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): October 22, 2004
AMERICAN GOLDFIELDS INC.
(Exact name of registrant as specified in its charter)
Nevada 000-49996 71-0867612
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(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)
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(Former name or former address, if changed since last report.)
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On October 22, 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 Hercules property, consists of 40 mineral claims at
the northern end of the Pine Nut Mountains in western Nevada, approximately 40
kilometers southwest of Reno, Nevada.
Simultaneous with the execution and delivery of the Property Option Agreement,
the Company paid MinQuest $20,000. In order to earn a 100% interest in the
Hercules property, the Company must pay MinQuest, Inc. and incur expenditures
relating to mining operations in accordance with the following schedule: (i) on
or before November 25, 2005, $20,000 to MinQuest and incur $150,000 in
expenditures incidental to the mining operations; (ii) on or before November 25,
2006, $20,000 to MinQuest and an additional $200,000 in expenditures; (iii) on
or before November 25, 2007, $20,000 to MinQuest and an additional $300,000 in
expenditures; (iv) on or before November 25, 2008, $20,000 to MinQuest and an
additional $400,000 in expenditures; and (v) on or before November 25, 2009,
$20,000 to MinQuest and incur an additional $500,000 in expenditures; (i) on or
before November 25, 2010, $20,000 to MinQuest and incur $500,000 in expenditures
incidental to the mining operations; (ii) on or before November 25, 2011,
$20,000 to MinQuest and an additional $500,000 in expenditures; (iii) on or
before November 25, 2012, $20,000 to MinQuest and an additional $500,000 in
expenditures; (iv) on or before November 25, 2013, $20,000 to MinQuest and an
additional $500,000 in expenditures; and (v) on or before November 25, 2014,
$20,000 to MinQuest and incur an additional $500,000 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. If
the Company fails to make any payment when due, the Agreement gives the Company
a 60-day grace period to pay the amount of the deficiency.
MinQuest retained a 3% royalty of the aggregate proceeds received by the Company
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. The Company has the
right to purchase 2% of such royalty for $3,000,000, exercisable 90 days
following completion of a bankable feasibility study. In order to exercise this
right, the Company has to provide notice to MinQuest during such time along with
$2,000,000.
The Company can use MinQuest for its mineral exploration expertise on the
property, but is not required to do so. Furthermore, both the Company and
MinQuest have the right to assign, sell, mortgage or pledge their rights in the
Agreement or on the property. In addition, any mineral interests staked,
located, granted or acquired by either the Company or MinQuest which is located
within 2 miles of the property will be included in the option granted to the
Company.
The Agreement will terminate if the Company fails to comply with any of its
obligations in the Agreement and fails to cure such alleged breach. If the
Company gives notice that it denies a default has occurred, the matter shall be
determined finally through such means of dispute resolution as such matter has
been subjected to by either party. The Agreement provides that all disputes
shall be resolved by a sole arbitrator under the rules of the Arbitration Act of
Nevada. The Company also has the right to terminate the Agreement by giving
notice to MinQuest.
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.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of businesses acquired. N/A
(b) Pro forma financial information. N/A
(c) Exhibits.
10.1 Property Option Agreement dated as of October 22,
2004, between MinQuest Inc. and American Goldfields
Corporation.
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: October 29, 2004