for personal injury or
property damage claims substantially in excess of our coverage.
We could also face claims by individuals and government agencies arising
from our use and potential discharge of toxic chemicals. We do not have
environmental liability insurance now, and we may not be able to obtain such
insurance in the future at a reasonable cost. Insurance companies have, in some
cases, successfully asserted that harm caused by the intentional use of toxic
substances is not covered by their policies regardless of the precautions that
were taken by the insured. If we incur liability for environmental harm while
uninsured, the resulting cost could seriously weaken our financial condition.
Our potential profitability is subject in part to matters over which we have no
control.
Potential profitability of mining ventures and mineral properties
depends upon factors beyond our control. For instance, world prices of, and
markets for, platinum and palladium are unpredictable, highly volatile,
potentially subject to government fixing, pegging and controls, and respond to
changes in domestic, international, political, social and economic environments.
Since January 2001, the world price for platinum, as published by Kitco.com, has
ranged from a low of approximately $400 per ounce to a high of approximately
$650 and has recently been in the $520 to $560 per ounce range. Over the same
period, the world price for palladium, as published by Kitco.com, has ranged
from a low of approximately $300 per ounce to a high of approximately $1,100 and
has recently been in the $320 to $340 per ounce range. Our future profitability,
should economic reserves of platinum and palladium be discovered, will be
directly linked to the volatile world prices of platinum and palladium.
- 6 -
Additionally, in the current period of world-wide economic uncertainty,
the availability and costs of funds for exploration and other costs have become
increasingly difficult, if not impossible, to project. These changes and events
could materially affect our financial condition.
We may face substantial costs for compliance with existing and future
legislation, government controls and environmental controls.
Our business is subject to extensive federal, state and local
governmental controls and regulations, including regulation of mining and
exploration operations, discharge of materials into the environment, disturbance
of land, reclamation of disturbed lands, threatened or endangered species and
other environmental matters. Compliance with existing and future laws and
regulations may require additional control measures and expenditures which
cannot be estimated at this time.
We must seek governmental permits for exploration activities at our
properties. Obtaining the necessary govemmental permits is a complex and
time-consuming process involving numerous federal, state and local agencies. The
duration and success of the permitting efforts are contingent upon many
variables not within our control. All our future exploration and development
projects require or will require a variety of permits. The failure to obtain
certain permits could have a material adverse effect on our business, operations
and prospects. Presently, we have our drill sites for the 2002 season fully
permitted. However, we will require additional drill sites to be permitted as we
continue to explore our current targets over the 2003 to 2005 seasons or for new
drill sites should the results of the current drilling program so dictate.
Compliance requirements for any mines and mills may require substantial
additional control measures that could materially affect proposed permitting and
construction schedules for such facilities. Under certain circumstances,
facility construction may be delayed pending regulatory approval. The cost of
complying with existing and future laws and regulations may render existing and
any future properties unprofitable and could adversely affect the value of our
mineralized material, if any.
Our business is subject to extensive environmental regulations including
Environmental Protection Laws, Clean Air Act, Clean Water Act, Endangered
Species Act, National Environmental Policy Act and State Environmental
Protection Laws. In the context of environmental protection permitting,
including the approval of reclamation plans, we must comply with the known
standards and existing laws and regulations which may entail greater or lesser
costs and delays depending on the nature of the activity to be permitted and the
interpretation of the regulations implemented by the permitting authority.
Compliance with existing and future laws and regulations may require additional
control measures and expenditures which cannot be estimated at this time. The
cost of complying with existing and future laws and regulations may render
existing and any future properties unprofitable and could adversely affect the
value of our mineralized material, if any.
A more detailed discussion of the environmental regulations, which
affect our business can be found in "Compliance Costs and Effects of
Environmental and other Laws".
- 7 -
Our properties may be subject to title disputes.
We have not performed formal title searches on all the claims, which we
hold and we do not perform formal title searches on an ongoing basis. Our
properties may be subject to prior unregistered agreements or transfers of
native land claims, and title may be affected by undetected defects. In
addition, certain of our boundaries have not been surveyed and, therefore, their
precise location and area may be in doubt. Should a title dispute arise and
should our title not stand we could lose the related claim or claims, which
could have a material adverse effect on our business, operations and prospects.
If we do not comply with applicable regulatory requirements, we may lose rights
to unpatented mining claims.
In order to establish rights to mining claims in the United States,
certain criteria must be met, including the erection of a monument, and the
posting of a location notice marking the boundaries of the "unpatented" mining
claim, together with filing a Notice of location within the county in which the
unpatented claim is located. If the statutes and regulations for the location of
an unpatented mining claim are complied with, the claimant obtains a valid
possessory right to the contained minerals. To preserve an otherwise valid
unpatented mining claim, a claimant also must make certain additional filings
with the county and the US Bureau of Land Management and annually pay a fee
required by the US regulatory authorities. Failure to pay the fee or make the
required filings may render the unpatented mining claim void or voidable.
Because unpatented mining claims are self-initiated and self-maintained, they
possess some unique vulnerabilities not associated with other types of property
interests. It is impossible to ascertain the validity of unpatented mining
claims from public real property records, and therefore it can be difficult or
impossible to confirm that all of the requisite steps have been followed for
location and maintenance of an unpatented mining claim.
We depend on key technical personnel and may unable to hire or retain such
personnel or general labor.
For us to succeed, we may be required to hire and retain additional
geologists and mining engineers. In any case, if we develop our claims we must
hire supervisors, heavy-equipment operators, experienced hard-rock miners and
general laborers. We will compete for these personnel in Montana with other
mining and exploration companies in addition to other heavy equipment users. In
periods of high employment in the mining industry we may be unable to attract
and retain sufficient competent employees to fulfill our business plans
efficiently and meet our budgets. Failure to retain such key employees or
consultants or to attract and retain additional key employees or consultants
with the necessary skills could have a materially adverse impact upon our growth
and profitability. As of the date hereof, key person life insurance has not been
established for any director or officer.
We have no significant assets except our mining claims.
Our assets are comprised of our mining claims and modest amounts of
cash. Our claims have no value apart from the economically recoverable metals,
if any, they contain. We do not have the financial or technical resources to
acquire other assets or engage in other businesses if our claims prove to be
unproductive. Should our claims not contain any economically recoverable metals,
we may not be able to continue as a going concern. See also Note 1 to our
consolidated financial statements for the year ended December 31, 2001 where the
going concern issue is further addressed.
- 8 -
We may not remain in business without obtaining additional financing.
Our December 31, 2001 financial statements contain in Note 1 the
following description related to our ability to continue as a going concern:
"These consolidated financial statements have been prepared assuming the Company
will continue as a going concern and be able to realize assets and liquidate
liabilities in the normal course of business. Since its inception, the Company
has incurred significant losses during the exploration stage and at December 31,
2001 has a net working capital deficiency of approximately $624,000. These
factors, along with the uncertainties regarding the Company's ability to obtain
necessary financing to develop its properties and to successfully develop
economic ore reserves on these properties and realize profitable production
levels or proceeds from their disposition, raise substantial doubt about the
Company's ability to continue as a going concern. These consolidated financial
statements do not include any adjustments that might result from the outcome of
these uncertainties. Management of the Company continues to seek additional
sources of financing to fund its ongoing capital needs and mitigate its working
capital deficiency. The Company is presently considering additional funding
sources including the sale of its common stock. Additionally, the Company is
seeking additional joint venture partners to assist in the exploration and
development of certain of its other properties. There can be no assurance that
the Company will be successful in obtaining additional funds or in locating
suitable joint venture partners to assist in the exploration and development of
its mineral properties."
Further our auditors in their opinion dated February 22, 2002 added the
following comments for U.S. Readers on Canada - U.S. Reporting Conflict: "In the
United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant conditions and events that cast
substantial doubt on the company's ability to continue as a going concern, such
as those described in Note 1 to the consolidated financial statements. Our
report to the shareholders dated February 22, 2002 (except for note 11, which is
at March 7, 2002) is expressed in accordance with Canadian reporting standards
which do not permit a reference to such events and conditions in the auditors'
report when these are adequately disclosed in the financial statements."
Should we not remain a going concern then the effect could have a material
adverse effect on our business, operations and prospects.
U.S. investors may face potential tax risks due to our status as a Canadian
Corporation.
U.S. Holders of shares of the Registrant should note that the Registrant
believes that it is a Passive Foreign Investment Corporation ("PFIC") as that
term is defined for U.S. income tax purposes. As a result, a U.S. Holder may be
subject to adverse income tax consequences resulting form their investment in
the Registrant and we urge U.S. holders to consult with competent U.S. tax
advice concerning the impact of the PFIC rules on their investment in the
Registrant.
A more detailed discussion of the potential tax risks, which our U.S. investors
may face can be found in "Additional Information - Taxation".
We are incorporated in a foreign country, which may affect the enforceability of
civil liabilities.
We are incorporated under the laws of a foreign country, some of our
officers and directors are residents of a foreign country and a substantial
portion of our assets and such persons' assets are located outside the United
States. As a result, it may be difficult for holders of our common shares, with
respect us or any of our non-U.S. resident executive officers, directors, or
experts we have named in this registration statement to (i) effect service of
process within the United States; (ii) enforce judgments obtained in the U.S.
courts based on the civil liability provisions of the U.S. federal securities
laws; (iii) enforce judgments of U.S. courts based on the civil liability
provisions of the U.S. federal securities laws in a Canadian court; and (iv)
bring an original action in a Canadian court to enforce liabilities based on the
U.S. federal securities laws.
- 9 -
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking" statements that involve risks
and uncertainties. Forward-looking statements include statements about our
expectations concerning future exploration activities, statements about future
business plans and strategies, and most other statements that are not historical
in nature. Because forward-looking statements involve risks and uncertainties,
there are factors, including those discussed in the section of this prospectus
titled "Risk Factors", that could cause actual results to be materially
different from any future results, performance or achievements expressed or
implied. Accordingly, readers should not place undue reliance on forward-looking
statements. We undertake no obligation to publicly release the result of any
revision of these forward-looking statements to reflect events or circumstances
after the date they are made or to reflect the occurrence of unanticipated
events.
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of the shares
covered by this prospectus. The proceeds from the initial sales of common shares
to the selling shareholders have been used to fund the exploration activities on
the Montana claims, the holding costs of the gold claims and our general and
administrative costs to date.
MARKET FOR OUR COMMON SHARES
Our shares are listed and quoted in the United States by the Pink Sheets
under the trading symbol BTPUF since July 24, 2002 (formerly IOCMF). Our shares
are traded on the TSX Venture Exchange under the trading symbol BTP since July
24, 2002 (formerly "IDO").
For the period from January 1, 2000 through June 30, 2002 the high and
low sales prices (in U.S. dollars) for the shares for each quarter, as reported
by the Pink Sheets, were:
2002 High Low
First Quarter $0.42 $0.23
Second Quarter $0.47 $0.28
2001 High Low
First Quarter $1.12 $0.57
Second Quarter $1.14 $0.64
Third Quarter $0.88 $0.19
Fourth Quarter $0.29 $0.20
2000 High Low
First Quarter $1.79 $0.28
Second Quarter $1.07 $0.61
Third Quarter $0.99 $0.50
Fourth Quarter $0.56 $0.28
- 10 -
For the period from January 1, 2000 through June 30, 2002 the high and
low sales prices (in Canadian dollars) for the shares for each quarter, as
reported by the TSX Venture Exchange and its predecessors, the CDNX and the
Vancouver Stock Exchange, were:
2002 High Low
First Quarter C$0.67 C$0.38
Second Quarter C$0.75 C$0.38
2001 High Low
First Quarter C$1.90 C$0.50
Second Quarter C$1.80 C$0.88
Third Quarter C$1.31 C$0.28
Fourth Quarter C$0.60 C$0.26
2000 High Low
First Quarter C$2.55 C$0.30
Second Quarter C$1.60 C$0.80
Third Quarter C$1.49 C$0.76
Fourth Quarter C$0.84 C$0.45
Holders
As of December 31, 2001, we had approximately 213 shareholders of
record.
Dividends
We have never paid dividends. We do not expect to have cash flow from
which we could pay dividends in the foreseeable future.
PLAN OF OPERATION
Liquidity and Capital Resources
We were incorporated on September 15, 1988 and since that time have
raised our capital resources through an Initial Public Offering completed in
Canada on April 12, 1991, the proceeds of a series of private placements, the
proceeds of a Short Form Prospectus offering, the proceeds from stock option
exercises and the proceeds from the issuance of convertible securities.
Our financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("GAAP") and the analysis of liquidity
and capital resources herein is based upon these statements. Our financial
statements contained in this prospectus include a reconciliation of Canadian
GAAP to U.S. GAAP at Note 12 for the December 31, 2001 financial statements, at
Note 6 for the March 31, 2002 interim financial statements and at Note 7 for the
June 30, 2002 interim financial statements.
- 11 -
We have had negative cash flows from operating activities since
inception, and expect that such negative cash flows will continue. For the
period ended June 30, 2002 and the years ended December 31, 2001, 2000, and
1999, the negative cash flows from operating activities, on a U.S. GAAP basis,
were ($1,035,962), ($1,888,443), ($1,640,629) and ($889,371), respectively. Our
negative cash flows from investing activities, on a U.S. GAAP basis, totaled
($13,693), ($305,639), ($537,931) and ($196,423) for the period ended June 30,
2002 and the years ended December 31, 2001, 2000, and 1999, respectively. Our
cash flows from financing activities, on the basis of both the Canadian and U.S.
GAAP, totaled $1,201,178, $2,255,494, $2,173,118 and $1,117,337 for the period
ended June 30, 2002 and the years ended December 31, 2001, 2000, and 1999,
respectively. As of December 31, 2001, we had a working capital deficiency of
$624,250 and as at June 30, 2002 our position had improved such that our working
capital was $315,861.
Subsequent to December 31, 2001, we raised a total of $1,554,625 through
June 30, 2002. Further, as part of the February 2002 private placement, we
issued a convertible debenture payable in the amount of $1,000,000. We will draw
down the proceeds of this debenture as required over the course of the 2002
exploration season. The debenture is convertible into units of our common stock
at the rate of one unit per C$0.35 of debt converted at the option of the
holder. Each unit will consist of one common share and one-half of one common
share purchase warrant, which allow the holder to acquire an additional common
share for two one-half common share purchase warrants and C$0.70 for two years
to December 19, 2003. However, we will require additional funding to continue
our operations during the next twelve months. We will be dependent on the
proceeds of debt and equity financing such as private placements, the issuance
of convertible securities, the exercise of stock options and warrants, and
optioning or selling our properties or other assets to fund our mineral
exploration expenditures and our general and administrative costs. Without such
proceeds, we may not continue as a going concern. There can be no assurance that
such funding will be available. We do not expect to purchase or sell significant
equipment, and we do not expect significant changes in the number of employees
over the next twelve months. As at December 31, 2001 we have two full-time and
two part-time employees employed in our exploration and administration areas.
For the ensuing twelve-month period, we anticipate that we will expend
approximately $1,000,000 on drilling, exploration programs and claim rental fees
related to our Montana claims and approximately $30,000 maintaining our Idaho
claims. The reduced maintenance costs for the Idaho claims is based upon the
goal of management to locate a new partner for the gold properties in order to
allow management to concentrate its efforts and resources on the Montana claims.
Subsequent to December 31, 2001, we entered into an agreement with Canden
Capital Corporation to sell them all of our gold interests in Idaho. The
transaction remains subject to TSX Venture Exchange approval.
At present, our plan for completing exploration of our Montana property
is to begin with a four-year staged program. We have divided the property into
various areas and have prioritized these targets. In the 2002 exploration season
we intend to expend approximately $1,000,000 exploring our highest priority
targets. Based on the results of the 2002 programs and dependent upon funding,
we intend to expend an additional $5,000,000 over the 2003 to 2005 exploration
seasons to further investigate the highest priority targets. We are currently
utilizing the results and interpretations of the 2000 exploration season
airborne geophysical program and the recently completed ground geophysical
program in an effort to locate the most favorable targets for our current
systematic surface and drill sampling programs. The approach has identified
several geophysical anomalies, which on a priority basis will be the subject of
the remainder of the 2002 season exploration program and future programs. This
systematic approach will be employed to assist us in determining the location,
size and average grade of mineralization within our property.
- 12 -
We believe that we will require approximately $460,000 for general and
administrative expenses for the 2002 fiscal year. The budget includes
approximately $265,000 for wages, consulting fees and benefits, $92,000 for
professional fees, $42,000 for office costs and rent, $38,000 for corporate
travel and board meetings and $24,000 for shareholder information. The amount
has decreased from the amount reported for this item in our Annual Report on
Form 10-KSB for the year ended December 31, 2001, as a result of closing
administrative offices in Vancouver, British Columbia and Lewiston, Idaho and
decreased professional fees to comply with Canadian and U.S. regulations as a
result of more of these tasks being performed with in-house staff. Management
will also be employing cost cutting measures on all areas of the general and
administrative expenses in an effort to expend as high a proportion of our funds
as possible on exploration activities.
Should we discover economic reserves on our property, our current plans
would be to look for a take-over by a larger company experienced in the
development of a producing mine or a joint venture or similar agreement to
advance the project through the development of a mine.
We are also investigating the possibility of a listing on the
Alternative Investment Market, operated by the London Stock Exchange, in the
coming months and have established a preliminary budget of $300,000 to
accomplish this task.
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 2002,
as adjusted for our anticipated proceeds from draws upon the convertible
debenture agreement.
June 30, 2002
---------------------------
Actual As Adjusted
----------- -----------
Common voting shares, no par value, 100,000,000
shares authorized and 44,021,930 shares
outstanding actual and 48,556,216 shares
outstanding pro forma as adjusted (1) $16,259,161 $17,259,161
Deficit accumulated during exploration stage (13,745,143) (13,745,143)
----------- -----------
$2,514,018 $3,514,018
- --------------------------------------------------------------------------------
(1) As part of the private placement, which closed on February 7, 2002 was
the issuance of a convertible debenture in the amount of $1,000,000. The
debenture is convertible at the option of the holder. To date, we have
not drawn down any of the funds related to this debenture, although we
expect to call upon these funds as we proceed with the 2002 exploration
season. The debenture is convertible into units of our stock at C$0.35
per share. Each unit consists of one common share and one half common
share purchase warrant. Each full warrant entitles the holder to acquire
one common share at C$0.70 for two years expiring December 19, 2003.
Using an exchange rate of 0.6301 we expect to issue 4,534,286 shares on
conversion of the debenture. We have not adjusted for the potential
exercise of the related warrants, as the warrants are not currently in
the money.
- 13 -
SELECTED FINANCIAL DATA
The income statement data for the years ended December 31, 1999 through
2001, and balance sheet data at December 31, 1999 through 2001, are derived from
our financial statements that have been audited by PricewaterhouseCoopers, LLP,
independent accountants, and are qualified by reference to those audited
financial statements and related notes to the statements, which are included
elsewhere in this prospectus. The audited financial statements for the year
ended December 31, 2001 and 2000, included herein, include Note 12, which
provides a reconciliation from Canadian to U.S. generally accepted accounting
principles. The income statement data for the six months ended June 30, 2002,
and balance sheet data at June 30, 2002, are derived from unaudited interim
consolidated financial statements, which are included elsewhere in this
prospectus. The unaudited interim consolidated financial statements include all
adjustments, consisting of normal recurring accruals, which our management
considers necessary for a fair presentation of the information set forth in
those statements. Operating results for the six months ended June 30, 2002, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. You should read the data set forth below in
conjunction with "Plan of Operation," above, and the financial statements and
notes included in this prospectus. Further the data set forth below is based
upon U.S. generally accepted accounting principles based upon Note 12 to the
December 31, 2001 consolidated financial statements and Note 7 to the June 30,
2002 interim consolidated financial statements.
Six
Months
Years Ended 31 December Ended
------------------------------------------- 30 June
Income Statement Data 2001 2000 1999 2002
- -------------------------------------------------------------------------------------
Revenue $ -- $ -- $ -- $ --
Net loss for the period $ (4,580,618) $ (2,153,262 $ (1,195,978) $ (984,412)
Net loss per share
- Basic and diluted $ (0.13) $ (0.07) $ (0.07) $ (0.02)
Weighted average Shares
- Basic and diluted 36,181,875 29,868,903 16,692,843 43,102,569
- -------------------------------------------------------------------------------------
Years Ended As At 31 December As At
------------------------------------------- 30 June
Income Statement Data 2001 2000 1999 2002
- -------------------------------------------------------------------------------------
Balance Sheet Data 2001 2000 1999 2002
Total assets $ 353,253 $ 1,493,234 $ 1,236,662 $ 1,420,848
Working capital $ (624,250) $ (234,490) $ (610,609) $ 315,861
Long-term debt $ 390,785 $ -- $ 3,590 $ --
Shareholders'
equity (deficiency) $ (780,964) $ 1,220,276 $ 741,885 $ 1,284,371
- 14 -
DESCRIPTION OF BUSINESS
Organization and corporate structure
We were incorporated in British Columbia, Canada on September 15, 1988.
Our original name was "Consolidated Idaho Platinum Resources Inc." We changed
our name to "Idaho Consolidated Metals Corp." as of June 30, 1989. We changed
our domicile in Canada from British Columbia to the Yukon as of August 2, 2001.
We changed our name to Beartooth Platinum Corporation on July 24, 2002.
We have one wholly owned subsidiary, Idaho Consolidated Metals
International, Ltd. It was incorporated in the British Virgin Islands on July
17, 1996. The subsidiary does not operate any business at the date of this
Prospectus.
Map of the Location of our Montana Property
- 15 -
Map of our Montana Claims
Assembly and exploration of our mining claims - 1988 to 2001
We are a mineral exploration company and are primarily engaged in the
acquisition, and exploration of precious metals properties. The principal
precious metals targeted by us are platinum group metals and gold. From 1988 to
1996 we purchased, staked and leased gold claims in Idaho. Beginning in 1998, we
shifted our focus to claim acquisitions and exploration for platinum group
metals on the Stillwater Complex located in the Park, Sweetgrass and Stillwater
Counties, Montana, by staking unpatented claims, and by obtaining leasehold
interests in and/or options to purchase, explore and develop certain patented
and unpatented claims located therein. (For a discussion of these terms, see
Risk Factor entiltled "If we do not comply with applicable regulatory
requirements, we may lose rights to unpatented mining claims.")
- 16 -
Subsequent to December 31, 2001 we have sold all of our gold properties,
subject to regulatory approval currently being sought by the acquirer. We are
actively exploring our platinum group claims in Park County, Sweetgrass County
and Stillwater County, Montana. Accordingly, our current principal business does
not include further acquisition or exploration of our gold claims. (See Gold
Properties Description below).
The Stillwater Complex contains five stratigraphic layers that appear to
host layers or reefs that contain anomalous platinum group metal values. Our
claims possess anomalous mineralization (platinum, palladium, nickel and copper)
hosted in horizons or layers, that are encountered and labeled from south to
north as follows: the Basal Series, the A and B Chromites (hosted in the
Ultramafic series), the Stillwater-Rose-Volatile Enrichment Zone (the "VEZ",
located at the contact between the Ultramafic Series and the Lower Member of the
Banded Series), the transverse faults (which cut across the Basal Zone and
Ultramafic Series), and the Picket Pin Zone (located at the contact between the
Middle and Upper Member's of the Banded Series)..
The significance of the Stillwater Complex can be found in the diverse
use of platinum group metals in industrial applications. Platinum group metals
are rare precious metals with unique physical properties. Platinum's largest use
is jewelry. However, the fastest growing use for platinum group metals is in the
automotive industry for the production of catalytic converters that reduce
harmful gases in automobile emissions. Industrial uses for platinum, in addition
to catalysts, include the production of data storage disks, glass, paints,
nitric acid, anti-cancer drugs, fiber optic cables, fertilizers, unleaded and
high-octane gasoline refining and fuel cells. Palladium is the conductive
element in multi-layer ceramic capacitors used in personal computers, cellular
phones, facsimile machines and other devices, as well as dental applications.
At the end of 2001, we have no proven or probable reserves in any of our
claims. However, the area consisting of our Montana claims, indicate anomalous
enrichment in the platinum group elements and we will conduct drilling,
sampling, trenching, assaying, geological and geophysical programs during the
year 2002. We will follow-up on results obtained during the 2001 exploration
program and are currently compiling the information and developing the
exploration plan for the 2002 exploration field season.
For a discussion of the risks associated with our business, please see
"Risk Factors", "Description of Properties" and "Plan of Operation".
Our Montana Claims for Platinum, Palladium and Rhodium
Our platinum group metals claims lie within or around the Stillwater
Complex. The Stillwater Complex is located in the Beartooth Mountains in south
central Montana. The Stillwater Complex is situated along the northern edge of
the Beartooth Plateau, which rises to elevations of over 10,000 feet. The
Beartooth Plateau is deeply incised by multiple rivers and their tributaries,
including the Stillwater River, which is located towards the eastern end of the
Complex and the Boulder River, which is near the western end of the Complex.
Both of these rivers eroded their valley floor, resulting in deep valleys that
cut into the gently undulating Beartooth Plateau.
- 17 -
The Stillwater Complex is a rare geological feature, composed of an
assemblage of mafic and ultramafic rocks derived from a single, large, buried
magma body emplaced an estimated 2.7 billion years ago. It is believed that as
the molten rock cooled individual minerals crystallized sequentially, with the
heavier, basic, darker minerals crystallizing first and sinking towards the
bottom of the magma chamber and the lighter, more siliceous light-colored
minerals crystallizing later to produce bands of norite, gabbro and anorthosite.
These layers formed in a generally horizontal position, but, through the years,
a portion of the original horizontal orientation of the Stillwater Complex was
moved due to shifts in the earth's crust, and it was tilted, dipping towards the
northeast at an angle of between 50 and 90 degrees to the horizontal. This
tilting exposed the rock of the Stillwater Complex at the surface as a series of
bands, which can be traced across most of the strike length of the Complex.
Erosion has caused the Stillwater Complex to be visible as a lens shaped body of
rocks that is approximately 28 miles long in a northwest to southeast direction
and up to 5 miles wide in a northeast to southwest direction. The oldest layers
exposed are located on the south-end of the Complex and as one moves northerly
(stratigraphically up section) the rock units get progressively younger.
The platinum group metals, which consist primarily of palladium,
platinum and a minor amount of rhodium, are known to be richly concentrated in
several horizons. However, anomalous platinum group metal mineralization and
small amounts of nickel, copper, silver and gold have been observed in most of
the other mineralized layers comprising the Stillwater Complex.
During the late 1960's and early 1970's, the Stillwater Mining Company
and its predecessors, had staked claims covering most of the known portions of
the Stillwater Complex. In October of 1993, due to new claim rental fee
regulations imposed by the Bureau of Land Management ("BLM"), Stillwater Mining
Company elected not to pay the increased claim rental fees for certain of its
staked claims and abandoned in excess of 1,346 claims. As a result, those claims
for which Stillwater Mining Company elected not to pay the required claim rental
fee were adjudicated by the BLM as relinquished.
Beginning in 1999, we staked 758 unpatented claims and entered into a
Tri-Party Lease and Purchase Option Agreement with Platinum Fox, LLC and Emerald
Chimera, LLC, for an additional 54 unpatented claims (the "Platinum Fox Lease").
We also continued with our land acquisition program in 2000 by staking another
912 claims on approximately 18,000 acres and entering into a Joint Venture with
Chrome Corporation of America ("Chrome Corp.") for 102 additional unpatented
claims, 32 patented claims and 21 unpatented claims upon which a patent
application has been filed, all of which are contiguous to our existing land
holdings in Montana.
During 2001, we staked an additional 123 claims on approximately 2,500
acres, which are contiguous to our existing land holdings in Montana. At
December 31, 2001 we had a total of 2,002 separate but generally contiguous
platinum group metals mining claims extending over approximately 34,500 acres of
federal land.
Our controlled claims run the length of the complex and are divided into
10 properties which are often contiguous and are designated by geographical area
listed from west to east as follows: Picket Pin Property, Blakely Creek
Property, Chrome Mountain Property (we did not renew the Platinum Fox lease
portion in fiscal 2002), Iron Mountain Property, Crescent Creek Property,
Bluebird Property, Mountain View Property (dropped in fiscal 2001), Blitz
Property (formerly the Nye Basin Property), Black Butte Property and the East
Millsite Property. We also staked the Stillwater West property, which was under
a joint venture agreement to First Choice Industries, Ltd., until 60 days notice
of termination was received by us on June 3, 2002.
The claims that comprise these properties cover several prospective
horizons and ongoing exploration is required to determine the location and
quantity (if any) of mineralization on the properties. The properties are
contiguous with each other in a number of cases and are separated into distinct
properties for ease of permitting and access.
- 18 -
The properties are listed below from west to east:
Picket Pin Zone
We hold 703 unpatented claims ("Picket Pin Claims"), covering
approximately 12,000 acres. The Picket Pin Claims are located along the
stratigraphic subdivisions between the Middle Banded series and the Upper Banded
series of the Stillwater Complex, over a 12-mile strike length and shows
anomalous enrichment in the platinum group metals. The Picket Pin Claims are
contiguous and span from Picket Pin Creek on the east-end of the Picket Pin Zone
to Contact Creek, 1.5 miles west of the Boulder River.
The claims can be accessed by public roads; however, snowdrifts prevent
truck access to the claims until June of each year.
We have yet to conduct any substantial drilling or assay programs on the
Picket Pin Claims, and therefore, there are no Probable or Proven Reserves. We
plan to conduct drilling, assaying, trenching, geological and geophysical
programs to determine whether our claims possess economic mineralization in
platinum group metals.
During 2001, we split the Picket Pin Claim block into 3 blocks referred
to as the (from West to East) Stillwater West, Picket Pin West, and Picket Pin
East. The western most block (Stillwater West) consisting of 215 claims has been
Joint Ventured to a public company (First Choice Industries), which is obligated
to conduct exploration on the property, as well as issue shares and a payment to
us to earn a 40% interest in the property (additional details are given in the
section entitled Stillwater West Property). The Picket Pin West property
consists of 316 claims and the Picket Pin East property consists of 387 claims
and both blocks are currently undergoing review to develop the best approach for
ongoing exploration.
Blakely Creek Property
We have staked 56 unpatented claims between the Boulder River and Chrome
Mountain to the east, covering approximately 960 acres. The Blakely Creek claims
are contiguous with the Chrome Mountain property to the east.
The property is located 32 miles south of Big Timber, located along
Interstate 90 and may be accessed via public roads.
The project area contains indications of several promising styles of
mineralization. Based on review of previous geologic investigations and studies,
the area also appears to have some structural complexities consisting of
transverse faults with lateral offsets as well as thrust faults that have
shifted the mineral horizon. The transverse faults developed during the late
stages of crystallization and formation of the layers that comprise the
Stillwater Complex. These faults are significant for two reasons. Firstly, the
faults displace the horizons of known mineralization in a north-south direction.
In areas of glacial cover, which masks the geology, these faults provide the
possibility that areas of known mineralization may have shifted onto our claims.
Secondly, the faults acted as conduits for late stage mineralizing fluids which
formed the VEZ horizon.
Interpretation of the airborne geophysical program conducted during 2000
indicated the presence of a high magnitude geophysical conductor trending
through this claim block. The position of the conductor correlates with the
position of the Basal Zone, which commonly hosts nickel and copper enriched
sulfides. The geologic interpretation is complicated by the presence of
transverse and thrust faults, but the older metamorphic rocks mapped on the
surface, are interpreted to be a thin thrust layer over Stillwater Complex
rocks.
- 19 -
We plan to conduct drilling, assaying, trenching, geological and
geophysical programs along the various horizons to determine the amount of
enrichment of platinum group metals in the "A" & "B" chromites and to better
define the extent of copper and nickel and the amount of platinum group metals
associated with these mineralized materials.
Chrome Mountain Property
We have staked 167 unpatented claims on Chrome Mountain and have
obtained a leasehold interest in 54 additional claims pursuant to the Lease
(discussed below). On May 3, 2002, we gave notice to the lessors that we would
not be making the required cumulative property expenditures of $210,000 by June
10, 2002. On July 19, 2002, we did not renew the lease and the agreement was
terminated. In total, the staked claims and leased claims cover approximately
3,800 acres.
The Company's Chrome Mountain claims can be accessed from Interstate-90
by existing public roads; however, snowdrifts prevent truck access to the claims
until June of each year. We conducted exploration on the Pine Claim, which is
located within the Chrome Mountain area, and identified a number of parallel
bands of chromite. These bands of chromite are known as the "A" and "B"
Chromites, which bear similarities to Chromites found in South Africa.
We then conducted a mapping and surface grab sampling program on the "A"
and "B" Chromite horizons on the Pine Claim, which returned 11 samples ranging
from anomalous to high-grade. A few of these samples indicated a palladium to
platinum ratio near 4:1.
West of Chrome Mountain is the historic Gish Mine. During World War II,
the Gish Mine, located east of the Boulder River, produced chromite ore, which
was refined to produce Chromium, which at that time was a strategic metal as it
was produced primarily in the Soviet Union and Rhodesia. The chromite ore was
produced from the "G" & "H" chromite horizons located between the VEZ horizon
and the "A"& "B" chromites. There are significant platinum and palladium assays
associated with the "A" & "B" chromites along the length of the complex. Little
exploration for these zones has been conducted in this area due to a thin cover
of metamorphic rocks and the steepness of the terrain. The Basal Zone is host to
nickel and copper mineralization and is also under a thin veneer of metamorphic
rocks. Airborne geophysics is effective in the detection of the sulfide
mineralization associated with this horizon and has extended the zone of known
mineralization by a distance of five miles.
We sampled rocks in Blakely Creek in August 1999. Several of the samples
returned anomalous assays. Three samples contained combined platinum, palladium
and rhodium values between 0.269 and 0.962 ounces per ton.
During 2001, we conducted follow-up exploration 2 miles east of Chrome
Mountain near Lost Mountain. This work consisted of mapping and sampling, sample
soil grid and ground geophysics to delineate the source of a prominent
geophysical conductor interpreted during the 2000 airborne geophysical program.
This conductor is generally located near the contact between the Ultramafic
Horizon and the Lower Member of the Banded Series. On strike and 2000 feet east
of our property, this conductive zone is associated with a graphitic zone that
is enriched in platinum and palladium. Historic exploration by another company
returned results as high as 0.85 ounce per ton over 10.8 feet in a trench.
Similar results were also obtained from adjacent trenches and drill holes from
this area, known as "Coors 602" or "Coors Swamp". We are calling this conductive
horizon the "VEZ" or Volatile Enriched Zone.
- 20 -
We are currently assessing the geologic information and preparing the
2002 exploration plan. We have permits to drill 10 sites in this area on the VEZ
horizon.
Platinum Fox Lease
We were granted the rights to explore and develop 54 leased claims on
Chrome Mountain pursuant to the terms of the Platinum Fox Lease, between three
parties: (1) Platinum Fox, LLC, as Lessor; (2) Emerald Chimera, LLC, the current
tenant; and (3) the Company, as the subtenant.
The Platinum Fox Lease was granted for a term of five years, consisting
of 5 successive one-year renewable terms. All lease renewals were subject to an
independent geological evaluation with a recommendation of continued work on the
claims acceptable to the TSX Venture Exchange.
We were responsible for the payment of all assessments, permits, taxes
and BLM fees required to maintain the leased claims in good standing, the
payment of which was credited to the annual minimum exploration expenditures set
forth below. In addition, we were to make cash payments, stock grants and
exploration expenditures over the five-year period of the lease, assuming
renewal of the lease in each year, as follows:
Cumulative
Minimum
Cash Exploration
Payment Stock Grant Expenditures
Year
1999 $19,500 150,000 common shares upon execution
of Lease (issued during fiscal 2000) $ 0
2000 $0 200,000 common shares upon renewal of $50,000
Lease (issued during fiscal 2000) (Completed)
2001 $0 200,000 common shares upon renewal of $120,000
Lease (issued during fiscal 2001) (Completed)
2002 $0 375,000 common shares upon renewal of
Lease (not issuable - agreement $210,000
terminated) (In Default)
2003 $0 575,000 common shares upon renewal of
Lease (not issuable - agreement
terminated) $210,000
The stock grants were due by July 16 in each year of the lease. The 2002
stock grant was conditional upon an independent geological evaluation including
the commission of a feasibility study based on a drill indicated resource.
Should the exploration not have reached the stage to commence the feasibility
study, but the independent geological evaluation recommends continued
exploration, then no stock grants were to be paid until the feasibility study
was commenced.
The minimum exploration expenditures were cumulative and were to be
completed by June 10 of each year of the lease.
- 21 -
Through December 31, 2001, we expended approximately $503,000 on the
property including the acquisition cash payments of $22,000 and the issuance of
550,000 common shares, at a deemed price of $350,925, during fiscal 2000 and
2001, as required for the years 1999 through 2001, upon receipt of the required
regulatory approvals from the TSX Venture Exchange. The remaining expenses,
within the $503,000 total, included staking and filing costs of approximately
$18,300 and $112,300 expended on geological, geophysical, assaying and survey
costs for a total of approximately $130,600 expended on qualifying exploration
expenditures under the Platinum Fox Lease. The Platinum Fox Lease contains an
Area of Influence clause, which affects approximately 70 claims staked by us.
These claims include one claim in the Iron Mountain area, twenty-nine claims in
the Chrome Mountain area, thirty-five claims in the Blakely Creek area and five
claims in the Picket Pin area. Through December 31, 2001, we have expended
approximately $27,000 on staking and filing costs on these claims and have
expended approximately $17,000 on geological, geophysical, assaying and survey
costs. Accordingly at December 31, 2001, we have spent approximately $174,600 of
the $210,000 required prior to June 10, 2002 under the terms of the Platinum Fox
Lease. Subsequent to December 31, 2001 we incurred only minimal additional
expenditures on the property and consequently we did not make the required
cumulative property expenditures by June 10, 2002. Accordingly, we have
subsequently written-off the accumulated capitalized acquisition costs of
approximately $391,000 and exploration costs of approximately $177,000 in the
second quarter of 2002.
Under the terms of the Platinum Fox Lease agreement, we had the right to
extend the lease for five additional one-year terms, beyond the initial term of
the lease, by paying a one-time cash payment of $50,000 and incurring an
additional $250,000 per year in exploration expenditures. Platinum Fox had the
right to convert the $50,000 cash payment into our common shares at a deemed
price equal to 85% of the average closing price of our common shares on the TSX
Venture Exchange for the ten trading days prior to the date we were to deliver
the cash payment.
Under the Platinum Fox Lease, we were granted an option to purchase, at
any time, the claims for $5,000,000. If exercised, we were also required to pay
Platinum Fox a net smelter return royalty of 0.25% with respect to ore mined
from the leased claims. However, if we located or discovered ore or product on
other claims in which Platinum Fox would have an interest due to its apex or
lateral rights, Platinum Fox would have received, as additional consideration, a
3% net smelter return on such ore or product. Under the Platinum Fox Lease we
were required to exercise our purchase option if we placed any of the claims
into commercial production.
If we had exercised our option to purchase, as additional consideration
for the termination of Emerald Chimera's leasehold interest in the leased
claims, we would have been required to issue Emerald Chimera a non-transferable
common share purchase warrant for that number of shares equal to 110% of the
number of shares that would have been issued in connection with all of the
unexercised lease renewals set forth in the table above. The warrants would have
had an exercise term of 5 years and would have been priced equal to the average
trading price for the 10 days prior to the closing of the purchase of the leased
claims.
Under the Platinum Fox Lease, Platinum Fox has the right to forego being
bought out by us by electing to participate directly in the exploration of the
claims by paying a portion of the exploration costs and expenses. However,
Platinum Fox's interest shall not exceed 40% of the total. Platinum Fox's
election to forego being bought out by us and obtain up to a 40% interest in the
claims would have been contingent upon the parties entering into a joint
development agreement.
The Area of Interest provision of the Lease provided that, if any of the
parties stake additional mining claims within a one-mile radius of the Platinum
Fox Claims, such claims shall be deemed to be included as part of the Platinum
Fox Claims for the purpose of the Lease and calculation of net smelter
royalties. Apart from the 70 claims described above, all other staked claims
owned by us in the Area of Interest, were staked prior to entering the Platinum
Fox Lease. In addition, this Area of Interest provision does not apply to claims
held or acquired through a joint venture, where a joint venture participant
other than our contributed claims.
- 22 -
Under the terms of the agreement, we had the right to terminate the
agreement at anytime upon thirty days written notice and the right to not renew
the lease. We believe that we have given proper notice of termination.
An amendment to the Platinum Fox Lease, dated March 20, 2001, was
executed by us, Platinum Fox and Emerald Chimera, which would have amended the
term of the lease from 5 successive one-year renewable terms to a straight
five-year term. The amendment would have also revised the terms of the
consideration payable by us in connection with the lease. The enforceability of
the amendment is subject to dispute.
On May 3, 2002, we gave notice to the lessors that we would not be
making the required cumulative property expenditures of $210,000 by June 10,
2002. On July 16, 2002, we did not renew the lease and the agreement was
terminated. We have received a notice from counsel to the lessors dated
September 27, 2002, that it is the lessors' position that we are in default of
certain terms of the lease and that the lessor will be invoking the dispute
resolution provisions under the lease.
The Platinum Fox Lease claims can be accessed from Interstate-90 by
existing public roads; however, snowdrifts prevent truck access to the claims
until June of each year.
Iron Mountain Property
We have staked 237 unpatented claims near Iron Mountain. In total, these
claims cover approximately 4,000 acres. The claims cover the geological features
known as the Upper Banded and Lower Banded series, the Ultramafic unit and the
Basal Zone. The VEZ horizon is located at the contact between the Banded Series
and the Ultramafic series. The nickel and copper sulfide mineralization is
hosted in the Basal zone.
The claims can be accessed from Interstate-90 by existing public roads;
however, snowdrifts prevent truck access to the claims until June of each year.
The project area has indications of several promising styles of
mineralization. Based on review of previous geologic investigations and studies,
the area appears to have some structural complexities consisting of transverse
faults with lateral offsets as well as thrust faults that have shifted the
mineral horizon. The transverse faults developed during the late stages of
crystallization and formation of the layers that comprise the Stillwater
Complex. These faults are significant for two reasons. Firstly, the faults
displace the horizons of known mineralization either north or south. Secondly,
the faults acted as conduits for late stage mineralizing fluids which formed the
VEZ horizon. The thrust faults represent a different style of faulting that is
younger in age. These faults tend to be flatter and are parallel to the layering
in the rock, which leads to repetition of the rocks and the mineralized
horizons. The VEZ horizon has also been interpreted through airborne geophysics
and is an untested horizon. The "G" & "H" chromite horizons located between the
VEZ horizon and the "A"& "B" chromites are also in this area and have not been
systematically explored, although they may be an important source of Chromium.
There are significant platinum and palladium assays associated with the "A" &
"B" chromites along the length of the complex. The Basal Zone is host to nickel
and copper mineralization. The airborne geophysics was effective at detecting
the sulfide mineralization associated with this horizon and has traced the zone
of mineralization for several miles.
Sampling on the Iron Creek claims has located a platinum and palladium
rich horizon associated with the "A" & "B" chromites. Several samples were
greater than 0.3 ounces per ton and one sample assayed 3.0 ounces per ton.
- 23 -
Drilling during the 2001 field season, near Iron Creek, was successful
in determining the existence of transverse faults. Several of the drill holes
intersected a Troctolite-Anorthosite zone interpreted to be the TAZ 1. We are
reviewing the geologic information and developing a plan for the 2002
exploration season. There are 2 additional, fully permitted drill sites in the
Iron Creek area, available for additional drilling.
During 2001, permits have been received from the Custer National Forest
District office located in Red Lodge, Montana for an additional 13 drill sites
along the various target horizons. Several holes can be drilled from each site.
Crescent Creek Property
The 17 claims are located southeast of Iron Mountain and are directly
south and contiguous with the Iron Creek Property Claims. These 17 claims are
controlled under a Joint Venture agreement with Chrome Corp. In total, these
claims cover approximately 300 acres.
Subsequent to December 31, 2001, we gave 60-day notice to Chrome Corp.
of our intention to withdraw from the agreement, prior to earn-in.
Bluebird Property
We have staked 25 unpatented claims on Bluebird Mountain. In total,
these claims cover approximately 425 acres. The claims cover portions of the
geological features known as the Lower Banded series, the Ultramafic unit and
the Basal Zone. The VEZ horizon is located at the contact between the Banded
Series and the Ultramafic series. The nickel and copper sulfide mineralization
is hosted in the Basal zone.
The property can be accessed from Interstate 90 by existing public
roads.
The project area has indications of several promising styles of
mineralization. Based on review of previous geologic investigations and studies,
the area appears to have some structural complexities consisting of transverse
faults with lateral offsets as well as thrust faults that have shifted the
mineral horizon. The transverse faults developed during the late stages of
crystallization and formation of the layers that comprise the Stillwater
Complex. These faults are significant for two reasons. Firstly, the faults
displace the horizons of known mineralization either north or south. In areas of
glacial cover, which masks the geology, these faults provide the possibility
that areas of known mineralization may have shifted onto our claims. Secondly,
the faults acted as conduits for late stage mineralizing fluids which formed the
VEZ horizon. The thrust faults represent a different style of faulting that is
younger in age. These faults tend to be flatter and are parallel to the layering
in the rock, which leads to repetition of the rocks and the mineralized
horizons. The VEZ horizon has also been detected through geophysics and is an
untested horizon. The "G" & "H" chromite horizons located between the VEZ
horizon and the "A" & "B" chromites are also in this area and have not been
systematically explored. There are significant platinum and palladium assays
associated with the "A" & "B" chromites along the length of the complex. The
Basal Zone is host to nickel and copper mineralization. Airborne geophysics is
effective in detecting the sulfide mineralization associated with this horizon
and has traced the zone of mineralization for several miles.
Interpretation of the 2000 airborne geophysical program indicates a
conductor, which crosses a portion of the claim block. The terrain is generally
steep and covered with landslide debris and therefore we are developing a plan
that may include limited drilling, assaying, trenching, and geological and
geophysical programs along the various horizons. The plans will be designed to
determine the amount of enrichment of platinum group metals in the VEZ and "A" &
"B" chromites as well as better defining the extent of copper and nickel
associated with these claims.
- 24 -
Mountain View Property
The 132 claims are located east of Bluebird Mountain and west of the
Stillwater River. These 132 claims are controlled under a Joint Venture
agreement with Chrome Corp. In total, these claims cover approximately 2,200
acres. The 132 claims can be accessed from Interstate-90 by existing public
roads.
Subsequent to December 31, 2001, we gave 60-day notice to Chrome Corp.
of our intention to withdraw from the agreement, prior to earn-in.
Chrome Corporation Joint Venture Agreement
In February 2000, we entered into a joint venture agreement ("PGM
Venture") with Chrome Corp., a Delaware corporation wholly owned by Boulder
Group N.L., an Australian public company. Chrome Corp. owns 17 unpatented claims
and is the lessee of a total of 86 unpatented claims, 31 patented claims and 21
unpatented claims upon which a patent application has been filed. The claims are
located in Stillwater and Sweetgrass counties, Montana, with 17 claims in the
Crescent Creek area, 132 claims in the Mountain View area and 6 claims in the
Blitz area. The purpose of the PGM Venture was to conduct exploration, evaluate
possible development and, if feasible, engage in development and mining
operations and marketing products with respect to the 155 claims.
The term of the PGM Venture was for 20 years, with us having a 5-year
earn-in period as follows:
- ---------------------------------------------------------------------------
Cumulative
Due Date Annual Expenditure Expenditure
- ---------------------------------------------------------------------------
By March 31,2001 $200,000 (completed) $200,000
- ---------------------------------------------------------------------------
By March 31,2002 $400,000 $600,000
- ---------------------------------------------------------------------------
By March 31,2003 $500,000 $1,100,000
- ---------------------------------------------------------------------------
By March 31,2004 $500,000 $1,600,000
- ---------------------------------------------------------------------------
By March 31,2005 $500,000 $2,100,000
- ---------------------------------------------------------------------------
Total: $2,100,000 = 55% interest in the venture
- ---------------------------------------------------------------------------
5% of the our administrative costs in performing exploration work and
maintaining the claims governed by the PGM Venture can be credited towards the
total annual expenditure requirements.
In addition to the expending the foregoing amounts, we made a cash
payment in the amount of $5,000 upon signing and must make annual payments of
stock as follows:
Upon receipt of regulatory approval - 100,000 Common Shares (issued
during fiscal 2000) By January 31, 2001 - 100,000 Common Shares (issued during
fiscal 2000)
By January 31, 2002 - 100,000 Common Shares (issued during fiscal 2001)
By January 31, 2003 - 100,000 Common Shares (agreement terminated prior
to earn-in)
By January 31, 2004 - 100,000 Common Shares (agreement terminated prior
to earn-in)
- 25 -
Either party may withdraw from the PGM Venture by giving advance written
notice. The withdrawing participant must transfer its interest in and to the
assets of the PGM Venture and this Agreement to the remaining participant
without additional consideration. The withdrawing participant is still
responsible for liabilities arising from operations conducted prior to withdraw.
The withdrawing participant's share of liabilities shall be equal to its
interest in the PGM Venture at the time such liability was incurred. Each
participant is responsible for continuing obligations until final settlement of
all accounts and for liability arising from operations during term of Agreement.
Any participant that withdraws from the PGM Venture cannot compete directly or
indirectly by acquiring property within the area of interest for 2 years.
We had agreed to maintain certain underlying property agreements in good
standing during the earn-in phase of the joint venture. The first of these
agreements requires monthly payments of $1,000 during 2000, $2,000 during 2001
and $2,500 per month thereafter. The second of these agreements required a
one-time payment of $500,000 on commencement of construction leading to
commercial production. To December 31, 2001, we have paid $36,000 on these
agreements.
Subsequent to December 31, 2001, we gave 60-day notice to Chrome Corp.
of our intention to withdraw from the agreement, prior to earn-in.
Blitz Property (formerly the Nye Basin Property)
We hold 131 unpatented claims ("Nye Basin Claims"), covering
approximately 2,350 acres in the area known as the Nye Basin, which were staked
by the Company. A further 6 claims are controlled under the Joint Venture
Agreement with Chrome Corp. Subsequent to December 31, 2001, we gave 60-day
notice to Chrome Corp. of our intention to withdraw from the agreement, prior to
earn-in.
The Nye Basin Property is located directly east of the main stem of the
Stillwater River, which flows northerly across the Stillwater Complex. The
claims consist of a two blocks with the largest block located in Nye Basin. This
block has a 3.8-mile strike-length over the Banded series, the Ultramafic series
and the Basal Zone. The VEZ horizon is located at the contact between the Banded
Series and the Ultra-Mafic series. The nickel and copper sulfide mineralization
is hosted in the Basal zone.
Interpretation of the 2000 airborne geophysical program delineates a
conductor on the north side of Nye Basin that correlates with the contact
between the Ultramafic Zone and the Lower Member of the Banded Series. This
corresponds to the approximate position of the VEZ in other areas of the
complex. Nye Basin is generally covered with glacial gravel and therefore we are
developing a plan that may include drilling, assaying, trenching, geological and
geophysical programs along the horizons of interest. These plans are being
designed to determine the amount of enrichment of platinum group metals in the
VEZ and "A" & "B" chromites and towards better defining the extent of platinum
group metals, copper and nickel associated with these claims. At this time, five
drill sites with water management sumps are approved in Nye Basin. The bond for
these sites is $3,000.
Black Butte Property
We hold 220 unpatented claims ("Black Butte Claims") covering
approximately 3,740 acres in the area known as the Black Butte Mountain. The
Black Butte Mountain is located east of the main Stillwater River, which is
within the Stillwater Complex. The contiguous claims have an 8-mile strike
length over the geological features known as the Upper Banded and Lower Banded
series, the Ultramafic unit and the Basal Zone. The VEZ horizon is located at
the contact between the Banded Series and the Ultramafic series. The nickel and
copper sulfide mineralization is hosted in the Basal zone.
- 26 -
The claims can be accessed from Interstate-90 by existing public roads;
however, snowdrifts prevent truck access to the claims until June of each year.
Based on a review of previous geologic investigations and studies, the
area appears to have some structural complexities consisting of transverse
faults with lateral offsets that have shifted the mineral horizon. The
transverse faults developed during the late stages of crystallization and
formation of the layers that comprise the Stillwater Complex. These faults are
significant for two reasons. Firstly, the faults displace the horizons of known
mineralization either in a north-south direction. In areas of glacial cover,
which masks the geology, these faults provide the possibility that areas of
known mineralization may have shifted onto our claims. Secondly, the faults
acted as conduits for late stage mineralizing fluids which formed the VEZ
horizon.
Interpretation of the 2000 airborne geophysical program delineates a
conductor that crosses a portion of the claim block. The terrain is generally
covered with glacial debris and therefore we conducted a limited drilling
program consisting of two holes in 2001. The first hole established the depth of
unconsolidated sediments in the vicinity of Fishtail Creek and also determined
the type of underlying bedrock. The second drill hole located near Black Butte
established the location of the contact between the Ultramafic and Banded
Series.
Based on the information generated during the 2001 field season, we are
developing a plan that may include drilling, assaying, trenching, geological and
geophysical programs along the various horizons. The plan will assist us in
determining the amount of enrichment of platinum group metals in the VEZ and "A"
& "B" chromites as well as to define the extent of copper and nickel associated
with these claims.
East Millsite Property
We hold 39 unpatented claims ("East Millsite Claims") covering
approximately 180 acres in the area known as the old Anaconda mill site. The
mill site is located east of the main stem of the Stillwater River, which is
within the Stillwater Complex and north of Black Butte. The claims are 5
one-acre mill site claims staked to control the best logical mill site area to
develop the eastern portion of the Stillwater Complex. These East Millsite
Claims are adjacent to the Black Butte Claims.
Stillwater West Property
During 2001, we staked 123 unpatented claims, in two blocks, on the
west-end of the Stillwater Complex and combined these with 92 contiguous claims
from our existing Picket Pin property claims. The property consists of a total
of 215 unpatented claims covering an area of 3,700 acres. The claims are located
along the stratigraphic subdivisions between the Middle Banded series and the
Upper Banded series of the Stillwater Complex, over a 5-mile strike length. The
claims are in two blocks with one block of 87 claims west of the Boulder River
and one block of 128 claims east of the Boulder River. The 128 claims east of
the Boulder River are contiguous to the Picket Pin Property. By an agreement
dated November 1, 2001 we entered into the Stillwater West PGM Venture with
First Choice Industries Ltd. ("First Choice") as described below.
On June 3, 2002, we received 60 days notice of termination of the
Agreement from First Choice Industries, Ltd.
On July 11, 2002 we commenced an action in the British Columbia Supreme
Court against First Choice Industries Ltd. ("First Choice") under No. S023888,
Vancouver Registry by filing a Writ and Statement of Claim. These documents have
been served on First Choice.
- 27 -
The Statement of Claim references the Stillwater West PGM Agreement (the
"Agreement") of November 1, 2001 between us and First Choice and the notice of
termination of the Agreement provided by First Choice to us on June 3, 2002. The
Statement of Claim does not contest the termination of the Agreement but does
seek the specific performance of obligations owed to us by First Choice, which
accrued prior to any termination and remain outstanding pursuant to the terms of
the Agreement. Specifically we seek an order that First Choice pay to us
$137,000 (U.S.) and issue 200,000 shares of First Choice's unrestricted,
registered common stock to us in substitution for the shares provided to date,
or, in the alternative, damages in lieu of specific performance and interest and
costs. First Choice filed an Appearance on July 22, 2002 but has yet to file a
Statement of Defense. The parties are currently conducting settlement
negotiations.
The property is located 29.2 miles south of Big Timber, along Interstate 90, and
is accessible by existing public roads. The property covers the western
projection of the Picket Pin Zone, which shows anomalous enrichment in the
platinum group metals.
We have yet to conduct any drilling or assay programs on the Stillwater
West Property, and therefore, we have no Probable or Proven Reserves. The
Stillwater West Joint Venture had planned to conduct geological mapping,
sampling and geophysical programs, likely followed by trenching, and drilling,
to determine whether these claims possess economic mineralization of platinum
group metals. Due to the notice of termination from First Choice, we are
currently re-evaluating the exploration and maintenance plans for this property
for the current year.
Stillwater West PGM Venture
By an agreement dated November 1, 2001, we agreed to formalize the terms
of a Memorandum of Understanding dated June 27, 2001 and a subsequent
modification with First Choice. First Choice has been granted an option to
acquire a 40% undivided interest in 220 claims staked by us on the west end of
our Picket Pin claims, located in Park and Sweetgrass Counties, Montana. In
order to earn its interest First Choice must, at its option, complete the
following:
Issue
Shares Annual
Cash To the Exploration
Payment(i) Company Expenditures
-------------------------------------------------------
On signing $55,000 (ii)
Upon receipt of
regulatory approval 200,000
By May 31, 2002 135,000
By November 30, 2003 250,000
By December 31, 2003 $ 75,000
By November 30, 2004 250,000
By December 31, 2004 150,000
By November 30, 2005 250,000
By December 31, 2005 200,000
-------------------------------------------------------
$190,000 950,000 $425,000
-------------------------------------------------------
(i) The cash payments are required and not optional under the agreement.
(ii) Received $53,000 during the year ended December 31, 2001.
- 28 -
Upon completion of the 40% earn-in, First Choice has a 60-day period to
elect to acquire an additional 10% interest for cash in the amount of
$2,500,000. The parties each may elect to participate in the joint venture phase
by contributing their respective contributions or to convert to a 3% net smelter
return. Should a party elect to participate in the joint venture but fail to
contribute its proportionate share, then it will be subjected to dilution. Once
a party is diluted to a 10% interest or less, it will be automatically converted
to a 3% net smelter return. Should First Choice be diluted and converted to a 3%
net smelter return, its net smelter return royalty will be capped at 115% of its
actual or deemed expenditures.
First Choice is responsible for maintenance of the unpatented claims
during the earn-in phase and we are the initial manager. The manager shall
charge a fee of 10% of all qualifying expenditures and such fee qualifies as
exploration expenditures under the agreement.
Our Idaho Gold Claims
Until the elimination of the Gold Standard, gold was the principal
medium of international monetary exchange, but its role has changed
significantly in recent years. The United States monetary system functioned on
the Gold Standard with a fixed rate of $35 per ounce. In 1971, the U.S.
abandoned the gold standard and U.S. citizens were allowed to own gold. The U.S.
gold market grew rapidly and the price of gold increased to a high of $850 per
ounce in January 1980. Since that time, the price of gold has declined steadily.
From 1998 through February 2002, the price of gold has averaged $282 per ounce.
Gold has been mined in virtually every U.S. State but has been
concentrated in the following 15: Alaska, Arizona, California, Colorado, Idaho,
Michigan, Montana, Nevada, New Mexico, North Carolina, Oregon, South Carolina,
South Dakota, Utah, and Washington.
End uses for gold include jewelry, artifacts, dental, and industrial
products. Although the majority of refined gold is used in jewelry
manufacturing, gold is becoming increasingly important in other industries. Gold
has superior electric and thermal conductive properties, reflects infrared
radiation and most of the visible spectrum, alloys easily with other metals, and
resists corrosion and tarnishing. These characteristics make gold valuable in
high-technology products such as computers, communications equipment, and
spacecraft. In addition, gold has high malleability and ductility, making it
extremely easy to work. In the electronics industry, gold is used in printed
circuit boards, connectors, keyboard contacts, miniaturized circuitry, and in
semiconductors.
The Orogrande Shear Zone in Idaho
We control three significant properties that lie along the 26-mile
Orogrande Shear Zone, which include (running from north to south): Buffalo
Gulch, Deadwood and the Petsite/Friday Properties.
The Orogrande Shear Zone ("Shear Zone") features a prominent structural
break in a contiguous metamorphic rock formation caused by adjacent parts of the
rock formation moving past each other and parallel to the plane separating them
(fault plane). About six million years ago, younger rocks were intruded along
the fault plane. The intrusions then formed small dykes, sills, irregular lens
shaped bodies and breccias within the country rocks. The resulting alteration
formed a gold anomalous zone, extending for approximately 26 miles north and
south near Elk City, Idaho.
Our material gold property interests comprise of 256 unpatented claims
and 8 patented claims located in the Orogrande and Elk City Mining Districts of
Idaho County, Idaho. Up until August 2000, the Petsite and Friday Properties
were subject to a joint venture agreement between us and Kinam Gold, Inc.
("Kinam Gold"), dated May 20, 1996 (the "Petsite Venture"). Likewise, the
Deadwood Property was the subject of another joint venture agreement between us
and Kinam Gold, dated June 13, 1997 ("Orogrande Venture"). Kinam Gold was
formerly named Amax Gold Inc. ("Amax"). These joint ventures were initially with
Cyprus Gold Exploration Company ("Cyprus"). Through a number of mergers and
acquisitions Kinam Gold succeeded to the interest of Cyprus on June 1, 1998. All
references to Kinam Gold herein apply to activities conducted by Cyprus prior to
the assignment of its interests to Kinam Gold and to the activities of Kinam
Gold thereafter.
- 29 -
Cancellation of the Petsite and Orogrande Ventures
In August 2000, Kinam Gold assigned all of its interests in and to the
Petsite Venture, the Orogrande Venture, the claims it had contributed to each
joint venture and all underlying options and interests in the properties
comprising each joint venture back to us for $100,000. As part of this
assignment, our obligation with respect to carried costs in each of the joint
ventures was cancelled. We now own an undivided 100% interest in each of the
staked, leased or optioned claims comprising our Idaho Properties, and are
solely responsible for maintaining and performing the covenants and obligations
of the underlying agreements affecting the Deadwood and the Petsite/Friday
properties.
Sale of Gold Properties
By a Letter Agreement dated March 7, 2002, we agreed to sell all of our
gold properties located in Idaho, including the Petsite Project, Deadwood
Project and Buffalo Gulch Property, to Canden Capital Corp. ("Canden"). Proceeds
on the sale will be 2,400,000 shares of Canden, representing 41.8% of the issued
and outstanding shares of the purchaser, after the issuance of the shares. The
closing of the sale is contingent upon due diligence by the purchaser, within 10
weeks of the letter agreement, including a technical report recommending a work
program of at least C$200,000 (completed) and an independent valuation at the
purchaser's cost (completed). The agreement is subject to regulatory approval,
the approval of the shareholders of Canden (completed) and the completion of a
formal agreement by May 15, 2002. The agreement may be terminated, should the
parties not agree to the formal agreement by May 15, 2002. The parties are
continuing to work on obtaining TSX Venture Exchange approval for the agreement
and certain other conditions precedent to completing the sale.
The current delay in closing the sale relates to the due diligence
procedures of Canden. With our approval, they have extended their procedures to
include a limited program of diamond drilling on the property in order to test a
high-grade shear zone identified by earlier drill programs. The TSX Venture
Exchange has delayed approval of the agreement pending Canden raising additional
funds. We expect the agreement to be finalized during October or early November
2002.
The properties are listed below from north to south:
Buffalo Gulch Property
The Buffalo Gulch property is comprised of 79 unpatented mining claims
covering approximately 1,660 acres and is located 3 miles west of Elk City,
Idaho in Idaho County. The claims lie within sections 17, 20 and 21, Township 29
North, Range 8 East. Elk City is approximately 55 miles east of Grangeville,
Idaho. We control the claims through four agreements and one underlying
agreement, whereby our interests take the form of a leasehold interest,
assignment interest or optioned interest.
The property can be accessed directly from highway 14, by a secondary
logging road along Buffalo Gulch.
- 30 -
Idaho Gold Corporation Lease - Buffalo Gulch Claims
On July 9, 1996, we acquired an interest in 63 unpatented mining claims
comprising the Buffalo Gulch Property from Idaho Gold Corporation ("Idaho Gold")
in accordance with a purchase agreement (the "Buffalo Gulch Agreement").
The Property is subject to an underlying lease, dated May 21, 1984,
between Thunderbird Resources, Inc. and Amir Mines, Inc. (the "Thunderbird
Lease"). In addition to assuming the payment of the advance royalties on the
Thunderbird Lease (described below), we also issued 120,000 common shares to
Idaho Gold and agreed to pay exploration expenditures of not less than $310,000
within five-years. We also granted to Idaho Gold a net smelter return of 3% of
net smelter revenue, not to exceed $3,000,000.
During 2001, an option whereby Idaho Gold could reacquire a 49% working
interest in the Buffalo Gulch Claims, subject to Idaho Gold forfeiture of its 3%
smelter return royalty, expired.
Gold mineralization was discovered by Idaho Gold, the prior owner of the
property, through prospecting and reconnaissance stream sediment and soil
sampling campaigns. Subsequently, grid soil sampling and bulldozer trenching
defined the extent of the mineralization in bedrock. Drilling on the Buffalo
Gulch property consisted of 150 vertical, reverse-circulation drill-holes,
drilled on a 100-foot grid. This drill hole distribution and spacing are
sufficient to define the deposit. The deepest mineralized intersection is at a
depth of about 500ft. The oxide mineralization has been completely delineated by
drilling; the sulfide mineralization is open at depth to the east, to the north
and to the south. Limited surface mapping has been done because of limited
surface exposure. Excavation of the test pit for metallurgical samples allowed
limited geological mapping.
Buffalo Gulch ore has been the subject of an extensive metallurgical
testing program, beginning with bottle-roll cyanidation leach tests in 1986,
through two pilot-scale heap leach tests carried out in 1987 and 1989. Based on
this work, the mineable reserves are estimated to be 4,800,000 tons of ore,
containing 96,000 ounces of gold, at a low stripping ratio of 0.88 tons of waste
to per ton of ore.
Idaho Gold filed for permit approval for full-scale operation in late
1990, and initial construction activities began in anticipation of mine
construction in the spring of 1991. These initial construction activities
consisted of logging the site, upgrading the access road, building sediment
control "brush filter winrows" around the site, and completion of over 12,000
feet of pole fence along the perimeter of the project site. These activities
have been completed, leaving the site prepared for construction to begin upon
completion of required permitting. The final permits were issued to Idaho Gold
in 1991. However, construction of the mine did not commence because the parent
company of Idaho Gold, Bema Gold, was preoccupied with its properties in South
America. The Plan of Operations, which is the key document for maintenance and
acquisition of all required operating permits, is administered by the Bureau of
Land Management and has been transferred to us and remains in good standing.
The Buffalo Gulch Property is underlain by Precambrian gneisses, schists
and quartzites, which have been intruded by the Cretaceous-Tertiary granitic
rocks. The intrusives form small dykes, sills, irregular lens shaped bodies and
breccias within the country rocks. The resulting alteration enveloping the
Buffalo Gulch Deposit weakened the local rock fabric, which was then subjected
to deep weathering. Much of the host rock is totally dissociated to sand and
gravel sized fragments, yet original rock fabric is still visible and can be
mapped. Weathering is up to 300 feet deep, facilitating trenching, sampling and
reverse circulation drilling. Although little determinative work has been done,
detailed assaying indicates the gold was liberated from the sulfides and now
occurs as free grains associated with siliceous, hematitic or limonitic zones.
Sulfide gold mineralization underlies the oxidized zone with the deepest
identified mineralization occurring at about a 500-foot depth. The deposit is
open and untested at depth.
- 31 -
During 2001, we indicated to the Bureau of Land Management ("BLM") that
we intended to continue with the permitting of the project and that the existing
Plan of Operation would remain in full force and effect with the BLM as the lead
agency.
As at December 31, 2001, we have incurred exploration expenditures of
$686,000 on the Buffalo Gulch property, excluding the deemed cost related to the
acquisition of the property. We wrote-down the property by $604,321 during the
year ended December 31, 2000 and are carrying the property at $36,750 at
December 31, 2000 and 2001. Management has located a purchaser for the property,
subject to regulatory approvals to be obtained by the purchaser, in order to
eliminate the ongoing holding costs and concentrate our efforts on the platinum
group metals properties.
Thunderbird Lease
The lease, dated May 21, 1984, between Thunderbird Resources and Amir
Mines, Inc. covers all 63 unpatented claims contained within the July 9, 1996
Buffalo Gulch Agreement with Idaho Gold.
Gray Estates, Inc. succeeded to the interest of Thunderbird Resources,
Inc. and Idaho Gold succeeded to the interest of Amir Mines, Inc. Consequently,
we are obligated to perform Idaho Gold's obligations under the Thunderbird
Agreement, which requires that we pay Gray Estates, Inc., on a quarterly basis,
the greater of an advance royalty payment of $6,000 or a 5% net smelter return
royalty, in the event the property is placed into production. Once the advance
royalty payments or the 5% net smelter return royalty or a combination thereof
total $500,000, Gray Estates, Inc. shall have no further interest in the
property. To December 31, 2001, previous parties and we have paid a total of
$420,000 of advance royalty payments on the agreement.
We acquired the remaining 16 claims within the Buffalo Gulch area, by
way of the Black Bear Agreement, the Whiskey Jack Agreement and the Gallaugher
Agreement.
Black Bear Agreement
On August 1, 1996, we entered into an agreement (the "Black Bear
Agreement") with Frank H. Piatt, John R. Heigis and Thomas C. Rich ("Owners")
whereby we were granted an option to acquire a 100% interest in 6 claims known
as the "Black Bear Mining Claims" located in the Elk City Mining District, Idaho
for a purchase price of $120,000. To keep the option in good standing, we are
required to make quarterly payments equal to $4,800 for 1999, $6,000 for 2000,
$7,200 for 2001 and a balloon payment of $24,000 by July 1, 2002. However, due
to the depressed price of gold the required quarterly payments were
re-negotiated during 1999 to $600 per quarter. If the price of gold increases to
$325 per ounce, then the quarterly payment will increase to $1,000.
Consequently, the balloon payment due by July 1, 2002 will be $86,400.
In the event we place the claims into production, the Owners agree to
transfer the claims to us and the Owners shall receive $120,000 less all
quarterly payments made to date. If the claims are not placed into production by
July 1, 2002, then we shall have no further interest in the claims unless we pay
the sum of $120,000 less all quarterly payments made.
Pursuant to the terms of the Black Bear Agreement, we must expend a
total of $3,000 per year on the claims, commencing July 1, 1997. We must also
perform assessment work or make payments in lieu thereof and pay all applicable
taxes on the claims. We have been granted unrestricted access and exclusive
rights to the claims for the purposes of certain exploration activities.
- 32 -
We have "after-acquired rights," which provide that in the event the
Owner acquires any right or interest in property located within one mile of the
property contemplated by the Black Bear Agreement, such interest or right shall
automatically become part of the property description defined in the Black Bear
Agreement.
As of December 31, 2001, we have made all required payments to the
owners of the Black Bear Mining Claims, under the agreement totaling $32,400.
Whiskey Jack Agreement
By an agreement dated August 29, 1998 ("Whiskey Jack Agreement") with
Don Nitz and Thomas C. Rich ("Owners"), we were granted an option to acquire a
100% working interest in 4 unpatented mineral claims in Idaho for a purchase
price of $65,000. This agreement replaced a prior agreement for the same claims
under which we paid a total of $23,400.
To keep the option in good standing, we are required to make quarterly
payments equal to $1,000 for the first year, $1,400 for the second year, $1,800
for the third year, $2,000 for the fourth year and $2,400 for the fifth year,
with a balloon payment of $30,600 due July 1, 2003. However, due to the
depressed price of gold the required quarterly payments were re-negotiated
during 1999 to $400 per quarter for the remainder term of the agreement. If the
price of gold increases to $325 per ounce the quarterly payment will increase to
$1,000.
In the event we place the claims into production, the Owners agree to
transfer the claims to us and the Owners shall receive $65,000 less all
quarterly payments made to date. If the claims are not placed into production by
July 1, 2002, then we shall have no further interest in the claims unless we pay
the sum of $65,000 by July 1, 2003, less all quarterly payments made to date.
Pursuant to the terms of the Whiskey Jack Agreement, we must expend a
total of $1,000 per year on the claims, commencing July 1, 1999. We must also
perform assessment work or make payments in lieu thereof and pay all applicable
taxes on the claims. We have been granted unrestricted access and exclusive
rights to the claims for the purposes of certain exploration activities.
We have "after-acquired rights," which provide that in the event the
Owner acquires any right or interest in property located within one mile of the
property contemplated by the Whiskey Jack Agreement, such interest or right
shall automatically become part of the property description defined in the
Whiskey Jack Agreement.
As of December 31, 2001, we have made all required payments under the
Whiskey Jack Agreement totaling $8,000.
Gallaugher Agreement
Pursuant to an Option and Purchase Agreement, between us and Cliff and
June Gallaugher (the "Gallaughers"), dated September 5, 1996 ("Gallaugher
Agreement"), we were granted an exclusive option to purchase 6 unpatented mining
claims located in the Elk City Mining District, Idaho County, Idaho. We can
exercise our option by making quarterly payments over a five-year period for a
total purchase price of $150,000. Under the terms of the agreement, the
Gallaughers are required to keep the claims in good standing during the term of
the agreement.
- 33 -
As of the December 31, 2000, we have paid all quarterly payments due
under the Gallaugher Agreement, and were required to pay $7,200 per quarter
through March 5, 2002, at which time a final payment of $54,000 would have been
due. However, the parties amended the agreement on May 20, 1999 to reduce the
quarterly payments as follows: we agreed to make quarterly payments of $500
until such time gold prices increase to $325 per ounce, at which time the
quarterly payment would increase to $1,200; if gold increases to $350 per ounce,
then we will pay quarterly payments of $1,800, and if gold prices increase to
$400 per ounce, then we will make quarterly payments of $4,800. The due date for
the final balloon payment was deferred to March 5, 2007.
A third party receives a 10% finder's fee deducted from all option
payments made by us to the Gallaughers. In the event we place the claims into
production, the Gallaughers will transfer the claims to us in exchange for
$150,000 less all quarterly payments made as of the date of transfer. If the
claims are not placed into production by September 5, 2002, then we shall have
no further interest in the claims unless we pay the sum of $150,000 to the
Gallaughers.
As of December 31 2001, we have made all required payments under the
Gallaugher Agreement totaling $23,800.
The mineralization consists of gold hosted in 2 major veins striking
easterly and dipping to the south. They are traceable on the surface for over
600 feet. The historic grade according to a report, published in 1909, was $12
per ton, which would be equivalent to approximately 0.6 ounces per ton.
The Gallaugher Property is in the exploration stage, and there is no
assurance that a commercially viable ore deposit exists in any such properties
until further exploration work and a comprehensive evaluation based upon unit
cost, grade, recoveries and other factors conclude economic feasibility.
Deadwood Property
The Deadwood Property consists of 36 unpatented lode-mining claims
located in Idaho County in Townships 28 and 29 North in Range 7 East, Sections
5, 6, 7 and 8, Boise Meridian. Each claim is approximately 20 acres in extent.
The Deadwood Property is in the exploration stage. The claims are located in the
Nez Perce National Forest, approximately 145 miles north of Boise in Idaho
County. Access to the claims is gained from Grangeville by existing public
roads.
Idaho Gold Corporation Lease - Deadwood Claims
The Deadwood Property is subject to an agreement between us and Idaho
Gold, dated July 9, 1996 (the "Deadwood Agreement"), whereby Idaho Gold assigned
us certain mining interests, known as the "Deadwood Claims".
The Property is subject to an underlying option agreement, dated July
11, 1985, between Joyce Mines, Inc., Thunderbird Resources, Inc. and Amir Mines,
Inc. (the "Orogrande Agreement").
In addition to assuming the payments on the underlying Orogrande
Agreement (described below), we delivered to Idaho Gold 70,000 common shares and
were obligated to incur exploration expenditures of not less than $135,000 over
the five year term of the agreement, plus pay all fees necessary to maintain the
unpatented claims in good standing, replace all bonds, bear all costs of
environmental compliance, and pay a 3% net smelter return royalty on ore mined
by us from the Deadwood Claims, which is not to exceed $2,000,000.
During 2001, an option whereby Idaho Gold could reacquire a 49% working
interest in Deadwood Claims, subject to Idaho Gold forfeiture of its 3% smelter
return royalty, expired.
- 34 -
Orogrande Agreement
The agreement, dated July 11, 1985, between Joyce Mines, Inc.,
Thunderbird Resources, Inc. and Amir Mines, Inc. covers all 36 claims in the
July 9, 1996 Deadwood Agreement with Idaho Gold.
Arctic Fox, Inc succeeded to the interest of Joyce Mines, Inc., Grey
Estates, Inc. succeeded to the interest of Thunderbird Resources, Inc. and Idaho
Gold succeeded to the interest of Amir Mines, Inc. Consequently, we are
obligated to perform Idaho Gold's obligations under the agreement, which
requires that we pay Arctic Fox, Inc., on a quarterly basis, the greater of an
advance royalty payment of $3,000 or a 5% net smelter return royalty, in the
event the property is placed into production. Once the advance royalty payments
or the 5% net smelter return royalty or a combination thereof total $300,000,
Arctic Fox, Inc. shall have no further interest in the property. To December 31,
2001 previous parties and we have paid a total of $192,000 of advance royalty
payments on the agreement.
The agreement also covers 2 claims, which were assigned to the
Petsite/Friday Property by an amendment to the Petsite Joint Venture entered
into between Amax, Arctic Fox Ltd. and us on July 16, 1998 (the "Grande"
agreement).
Deadwood Property - Description
Second to the Buffalo Gulch Property, the North end of the Deadwood
Property appears to be the most significant gold mineralization outlined by
reconnaissance prospecting of our gold properties. Beginning in 1985, prior
owners of the property performed various samplings and mappings on the property.
Stream silt sampling outlined an anomalous gold source area at the head of
Little Campbell Creek and several drainages over a northerly strike length of
5,000 feet from the South Fork of the Clearwater River to Campbell Creek, with
values of 900 to 4,000 parts per billion gold. Idaho Gold conducted additional
geological mapping and sampling, which outlined a silicified, sheared and
brecciated structure 200 feet wide on the property with rock sample values of
0.01 to 0.036 oz of gold per ton and soil values of 25 to 400 parts per billion
gold. The anomalous silt and soil samples continued south through to Big
Campbell Creek 5,000 feet to the south.
The mapping and sampling delineated a broad zone of pervasive
sericite-clay alteration, which averages 2,000 to 3,000 feet in width. On the
northern portion of the area the alteration zone corresponds to the outer limits
of the greater than 10 parts per billion gold soil anomaly and on the southern
portion of the area it extends 2,000 feet further north outside the soil
anomaly. This extension may be due to a weakly limonitic quartz monzonite
intrusive mapped in this area.
We have not performed any other work on the Deadwood Property, except
for our review and analysis of the prior work performed by Centennial and Idaho
Gold and an IP/resistivity geophysical program in 1997 to delineate the
Orogrande Shear Zone and locate the mineralizing structures.
To date, we have expended $34,039 in exploration expenditures and have
issued 70,000 shares, at a deemed value of $51,750, to Idaho Gold per the
Deadwood Agreement. We have also caused to be expended in excess of $305,000 on
the property pursuant to the Orogrande Venture. Pursuant to the Orogrande
Venture we received $165,000 during the 1997 fiscal year and expensed $72,588 of
costs to that date against these proceeds. During 2000, we further wrote-down
our carrying value in the property by $13,200 and the property is carried at the
nominal value of $1 as at December 31, 2000 and 2001. We believe that the
Deadwood Agreement and the Orogrande Agreement are current and in good standing.
- 35 -
Petsite/Friday Property
The Petsite/Friday Property consists of 124 unpatented mining claims and
8 patented mining claims in Idaho County, Idaho and is adjacent to the Deadwood
Property. All current claims are approximately 20 acres each and are in the
exploration stage. Our interest in the property is owned outright as to 95 of
the unpatented mining claims, 6 unpatented mining claims are subject to an
agreement with Idaho Mining and Development Company ("IMD") dated June 10, 1997,
12 unpatented mining claims are subject to an agreement with IMD dated April 29,
1998, 10 unpatented mining claims which are held pursuant to the Grande
agreement and 1 unpatented claim is subject to the MacMenamin & Sons Lease and
Option to Purchase Agreement. The patented claims consist of 5 claims subject to
the Idaho Gold Corporation Lease - Friday Claims and 3 claims, which are subject
to the Filer Agreement.
Access to the Petsite and Friday Property claims is gained by existing
public roads.
IMD agreement dated June 10, 1997
During the Kinam joint venture on the property, Kinam entered into an
agreement with IMD on June 10, 1997. The agreement terminated a 5% net profits
interest on certain claims originally obtained from IMD by us in February 1991
and granted IMD a 5% net profits royalty in 16 unpatented claims, which were
staked by Kinam during the joint venture. Subsequently, Kinam quit claimed 10 of
these claims to us and the remaining 6 claims were quit claimed back to us on
the termination of the joint venture in 2000.
IMD agreement dated April 29, 1998
The Exploration and Mining Lease Agreement provided that the original
209 unpatented claims covered by the agreement would be 60% beneficially owned
by us ("the lessee") and 40% by IMD ("the lessor") and the lease term would
coincide with the term of the June 13, 1997 joint venture with Kinam. Kinam quit
claimed back to the lessor 197 of these claims during the term of the joint
venture leaving a balance of 12 claims covered by the agreement. In 2000, the
joint venture was terminated and we were required to pay the lessor $10,000 to
extend the lease term for 5 years and to incur $100,000 per year on exploration
of the property. We could extend the 5-year term for a further 5 years upon
payment to the lessee of an additional $10,000 and continuing with the annual
work commitment. We have not made these payments and have not completed the
annual work commitment. To date, no default notice has been received although we
have continued to pay the annual claim rental fees. Accordingly, these claims
are carried at a nominal value of $1 in the financial statements.
Idaho Gold Corporation Lease - Friday Claims
The Friday Property is at the southern end of the Elk City Gold Belt and
consists of 5 patented lode-mining claims. The Friday Property is in the
exploration stage. The claims are located in the Nez Perce National Forest
approximately 138 miles north of Boise in Idaho County.
We acquired a leasehold interest in these claims (known as the "Friday
Claims") from Idaho Gold Corporation ("Idaho Gold") dated July 9, 1996 (the
"Friday Agreement") for an initial term of five years. As consideration for the
lease, we delivered to Idaho Gold 60,000 of our common shares and we were
required to incur exploration expenditures of not less than an aggregate of
$135,000 within the five year term of the agreement, plus pay all claim fees to
maintain the leased claims, replace all bonds, bear all costs of environmental
compliance and pay a 3% net smelter return royalty.
- 36 -
During 2001, an option whereby Idaho Gold could reacquire a 49% working
interest in Friday Claims, subject to Idaho Gold forfeiture of its 3% smelter
return royalty, expired.
As of December 31, 2001, we have issued all of the required shares per
the Friday Agreement and have incurred over $765,000 in exploration expenditures
for the Friday Property, thereby fulfilling the covenant to expend not less than
$135,000 in exploration as required under the Friday Agreement.
Grande Agreement
During the Petsite Joint Venture, we entered into an agreement dated
July 16, 1998 with Amax and Arctic Fox Ltd. The amendment to the Joint Venture
(the "Grande" agreement) transferred the 10 Grande claims into the joint
venture. Two of the unpatented claims are subject to an underlying agreement,
dated July 11, 1985, between Joyce Mines, Inc. and Amir Mines, Inc. (the
"Orogrande" agreement). The agreement is summarized within the description of
the Deadwood Property. Eight of these claims are subject to an underlying
agreement (the "Joyce" agreement).
Joyce Agreement
Eight of the unpatented claims are subject to an underlying agreement,
dated April 14, 1986, between Joyce Mines, Inc. and Normine Resources Ltd.
Arctic Fox, Inc succeeded to the interest of Joyce Mines, Inc. and Idaho Gold
succeeded to the interest of Normine Resources Ltd. Consequently, we are
obligated to perform Idaho Gold's obligations under the agreement, which
requires that we pay Arctic Fox, Inc., on a quarterly basis, the greater of an
advance royalty payment of $6,000 or a 5% net smelter return royalty, in the
event the property is placed into production. Once the advance royalty payments
or the 5% net smelter return royalty or a combination thereof total $500,000,
Arctic Fox, Inc. shall have no further interest in the property. To December 31,
2001 previous parties and we have paid a total of $372,000 of advance royalty
payments on the agreement.
Filer Agreement
Three of the patented mining claims making up our Petsite Property are
subject to a certain Mining Lease and Option to Purchase between us and Paul and
Tressie Filer, dated September 6, 1997. The lease was originally entered into
with Kinam Gold, and subsequently assumed by us as part of the assignment of
Kinam Gold's interests in the Petsite Venture and the Filer Agreement to us on
August 8, 2000.
The Filer Agreement originally required us to make the following option
payments:
Year 2001 $20,000 on or before 9/16/01
Year 2002 $20,000 on or before 9/16/02
Year 2003 $25,000 on or before 9/16/03
Year 2004 $25,000 on or before 9/16/04
Year 2005 $25,000 on or before 9/16/05
Year 2006 $25,000 on or before 9/16/06
Year 2007 $305,000 on or before 9/16/07
- 37 -
On October 26, 2001, the agreement was amended to semi-annual payments
of $1,000 each September 1 and March 1 so long as gold remains below $300 per
ounce. The future semi-annual payments increase to $2,000 should the price of
gold exceed $300 per ounce, to $5,000, should the price of gold exceed $350 per
ounce and to $10,000 upon commercial production. The claims may be acquired for
$270,000 less all payments made up to September 16, 2007.
We have an Option to Purchase the claims outright at any time for
$500,000 less any amounts previously paid. We, at our sole election, can also
demand that any right or interest in any property acquired by Lessor become part
of the Property and subject to the Agreement. We are responsible for maintaining
all roads and payment of all BLM Fees and taxes assessed against the claims. We
may terminate the Filer Agreement at any time, but shall remain liable for any
reclamation on the Property for work performed by us, Kinam Gold and its
predecessor's in interest.
MacMenamin & Sons Lease and Option to Purchase Agreement
The one placer mining claim that makes up our Petsite Property is
subject to a certain Lease and Option to Purchase Agreement between us and
MacMenamin & Sons Mining, Inc. ("MacMenamin Agreement"), dated February 3, 1998.
The lease was originally entered into with Kinam Gold, and subsequently assumed
by us as part of the assignment of Kinam Gold's interests in the Petsite Venture
and the MacMenamin Agreement to us on August 8, 2000. The term of the agreement
is for 10 years and it requires us to make the following annual option payments:
- --------------------------------------------------------------------------------
Upon execution $1,000
- --------------------------------------------------------------------------------
February 1999 $2,000
- --------------------------------------------------------------------------------
February 2000 $2,000
- --------------------------------------------------------------------------------
February 2001 $3,000
- --------------------------------------------------------------------------------
February 2002 $3,000
- --------------------------------------------------------------------------------
February 2003 $4,000
- --------------------------------------------------------------------------------
February 2004 $5,000
- --------------------------------------------------------------------------------
February 2005 to February 2008 $5,000
- --------------------------------------------------------------------------------
All payments due and payable through February 2001 have been paid. All
option payments are credited towards the purchase price of the property. We can
purchase the property for $150,000 if exercised prior to the end of 2002, or for
$200,000 if exercised after 2002.
We are obligated to indemnify the lessor for any reclamation of the
property caused by Kinam Gold, its predecessors and us. We must also pay all
taxes levied upon us as an employer, upon fixtures and personal property placed
by us on the Property, plus pay all annual BLM fees for the unpatented placer
mining each year.
- 38 -
Petsite/Friday Property - Description
Historically, most of the precious metal mineralization developed on the
Petsite/Friday Property has been associated with an elliptically shaped stock of
rhyolite porphyry (fine grain igneous rocks that are rich in silica and
containing small crystals of feldspar), which has intruded into the underlying
Idaho Batholith granodiorite near the center of the property. Due to lack of
outcrop and the compositional similarities between the rhyolite porphyry and the
granodiorite, the size and shape of this stock has not yet been accurately
determined.
In September 1992, Wilfred J. Struck, an independent geological engineer
retained by us, who now is an executive officer of the Company, completed a
report on the Petsite Property. Mr. Struck concluded that mineralization
occurred on the Petsite Property as finely disseminated sulfides in a quartz
stockwork, a quartz porphyry rhyolite and associated granodiorite. Mr. Struck
recommended a program of trenching, mapping, sampling and drilling on the
Petsite Property. However, no further exploration of the Petsite Property
occurred until 1997, when we entered into the Petsite Venture.
Kinross prepared a Petsite Project evaluation, which included both the
Friday Property and the Petsite Property. The estimate is based on 129 drill
holes aggregating 53,513.5 feet. The drill hole information was imported into
Datamine and modeled by triangular-faceted wire-frame bounded zones. Using
a0.015 ounces per ton gold cutoff, the model above the 4,000 foot elevation
includes mineralized material of 16.73 million tons at 0.032 ounces per ton
gold.
By 1998, Kinam Gold had completed the exploration phase of the Petsite
Venture, on the Petsite Property and the Friday Property. However, gold prices
began to decline and further work on the Friday Property was curtailed. In 1999,
gold prices continued to decline. Consequently, no additional work was performed
on the Petsite and Friday properties, except that which was necessary to
maintain our interests in those properties.
In 2001, no additional work was conducted on the Property except for
making the property payments and claim fees due under the related agreements.
Consequently, we have no proven or probable reserves on the
Petsite/Friday Property.
Dixie Property
The Dixie Property consists of 17 unpatented lode-mining claims located
in Idaho County, Idaho. Each claim is approximately 20 acres in extent and the
claims are held directly by us. The Dixie Property is in the exploration stage.
The claims are located in the Nez Perce National Forest, approximately 5 miles
south-southeast of the Petsite/Friday Property on the eastern slope of Burpee
Mountain.
Access to the Dixie Property is gained by existing public roads.
We have conducted limited stream sediment and soil geochemical sampling
on the property. In 2001, no additional work on the Property except for making
payment of the claim fees due on the unpatented claims.
Consequently, we have no proven or probable reserves on the Dixie
Property
- 39 -
Compliance Costs and Effects of Environmental and other Laws
Costs of compliance have not been substantial and to date have been
within budget. We maintain bonds sufficient for our current exploration activity
with respect possible reclamation costs at all sites where we construct roads or
conduct drilling.
The company has to clear its exploration plans with the U.S. Forest
Service and the Montana State Division of Environmental Quality. The claims,
which are located west of the Boulder drainage divide between Picket Pin
Mountain and Iron Mountain are administered by the Gallatin Forest with the
district office located in Big Timber, MT. Claims located east of the Stillwater
drainage divide are administered by the Custer Forest with the district office
located in Red Lodge, MT. When the company proposes to conduct exploration a
Plan of Operations must be filed with the Forest Service for scoping and review.
Interested members of the public and other groups can review and comment on the
proposal. The review must conform to NEPA (National Environmental Policy Act)
policy. The scoping process takes a minimum of 45 days, with on the ground
review by biologists, archeologists, and wildlife specialists. Once the reviews
have been conducted and reports written with recommendations, the Forest Service
must analyze the comments and propose mitigation for substantive issues. Once
these issues are addressed, a Decision Memo is prepared and signed by the
District Ranger allowing the company to proceed. The company then posts a bond,
which is held by the State of Montana. Typically the bond is $600 per drill site
and $1,000 per Decision Memo covering several sites for noxious weed abatement.
Once the site has been reclaimed and signed off on by the agencies the bond is
released back to the company, but this typically takes several years.
At the current stage of exploration the permitting is relatively
straight-forward, although the company must comply with all of the regulations
pertaining to Environmental Protection Laws, Clean Air Act, Clean Water Act,
Endangered Species Act, National Environmental Policy Act and State
Environmental Protection Laws. These issues are reviewed during the scoping
process and must be ruled to have no significant impact before a permit is
issued.
Once a mine is proposed the permitting procedure gets very intense, time
consuming and costly. We believe that we are not far enough advanced in our
exploration program to address the specific procedures and regulations at this
time.
With respect to costs, we prepare the Plan of Operations and do the site
visits in-house with the assistance of a geologist, as required. We estimate our
annual costs at a total of $30,000 per annum at our present level of
exploration. Based on our existing exploration program we would expect this
annual cost estimate to be relevant through the 2005 exploration season.
Currently we also have a blanket bond of $35,000 held by the State of Montana.
Environmental Protection Laws
At its exploration operations, the Company is required to comply with federal
environmental protection laws. The Company is also required to comply with
regulations adopted by the U.S. Environmental Protection Agency (the "EPA"), the
U.S. Forest Service (the "USFS"), the Bureau of Land Management (the "BLM"), the
U.S. Fish and Wildlife Service, the United States Army Corps of Engineers and
other agencies. In each state in which the Company operates, various federal,
state and local agencies enforce extensive laws and regulations, which address
the environmental impacts of mining and mineral processing. Such laws and
regulations address the potential for contamination of soil, water and air from
various discharges or wastes generated in the normal course of mining
activities. In particular, various legislation, including, but not limited to,
the Clean Air Act, the Clean Water Act, the Endangered Species Act and the
National Environmental Policy Act, requires analyses and/or imposes effluent
standards, new source performance standards, air quality and emissions standards
and other design or operational requirements upon various aspects of gold
exploration, mining and processing.
- 40 -
Clean Air Act
The 1990 amendments to the Clean Air Act imposed a large number of new
regulatory requirements, including the establishment of a federal air-permitting
program, a list of regulated hazardous air pollutants, including various metals
and cyanide, and expanded enforcement authority. The EPA has published final
regulations establishing minimum elements of state operating permit programs.
The individual states were given until November 15, 1993 to submit their permit
programs to the EPA for review and approval. Until federal approval of these
state programs occurs, the full effect of the new regulations on the Company
cannot be accurately predicted. At a minimum, the new federal program will
require additional permitting at certain existing facilities and may require
additional facility monitoring and additional air pollution control equipment.
Clean Water Act
The Clean Water Act is one of the principal federal environmental protection
laws regulating mining operations. The Clean Water Act sets effluent limitations
on wastewater discharges and establishes the National Pollution Discharge
Elimination System (the "NPDES"), which permits limited discharges from point
sources, including certain mining facilities, into waters of the United States.
Permits with strict effluent limitations are often issued for discharges from
ore processing, maintenance and heap leaching operations, for tailings ponds,
and with respect to acid mine drainage. Clean Water Act permits are also
required for the dredging and filling of all waters and wetlands (which are
broadly defined under federal law) and for certain storm water discharges where
runoff comes in contact with overburden.
Endangered Species Act
Certain of the Company's properties are directly affected by the Endangered
Species Act through the listing of salmon as a threatened species. Absent the
success of pending reform proposals to amend the effect of the Endangered
Species Act, the Company anticipates increasingly difficult permitting and
operating conditions under the Endangered Species Act.
National Environmental Policy Act
The National Environmental Policy Act requires all agencies to consider the
impact on the human environment of major federal actions within the meaning of
the National Environmental Policy Act. The Company's exploration activities
often involve federal lands or federal permits, or both, and may trigger major
federal actions. The National Environmental Policy Act's requirements for major
federal actions are that they be reviewed in an environmental impact statement
prepared by or under the direction of a federal agency, if the major federal
actions have a significant impact on the human environment. Preparation of an
environmental impact statement may delay the federal action being reviewed and
the Company's activity, which depends on that action. The Company has no control
over the preparation or review of the environmental impact statement, and delays
resulting from environmental impact statement preparation or review are
uncertain risks to the completion of any activity subject to the environmental
impact statement required under the National Environmental Policy Act. The
Company currently does not have any activity subject to an environmental impact
statement.
State Environmental Protection Laws
Certain state environment protection laws address subjects - most notably
groundwater withdrawal - not directly regulated by federal law. Other state
environmental protection laws complement or overlap federal laws. Where states
have enacted environmental protection laws covering similar subject matter as
federal laws and the state laws are more stringent or burdensome, the Company
must comply with the state law in all cases except where the state law is
pre-empted by the federal law.
- 41 -
Employees
As of December 31, 2001, we have two full-time employees and two
part-time employees including our executive officers. The number of employees
does not include Mr. Kenneth A. Scott, our Chief Financial Officer, whose time
is billed by his partnership and is included in professional fees.
LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us.
On July 11, 2002 we commenced an action in the British Columbia Supreme
Court against First Choice Industries Ltd. ("First Choice") under No. S023888,
Vancouver Registry by filing a Writ and Statement of Claim. These documents have
been served on First Choice.
The Statement of Claim references the Stillwater West PGM Agreement (the
"Agreement") of November 1, 2001 between us and First Choice and the notice of
termination of the Agreement provided by First Choice to us on June 3, 2002. The
Statement of Claim does not contest the termination of the Agreement but does
seek the specific performance of obligations owed to us by First Choice, which
accrued prior to any termination and remain outstanding pursuant to the terms of
the Agreement. Specifically we seek an order that First Choice pay to us
$137,000 (U.S.) and issue 200,000 shares of First Choice's unrestricted,
registered common stock to us in substitution for the shares provided to date,
or, in the alternative, damages in lieu of specific performance and interest and
costs. First Choice filed an Appearance on July 22, 2002 but has yet to file a
Statement of Defense. The parties are currently conducting settlement
negotiations.
MANAGEMENT
Our current directors are John E. Andrews, Delbert W. Steiner, Theodore
Tomasovich, James W. Ashcroft and James D. Clucas. Mr. Clucas was appointed as a
director on April 23, 2002. David Fraser, a director during 2001, resigned from
the Board on April 1, 2002. Luca Riccio and Marc Oppenheimer, both directors
during 2001, resigned from the Board on April 15, 2002. Dr. Reid Roderick Keays
was appointed as a director on July 30, 2002.
- --------------------------------------------------------------------------------
Name and Age Principal Occupation for
Municipality Previous Five Years
of Residence
- --------------------------------------------------------------------------------
John E. Andrews 55 From September 19, 1994 until July 30, 1999, Mr.
President and CEO Andrews was President and COO of Stillwater
Mining Company, a mining company publicly traded
on the American Stock Exchange. From August
1999, Mr. Andrews has been engaged as a
consultant to the metals mining industry
performing such duties as project and corporate
valuations, operations review and expert witness
testimony including consulting for Beartooth
Platinum Corporation (formerly Idaho
Consolidated Metals Corp.). On August 28th, 2001
Mr. Andrews was appointed a Director of the
Company. From October 9, 2001 to the present Mr.
Andrews principal occupation is as President and
CEO of the Company.
- 42 -
- --------------------------------------------------------------------------------
Delbert W. 57 Mr. Steiner's principal occupation in the last
Steiner(1) five years is as President of the Company from
Director, September 15, 1988 to June 27, 1997 and from
July 23, 1997 to October 9, 2001 and CEO of the
Company from June 24, 1996 to June 27, 1997 and
July 23, 1997 to October 9, 2001. Mr. Steiner
has been a director of the Company since
September 15, 1988.
- --------------------------------------------------------------------------------
Theodore Tomasovich 55 Director of the Company since July 22, 1997. Mr.
Director Tomasovich's principal occupation in the last
five years was as President of PYJ Corporation,
a real estate development company, from October
1988 to the present.
- --------------------------------------------------------------------------------
James W. 62 Director of the Company since August 28, 2001.
Ashcroft(1) Mr. Ashcroft's principal occupation in the last
Director five years was as President of J.W. Ashcroft &
Assoc. Ltd. - Mining Consultants from 1998 to
2001 and prior to 1998 as President of the
Ontario Division of INCO Ltd., a Canadian mining
company involved in the production of nickel and
copper.
- --------------------------------------------------------------------------------
James D. Clucas(1) 59 Director of the Company since April 23, 2002.
Director From 1970 to 1979 Mr. Clucas was Chief Financial
Officer of the Manitoba Division of Inco Ltd., a
Canadian mining company involved in the
production of nickel and copper. In 1984, he
joined Centennial Minerals Ltd. as
Vice-President, Finance and then served for 5
years as President of High River Gold Mines Ltd.
Mr. Clucas was President of Crystallex
International from 1993 to 1995 and from August
1995 to date has been the Chairman of Geostar
Metals Inc., a junior Canadian company involved
in the application of a new technology to treat
nickel laterite deposits in the Philippines and
Brazil.
- --------------------------------------------------------------------------------
Dr. Reid Roderick 63 Director of the Company since July 30, 2002.
Keays From 1992 to 1997, Dr. Keays was the Dean,
Director Faculty of Science and Engineering, Laurentian
University, Sudbury, Canada. From 1992 to the
present, Dr. Keays has been a Full Professor at
Laurentian University. From 1998 to the present,
Dr. Keays has been a Professional Fellow at
Monash University, Melbourne, Australia and from
1999 to the present has been Director, Victorian
Institute of Earth and Planetary Sciences.
- --------------------------------------------------------------------------------
Wilfried.J. Struck 43 VP, Mining and Exploration and Chief Operating
VP, Mining and Officer of the Company since August 29, 1995.
Exploration and Mr. Struck's principal occupations in the last
Chief Operating five years was as a self employed consulting
Officer geological mining engineer from July, 1991 to
August 29, 1995 and as COO of the Company from
August 1995 to the present.
- --------------------------------------------------------------------------------
Kenneth A. Scott 44 Chief Financial Officer of the Company since
Chief Financial March 25, 1995. Mr. Scott's principal occupation
Officer is as a partner in Staley, Okada & Partners
(formerly Staley, Okada, Chandler & Scott),
Chartered Accountants and he spends
approximately 20% of his time exclusively on
matters of the Company.
- --------------------------------------------------------------------------------
Diane R. Garrett 42 VP, Corporate Development of the Company since
VP, Corporate June 2001. Ms. Garrett's principal occupation in
Development, the last five years was as VP Corporate
Corporate Secretary Development of Dayton Mining Corporation, a gold
mining company with producing operations in
North and South America and exploration projects
in Central America, from February 1996 to August
2000 and as a director of Romarco Minerals from
1999 to the present. From August 2000 to January
2001, Ms. Garrett worked for Galaxy On-Line
Inc., a wireless technology company. From
January to June 2001, Ms. Garrett was engaged as
a consultant in the precious metals mining
industry performing project valuations for
acquisitions.
- --------------------------------------------------------------------------------
(1) Member of our Audit Committee.
- 43 -
Each Director is elected at our annual shareholder's meeting and serves
for a term of one year and until his successor is duly elected, unless his
office is earlier vacated in accordance with our Articles of Continuance.
There are no family relationships among our directors, executive
officers or persons nominated or appointed to become directors or officers, nor
have any of such persons been a party to or involved in any legal proceeding
during the past five years that is material to an evaluation of the ability or
integrity of such person.
EXECUTIVE COMPENSATION
The following compensation information relates to amounts paid to the
Chief Executive Officer for the preceding three (3) years. No other director or
executive officer received compensation in excess of $100,000 in 2001, 2000 or
1999.
- ---------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
Awards Pay-outs
- ---------------------------------------------------------------------------------------------------------
Restricted
Securities Shares of
Name and Other Under Restricted
Principal Year Salary or Annual Options Share LTIP All Other
Position Ending Fee Bonus Compensation Granted Units Pay-outs Compensation
- ---------------------------------------------------------------------------------------------------------
John E. 2001 US$20,655 - - 400,000 - - -
Andrews
- ---------------------------------------------------------------------------------------------------------
Delbert W. 2001 US$79,750 - - 275,000 - - -
Steiner 2000 US$81,000 - - 625,000 - - -
1999 US$67,850 - - 50,000 - - -
- ---------------------------------------------------------------------------------------------------------
Pension Plans
We do not have any defined benefit pension plan that provides annual
benefits to any Executive Officers or any long-term incentive plans.
Compensation of Directors
None of the Directors receives director's fees. Certain directors
received stock option grants during 2001, as discussed below.
Executive Compensation
Other than the Chief Executive Officer, none of the Executive Officers
of the Company received any reportable salary or bonus during 2001. The
following describes the stock option regime currently followed by us.
We have a stock option plan dated January 9, 2001, under which the
maximum number of options issuable shall not exceed 8,709,386 shares. On May 27,
2002, the shareholders approved an increase in the number of shares in the stock
option plan from the original 6,586,442 shares to the current 8,709,386 shares.
Options granted on or after January 9, 2001 are for a maximum term of five years
and vest as to 25% on allocation and 25% each six months thereafter. For options
granted on or after May 27, 2002 the vesting terms remain unchanged for
directors. Options granted to officers vest as to 25% each six months after the
grant date. Options granted prior to the plan are for varying terms ranging from
two to seven years and are immediately vested upon the date of grant.
- 44 -
Incentive stock options to purchase securities from us are granted to
Directors and employees on terms and conditions acceptable to the regulatory
authorities in Canada, namely the TSX Venture Exchange. Incentive stock options
for up to 10% of the number of issued and outstanding shares of the common stock
may be granted from time to time, provided that incentive stock options in favor
of any one individual may not exceed 5% of the issued and outstanding common
shares. No incentive stock option granted under the stock option program is
transferable by the optionee other than by will or the laws of descent and
distribution, and each incentive stock option is exercisable during the lifetime
of the option only by such optionee. The exercise price of all incentive stock
options granted under the stock option program must be at least equal to the
fair market value of such common shares on the date of grant, and the maximum
term of each incentive stock option may not exceed five years. The exercise
prices for incentive stock options are determined in accordance with TSX Venture
Exchange Guidelines and reflect the average closing price of our common shares
for the ten trading days on the TSX Venture Exchange immediately preceding the
day on which the Directors grant and publicly announce the incentive stock
options. The Board of Directors may amend existing stock options granted to
insiders of the Company.
The following table sets forth, certain information on option grants to
the Named Executives in 2001:
Individual Grants
- -------------------------------------------------------------------------------------------------
Name Number of Percentage of Exercise Expiration Grant Date
Shares Total Options Price Per Date Value (1)
Underlying Granted to Share(2)
Options Granted Employees in
Fiscal Year
- -------------------------------------------------------------------------------------------------
John E. Andrews 200,000 (2) 12.7% C$0.38 September C$4,000
5, 2006
200,000 (3) 12.7% C$0.27 November C$32,000
7, 2006
- -------------------------------------------------------------------------------------------------
Delbert Steiner 75,000 4.8% C$0.80 (4) January C$11,250
9, 2006
50,000 (2) 3.2% C$0.38 September C$1,000
5, 2006
150,000 (3) 9.5% C$0.27 November C$24,000
7, 2006
- -------------------------------------------------------------------------------------------------
(1) Grant date value represents the difference between the exercise price
and the fair market value of the shares underlying the options at the
date of grant. The fair market value is the closing price of our common
shares as reported by the TSX Venture Exchange (in Canadian dollars) on
the date of the option grant.
(2) Represents incentive stock options granted on September 5, 2001. The
option shares vest and become exercisable 25% upon the date of grant and
25% each six months thereafter.
(3) Represents incentive stock options granted on November 7, 2001. The
option shares vest and become exercisable 25% upon the date of grant and
25% each six months thereafter.
(4) Repriced from C$0.80 to C$0.38 on September 5, 2001.
- 45 -
The following table sets forth, certain information on option grants to
the Directors in 2001:
Individual Grants
- -------------------------------------------------------------------------------------------------
Name Number of Percentage of Exercise Expiration Grant Date
Shares Total Options Price Per Date Value (1)
Underlying Granted to Share
Options Granted Directors in
Fiscal Year
- -------------------------------------------------------------------------------------------------
Theodore 50,000 3.2% C$0.80 (2) January C$7,500
Tomasovich 9, 2006
50,000 3.2% C$0.38 September C$1,000
5, 2006
- -------------------------------------------------------------------------------------------------
James W. Ashcroft 200,000 12.7% C$0.38 September C$4,000
5, 2006
- -------------------------------------------------------------------------------------------------
David Fraser 50,000 3.2% C$0.80 (2) January C$7,500
9, 2006
50,000 3.2% C$0.38 September C$1,000
5, 2006
- -------------------------------------------------------------------------------------------------
Marc Oppenheimer 200,000 12.7% C$0.80 (2) January C$30,000
9, 2006
50,000 3.2% C$0.38 September C$1,000
5, 2006
- -------------------------------------------------------------------------------------------------
Luca Riccio 200,000 12.7% C$0.80 (2) January C$30,000
9, 2006
50,000 3.2% C$0.38 September C$1,000
5, 2006
- -------------------------------------------------------------------------------------------------
(1) Grant date value represents the difference between the exercise price
and the fair market value of the shares underlying the options at the
date of grant. The fair market value is the closing price of our common
shares as reported by the TSX Venture Exchange (in Canadian dollars) on
the date of the option grant.
(2) Repriced from C$0.80 to C$0.38 on September 5, 2001.
The following table summarizes option exercises and the value of
unexercised stock options granted to the Named Executives as of December 31,
2001:
- ---------------------------------------------------------------------------------------------------
Number of Shares Value of
Underlying Unexercised
Name Unexercised In-the-Money
Options at Options at
Shares 12/31/01 12/31/01
Acquired on (Exercisable/ (Exercisable/
Exercise Value Realized(1) Unexercisable) Unexercisable)(2)
- ---------------------------------------------------------------------------------------------------
John E. Andrews - - 100,000/300,000 C$27,500/C$82,500
- ---------------------------------------------------------------------------------------------------
Delbert W. Steiner - - 731,250/168,750 C$191,000/C$49,500
- ---------------------------------------------------------------------------------------------------
(1) The Value Realized is the difference between the exercise price and the fair
market value of the shares underlying the options. The fair market value is
the closing price of our common shares as reported by the TSX Venture
Exchange (in Canadian dollars) on the date of exercise.
(2) The value of unexercised in-the-money options is the difference between the
exercise price and the fair market value of the shares underlying the
options. For purposes of determining the value of unexercised in-the-money
options as of December 31, 2001, the fair market value is deemed to be
C$.60, which the last closing price of our common shares reported on the TSX
Venture Exchange during December 2001.
- 46 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the total-number of our common shares and
the percentage of such beneficially owned as of June 30, 2002 by our Directors
and Officers, and with respect to shares owned by each person or group known by
us to be the beneficial owner of more than 5% of the shares.
- --------------------------------------------------------------------------------
Number of Percent
Name of Beneficial Owners Shares Owned (**) of Class (**)
- --------------------------------------------------------------------------------
John E. Andrews 237,500 (1) *
Director, President and CEO
1060 Maple Ridge Way,
Greensboro, GA
- --------------------------------------------------------------------------------
Delbert W. Steiner 2,210,982 (2) 4.92%
Director
3555 Country Club Drive
Lewiston, ID
- --------------------------------------------------------------------------------
Theodore Tomasovich 17,141,025 (3) 33.45%
Director
4812 Lakeview Canyon Road
Westlake Village, CA
- --------------------------------------------------------------------------------
James Ashcroft 192,500 (4) *
Director
337 Edgewater Road
Sudbury, ON
- --------------------------------------------------------------------------------
James Clucas 12,500 (5) *
Director
1255 West Pender Street,
Vancouver, BC, V6E 2V1
- --------------------------------------------------------------------------------
Wilfried J. Struck 699,583 (6) 1.57%
Chief Operating Officer
P.O. Box 42
Red Lodge, MT
- --------------------------------------------------------------------------------
Diane R. Garrett 125,000 (7) *
VP, Corporate Development,
Corporate Secretary
HCI Box 923-23
Center Point, TX
- --------------------------------------------------------------------------------
Kenneth A. Scott 339,098 (8) *
Chief Financial Officer
225 - 4299 Canada Way
Burnaby, BC
- --------------------------------------------------------------------------------
All Directors and Executive 20,958,188 (9) 39.33%
Officers as a Group (8 Persons)
- --------------------------------------------------------------------------------
Resources Investment Trust 6,995,503 (10) 15.61%
Limited, Ocean House, 10/12
Little Trinity Lane, London,
UK, EC4V 2DH
- --------------------------------------------------------------------------------
Tomasovich 1999 Revocable Trust 7,833,025 (11) 15.44%
4812 Lakeview Canyon Road
Westlake Village, CA
- --------------------------------------------------------------------------------
Stillwater International Trust 8,743,000 (12) 19.91%
ATC Trustees (Cayman) Ltd., PO
Box 30592 S.M.B., Cayside, 2nd
Floor
George Town, Grand Cayman,
Cayman Islands, BWI
- --------------------------------------------------------------------------------
- 47 -
* Represents less than 1% of our common stock.
** The number of common shares and percentage owned by each person includes
shares as to which the person has sole or shared voting power or
investment power and those which such person has the right to acquire
within 60 days after June 30, 2002. As at June 30, 2002 there were
44,021,930 common shares outstanding.
(1) Includes 237,500 shares issuable upon the exercise of options
exercisable within 60 days of June 30, 2002.
(2) Includes 825,000 shares issuable upon the exercise of options
exercisable within 60 days of June 30, 2002. Also includes 152,500
shares, which may be issued upon the exercise of share purchase warrants
at C$1.60 per share.
(3) Includes indirect ownership of 7,833,025 shares owned, and shares which
may be acquired on conversion of a convertible security, by the
Tomasovich 1999 Revocable Trust for which Mr. Tomasovich is the Trustee.
(See Note 11.) Includes indirect ownership of 8,743,000 shares owned by
the Stillwater International Trust for which Mr. Tomasovich is a
beneficiary. (See Note 12.) Includes indirect ownership of 39,000 shares
owned within an IRA trust. Includes 152,500 shares issuable upon the
exercise of warrants at C$1.60 per share. Includes 373,500 shares, which
may be issued upon exercise of options exercisable within 60 days of
June 30, 2002.
(4) Includes 112,500 shares issuable upon the exercise of options
exercisable within 60 days of June 30, 2002.
(5) Includes 12,500 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 2002.
(6) Includes 525,000 shares issuable upon the exercise of options
exercisable within 60 days of June 30, 2002. Also includes 11,338 shares
which may be acquired on exercise of warrants at C$0.70.
(7) Includes 125,000 shares issuable upon the exercise of options
exercisable within 60 days of June 30, 2002.
(8) Includes indirect ownership resulting from Mr. Scott being the
beneficial owner of a holding company, which owns 276,674 shares. Also
includes 37,500 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 2002.
(9) Includes all direct and indirect ownership by named executive officers
and directors.
(10) Includes 881,834 shares which may be acquired on exercise of warrants at
C$0.70. Resources Investment Trust Limited is a public company listed on
the Alternative Investment Market of the London Stock Exchange.
(11) Includes 4,534,286 shares, which may be issued to the holder on
conversion of a convertible debenture. Includes 2,267,143 shares, which
may be issued on exercise of warrants. Theodore Tomasovich, director, is
the Trustee of the Tomasovich 1999 Revocable Trust. (See Note 3.)
(12) Theodore Tomasovich, director, is a beneficiary of the Stillwater
International Trust. (See Note 3.)
SELLING SECURITY HOLDERS
The selling security holders identified in the following table are
offering for sale 44,481,728 shares of our common shares. These shares were
issued to our security holders or are shares which may be issued to the selling
security holders under outstanding stock options, warrants and convertible
securities as described below under "Recent Sales of Unregistered Securities."
28,897,191 of these shares are being offered by our directors, officers or
principal stockholders.
The selling security holders may offer their common shares for sale from
time to time at market prices prevailing at the time of sale or at negotiated
prices, and without payment of any underwriting discounts or commissions except
for usual and customary selling commissions paid to brokers or dealers.
The following table sets forth, as of June 30, 2002, the number of
shares being held of record, or beneficially, or convertible to shares on
exercise of existing options, warrants and convertible securities, by the
selling security holders and provides by footnote reference any material
relationship between us and the selling security holder, all of which is based
upon information currently available to us.
- 48 -
- -----------------------------------------------------------------------------------------------------------------
Beneficial Ownership of Selling Security Holder
- -----------------------------------------------------------------------------------------------------------------
Prior to Offering(1)
----------------------------------
Number
of Shares After Offering(2)
offered -----------------
Name of Selling Security Holder Number Percent hereby(2) Number Percent
- -----------------------------------------------------------------------------------------------------------------
Brian Fagan, PO Box 48296 Bentall Centre,
Vancouver, BC, V7X 1A1 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sterling Securities International Ltd., PO Box
793, Dartford, England, DA2 7Z6 150,000 * 150,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Jim Barbieri, 814 East 16th Street, North
Vancouver, BC, V7L 2V4 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Gary Nelson, 313-3215 Cowichan Lake Road,
Duncan, BC, V9L 5G5 10,500 * 10,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Rick W. Ford, 1418 Highland Place, RR #3,
Cobble Hill, BC, V0R 1L0 6,000 * 6,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Karen M. Ford,1418 Highland Place, RR #3,
Cobble Hill, BC, V0R 1L0 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Alex Ticknor, Chapman Site C-21, RR #1,
Sechelt, BC, V0N 3A0 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Geoffrey Clayton, 23533-128th Avenue, Maple
Ridge, BC, V2X 4R9 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sheila Nelson,701-9135-1514th Street, Surrey,
BC, V3R 9G8 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Strates Fireplace Centre,1200 Battle Street,
Kamloops, BC, V2C 2W6 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Brad Nelson,1747 Balaclava Street, Vancouver,
BC, V6K 4B6 30,000 * 30,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Brian Nelson,1747 Balaclava Street, Vancouver,
BC, V6K 4B6 30,000 * 30,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Ian Josephson, 15435-80A Avenue, Surrey, BC,
V3S 7X7 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
272931 BC Ltd., 400-455 Granville Street,
Vancouver, BC, V6C 1T1 150,000 * 150,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mike Dolighan, SS1, Box 6, S-21, Stn Main,
Kimberley, BC, V1A 2Y3 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Shaun Josephson, 1011-12th Street, Kamloops,
BC, V2B 3C3 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Stash Rides, 1384 Cambridge Drive, Coquitlam,
BC, V3J 2P7 7,500 * 7,500(4) - -
- 49 -
- -----------------------------------------------------------------------------------------------------------------
Gurmit Kaur Sumel, 4420 Westminster Highway,
Richmond, BC, V7C 1B5 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Bawa Singh Sumel, 4420 Westminster Highway,
Richmond, BC, V7C 1B5 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Gary Brassart, #117-20575 Langley By-Pass,
Langley, BC, V3A 5E8 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mindy Sumel, 4420 Westminster Highway,
Richmond, BC, V7C 1B5 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mindy Sumel for Devon Sumel, 4420 Westminster
Highway, Richmond, BC, V7C 1B5 13,500 * 13,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mindy Sumel for Lauren Sumel, 4420 Westminster
Highway, Richmond, BC, V7C 1B5 13,500 * 13,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Colin Clark, 2954 Panorama Drive, North
Vancouver, BC, V7G 2A4 3,750 * 3,750(4) - -
- -----------------------------------------------------------------------------------------------------------------
Stephen B. Parker, 2695 Cactus Court, North
Vancouver, BC, V7H 1R7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Rob Trenaman, 4626 Lockehaven Place, North
Vancouver, BC, V7G 2B8 17,700 * 17,700(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mark Trotzuk, 1771 East Hastings Street,
Vancouver, BC, V5L 1T1 17,700 * 17,700(4) - -
- -----------------------------------------------------------------------------------------------------------------
Bill Trenaman, 513 Yale Road, Port Moody, BC,
V3H 3K4 9,000 * 9,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Angela Nielsen, 1538 Fulton Avenue, West
Vancouver, BC, V7V 1S6 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Steve Swatton, 2062 Whyte Avenue, Vancouver,
BC, V6J 1B5 9,000 * 9,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Plen Dickson, 6992 Cypress Street, Vancouver,
BC, V6P 5M1 9,000 * 9,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Cheryl Kermeen, 3449 Bossetti Drive, Ladysmith,
BC, V9G 1J9 9,000 * 9,000(4) - -
- 50 -
- -----------------------------------------------------------------------------------------------------------------
N.J. Nielsen Ltd., 1538 Fulton Avenue, West
Vancouver, BC, V7V 1S6 17,250 * 17,250(4) - -
- -----------------------------------------------------------------------------------------------------------------
Rob Layng, 1030 Millar Creek road, Unit 1B,
Whistler, BC, V0N 1B1 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Keith Leech, #209-2540 Cornwall Avenue,
Vancouver, BC, V6K 1B8 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Rose Marie Gill, 2048 Boulevard Crescent, North
Vancouver, BC, V7L 3Z1 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Wayne Gilbert, 250 Kimbrook Crescent,
Kimberley, BC, V1A 3A7 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
John Dunn, 8531 Allison Road, Richmond, BC, V6Y
3H9 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Debbie Radonich, 1384 Cambridge Drive,
Coquitlam, BC, V3J 2P7 22,500 * 22,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Tim G. Larson, 1927 West 17th Avenue,
Vancouver, BC, V6J 2N2 4,500 * 4,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Armand Distefano, 1669 Balmoral Avenue,
Coquitlam, BC, V3J 4Y7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Carol Billingsley, 7239 Oak Street, Vancouver,
BC, V6P 4A1 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Frank De Koning, 117-20575 Langley Bypass,
Langley, BC, V3A 5E8 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Claire Thornthwaite, P.O. Box 745, Whistler,
BC, V0N 1B7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Allan H. Ferguson, Unit 24, 7715 Luckakuck
Place, Sardis, BC, V2R 3N6 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Ron Ewing, #900-999 West Hastings Street,
Vancouver, BC, V6C 2W2 13,500 * 13,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Barbara Thompson, #101-8580 General Currie
Road, Richmond, BC, V6Y 1M3 7,500 * 7,500(4) - -
- 51 -
- -----------------------------------------------------------------------------------------------------------------
Gregory Miles, #31-1091 Broughton Street,
Vancouver, BC, V6G 2A9 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Robin G. Tolhurst, 2773 Thompson Avenue,
Victoria, BC, V8R 3K7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Josephine N. Stonehocker, Unit 29, 19797-64th
Avenue, Langley, BC, V2Y 1G9 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
James Seaton Kermeen, 1 Arbourlane, 5773
Mayview Circle, Burnaby, BC, V5E 4B7 9,000 * 9,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Chuck Tang, 5051 Quebec Street, Vancouver, BC,
V5W 2N3 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
James Pauls, 255-1755 Robson Street, Vancouver,
BC, V6G 3B7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Imex Resources Ltd., 301-1110 Hamilton Street,
Vancouver, BC, V6B 2S2 3,750 * 3,750(4) - -
- -----------------------------------------------------------------------------------------------------------------
Clause Ritter and/or Sigrid Ritter, 12740-21A
Avenue, South Surrey, BC, V4N 5S8 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Barrie M. Gillmore, 850-1075 West Georgia
Street, Vancouver, BC, V6E 3C9 3,750 * 3,750(4) - -
- -----------------------------------------------------------------------------------------------------------------
Niels J. Nielsen, 1538 Fulton Avenue, West
Vancouver, BC, V7V 1S6 17,250 * 17,250(4) - -
- -----------------------------------------------------------------------------------------------------------------
Lawrence Roulston, 3389 Radcliffe Avenue, West
Vancouver, BC V7V 1G7 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Gary Logan, 4508 Strathcona Road, North
Vancouver, BC, V7G 1G3 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
John A. Van Duzen, 5184 Sonora Drive, North
Vancouver, BC, V7R 3V6 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Robert N. Strate, 4747 Aspen Park Drive,
Kamloops, BC, V2H 1M5 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Adam Sumel, 4420 Westminster Highway, Richmond,
BC, V7C 1B5 16,500 * 16,500(4) - -
- 52 -
- -----------------------------------------------------------------------------------------------------------------
Alvin W. Jackson, 680 Greenwood Road, West
Vancouver, BC, V7S 1X7 9,000 * 9,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
David Parkes, 460-2609 Granville Street,
Vancouver, BC, V6H 3H3 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Gordon Bennett, 460-2609 Granville Street,
Vancouver, BC, V6H 3H3 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Alan Saunders, for Carli Saunders, 977 Beaumont
Drive, North Vancouver, BC, V7R 1P7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sharon M. Gilbert, 250 Kimbrook Court,
Kimberley, BC, V1A 3A7 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Ian Sinclair, 1943 East Hastings Street,
Vancouver, BC, V5L 1T5 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Tony Riddle, 3646 West 48th Avenue, Vancouver,
BC, V6N 3R3 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Jean Marguerite Bonvini, 741 Montroyal
Boulevard, North Vancouver, BC, V7R 2G4 6,000 * 6,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Jeanette Mary Rogerson, #8, 888 West 16th
Street, North Vancouver, BC, V7P 1R3 6,000 * 6,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Jacob Hamilton, 5461 Brydon Crescent, Langley,
BC, V3A 4A3 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Tom Prochazka, P.O. Box 745, Whistler, BC, V0N
1B0 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Moira Boyd, 1277 Evelyn Street, North
Vancouver, BC, V7K 3A7 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Barbara Baxter, 2152 Sifton Avenue, Kamloops,
BC, V1S 1A5 6,000 * 6,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Gerald Roper, 1229 West 23rd Street, North
Vancouver, BC, V7P 2H5 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Dianne Distefano, 1669 Balmoral Avenue,
Coquitlam, BC, V3J 5Y7 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sandra Lynne Strate, 4747 Aspen Park Drive,
Kamloops, BC, V2H 1M5 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Hazel A. Minaker, 1971 Valleyview Drive,
Kamloops, BC, V2C 4C1 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
John T. Wheeler, 1375 West Keith Road, North
Vancouver, BC, V7P 1Y9 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Ted Wheeler, 43 East 3rd Avenue, Vancouver, BC,
V5T 1C5 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Doris Ticknor, Chapman Site, C-21, RR #1, BC,
V0N 3A0 1,500 * 1,500(4) - -
- 53 -
- -----------------------------------------------------------------------------------------------------------------
Laurie E. Barbieri, 1025 Grand Boulevard, North
Vancouver, BC, V7L 3X1 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Carolyn Osborne for Jesse Osborne, 1940
Valleyview Drive, Kamloops, BC, V2C 4B9 6,000 * 6,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Olive M. Lucky, 1940 Valleyview Drive,
Kamloops, BC, V2C 4B9 4,500 * 4,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
TBC Investments, 1400 Riverside Drive, North
Vancouver, BC, V7H 1V5 17,100 * 17,100(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mark Strate, 1200 Battle Street, Kamloops, BC,
V2C 2N6 6,000 * 6,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Deborah Hodge, 7480 Colleen Street, Burnaby,
BC, V5A 2A6 5,250 * 5,250(4) - -
- -----------------------------------------------------------------------------------------------------------------
William J. Boden, 4264 West 9th Avenue,
Vancouver, BC, V6R 2C5 4,500 * 4,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Gordon Minaker, 1971 Valleyview Drive,
Kamloops, BC, V2C 4C1 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Carlisle Holdings Ltd., 4420 Westminster
Highway, Richmond, BC, V7C 1B5 16,500 * 16,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Scott Kennedy, 20326-92A Avenue, Langley, BC,
V1M 2M7 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Showroom Lease Inc., 1570 Main Street, North
Vancouver, BC, V7J 1E2 5,250 * 5,250(4) - -
- -----------------------------------------------------------------------------------------------------------------
BNM Management Ltd., 5380 Smith Drive, #29,
Richmond, BC, V6V 2K8 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Rita Millikin, 2420 William Avenue, North
Vancouver, BC, V7K 1Z3 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Penny Hamilton, #117-20575 Langley Bypass,
Langley, BC, V3A 5E8 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Betty Lebel, 629 Verona Place, North Vancouver,
BC, V7N 3A4 3,000 * 3,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Robert Boyd, 1277 Evelyn Street, North
Vancouver, BC, V7K 3A7 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Bob Melnychuk, 3560 Arthur Drive, Delta, BC,
V4K 3N2 1,500 * 1,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Maria Minicucci, 6156 Victoria Drive,
Vancouver, BC, V5P 3X4 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
David Fraser, 1200-999 West Hastings Street,
Vancouver, BC, V6C 2W2 15,000 * 15,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sigrid Ritter, 12740-21A Avenue, Surrey, BC,
V4A 6P2 4,500 * 4,500(4) - -
- 54 -
- -----------------------------------------------------------------------------------------------------------------
Kelly Taylor, 860-625 Howe Street, Vancouver,
BC, V6C 2T6 7,500 * 7,500(4) - -
- -----------------------------------------------------------------------------------------------------------------
Ronald Erwin Walter, 1037 Palermo Street,
Coquitlam, BC, V3J 6S8 3,750 * 3,750(4) - -
- -----------------------------------------------------------------------------------------------------------------
Craig Drill Capital, L.P., 767 Fifth Avenue,
New York, NY 10153 450,000 * 450,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Mitchell Nelson, 134 East 80th Street, New
York, NY 10021 150,000 * 150,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Telecast Communications Inc., Defined Benefit
Pension Plan, 10797 E. Palm Ride Drive, -
Scottsdale, AZ 85259 132,353 * 132,353(4) -
- -----------------------------------------------------------------------------------------------------------------
Okanadian Management Corp., 1001 - 825 8th
Avenue SW, Calgary, AB T2P 2T3 352,941 * 352,941(4) - -
- -----------------------------------------------------------------------------------------------------------------
Tuscarora Capital Inc., 3104 - 77 King Street
W, Toronto, Ontario M5K 1H1 529,413 * 529,413(4) - -
- -----------------------------------------------------------------------------------------------------------------
Bruce Mitchell, 3424 Paul Anka Drive, Ottawa,
Ontario K1V 9K6 264,705 * 264,705(4) - -
- -----------------------------------------------------------------------------------------------------------------
272931 BC Ltd., 400 - 455 Granville St.,
Vancouver, BC 176,471 * 176,471(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sterling Securities International Ltd.
PO Box 793, Dartford England DAZ 7ZY 176,471 * 176,471(4) - -
- -----------------------------------------------------------------------------------------------------------------
Erminia Minicucci, 6228 East 17th Street, North
Vancouver, B.C. 176,471 * 176,471(4) - -
- -----------------------------------------------------------------------------------------------------------------
Peter Brown, 2200 - 609 Granville Street,
Vancouver, B.C. V7Y 1H2 264,707 * 264,707(4) - -
- -----------------------------------------------------------------------------------------------------------------
Pacific International Securities Inc.
1900 - 666 Burrard Street, Vancouver, B.C. V6C -
3N1 11,765 * 11,765 -
- -----------------------------------------------------------------------------------------------------------------
Jennings Capital Inc., 2600 - 520 5th Avenue
SW, Calgary, A.B. T2P 3R7 39,706 * 39,706 - -
- -----------------------------------------------------------------------------------------------------------------
Graeme Currie, 1765 Gordon Avenue, West
Vancouver, B.C. V7V 1V4 163,044 * 163,044(4) - -
- -----------------------------------------------------------------------------------------------------------------
Eleuterra Investment Management 2004 - 200 King
Street West, Toronto, Ontario W5H 3T4 326,087 * 326,087(4) - -
- -----------------------------------------------------------------------------------------------------------------
Belmont Investments Ltd.
11971 Flamingo Court, Richmond, B.C. V7E 3S7 163,044 * 163,044(4) - -
- -----------------------------------------------------------------------------------------------------------------
Hideo Kita, 4812 Lakeview Canyon Road, Westlake
Village, CA, 91361 136,055 * 136,055(4) - -
- 55 -
- -----------------------------------------------------------------------------------------------------------------
Stan Moore, 200-1125 West 190th Street,
Gardena, CA, 90248 340,136 * 340,136(4) - -
- -----------------------------------------------------------------------------------------------------------------
Stan Case, 9803 - 209 Street,Edmonton AB, T5T
5X9 432,000 * 432,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Sterling Securities International Ltd., PO Box
793, Dartmouth, England, DAZ 7ZY 3,528,571 5.91% 3,528,571(4) - -
- -----------------------------------------------------------------------------------------------------------------
Staley, Okada & Partners, 3rd Floor, 10190 -
152A Street, Surrey, BC, V3R 1J7 707,250 1.18% 707,250(4) - -
- -----------------------------------------------------------------------------------------------------------------
Arthur T. Fisher & Associates Ltd., 1006-750
West Pender Street, Vancouver, BC, V6C 2T8 441,582 * 441,582(4) - -
- -----------------------------------------------------------------------------------------------------------------
Arthur T. Fisher Lines Overseas Management
(Cayman) Limited, Buckingham Square, West Bay -
Road, SMB PO Box 1159, GT, Grand Cayman, Cayman
Islands 1,283,769 2.15% 1,283,769(4) -
- -----------------------------------------------------------------------------------------------------------------
Humboldt Capital Corporation, 633-6th Avenue
SW, Suite 1760, Calgary, AB, T2P 2Y5 435,000 * 435,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Paul Rohde, 1415 N. Kenter Ave., Los Angeles,
CA, 90049 120,000 * 120,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
David Fraser, 1200-999 West Hastings Street,
Vancouver, BC, V6C 2W2 51,015 * 51,015(4) - -
- -----------------------------------------------------------------------------------------------------------------
Bryce Porter, 1006-750 West Hastings Street,
Vancouver, BC, V6C 2T8 150,000 * 150,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Roman Friedrich, 2950 Altamont Cres., West
Vancouver, BC, V7V 3C1 85,034 * 85,034(4) - -
- -----------------------------------------------------------------------------------------------------------------
Navtej Purewal, 7894 Glover Road, Langley, BC,
V1M 3S2 150,000 * 150,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Laurie Sadler, 13492 Marine Drive, Surrey, BC,
V4A 1G2 60,000 * 60,000(4) - -
- -----------------------------------------------------------------------------------------------------------------
Pacific International Securities Inc.
1900 - 666 Burrard Street, Vancouver, B.C. V6C -
3N1 78,571 * 78,571 -
- -----------------------------------------------------------------------------------------------------------------
Arthur T. Fisher, 1006-750 West Pender Street,
Vancouver, BC, V6C 2T8 57,800 * 57,800 - -
- -----------------------------------------------------------------------------------------------------------------
Resources Investment Trust Limited, Ocean
House, 10/12 Little Trinity Lane, London, UK, -
EC4V 2DH 6,995,503 11.72% 6,995,503(4) -
- -----------------------------------------------------------------------------------------------------------------
John Andrews, 1060 Maple Ridge Way, Greensboro,
GA, 30642 550,000 * 550,000(5) - -
- 56 -
- -----------------------------------------------------------------------------------------------------------------
Delbert Steiner, 3555 Country Club Drive,
Lewiston, Idaho, 83501 2,385,982 3.99% 2,385,982(6) - -
- -----------------------------------------------------------------------------------------------------------------
Theodore Tomasovich, 4812 Lakeview Canyon Road,
Westlake Village, CA, 91361 588,500 * 588,500(7) - -
- -----------------------------------------------------------------------------------------------------------------
Tomasovich 1999 Revocable Trust, 2641 Lombardy
Road, San Marino, California, 91108 7,833,025 13.10% 7,833,025(3) - -
- -----------------------------------------------------------------------------------------------------------------
Stillwater International Trust, ATC Trustees
(Cayman) Ltd., PO Box 30592 S.M.B., Cayside, -
2nd Floor, George Town, Grand Cayman, Cayman
Islands, BWI 8,743,000 14.62% 8,743,000 -
- -----------------------------------------------------------------------------------------------------------------
James W. Ashcroft, 337 Edgewater Road, Sudbury,
ON, P3G 1J7 250,000 * 250,000(8) - -
- -----------------------------------------------------------------------------------------------------------------
James D. Clucas, 1255 West Pender Street,
Vancouver, BC, V6E 2V1 50,000 * 50,000(9) - -
- -----------------------------------------------------------------------------------------------------------------
Wilfried Struck, PO Box 42, Red Lodge, MT, 59068
799,583 1.34% 799,583(10) - -
- -----------------------------------------------------------------------------------------------------------------
Kenneth A. Scott, 225-4299 Canada Way, Burnaby,
BC V5G 1H3 124,924 * 124,924(11) - -
- -----------------------------------------------------------------------------------------------------------------
Kenneth A. Scott, Inc., 225-4299 Canada Way,
Burnaby, BC V5G 1H3 276,674 * 276,674 - -
- -----------------------------------------------------------------------------------------------------------------
Diane R. Garrett, HCI Box 923 - 23, Center
Point, TX 78010 300,000 * 300,000(12) - -
- -----------------------------------------------------------------------------------------------------------------
Larry M. Okada, 225-4299 Canada Way, Burnaby,
BC V5G 1H3 14,578 * 14,578 - -
- -----------------------------------------------------------------------------------------------------------------
Charles N. Chandler, 225-4299 Canada Way,
Burnaby, BC V5G 1H3 14,578 * 14,578 - -
- -----------------------------------------------------------------------------------------------------------------
Jay Bhagirath, 225-4299 Canada Way, Burnaby, BC
V5G 1H3 11,348 * 11,348 - -
- -----------------------------------------------------------------------------------------------------------------
Leif Vickars, 225-4299 Canada Way, Burnaby, BC
V5G 1H3 1,655 * 1,655 - -
- -----------------------------------------------------------------------------------------------------------------
Kerry Spong, 225-4299 Canada Way, Burnaby, BC
V5G 1H3 5,000 * 5,000 - -
- -----------------------------------------------------------------------------------------------------------------
Gary Traher, 225-4299 Canada Way, Burnaby, BC
V5G 1H3 2,917 * 2,917 - -
- -----------------------------------------------------------------------------------------------------------------
Crystallex International Corporation, 902-700
West Pender Street, Vancouver, B.C., V6C 1G8 2,250,000 3.76% 2,250,000(13) - -
- -----------------------------------------------------------------------------------------------------------------
Chrome Corporation of America, 5613 S. Prince
Street, Littleton, CO, 80120 300,000 * 300,000 - -
- -----------------------------------------------------------------------------------------------------------------
Rod G. Nicholls, 2922 Western Avenue, #418,
Seattle, WA, 98121 77,000 * 77,000 - -
- 57 -
- -----------------------------------------------------------------------------------------------------------------
Judy Bates, 1717 Swede Pass Road, Evans, WA,
99126 110,000 * 110,000 - -
- -----------------------------------------------------------------------------------------------------------------
Patrick W. Rhodes, 31620 - 23rd Avenue, Suite
218, Federal Way, WA, 98003 8,250 * 8,250 - -
- -----------------------------------------------------------------------------------------------------------------
David S. Sauve, 716 South 348th Street, Federal
Way, WA, 98003 8,250 * 8,250 - -
- -----------------------------------------------------------------------------------------------------------------
Rodney J. Lamphear, 716 South 348th Street,
Federal Way, WA, 98003 8,250 * 8,250 - -
- -----------------------------------------------------------------------------------------------------------------
Michael L. Fullaway, 716 South 348th Street,
Federal Way, WA, 98003 8,250 * 8,250 - -
- -----------------------------------------------------------------------------------------------------------------
Emerald Chimera, LLC, 1201 3rd Avenue, Suite
2900, Seattle, WA, 98101 330,000 * 330,000 - -
- -----------------------------------------------------------------------------------------------------------------
* Represents less than 1% of the outstanding shares of common stock.
(1) Applicable percentage of ownership is based on 44,021,930 common shares
outstanding as of June 30, 2002. The number of common shares and
percentage owned by each person includes shares as to which the person
has the right to acquire upon exercise of options and/or warrants and
conversion of convertible securities.
(2) Assumes that all shares are sold pursuant to this offering and that no
other common shares are acquired or disposed of by the selling security
holders prior to the termination of this offering. Because the selling
security holders may sell all, some or none of their shares or may
acquire or dispose of other common shares, we cannot estimate the
aggregate number of shares which will be sold in this offering or the
number or percentage of common shares that each selling security holder
will own upon completion of this offering.
(3) Includes an estimated 6,801,429 shares which would be issued to the
Trust on conversion of a debenture and full exercise of related
warrants.
(4) Includes the common shares issued on the related private placement and
the common share equivalent of the non-transferable one-half common
share purchase warrant issued to the holder as part of the private
placement.
(5) Includes 550,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002.
(6) Includes 1,000,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002 and 152,500 common
shares, which may be issued to the holder upon the exercise of warrants
outstanding at June 30, 2002.
(7) Includes 436,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002 and 152,500 common
shares, which may be issued to the holder upon the exercise of warrants
outstanding at June 30, 2002.
(8) Includes 250,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002.
(9) Includes 50,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002.
(10) Includes 625,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002 and 11,338 common
shares, which may be issued to the holder upon the exercise of warrants
outstanding at June 30, 2002.
(11) Includes 100,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002.
(12) Includes 300,000 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002.
(13) Includes 2,093,958 common shares, which may be issued to the holder upon
the exercise of options outstanding at June 30, 2002.
We will pay all expenses in connection with the distribution of the
shares of common stock being sold by the selling security holders, except for
the fees and expenses of any counsel and other advisors that any selling
security holders may employ to represent them in connection with the offering
and any brokerage or underwriting discounts or commissions paid to
broker-dealers in connection with the sale of the shares.
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the shares
offered by the selling security holders.
- 58 -
The selling security holders have not advised us of any specific plan
for distribution of the shares offered hereby, but it is anticipated that the
shares will be sold from time to time by the selling security holders or by
pledgees, donees, transferees or other successors in interest without an
underwriter. Such sales may be made on the TSX Venture Exchange, the Pink
Sheets, any exchange upon which our shares may trade in the future,
over-the-counter, or otherwise, at prices and at terms then prevailing or at
prices related to the then current market price, or in negotiated transactions.
The shares may be sold by one or more of the following, without limitation:
o a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell
a portion of the block as principal to facilitate the
transaction;
o purchases by a broker or dealer for its account pursuant to this
prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchases;
o through options, swaps or derivatives;
o in privately negotiated transactions;
o in transactions to cover short sales;
o through a combination of any such methods of sale; or
o in accordance with Rule 144 under the Securities Act, rather
than pursuant to this prospectus.
The selling security holders may sell their shares directly to
purchasers or may use brokers, dealers, underwriters or agents to sell their
shares. Brokers or dealers engaged by the selling security holders may arrange
for other brokers or dealers to participate. Brokers or dealers may receive
commissions, discounts or concessions from the selling security holders, or, if
any such broker-dealer acts as agent for the purchaser of shares, from the
purchaser in amounts to be negotiated immediately prior to the sale. The
compensation received by brokers or dealers may, but is not expected to, exceed
that which is customary for the types of transactions involved. Broker-dealers
may agree with a selling security holder to sell a specified number of shares at
a stipulated price per share, and, to the extent the broker-dealer is unable to
do so acting as agent for a selling security holder, to purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to the selling security holder. Broker-dealers who acquire shares as principal
may thereafter resell the shares from time to time in transactions, which may
involve block transactions and sales to and through other broker-dealers,
including transactions of the nature described above, in the over-the counter
market or otherwise at prices and on terms then prevailing at the time of sale,
at prices then related to the then-current market price or in negotiated
transactions. In connection with resales of the shares, broker-dealers may pay
to or receive from the purchasers of shares commissions as described above.
The selling security holders and any broker-dealers or agents that
participate with the selling security holders in the sale of the shares may be
deemed to be "underwriters" within the meaning of the Securities Act. In that
event, any commissions received by broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
From time to time the selling security holders may engage in short
sales, short sales against the box, puts and calls and other hedging
transactions in our securities, and may sell and deliver the shares in
connection with such transactions or in settlement of securities loans. These
transactions may be entered into with broker-dealers or other financial
institutions. In addition, from time to time, a selling security holder may
pledge its shares pursuant to the margin provisions of its customer agreements
with its broker-dealer. Upon delivery of the shares or a default by a selling
security holder, the broker-dealer or financial institution may offer and sell
the pledged shares from time to time.
- 59 -
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
We have paid or accrued for payment the following amounts to related
parties:
We paid salary of $77,500 to our Chief Operating Officer in 2001,
$73,000 in 2000 and $72,000 in 1999.
We paid management fees of $188,521 to two companies controlled by our
directors during 2001. Both of these management contracts have been terminated
by December 31, 2001. One of these companies, Crystallex International
Corporation ("Crystallex"), was granted options to purchase up to 2,250,000 of
our shares for a contract price of C$1.08 per share. Pursuant to the termination
agreement the options may be exercised until November 15, 2002.
We engaged Fraser & Co. as Canadian legal counsel from February 1, 2000
to April 1, 2002. David Fraser is a partner in Fraser & Co. and was a director
for the Company from June 2000 until his resignation on April 1, 2002. Fees paid
or accrued to Fraser & Co. during the December 2001 fiscal year amounted to
$92,653 and $112,090 in 2000.
Global Settlement Agreement
By an agreement dated January 8, 2000, we reached a settlement with
various parties to conclude numerous lawsuits, disagreements and contractual
relationships. As a result, all actions in which we were named have been
dismissed, with prejudice, at no cost to us except for our direct legal,
indemnity and other related costs.
A summary of the lawsuits, disagreements and contractual relationships
follows:
Civil Suit by Gumprecht - Promissory Note
On October 17, 1997, a lawsuit was brought against the Company and
others in the State of Idaho, Supreme Court number 25477 (civil case number
31150) by Thomas Gumphrect and Bonnie Witrak). The Plaintiffs brought the action
to collect on a promissory note dated October 19, 1995 entered into between the
Plaintiffs and the Company in the amount of $250,000. In connection with the
execution of the promissory note, the Company and Plaintiffs entered into a
security agreement, which granted the Plaintiffs a security interest in certain
assets. The Plaintiffs sought possession of certain assets, which included
equipment located at the Eckert's Hill Mine and Mill site and at the Golden
Eagle site. The Plaintiffs sought a judgment in the total amount of $308,000 for
principal and interest up to and including October 1, 1997.
During 1998, the Company elected to allow a default to be entered in the
lawsuit and the Court ordered the Company to pay the amount of $332,216 (paid),
which included interest through May 17, 1998. The Court denied the Plaintiffs'
claim for attorney fees and filed an appeal of this decision.
- 60 -
Civil Suit by Gumprecht - Share Exchange
During 1996, Thomas Gumphrecht brought a lawsuit against Idaho Mining &
Development Company ("IMD") and Joseph Swisher in the State of Idaho, Idaho
County civil consolidated case number 30534. The case was consolidated with
civil case number 30968 brought by Thomas Gumphrect and Kirke White against IMD,
Joseph Swisher, the Company, and Delbert and Elli Steiner. During 1997, the
Plaintiff filed an Amended Complaint, which added the Company and Delbert and
Elli Steiner as defendants (with IMD and Joseph Swisher, collectively the
"Defendants"). The Plaintiff alleges that the Plaintiff made various loans to
Idaho Non-Metallic Mineral, a company owned in part by Mr. Steiner and Mr.
Swisher, in exchange for shares of Silver Crystal Mines and IMD. The Plaintiff
claims that prior to December 1991, the parties to the lawsuit had an oral
agreement to exchange the Plaintiff's shares in Silver Crystal and IMD for
250,000 of the Company's shares, which were owned by IMD. The Plaintiff is
seeking transfer of such shares. The Defendants deny that any such oral
agreement was made and have raised the statute of frauds and statute of
limitations as defenses to the Plaintiff's claims.
During 1998, the Court dismissed the claims for securities fraud and
negligent misrepresentation, on summary judgment. The remaining claims of the
lawsuit moved to the discovery phase and a trial date was set for August 23,
1999.
Civil Suit by Gumprecht - Derivative Action
On August 5, 1997, Thomas Gumphrect and Kirke White, on behalf of the
shareholders of Silver Crystal Mines, Inc., brought a lawsuit against Delbert
Steiner and others in the State of Idaho, Idaho County civil case number 31666.
Subsequently, the Company was added to the lawsuit, but not named formally, and
Miriam M. Lee, trustee of the Miriam M. Lee Trust dated May 5, 1973 substituted
as plaintiff representing the shareholders of Silver Crystal Mines, Inc.
The lawsuit made allegations against Mr. Steiner and named the Company
with respect to the transfer of various funds and alleged agreements between Mr.
Steiner and the Plaintiffs set out more particularly as follows:
The Plaintiffs alleged that Mr. Joseph Swisher was involved in the
creation of the Company, an allegation denied by the Company. The Plaintiffs
further alleged that the Company paid Silver Crystal $800,000 for the
construction of the Eckert's Hill Mine and Mill site, an allegation admitted by
the Company. The Plaintiffs alleged that such funds were diverted for the
personal use of Mr. Joseph Swisher, an allegation denied by the Company.
The Plaintiffs alleged that the Company made an August 1995 agreement,
to exchange the stock of the Plaintiffs in Silver Crystal for that of the
Company. The Company admitted an offer was made to this effect, but denied that
such offer was accepted and as a result no agreement was formed.
The Plaintiffs alleged that Mr. Steiner solicited funds from the
Plaintiffs while acting as their attorney and deposited such funds into his
attorney/client trust account and/or his attorney general business account. The
Plaintiffs alleged such funds were given to Mr. Steiner in exchange for stock in
the Company, which was not delivered. The Plaintiffs alleged that the
solicitation of funds, the depositing of such funds into Mr. Steiner's client
accounts, the disbursement of such funds without accounting, and the failure to
transfer stock to the Plaintiffs exhibits negligence by failure to exhibit the
care expected of a reasonably prudent attorney acting in the same or similar
circumstances in the same or similar community. Mr. Steiner specifically denied
soliciting funds from the Plaintiffs and stated that the disbursement of such
funds was undertaken at the instruction of the Plaintiff, Mr. Gumprecht. Mr.
Steiner further denied the remainder of the aforementioned allegations.
The Plaintiffs were seeking recission and restitution of funds,
compensatory damages, specific performance of the alleged contract, the
formation of a constructive trust in the Golden Eagle Mining properties and all
Company stock owned by Mr. Joseph Swisher and IMD, punitive damages for
$1,000,000, and several orders relating to the Golden Eagle Property, Silver
Crystal Mines, Inc., IMD and Mr. Swisher.
- 61 -
Indemnification
In order to reach a final settlement, a director, Mr. Delbert W. Steiner
agreed to transfer 252,000 common shares of his own personal company stock to
certain of the plaintiffs. We had agreed to indemnify our officers and directors
in relationship to the settlement hearings, which were successful in concluding
the various matters. Accordingly, we allotted 252,000 common shares from
treasury, which were issued upon receipt of regulatory approval to cover such
indemnification. The deemed value of such allotment in the amount of $239,202
was accrued in the year ended December 31, 1999 and the shares were issued
during the year ended December 31, 2000.
DESCRIPTION OF THE SHARES
Our capital structure
Our authorized share capital consists of 100,000,000 common shares
without par value. As of June 30, 2002, there were 44,021,930 shares issued and
outstanding. There are also outstanding warrants, options and convertible
securities that entitle the holders to purchase our shares at fixed prices. If
all of these warrants, vested options and convertible securities were exercised,
59,906,861 shares would be issued and outstanding. Including the unvested
options, 60,994,361 shares would be issued and outstanding. See also Market for
Our Common Shares, page 7.
Material Rights Applicable to our Shares
The holders of our common shares are entitled to dividends, if, as, and
when declared by the board of directors, to receive those assets distributable
to common shareholders upon liquidation, dissolution, or winding up of the
company; and to receive notice of, and to attend and vote at, all meetings of
our shareholders. All of our common shares rank equally as to dividends, voting
rights and any distribution of assets on winding up or dissolution. Each common
share carries with it the right to one vote. There are no pre-emptive or
conversion rights, and no provision for surrender, sinking or purchase funds.
There are no special liquidation rights, subscription rights or redemption
provisions. There are no founders, management or deferred shares that carry
rights that differ from the rights attached to the common shares. We do not have
cumulative voting rights for our shareholders.
Quorum requirements for shareholders' meetings include two shareholders
present in person or represented by proxy representing a minimum of 5% of our
issued voting shares. The Directors, the Secretary or, in his absence, an
Assistant Secretary, and our solicitor shall be entitled to attend at any
general meeting but no such person shall be counted in the quorum or be entitled
to vote at any general meeting unless he is a shareholder or proxy holder
entitled to vote thereat. If a quorum is present at the opening of any Meeting
of Shareholders, the Shareholders present or represented by proxy may proceed
with the business of the meeting notwithstanding that a quorum is not present
throughout the meeting.
Provision as to the modification, amendment or variation of the rights
attached to our common shares are contained in our Articles of Continuance,
Bylaws and the Yukon Business Corporations Act RSY, 1986, c.15. There are no
agreements affecting the rights of our shareholders other than our Articles of
Continuance, Bylaws, the Yukon Business Corporation Act, and the registration
rights of the Selling Security Holders as described in below.
We granted registration rights to certain investors with respect to
7,528,853 common shares and 7,528,853 one-half share purchase warrants, which if
exercised allow the holder to acquire 3,764,426 common shares, in private
placements completed during 2001 and 2002.
- 62 -
ADDITIONAL INFORMATION
Exchange Controls
Canada has no system of exchange controls. There are no exchange
restrictions on borrowing from foreign countries nor on the remittance of
dividends, interest, royalties and similar payments, management fees, loan
repayments, settlement of trade debts or the repatriation of capital.
Taxation
Certain Canadian Federal Income Tax Considerations for United States
Investors
The following is a summary of the principal Canadian federal income tax
considerations applicable to a person who is a U.S. Holder. In this summary, a
"U.S. Holder" means a person who, for the purposes of the Canada-United States
Income Tax Convention, 1980 as amended, (the "Convention") is a resident of the
United States and who, for the purposes of the Income Tax Act (Canada) (the
"Canadian Tax Act") (a) is not and never has been a resident of Canada, (b)
deals at arm's length with the Company, (c) is the beneficial owner of shares,
(d) holds the shares as capital property, (e) does not use or hold and is not
deemed to use or hold the shares in the course of carrying on a business in
Canada, and (f) is not an insurer for whom the shares constitute its designated
insurance property. A share will generally be capital property to a U.S. Holder
unless it is held in the course of carrying on a business of trading or dealing
in securities or has been acquired in a transaction or transactions considered
to be a venture in the nature of trade. This summary does not apply to a U.S.
Holder that is a "financial institution" for purposes of the mark-to-market
rules contained in the Canadian Tax Act.
This summary is based on the current provisions of the Canadian Tax Act
and the regulations thereunder in force on the date hereof, Company counsel's
understanding of the current published administrative and assessing practices of
the Canada Customs and Revenue Agency ("Revenue Canada") and all specific
proposals to amend the Canadian Tax Act and the regulations announced by the
Canadian Minister of Finance prior to the date hereof (the "Proposed
Amendments"). This summary is not exhaustive and does not discuss all the tax
consequences that may be relevant to particular U.S. Holders in light of their
circumstances and except for the Proposed Amendments, does not take into account
or anticipate changes in the law or the administrative or assessing practices of
Revenue Canada, whether by judicial, governmental or legislative action or
interpretation, nor does it take into account tax legislation or considerations
of any province or territory of Canada. U.S. Holders and prospective holders of
shares of the Company are urged to consult their own tax advisors about the tax
consequences of purchasing, owning and disposing of shares of the Company.
U.S. Holders will be subject to a 15% Canadian withholding tax on the
gross amount of dividends paid or deemed to be paid by the Company. In the case
of a U.S. corporation, which beneficially owns at least 10% of the voting stock
of the Company, the applicable rate of withholding tax on dividends is 5%.
A U.S. Holder will not be subject to tax under the Canadian Tax Act in
respect of any capital gain arising on a disposition or deemed disposition of
shares of the Company unless such shares constitute "taxable Canadian property"
within the meaning of the Canadian Tax Act and the U.S. Holder is not entitled
otherwise to relief under the Convention. Shares will not constitute taxable
Canadian property of a U.S. Holder unless, at any time during the five year
period immediately preceding the disposition of the shares, not less than 25% of
the issued shares of any class or series of a class of the capital stock of the
Company belonged to or were under option to the U.S. Holder, to persons with
whom the U.S. Holder did not deal at arm's length or to any combination thereof.
- 63 -
Under the Convention, capital gains derived by a U.S. Holder from the
disposition of shares, even where they constitute taxable Canadian property,
generally will not be taxable in Canada unless the value of the Company's shares
is derived principally from real property situated in Canada.
A disposition or deemed disposition of shares by a U.S. Holder whose
shares are taxable Canadian property and who is not entitled to an exemption
under the Convention will give rise to a capital gain (or a capital loss) equal
to the amount, if any, by which the proceeds of disposition, less the reasonable
costs of disposition, exceed (or are less than) the adjusted cost base of the
shares to the U.S. Holder at the time of the actual or deemed disposition.
Generally, one-half of any capital gain realized will be required to be included
in income as a taxable capital gain and one-half of any capital loss will be
deductible, subject to certain limitations, against taxable capital gains in the
year of disposition or the three preceding years or any subsequent year in
accordance with the detailed provisions in the Canadian Tax Act.
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.
- 64 -
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 rata 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.
- 65 -
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 balance 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 Act 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.
- 66 -
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 exchange 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.
LEGAL MATTERS
The validity of the common shares being offered hereby will be passed
upon for Beartooth Platinum Corporation (formerly Idaho Consolidated Metals
Corp.) by Campion & Macdonald, of Whitehorse, YT, Canada.
EXPERTS
The consolidated financial statements for Idaho Consolidated Metals
Corp. as of December 31, 2001 and 2000 and for the years ended December 31,
2001, 2000 and 1999 and for the period from inception (September 15, 1988)
through December 31, 2001, included in this prospectus, have been so included in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form SB-2 with the SEC, under
Registration No. 333-92018. This prospectus, which forms a part of that
registration statement, does not contain all of the information included in the
registration statement and the exhibits and schedules thereto as permitted by
the rules and regulations of the SEC. For further information with respect to
Beartooth Platinum Corporation (formerly Idaho Consolidated Metals Corp.) and
the common shares offered hereby, please refer to the registration statement,
including its exhibits and schedules. Statements contained in this prospectus as
to the contents of any contract or other document referred to herein are not
necessarily complete and, where the contract or other document is an exhibit to
the registration statement, each such statement is qualified in all respects by
the provisions of such exhibit, to which reference is hereby made. You may
review a copy of the registration statement at the SEC's public reference room
in Washington, D.C., and at the SEC's regional office in Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The registration statement can also be reviewed
by accessing the SEC's Internet site at http://www.sec.gov. We are subject to
the information and reporting requirements of the Securities Exchange Act and,
in accordance therewith, file periodic reports, proxy statements and other
information with the SEC. These reports can also be reviewed by accessing the
SEC's Internet site.
- 67 -
FINANCIAL STATEMENTS
The Company files financial statements that are prepared in accordance
with generally accepted accounting principles in the Canada. For a description
of the primary differences between Canadian and United States generally accepted
accounting principles, see Note 12 to the Company's Financial Statements for the
period ended December 31, 2001. See also Notes 1 and 2 to the Company's
Financial Statements for the period ended December 31, 2001.
- 68 -
Auditor's Report
To the Shareholders and Board of Directors
Idaho Consolidated Metals Corp.
We have audited the balance sheets of Idaho Consolidated Metals Corp. as at
December 31, 2001 and 2000 and the consolidated statements of operations and
cash flows for each of the years in the three year period ended December 31,
2001 and cumulative from September 15, 1988 (date of inception) to December 31,
2001 and the consolidated changes in shareholders' equity for the three years
ended December 31, 2001, which have been prepared on the basis of accounting
principles generally accepted in Canada. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States and Canada. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Idaho Consolidated Metals Corp. as
at December 31, 2001 and 2000 and the results of its operations and its cash
flows for each of the years in the three year period ended December 31, 2001 and
cumulative from September 15, 1988 (dated inception) to December 31, 2001 and
the consolidated changes in shareholders' equity for the three years ended
December 31, 2001 in accordance with Canadian generally accepted accounting
principles. As required by the British Columbia Company Act, we report that, in
our opinion, these principles have been applied on a consistent basis.
Signed "PricewaterhouseCoopers LLP"
Chartered Accountants
Vancouver, B.C., Canada
February 22, 2002 (except note 11, which is at March 7, 2002)
Comments by the Auditors for U.S. Readers on Canada - U.S. Reporting Conflict
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant conditions and events that cast
substantial doubt on the company's ability to continue as a going concern, such
as those described in Note 1 to the consolidated financial statements. Our
report to the shareholders dated February 22, 2002 (except for note 11, which is
at March 7, 2002) is expressed in accordance with Canadian reporting standards
which do not permit a reference to such events and conditions in the auditors'
report when these are adequately disclosed in the financial statements.
Signed "PricewaterhouseCoopers LLP"
Chartered Accountants
Vancouver, B.C., Canada
February 22, 2002 (except note 11, which is at March 7, 2002)
F-1
Idaho Consolidated Metals Corp.
(An Exploration Stage Company) Statement 1
Consolidated Balance Sheets
As at December 31
U.S. Funds
ASSETS 2001 2000
- --------------------------------------------------------------------------------
Current
Cash and cash equivalents $ 87,920 $ 26,508
Other 31,712 11,962
119,632 38,470
Restricted Investments 117,811 90,000
Property, Plant and Equipment, net (Note 3) 115,810 342,227
Property Rights (Note 4) 2,630,660 2,097,967
------------ ------------
$ 2,983,913 $ 2,568,664
============ ============
LIABILITIES
- --------------------------------------------------------------------------------
Current
Accounts payable - related parties $ 243,812 $ 58,895
Other accounts payable 500,070 210,475
Notes payable, due currently (Note 5) -- 3,590
------------ ------------
743,882 272,960
Notes Payable, non-current (Note 5) 37,500 --
Share Subscriptions 353,285 --
------------ ------------
1,134,667 272,960
------------ ------------
Continued Operations Commitments
and Contingencies
(Notes 1, 4 and 8)
SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Share Capital (Note 6)
Authorized:
100,000,000 common shares with no par value
Issued and outstanding:
37,165,623 (33,171,201) shares 14,657,490 12,573,110
Deficit Accumulated During the Exploration Stage (12,808,244) (10,277,406)
------------ ------------
1,849,246 2,295,704
------------ ------------
$ 2,983,913 $ 2,568,664
================================================================================
ON BEHALF OF THE BOARD:
"Delbert W. Steiner", Director
"John Andrews", Director
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
Idaho Consolidated Metals Corp.
(An Exploration Stage Company) Statement 2a
Consolidated Statements of Changes in Shareholders' Equity
U.S. Funds
Equity Deficit
Component Accumulated
Common Shares of During the
----------------------- Convertible Exploration
Shares Amount Securities Stage Total
- ----------------------------------------------------------------------------------------------------------------
Balance - December 31, 1998 9,434,650 $ 7,508,593 $ 249,862 $(7,263,201) $ 495,254
Equity component on issuance of
convertible securities -- -- 42,222 -- 42,222
Issuance of shares on conversion of
convertible securities in January
($0.21 per share) 546,154 113,108 (13,108) -- 100,000
Issuance of shares on conversion of
convertible securities in March
($0.21 per share) 600,769 124,419 (14,419) -- 110,000
Issuance of shares for cash in March
($0.10 per share) 2,000,000 200,000 -- -- 200,000
Issuance of shares on conversion of
convertible securities in May
($0.18 per share) 932,608 169,585 (19,585) -- 150,000
Issuance of shares for cash on
exercise of warrants in June ($0.10
per share) 570,000 57,000 -- -- 57,000
Issuance of shares for cash on
exercise of warrants related to
convertible securities in June
($0.23 per share) 1,146,923 268,494 (27,527) -- 240,967
Issuance of shares on conversion of
convertible securities in August
($0.13 per share) 2,227,941 283,419 (33,419) -- 250,000
Issuance of shares for cash on
exercise of warrants related to
convertible securities in August
($0.13 per share) 2,227,941 286,045 (33,419) -- 252,626
Issuance of shares on conversion of
convertible securities in September
($0.14 per share) 3,639,528 502,511 (65,511) -- 437,000
Issuance of shares for cash on
exercise of warrants related to
convertible securities in September
($0.12 per share) 1,172,847 140,311 (21,111) -- 119,200
Issuance of shares for cash on
exercise of options in October
($0.18 per share) 40,000 7,072 -- -- 7,072
Issuance of shares for cash on
exercise of warrants related to
convertible securities in December
($0.19 per share) 766,480 143,797 (13,797) -- 130,000
Loss for the year -- -- -- (1,010,626) (1,010,626)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 1999 25,305,841 $ 9,804,354 $ 50,188 $(8,273,827) $ 1,580,715
- ----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
Idaho Consolidated Metals Corp.
(An Exploration Stage Company) Statement 2b
Consolidated Statements of Changes in Shareholders' Equity
U.S. Funds
Equity Deficit
Component Accumulated
Common Shares of During the
-------------------- Convertible Exploration
Shares Amount Securities Stage Total
- ---------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 25,305,841 $ 9,804,354 $ 50,188 $(8,273,827) $ 1,580,715
Issuance of shares for cash on
exercise of warrants in January
($0.10 per share) 100,000 10,000 -- -- 10,000
Issuance of shares on conversion
of convertible securities in
February ($0.19 per share) 174,000 33,132 (3,132) -- 30,000
Issuance of shares for cash on
exercise of warrants in February
($0.29 per share) 1,047,492 299,420 -- -- 299,420
Issuance of shares for cash on
exercise of options in February
($0.19 per share) 350,000 67,593 -- -- 67,593
Issuance of shares for cash on
exercise of warrants in March
($0.43 per share) 1,377,574 597,323 -- -- 597,323
Issuance of shares for cash on
exercise of options in March
($0.25 per share) 75,000 18,923 -- -- 18,923
Issuance of shares for resource
property in April ($0.98 per
share) 150,000 147,739 -- -- 147,739
Issuance of shares for cash in
April ($0.50 per share) 667,000 333,616 -- -- 333,616
Issuance of shares for cash on
exercise of warrants in April
($0.70 per share) 500 349 -- -- 349
Issuance of shares on conversion
of convertible securities in May
($0.20 per share) 932,608 188,888 (19,585) -- 169,303
Issuance of shares for cash on
exercise of warrants in May
($0.70 per share) 500 349 -- -- 349
Issuance of shares for cash on
exercise of options in May
($0.25 per share) 80,000 16,040 -- -- 16,040
Issuance of shares for debt
settlement in June ($0.95 per
share) 252,000 239,202 -- -- 239,202
Issuance of shares for cash on
exercise of warrants in May
($0.70 per share) 4,750 3,312 -- -- 3,312
--------------------------------------------------------------------
Balance forward 30,517,265 $11,760,240 $ 27,471 $(8,273,827) $ 3,513,884
=========================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
Idaho Consolidated Metals Corp.
(An Exploration Stage Company) Statement 2c
Consolidated Statements of Changes in Shareholders' Equity
U.S. Funds
Equity Deficit
Component Accumulated
Common Shares of During the
------------------------ Convertible Exploration
Shares Amount Securities Stage Total
- -----------------------------------------------------------------------------------------------------------
Balance carried forward 30,517,265 $ 11,760,240 $ 27,471 $ (8,273,827) $ 3,513,884
Issuance of shares for cash
on exercise of warrants in
August ($0.70 per share) 500 348 -- -- 348
Issuance of shares for cash
in September ($0.68 per
share) 488,235 332,000 -- -- 332,000
Issuance of shares on
conversion of convertible
securities in September
($0.18 per share) 1,526,201 281,965 (27,471) -- 254,494
Issuance of shares for
resource property in
October ($0.66 per share) 200,000 87,117 -- -- 87,117
Issuance of shares for
resource property in
November ($0.48 per share) 200,000 61,440 -- -- 61,440
Issuance of shares for cash
on exercise of options in
December ($0.21 per share) 239,000 50,000 -- -- 50,000
Loss for the year -- -- -- (2,003,579) (2,003,579)
------------------------------------------------------------------------
Balance - December 31, 2000 33,171,201 12,573,110 -- (10,277,406) 2,295,704
Issuance of shares for cash
on exercise of options in
January ($0.20 per share) 50,000 9,866 -- -- 9,866
Issuance of shares for cash
in February ($0.53 per
share) 1,780,372 939,887 -- -- 939,887
Issuance of shares for cash
on exercise of options in
February ($0.17 per share) 100,000 16,890 -- -- 16,890
Issuance of shares for cash
on exercise of warrants in
February ($0.19 per share) 111,000 20,596 -- -- 20,596
Issuance of shares for cash
on exercise of warrants in
March ($0.12 per share) 568,000 67,610 -- -- 67,610
Issuance of shares for cash
on exercise of warrants in
April ($0.80 per share) 325,050 261,626 -- -- 261,626
Issuance of shares for cash
on exercise of options in
April ($0.24 per share) 75,000 18,003 -- -- 18,003
Issuance of shares for cash
on exercise of options in
May ($0.31 per share) 75,000 22,875 -- -- 22,875
Issuance of shares for cash
in June ($0.90) per share) 610,000 548,446 -- -- 548,446
Issuance of shares for
resource property in August
($0.58 per share) 200,000 116,069 -- -- 116,069
Issuance of shares for
resource property in
September ($0.63 per share) 100,000 62,512 -- -- 62,512
Loss for the year -- -- -- (2,530,838) (2,530,838)
------------------------------------------------------------------------
Balance - December 31, 2001 37,165,623 $ 14,657,490 $ -- $(12,808,244) $ 1,849,246
===========================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
Idaho Consolidated Metals Corp.
(An Exploration Stage Company) Statement 3
Consolidated Statements of Operations
U.S. Funds
Year Ended December 31 Cumulative
from Inception (September 15, 1988) through December 31,
2001 2000 1999 2001
- -------------------------------------------------------------------------------------------------------
Other Income
Property option receipts $ -- $ -- $ -- $ 165,000
Cost of property options -- -- -- (72,588)
-- -- -- 92,412
Interest 17,155 7,304 3,838 80,573
Other income 3,034 19,362 34,114 56,510
20,189 26,666 37,952 229,495
Operating Expenses
General and administrative 1,431,503 799,153 736,033 6,835,467
Gold property holding costs 117,911 -- -- 117,911
Write-off processing equipment
and related costs 329,285 140,000 -- 1,906,608
Abandonment of property rights 665,320 1,085,404 23,290 4,029,901
Loss on disposal of equipment -- -- -- 4,576
Interest costs 7,008 5,688 289,255 633,505
Less interest capitalized -- -- -- (87,145)
2,551,027 2,030,245 1,048,578 13,440,823
Loss Before the Following 2,530,838 2,003,579 1,010,626 13,211,328
Gain on settlement of lawsuit -- -- -- 223,946
Gain on settlement of debt -- -- -- 179,138
Net Loss for the Year $ 2,530,838 $ 2,003,579 $ 1,010,626 $ 12,808,244
=======================================================================================================
Net Loss per Share - Basic and Diluted $ 0.07 $ 0.07 $ 0.06
========================================================================================
Weighted Average Shares - Basic and Diluted 36,181,875 29,868,903 16,692,843
========================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
Idaho Consolidated Metals Corp. Statement 4a
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
U.S. Funds
Cumulative
from Inception
Year Ended December 31 (September 15, 1988)
-------------------------------------------- through December 31,
2001 2000 1999 2001
- ----------------------------------------------------------------------------------------------------------------
Operating Activities
Net loss for the year $ (2,530,838) $ (2,003,579) $ (1,010,626) $(12,808,244)
Adjustments to reconcile loss to
net cash used by operating activities
Amortization 22,213 14,329 7,012 91,766
Amortization of interest discount -- -- 220,901
277,713
Gain on settlement of lawsuit -- -- -- (223,946)
Gain on settlement of debt -- -- -- (179,138)
Loss on disposal of equipment -- -- -- 4,576
Write-off of plant and equipment 329,285 140,000 -- 1,902,422
Abandonment and sale of property rights 665,320 1,085,404 23,290 4,102,489
Change in:
Other assets (19,750) 7,379 (2,907) (31,712)
Accounts payable - related parties 184,917 (69,562) 238,972 879,105
Other accounts payable 289,595 (73,814) 56,581 991,131
----------------------------------------------------------
Net cash used in operating activities (1,059,258) (899,843) (466,777) (4,993,838)
----------------------------------------------------------
Investing Activities
Property rights
Acquisition costs (190,247) (521,149) (250,166) (1,509,217)
Exploration costs (829,185) (740,786) (422,594) (3,684,585)
Property, plant and equipment acquisition (87,581) (8,782) (8,257) (1,331,074)
Proceeds on sale of equipment -- -- 4,000 4,000
Cash in trust -- -- 50,000 --
Purchase of investment for reclamation bond (27,811) (8,000) 8,000 (117,811)
----------------------------------------------------------
Net cash used in investing activities (1,134,824) (1,278,717) (619,017) (6,638,687)
----------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
Idaho Consolidated Metals Corp. Statement 4b
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
U.S. Funds
Cumulative
from Inception
Year Ended December 31 (September 15, 1988)
-------------------------------------------- through December 31,
2001 2000 1999 2001
- -------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from related party notes payable $ -- $ -- $ 72,778 $ 1,320,878
Repayments on related party notes payable (3,590) (9,952) (4,528) (815,817)
Share subscriptions 353,285 -- -- 353,285
Net proceeds from issuance of convertible securities -- -- 42,222 292,084
Net proceeds from sale of common stock 1,905,799 2,183,070 1,006,865 10,570,015
-----------------------------------------------------------
Net cash provided by financing activities 2,255,494 2,173,118 1,117,337 11,720,445
-----------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 61,412 (5,442) 31,543 87,920
Cash and cash equivalents - Beginning of period 26,508 31,950 407 --
-----------------------------------------------------------
Cash and Cash Equivalents - End of Period $ 87,920 $ 26,508 $ 31,950 $ 87,920
===================================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
Idaho Consolidated Metals Corp. Statement 4c
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
U.S. Funds
U.S. Funds
Cumulative
from Inception
Year Ended December 31 (September 15, 1988)
------------------------------------- through December 31,
2001 2000 1999 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest, net of amount capitalized $ 7,008 $ 5,688 $ 14,122 $ 157,466
Schedule of Non-Cash Investing and Financing Activities:
Note payable to shareholders incurred for property rights $ -- $ -- $ -- $ 80,000
Common stock issued for property rights 178,581 296,296 -- 1,459,347
Common stock issued for equipment and process rights -- -- -- 750,000
Common stock issued upon conversion of accounts payable to related parties -- 239,202 -- 411,347
Common stock issued upon conversion of other accounts payable -- -- -- 86,923
Common stock issued for conversion of notes payable to shareholders -- -- 1,047,000 1,087,774
Conversion of accounts payable to notes payable -- -- -- 225,000
Common stock issued for conversation on convertible securities -- 50,188 241,896 292,084
Property, plant and equipment acquired for note payable 37,500 -- -- 37,500
The accompanying notes are an integral part of the consolidated financial
statements.
F-9
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
1. The Company and Basis of Presentation of Consolidated Financial Statements
Idaho Consolidated Metals Corp. (the Company) was incorporated in British
Columbia, Canada on September 15, 1988 to engage in mineral exploration,
development and processing. Effective August 17, 2001, the Company was
continued to the Yukon Territory. The Company is presently in the
exploration stage, as revenue-producing activities have not commenced. The
Company's consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles and are stated in
U.S. dollars.
During 1996, the Company established a wholly owned subsidiary, Idaho
Consolidated Metals International, Ltd. (ICMI) in the British Virgin
Islands. ICMI does not have any operations as of December 31, 2001. All
intercompany accounts and transactions have been eliminated on
consolidation.
These consolidated financial statements have been prepared assuming the
Company will continue as a going concern and be able to realize assets and
liquidate liabilities in the normal course of business. Since its inception,
the Company has incurred significant losses during the exploration stage and
at December 31, 2001 has a net working capital deficiency of approximately
$624,000. These factors, along with the uncertainties regarding the
Company's ability to obtain necessary financing to develop its properties
and to successfully develop economic ore reserves on these properties and
realize profitable production levels or proceeds from their disposition,
raise substantial doubt about the Company's ability to continue as a going
concern. These consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Management of the Company continues to seek additional sources of financing
to fund its ongoing capital needs and mitigate its working capital
deficiency. The Company is presently considering additional funding sources
including the sale of its common stock. Additionally, the Company is seeking
additional joint venture partners to assist in the exploration and
development of certain of its other properties. There can be no assurance
that the Company will be successful in obtaining additional funds or in
locating suitable joint venture partners to assist in the exploration and
development of its mineral properties (Note 11).
- --------------------------------------------------------------------------------
2. Significant Accounting Policies
a) Property Rights and Property, Plant and Equipment
Property, plant and equipment are stated at the lower of cost (or the
predecessor's cost basis if acquired from an affiliate) or estimated net
realizable value. Maintenance, repairs and renewals are charged to
operations. Major betterments are capitalized. When assets are retired
or sold, the costs and related accumulated depreciation and amortization
are eliminated and any resulting gain or loss is reflected in
operations. Proceeds received from the sale of any interest in the
property will first be credited against the carrying value of the
property with any excess included in operations for the period.
F-10
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
2. Significant Accounting Policies - Continued
a) Property Rights and Property, Plant and Equipment - Continued
The Company is in the process of exploring its mineral properties and
has not yet determined whether these properties contain ore reserves
that are economically recoverable.
Property rights are comprised of acquisition, development and
exploration costs, which are capitalized on an individual property basis
until such time as an economic ore body is defined or an event occurs,
which indicates a need to consider the recoverability of the carrying
value. Capitalized costs associated with a producing property will be
amortized on a unit-of-production method based on the estimated life of
the ore reserves while costs for abandoned properties are written off in
the period in which a decision is made to abandon such property.
Amortization of furniture and fixtures is based on the estimated lives
of the assets using the 20% per annum, declining balance method.
Amortization of automotive equipment is based on the estimated lives of
the assets using the 30% per annum declining balance method.
Management periodically reviews and obtains independent geological
reports in determining if adjustments to the carrying values of each of
its mineral properties, on a property-by-property basis, are required to
record those properties at the net recoverable amount. The ultimate
recoverability of the amounts capitalized for the mineral properties is
dependent upon the delineation of economically recoverable ore reserves,
the Company's ability to obtain the necessary financing to complete
their development and realize profitable production or proceeds from the
disposition thereof. Management's estimates of recoverability of the
Company's investment in various projects have been based on best
estimates. However, it is reasonably possible that changes could occur
in the near term, which could adversely affect management's estimates
and may result in future write-downs of capitalized property carrying
values.
Title to mineral properties involves inherent risks due to the
difficulties of determining the validity of certain claims as well as
the potential for problems arising from the frequently unreliable
conveyancing history characteristics of many mineral properties. The
Company has investigated title to all of its mineral properties and, to
the best of its knowledge, all of its properties are in good standing.
b) Accounting for Income Taxes
Income taxes are calculated using the liability method of accounting.
Temporary differences arising from the difference between the tax basis
of an asset or liability and its carrying amount on the balance sheet
are used to calculate future income tax liabilities or assets. The
future income tax asset and liabilities are measured using tax rates and
laws that are expected to apply when the temporary differences are
expected to reverse.
When acquisitions are made and a difference exists between the cost of
the asset and its tax basis, a future income tax liability or asset is
recorded. The amount of the future income tax liability or asset is
included in the initial carrying value of the acquired asset.
F-11
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
2. Significant Accounting Policies - Continued
c) Cash, Cash Equivalents and Restricted Investments
The Company considers cash and cash equivalents to include amounts held
in banks and highly liquid investments with remaining maturities at
point of purchase of three months or less. Restricted investments
represent certificates of deposit, which were purchased for reclamation
bond requirements. The Company places its cash and cash investments with
institutions of high-credit worthiness. At times, such investments may
be in excess of federal insurance limits.
d) Net Loss Per Common Share
Loss per share is calculated based on the weighted-average number of
common shares issued and outstanding during the year. The Company has
adopted the revised recommendations of the Canadian Institute of
Chartered Accountants, whereby the new rules are applied on a
retroactive basis and did not result in any restatement of the Company's
financial statements. The effect of potential issuances of shares under
options or warrants would be anti-dilutive, and therefore basic and
fully diluted losses per share are the same.
e) Foreign Currency Translation
The accounts of the Company's Canadian operations have been translated
into U.S. dollars as follows:
i) Monetary assets and liabilities at year-end rates,
ii) All other assets and liabilities at historical rates, and
iii) Revenue and expense and exploration and development items at the
average rate of exchange prevailing during the year.
iv) Gains and losses arising on translation are charged to the
statement of operations in the period in which they occur.
f) Management's Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the reported periods. Actual results could differ from those
estimates.
g) Financial Instruments
The Company allocates convertible security instruments, including their
component parts, as a liability or as equity in accordance with the
substance of the related contractual arrangement.
h) Stock Option Plan
The Company has a stock option plan described in Note 6a. No
compensation expense is recognized for this plan when share options are
issued pursuant to the plan. Consideration paid for shares on exercise
of the stock options is credited to share capital.
F-12
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
3. Property, Plant and Equipment
Following are the major components of property, plant and equipment:
2001 2000
--------- --------
Land $ 71,191 $ -
Building and equipment - 329,285
Furniture and fixtures 97,608 76,036
Automotive 32,318 -
--------- --------
201,117 405,321
Less: Accumulated depreciation (85,307) (63,094)
--------- --------
$115,810 $342,227
--------- --------
During the year ended December 31, 2001, the Company wrote-off the $329,285
balance of building and equipment based upon the net realizable value of the
related assets.
- --------------------------------------------------------------------------------
4. Property Rights
The details by major area of interest of the Company's investments in mining
property rights are as follows:
2001
-------------------------------------
Acquisition Exploration Total 2000
Stillwater Complex, Montana $1,016,821 $1,434,086 $2,450,907 $1,918,214
Petsite Project, Idaho 143,000 -- 143,000 143,000
Deadwood Project, Idaho 1 -- 1 1
Buffalo Gulch Property, Idaho 36,750 -- 36,750 36,750
Other properties 2 -- 2 2
-------------------------------------------------
$1,196,574 $1,434,086 $2,630,660 $2,097,967
-------------------------------------------------
The Stillwater Complex is a platinum group metals target, which is located
in the Stillwater and Sweetgrass counties, Montana. Portions of the property
are located within the Gallatin and Custer National Forests, on land
administered by the U.S. Forest Service. Permits must be obtained for all
exploration and development work to be carried out on these properties.
There can be no assurances that the Company will be able to obtain all
necessary permits in order to place its mineral properties into production.
A number of the gold properties are located within the Nez Perce National
Forest, Idaho, on land administered by the U.S. Forest Service. Permits must
be obtained for all exploration and development work to be carried out on
these properties. There can be no assurances that the Company will be able
to obtain all necessary permits in order to place its mineral properties
into production.
Following is a summary of the agreements associated with the Company's major
mineral property projects and acquisition of its mineral rights.
F-13
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
a) Stillwater Complex, Montana
Staked Claims
From 1999 through 2001, the Company staked approximately 1,775 claims in
the Stillwater area of Montana upon which the Company has an undivided
interest. These claims require annual payments of $100 per claim in
August each year, as a claim rental to the Bureau of Land Management.
This represents an annual cost of $177,500 to maintain these properties.
Chrome Mountain Property
The Company entered into a Tri-Party Lease and Purchase Option dated
July 16, 1999 with two non-related parties covering 54 unpatented mining
claims located in Sweetgrass County, Montana. The lease, which received
regulatory approval on April 4, 2000, is for 5 years with 5 successive
one year renewal terms and requires the following during the initial 5
year term:
Cumulative
Cash Issue Exploration
Payment Shares Expenditures
----------------------------------
On signing (paid) $ 19,500 -- $ --
On receipt of regulatory approval
(Issued - 2000) -- 150,000 --
By June 10, 2000 (completed) -- -- 50,000
By July 16, 2000 (Issued - 2000) -- 200,000 --
By June 10, 2001 (completed) -- -- 120,000
By July 16, 2001 (Issued - 2001) -- 200,000 --
By June 10, 2002 -- -- 210,000
By July 16, 2002 -- 375,000 --
By July 16, 2003 -- 575,000 --
Each successive year, after the initial 5-year term, would require a
cash payment of $50,000 and annual exploration expenditure of $250,000.
The Company has a purchase option of $5,000,000 plus a non-transferable
share purchase warrant for 110% of the shares not yet issued for the
unexpired portion of the lease term, at the prevailing market price and
for a minimum 5 year exercise term. Such purchase option must be
exercised if the property is placed into commercial production. Upon
exercise of the purchase option one of the vendors will retain a 0.25%
net smelter return. The vendor retains the right to refuse the purchase
and to participate in a joint venture with up to a maximum interest of
40%, by sharing in its proportionate cost of the development.
F-14
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
a) Stillwater Complex, Montana - Continued
Chrome Corp. Property
By an agreement dated February 1, 2000, the Company entered into a joint
venture with Chrome Corporation of America (CCA) on 32 patented and 124
unpatented mining claims located in Stillwater, Montana with the
following terms:
i) 5 year term;
ii) the Company can earn a 55% interest by completing the following:
Cumulative
Cash Issue Exploration
Payment Shares Expenditures
---------------------------------------
On signing (paid) $ 5,000 -- $ --
On signing upon receipt of
regulatory approval (issued - 2000) -- 100,000 --
By January 31, 2001 (issued - 2000) -- 100,000 --
By March 31, 2001 (completed -- -- 200,000
By January 31, 2002 (Issued 2001) -- 100,000 --
By March 31, 2002 -- -- 600,000
By January 31, 2003 -- 100,000 --
By March 31, 2003 -- -- 1,100,000
By January 31, 2004 -- 100,000 --
By March 31, 2004 -- -- 1,600,000
By January 31, 2005 -- 100,000 --
By March 31, 2005 -- -- 2,100,000
The patented claims are subject to an underlying 5% net smelter return and the
remainder will be subject to a 3.5% net smelter return to CCA.
The Company has agreed to maintain certain underlying property agreements in
good standing during the earn-in phase of the joint venture. The first of these
agreements requires monthly payments of $1,000 during 2000, $2,000 during 2001
and $2,500 per month thereafter. The second of these agreements requires a
one-time payment of $500,000 on commencement of construction leading to
commercial production. To December 31, 2001, the Company has paid $36,000 on
these agreements.
Subsequent to December 31, 2001, the Company gave 60-day notice to CCA of its
intention to withdraw from the agreement, prior to earn-in. Accordingly, the
Company has written-off cumulative exploration and development costs of $665,320
during the year ended December 31, 2001.
F-15
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
a) Stillwater Complex, Montana - Continued
Stillwater West Property
By an agreement dated November 1, 2001, the Company agreed to formalize
the terms of a Memorandum of Understanding dated June 27,2001 and a
subsequent modification with First Choice Industries Ltd. ("First
Choice"). First Choice has been granted an option to acquire a 40%
undivided interest in 220 claims staked by the Company on the west end
of the Company's Picket Pin claims, located in Park and Sweetgrass
Counties, Montana. In order to earn its interest First Choice must, at
its option, complete the following.
Issue
Shares Annual
Cash To the Exploration
Payment Company Expenditures
-------------------------------------
On signing $ (i)55,000 -- $ --
Upon receipt of
regulatory approval -- 200,000 --
By May 31, 2002 135,000 -- --
By November 30, 2003 -- 250,000 --
By December 31, 2003 -- -- 75,000
By November 30, 2004 -- 250,000 --
By December 31, 2004 -- -- 150,000
By November 30, 2005 -- 250,000 --
By December 31, 2005 -- -- 200,000
-------------------------------------
$ 190,000 950,000 $ 425,000
-------------------------------------
(i) Received $53,000 during the year ended December 31, 2001.
Upon completion of the 40% earn-in, First Choice has a 60-day period to
elect to acquire an additional 10% interest for cash in the amount of
$2,500,000. The parties each may elect to participate in the joint
venture phase by contributing their respective contributions or to
convert to a 3% net smelter return. Should a party elect to participate
in the joint venture but fail to contribute its proportionate share,
then it will be subjected to dilution. Once a party is diluted to a 10%
interest or less, it will be automatically converted to a 3% net smelter
return. Should First Choice be diluted and converted to a 3% net smelter
return, then its net smelter return royalty will be capped at 115% of
its actual or deemed expenditures.
First Choice is responsible for maintenance of the unpatented claims
during the earn-in phase and the Company is the initial manager. The
manager shall charge a fee of 10% of all qualifying expenditures and
such fee qualifies as exploration expenditures under the agreement.
F-16
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
b) Petsite Project, Idaho
By a letter agreement dated August 8, 2000, the Company reacquired the
entire 100% working interest in the Petsite Project upon payment of
$100,000 (paid) to Kinross Gold, U.S.A., Inc. (Kinross) for its 70%
interest in the project. Kinross had earned its 70% working interest in
the project by paying $50,000 to the Company and incurring in excess of
$1,500,000 on the property by December 31, 1997. During the joint
venture phase, Kinross completed an additional $525,161 of work on the
project to December 31, 1999. The Company's share of these expenditures,
which amounted to $157,548, was carried by Kinross with repayments, if
any, to come from the Company's share of commercial production. Upon
termination of the May 20, 1996 joint venture agreement with Kinross,
the Company's remaining obligation, with respect to the carried costs,
was extinguished.
The Company assumed responsibility for reclamation costs on the project,
annual claim rental fees and the underlying property agreement payments
(explained below).
Based upon the continued depressed gold prices and the third party
payment of $100,000 to reacquire the 70% working interest during fiscal
2000, management has established a fair market value of $143,000 for the
entire 100% interest in the project. Accordingly, the Company wrote-off
cumulative exploration and development costs of $320,873 during the year
ended December 31, 2000.
As at December 31, 2001, the property is carried at $143,000 and all
current period and future holding costs are expensed as incurred.
Subsequent to year-end the project has been sold, contingent upon
successful closing of the agreement (Note 11e).
The Company's claims are the Petsite Property and the Friday Property.
Petsite Property
The Company originally acquired these unpatented lode-mining claims for
cash in the amount of $10,000 during 1989, cash in the amount of $10,000
during 1991 and the issuance of 20,000 common shares during 1991 at a
price of $9,599. The optionor retained a 5% net profits interest in the
claims.
Friday Property
By an agreement effective July 9, 1996, the Company acquired a 100%
working interest on a renewable 5 year lease, on certain patented claims
in Idaho, for an initial term expiring July 19, 2001, from Idaho Gold
Corporation (IGC). In order to obtain the lease, the Company:
o Issued IGC 30,000 common shares on the closing date of the
agreement (deemed $25,000).
o Issued IGC an additional 30,000 common shares by July 19, 1997.
o Completed exploration and development expenditures of $135,000
on or before July 19, 2001.
F-17
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
b) Petsite Project, Idaho - Continued
Friday Property - Continued
The lease is renewable for subsequent terms of five years each, at the
Company's option, so long as the Company continues to carry out
exploration, development or mining work on the property.
IGC retains a 3% net smelter royalty to a maximum of $1,000,000.
The Company is also responsible on an underlying agreement for a 3% net
smelter royalty payable at $3,000 per quarter to a maximum of $300,000
covering certain claims within the property. As of December 31, 2001, a
total of $192,000 advance royalty payments have been made.
MacMenamin Agreement
During the joint venture phase of the project, Kinross entered into an
agreement dated February 3, 1998 covering a placer claim in the area of
influence of the Petsite project. The Company assumed the agreement,
which calls for annual payments of $1,000 per year and increasing to
$5,000 per year over the ten-year term of the agreement, which expires
February 3, 2008. The claim may be acquired for $150,000 by February 3,
2003 and for $200,000 thereafter.
All required payments under the agreement have been made to date.
Filer Agreement
During the joint venture phase of the project, Kinross entered into an
agreement dated September 16, 1997 covering three patented claims in the
area of influence of the Petsite project. The Company assumed the
agreement, which calls for annual payments of $15,000 per year and
increasing to $25,000 per year over the ten-year term of the agreement,
which expires on September 16, 2007. The claims may be acquired for
$305,000 by September 16, 2007.
On October 26, 2001, the agreement was amended to semi-annual payments
of $1,000 each September 1 and March 1 so long as gold remains below
$300 per ounce. The future semi-annual payments increase to $2,000
should the price of gold exceed $300 per ounce, to $5,000, should the
price of gold exceed $350 per ounce and to $10,000 upon commercial
production. The claims may be acquired for $270,000 less all payments
made up to September 16, 2007.
c) Deadwood Property
By an agreement effective July 9, 1996, the Company acquired a 100%
working interest on a renewable 5 year lease, on certain unpatented
claims in Idaho, for an initial term expiring July 19, 2001, from IGC.
In order to obtain the lease, the Company:
o Issued IGC 35,000 common shares on the closing date of the
agreement.
o Issued IGC an additional 35,000 common shares by July 19, 1997.
o Completed exploration and development expenditures of $135,000
on or before July 19, 2001.
F-18
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
c) Deadwood Property - Continued
The lease is renewable for subsequent terms of five years each, at the
Company's option, so long as the Company continues to carry out
exploration, development or mining work on the property.
The Company is also responsible for an underlying agreement:
o A 3% net smelter royalty payable at $6,000 per quarter to a
maximum of $500,000 covering certain claims within the property
known as the Deadwood claims. As of December 31, 2001, a total
of $372,000 of advance royalty payments have been made.
Based upon the continued depressed gold prices, the property has been
written-down to a nominal value of $1. Accordingly, the Company
wrote-off cumulative exploration and development costs of $13,200 during
the year ended December 31, 2000.
As at December 31, 2001, the property is carried at the nominal value of
$1 and all current period and future holding costs are expensed as
incurred. Subsequent to year-end the project has been sold, contingent
upon successful closing of the agreement (Note 11e).
d) Buffalo Gulch Property
By an agreement effective December 11, 1995, the Company acquired a 100%
working interest on a 5-year renewable lease, on certain unpatented
claims in Idaho, for an initial term of expiring July 19, 2001, from
IGC. In order to obtain the lease, the Company:
o Issued IGC 60,000 common shares on the closing date of the
agreement (valued at $50,000).
o Issued IGC an additional 60,000 common shares by July 19, 1997
(valued at $39,000).
o Completed exploration and development expenditures of $310,000
on or before July 19, 2001.
The lease is renewable for subsequent terms of five years each, at the
Company's option, so long as the Company continues to carry out
exploration, development or mining work on the property.
IGC retains a 3% net smelter royalty to a maximum of $3,000,000.
Based upon the continued depressed gold prices and a comparison of this
property with the Petsite Project, management has established a fair
market value of $36,750 for the property including its underlying
agreements. Accordingly, the Company wrote-off cumulative exploration
and development costs of $658,571 during the year ended December 31,
2000.
As at December 31, 2001, the property is carried at $36,750 and all
current period and future holding costs are expensed as incurred.
Subsequent to year-end the property has been sold, contingent upon
successful closing of the agreement (Note 11e).
F-19
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
d) Buffalo Gulch Property - Continued
The Company is also responsible on three underlying agreements as
follows:
Black Bear Agreement
By an agreement dated August 1, 1996 and an amendment dated August 11,
1999, the Company entered into an option to acquire a 100% working
interest in certain unpatented mineral claims in Idaho upon making cash
payments of $9,300. The Company shall, at its option, make quarterly
payments to a cumulative total of $120,000 by July 31, 2002, including a
balloon payment at the end of the term.
The Company must also complete a minimum of $3,000 annually in
exploration and development expenditures on the property.
The quarterly payments are currently $600 per quarter. The future
quarterly payments increase to $1,000 per quarter should the price of
gold increase to $325 per ounce and the regular payments are
re-established should the price of gold reach $375 per ounce. All
required payments under the agreement have been made to date.
Whiskey Jack Agreement
By an agreement dated August 29, 1998 and an amendment dated June 11,
1999, the Company was granted an option to acquire a 100% working
agreement interest in certain upatented mineral claims in Idaho. In
order to complete the option, the Company shall, at its option, make
quarterly payments to a cumulative total of $65,000 by July 1, 2003,
including a balloon payment at the end of the term.
The Company must also complete a minimum of $1,000 annually in
exploration and development expenditures on the property.
The quarterly payments are currently $400 per quarter. The future
quarterly payments increase to $800 per quarter should the price of gold
increase to $325 per ounce and the regular payments are re-established
should the price of gold reach $375 per ounce. All required payments
under the agreement have been made to date.
Gray Estates Agreement
The Company has assumed the obligation of an underlying agreement dated
May 21, 1984 which requires quarterly advance royalty payments of $6,000
or a 5% net smelter royalty upon commencement of commercial production,
to a maximum of $500,000. As of December 31, 2001, a total of $420,000
of advance royalty payments have been made.
F-20
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
4. Property Rights - Continued
d) Buffalo Gulch Property - Continued
The Company has also entered into the following agreement on a
contiguous property:
Gallaugher Property
By an agreement dated September 5, 1996 and an amendment dated May 20,
1999, the Company was granted an option to acquire a 100% working
interest in certain unpatented mineral claims in Idaho. In order to
complete the option, the Company shall, at its option, make quarterly
payments to a cumulative total of $150,000 by March 5, 2007, including a
balloon payment at the end of the term.
A third party receives a 10% finder's fee deducted from all option
payments made by the Company to the optionor.
The quarterly payments are currently $500 per quarter. The future
quarterly payments increase to $1,200, $1,800 and $4,800 per quarter,
respectively, should the price of gold increase to $325, $350 and $400
per ounce, respectively. All required payments under the agreement have
been made to date.
e) Other Properties
Based upon the continued depressed gold prices, the Company wrote-down
two minor properties in Idaho to nominal value and dropped two minor
properties in Idaho and the related acquisition, exploration and
development costs of $53,142 were written-off during the year ended
December 31, 2000. The Company also dropped an exploration project in
Mexico and the related exploration and development costs of $39,618 were
written-off.
- --------------------------------------------------------------------------------
5. Notes Payable
Details of notes payable are as follows:
2001 2000
-----------------
Uncollateralized note payable, due in
monthly payments of $460 including
interest at 9.0% per annum, due to
a shareholder $ -- $ 3,590
Uncollateralized note payable, bearing
interest at 9% per annum, monthly
payments of interest only, due in
full, August 1, 2003 37,500 --
-----------------
37,500 3,590
Current portion -- (3,590)
-----------------
$37,500 $ --
- --------------------------------------------------------------------------------
F-21
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
6. Share Capital
a) Common Share Options
The Company has a stock option plan dated January 9, 2001, under which
the maximum number of options issuable shall not exceed 6,586,442
shares. Options granted after January 9, 2001 are for a maximum term of
five years and vest as to 25% on allocation and 25% each six months
thereafter. Options granted prior to the plan are for varying terms
ranging from two to seven years and are immediately vested upon the date
of grant. Following is a schedule of the activity pursuant to this stock
option plan.
Exercise Price
Number per Share (C$) Expiry Date
- --------------------------------------------------------------------------------
Balance - December 31, 1998 645,000 $ 0.26 October 1999
to April 2002
Options exercised (40,000) 0.26 October 1999
Options expired (70,000) 0.26 October 1999
Options granted 465,000 0.37 April 2004
------------------------------------------------
0.26 May 2000 to
Balance - December 31, 1999 1,000,000 to 0.37 April 2004
Options granted 1,175,000 0.30 January 2005
Options granted 500,000 (ii)1.20 March 2005
Options granted 150,000 (iii)0.72 March 2003
Options granted 50,000 (iii)1.12 June 2005
Options granted 150,000 0.96 July 2005
Options exercised (55,000) 0.26 May 2000
Options exercised (200,000) 0.26 February 2001
Options exercised (150,000) 0.26 August 2001
Options exercised (250,000) 0.37 April 2004
Options exercised (89,000) 0.30 January 2005
Options expired (200,000) 1.20 March 2005
------------------------------------------------
Balance - December 31, 2000 $ 0.26 February 2001
(i)2,081,000 to $ 1.20 to July 2005
------------------------------------------------
F-22
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
6. Share Capital - Continued
a) Common Share Options - Continued
Exercise Price
Number per Share (C$) Expiry Date
- ----------------------------------------------------------------------------
$0.26 February 2001
Balance - December 31, 2000 (i)2,081,000 to $1.20 to July 2005
Options granted 1,225,000 (iv)0.80 January 2006
Options granted 2,250,000 1.08 November 2002
Options granted 1,000,000 0.38 September 2006
Options granted 350,000 0.27 November 2006
Options exercised (100,000) 0.26 February 2001
Options exercised (75,000) 0.37 April 2004
Options exercised (100,000) 0.30 January 2005
Options exercised (25,000) 0.80 January 2006
Options expired (150,000) 0.96 July 2005
Options expired (200,000) 0.80 January 2006
----------------------------------------
$ 0.26 April 2002 to
Balance - December 31, 2001 6,256,000 to $ 1.08 November 2006
----------------------------------------
(i) Issued prior to the effective date of the new stock option plan.
(ii) Repriced during the year ended December 31, 2001 to $0.38 per share on
the 300,000 shares not previously exercised.
(iii) Repriced during the year ended December 31, 2001 to $0.38 per share.
(iv) Repriced during the year ended December 31, 2001 to $0.38 per share on
the 1,000,000 shares not previously exercised or expired.
A summary of the options outstanding at December 31, 2001 is as follows:
Exercise Price
Number per Share(C$) Expiry Date
- --------------------------------------------------------------------------------
30,000 $0.26 April 1, 2002
2,250,000 1.08 November 15, 2002
150,000 0.38 March 4, 2003
140,000 0.37 April 7, 2004
986,000 0.30 January 14, 2005
300,000 0.38 March 24, 2005
50,000 0.38 June 25, 2005
1,000,000 0.38 January 9, 2006
1,000,000 0.38 September 5, 2006
350,000 0.27 November 7, 2006
--------------------------------------------------
Balance - December 31, 2001 6,256,000
--------------------------------------------------
F-23
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
6. Share Capital - Continued
a) Common Share Options - Continued
As of December 31, 2001, 4,431,000 options are exercisable. At December
31, 2001, the weighted average exercise price per option was C$0.61
(2000 - C$0.53). The weighted-average remaining contractual life of the
options was 2.7 years (2000 - 3.7 years).
b) Common Share Warrants
The warrant activity is as follows:
Number of Price per
Warrants Share (C$) Expiry Date
- ---------------------------------------------------------------------------------
Balance - December 31, 1998 1,763,233 $ 0.70 March 2000
Warrants issued
- - Convertible note #1 546,154 0.31 January 2000
- - Convertible note #2 600,769 0.31 March 2000
- - Convertible note #3 932,608 0.28 May 2000
- - Convertible note #4 2,227,941 0.17 September 1999
- - Convertible note #5 2,466,681 0.25 October 2000
- - Convertible note #6 1,172,847 0.15 January 2000
0.15 March 2000
- - Private placement 2,000,000 or 0.18 March 2001
Warrants exercised
- - Convertible note #1 (546,154) 0.31 January 2000
- - Convertible note #2 (600,769) 0.31 March 2000
- - Convertible note #4 (2,227,941) 0.17 September 1999
- - Convertible note #5 (766,480) 0.25 October 2000
- - Convertible note #6 (1,172,847) 0.15 January 2000
- - Private placement (570,000) 0.15 March 2000
-------------------------------------------------
$ 0.15 March 2000 to
Balance - December 31, 1999 5,826,042 to $ 0.70 March 2001
Warrants issued
1.05 October 2000
- - Short form prospectus 433,550 or 1.26 April 2001
1.00 September 2001
- - Private placement 244,118 or 1.25 September 2002
Warrants expired (167) 0.70 March 2000
Warrants exercised
- - Private placement (1,763,066) 0.70 March 2000
- - Private placement (762,000) 0.15 March 2000
- - Convertible note #3 (932,608) 0.28 May 2000
- - Convertible note #5 (1,700,201) 0.25 October 2000
- - Short form prospectus (6,250) 1.05 October 2000
-------------------------------------------------
$ 0.18 March 2000 to
Balance - December 31, 2000 1,339,418 to $ 1.26 September 2002
- ---------------------------------------------------------------------------------
F-24
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
6. Share Capital - Continued
b) Common Share Warrants - Continued
Number of Price per
Warrants Share (C$) Expiry Date
- -----------------------------------------------------------------------------------
$ 0.18 March 2002 to
Balance - December 31, 2000 1,339,418 to $ 1.26 September 2002
Warrants issued
- - Private placement 647,059 1.25 January 2002(i)
- - Private placement 217,392 1.25 January 2002(ii)
- - Private placement 305,000 1.60 April 2002
Warrants exercised
- - Private placement (668,000) 0.18 March 2001
- - Short form prospectus (336,050) 1.26 April 2001
Warrants expired
- - Short form prospectus (91,250) 1.26 April 2001
------------------------------------------------
$ 1.25 April 2002 to
Balance - December 31, 2001 1,413,569 to $ 1.60 January 2003
- --------------------------------------------------------------------------------
(i) Subsequent to December 31, 2001 these warrants were extended to
January 11, 2003 for no consideration.
(ii) Subsequent to December 31, 2001 these warrants were extended to
January 23, 2003 for no consideration.
c) Escrow Shares
In conjunction with the Company's initial public offering, certain
Company officers and directors were required to place 750,000 common
shares of the Company in escrow in accordance with policies of the
Canadian Venture Exchange (CDNX). The shares are subject to release from
escrow as the Company expends funds on exploration and development of
its mineral properties and with regulatory approval. During the year
ended December 31, 2000 the Company released 187,500 shares from escrow
upon receipt of regulatory approval. The Company released the final
187,500 on October 6, 2001. At December 31, 2001, all escrow shares have
been fully released from escrow.
- --------------------------------------------------------------------------------
F-25
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
7. Related Party Transactions
a) In addition to related party transactions disclosed elsewhere herein,
the Company has paid or accrued for payment the following amounts to
related parties:
2001 2000 1999
------------------------------
Wages and management fees to
officers and directors $437,938 $154,000 $139,850
Legal fees to a firm in
which a director is a partner 92,653 112,090 --
Accounting fees to a firm in
which an officer is a partner 43,800 45,000 42,100
Interest expense on notes
payable to shareholders 123 718 268,988
------------------------------
$574,514 $311,808 $450,938
------------------------------
b) As at December 31, the following amounts remain unpaid in relation to
the related party amounts (Note 7a) and are included in accounts payable
- related parties on the consolidated balance sheets of the Company:
2001 2000
-------------------------
Wages and management fees to officers and directors $ 149,611 $ 12,500
Legal fees to a firm in which a director is a partner 16,708 9,601
Accounting fees to a firm in which an officer is a partner 63,800 35,000
Interest expense on notes payable to shareholders - -
-------------------------
$ 230,119 $ 57,101
-------------------------
c) Related party transactions, occurring in the normal course of
operations, are measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties.
- --------------------------------------------------------------------------------
8. Global Settlement Agreement
By an agreement dated January 8, 2000, the Company reached a settlement with
various parties to conclude numerous lawsuits, disagreements and contractual
relationships. As a result, all actions in which the Company was named have
been dismissed, at no cost to the company, except for its direct legal,
indemnity and other related costs.
The Company had agreed to indemnify its officers and directors in
relationship to the settlement hearings, which were successful in concluding
the various matters. Accordingly, the Company has allotted 252,000 common
shares from treasury, which were issued upon receipt of regulatory approval
to cover such indemnification. The deemed value of such allotment in the
amount of $239,202 has been accrued in the year ended December 31, 2000.
- --------------------------------------------------------------------------------
F-26
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
9. Fair Value of Financial Instruments
The following estimated fair value amounts have been determined using
available market information and appropriate valuation methodologies.
However, considerable judgement is required to interpret market data and to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company could
realize in a current market exchange.
The carrying amounts for cash and cash equivalents and the restricted
investments are a reasonable estimate of their fair value. Due to the due
dates and interest rates of the notes payable to shareholders, the carrying
value of these notes is a reasonable estimate of their fair value.
- --------------------------------------------------------------------------------
10. Income Taxes
a) Effective January 1, 2000, the Company adopted CICA 3465, "Accounting
for Income Taxes". This new accounting standard, which required adoption
on a retroactive basis, resulted in no adjustment to the results
previously reported by the Company.
No income tax provision or benefit has been provided for any of the
periods presented due to the Company's net operating loss carry-forward
position.
The Company has not recorded a future tax asset principally due to the
uncertainty regarding the generation of future taxable income to utilize
existing net operating losses. If it becomes more likely than not that
the Company will generate future taxable income, a future tax asset may
be recognized.
The Company is subject to income tax filing requirements in both Canada
and the United States.
F-27
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
10. Income Taxes - Continued
b) As of December 31, 2001, the Company had income tax losses carried
forward available to reduce future taxable income, if any. These losses
expire at different rates depending on the jurisdiction as follows:
United
States
Year (U.S. $) Canada (C$)
- ----------------------------------------------
2002 $ - $ 722,000
2003 - 1,496,300
2004 - 507,900
2005 - 1,004,300
2006 - 1,023,900
2007 - 1,200,900
2008 - 2,343,200
2011 557,100 -
2012 105,200 -
2018 586,500 -
2019 673,200 -
2020 580,900 -
2021 1,744,000 -
--------------------------
$ 4,246,900 $ 8,298,500
--------------------------
The U.S. $4,246,900 of income tax losses were incurred by the U.S.
branch of the Company and are available to reduce future taxable income,
if any, of the U.S. branch. The amount is included within the Canadian
income tax losses of C$8,298,500.
c) The Company has accumulated deferred resource property expenditures, for
tax purposes, of approximately C$9,838,600, which may be used to reduce
future taxable income in Canada. The income tax benefits, if any, of
these expenditures have not been recorded in these financial statements.
F-28
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
11. Subsequent Events
In addition to items disclosed elsewhere in these financial statements, the
Company conducted the following transactions after December 31, 2001:
a) Completed a private placement of 4,036,283 units for gross proceeds of
C$1,412,699 at C$0.35 per unit. Each unit consists of one common share
and one-half non-transferable share purchase warrant. Two warrants and
C$0.70 allow the holder to acquire an additional common share to
December 19, 2002. Commissions related to the placement total C$10,500
and 136,371 common shares.
b) Issued a debenture payable to a maximum amount of $1,000,000
(C$1,587,000) to the Tomasovich Family Trust. The debenture carries
interest at 6% per annum, calculated and paid monthly. The balance is
payable in full by February 7, 2003, unless the debenture holder
exercises its right of conversion. The debenture holder has the right to
convert the debenture into units of the Company at the rate of C$0.35
per unit. Two warrants and C$0.70 allow the holder to acquire an
additional common share to February 7, 2004. The debenture payable and
the related conversion rights to units, were approved by the regulatory
authorities in connection with the 4,036,283 unit private placement.
The funds are to be advanced by the debenture holder over the next six
months as the company requires funding for its proposed drilling program
on the Stillwater Complex, Montana.
c) Completed a private placement of 1,763,668 units for gross proceeds of
C$793,650 at C$0.45 per unit. Each unit consists of one common share and
one-half non-transferable share purchase warrant. Two warrants and
C$0.70 allow the holder to acquire an additional common share to January
3, 2003. A commission of 148,942 common shares was paid in connection
with the private placement.
d) Issued 156,042 common shares on exercise of common share options at
C$1.08 per share for proceeds of C$168,525.
e) By a Letter Agreement dated March 7, 2002, the Company has agreed to
sell all of its gold properties located in Idaho, including the Petsite
Project, Deadwood Project and Buffalo Gulch Property. The purchaser,
Canden Capital Corp. ("Canden"), is a Capital Pool Company in accordance
with the policies of the CDNX. Proceeds on the sale will be 2,400,000
shares of Canden, representing 41.8% of the issued and outstanding
shares of the purchaser, after the issuance of the shares. The closing
of the sale is contingent upon due diligence by the purchaser, within 10
weeks of the letter agreement, including a technical report recommending
a work program of at least C$200,000 and an independent valuation at the
purchaser's cost. The agreement is subject to regulatory approval, the
approval of the shareholders of Canden and the completion of a formal
agreement by May 15, 2002. Should the parties not agree to the formal
agreement by May 15, 2002, then given reasonable efforts to conclude the
agreement, the agreement may be terminated.
- --------------------------------------------------------------------------------
F-29
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
12. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP)
a) Accounting Policy Differences
These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. The significant
differences between Canadian and U.S. GAAP are as follows:
Under Canadian GAAP, no value is attributed to the release of escrowed
shares and no compensation expense is recorded. Under U.S. GAAP, stock
compensation expense is recorded as such shares become eligible for
release based upon the number of shares eligible for release and the
market value of the shares at that time (Note 6c).
Under Canadian GAAP, the Company is not required to record the effect of
non-employee stock option based compensation expense in the consolidated
financial statements. Under U.S. GAAP, stock compensation expense is
recorded for non-employees based upon the discount from market at the
date the option is granted.
Under Canadian GAAP, convertible security instruments are allocated
between liability and equity based upon the fair value of the components
at the inception of the related contractual obligation. Further,
additional interest expense is recorded on amortization of the related
interest discount over the term of the related debt. Under U.S. GAAP, no
allocation is calculated unless the equity component is detachable from
the liability component and no amortization of the interest discount is
required.
Under Canadian GAAP, acquisition and exploration costs are capitalized
on an individual property basis until such time as an economic ore body
is defined or an event occurs, which indicates a need to consider the
recoverability of the carrying value and are treated as investing
activities. Under U.S. GAAP, the Company expenses exploration costs as
incurred and these are treated as operating activities. Under U.S. GAAP,
the Company has determined it not appropriate to carry-forward its
mineral property acquisition costs and consequently has provided a
provision for impairment in the year ended December 31, 2001.
b) Statement Reconciliation
A reconciliation of the consolidated statements of operations from
Canadian presentation to U.S. presentation is as follows:
2001 2000 1999
-----------------------------------------
Net loss - Canadian basis $ 2,530,838 $ 2,003,579 $ 1,010,626
Compensation expense on common
stock options granted to
non-employees 164,548 83,798 --
Compensation expense on
re-priced employee options 330,000 -- --
Amortization of interest discount -- -- (220,901)
Provision for impairment 1,196,574 -- --
Current year exploration costs 829,185 740,786 422,594
Current year exploration abandonments (470,527) (674,901) (16,341)
-----------------------------------------
Net loss - U.S. basis $ 4,580,618 $ 2,153,262 $ 1,195,978
-----------------------------------------
Net loss U.S. basis per share
- - Basic and Diluted $ 0.13 $ 0.07 $ 0.07
-----------------------------------------
F-30
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
12. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
b) Statement Reconciliation - Continued
A reconciliation of certain consolidated balance sheet accounts from
Canadian presentation to U.S. presentation is as follows:
2001 2000 1999
--------------------------------------------
Deficit accumulated during the
exploration stage - Canadian basis $ 12,808,244 $ 10,277,406 $ 8,273,827
Stock compensation expense, prior
years' cumulative 1,285,534 1,201,736 1,201,736
Compensation expense on common stock
options granted to non-employees 164,548 83,798 --
Compensation expense on re-priced
employee options 330,000 -- --
Amortization of interest discount,
prior years' cumulative (277,713) (277,713) (56,812)
Amortization of interest discount -- -- (220,901)
Provision for impairment 1,196,574 -- --
Current year exploration costs 829,185 740,786 422,594
Current year exploration abandonments (470,527) (674,901) (16,341)
Prior years' exploration costs, net
of abandonments 1,075,428 1,009,543 603,290
--------------------------------------------
Deficit accumulated during the
exploration stage - U.S. basis $ 16,941,273 $ 12,360,655 $ 10,207,393
--------------------------------------------
Notes payable to shareholders,
non-current - Canadian basis $ -- $ -- $ 3,590
Non-detachable convertible security
instruments -- -- 292,084
Amortization of interest discount -- -- (292,084)
--------------------------------------------
Notes payable to shareholders,
non-current - U.S. basis $ -- $ -- $ 3,590
--------------------------------------------
Property rights - Canadian basis $ 2,630,660 $ 2,097,967 $ 1,625,140
Provision for impairment (1,196,574) -- --
Current year exploration expense
abandonments 470,527 674,901 16,341
Prior years' exploration costs,
net of abandonments (1,075,428) (1,009,543) (603,290)
Current year exploration costs (829,185) (740,786) (422,594)
--------------------------------------------
Property rights - U.S. basis $ -- $ 1,022,539 $ 615,597
--------------------------------------------
F-31
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
12. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
b) Statement Reconciliation - Continued
A reconciliation of certain consolidated balance sheet accounts from
Canadian presentation to U.S. presentation is as follows:
2001 2000 1999
--------------------------------------------
Share capital - Canadian basis $ 14,657,940 $ 12,573,110 $ 9,804,354
Amortization of interest discount,
prior years' cumulative (277,713) (277,713) (56,812)
Stock compensation expense, prior
years' cumulative 1,201,736 1,201,736 1,201,736
Compensation expense on common stock
options granted to non-employees,
cumulative 248,346 83,798 --
Compensation expense on re-priced
options to employees 330,000 -- --
--------------------------------------------
Share capital - U.S. basis $ 16,160,309 $ 13,580,931 $ 10,949,278
--------------------------------------------
A reconciliation of certain consolidated cash flow activities from
Canadian presentation to U.S. presentation is as follows:
2001 2000 1999
--------------------------------------------
Net cash used in operating activities
- Canadian basis $(1,059,258) $ (899,843) $ (466,777)
Exploration costs (829,185) (740,786) (422,594)
--------------------------------------------
Net cash used in operating activities
- U.S. basis $(1,888,443) $(1,640,629) $ (889,371)
--------------------------------------------
Net cash used in investing activities
- Canadian basis $(1,134,824) $(1,278,717) $ (619,017)
Exploration costs 829,185 740,786 422,594
--------------------------------------------
Net cash used in investing activities
- U.S. basis $ (305,639) $ (537,931) $ (196,423)
--------------------------------------------
F-32
Idaho Consolidated Metals Corp.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2001 and 2000
U.S. Funds
- --------------------------------------------------------------------------------
12. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
c) Note Disclosure Reconciliation
Under Canadian GAAP, the Company is not required to disclose the
proforma effect of employee stock option based compensation on expense
in the notes to the consolidated financial statements. Under U.S. GAAP,
Statement of Financial Accounting Standards No. 123 (SFAS No. 123),
"Accounting for Stock-Based Compensation", establishes financial
accounting and reporting standards for stock-based employee compensation
plans. The statement encourages all entities to adopt a fair value based
method of accounting, but allows an entity to continue to measure
compensation cost for those plans using the intrinsic value based method
of accounting prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees." The disclosure only provisions of SFAS No. 123 are
as follows:
2001 2000 1999
------------------------------------------
Net loss U.S. basis (Note 12a)
As reported $ 4,580,618 $ 2,153,262 $ 1,195,978
Pro forma 4,957,841 2,613,812 1,279,678
Net loss per share U.S. basis
(Note 12a)
As reported $ 0.13 $ 0.07 $ 0.07
Pro forma 0.14 0.09 0.08
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
2001 2000 1999
---------------------------------------
Expected dividend yield 0.00% 0.00% 0.00%
Expected stock price volatility 110.51% 125.01% 151.82%
Risk-free interest rate 4.64% 5.83% 5.00%
Expected life of options 2.0 years 1.5 years 2 years
The weighted average grant-date fair value of options granted in 2001,
2000 and 1999 was C$0.71, C$0.44 and C$0.27, respectively.
- --------------------------------------------------------------------------------
F-33
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Consolidated Balance Sheet
U.S. Funds
Unaudited - Prepared by Management
As at As at
31 March 31 December
ASSETS 2002 2001
- -----------------------------------------------------------------
Current
Cash $ 343,019 $ 87,920
Other 19,000 31,712
----------------------------
362,019 119,632
Restricted Investments 118,550 117,811
Plant and Equipment, net 115,463 115,810
Property Rights 2,648,436 2,630,660
----------------------------
$ 3,244,468 $ 2,983,913
=================================================================
LIABILITIES
- -----------------------------------------------------------------
Current
Accounts payable - Related parties $ 9,000 $ 243,812
- Other 101,007 500,070
Notes payable 840 --
----------------------------
110,847 743,882
Share Subscriptions -- 353,285
Note Payable 36,586 37,500
----------------------------
147,433 1,134,667
----------------------------
SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------
Share Capital - Statement 2 16,156,648 14,657,490
Deficit - Accumulated during
the exploration stage
- Statement 2 (13,059,613) (12,808,244)
----------------------------
3,097,035 1,849,246
----------------------------
$ 3,244,468 $ 2,983,913
=================================================================
ON BEHALF OF THE BOARD:
"Delbert W. Steiner", Director
"John Andrews", Director
- See Accompanying Notes -
F-34
Idaho Consolidated Metals Corp. Statement 2
Interim Consolidated Statement of Changes
In Shareholders' Equity
U.S. Funds
Unaudited - Prepared by Management
Deficit
Accumulated
Common Shares During the
------------------------- Exploration
Shares Amount Stage Total
- -------------------------------------------------------------------------------------------------
Balance - 31 December 2000 33,171,201 $ 12,573,110 $(10,277,406) $ 2,295,704
Shares issued on exercise of warrants 679,000 88,206 -- 88,206
Shares issued on private placements,
net of issuance costs of $23,014 1,780,372 939,886 -- 939,886
Shares issued on exercise of options 150,000 26,756 -- 26,756
Loss for the period - Statement 3 -- -- (335,252) (335,252)
--------------------------------------------------------
Balance - 31 March 2001 35,780,573 $ 13,627,958 $(10,612,658) $ 3,015,300
=================================================================================================
Balance - 31 December 2001 37,165,623 $ 14,657,490 $(12,808,244) $ 1,849,246
Shares issued on private placements,
net of issuance costs of $10,500 6,085,265 1,386,316 -- 1,386,316
Shares issued on exercise of options 171,042 112,842 -- 112,842
Loss for the period - Statement 3 -- -- (251,369) (251,369)
--------------------------------------------------------
Balance - 31 March 2002 43,421,930 $ 16,156,648 $(13,059,613) $ 3,097,035
=================================================================================================
- See Accompanying Notes -
F-35
Idaho Consolidated Metals Corp. Statement 3
Interim Consolidated Statement of Operations
For the Three Months Ended 31 March
U.S. Funds
Unaudited - Prepared by Management
2002 2001
- ----------------------------------------------------------------------
Operating Expenses
General and administrative - Schedule 1 $ 222,642 $ 312,416
----------------------------
Other (Income) Expenses
Interest income (888) (8,227)
Interest expense 1,199 424
General property search and gold
property holding costs 28,416 30,639
----------------------------
28,727 22,836
----------------------------
Loss for the Period $ 251,369 $ 335,252
======================================================================
Loss per Common Share $ 0.01 $ 0.01
======================================================================
Weighted Average Number of
Common Shares Outstanding 40,591,632 34,376,326
======================================================================
- See Accompanying Notes -
F-36
Idaho Consolidated Metals Corp. Statement 4
Interim Consolidated Statement of Cash Flows
For the Three Months Ended 31 March
U.S. Funds
Unaudited - Prepared by Management
Cash Resources Provided By (Used In) 2002 2001
- ----------------------------------------------------------------------
Operating Activities
Loss for the period $ (251,369) $ (335,252)
Items not affected by cash
Amortization 347 4,095
Changes in current assets and liabilities
Other assets 12,712 1,085
Accounts payable - Related parties (234,812) (23,460)
- - Other (399,063) (79,750)
-------------------------
Net cash used in operating activities (872,185) (433,282)
-------------------------
Investing Activities
Restricted investments (739) (6,152)
Plant and equipment -- (11,707)
Property rights (17,776) (67,898)
-------------------------
Net cash used in investing activities (18,515) (85,757)
-------------------------
Financing Activities
Notes payable (74) (1,309)
Subscriptions payable (353,285) --
Share capital 1,499,158 1,054,848
-------------------------
Net cash provided by financing activities 1,145,799 1,053,539
-------------------------
Net Increase in Cash 255,099 534,500
Cash position - Beginning of period 87,920 26,508
-------------------------
Cash Position - End of Period $ 343,019 $ 561,008
======================================================================
- See Accompanying Notes -
F-37
Idaho Consolidated Metals Corp. Schedule 1
Interim Consolidated Schedule of Administrative Expenses
For the Three Months Ended 31 March
U.S. Funds
Unaudited - Prepared by Management
2002 2001
- ----------------------------------------------------
Management fees and wages $137,070 $109,936
Professional fees 52,571 100,730
Office and general 17,157 20,009
Travel 7,160 31,720
Shareholder information 5,060 33,321
Office rent 2,651 7,467
Transfer agent and filing fees 626 4,364
Amortization 347 4,095
Entertainment and promotion -- 774
--------------------
Expenses for the Period $222,642 $312,416
====================================================
Interim Consolidated Schedule of Resource Property Costs Schedule 2
For the Three Months Ended 31 March
U.S. Funds
Unaudited - See Notice to Reader
2002 2001
- ------------------------------------------------------
Direct - Mineral
Montana, U.S.A
Geological $15,562 $49,741
Survey and mapping 2,214 490
Acquisition -- 9,800
Assaying -- 615
Staking, filing and claim rental -- 725
Field transportation -- 2,157
Camp and general -- 4,370
-----------------
Costs for the Period $17,776 $67,898
======================================================
- See Accompanying Notes -
F-38
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
31 March 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The notes to the consolidated financial statements as at 31 December 2001,
as set forth in the company's 2001 Annual Report substantially apply to
these interim consolidated financial statements and are not repeated here.
- --------------------------------------------------------------------------------
2. Interim Consolidated Financial Statements Adjustments
The financial information given in the accompanying unaudited interim
consolidated financial statements reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods reported. All such adjustments are of a normal recurring
nature. All financial statements presented herein are unaudited.
- --------------------------------------------------------------------------------
3. Share Capital
a) On 7 February 2002, the Company issued 4,036,283 units, each unit
consisting of one common share and one-half warrant, at C$0.35 per unit,
for gross proceeds of $901,710 (C$1,412,699). Each whole warrant
entitles the holder to acquire an additional common share at C$0.70 per
share to 19 December 2002.
b) On 15 February 2002, the Company issued 1,763,669 units, each unit
consisting of one common share and one-half warrant, at C$0.45 per unit,
for gross proceeds of $500,000 (C$793,651). Each whole warrant entitles
the holder to acquire an additional common share at C$0.70 per share to
3 January 2003.
- --------------------------------------------------------------------------------
4. Convertible Debenture
As part of the private placement, which closed on 7 February 2002 was the
issuance of a convertible debenture in the amount of $1,000,000 to a
director of the Company. To date, the Company has not drawn down any of the
funds related to this debenture, although we expect to call upon these funds
as we proceed with the 2002 exploration season. The debenture is convertible
into units of the Company at C$0.35 per share. Each unit consists of one
common share and one half common share purchase warrant. Each full warrant
entitles the holder to acquire one common share at C$0.70 for two years
expiring 19 December 2003.
- --------------------------------------------------------------------------------
5. Subsequent Events
In addition to items disclosed elsewhere in these financial statements, the
following significant events occurred between 1 April 2002 and 14 May 2002:
a) During the period to 14 May 2002, the Company issued 125,000 common
shares on settlement of a debt owing in the amount of $77,264
(C$123,065).
b) On 18 April 2002, the Company received regulatory approval to extend the
expiry date on 305,000 share purchase warrants from 25 April 2002 to 25
April 2003 at C$1.60 per share.
F-39
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
31 March 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
6. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP)
a) Accounting Policy Differences
These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. The significant
differences between Canadian and U.S. GAAP are as follows:
Under Canadian GAAP, no value is attributed to the release of escrowed
shares and no compensation expense is recorded. Under U.S. GAAP, stock
compensation expense is recorded as such shares become eligible for
release based upon the number of shares eligible for release and the
market value of the shares at that time.
Under Canadian GAAP, the Company was not required to record the effect
of non-employee stock option based compensation expense in the
consolidated financial statements until 1 January 2002. Under U.S. GAAP,
stock compensation expense is recorded for non-employees based upon the
discount from market at the date the option is granted.
Under Canadian GAAP, convertible security instruments are allocated
between liability and equity based upon the fair value of the components
at the inception of the related contractual obligation. Further,
additional interest expense is recorded on amortization of the related
interest discount over the term of the related debt. Under U.S. GAAP, no
allocation is calculated unless the equity component is detachable from
the liability component and no amortization of the interest discount is
required.
Under Canadian GAAP, acquisition and exploration costs are capitalized
on an individual property basis until such time as an economic ore body
is defined or an event occurs, which indicates a need to consider the
recoverability of the carrying value and the item is treated as an
investing activity. Under U.S. GAAP, the Company expenses exploration
costs as incurred and the item is treated as an operating activity.
b) Statement Reconciliation
A reconciliation of the consolidated statements of operations from
Canadian presentation to U.S. presentation is as follows:
For the Three Months
Ended 31 March
-------------------
2002 2001
-------------------
$251,369 $335,252
Net loss - Canadian basis
Compensation expense on common stock
options granted to non-employees 251,952 164,548
Current period exploration costs 17,776 57,373
-------------------
Net loss - U.S. basis $521,097 $557,173
-------------------
Net loss U.S. basis per share
- Basic and Diluted $ 0.01 $ 0.02
-------------------
F-40
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
31 March 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
6. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
b) Statement Reconciliation - Continued
A reconciliation of certain consolidated balance sheet accounts from
Canadian presentation to U.S. presentation is as follows:
As at As at
31 March 31 December
2002 2001
----------------------------
Deficit accumulated during the
exploration stage - Canadian
basis $ 13,059,613 $ 12,808,244
Stock compensation expense,
prior years' cumulative 1,780,082 1,285,534
Compensation expense on common
stock options granted to
non-employees 251,952 164,548
Compensation expense on
re-priced employee options 330,000
Amortization of interest
discount, prior years'
cumulative (277,713) (277,713)
Provision for impairment 1,196,574 1,196,574
Current period exploration costs 17,776 829,185
Current period exploration
abandonments -- (470,527)
Prior years' exploration costs,
net of abandonments 1,434,086 1,075,428
----------------------------
Deficit accumulated during the
exploration stage - U.S. basis $ 17,462,370 $ 16,941,273
----------------------------
Property rights - Canadian basis $ 2,648,436 $ 2,630,660
Provision for impairment (1,196,574) (1,196,574)
Current period year exploration
expense abandonments -- 470,527
Prior years' exploration costs,
net of abandonments (1,434,086) (1,075,428)
Current period exploration costs (17,776) (829,185)
----------------------------
Property rights - U.S. basis $ -- $ --
----------------------------
Share capital - Canadian basis $ 16,156,648 $ 14,657,940
Amortization of interest discount,
prior years' cumulative (277,713) (277,713)
Stock compensation expense, prior
years' cumulative 1,780,082 1,201,736
Compensation expense on common
stock options granted to
non-employees, current 251,952 248,346
Compensation expense on re-priced
options to employees -- 330,000
----------------------------
Share capital - U.S. basis $ 17,910,969 $ 16,160,309
----------------------------
F-41
Idaho Consolidated Metals Corp.
Notes to Interim Consolidated Financial Statements
31 March 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
6. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
c) A reconciliation of certain consolidated cash flow activities
from Canadian presentation to U.S. presentation is as follows:
For the Three Months
Ended 31 March
2002 2001
----------------------
Net cash used in operating activities
- Canadian Basis $(872,185) $(433,282)
Exploration costs (17,776) (57,373)
----------------------
Net cash used in operating activities
- U.S. Basis $(889,961) $(490,655)
----------------------
Net cash used in investing activities
- Canadian basis $ (18,515) $ (85,757)
Exploration costs 17,776 57,373
----------------------
Net cash used in investing activities
- U.S. basis $ (739) $ (28,384)
----------------------
d) Note Disclosure Reconciliation
Under Canadian GAAP, the Company was not required to disclose the
proforma effect of employee stock option based compensation on expense
in the notes to the consolidated financial statements until 1 January
2002. Under U.S. GAAP, Statement of Financial Accounting Standards No.
123 (SFAS No. 123), "Accounting for Stock-Based Compensation",
establishes financial accounting and reporting standards for stock-based
employee compensation plans. The statement encourages all entities to
adopt a fair value based method of accounting, but allows an entity to
continue to measure compensation cost for those plans using the
intrinsic value based method of accounting prescribed by APB Opinion No.
25, "Accounting for Stock Issued to Employees." The disclosure only
provisions of SFAS No. 123 are as follows:
For the Three Months Ended
2002 2001
--------------------------
Net loss U.S. basis
As reported $ 521,097 $ 557,173
Pro forma 524,497 835,973
Net loss per share U.S. basis
As reported $ 0.01 $ 0.02
Pro forma 0.01 0.03
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
For the Three Months Ended
2002 2001
Expected dividend yield 0.00% 0.00%
Expected stock price volatility 110.51% 110.51%
Risk-free interest rate 4.64% 4.64%
Expected life of options 2 years 2 years
F-42
- --------------------------------------------------------------------------------
Beartooth Platinum Corporation Statement 1
(formerly Idaho Consolidated Metals Corp.)
(An Exploration Stage Company)
Interim Consolidated Balance Sheet
U.S. Funds
Unaudited - Prepared by Management
ASSETS As at As at
30 June 31 December
2002 2001
- -----------------------------------------------------------------
Current
Cash $ 239,443 $ 87,920
Other assets 176,397 31,712
----------------------------
415,840 119,632
Restricted Investments 119,272 117,811
Plant and Equipment 107,365 115,810
Property Rights 2,008,018 2,630,660
----------------------------
$ 2,650,495 $ 2,983,913
LIABILITIES
- -----------------------------------------------------------------
Current
Accounts payable - Related parties $ 43,359 $ 243,812
- Other 55,780 500,070
Current portion of notes payable 840 --
----------------------------
99,979 743,882
Notes Payable 36,498 37,500
Subscription Payable -- 353,285
136,477 1,134,667
----------------------------
SHAREHOLDERS' EQUITY
Share Capital - Statement 2 16,259,161 14,657,490
Deficit - Accumulated during
the Exploration Stage
- Statement 2 (13,745,143) (12,808,244)
----------------------------
2,514,018 1,849,246
----------------------------
$ 2,650,495 $ 2,983,913
=================================================================
ON BEHALF OF THE BOARD:
"Delbert W. Steiner", Director
"John Andrews", Director
- See Accompanying Notes -
F-43
Beartooth Platinum Corporation Statement 2
(formerly Idaho Consolidated Metals Corp.)
Interim Consolidated Statement of Changes
In Shareholders' Equity
U.S. Funds
Unaudited - Prepared by Management
Deficit
Accumulated
Common Shares During the
----------------- Exploration
Shares Amount Stage Total
- --------------------------------------------------------------------------------------------------
Balance - 31 December 2000 33,171,201 $ 12,573,110 $(10,277,406) $ 2,295,704
Shares issued on exercise of warrants 1,004,050 349,832 -- 349,832
Shares issued on private placements,
net of issuance costs of $66,000 2,390,372 1,488,333 -- 1,488,333
Shares issued on exercise of options 300,000 67,634 -- 67,634
Loss for the period - Statement 3 -- -- (779,719) (779,719)
--------------------------------------------------------
Balance - 30 June 2001 36,865,623 $ 14,478,909 $(11,057,125) $ 3,421,784
==================================================================================================
Balance - 31 December 2001 37,165,623 $ 14,657,490 $(12,808,244) $ 1,849,246
Shares issued on settlement of debt 125,000 47,046 -- 47,046
Shares issued on private placements,
net of issuance costs of $58,397 6,085,265 1,327,919 -- 1,327,919
Shares issued on exercise of options 646,042 226,706 -- 226,706
Loss for the period - Statement 3 -- -- (936,899) (936,899)
--------------------------------------------------------
Balance - 30 June 2002 44,021,930 $ 16,259,161 $(13,745,143) $ 2,514,018
==================================================================================================
- See Accompanying Notes -
F-44
Beartooth Platinum Corporation Statement 3
(formerly Idaho Consolidated Metals Corp.)
Interim Consolidated Statement of Operations
U.S. Funds
Unaudited - Prepared by Management
2002 2001
-------------------------- ---------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- -------------------------------------------------------------------------------------------------
Operating Expenses
General and administrative
- Schedule 1 $ 150,898 $ 373,540 $ 418,826 $ 731,242
------------------------------------------------------------
Other Expenses (Income)
Interest income (7,373) (8,261) (6,741) (14,968)
Interest expense 1,975 3,174 205 629
General property search and gold
property holding costs 19,207 47,623 32,177 62,816
Write-off capitalized resource
property costs 549,764 549,764 -- --
Gain on settlement of debt (30,218) (30,218) -- --
Loss on sale of plant and equipment 1,277 1,277 -- --
------------------------------------------------------------
534,632 563,359 25,641 48,477
------------------------------------------------------------
Loss for the Period $ 685,530 $ 936,899 $ 444,467 $ 779,719
==================================================================================================
Loss per Basic and Diluted Share $ 0.02 $ 0.02 $ 0.01 $ 0.02
==================================================================================================
Weighted Average Number of
Common Shares Outstanding 43,726,984 43,102,569 35,988,911 35,290,668
==================================================================================================
- See Accompanying Notes -
F-45
Beartooth Platinum Corporation Statement 4
(formerly Idaho Consolidated Metals Corp.)
Interim Consolidated Statement of Cash Flows
U.S. Funds
Unaudited - Prepared by Management
2002 2001
-------------------------- ---------------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- --------------------------------------------------------------------------------------------------------------------
Operating Activities
Loss for the period $ (685,530) $ (936,899) $ (444,467) $ (779,719)
Items not affecting cash
Amortization 5,053 5,400 6,106 10,201
Loss on disposal of plant and equipment 1,277 1,277 -- --
Gain on settlement of debt (30,218) (30,218) -- --
Write-off capitalized resource property costs 549,764 549,764 -- --
Changes in current assets and liabilities
Other assets (143,397) (130,685) (25,339) (24,254)
Accounts payable
- Related parties 34,359 (200,453) (8,173) (31,633)
- Other 32,037 (367,026) 217,085 137,335
--------------------------------------------------------
Net cash used in operating activities (236,655) (1,108,840) (254,788) (688,070)
--------------------------------------------------------
Investing Activities
Property rights 76,654 58,878 (382,918) (450,816)
Plant and equipment 1,768 1,768 (28,813) (40,520)
Restricted investments (722) (1,461) (20,611) (26,763)
--------------------------------------------------------
Net cash provided by (used in) investing activities 77,700 59,185 (432,342) (518,099)
--------------------------------------------------------
Financing Activities
Share capital 55,467 1,554,625 850,951 1,905,799
Subscription payable -- (353,285) -- --
Repayment of notes payable (88) (162) (1,338) (2,647)
--------------------------------------------------------
Net cash provided by financing activities 55,379 1,201,178 849,613 1,903,152
--------------------------------------------------------
Net Increase (Decrease) in Cash (103,576) 151,523 162,483 696,983
Cash position - Beginning of period 343,019 87,920 561,008 26,508
--------------------------------------------------------
Cash Position - End of Period $ 239,443 $ 239,443 $ 723,491 $ 723,491
===================================================================================================================
Schedule of Non-Cash Investing and Financing Activities:
Common stock issued for debt settlement $ 47,046 $ 47,046 $ -- $ --
Investment received for option receipts $ 14,000 $ 14,000 $ -- $ --
===================================================================================================================
- See Accompanying Notes -
F-46
Beartooth Platinum Corporation Schedule 1
(formerly Idaho Consolidated Metals Corp.)
Interim Consolidated Schedule of General and
Administrative Expenses
U.S. Funds
Unaudited - Prepared by Management
2002 2001
------------------- -----------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- --------------------------------------------------------------------------
Management fees and wages $ 58,316 $195,386 $131,033 $240,969
Professional fees 30,985 83,556 127,110 227,840
Shareholder information 28,784 33,844 60,000 93,321
Travel 10,878 18,038 46,420 78,140
Transfer agent and filing fees 10,724 11,350 5,745 10,109
Office rent 5,074 7,725 13,544 21,011
Amortization 5,053 5,400 6,106 10,201
Office and general 1,084 18,241 28,541 48,550
Entertainment and promotion -- -- 327 1,101
-----------------------------------------
Expenses for the Period $150,898 $373,540 $418,826 $731,242
==========================================================================
Interim Consolidated Schedule of Resource Property Costs Schedule 2
U.S. Funds
Unaudited - Prepared by Management
2002 2001
-------------------- -------------------
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
30 June 30 June 30 June 30 June
- ----------------------------------------------------------------------------------
Direct - Mineral
Montana, U.S.A
Camp and general $ 46,399 $ 64,175 $ 12,873 $ 17,243
Geophysical 7,770 7,770 4,134 4,134
Trenching 1,962 1,962 -- --
Field transportation 1,401 1,401 40,914 43,071
Geological 1,200 1,200 136,384 186,125
Sampling 894 894 -- --
Survey and mapping 720 720 1,229 1,719
Staking, filing and claim rental -- -- -- 725
Assaying -- -- 75,598 76,213
Acquisition -- -- 9,500 19,300
Drilling -- -- 102,286 102,286
Option receipts (151,000) (151,000) -- --
-----------------------------------------------
Costs (Recovery) for the Period $ (90,654) $ (72,878) $ 382,918 $ 450,816
==================================================================================
- See Accompanying Notes -
F-47
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
1. Name Change
On 24 July 2002, the Company changed its name to Beartooth Platinum
Corporation.
- --------------------------------------------------------------------------------
2. Significant Accounting Policies
The notes to the consolidated financial statements as at 31 December
2001, as set forth in the Company's 2001 Annual Report substantially
apply to these interim consolidated financial statements and are not
repeated here.
- --------------------------------------------------------------------------------
3. Change in Accounting Policy
The Company has adopted the new recommendations of CICA Handbook Section
3870, Stock-based compensation and other stock-based payments. It is
applied on a prospective basis and applies to all awards granted on or
after 1 January 2002. The Section establishes standards for the
recognition, measurement and disclosure of stock-based compensation and
other stock-based payments made in exchange for goods and services.
Non-Employees
The standard requires that all stock-based awards made to non-employees
be measured and recognized using a fair value based method.
Employees
The standard encourages the use of a fair value based method for all
awards granted to employees, but only requires the use of a fair value
method for direct awards of stock, stock appreciation rights, and awards
that call for settlement in cash or other assets. Awards that a company
has the ability to settle in stock are recorded as equity, whereas that
the entity is required to or has a practice of settling in cash are
recorded as liabilities. The Company has elected to account for employee
stock options by measuring compensation cost for options as the excess,
if any, of the quoted market price of the Company's common shares at the
date of grant over the amount an employee must pay to acquire the common
shares. As required for the employee stock options, the Company will
disclose pro-forma income (loss) and pro-forma earnings (loss) per share
using a fair value based method.
- --------------------------------------------------------------------------------
4. Interim Consolidated Financial Statements Adjustments
The financial information given in the accompanying unaudited interim
consolidated financial statements reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the results
for the interim periods reported. All such adjustments are of a normal
recurring nature. All financial statements presented herein are
unaudited.
F-48
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
5. Share Capital
a) On 7 February 2002, the Company issued 4,036,283 units, each unit consisting
of one common share and one-half warrant, at C$0.35 per unit, for gross
proceeds of $901,710 (C$1,412,699). Each whole warrant entitles the holder
to acquire an additional common share at C$0.70 per share to 19 December
2002.
b) On 15 February 2002, the Company issued 1,763,669 units, each unit
consisting of one common share and one-half warrant, at C$0.45 per unit, for
gross proceeds of $500,000 (C$793,651). Each whole warrant entitles the
holder to acquire an additional common share at C$0.70 per share to 3
January 2003.
c) Share Purchase Options
The Company has established a share purchase option plan whereby the
board of directors may, from time to time, grant options to directors,
officers, employees or consultants. Options granted must be exercised no
later than ten years from date of grant or such lesser period as
determined by the Company's board of directors. The exercise price of an
option is not less than the closing price on the TSX Venture Exchange on
the last trading day preceding the grant date. Options vest as to 25% on
the grant date and 25% each six months thereafter.
i) A summary of the Company's options at 31 December 2001 and the
changes for the period are as follows:
Number Number
Outstanding Outstanding Exercise
31 December 30 June Price
2001 Issued Exercised Forfeited Expired 2002 Per Share Expiry Date
- ------------------------------------------------------------------------------------------------------
30,000 -- (15,000) -- (15,000) -- $ 0.26 1 April 2002
150,000 -- (150,000) -- -- -- $ 0.38 4 March 2003
140,000 -- -- (75,000) -- 65,000 $ 0.37 7 April 2004
986,000 -- -- -- -- 986,000 $ 0.30 14 January 2005
300,000 -- -- -- -- 300,000 $ 0.38 24 March 2005
50,000 -- (50,000) -- -- -- $ 0.38 25 June 2005
1,000,000 -- (287,500) (237,500) -- 475,000 $ 0.38 9 January 2006
2,250,000 -- (156,042) -- -- 2,093,958 $ 1.08 15 November 2002
850,000 -- (12,500) (75,000) -- 762,500 $ 0.38 5 September 2006
150,000 -- -- -- -- 150,000 $ 0.38 21 September 2006
350,000 -- -- -- -- 350,000 $ 0.27 7 November 2006
-- 650,000 -- -- -- 650,000 $ 0.71 27 May 2007
- ------------------------------------------------------------------------------------------------------
6,256,000 650,000 (671,042) (387,500) (15,000) 5,832,458
- ------------------------------------------------------------------------------------------------------
F-49
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
5. Share Capital - Continued
ii) The fair value of stock options used to calculate compensation
expense for employees is estimated using the Black-Scholes Option
Pricing Model with the following weighted average assumptions as at
30 June 2002:
- --------------------------------------------------------------------------------
Expected dividend yield 0.00%
Expected stock price volatility 113.84%
Risk-free interest rate 4.64%
Expected option life in years 3.00
The pro forma effect on net less and loss per share for the period
ended 30 June 2002 of the actual results has the Company accounted
for the stock options granted to directors and employees using the
fair value method is as follows:
Net loss for the period
Reported $ (387,135)
Pro-forma (439,840)
Basic and diluted loss per share
Reported (0.01)
Pro-forma (0.01)
Options pricing models require the input of highly subjective
assumptions including the expected price volatility. Changes in the
subjective input assumptions can materially affect the fair value
estimate, and therefore the existing models do not necessarily
provide a reliable single measure of the fair value of the Company's
stock options.
- --------------------------------------------------------------------------------
6. Convertible Debenture
As part of the private placement, which closed on 7 February 2002 was the
issuance of a convertible debenture in the amount of $1,000,000 to a
director of the Company. To date, the Company has not drawn down any of the
funds related to this debenture, although we expect to call upon these funds
as we proceed with the 2002 exploration season. The debenture is convertible
into units of the Company at C$0.35 per share. Each unit consists of one
common share and one half common share purchase warrant. Each full warrant
entitles the holder to acquire one common share at C$0.70 for two years
expiring 19 December 2003.
- --------------------------------------------------------------------------------
F-50
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
7 Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP)
a) Accounting Policy Differences
These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. The significant
differences between Canadian and U.S. GAAP are as follows:
Under Canadian GAAP, no value is attributed to the release of escrowed
shares and no compensation expense is recorded. Under U.S. GAAP, stock
compensation expense is recorded as such shares become eligible for release
based upon the number of shares eligible for release and the market value of
the shares at that time.
Under Canadian GAAP, the Company was not required to record the effect of
non-employee stock option based compensation expense in the consolidated
financial statements until 1 January 2002. Under U.S. GAAP, stock
compensation expense is recorded for non-employees based upon the discount
from market at the date the option is granted.
Under Canadian GAAP, convertible security instruments are allocated between
liability and equity based upon the fair value of the components at the
inception of the related contractual obligation. Further, additional
interest expense is recorded on amortization of the related interest
discount over the term of the related debt. Under U.S. GAAP, no allocation
is calculated unless the equity component is detachable from the liability
component and no amortization of the interest discount is required.
Under Canadian GAAP, acquisition and exploration costs are capitalized on an
individual property basis until such time as an economic ore body is defined
or an event occurs, which indicates a need to consider the recoverability of
the carrying value and the item is treated as an investing activity. Under
U.S. GAAP, the Company expenses exploration costs as incurred and the item
is treated as an operating activity.
b) Statement Reconciliation
A reconciliation of the consolidated statements of operations from Canadian
presentation to U.S. presentation is as follows:
For the Six Months Ended
30 June
2002 2001
----------------------
$ 936,899 $ $779,719
Net loss - Canadian basis
Compensation expense on common stock options
granted to non-employees 251,952 164,548
Current period exploration expense write-offs (549,764) -
Current period exploration costs (recovery) (72,878) 430,791
----------------------
Net loss - U.S. basis $ 566,209 $1,375,058
----------------------
Net loss U.S. basis per share
- Basic and Diluted $ 0.01 $ 0.04
----------------------
F-51
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
7. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
b) Statement Reconciliation - Continued
A reconciliation of certain consolidated balance sheet accounts from
Canadian presentation to U.S. presentation is as follows:
As at As at
30 June 31 December
2002 2001
----------------------------
Deficit accumulated during the
exploration stage
- Canadian basis $ 13,745,143 $ 12,808,244
Stock compensation expense,
prior years' cumulative 1,780,082 1,285,534
Compensation expense on common
stock options granted to
non-employees 251,952 164,548
Compensation expense on
re-priced employee options -- 330,000
Amortization of interest discount,
prior years' cumulative (277,713) (277,713)
Provision for impairment 1,196,574 1,196,574
Current period exploration
costs (recovery) (72,878) 829,185
Current period exploration
abandonments (549,764) (470,527)
Prior years' exploration costs,
net of abandonments 1,434,086 1,075,428
Deficit accumulated during the
exploration stage - U.S. basis $ 17,507,482 $ 16,941,273
Property rights - Canadian basis $ 2,008,018 $ 2,630,660
Provision for impairment (1,196,574) (1,196,574)
Current period year exploration
expense abandonments 549,764 470,527
Prior years' exploration costs,
net of abandonments (1,434,086) (1,075,428)
Current period exploration
(costs) recovery 72,878 (829,185)
Property rights - U.S. basis $ -- $ --
Share capital - Canadian basis $ 16,259,161 $ 14,657,940
Amortization of interest discount,
prior years' cumulative (277,713) (277,713)
Stock compensation expense,
prior years' cumulative 1,780,082 1,201,736
Compensation expense on common
stock options granted to
non-employees, current 251,952 248,346
Compensation expense on
re-priced options to employees -- 330,000
Share capital - U.S. basis $ 18,013,482 $ 16,160,309
F-52
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
7. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
b) Statement Reconciliation - Continued
A reconciliation of certain consolidated cash flow activities from
Canadian presentation to U.S. presentation is as follows:
For the Six Months Ended
30 June
2002 2001
-------------------------------
Net cash used in operating activities - Canadian Basis $ (1,108,840) $ (688,070)
Exploration (costs) recovery 72,878 (430,791)
-------------------------------
$ (1,035,962) $ (1,118,861)
Net cash used in operating activities - U.S. Basis
-------------------------------
Net cash provided by (used in) investing activities -
Canadian basis $ 59,185 $ (518,099)
Exploration costs (recovery) (72,878) 430,791
-------------------------------
Net cash used in investing activities - U.S. basis $ (13,693) $ (87,308)
-------------------------------
c) Note Disclosure Reconciliation
Under Canadian GAAP, the Company was not required to disclose the proforma
effect of employee stock option based compensation on expense in the notes
to the consolidated financial statements until 1 January 2002. Under U.S.
GAAP, Statement of Financial Accounting Standards No. 123 (SFAS No. 123),
"Accounting for Stock-Based Compensation", establishes financial accounting
and reporting standards for stock-based employee compensation plans. The
statement encourages all entities to adopt a fair value based method of
accounting, but allows an entity to continue to measure compensation cost
for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." The disclosure only provisions of SFAS No. 123 are as follows:
For the Six Months Ended
30 June
2002 2001
------------------------------
Net loss U.S. basis
As reported $ 566,209 $ 1,375,058
Pro forma 639,436 1,653,858
Net loss per share U.S. basis
As reported $ 0.01 $ 0.04
Pro forma 0.01 0.05
F-53
Beartooth Platinum Corporation
(formerly Idaho Consolidated Metals Corp.)
Notes to Interim Consolidated Financial Statements
30 June 2002
U.S. Funds
Unaudited - Prepared by Management
- --------------------------------------------------------------------------------
7. Differences Between United States and Canadian Generally Accepted
Accounting Principles (GAAP) - Continued
c) Note Disclosure Reconciliation- Continued
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
For the Six Months Ended
30 June
2002 2001
------------------------------
Expected dividend yield 0.00% 0.00%
Expected stock price volatility 113.84% 110.51%
Risk-free interest rate 4.64% 4.64%
Expected life of options 3 years 2 years
- --------------------------------------------------------------------------------
F-54
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
In accordance with applicable Canadian law, our charter documents
provide that we will indemnify our directors and officers against liability for
actions taken or permitted by them in good faith in their official capacities.
Our bylaws provide that no Director shall be liable for the acts, receipts,
neglects or defaults of any other Director or Officer or employee, or for
joining in any receipt or other act for conformity, or for any loss, damage or
expense happening to us through the insufficiency or deficiency of title to any
property acquired for or on behalf of us, or for the insufficiency or deficiency
of any security in or upon which any moneys of ours shall be invested, or for
any loss or damage arising from the bankruptcy, insolvency or tortuous acts of
any person with whom any of the moneys, securities of ours shall be deposited,
or for any loss occasioned by any error of judgement or oversight on his part,
or for any other loss, damage or misfortune whatever which shall happen in the
execution of the duties of his office or in relation thereto, unless the same
are occasioned by his own wilful neglect or default; provided that nothing shall
relieve any Director or Officer from the duty to act in accordance with the
Yukon Business Corporations Act RSY, 1986, c.15 and the regulations thereunder
or from liability for any breach thereof.
Subject to the limitations contained in the Yukon Business Corporations
Act RSY, 1986, c.15, and to the extent he is otherwise fairly and reasonably
entitled thereto, we shall indemnify a Director or Officer, a former Director or
Officer, or a person who acts or acted at our request as a Director or Officer
of a corporate body of which we are or were a shareholder or creditor (or a
person who undertakes or has undertaken any liability on behalf of us or any
such body corporate) and his heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a Director or Officer of us or such corporate body, if
(a) he acted honestly and in good faith with a view to the best
interests of us; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable
grounds for believing that his conduct was lawful.
The Yukon Business Corporation Act allows us to indemnify our directors
and officers against costs, charges, expenses, and amounts paid for settlements
or judgments that a director or officer reasonably incurs in a civil, criminal,
or administrative proceeding as a result of being a director or officer if (i).
he acted in good faith with a view to our best interest and (ii) if a criminal
or administrative action is involved, he had reasonable grounds to believe that
his conduct was lawful. Such indemnity from us is mandatory in respect of all
costs, charges, and expenses reasonably incurred by him in connection with the
defence of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of having been a director or officer of us, if the
person seeking the indemnity:
(a) was substantially successful on the merits in his defence of the
action or proceeding;
(b) fulfils the conditions set out in paragraphs (i) and (ii) above,
and
(c) is fairly and reasonably entitled to indemnity.
II-1
The approval of the appropriate Supreme Court in the Yukon is required
for an indemnity in respect of actions brought by us or on our behalf to procure
a judgement in our favour, to which the director is made a party by reason of
being or having been a director, against all costs and charges reasonably
incurred by him in connection with the action if the director fulfils the
conditions set out in paragraphs (i) and (ii) above.
Item 25. Other Expenses of Issuance and Distribution
The following is a list of the expenses to be incurred by the Registrant
in connection with the preparation and filing of this Registration Statement.
All amounts shown are estimates except for the SEC registration fee. The
Registrant will pay all expenses in connection with the distribution of the
common shares being sold by the selling security holders, except for the fees
and expenses of any counsel and other advisors that any selling security holders
may employ to represent them in connection with the offering and any brokerage
or underwriting discounts or commissions paid to broker-dealers in connection
with the sale of the shares.
SEC Registration Fee...................... $ 1,354
Printing and Engraving.................... 2,500
Accountants' Fees and Expenses............ 6,500
Legal Fees and Expenses................... 30,000
Transfer Agent Fees and Expenses.......... 5,000
Other Offering Expenses................... 6,500
Total $51,854
Item 26. Recent Sales of Unregistered Securities
Short Form Prospectus Offering
On April 10, 2000, we issued 667,000 units (the "Units") at a price of
C$0.84 resulting in net proceeds of $333,616 (C$494,252) after deducting the
costs of the offering. Each unit consisted of one common share and one-half of
one non-transferable share purchase warrant. The TSX Venture Exchange accepted
the Short Form Prospectus Offering on April 10, 2000 and the shares were issued
from treasury on April 10, 2000. We also granted 100,050 non-transferable share
purchase warrants, as a commission, to the agent, Pacific International
Securities Inc. Each full warrant entitles the holder to acquire a common share
at C$1.05 per share to October 10, 2000 and at C$1.26 per share to April 10,
2001. The issuance of the common shares and warrants was exempt from
registration by virtue of Section 4(2) of the Securities Act.
The offering consisted of 10,000 units issued to our officers and
directors as a group, 407,100 units issued to individual investors, 249,900
units issued to entities, which are not natural persons and which are not
broker-dealers nor affiliates of a broker-dealer. We also issued 100,050
warrants to a broker-dealer or an affiliate of a broker-dealer as a commission
on the offering.
Private Placements
September 7, 2000
On September 7, 2000, we issued 488,235 units at C$1.00 per unit for
cash proceeds of $332,000 (C$488,235) in connection with a private placement of
securities. Each unit consisted of one common share and one-half of one
non-transferable share purchase warrant. The warrant entitles the holder to
acquire an additional common share at C$1.00 to September 7, 2001 and at C$1.25
to September 7, 2002. The issuance of the common shares and warrants was exempt
from registration by virtue of Section 4(2) of the Securities Act.
II-2
The private placement consisted of 100,000 units issued to individual
investors and 388,235 units issued to entities, which are not natural persons
and, which are not broker-dealers, nor affiliates of a broker-dealer.
January 11, 2001
On January 11, 2001, we issued 1,294,118 units, each unit consisting of
one common share and one-half warrant, at C$0.85 per unit, for gross proceeds of
$728,361 (C$1,100,000). Each whole warrant entitles the holder to acquire an
additional common share at C$1.25 per share to January 11, 2002. We also issued
51,471 shares as a commission or finder fee. On January 3, 2002, we received
regulatory approval to extend the expiry date for these warrants to January 11,
2003. The issuance of the common shares and warrants was exempt from
registration by virtue of Section 4(2) of the Securities Act.
The private placement consisted of 470,588 units issued to individual
investors, 823,530 units issued to entities, which are not natural persons and
which are not broker-dealers nor affiliates of a broker-dealer. We also issued
11,765 shares to a broker-dealer or an affiliate of a broker-dealer as a
commission on the offering and issued 39,706 shares to an entity, which is not a
natural person and which is not a broker-dealer, nor an affiliate of a
broker-dealer as a finder fee.
Janaury 23, 2001
On January 23, 2001, we issued 434,783 units, each unit consisting of
one common share and one-half warrant, at C$0.92 per unit, for gross proceeds of
$260,603 (C$400,000). Each whole warrant entitles the holder to acquire an
additional common share at C$1.25 per share to January 23, 2002. On January 3,
2002, we received regulatory approval to extend the expiry date for these
warrants to January 11, 2003. The issuance of the common shares and warrants was
exempt from registration by virtue of Section 4(2) of the Securities Act.
The private placement consisted of 108,696 units issued to individual
investors and 326,087 units issued to entities, which are not natural persons
and, which are not broker-dealers, nor affiliates of a broker-dealer.
April 25, 2001
On April 25, 2001, we issued 610,000 units, each unit consisting of one
common share and one-half warrant, at C$1.40 per unit, for gross proceeds of
$565,053 (C$854,000). Each whole warrant entitles the holder to acquire an
additional common share at C$1.60 per share to April 25, 2002. On April 18,
2002, we received regulatory approval to extend the expiry date for these
warrants to April 25, 2003. The issuance of the common shares and warrants was
exempt from registration by virtue of Section 4(2) of the Securities Act.
The private placement consisted of 610,000 units issued to our officers
and directors as a group.
II-3
February 7, 2002
On February 7, 2002, we issued 4,036,283 units, each unit consisting of
one common share and one-half warrant, at C$0.35 per unit, for gross proceeds of
$901,710 (C$1,412,699). Each whole warrant entitles the holder to acquire an
additional common share at C$0.70 per share to December 19, 2002. The issuance
of the common shares and warrants was exempt from registration by virtue of
Section 4(2) of the Securities Act.
The private placement consisted of 56,686 units issued to our officers
and directors as a group, 982,149 units issued to individual investors,
2,997,448 units issued to entities, which are not natural persons and which are
not broker-dealers nor affiliates of a broker-dealer. We also issued 78,571
shares to a broker-dealer or an affiliate of a broker-dealer as a commission on
the offering and 57,800 shares to an individual as a finder fee.
February 15, 2002
On February 15, 2002, we issued 1,763,669 units, each unit consisting of
one common share and one-half warrant, at C$0.45 per unit, for gross proceeds of
$500,000 (C$793,651). Each whole warrant entitles the holder to acquire an
additional common share at C$0.70 per share to January 3, 2003. The issuance of
the common shares and warrants was exempt from registration by virtue of Section
4(2) of the Securities Act.
The private placement consisted of 1,763,669 units issued to entities,
which are not natural persons and which are not broker-dealers, nor affiliates
of a broker-dealer. We also issued 148,942 shares to an individual as a finder
fee
Convertible Debt Issuances
Convertible Loan Agreement #1
On April 9, 1998, we entered into a Convertible Loan Agreement regarding
a promissory note dated January 23, 1998 with the Tomasovich Family Trust (the
"Trust"), Theodore Tomasovich being both Trustee of the Trust and a Director of
the Company. We borrowed $100,000 repayable to the Trust on or before January
23, 2000 (the "Maturity Date") bearing interest at 9% per annum. After June 17,
1998, the Trust could require us to convert all or any portion of the principal
amount of the loan advanced and then outstanding into units ("Units") at a
conversion price of one Unit for each C$0.26 of indebtedness until and including
January 23, 1999 and at a conversion price of one Unit for each C$0.31 of
indebtedness during the period from January 24, 1999 until the Maturity Date for
a maximum of 546,154 units if the principal amount is converted in its entirety
by January 23, 1999 and a maximum of 458,065 units if the principal amount is
converted in its entirety between January 24, 1999 and the Maturity Date. Each
Unit consisted of one common share and one non-transferable common share
purchase warrant with each warrant being exercisable at a price of C$0.26 per
share until January 23, 1999 and C$0.31 per share from January 24, 1999 to the
Maturity Date.
II-4
During 1999, the holder of the convertible loan agreement
requested conversion of the note payable and on January 20, 1999 we issued
546,154 units to the holder. Each Unit consists of one common share and one
non-transferable common share purchase warrant with each warrant being
exercisable at a price of C$0.31 per share until January 23, 2000. We reduced
notes payable by $100,000, reduced convertible securities by $13,108 and
increased share capital by $113,108 on conversion of these notes. The issuance
of common shares was exempt from registration by virtue of Section 4(2) of the
Securities Act.
During 1999, the holder of the warrants related to the convertible loan
agreement exercised the warrants and we issued 546,154 shares to the holder. We
reduced convertible securities by $13,108 and increased share capital by
$127,854 on exercise of these warrants. The issuance of common shares was exempt
from registration by virtue of Section 4(2) of the Securities Act.
Convertible Loan Agreement #2
On April 9, 1998, we entered into Convertible Loan Agreement #2
regarding a promissory note dated March 31, 1998 with the Trust, as lender. We
borrowed $110,000 repayable to the Trust on or before March 31, 2000 (the
"Maturity Date") bearing interest at 9% per annum. After June 17, 1998, the
Trust could require us to convert all or any portion of the principal amount of
the loan advanced and then outstanding into units ("Units") at a conversion
price of one Unit for each C$0.26 of indebtedness until and including March 31,
1999 and at a conversion price of one Unit for each C$0.31 of indebtedness
during the period from April 1, 1999 until the Maturity Date for a maximum of
600,769 units if the principal amount is converted in its entirety by March 31,
1999 and a maximum of 503,870 units if the principal amount is converted in its
entirety between April 1, 1999 and the Maturity Date. Each Unit consisted of one
common share and one non-transferable common share purchase warrant with each
warrant being exercisable at a price of C$0.26 per share until March 31, 1999
and C$0.31 per share from April 1, 1999 to the Maturity Date.
During 1999, the holder of the convertible loan agreement requested
conversion of the note payable and we issued 600,769 units to the holder. Each
Unit consisted of one common share and one non-transferable common share
purchase warrant with each warrant being exercisable at a price of C$0.31 per
share until March 31, 2000. We reduced notes payable by $110,000, reduced
convertible securities by $14,419 and increased share capital by $124,419 on
conversion of these notes. The issuance of common shares was exempt from
registration by virtue of Section 4(2) of the Securities Act.
During 1999, the holder of the warrants related to the convertible loan
agreement exercised the warrants and we issued 600,769 shares to the holder. We
reduced convertible securities by $14,419 and increased share capital by
$140,640 on exercise of these warrants. The issuance of common shares was exempt
from registration by virtue of Section 4(2) of the Securities Act.
Convertible Loan Agreement #3
On May 15, 1998, we as borrower, entered into Convertible Loan Agreement
#3 with the Trust as lender for $150,000 repayable on or before May 15, 2000
(the "Maturity Date") bearing interest at 9% per annum. After June 17, 1998, the
Trust could require us to convert all or any portion of the principal amount of
the loan advanced and then outstanding into units ("Units") at a conversion
price of one Unit for each C$0.23 of indebtedness until and including May 15,
1999 and at a conversion price of one Unit for each C$0.28 of indebtedness
during the period from May 16, 1999 until the Maturity Date for a maximum of
932,608 units if the principal amount is converted in its entirety by May 15,
1999 and a maximum of 766,071 units if the principal amount is converted in its
entirety between May 16, 1999 and the Maturity Date. Each Unit consists of one
common share and one non-transferable common share purchase warrant with each
warrant being exercisable at a price of C$0.23 per share until May 15, 1999 and
C$0.28 per share from May 16, 1999 to the Maturity Date.
During 1999, the holder of the convertible loan agreement requested
conversion of the note payable and we issued 932,608 units to the holder. Each
Unit consisted of one common share and one non-transferable common share
purchase warrant with each warrant being exercisable at a price of C$0.28 per
share until May 15, 2000. We reduced notes payable by $150,000, reduced
convertible securities by $19,585 and increased share capital by $169,585 on
conversion of these notes. The issuance of common shares was exempt from
registration by virtue of Section 4(2) of the Securities Act.
II-5
During 2000, the holder of the warrants related to the convertible loan
agreement, exercised warrants to purchase 932,608 shares of our common stock for
$169,308 (C$261,130). We reduced convertible securities by $19,585 and increased
share capital by $188,888 on exercise of these warrants The issuance of common
shares was exempt from registration by virtue of Section 4(2) of the Securities
Act.
Convertible Loan Agreement #4
On September 10, 1998, we as borrower, entered into Convertible Loan
Agreement #4 with the Trust as lender for $250,000 repayable on or before
September 10, 2000 (the "Maturity Date") bearing interest at 9% per annum. The
Trust could require us to convert all or any portion of the principal amount of
the loan advanced and then outstanding into units ("Units") at a conversion
price of one Unit for each C$0.17 of indebtedness until and including September
10, 1999 and at a conversion price of one Unit for each C$0.22 of indebtedness
during the period from September 11, 1999 until the Maturity Date for a maximum
of 2,227,941 units if the principal amount is converted in its entirety by
September 10, 1999 and a maximum of 1,721,590 units if the principal amount is
converted in its entirety between September 11, 1999 and the Maturity Date. Each
Unit consists of one common share and one non-transferable common share purchase
warrant with each warrant being exercisable at a price of C$0.17 per share until
September 10, 1999 and C$0.22 per share from September 11, 1999 to the Maturity
Date.
During 1999, the holder of the convertible loan agreement requested
conversion of the note payable and we issued 2,227,941 units to the holder. Each
Unit consisted of one common share and one non-transferable common share
purchase warrant with each warrant being exercisable at a price of C$0.17 per
share to September 10, 1999 or at C$0.22 per share until September 10, 2000. We
reduced notes payable by $250,000, reduced convertible securities by $33,419 and
increased share capital by $283,419 on conversion of these notes. The issuance
of common shares was exempt from registration by virtue of Section 4(2) of the
Securities Act.
During 1999, the holder of the warrants related to the convertible loan
agreement exercised the warrants and we issued 2,227,941 shares to the holder.
We reduced convertible securities by $33,419 and increased share capital by
$286,045 on exercise of these warrants. The issuance of common shares was exempt
from registration by virtue of Section 4(2) of the Securities Act.
Convertible Loan Agreement #5
On October 1, 1998, we as borrower, entered into Convertible Loan
Agreement #5 with the Trust as lender for $322,000 repayable on or before
October 1, 2000 (the "Maturity Date") bearing interest at 9% per annum. The
Trust could require us to convert all or any portion of the principal amount of
the loan advanced and then outstanding into units ("Units") at a conversion
price of one Unit for each C$0.20 of indebtedness until and including October 1,
1999 and at a conversion price of one Unit for each C$0.25 of indebtedness
during the period from October 2, 1999 until the Maturity Date for a maximum of
2,466,681 units if the principal amount is converted in its entirety by October
1, 1999 and a maximum of 1,973,732 units if the principal amount is converted in
its entirety between October 2, 1999 and the Maturity Date. Each Unit consists
of one common share and one non-transferable common share purchase warrant with
each warrant being exercisable at a price of C$0.20 per share until October 1,
1999 and C$0.25 per share from October 2, 1999 to the Maturity Date.
During 1999, the holder of the convertible loan agreement requested
conversion of the note payable and we issued 2,466,681 units to the holder. Each
Unit consisted of one common share and one non-transferable common share
purchase warrant with each warrant being exercisable at a price of C$0.25 per
share until October 1, 2000. We reduced notes payable by $322,000, reduced
convertible securities by $44,400 and increased share capital by $366,400 on
conversion of these notes. The issuance of common shares was exempt from
registration by virtue of Section 4(2) of the Securities Act.
II-6
During 1999, the holder of the warrants exercised warrants to purchase
766,480 common shares for $130,000 (C$191,620). We reduced convertible
securities by $13,797 and increased share capital by $143,797 on exercise of
these warrants. The issuance of common shares was exempt from registration by
virtue of Section 4(2) of the Securities Act.
In February 2000, the holder of the warrants exercised warrants to
purchase 174,000 common shares for $30,000 (C$43,500). We reduced convertible
securities by $3,132 and increased share capital by $33,132 on exercise of these
warrants. The issuance of common shares was exempt from registration by virtue
of Section 4(2) of the Securities Act.
In September 2000, the holder of the warrants exercised warrants to
purchase 1,526,201 common shares for $254,494 (C$381,550). We reduced
convertible securities by $27,471 and increased share capital by $281,965 on
exercise of these warrants The issuance of common shares was exempt from
registration by virtue of Section 4(2) of the Securities Act of 1933.
Convertible Loan Agreement #6
On January 28, 1999, we as borrower, entered into Convertible Loan
Agreement #6 with the Trust as lender for $115,000 repayable on or before
January 28, 2001 (the "Maturity Date") bearing interest at 9% per annum. The
Trust could require us to convert all or any portion of the principal amount of
the loan advanced and then outstanding into units ("Units") at a conversion
price of one Unit for each C$0.15 of indebtedness until and including January
28, 2000 and at a conversion price of one Unit for each C$0.20 of indebtedness
during the period from January 29, 2000 until the Maturity Date for a maximum of
1,172,847 units if the principal amount is converted in its entirety by January
28, 2000 and a maximum of 879,635 units if the principal amount is converted in
its entirety between January 29, 2000 and the Maturity Date. Each Unit consists
of one common share and one non-transferable common share purchase warrant with
each warrant being exercisable at a price of C$0.15 per share until January 28,
2000 and C$0.20 per share from January 29, 2000 to the Maturity Date.
During 1999, the holder of the convertible loan agreement requested
conversion of the note payable and we issued 1,172,847 units to the holder. Each
Unit consisted of one common share and one non-transferable common share
purchase warrant with each warrant being exercisable at a price of C$0.15 per
share to January 28, 2000 or at C$0.20 per share until January 28, 2001. We
reduced notes payable by $115,000, reduced convertible securities by $21,111 and
increased share capital by $136,111 on conversion of these notes. The issuance
of common shares was exempt from registration by virtue of Section 4(2) of the
Securities Act. The remaining $21,111 of equity remains in convertible
securities until the related warrants are exercised.
During 1999, the holder of the warrants related to the convertible loan
agreement exercised the warrants and we issued 1,172,847 shares to the holder.
We reduced convertible securities by $21,111 and increased share capital by
$140,311 on exercise of these warrants. The issuance of common shares was exempt
from registration by virtue of Section 4(2) of the Securities Act.
Convertible Loan Agreement #7
As part of the private placement, which closed on February 7, 2002 was
the issuance of a convertible debenture in the amount of $1,000,000
(C$1,587,000). The debenture is convertible at the option of the holder. To
date, we have not drawn down any of the funds related to this debenture,
although we expect to call upon these funds as we proceed with the 2002
exploration season. The debenture is convertible into units of our stock at
C$0.35 per share. Each unit consists of one common share and one half common
share purchase warrant. Each full warrant entitles the holder to acquire one
common share at C$0.70 for two years expiring December 19, 2003. Using an
exchange rate of 0.6301 we expect to issue approximately 4,534,286 shares on
conversion of the debenture and approximately 2,267,143 on exercise of the
related warrants.
II-7
Other sales
On January 8, 2000, we reached a settlement with various parties to
conclude numerous lawsuits which are outlined in the Company's 10-QSB for the
period ended March 31, 2000. As a result of the settlement, all actions in which
we were named have been dismissed, with prejudice, at no cost to us except for
our direct legal, indemnity and other related costs. Pursuant to the terms of
the settlement agreement, Delbert Steiner delivered 252,000 common shares of the
Company stock to two plaintiffs. We agreed to reimburse Delbert Steiner by
issuing 252,000 shares of our stock. The deemed value of the issuance was
$239,202. The Agreement was approved by the TSX Venture Exchange on June 14,
2000 and 252,000 shares were issued on June 14, 2000. The issuance of common
shares was exempt from registration by virtue of Section 4(2) of the Securities
Act.
On April 5, 2000 we issued 150,000 common shares to Platinum Fox and
Emerald Chimera as partial consideration for the acquisition of the platinum
properties from Platinum Fox and Emerald Chimera pursuant to an agreement dated
July 16, 1999 between us, Platinum Fox and Emerald Chimera ("Platinum Fox
Agreement"). The price per share was C$1.47 ($0.098 US) and total proceeds were
C$220,500 ($147,739 US). The terms of the Platinum Fox Agreement are described
herein as "Description Of Business - Platinum Fox Lease." The issuance of common
shares was exempt from registration by virtue of Section 4(2) of the Securities
Act.
On October 13, 2000, we issued 200,000 common shares at C$0.66 ($0.44
US) per share to Platinum Fox and Emerald Chimera as partial consideration for
the acquisition of the platinum properties from Platinum Fox and Emerald Chimera
pursuant to an agreement dated July 16, 1999 between us, Platinum Fox and
Emerald Chimera ("Platinum Fox Agreement"). The total proceeds for the sale of
the shares was C$132,000 ($87,117 US). The issuance of common shares was exempt
from registration by virtue of Section 4(2) of the Securities Act.
On November 30, 2000, we issued 200,000 common shares at C$0.48 ($0.31
US) per share to Chrome Corporation as partial consideration for the acquisition
of the Stillwater, Montana property from Chrome Corporation pursuant to an
agreement dated January 18, 2000 between us and Chrome Corporation ("Chrome
Agreement"). Total proceeds for the sale of the shares was C$96,000 ($61,440
US). The terms of the Chrome Agreement are described herein "Description Of
Business - Chrome Corporation Joint Venture Agreement." See also Note 4(a) to
our Financial Statements for the period ended December 31, 2000. The issuance of
common shares was exempt from registration by virtue of Section 4(2) of the
Securities Act.
On August 30, 2001, we issued 200,000 common shares to Platinum Fox and
Emerald Chimera as partial consideration for the acquisition of the platinum
properties from Platinum Fox and Emerald Chimera pursuant to an agreement dated
July 16, 1999 between us, Platinum Fox and Emerald Chimera ("Platinum Fox
Agreement"). The price per share at the time of issuance was C$0.90, resulting
in deemed proceeds of C$180,000 ($116,069 US). The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
II-8
On September 13, 2001, we issued 100,000 common to Chrome Corporation as
partial consideration for the acquisition of the Stillwater, Montana property
from Chrome Corporation pursuant to an agreement dated January 18, 2000 between
us and Chrome Corporation ("Chrome Agreement. The price per share at the time of
issuance was C$0.98, resulting in deemed proceeds of C$98,000 ($62,512 US). The
issuance of common shares was exempt from registration by virtue of Section 4(2)
of the Securities Act.
Exercise of Stock Purchase Options
During the year ended December 31, 1999, option holders exercised 40,000
share purchase options and were issued 40,000 common shares from treasury for
cash in the amount of $7,072. The issuance of common shares was exempt from
registration by virtue of Section 4(2) of the Securities Act.
During the year ended December 31, 2000, option holders exercised
744,000 share purchase options and were issued 744,000 common shares from
treasury for cash in the amount of $152,556. The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
During the year ended December 31, 2001, option holders exercised
300,000 share purchase options and were issued 300,000 common shares from
treasury for cash in the amount of $67,635. The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
During the quarter ended March 31, 2002, option holders exercised
171,042 share purchase options and were issued 171,042 common shares from
treasury for cash in the amount of $112,842. The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
Exercise of Stock Purchase Warrants (not described within the Convertible Debt
Issuances)
During the year ended December 31, 1999, warrant holders exercised
570,000 share purchase warrants and were issued 570,000 common shares from
treasury for cash in the amount of $57,000. The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
During the year ended December 31, 2000, warrant holders exercised
2,531,316 share purchase warrants and were issued 2,531,316 common shares from
treasury for cash in the amount of $921,663. The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
During the year ended December 31, 2001, warrant holders exercised
1,004,050 share purchase warrants and were issued 1,004,050 common shares from
treasury for cash in the amount of $349,832. The issuance of common shares was
exempt from registration by virtue of Section 4(2) of the Securities Act.
II-9
Item 27. Exhibits
Exhibit. Description of Document
Number
3.1 Memorandum and Articles of Incorporation as amended by Special
resolution on June 24, 1996 (incorporated herein by reference to the
Registrant's Annual report on Form 10-KSB for the year ended December
31, 1997)
5 Opinion of Campion & Macdonald, Canadian Counsel [filed herewith]
5.1 Underlying opinion of Gowling Lafleur Henderson LLP, Canadian Counsel
[filed herewith]
Material Contracts:
10.01 Tri-Party Lease with Purchase Option Agreement between Platinum Fox,
Emerald Chimera and the Company dated July 16, 1999 (3)
10.02 Amendment dated March 30, 2001 to the Tri-Party Lease with Purchase
Option Agreement between Platinum Fox, Emerald Chimera and the Company
(5)
10.03 Montana PGM Venture - Joint Venture Agreement dated February 1, 2000
between the Company and Chrome Corporation of America (Chrome Corp.
Property) (4)
10.04 Mouat Family Stillwater Complex Mineral Claims Revised Agreement dated
May 1, 1999 between the Lessors to the 1996 Amended Extension Agreement
and Chrome Corporation of America, Inc. (Chrome Lease - Chrome Corp.
Property) (4)
10.05 August 5, 1996, Amended Extension Agreement to Lease Agreement dated
August 5, 1988 between the Lessors to the 1988 Lease Agreement and
Chrome Corporation of America, Inc. (Chrome Lease - Chrome Corp.
Property) (4)
10.06 Extension letter dated July 23, 1993 1988 between various parties and
Chrome Corporation of America, Inc (Chrome Lease - Chrome Corp.
Property) (4)
10.07 Lease Agreement dated August 5, 1988 between various parties and Chrome
Corporation of America, Inc. (Chrome Lease - Chrome Corp. Property) (4)
10.08 Stillwater Complex Basal Zone Lease Agreement dated January 18, 2000
between Mouat Nickel Mines Inc., William G. Mouat, individually and as
Trustee, and Fort Stockton Investments, Inc. and Chrome Corporation of
America (Nickel/Copper Lease - Chrome Corp. Property) (4)
10.09 Memorandum of Understanding between the Company and First Choice
Industries Ltd. dated June 27, 2001 (6)
II-10
10.10 Stillwater West PGM Venture agreement dated November 1, 2001 between the
Company and First Choice Industries Ltd. (8)
10.11 Agreement to Assign Interest - Friday claims dated December 11, 1995
between Idaho Gold Corporation and the Company (Friday Property) (2)
10.12 Memorandum of Agreement between Idaho Gold Corporation and Idaho
Consolidated Metals Corp. and Mineral Lease Agreement between Idaho Gold
Corporation and Idaho Consolidated Metals Corp. dated July 9, 1996
(Friday Property) (3)
10.13 Amendment to Option Agreement dated September 5, 1997 between Arctic
Fox, Idaho Consolidated Metals Corp., Idaho Gold Corporation and Cyprus
Gold Exploration Corporation (Friday Properties) (3)
10.14 Agreement to Assign Interest - Deadwood claims dated December 11, 1995
between Idaho Gold Corporation and the Company (The Deadwood Property)
(2)
10.15 Memorandum of Agreement between Idaho Gold Corporation and Idaho
Consolidated Metals Corp. and Agreement between Idaho Gold Corporation
and Idaho Consolidated Metals Corp. (The Deadwood Property) dated July
9, 1996 (3)
10.16 First Amendment to Option Agreement dated September 5, 1997 between
Arctic Fox, Idaho Consolidated Metals Corp., Idaho Gold Corporation and
Cyprus Gold Exploration Corporation (Orogrande/Deadwood) (3)
10.17 Agreement to Assign Interest - Buffalo Gulch claims dated December 11,
1995 between Idaho Gold Corporation and the Company (The Buffalo Gulch
Property) (2)
10.18 Memorandum of Agreement between Idaho Gold Corporation and Idaho
Consolidated Metals Corp. and Agreement between Idaho Gold Corporation
and Idaho Consolidated Metals Corp. (The Buffalo Gulch Property) dated
July 9, 1996 (3)
10.19 Global Settlement Agreement dated April 29, 1998 between the Company,
Delbert Steiner, Ellie Steiner, Theodore J. Tomasovich, acting
individually and as Trustee of the Tomasovich Family Trust and Joe
Swisher, Barbara Swisher, Idaho Mining and Development Company and
Silver Crystal Mines, Inc. (1)
10.20 Global Settlement Agreement dated January 8, 2000 between Thomas
Gumprecht, Kirk White, Bonnie Witrak, Joe Swisher, Barbara Swisher,
Idaho Mining and Development Company, Silver Crystal Mines, Inc., the
Company, Delbert Steiner, Ellie Steiner, American Guarantee and
Liability Insurance Company and Miriam M. Lee. (3)
10.21 Crystallex International Corporation - Management Services Agreement
dated January 10, 2001 (5)
10.22 Termination Agreement between the Company and Crystallex International
Corporation (7)
10.23 Letter of Understanding with Diane R. Garrett (6)
10.24 Incentive Stock Option Plan dated January 9, 2001 (5)
II-11
10.25 Form of Director Stock Option Agreement (3)
10.26 Form of Employee Stock Option Agreement (3)
10.27 February 7, 2002 Convertible Debenture
21 List of all Subsidiaries of Registrant
23.1 Consent of PricewaterhouseCoopers LLC, Accountants [filed herewith]
23.2 Consent of Campion & Macdonald, (included in Exhibit 5 above)
(1) Incorporated by reference to the Annual Report on Form 10KSB for the year
ended December 31, 1997 previously filed by the Company.
(2) Incorporated by reference to the Form 10QSB for the quarter ended June 30,
1996 previously filed by the Company
(3) Incorporated by reference to the Annual Report on Form 10KSB for the year
ended December 31, 1999 previously filed by the Company.
(4) Incorporated by reference to the Annual Report on Form 10KSB for the year
ended December 31, 2000 previously filed by the Company.
(5) Incorporated by reference to the Quarterly Report on Form 10QSB for the
period ended March 31, 2001 previously filed by the Company.
(6) Incorporated by reference to the Quarterly Report on Form 10QSB for the
period ended June 30, 2001 previously filed by the Company.
(7) Incorporated by reference to the Quarterly Report on Form 10QSB for the
period ended September 30, 2001 previously filed by the Company.
(8) Incorporated by reference to the Annual Report on Form 10KSB for the year
ended December 31, 2001 previously filed by the Company.
Form F-X
Item 28. Undertakings.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to: (i) include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended (the "Securities Act"); (ii) reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and (iii) include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
II-12
2. For the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
4. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Amendment No.2 to the Registration Statement
to be signed on behalf by the undersigned duly authorized, in the City of
Surrey, Province of British Columbia, Canada on this 4th day of October, 2002.
BEARTOOTH PLATINUM CORPORATION
Registrant
By: /s/ John E. Andrews
-------------------
John E. Andrews
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2, to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John E. Andrews President, Chief Executive October 4, 2002
------------------- Officer and Director
John Andrews (Principal Executive Officer)
/s/ Kenneth A. Scott Chief Financial Officer October 4, 2002
- -------------------- (Principal Financial and
Kenneth A. Scott Accounting Officer)
* Director October 4, 2002
- ----------------------
Delbert W. Steiner
* Director October 4, 2002
- -----------------------
Theodore Tomasovich
* Director October 4, 2002
- -------------------------
James W. Ashcroft
* Director October 4, 2002
- -------------------------
James D. Clucas
/s/ Dr. Reid R. Keays Director October 4, 2002
- -------------------------
Dr. Reid R. Keays
* By John E. Andrews, attorney in fact
II-14
