MOYDOW MINES INTERNATIONAL INC.
ANNUAL INFORMATION FORM
2002
Moydow Mines International Inc.
Suite 1220, 20 Toronto Street
Toronto, Ontario M5C 2B8
TABLE OF CONTENTS
Item 1. The Company 3
Item 2. General Development of the Business 4
History of the Moydow Group 5
Mining in West Africa 6
Mineral Rights in Ghana 6
Item 3. Description of Properties 9
Ntotoroso 9
Wassa 13
Kanyankaw 14
OtherProperties 16
Ris Factors 17
Item 4. SelectedConsolidatedFinancialInformation 21
Item 5. Management'sDiscussionandAnalysisof
Financial Condition 22
Item 6. MarketforSecurities 23
Item 7 DirectorsandOfficers 23
Item 8 AdditionalInformation 25
2
ITEM 1: THE COMPANY
Moydow Mines International Inc. (the "Company") was incorporated under the laws
of the province of Alberta, Canada, by certificate of incorporation issued
December 12, 1972, continued under the laws of the province of British Columbia
on January 16, 1981 by certificate of incorporation and continued under the laws
of the province of Ontario by articles of continuance effective on December 9,
1998. The Company's head office is located at 20 Toronto Street, 12th Floor,
Toronto, Ontario, M5C 2B8 and its registered office is located at BCE Place,
Canada Trust Tower, Suite 3900, 161 Bay Street, Toronto, Ontario, M5J 2S1. The
Company also has offices in Dublin, Ireland and Accra, Ghana. The Company's
outstanding common shares trade on the Toronto Stock Exchange under the symbol
"MOY"
The following diagram sets forth the relationship of the Company including its
material subsidiaries and associated companies (the Company together with such
subsidiaries and associated companies is collectively referred to herein as the
"Moydow Group"), including their jurisdictions of incorporation, and the
percentage interests of the Moydow Group in its current material mineral
properties:
[GRAPH MOYDOW MINES INTERNATIONAL INC.]
3
NOTES:
1. Moydow Limited (Isle of Man) ["Moydow (Isle of Man")] was incorporated under
the laws of the Isle of Man on January 27, 1992. Moydow (Isle of Man)'s
subsidiaries were created as follows:
* Wassa Holdings Limited ("Wassa Holdings"): incorporated on March 15,
1994; acquired on August 25, 1994;
* Satellite Goldfields Limited ("Satellite"): incorporated on February 9,
1994; acquired on September 19, 1994;
* Moydow Limited (Ghana) ["Moydow (Ghana)"]: incorporated on March 21,
1989; acquired on September 2, 1996; Rank Mining Company Limited
("Rank"): incorporated on March 22, 1995; acquired on November 23, 1996.
2. The interest held by Moydow (Ghana) in Rank is subject to dilution. See
"Description of Properties - Ntotoroso Property".
3. The Company holds a joint venture interest in the Kanyankaw gold property
with Antubia Resources Limited ("Antubia"), a subsidiary of Glencar Mining plc
("Glencar"). See "Description of Properties - Kanyankaw Property".
4. On December 9, 1998 the Company completed the acquisition (the "RTO
Transaction") of all of the outstanding shares and warrants of Moydow (Isle of
Man) in consideration for shares and warrants of the Company and commenced its
current business activities. In accordance with the terms of the RTO
Transaction, the name of the Company was changed from Westley Mines
International Inc. to its present name, the management of Moydow (Isle of Man)
took over management of the Company and the outstanding common shares of the
Company were consolidated on a 1 2 for 1 basis. The RTO Transaction resulted in
the former shareholders of Moydow (Isle of Man) owning, immediately following
the completion of such transaction, over 90% of the outstanding shares of the
Company. Moydow (Isle of Man), which was incorporated under the laws of the Isle
of Man on January 27, 1992, holds an interest in a gold mine and several
exploration and development properties in Ghana.
ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS
OVERVIEW
The Company is engaged primarily in the acquisition, exploration and development
of mineral properties, principally gold. The Company has focused its exploration
efforts in West Africa and, in particular, the historical gold producing regions
of Ghana (formerly the Gold Coast). The property portfolio currently includes
interests in properties in Ghana - Ntotoroso, Kanyankaw and Wassa. The Company,
at present, has a 50% interest in the Ntotoroso Property and considers this its
primary focus; the property is in the exploration stage with a feasibility study
completed in March 2001. The Company has a 50% interest in the Kanyankaw
Property. The Company has a 34% interest in Wassa
4
Holdings, which owns a 90% interest in the Wassa Property and which is operated
by Glencar. The Company has no further obligations regarding the Wassa Property
and has written its investment down to nil in 1999.
HISTORY OF THE MOYDOW GROUP
The Chairman of the Board of the Company, Noel Kiernan, has over 20 years of
experience in West Africa and is the Ghanaian Honourary Consul to Ireland. Mr
Kiernan was the original applicant for the property now known as the Teberebie
gold mine located in Ghana and, as managing director of the project, brought the
mine through feasibility and into production. The Teberebie gold mine has
produced over one million ounces of gold since it commenced production in the
early 1990's and is now owned and operated by Ashanti Goldfields Co. Ltd. Noel
Kiernan is also the Chairman of Pontil Minerex Limited, a drilling company which
is active in West Africa and from time to time provides drilling and other
services to the Moydow Group.
In March 1989, Noel Kiernan formed Moydow (Ghana) to acquire the Kanyankaw
property, which was subsequently the subject of an agreement with Glencar. Brian
Kiernan joined the management of the Moydow Group in 1993, as Chief Executivr
Officer of Moydow (Isle of Man), and Joseph Breen joined as Chief Operating
Officer of Moydow (Isle of Man) in 1996 after three years of consulting for
Moydow (Isle of Man).
Moydow (Isle of Man) began operations in June 1994 with the acquisition of a 42%
interest in Wassa Holdings, which held a 90% interest in Satellite, which held a
100% interest in the Wassa Property. Over the next three years, Moydow (Isle of
Man)'s interest in Wassa Holdings was diluted to 34%; the remaining 66% of Wassa
Holdings is held by Antubia, a subsidiary of Glencar. Satellite holds a 30-year
gold mining lease for the Wassa Property, which expires in the year 2022.
Moydow (Isle of Man)'s interest in the Ntotoroso Property was obtained in
September 1996 with the acquisition of Moydow (Ghana) from Noel Kiernan, then
Chairman of the Company. Moydow (Ghana) held the property indirectly through its
60% ownership of Rank. Pursuant to an October 1997 agreement, Normandy LaSource,
a subdiary of Normandy Mining Limited, held 40% through their commitment to fund
$2.5 million of exploration expenditures by June 30, 1999, which was achieved.
Normandy LaSource increased its ownership through its $4 million funding of
further exploration expenditures and holds a 50% beneficial interest in Rank. In
early 2002, Newmont Mining Corporation acquired Normandy Mining Limited.
Moydow (Isle of Man)'s 50% interest in the Kanyankaw prospecting licence was
obtained in September 1996 with the acquisition of Moydow (Ghana) from Noel
Kiernan, a related party. Moydow (Ghana) held the licence as a joint venture
with Antubia. Currently, the partners have agreed to split the property into
5
two parcels and application for the property split was approved by the Ghanaian
Minerals Commission.
Moydow (Isle of Man)'s 100% interest in the Kissi Kissi two-year prospecting
licence in Guinea, West Africa, was obtained in May 1996, although it was
allowed to expire in 1998 due to the political and economical uncertainty in the
region at that time.
MINING IN WEST AFRICA
West Africa has a long history of mineral production that dates back to the 10th
century A.D. and possibly as early as the 5th century B.C. A significant gold
trade began with overland transportation to North Africa and the middle east in
the 12th and 13th centuries. As European economies grew and the great marine
explorers of the 15th century took to the seas, French, Dutch, English and
Portuguese merchants launched aggressive trading activities between Europe and
West Africa. Gold was the most valuable commodity in this lucrative trade.
In the 18th and 19th centuries, the region was colonized and the "Gold Coast"
was carved into dependencies of Portugal, England, and France. France colonized
most of the region covering Senegal, Guinea, Cote d'Ivoire, Mali, Dahomey and
Niger. England became the protector of Sierra Leone, Ghana, Upper Volta and
Nigeria. The early history of Ghana and Mali is somewhat entwined because the
tribes of this region were nomadic. Ghana appears to have been the principal
source of West African gold and Mali a subsidiary source and main route for gold
that found its way to North America, Europe and the Middle East in the 13th and
14th centuries. The first record of gold from the region is connected with an
account that Emperor Cainca Moussa brought four tons of gold to Mecca on a
pilgrimage in 1433.
MINERAL RIGHTS IN GHANA
Under the constitution and the mining laws of Ghana, all minerals in Ghana in
their natural state are the property of the state and title to them is vested in
the President on behalf of and in trust for the people of Ghana, with rights of
prospecting, recovery and associated land usage granted by the state under
licences or leases. Three types of tenure are granted as a company progresses
through the reconnaissance, exploration, development and production phases: a
reconnaissance licence, a prospecting licence and a mining lease. In addition, a
licence is required for the export or disposal of minerals and the government
has a pre-emptive right over all minerals produced. Activities such as the
diversion of water require separate licences or consents. A rental fee is
payable to the government in respect of licences and leases.
A reconnaissance licence permits the holder to carry out geophysical,
geochemical and photo-geological surveys, but not drilling, excavation or
subsurface activities. They are granted
6
for a period of up to twelve months and may be renewed, provided the renewal
application is made at least three months prior to the expiration of the licence
and the government determines that the renewal is in the public interest. While
a reconnaissance licence is not necessary in order to secure a prospecting
licence, it does grant the holder with the exclusive right to obtain a
prospecting licence in respect of the lands/minerals.
A prospecting licence permits the holder to carry out both reconnaissance work
and surface excavation and drilling work, including trenching. Prospecting
licences are granted for a period of up to three years and may be renewed for
additional periods of two years, provided the renewal application is made at
least three months prior to the expiration of the licence and the government
determines that the renewal is in the public interest. Upon the renewal of a
prospecting licence, the area covered by the initial licence may be reduced by
one-half of the area covered by the previous licence. The licence holder is able
to select the areas to be eliminated upon renewal. If a licence holder fails to
expend any monies that the holder designated in its program for exploration
under the prospecting licence, then such non-expended monies will become a debt
due to the Republic of Ghana.
A mining lease grants rights to take all reasonable measures on or under the
surface to mine the mineral to which the mining lease relates, to erect
necessary equipment, plant and buildings, to prospect within the mining area and
to stack or dump mineral waste in an approved manner. A mining lease may only be
obtained by the holder of a prospecting licence who has given notice to the
government that a mineral covered by the terms of the licence exists in
commercial quantities, provided the proposed development plan ensures that
mining operations will be carried on in an efficient and environmentally safe
manner. The application for the mining lease must be made within three months of
such notice. A mining lease may also be obtained on request by persons who do
not hold a relevant prospecting licence over an area, but such grants are
discretionary.
A mining lease normally is valid for 30 years although the Ghanaian Government
may, where it considers that it is in the national interest to exceed this time
limit, direct that the grant of a mining lease exceed 30 years. A mining lease
may be renewed for an additional period of 30 years provided that the renewal
application is made no later than one year before expiry of the initial lease.
Persons proposing to undertake the mining and processing of minerals are
required to register the undertaking with the Environmental Protection Agency
(the "EPA") and obtain an environmental permit prior to commencing this
undertaking. Additionally, no person may commence activities in respect of the
undertaking which, in the opinion of the EPA, has, or is likely to have an
adverse effect on the environment or public health unless, prior to the
commencement, the undertaking has been registered with the EPA and an
environmental permit has been issued by the EPA in respect of the undertaking.
7
An environmental impact assessment ("EIA") is required to be submitted to the
EPA prior to issuance by the EPA of any environmental permit where the
undertaking is the mining and processing of minerals in areas where the mining
lease covers a total area in excess of 10 hectares. The grant of a mining lease
takes place upon approval of the EIA. A holder of a mining lease is obliged to
commence commercial production on the date specified in a program which it has
submitted to the government and to develop/mine the mineral in accordance with
such programs.
The EPA is required to hold a public hearing in respect of an application for an
environmental permit where there is material adverse public reaction to the
commencement of the proposed undertaking, where the undertaking will involve
dislocation, relocation or resettlement of communities, or where the undertaking
could have extensive and far reaching effects on the environment. Where an EIA
is ultimately found to be acceptable to the EPA, the environmental permit will
be required to be issued to the applicant. The permit is valid for 18 months
from the date of issuance. Failure to commence operations of the undertaking
within that time renders the permit invalid and the applicant is required to
resubmit an application to the EPA and provide reasons for the new application.
After commencement of mining operations, the applicant is required to apply for
an environmental certificate that may be issued subject to terms and conditions.
A certificate may not be issued by the EPA until the person responsible for the
certificate application has submitted to the EPA evidence or confirmation of
actual commencement of operations, acquisition of other permits and approvals
where required and compliance with mitigation commitments indicated in the EIA
or preliminary environmental report.
A mineral right or interest may not be transferred, assigned or otherwise dealt
with in any other manner without the Minister of Energy and Mines' prior written
approval. Also, a company holding, directly or indirectly, a mining lease in
Ghana must obtain the written consent of the Minister of Energy and Mines before
it undertakes any action which would result in a change of control of such
holder. The Ghanaian government must be advised of all changes in "significant
shareholders" of such a company, as well, which refers to shareholders holding
5% or more of the voting rights thereof.
The Minister of Energy and Mines has the power to negotiate, grant, revoke,
suspend or renew any mineral right, subject to a power of disallowance
exercisable within 30 days of such grant, revocation, suspension or renewal by
the cabinet. The powers of the Ministry of Energy and Mines are to be exercised
on the advice of the Minerals Commission, which is responsible for regulating
and managing the utilization of mineral material and coordinating policies
relating to them. The grant of a mining
8
lease by the Ministry of Energy and Mines is subject to parliamentary
ratification.
The Ghanaian government holds, as of right and without payment of any
compensation, a 10% interest in all mineral rights in Ghana. The government has
the option to acquire a further 20% interest where any mineral is discovered in
commercial quantities on terms agreed between the government and the holder of
the mining lease or, failing such agreement, on terms established through
arbitration. The government normally secures its 10% interest upon the grant of
a mining lease through a special class of shares in the company holding the
lease, which are typically non-assessable shares entitling the holder to 10% of
any dividends distributed by the holder. The Ghanaian government is also
entitled to a royalty of 3% to 12% of mineral sales after direct expenses.
Companies are required to make a payment on account of every quarter based on a
3% rate. At the end of each year, companies are required to compute the actual
royalty due on the basis of the profitability of the mine and to make any
further payment that may arise from the computation. The specific royalty rate
is determined by discussion with the Minister of Mines at the time of
commencement of feasibility studies and commencement of production.
Furthermore, the government may, if it so desires, acquire a "special share" in
a company holding, directly or indirectly, a mining lease in Ghana, which would
result in such company having to obtain the government's approval for: any
amendment to the regulations of the company that would have the effect of making
a person control of the company; the voluntary liquidation of the company; or
the disposal of any mining lease or the whole or a material part of the
company's assets. Control is considered a person who either directly or
indirectly directs the affairs of the mining company or controls at least 20% of
the voting power of the company, either alone or with an associate or
associates. The issuance of a "special share" may, at the government's option,
be for no consideration or at such consideration as the government and the
mining company may agree.
ITEM 3: DESCRIPTION OF PROPERTIES
NTOTOROSO PROPERTY
The Company hold a 50% joint venture interest in Rank. Rank holds a thirty year
mining lease, valid until the year 2031, on the Ntotoroso property in the
Yamfo-Sefwi gold belt in Ghana. As with the granting of all mineral rights, the
government of Ghana is entitled to a free 10% carried interest in the Ntotoroso
prospecting licence pursuant to the Ghana mining law, which eventually may be
secured by the issuance of shares in Rank.
Moydow (Isle of Man)'s interest in the Ntotoroso Prospecting Licence was
obtained in September 1996 with the acquisition of Moydow (Ghana) from a related
party, Noel Kiernan. At the time Mr. Kiernan was an Officer and Director and the
controlling
9
shareholder of Moydow (Isle of Man). Compensation for the acquisition of Moydow
(Ghana) was $1.
Moydow (Ghana) held the property indirectly through its majority ownership of
Rank. When acquired by Moydow (Isle of Man), Moydow (Ghana) held a 60% ownership
of Rank and Amegashie & Partners Limited ("Amegashie") held the other 40%.
Normandy LaSource, a subsidiary of Normandy Mining Limited, acquired the 40%
held by Amegashie pursuant to an agreement dated October 22,1997 (as amended
November 5, 1997) (the "Rank Farm-In Shareholders Agreement") whereby Normandy
LaSource committed to fund $2.5 million of exploration expenditures by June 30,
1999. Simultaneously, Normandy LaSource invested $1,000,000 into the purchase of
8,000 common shares (about 6% at the time) of Moydow (Isle of Man).
Normandy LaSource increased its ownership in Rank through funding further
exploration expenditures and completed a total of $6.5 million in exploration
expenditures. Normandy LaSource now holds a 50% beneficial interest in Rank. As
of December 31, 2001, Normandy LaSource had funded approximately $6,827,636. In
early 2002, Newmont Mining Corporation acquired Normandy Mining Limited.
The Company retained operatorship of the project until the completion of the
positive feasibility study. See "Rank Development and Production Agreement"
below. Now that such a study has been completed, Normandy LaSource has become
the operator of the project. Normandy LaSource has earned a 50% shareholding in
Rank and the parties agree that the deemed expenditure of each party would be
$20 million for a total deemed aggregate value of $40 million; the effect of
this agreement is to reduce the rate of dilution on the interest of that party
which elects not to participate in an ongoing budget.
Rank Development and Production Agreement
Effective July 24, 2000, a Development and Production Agreement (the
"Development and Production Agreement") was executed between the Company,
Normandy LaSource, Rank, and Ghanaian subsidiaries of the Company and Normandy
LaSource. The Development and Production Agreement sets forth the terms upon
which, subject to successful completion of feasibility studies, the Company and
Normandy will participate in the development and mining of Zones E, A and C on
Rank's Ntotoroso property. It also would enable the Company to participate in
the processing plant on the adjacent Normandy property to process ore mined from
both the Rank-held Ntotoroso property and the Normandy wholly-owned ground. The
Development and Production Agreement provides for studies to consider enlarging
the Normandy processing plant to 5,000,000 tonnes per annum in order to
accommodate ore from the deposits on Rank's Ntotoroso property. Now that
Normandy LaSource has completed its $4 million exploration-funding requirement,
the Company and Normandy LaSource each hold a 50% beneficial interest in Rank.
Under the agreement Normandy has
10
given Rank the option to participate in the ownership of the processing plant.
This option entitles Rank to acquire an ownership interest equal to its
proportionate share of the combined initial reserves as reported in the
integrated feasibility studies. Should the Company not elect to exercise the
Rank option, Rank would pay its share of allocated capital charges to Normandy
through an annual capital allocation charge based on its share of mill
throughput. Normandy and the Company have agreed to jointly seek debt financing
for both the processing plant and Rank mining plant costs. The Company shall
continue as operator of the exploration programs on other zones identified on
the Ntotoroso property and this exploration is to be funded by the Company and
Normandy LaSource. The Development and Production Agreement provides for
Normandy to become operator of the mining activities. The agreement expires on
July 24, 2002. The joint venture will continue to function under the original
Rank Farm-In Shareholders Agreement.
Feasibility Study
A detailed feasibility study was completed in March 2001. The study was prepared
by Lycopodium Pty. Ltd. of Perth, Australia and is based on a gold price of
US$270 per ounce and on proven and probable reserves of 14 million tonnes
grading 2.36 grams of gold per tonne. On the basis of mining 1.5 million tonnes
of ore per year, production during the first five years is estimated to average
120,000 ounces of gold at a cash cost per ounce of US$184. Rank has the right to
use up to 25% of the processing plant. If Rank participates in the plant, the
total capital cost for Rank, including mine capital, is expected to be
approximately $33 million.
Of the pits included in the feasibility study, two lie within the Ntotoroso Zone
E resource. One of the Yamfo-Sefwi pits (Kenyase East) extends into the
Ntotoroso Zone A resource, and an additional small pit is located to the north
of the Kenyase East extension. The Yamfo-Sefwi and Ntotoroso projects are
expected to be mined together with one mining contractor mining all pits. The
Yamfo-Sefwi mining staff will provide technical input and supervision. The pits
will be mined using conventional open pit mining techniques.
Snowden Mining Industry Consultants Inc. is the qualified person responsible for
the resource estimates for Zones E and A gold deposits as part of the Ntotoroso
feasibility study prepared by Lycopodium Pty. Ltd. The mineral resource and
mineral reserve estimates conform to definitions adopted by the Canadian
Institute of Mining, Metallurgy and Petroleum.
Location, Size and Access
The Ntotoroso Property is located in central west Ghana approximately 30
kilometres south of Sunyani and comprises 72 square kilometres. Travel time from
the capital, Accra, is about
11
five hours and all but the last five kilometres to the Company's base at
Kenyase is by good asphalt road. The remaining five kilometres is via a
well-maintained dirt road.
Geology and Mineralization
The Ntotoroso Property is located on the Yamfo-Sefwi gold belt, a well-defined
zone of many gold occurrences trending 20 to 30 degrees east of north and
stretching northwards from the Ghanaian border with Cote d'Ivoire for a distance
of about 200 kilometres. Intruded along this trend are a series of hornblende
granodiorites that preferentially exploit a major regional break separating
Lower Birimian sediments from Upper Birimian volcanics. This major break has
been mapped for a strike length of 6.4 kilometres in the northern part of the
licence and for an additional 6.4 kilometres in the southern part and marks the
contact between Birimian metasediments to the west and a complex of multiphase
granodiorite intrusions to the east.
Among the numerous major gold occurrences located along this structure is the
Centenary (Yamfo) deposit owned by Normandy LaSource lying some 35 kilometres
northeast of the Company's Ntotoroso Property. Normandy LaSource have indicated
further significant mineralization on this structure at Kenyase, on the western
border of the Ntotoroso Property, and at Subenso to the northeast. Lying within
the property are three segments of the granodiorite-metasediment contact
cumulatively estimated to cover approximately 13.1 kilometres of strike length -
6.6 kilometres in the north and 6.5 kilometres in the south.
Prior Exploration Activities
Archival data for the Ntotoroso Property is extremely scarce and is limited to
the general observation that occurrences of gold have been known in this area
for some time. The previous owner, Amegashie, states that a stream sediment
survey recorded anomalous gold values at seven different localities.
Current and Future Development and Exploration
In April 2002, following public hearings, the Ghanaian Environmental Protection
Agency granted approval for the development of a mine at Yamfo-Sefwi and
Ntotoroso. Progress has continued at Ntotoroso, although at a reduced level.
This has been due to several factors, not the least of which was the uncertainty
surrounding Normandy Mining Limited. Now that Newmont Mining Corporation has
acquired Normandy Mining Limited and Franco-Nevada Mining Corporation Limited,
the Company expects that a final production decision for Ntotoroso and the
adjoining Yamfo-Sefwi will be made in the near future. During 2001 a regolith
study was completed at Ntotoroso. This study, which included a re-interpretation
of the soil geochemistry has generated 15 anomalous zones. These potential new
targets on the property will be followed up in 2002 by in-fill soil sampling and
subsurface geochemistry. A program has also been proposed to test the depth
potential of Zone E. Deeper drilling in 2000 confirmed the existence of a
high-grade core to
12
Zone E which is open to depth. Two holes, about 200 metres apart, have
intersected this deeper mineralization which lies about 200 metres below the
currently outlined pit limits. The holes returned assays of 9.7 grams of gold
per tonne over a true width of 13 metres and 7.7 grams of gold per tonne over a
true width of 6 metres, respectively. A short drilling program will test these
potential down-dip extensions to Zone E in 2002.
WASSA PROPERTY
Moydow (Isle of Man) began operations in June 1994 with the acquisition of 42%
of Wassa Holdings, which held a 90% interest in Satellite, which held a 100%
interest in the Wassa Property. The government of Ghana pursuant to the Ghana
mining law holds the remaining 10% of Satellite. Ownership of Wassa Holdings
varied over the next three years with Moydow (Isle of Man) retaining a 34%
interest and the remaining 66% of Wassa Holdings being held by Antubia, a
subsidiary of Glencar.
Satellite holds a 30 year gold mining lease for the Wassa Property, which
expires in the year 2022.
Satellite was incorporated under the laws of Ghana on February 9, 1994 for the
purpose of holding the Wassa Property. Satellite operates under the directions
of its board of directors representing the two major shareholders. Management
and operational control of the Wassa mine is contracted out to Glencar. Wassa
Holdings was incorporated under the laws of the Isle of Man on March 15, 1994;
its two shareholders, Ensign Resources Limited ("Ensign") and Moydow (Isle of
Man), hold 66% and 34% of its shares, respectively. Ensign is a subsidiary of
Glencar. The board of directors of Wassa Holdings is composed of three
directors, of which one represents the Company (Noel Kiernan) and two represent
Glencar.
The Wassa mine started production in early 1999. The capital cost of the mine
was $42.5 million and was funded entirely by debt finance. Standard Bank of
London Limited provided a $27.5 million senior finance gold loan and the
Commonwealth Development corporation provided $15 million of subordinated
finance. The first ore was mined at Wassa in October 1998. The following month
the crushing plant was commissioned and crushed ore began to be stacked on the
leach pad. Production over the next two years was lower than expected. Because
the Company's share of the losses in Wassa Holdings for 1999 exceeded the
carrying value of its equity investment, the Company has written down the
carrying value of its investment to nil.
In April 2001, the Company was notified that certain terms of the project
financing loan agreement, under which an amount of $40 million was outstanding,
were in default. The senior lender subsequently enforced its security and
appointed a receiver in November 2001. The Company had granted the lenders a
first fixed charge on its shares of Wassa Holdings and provided security for the
obligations of Wassa Holdings to the lenders to the extent of
13
the value of its shares of Wassa Holdings. The Company has no further
obligations with respect to the Wassa mine.
In November 2001, Satellite signed a letter with Golden Star Resources Limited
("Golden Star") and the Senior Secured Lenders to the Wassa gold project setting
out terms to conclude an agreement for the purchase by Golden Star of certain of
the assets and business comprising the Wassa gold mine in Ghana.
Location, Size and Access
The Wassa Property is located in the south-central region of Ghana approximately
80 kilometres north of Cape Coast and 150 kilometres west of the capital, Accra
and consists of a mining lease (57 square kilometres) and a prospecting license
(41 square kilometres).
Geology and Mineralization
The Wassa area is reported to be underlain by rock of the Proterozoic Birimian
Formation, a metamorphosed volcano-sedimentary package that hosts most of the
lode gold deposits of Ghana. Unlike either the Lower (Sedimentary) or the Upper
(Volcanic) Birimian, the succession in the Wassa area exposes a highly
tectonized suite of quartzitic phyllites and ironstones which do not fit neatly
into either category. Other known lode Ghanaian deposits occur in simple shear
zones which are unaffected by post-mineralization folding.
Gold mineralization at the Wassa Property has been subjected to at least three
phases of folding and is consequently thought to be older than "typical"
Ghanaian deposits, such as Ashanti or Prestea. Mineralization in the Main Zone
occurs in a hydrothermal vein stockwork preferentially hosted by a phyllitic
pyroclastic unit within which gold is mainly associated with veinlets, stringers
and blebs of quartz-pyrite set in a matrix of finely disseminated, dusty pyrite;
a variable alteration assemblage of ankerite, albite, chlorite and sericite may
also be locally present. Mineralized shoots vary from 10-to-25 metres in
thickness and are distributed about opposing limbs of an asymmetrical synform.
On the flat limb, mineralized shoots are sub-horizontal and are parallel to a
metamorphic layering. On the steep limb, mineralized shoots are generally
sub-vertical, but may be as little as 50 degrees. In the Dead Man's Hill zone,
the presence of quartz-eye rhyolites spatially related to gold mineralization
and coarse clots of hydrothermal chlorite observed in an agglomeratic facies
suggest that gold mineralization may be contemporaneous with brecciation and
explosive activity in a proximal volcanic setting.
KANYANKAW PROPERTY
Moydow (Isle of Man)'s interest in the Kanyankaw Prospecting License was
obtained in September 1996 with the acquisition of Moydow (Ghana) from a related
party, Noel Kiernan. At the time Mr. Kiernan was an Officer and Director and the
controlling shareholder of Moydow (Isle of Man).
14
Moydow (Ghana) was granted the first licence in April 1992. Subsequently, a
joint venture was established between Antubia, a subsidiary of Glencar, and
Moydow Ghana pursuant to an agreement dated November 6, 1992 (amended March 17,
1994 and June 20, 1995) ("Kanyankaw 1992 Agreement"). The agreement granted
Glencar (or its nominee) an option to earn a 50% interest in the licence in
return for funding $150,000 of reverse circulation drilling and then
contributing a further $300,000 in exploration expenditures.
Antubia was deemed to have completed the exercise of the option in 1995 when
each party was deemed to have advanced $480,000 to the joint venture. Since
1995, the joint venture agreement provides for the funding of work through pro
rata contributions to work plans in accordance with each parties' respective
interests in the joint venture.
The original prospecting licence was obtained in January 1996. The renewal
application to extend the licence to March 2003 has been submitted to the
Minerals Commission and approval is expected shortly.
Glencar, Antubia, Moydow Ghana and the Company entered into an additional
agreement dated January 25, 2000 which contemplates the parties making an
application to the Ghanaian government for a split of the property into two
licences (the "Kanyankaw 2000 Agreement"). Pursuant to the Kanyankaw 2000
Agreement, Moydow Ghana would hold the licence for the eastern half which
contains the old gold workings at Kanyankaw (the "Kanyankaw East Property") and
Antubia would hold the licence to the western half which contains the old
workings at Asheba (the "Kanyankaw West Property"). Application for the property
split was approved by the Ghanaian Minerals Commission. Pursuant to the
agreement, each party has the right to back-in and acquire an interest in the
other party's property (40% in the case of the Kanyankaw East Property and 44%
in the case of the Kanyankaw West property). In order to exercise a back-in
right, the option holder must have performed a minimum of 5000 metres of
drilling on the option holder's property. The payment is calculated by
multiplying the number of metres of drilling completed by the option issuer by a
figure ranging between $50 and $100 (depending on the overall number of drill
holes completed by the option issuer).
Location, Size and Access
The Kanyankaw Property is located in south central Ghana approximately 50
kilometres north of the seaport of Takoradi. The licence area is 91 square
kilometres. Travel time from Accra to the property is about four hours via a
good network of asphalt roads. The main road from Takoradi to the gold mines of
Teberebie and Tarkwa, located approximately 30 kilometres to the north,
traverses the licence area.
Geology and Mineralization
The licence area is underlain chiefly by Upper Birimian greenstones and intruded
by small stocks and dykes of hornblende granodiorite.
15
Slicing through the rock pile is a series of NNE-trending fractures with
associated minor splays; all recorded past production has come from the minor
splays and only minimal exploration has been conducted over the major lineaments
that characteristically occupy the low ground in fault-controlled valleys. Where
these major lineaments cross slightly more elevated terrain their trace is
coincident with a trail of sericitically altered, granodiorite dykes which show
patchy gold-bearing, quartz stockworks.
Prior Exploration Activities
Placer mining has been a continuous occupation of the local population for well
over 100 years and is still in evidence today. In the early part of this
century, several small companies worked a number of high-grade, quartz reefs in
the southern parts of the current license area. It has been reported that these
companies recovered approximately 20,000 ounces of gold from an array of stamp
mills. A drilling program on the Kanyankaw West Property by Moydow Ghana in 1992
tested several geochemical anomalies and returned mineralized intersections from
a number of drill holes, the most significant being from a hole in the southwest
part of the license area which averaged 1.5 g/t gold over 40 meters.
Current and Future Exploration
A landform and regolith study completed in 2001 on the property has generated
nine new targets which warrant further testing. During 2001 there was a
significant increase in the number of illegal artisanal miners. In 2002, a new
exploration program will be undertaken.
OTHER PROPERTIES
The Company has an ongoing process of new project review and evaluation of
worldwide mineral properties. During 2000 and 2001 it carried out reconnaissance
and review of several properties located in Ghana and elsewhere, including
Nevada. Expenditures on geological reconnaissance and reviews are written off as
it occurs unless the property is staked or acquired. Applications have been
approved for two new licence areas in Ghana along the Yamfo-Sefwi belt and
payments have been made related to these applications. The Company has been
granted a three year exploration permit on the N'godiarala licence in southern
Mali. The permit expires on December 30, 2004. The Company is exploring three
unpatented mining claims groups in Elko County, Nevada. In early 2002, the
Company staked 570 claims covering more than 140 square kilometres in the
Botwood Basin area of central Newfoundland, Canada. An exploration program has
commenced on this claim group and it is proposed to fund this work through a
$0.5 million flow-through issue.
Exploration expenditures were $1,027,503 in 2001 and $1,056,537 in 2000.
16
RISK FACTORS
Risk Posed by Continued Losses
Lack of Cash Flow and Requirements for New Capital
The Company's current operations do not generate any positive cash flow and it
is not anticipated that any positive cash flow will be generated for some time.
The Company has limited financial resources. Leases and licences that the
Company holds and joint venture agreements to which the Company is a party
impose possible financial expenditures on the Company. The most material of
these possible expenditures occurs in the event that the Company elects to
participate along with Normandy LaSource in further exploration and development
of the Ntotoroso property. Failure to equally participate in such expenditures
would result in a dilution in the Company's interest in the property.
Further exploration and possible development of the various mineral properties
in which the Company holds interests depends upon the Company's ability to
obtain financing through the joint venturing of projects, debt financing, equity
financing or other means. There can be no assurance that additional funding will
be available to allow the Company to fulfill such obligations.
The location of the mineral properties in which the Company holds interests in
developing countries may make it more difficult, or impossible, for the Company
to obtain debt financing from senior lenders. Failure to obtain necessary
financing on a timely basis could cause the Company to forfeit all or parts of
its interests in some or all of its properties or joint ventures and reduce or
terminate its operations.
Lack of Operating History
The Company was materially changed by the RTO Transaction completed in December
1998 and Moydow (Isle of Man) has been conducting operations only since 1994.
The Company has no current source of revenue and its success ultimately depends
on its ability to generate profits from its properties. The Company currently
has no producing properties, other than an interest in the Wassa mine, and the
Wassa mine currently operates at a loss. The Company has no further obligations
with respect to the Wassa mine. The Company is largely dependent on successful
exploration and its ability to complete financing for its projects. The possible
commercial development and production at the Ntotoroso property is its most
advanced exploration project, with a feasibility study completed in March 2001.
Exploration Risks
Exploration for gold is speculative in nature, involves many risks and is
frequently unsuccessful. Any gold exploration program entails risks relating to
the location of economic ore bodies, development of appropriate metallurgical
processes,
17
receipt of necessary governmental approvals and construction of mining and
processing facilities at any site chosen for mining. The commercial viability of
a mineral deposit is dependent on a number of factors including the price of
gold, exchange rates, the particular attributes of the deposit, such as its
size, grade and proximity to infrastructure, as well as other factors including
financing costs, taxation, royalties, land tenure, land use, water use, power
use, importing and exporting gold and environmental protection. The effect of
these factors cannot be accurately predicted.
The Company is exploring its minerals properties and as at December 31, 2001 had
not determined the existence of economically recoverable reserves with the
exception of the Ntotoroso project which has been the subject of a feasibility
study. There can be no assurance that the current or proposed exploration or
possible development programs on properties in which the Company has an interest
will result in the discovery of gold mineralization or will result in a
profitable commercial mining operation.
Political and Regulatory Risks
The Company is conducting exploration activities in the West African country of
Ghana. Ghana had its first democratic election in 1992, followed by further
elections in 1996 and in 2001. There is no assurance that future political and
economic conditions in Ghana will not change or that the government may adopt
less supportive policies respecting foreign development and ownership of mineral
property.
Changes in government policy may result in changes to laws affecting ownership
of assets, mining policies, monetary policies, taxation, rates of exchange,
environmental regulations, labor relations, repatriation of income and return of
capital. This may affect both the Company's ability to undertake exploration and
development activities in respect of present and future properties in the manner
currently contemplated, as well as its ability to continue to explore and
possible develop/operate those properties in which it has an interest or in
respect of which it has obtained exploration rights to date. The possibility
that future governments of these and other countries may adopt substantially
different policies, which might extend to expropriation of assets, cannot be
ruled out.
Environmental Risks
Environmental legislation is evolving in a manner which will require stricter
standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers, directors and
employees. There can be no assurance that future changes to environmental
regulation, if any, will not adversely affect the Company's operations.
Environmental hazards may exist on the
18
properties in which the Company holds interests that have been caused by
previous or existing owners or operators.
Compliance with environmental, reclamation, closure and other requirements may
involve significant costs and other liabilities. The EPA has broad powers under
environmental assessment legislation to suspend, cancel or revoke an
environmental permit or certificate in cases of non compliance with laws,
permits, certificates and mitigation commitments in an EIA or environmental
management plan. The EPA also may suspend a permit or certificate in the event
of an occurrence of fundamental changes in the environment due to natural causes
before or during the implementation of an undertaking.
Regulatory, Environmental and Other Risk Factors
The Company intends to fulfill all statutory commitments on its current licences
over the next year and to apply for licence renewals in the normal course of
business.
The Company's operating income and cash flow are also affected by changes in the
U.S./Canadian dollar exchange rate together with movement in the local currency
in Ghana, the Cedi, as a portion of the Company's costs are incurred in these
currencies.
The profitability of any gold mining operation will be significantly affected by
changes in the market price of gold. Gold prices fluctuate on a daily basis and
are affected by numerous factors such as world supply of gold, central bank
selling, stability of exchange rates, forward sales and inflationary forces,
among other factors beyond the Company's control.
In addition, exploration companies are subject to various laws and regulations
including but not limited to environmental, health and safety matters together
with political risks that are outside the Company's control. The Company is
committed to a program of environmental protection at all of its projects and
exploration sites.
Calculation of Reserves and Metal Recovery
There is a degree of uncertainty attributable to the calculation of reserves,
mineralized material, and corresponding grades being dedicated to future
production. Until reserves or mineralized material are actually mined and
processed, the quantity of reserves or mineralized material and grades must be
considered as estimates only. In addition, the quantity of reserves or
mineralized material may vary depending on metal prices. Any material change in
the quantity of reserves, ore grade or stripping ratio may affect the economic
viability of the Company's properties. In addition, there can be no assurance
that mineral recoveries in small-scale laboratory tests will be duplicated in
large tests under on-site conditions or during production.
19
Dependence on Key Personnel
The Company is dependent on a relatively small number of key personnel the loss
of any one of whom could have an adverse effect on the Company. In addition,
while certain of the Company's officers and directors have experience in the
exploration and operation of gold producing properties, the Company will remain
dependent upon contractors and third parties in the performance of its
exploration and possible development activities. As such there can be no
guarantee that such contractors and third parties will be available to carry out
such activities on behalf of the Company or be available upon commercially
acceptable terms.
Title Matters
No assurance can be given that the Ghanaian government will not significantly
alter the conditions of or revoke the applicable exploration or mining
authorizations or that such exploration and mining authorizations will not be
challenged or impugned by third parties. In addition, there can be no assurance
that the properties in which the Company has an interest are not subject to
prior unregistered agreements, transfers or claims and title may be affected by
undetected defects.
The Ghana mining law entitles the Republic of Ghana to a free 10% carried equity
interest in all mineral properties in Ghana. Pursuant to the Ghana Mining Law,
the Republic of Ghana also has an option to acquire, on terms as shall be agreed
upon between the holder of the mining lease and the government of Ghana or,
failing such agreement, as determined by arbitration, an additional 20% interest
in any mineral properties. To the knowledge of the Company, this purchase option
has never been exercised. There can be no assurance that the government of Ghana
will not decide to exercise this right in the future or that the price at which
such option would be exercised would reflect the then current value of the
property concerned.
Repatriation of Capital and Distribution of Earnings
Currently there are no significant restrictions on the repatriation of capital
and distribution of earnings from Ghana to foreign entities. There can be no
assurance, however, that restrictions on repatriation of capital or
distributions of earnings from Ghana will not be imposed in the future.
Tax
Amendments to current taxation laws and regulations that alter tax rates and/or
capital allowances could have a material adverse impact on the Company. The
Company has a number of subsidiaries and related companies that operate in a
number of different tax jurisdictions. At present, profits from the Company
would most likely be generated in Ghana and will be susceptible to taxation in
that jurisdiction, as well as the Isle of Man and Canada.
20
Legal Proceedings
To the best of the knowledge of management and the Directors of the Company, the
Company knows of no material, active or pending, legal proceedings against them,
nor is the Company involved as a plaintiff in any material proceeding or pending
litigation.
To the best of the knowledge of management and the Directors of the Company, the
Company knows of no active or pending proceedings against anyone that might
materially adversely affect an interest of the Company.
ITEM 4: SELECTED CONSOLIDATED FINANCIAL INFORMATION
Reference is made to the Company's 2001 Annual Report which contains the
comparative consolidated financial statements for the fiscal years 2001 and
2000.
The following table sets forth selected consolidated financial information for
each of the last five years ended December 31 (Note 1):
ANNUAL FINANCIAL INFORMATION
<Table>
<Caption>
US$ (000S) EXCEPT AS INDICATED 2001 2000 1999 1998 1997
- ------------------------------ ---------- --------- --------- ---------- ---------
REVENUES - 199.6 331.9 272.2 345.3
CASH 1933.0 3361.5 5466.2 1046.8 674.8
WORKING CAPITAL 1670.8 3178.4 4916.9 672.4 304.2
TOTAL ASSETS 6422.1 6941.6 8680.5 8495.4 7454.1
INCOME (LOSS) (569.3) (1189.9) (5107.7) (1044.4) (822.4)
INCOME (LOSS) PER SHARE $ (0.02) $ (0.04) $ (0.22) $(0.06) $(0.05)
WEIGHTED AVERAGE NUMBER 27,026,514 26,499,778 23,050,882 18,418,023 15,484,382
OF SHARES OUTSTANDING(1):
</Table>
(1) On December 9, 1998 the Company completed the acquisition (the "RTO
Transaction") of all of the outstanding shares and warrants of Moydow
Limited (Isle of Man) ("Moydow (Isle of Man)") in consideration for shares
and warrants of the Company and commenced its current business activities.
In accordance with the terms of the RTO Transaction, the name of the
Company was changed from Westley Mines International Inc. to its present
name, the management of Moydow (Isle of Man) took over management of the
Company and the outstanding Common Shares of the Company were consolidated
on a 12 for 1 basis. The RTO Transaction resulted in the former
shareholders of Moydow (Isle of Man) owning, immediately following the
completion of such transaction, over 90% of the outstanding common shares
of the
21
Company. As the former shareholders of Moydow (Isle of Man) obtained control of
the Company through this RTO Transaction, the RTO Transaction has been accounted
for in the Company's financial statements as a reverse take-over and the
purchase method of accounting has been applied. Under reverse take-over
accounting, Moydow (Isle of Man) is considered to have acquired the Company and
is considered to be the continuing entity. Accordingly, the figures in the above
table, which should be read in conjunction with the consolidated financial
statements of the Company, reflect this accounting treatment.
The following table sets forth selected consolidated financial information for
the eight calendar quarters for 2000 and 2001:
QUARTERLY FINANCIAL INFORMATION
<Table>
<Caption>
US$ (000s) except as
indicated
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
2000
Revenues 52.6 35.7 71.3 40.0
Income (Loss) (112.0) (296.5) (499.1) (282.4)
Income (Loss) per share (0.004) (0.011) (0.019) (0.01)
Total Assets 7962.0 7685.8 7230.9 6941.6
2001
Revenues -- -- -- --
Income (Loss) (148.2) (147.0) (133.9) (140.1)
Income (Loss) per share (0.005) (0.005) (0.005) (0.005)
Total Assets 7058.8 6853.9 6579.3 6422.1
</Table>
The Company has not paid any dividends to date and payment of dividends would
require a decision by the Board of Directors when and if a reliable cash flow is
being received by the Company which, in the opinion of the Board of Directors,
is sufficient for on-going corporate needs and in addition to other factors
considered, is appropriate for the Company under the then prevailing
circumstances.
ITEM 5: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Management's Discussion and Analysis of Financial Results is included on pages
6-10 of the 2001 Annual Report and is incorporated herein by reference.
22
ITEM 6: MARKET FOR SECURITIES
The common shares of the Company are listed on the Toronto Stock Exchange under
the symbol "MOY".
ITEM 7: DIRECTORS AND OFFICERS
The following table and the notes thereto set out the name and municipality of
residence of each director and officer of the Company, his or her current
position and office with the Company, his or her principal occupations during
the past five years, the date on which he was first elected a director of the
Company (as applicable), and the approximate number of common shares of the
Company beneficially owned directly or indirectly or over which he or she
exercises control or direction:
<Table>
<Caption>
Shares of the
Company
Beneficially
Name, Current Position(s) with Owned,
the Company and Municipality Principal Occupations Director Controlled or
of Residence During the Past Five Years Since Directed(1)
- ------------------------------ -------------------------- -------- -------------
Sylvester P. Boland(2)(3) Chartered accountant, December 9, 1998 26,180
Director retired; corporate director;
Dublin, Ireland formerly a mining executive
Albert C. Gourley(2) Partner of Macleod Dixon, December 9, 1998 100,000
Director Barristers & Solicitors(4)
Gormley, Ontario
Norman D. A. Hardie(3) Business consultant; December 9, 1998 50,320
Director formerly mining company
Toronto, Ontario manager and executive
Victor J.E. Jones(2)(3) Management consultant; January 6, 1983 6,405
Vice President, Secretary and a senior officer of the
director Company prior to April 2001
Vancouver, British Columbia
Brian P. Kiernan Chief Executive Officer of December 9, 1998 135,000
Chief Executive Officer, the Company (December
President and a director(5) 1998 to present) and its
Dublin, Ireland subsidiary, Moydow Limited
(the Isle of Man company)
Noel P. Kiernan Chairman of the Board of December 9, 1998 9,910,200
Chairman of the Board the Company (December
and a director(6) 1998 to present) and its
Dublin, Ireland subsidiary, Moydow Limited
(the Isle of Man company);
senior officer (currently
Chairman of the Board) of
Pontil Minerex Limited (a
drilling company)
</Table>
23
<Table>
<Caption>
Shares of the
Company
Name, Current Position(s) with Principal Occupations Director Beneficially
the Company and Municipality During the Past Five Years Since Owned,
of Residence Controlled or
Directed(1)
Michael E. Power Secretary and Vice December 9, 1998 20,720
Director President of the Company
Toronto, Ontario April 2001 to present, mining
consultant, Vice-President of
River Gold Mines Ltd.
(September 1996 to
September 2000)
J. Joseph Breen Chief Operating Officer of Not applicable Nil
Chief Operating Officer the Company (December
Cushendall, Northern Ireland 1998 to present) and its
subsidiary, Moydow (Isle of
Man) (1996 to present); also
a geological consultant
Geoffrey G. Farr Lawyer with Macleod Dixon, Not applicable 5,000
Assistant Secretary Barristers & Solicitors (4),
Toronto, Ontario from August 1998 to
present; prior to August
1998, lawyer with Weir &
Foulds, Barristers &
Solicitors
Rosemary G. O'Mongain Chief Financial Officer of Not applicable 20,000
Chief Financial Officer the Company (December
Dublin, Ireland 1998 to present) and its
subsidiary, Moydow (Isle of
Man) (1995 to present);
formerly a tax and audit
consultant
</Table>
<FN>
(1) The information as to shares beneficially owned, directly or indirectly,
not being within the knowledge of the Company, has been furnished by the
respective directors individually.
(2) Member of the audit committee of the board of directors of the Company.
(3) Member of the compensation committee of the board of directors of the
Company
(4) Macleod Dixon acts as counsel to the Company.
(5) Brian P. Kiernan is also Chief Executive Officer and a director of the
Company's wholly-owned subsidiary, Moydow Limited (the Isle of Man
company), and a director of the Company's wholly-owned subsidiary in Ghana,
also named Moydow Limited.
(6) Noel P. Kiernan is also Chairman of the Board and a director of the
Company's wholly-owned subsidiary, Moydow Limited (the Isle of Man
company), President and a director of the Company's wholly-owned subsidiary
in Ghana, also named Moydow Limited, and President and a director of the
Company's 50%-owned subsidiary, Rank Mining Company Limited, a Ghanaian
company.
</FN>
24
Each director holds office until the close of the first annual meeting of
shareholders of the Company following his election unless his office is earlier
vacated in accordance with the bylaws of the Company.
ITEM 8: ADDITIONAL INFORMATION
Additional information with respect to the Company, including directors' and
officers' remuneration and indebtedness, principal holders of securities of the
Company, options to purchase securities and interests of insiders in material
transactions, where applicable, is contained in the Management Information
Circular of the Company dated April 17, 2002 distributed in connection with the
Annual Meeting of Shareholders of the Company held on June 13, 2002.
Additional financial information is provided in the comparative consolidated
financial statements of the Company contained in the 2001 Annual Report.
The Company will provide a copy of the said documents, this Annual Information
Form, and any documents incorporated herein by reference to any person upon
request to the Secretary of the Company.
All dollar amounts herein are presented in United States dollars unless
otherwise indicated.
REGISTERED OFFICE DUBLIN OFFICE
BCE Place 74 Haddington Road
161 Bay Street, Suite 3900 Dublin 4, Ireland
Toronto, Ontario M5J 2S1 Tel: (353) 1 667 7611
Tel: (416)-360-8511 Fax: (353) 1 667 7622
Fax: (416)-360-8277
TRANSFER AGENT TORONTO OFFICE
Computershare Trust Suite 1220,20 Toronto Street
Company of Canada Toronto, ON M5C 2B8
Corporate Services Tel: (416) 703-3751
100 University Avenue, 8th floor Fax: (416) 367-3638
Toronto,Ontario M5J 2Y1
E-mail: ACCRA OFFICE
Info@moydow.com Shankill House
21, 5th Circular Road
Web site: East Cantonments
www.moydow.com Accra, Ghana
Tel: (233) 21 772516
Fax: (233) 21 777247
25
FORM 27
SECURITIES ACT (ONTARIO)
MATERIAL CHANGE REPORT UNDER SECTION 75(2) OF THE ACT
1. REPORTING ISSUER:
Moydow Mines International Inc. 12th Floor, 20 Toronto Street
Toronto, Ontario M5C 2B8
2. DATE OF MATERIAL CHANGE: July 11, 2002
3. PUBLICATION OF MATERIAL CHANGE: Press release issued on July 16, 2002
4. SUMMARY OF MATERIAL CHANGE: See item 5 below.
5. FULL DESCRIPTION OF MATERIAL CHANGE:
Moydow Mines International Inc. (the "Company") has completed the
issue and sale on a private placement basis of an aggregate of
687,500 flow-through common shares of the Company ("Flow-Through
Shares") at a price of Cdn$0.80 per Flow-Through Share, or
Cdn$550,000 in the aggregate. Haywood Securities Inc. (the "Agent")
acted as agent of the Company in connection with the sale of the
Flow-Through Shares pursuant to the terms of an agency agreement
dated July 11, 2002 between the Company and the Agent.
Each Flow-Through Share entitles the holder thereof to acquire one
common share (a "Common Share") of the Company. In consideration of
the Agent's services, the Company paid to the Agent a commission
equal to 6.0% of the gross aggregate proceeds of the offering, being
Cdn$550,000 and issued to the Agent an option (the "Agent's
Option"). The Agent's Option will entitle the Agent to purchase
68,750 Flow-Through Shares at a price of Cdn$0.80 per Common Share
at any time commencing on the date of issuance of the Agent's Option
and continuing up to 5:00 p.m. (Toronto time) on July 11, 2004.
- 2 -
The net proceeds from the sale of the Flow-Through Shares will be
used for further exploration and development of the Company's
Botwood Basin property and for general corporate purposes.
6. SENIOR OFFICER:
Michael E. Power
Telephone: (416) 703-3751
I, MICHAEL E. POWER, a director of the Corporation, certify that the
foregoing accurately discloses the material change referred to herein.
SIGNED in Toronto, Ontario the 16th day of July, 2002.
MOYDOW MINES INTERNATIONAL INC.
Per: "Michael E. Power"
----------------------
Michael E. Power Director
FORM 45-102F2
CERTIFICATE UNDER SUBSECTION 2.7(2) OR (3) OF
MULTILATERAL INSTRUMENT 45-102 RESALE OF SECURITIES
Moydow Mines International Inc. (the "CORPORATION") has distributed securities
under a provision listed in Appendix D or E to Multilateral Instrument 45-102 or
a provision of securities legislation that specifies that the first trade of the
securities is subject to section 2.5 or 2.6 of Multilateral Instrument 45-102
and hereby certifies that in respect of a distribution on July 11, 2002 of
687,500 flow-through common shares of the Corporation, the Corporation was a
qualifying issuer within the meaning of Multilateral Instrument 45-102 Resale of
Securities at the distribution date.
DATED at Toronto this 16th day of July, 2002.
MOYDOW MINES INTERNATIONAL INC.
Per: "Michael E. Power"
--------------------------
Michael E. Power
Director