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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 7, 1996
GRANGES INC.
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(Exact name of registrant as specified in its charter)
1-9025 Not Applicable
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(Commission File No.) (I.R.S. Employer Identification No.)
British Columbia, Canada
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(State or other jurisdiction of incorporation or organization)
Suite 3000, 370 Seventeenth Street, Denver, CO, USA 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 303-629-2450
Not Applicable
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(Former name or former address, if changed since last report)
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GRANGES INC.
Item 1. Changes in Control of Registrant
Not applicable
Item 2. Acquisition or Disposition of Assets
Not applicable
Item 3. Bankruptcy or Receivership
Not applicable
Item 4. Changes in Registrant's Certifying Accountant
Not applicable
Item 5. Other Events
(a) On June 7, 1996, the Registrant issued the following
press release:
"GRANGES SIGNS OPTION AGREEMENT FOR GUARICHE PROJECT IN VENEZUELA
VANCOUVER, BRITISH COLUMBIA, JUNE 7, 1996 - Granges Inc. announced today that
it has completed its due diligence and negotiated the final terms of the option
agreement with L.B. Mining Co. for the previously announced acquisition of the
Guariche gold property in Venezuela. The terms of the definitive option
agreement, which has now been signed by the parties, provides that the
consideration for the option is US$275,000 payable as to $125,000 upon receipt
of the necessary mining concessions for the property and US$150,000 upon
receipt of exploration permits and upon Granges being satisfied there are no
remaining overriding interests in the property. If these requirements are
satisfied within 30 days, then Granges will be required to incur minimum
exploration expenditures on the property of US$350,000 over a period of five
months. Granges will be undertaking a geologic evaluation including at least
6,000 metres of drilling.
If drilling and technical studies completed during the option period satisfy
Granges that the property contains a minimum proven and probable minable
reserve of 500,000 ounces of gold, Granges intends but will not be obligated to
exercise the option to purchase the property for US$15 million payable as to
US$5 million in 2,047,938 Common shares of Granges (US$2.44 per share) and the
balance in cash. The purchase agreement to be entered into at the time of
exercise of the option by Granges will also provide for payment for proven and
probable minable reserves ("excess ounces") over and above 500,000 ounces at
the rate of US$30 per ounce. The purchase agreement will also provide that if
more than 500,000 excess ounces (over 1,000,000
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total ounces) are established within two years after the purchase of the
property, L.B. Mining Co. can elect to take US$5 million of the US$15 million
that it would then be owed for the excess ounces in the form of 2,529,161
Common shares of Granges (Cdn$2.70 or US$1.97694 per share).
The purchase agreement will also provide that if more than 500,000 additional
excess ounces (over 1,500,000 total ounces) are established within five years
after the two year period for establishing the first 500,000 excess ounces,
then Granges will pay L.B. Mining Co. US$30 per ounce for each additional
excess ounce. If less than 500,000 of such additional excess ounces are
established, then in lieu of the US$30 per ounce payment Granges will pay L.B.
Mining Co. a net smelter production royalty of 7.5% of net smelter returns from
such additional excess ounces. The net smelter royalty will also be paid on all
additional ounces established after the end of such five year period to the
extent not previously paid for.
In order to facilitate the issuance of 2,047,938 Common shares in the event
Granges exercises the option and the issuance of the additional 2,529,161
Common shares in the event L.B. Mining Co. thereafter elects to receive payment
for excess ounces in the form of such Common shares in lieu of cash, the Board
of Directors of Granges today approved a Special Warrant Indenture under which
the company has agreed to issue 2,047,938 Special Warrants to L.B. Mining which
will be deemed to be exercised for 2,047,938 Class A Common Share Purchase
Warrants and 2,529,161 Class B Common Share Purchase Warrants upon Granges
obtaining a receipt for a final prospectus in British Columbia and Ontario
qualifying the exercise of such Special Warrants. Upon exercise of the option
by Granges, the Class A Common Share Purchase Warrants will be automatically
exercised for 2,047,938 Common shares in payment of US$5 million of the US$15
million purchase price for the property as described above. The Class B Common
Share Purchase Warrants may be exercised by L.B. Mining Co. if it elects to
receive payment for excess ounces in the form of 2,529,161 Common shares as
described above.
The property, which has been under investigation by L.B. Mining Co. over the
past 10 years, has undergone exploration by trenching, extensive shallow
drilling and some deeper drilling. Currently Granges has estimated that the
property contains at least 560,000 ounces of gold resources that are close to
the surface. To date approximately one square kilometre has been explored out
of a total of 25 square kilometres and there is potential for additional
discoveries. The preliminary discoveries indicate the potential for a 70,000
ounce per year gold operation employing open pit mining and a mill with
operating costs under US$200 per ounce."
Item 6. Resignations of Registrant's Directors
Not applicable
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Item 7. Financial Statements and Exhibits
(a) Financial Statements - none
(b) Pro Forma financial information - none
(c) Exhibit - none
Item 8. Change in Fiscal Year
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GRANGES INC.
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(Registrant)
Date: June 11, 1996 By: /s/ A.J. Ali, CA
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A.J. Ali, CA
Vice President Finance and
Chief Financial Officer
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