SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) December 4, 1998
TOUCAN GOLD CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 33-28562 75-2661571
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification
No.)
8201 Preston Road, Suite 600, Dallas, Texas 75225
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 890-8065
-----------------------------
--------------------------------------------------------
(Former name or former address, if changed since last report)
1
Item 2. Acquisition or Disposition of Assets
On December 4, 1998, Toucan Gold Corporation (the "Company")
consummated the following transactions, involving, among other things, the grant
of an option to Minmet PLC ("Minmet"), an Irish company, whose shares are quoted
on the Exploration Securities Market of the Irish Stock Exchange, to purchase
all of the issued share capital of Mineradora de Bauxita Ltda. ("MBL"), the
Brazilian subsidiary of the Company through which the Company's Brazilian
exploration activities are conducted.
Toucan Mining Limited ("TML"), the Company's wholly-owned subsidiary
that is the beneficial owner of the issued share capital of MBL, granted an
option (the "MBL Option") to Minmet to acquire all of the issued share capital
of MBL. TML received 7.5 million Ordinary Shares (the "Option Shares") in Minmet
solely for TML granting the MBL Option. If the MBL Option is exercised by
Minmet, Minmet will acquire all of the issued share capital of MBL by issuing an
additional 25 million Ordinary Shares (the "Completion Shares") in Minmet to
TML. The MBL Option expires on June 30, 1999, subject to earlier termination
under certain circumstances.
TML is restricted from selling or distributing the Option Shares during
the term of the MBL Option and for two (2) months thereafter without the consent
of Minmet.
The sale and distribution of the Completion Shares are also restricted
as follows. TML or the Company may sell up to 3 million of the Completion Shares
in each of the three six (6) month periods after the issuance thereof. Any
Completion Shares not disposed of in a six (6) month period may be added to the
number of Completion Shares that may be sold in later periods.
Minmet has agreed that the Option Shares and the Completion Shares may
be placed through Minmet's brokers with Minmet's consent and that it will act
reasonably in respect of all such requests by the Company for the sale of the
Option Shares and the Completion Shares.
Pursuant to the terms and conditions of the Transaction Documents (as
defined below), from November 1, 1998 to the expiration of the MBL Option,
Minmet is obligated (i) to conduct detailed ground and airborne geophysical
surveys of MBL's claims and additional geological mapping, (ii) to cover all of
MBL's reasonable overhead and costs, and (iii) to spend a minimum of $500,000 on
claim development efforts with MBL, including expenses incurred through (i) and
(ii). MBL will have the benefit of these obligations even if the MBL Option is
not exercised.
In addition, the Company granted an option (the "Loan Option") to
Minmet to acquire from the Company the benefit of the loans that it has made to
MBL in the approximate principal amount of $975,000. The Company received the
sum of U.S. $275,000 solely for the Company granting the Loan Option. The Loan
Option expires on June 30, 1999, subject to earlier termination under certain
circumstances. If the Loan Option is exercised, Minmet will pay to the Company
the further sum of U.S. $250,000 and will issue to the Company warrants (the
"Warrants") to subscribe for a further 7.7 million Ordinary Shares (the "Warrant
Shares") of Minmet at an exercise price of (British Pound) 0.08p per share.
2
The grant of the MBL and Loan Options to Minmet was accomplished
through the sale of all of the issued share capital of Anagram Limited, a newly
formed, wholly-owned subsidiary of TML and a private limited company
incorporated under the laws of the Isle of Man ("Anagram") pursuant to an
Agreement dated December 3, 1998 among the Company, TML and Minmet (the
"Purchase Agreement"). Through the purchase of Anagram by Minmet and the
assumption by Minmet of that certain Option Agreement among the Company, MBL and
Anagram dated December 3, 1998 (the "Option Agreement") and that certain
Supplemental Agreement dated December 3, 1998 among the Company, MBL, Anagram
and Minmet (the "Supplemental Agreement," collectively with the Purchase
Agreement and the Option Agreement, the "Transaction Documents"), Minmet
obtained the MBL Option and the Loan Option and incurred the obligations
detailed above.
The Company has reached agreement with certain of its creditors,
including certain affiliates of the Company, for the creditors to receive
Ordinary Shares of Minmet from the Option Shares held by the Company in payment
of the obligations of the Company to such creditors. Such creditors and Roy G.
Williams received such Minmet Shares with the same restrictions on transfer
applicable to the Company and described above. For this purpose the Minmet
Shares were valued at approximately $0.09 per share, and the Company
extinguished $640,720 of obligations with 7,100,000 Minmet Shares. The Company
has agreed to pay Roy G. Williams certain fees for introducing Minmet to the
Company, negotiation of the MBL Option, arranging short term funding of the
Company's operations, and providing basic office accommodations and secretarial
assistance. On the execution of the Transaction Documents, Mr. Williams was paid
a fee of $60,000. The Company paid the fee by issuing to Mr. Williams 180,000
shares in the Company valued for this purpose at $0.20 per share and
transferring to Mr. Williams 265,000 Minmet Shares valued for this purpose at
approximately $0.09 per share. On the exercise of the MBL Option, Mr. Williams
will be entitled to a further fee of $60,000 payable as to $36,000 in cash or
the equivalent value in shares of the Company and as to $24,000 in cash or the
equivalent value in shares of Minmet.
While the Transaction Documents may permit the Company to distribute
the Option Shares, the Completion Shares, the Warrants, and the Warrant Shares
(collectively, the "Minmet Securities") to stockholders of the Company, subject
to certain limitations, the Board of Directors of the Company in approving the
various agreements with Minmet has determined for securities law reasons that no
Minmet Securities will be distributed to stockholders of the Company.
Accordingly, the Board of Directors of the Company has no present intention of
distributing any of the Minmet Securities to stockholders of the Company, and no
such distribution can be made to stockholders of the Company unless with the
unanimous consent of the Board based on an opinion of counsel that such
distribution will not require registration under the Securities Act of 1933, as
amended, of the issuance of the Minmet Securities to TML or the Company or such
distribution. Consequently, depending on the amount and nature of other assets
owned by the Company at relevant times, the Company may need to acquire
non-securities assets or sell or otherwise dispose of the Minmet Securities in
order to avoid being deemed to be an investment company under the Investment
Company Act of 1940, as amended.
3
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
10.1 Agreement for the sale and purchase of the
whole of the issued share capital of Anagram
Limited dated December 3, 1998 among Toucan
Mining Limited, Toucan Gold Corporation Inc.
and Minmet plc
10.2 Supplemental Agreement dated December 3,
1998 among Toucan Mining Limited, Toucan
Gold Corporation Inc. and Minmet plc
10.3 Option Agreement Re Mineradora De Bauxita
Ltda dated December 3, 1998 among Toucan
Mining Limited, Toucan Gold Corporation Inc.
and Anagram Limited
10.4 Agreement for the purchase of the whole of
the issued share capital of Mineradora de
Bauxita Ltda dated December 3, 1998 among
Toucan Mining Limited, Toucan Gold Corpora-
tion Inc. and Anagram Limited
10.5 Form of Minmet plc Warrant Instrument
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Toucan Gold Corporation
(Registrant)
Date: January 4, 1999 By: /s/ Robert A. Pearce
-----------------------
Robert A. Pearce
Chief Financial Officer
5