UNITED STATES
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 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): June 30, 2004
AMERICAN GOLDFIELDS INC.
(Exact name of registrant as specified in its charter)
Nevada 000-49996 71-0867612
------ --------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
200-4170 Still Creek Drive
Burnaby, B.C., Canada V5C 6C6
(Address of principal executive offices)
604-299-6600
(Registrant's telephone number, including area code)
---------------
(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
On June 30, 2004, American Goldfields Inc. (the "Company") executed an agreement
with MinQuest, Inc. ("MinQuest") granting the Company the right to purchase 100%
of the mining interests of a Nevada mineral exploration property currently
controlled by MinQuest, a natural resource exploration company. Mr. Richard
Kern, who joined the Board of Directors of the Company on May 26, 2004, is the
President of MinQuest.
The property, known as the Imperial property, consists of 22 contiguous,
unpatented mineral claims covering approximately 450 acres located in Esmeralda
County, Nevada. All of the claims are administered by the Department of
Interior, Bureau of Land Management.
Simultaneous with the execution and delivery of the Property Option Agreement,
the Company paid MinQuest $60,000. In order to earn a 100% interest in the
Imperial property, the Company must pay MinQuest, Inc. and incur expenditures
relating to mining operations in accordance with the following schedule: (i) on
or before July 1, 2005, $20,000 to MinQuest and incur $75,000 in expenditures
incidental to the mining operations; (ii) on or before July 1, 2006, $20,000 to
MinQuest and an additional $100,000 in expenditures; (iii) on or before July 1,
2007, $20,000 to MinQuest and an additional $100,000 in expenditures; (iv) on or
before July 1, 2008, $20,000 to MinQuest and an additional $100,000 in
expenditures; and (v) on or before July 1, 2009, incur an additional $125,000 in
expenditures. Since our payment obligations are non-refundable, if we do not
make any payments, we will lose any payments made and all our rights to the
properties. If all said payments are made, then we will acquire all mining
interests in the property. MinQuest is entitled to retain a 3% royalty of the
aggregate proceeds received by us from any smelter or other purchaser of any
ores, concentrates, metals or other material of commercial value produced from
the property, minus the cost of transportation of the ores, concentrates or
metals, including related insurance, and smelting and refining charges,
including penalties. Such royalty is payable quarterly within 30 days after the
end of each calendar quarter during which we receive proceeds with respect to
ores, concentrates, metals or other material of commercial value.
The Company agreed to use MinQuest for on-site management at rates reasonably
acceptable. In addition, any mineral interests staked, located, granted or
acquired by either the Company or MinQuest which is located within 1 mile of the
property will be included in the option granted to the Company. The Company will
escrow $5,000 for the costs of staking additional claims undertaken by MinQuest
at the request of the Company.
In order to fund the payment due to MinQuest upon execution of the Property
Option Agreement, the Company entered into a Loan Agreement with a minority
shareholder of the Company. The entire proceeds of the $60,000 loan were used to
make the initial $60,000 payment to MinQuest. The loan bears interest at the
Bank of Canada Prime Rate plus 1% and is repayable on or before July 5, 2005.
The Company has the option of repaying the loan earlier without penalty. No
security was provided for the loan.
For all the terms and conditions of the Property Option Agreement, reference is
hereby made to such agreement annexed hereto as Exhibit 1. All statements made
herein concerning the foregoing agreement are qualified by reference to Exhibit
1.
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.
American Goldfields Inc.
(Registrant)
By: /s/ Donald Neal
Donald Neal, Chief Executive and Financial
Officer, Treasurer and Secretary
Date: July 9, 2004