UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) FEBRUARY 13, 2006
------------------------------
WESTERN GOLDFIELDS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
IDAHO
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-50894 38-3661016
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
1575 DELUCCHI LANE, SUITE 116
RENO, NEVADA 89502
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(775) 337-9433
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On February 13, 2005, Western Goldfields, Inc., an Idaho corporation
(the "Company"), closed (the "Initial Closing") a $3,700,000 of a total of a
$6,000,000 non-brokered private placement (the "Private Placement"), pursuant to
a securities purchase agreement (the "Purchase Agreement") with accredited
investors (the "Initial Investors"). Pursuant to the Purchase Agreement the
Company sold 12,333,333 units (the "Units") at the Initial Closing, each Unit
consisting of one share of the Company's common stock, par value $0.01 per share
(the "Common Stock"), and one half of one warrant (the "Warrant") to purchase
one share of Common Stock (the "Warrant Shares"), at a price of $0.30 per Unit,
for gross proceeds of $3,700,000. The gross proceeds received at the Initial
Closing will be used (i) to pay any and all expenses incurred in connection with
the sale of the Units, (ii) to pay for the filing and maintaining of any
registration statement required by the Purchase Agreement, (iii) to pay off
$1,500,000 face principal amount of notes (plus accrued and unpaid interest
thereon and other expenses) issued to RMB International (Dublin) Limited and RMB
Resources Limited, (iv) to pay $19,141.25 to legal counsel to lender (v) to pay
$705,186.12 face principal amount of promissory notes (plus accrued and unpaid
interest thereon) issued to Romarco Minerals, Inc. ("Romarco"); (vi) to pay off
$225,000 of expenses incurred by Romarco in connection with the Merger
Agreement, dated September 30, 2005 (the "Merger Agreement"), among the Company,
Romarco and Romarco Merger Corporation (the "Merger Sub"); (vii) to pay
$1,000,000 to Romarco in connection with the termination of the Merger
Agreement, and (viii) for the general working capital requirements of the
Company. The Company anticipates that second closing of 7,666,667 Units will
occur on or prior to February 21, 2006.
Under the Purchase Agreement, the Company has also agreed to: (i) file
a registration statement on Form SB-2 with the Securities and Exchange
Commission covering the resale of the shares of its common stock and the Warrant
Shares, within 90 days following the Initial Closing and (ii) cause the
registration statement to become effective within 120 days after filing the
registration statement on Form SB-2.
The Warrants issued to the Initial Investors at the Initial Closing
have a two (2) year term and an initial exercise price equal to $0.45 per share,
for an approximate of 6,166,665 shares of Common Stock. The exercise price of
and the number of shares issuable under the warrants are subject to customary
adjustments in certain events, including certain mergers, consolidations, sales
of substantially all of the Company's assets, subdivision or combination of the
Company's shares, stock dividends and other distributions by the Company.
No representation, warranty, covenant, or agreement contained in the
Purchase Agreement and/or Warrant is, or should be construed as, a
representation or warranty by the Company to any person other than the Initial
Investors, or a covenant or agreement of the Company or the Initial Investors
with any other person. The representations and warranties in the Purchase
Agreement and/or Warrant may be qualified by information that has not been filed
with the Securities and Exchange Commission, may be qualified by materiality
standards that differ from what may be viewed as material for securities law
purposes, and represent an allocation of risk as between the parties as part of
the transaction reflected in the purchase agreement and/or warrant. Moreover,
the representations and warranties may become incorrect after the date of the
Purchase Agreement and/or Warrant, and changes, if any, may not be reflected in
the Company's public disclosures. The covenants and agreements contained in the
Purchase Agreement and/or Warrant are solely for the benefit of the Company and
the Initial Investors, and compliance with each covenant and agreement may be
waived, and the time for performance under each covenant and agreement may be
extended, by the party entitled to the benefit of the covenant or agreement.
Copies of the forms of Purchase Agreement and Warrant relating to the
Private Placement are attached hereto as Exhibit 10.1 and Exhibit 10.2
respectively, and are incorporated herein by reference. The summary contained in
this report is qualified in its entirety by reference to the more detailed terms
set forth in the Purchase Agreement and the Warrant.
A copy of the press release is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES.
The Common Stock, Warrants and Warrant Shares described in Item 1.01
above were offered and sold in reliance upon exemptions from registration
pursuant to Section 4(2) under the Securities Act of 1933, as amended.
2
The issuance did not involve any public offering; the Company made no
solicitation in connection with the Offering other than communications with the
Initial Investors; the Company obtained representations from the Initial
Investors participating in the Private Placement regarding their investment
intent and knowledge of the offering; and the Initial Investors either received
or had access to adequate information about the Company in order to make
informed investment decisions.
The information set forth in Item 1.01 of this Report is incorporated
by reference into this Item 3.02.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
(a) On February 13, 2006, James Mancuso notified the Company of his
resignation from the Company's board of directors. As of such date, Mr. Mancuso
was a member of the Audit Committee, Compensation Committee, Corporate
Governance Committee and Technical Committee.
(b) On February 13, 2006, Douglas Newby resigned as Chairman of the
Board, President and Chief Executive Officer (Principal Executive Officer). On
February 13, 2006, Becky Corigliano resigned as Chief Financial Officer
(Principal Financial and Accounting Officer) of the Company. Mr. Newby will
remain a member of the Company's board of directors.
(c) On February 13, 2006 the Company's board of directors appointed the
following to serve as new officers of the Company:
o Randall Oliphant Chairman of the Board
o Ray Threlkeld President and Chief Executive Officer
(Principal Executive Officer)
o Brian Penny Chief Financial Officer (Principal
Financial and Accounting Officer)
o Paul Semple Vice President of Projects
o Graham Desson Controller and Secretary
(d) On February 13, 2006, Randall Oliphant and Martyn Konig were each
nominated and elected to serve on the board of directors of the Company, to hold
office until the annual meeting of stockholders of the Company in 2006, or until
their respective successors are elected and qualify. On February 13, 2006 Vahan
Kololian was nominated and elected to serve on the board of directors of the
Company, effective eleven days after mailing of an information statement on Form
14f-1 to the shareholders of record of the Company as of February 13, 2006.
Each of Messers Oliphant, Threlkeld, Penny, Semple, Desson, Konig and
Kololian were granted options to purchase 2,500,000, 1,250,000, 1,000,000,
700,000, 500,000, 750,000 and 750,000 shares of the Company's Common Stock,
respectively. The exercise price of the options is equal to the closing price of
the Company's Common Stock on February 10, 2006 ($0.34 per share).
Mr. Randall Oliphant, age 46, has been the Chairman and CEO of
Rockcliff Group Limited, a private corporation actively involved with its
shareholdings, primarily in the mining sector, including Silver Bear Resources
Inc> since September 2004. Mr. Oliphant is on the Advisory Board of Metalmark
Capital LLC (formerly Morgan Stanley Capital Partners) and since February 2005
has served on the Board of Western Oil Sands Inc. Since 2003 Mr. Oliphant has
served on the boards of a number of private companies and not-for-profit
organizations. From March 1999 to February 2003, he was the President and CEO of
Barrick Gold Corporation. Mr. Oliphant holds a Bachelor's of Comm. from the
University of Toronto and is a Chartered Accountant.
Mr. Vahan Kololian, age 52, founded and is Managing Partner of
TerraNova Partners LP, which invests in the industrial, services and resource
sectors. Since 2002 Mr. Kololian has been Chairman of Precinda Corporation, a
private manufacturing company. Mr. Kololian also serves on the boards of the
following public companies Terra
3
Nova Acquisition Corporation and Manicouagen. Mr. Kololian has obtained degrees
from University of Western Ontario, University of Grenoble, and a LL.B. from the
University of Ottawa. Mr. Kololian is a Member of the Law Society of Upper
Canada.
Mr. Martyn Konig, age 48, has 20 years experience in investment banking
and commodity markets. Since January 2005 Mr. Konig has served as CEO of AIM
listed Latitude Resources Plc. Since June 2001 Mr. Konig has served as
Non-Executive Chairman of EBT Mobile China. He has extensive experience in the
natural resource sector, which includes senior management responsibility in
resource finance and commodity trading operations at various international
investment banks. Mr. Konig was a main Board Director of NM Rothschild for 15
years and held senior positions at Goldman Sachs and UBS. Mr. Konig is a
Barrister and Fellow of the Chartered Institute of Bankers.
Mr. Raymond W. Threlkeld, age 59, has over 30 years of mineral industry
experience ranging from discovery, feasibility study, development management,
operations management, and corporate officer. Since July 2005, Mr. Threlkeld has
been the Chief Operating Officer of Silver Bear Resources Inc., a private
mineral resource company. From 1996 to 2005 Mr. Threlkeld held various senior
management positions in precious metal mine development with Barrick Gold
Corporation and Coeur d'Alene Mines Corporation including the development of the
Pierina Mine in Peru, the Bulyanhulu Mine in Tanzania and the Veladero Mine
located in Argentina. Mr. Threlkeld holds a degree in Geology and has had
exploration acquisition success in the Western United States in addition to the
management and project development experience sited above.
Mr. Brian Penny, age 43, has over 20 years of experience in mine
finance and accounting. Since January 2005 Mr. Penny has been the Chief
Financial Officer of Silver Bear Resources Inc., a private mineral resource
company. Since 2004 Mr. Penny has been and Director of, and chairs, the Audit
Committees of Equinox Minerals Limited and Baffinland Iron Mines Corporation and
since 2005 has been and Director of, and chairs, the Audit Committees of Alamos
Gold Inc. While serving as Chief Financial Officer (1993 - 2004) with Kinross
Gold Company, Mr. Penny was responsible for all finance, banking, hedging and
financial reporting activities including the financial due diligence surrounding
a U.S. $1.3 billion merger with TVX Gold Inc. and Echo Bay Mines Ltd. Mr. Penny
holds a diploma of Business in Accounting and is a Certified Management
Accountant.
Mr. Paul G. Semple, age 45, has 23 years of experience in the mining
industry and has focused on feasibility studies, project development and
operations of precious and base metals deposits. From 2001 until 2006 Mr. Semple
has been President of PG Semple Consulting and President of Penguin Automated
Systems Inc. Mr. Semple has spent much of his time with Kilborn (later
SNC-Lavalin) where he was involved in all aspects of project development from
initial studies through to construction and operations. During this time, Mr.
Semple held various positions including Vice President and General Manager, SNC
Lavalin Engineers and Constructors. Mr. Semple holds a Bachelor's of Applied
Science from Queen's University and is a professional engineer.
Mr. Graham Desson, age 58, has served as Controller of Silver Bear
Resources Inc., a private Canadian company engaged in mining exploration in the
Russian Federation since May 2005. From 2001 to 2004 Mr. Desson was engaged as a
financial consultant and then served as Director - Treasury of Biovail
Corporation, a public pharmaceutical company. Thereafter he was engaged in
consulting activity in the mining industry.
A copy of the press release is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
4
ITEM 8.01 OTHER EVENTS
On February 13, 2006, the Company issued a press release announcing
that it had terminated its Agreement and Plan of Merger and Reorganization,
dated September 30, 2005, with Romarco and Merger Sub. A copy of the press
release is attached hereto as Exhibit 99.2 and incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
10.1 Form of Securities Purchase Agreement, dated February 13,
2006, by and among Western Goldfields, Inc. and the Purchasers
listed on the Schedule of Purchasers therein.
10.2 Form of Warrant.
99.1 Press Release of the Company issued on February 13, 2006.
99.2 Press Release of the Company issued on February 13, 2006.
5
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.
Date: February 17, 2006 Western Goldfields, Inc.
By: /s/ Brian Penny
---------------------------------------
Name: Brian Penny
---------------------------------------
Title: Chief Financial Officer
---------------------------------------
6
EXHIBIT INDEX
Exhibit No. Exhibit Name
10.1 Form of Securities Purchase Agreement, dated February 13,
2006, by and among Western Goldfields, Inc. and the Purchasers
listed on the Schedule of Purchasers therein.
10.2 Form of Warrant.
99.1 Press Release of the Company issued on February 13, 2006.
99.2 Press Release of the Company issued on February 13, 2006.
7