FORM 20-F
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
____________________________________
LES ENTREPRISES MINIERES GLOBEX INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GLOBEX MINING ENTERPRISES INC.
(TRANSLATION OF REGISTRANT AS SPECIFIED IN ENGLISH)
333-6900
(COMMISSION FILE NUMBER)
QUEBEC, CANADA
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
146-14TH STREET
ROUYN-NORANDA, QUEBEC
CANADA J9X 2J3
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICERS)
------------------------------------------------------------------------------
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15 (D)
OF THE ACT.
Indicate number of outstanding shares of each of the issuer's classes of capital
or common stock as of the close of the period covered by the annual report:
COMMON SHARES 11,641,785
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
YES X NO
--- ---
TABLE OF CONTENTS
GLOSSARY . . . . . . . . . . . . . . . . . . . . 1
CURRENCY. . . . . . . . . . . . . . . . . . . . . 3
EXCHANGE RATES. . . . . . . . . . . . . . . . . . 3
UNCERTAINTY OF FORWARD-
LOOKING STATEMENTS. . . . . . . . . . . . . . . . 3
PART 1
ITEM 1. DESCRIPTION OF BUSINESS. . . . . . . . . 3
Overview. . . . . . . . . . . . . . . . . . . . 4
2000 Summary. . . . . . . . . . . . . . . . . . 4
Business and principal
exploration properties. . . . . . . . . . . . 6
Reclamation . . . . . . . . . . . . . . . . . . 7
Employees. . . . . . . . . . . . . . . . . . . 7
Risk Factors. . . . . . . . . . . . . . . . . . 7
- Immediate Need for Cash . . . . . . . . . . 7
- Operating Losses, Negative Cash Flow
from Mining Operations and Financing Risks 7
- Fluctuations in the market price of gold . 7
- Exploration Risks . . . . . . . . . . . . . 7
- Development and Operating Risks . . . . . . 8
- Uncertainty of reserves and
Mineralization Estimates. . . . . . . . . . 8
- Competition . . . . . . . . . . . . . . . . 8
- Regulation. . . . . . . . . . . . . . . . . 8
- Foreign operations. . . . . . . . . . . . . 9
- Dependance on key personnel . . . . . . . . 9
- No Operating History. . . . . . . . . . . . 9
- Regulatory Compliance, Permitting Risks
and Environmental Liability . . . . . . . . 9
- Lack of Production Experience . . . . . . . 10
- Volatility of Stock Price and
Limited Liquidity . . . . . . . . . . . . . 10
- Title of properties . . . . . . . . . . . . 10
ITEM 2. DESCRIPTION OF PROPERTIES . . . . . . . 11
Globex Mineral Exploration Properties Tables. . 11
Principal Exploration Properties. . . . . . . . 13
Less Significant Properties with
Past Production. . . . . . . . . . . . . . 22
Other Early/Intermediate Stage
Exploration Properties. . . . . . . . . . . . 24
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . 25
ITEM 4. CONTROL OF REGISTRANT . . . . . . . . . 25
ITEM 5. NATURE OF TRADING MARKET. . . . . . . . 25
Comparative Market Price Data . . . . . . . . . 25
ITEM 6. EXCHANGE CONTROLS AND
OTHER LIMITATIONS AFFECTING
SECURITY-HOLDERS . . . . . . . . . . . . . . . 26
ITEM 7. CANADIAN FEDERAL INCOME TAX
INFORMATION FOR UNITED STATES
RESIDENTS . . . . . . . . . . . . . . . . . . . 27
ITEM 8. SELECTED CONSOLIDATED
FINANCIAL INFORMATION . . . . . . . . . . . . . 28
Currency . . . . . . . . . . . . . . . . . . . 29
Dividends . . . . . . . . . . . . . . . . . . . 29
ITEM 9. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS. . . . . . . . . . . . . . . . . . . 29
Introduction. . . . . . . . . . . . . . . . . . 29
Consolidated Results of Operations. . . . . . . 30
Liquidity and Capital Resources . . . . . . . . 31
ITEM 10. DIRECTORS AND OFFICERS
OF THE REGISTRANT . . . . . . . . . . . . . . . 33
Directors of Globex . . . . . . . . . . . . . . 33
Executive Officers. . . . . . . . . . . . . . 33
Executive and Audit Committees. . . . . . . . . 33
ITEM 11. COMPENSATION OF
DIRECTORS AND OFFICERS. . . . . . . . . . . . . 33
Summary Compensation Table. . . . . . . . . . . 33
Option Grants During the Most Recently
Completed Fiscal Year . . . . . . . . . . . . 34
Remuneration of Directors. . . . . . . . . . . 34
ITEM 12. OPTIONS TO PURCHASE SECURITIES
FROM REGISTRANT OR SUBSIDIARIES . . . . . . . . 34
ITEM 13. INTEREST OF MANAGEMENT
IN CERTAIN TRANSACTIONS . . . . . . . . . . . . 35
PART II
ITEM 14. DESCRIPTION OF
SECURITIES REGISTERED . . . . . . . . . . . . . 35
PART III
ITEM 15. DEFAULTS UPON
SENIOR SECURITIES . . . . . . . . . . . . . . . 35
ITEM 16. CHANGES IN SECURITIES
AND CHANGES IN SECURITY FOR
REGISTERED SECURITIES. . . . . . . . . . . . . 35
PART IV
ITEM 17. FINANCIAL STATEMENTS . . . . . . . . . 35
ITEM 18. FINANCIAL STATEMENTS . . . . . . . . . 35
ITEM 19. FINANCIAL STATEMENTS AND
EXHIBITS. . . . . . . . . . . . . . . . . . . . 36
Exhibit index . . . . . . . . . . . . . . . . . 36
Signatures. . . . . . . . . . . . . . . . . . . 37
Consent of Independant Chartered Accountants. . 38
Consolidated Financial Statements Index . . . . 39
i
GLOSSARY OF CERTAIN MINING TERMS
The following is a glossary of some of the terms used in the mining
industry and referenced herein:
"AU" means gold.
"CIL" - an acronym for Carbon-In-Leach - means the process of a solution
leach plant in which the dissolved gold in the pregnant cyanide solution is
extracted through adsorption onto activated carbon concurrent with leaching.
"CONTAINED GOLD" means the total measurable gold or gold equivalent in
grams or ounces estimated to be contained within a mineral deposit. A
calculation or estimate of contained gold makes no allowance for mining dilution
or recovery losses.
"CU" means copper.
"CUTOFF GRADE" means the grade of mineralization, established by reference
to economic factors, above which material is included in mineral deposit
reserve/resource calculations and below which the material is considered waste.
Cutoff grade may be either an external cutoff grade which refers to the grade of
mineralization used to control the external or design limits of an open pit
based upon the expected economic parameters of the operation, or an internal
cutoff grade which refers to the minimum grade required for blocks of
mineralization present within the confines of an open pit to be included in
mineral deposit estimates.
"DEVELOPMENT STAGE" means the period when a mineral deposit that has been
estimated to be economically viable is prepared for commercial production and
includes pre-production stripping in the mine and the construction of the
necessary process plant and supporting facilities.
"DIAMOND DRILL" means a machine designed to rotate under pressure an
annular diamond-studded cutting tool to produce a more or less continuous solid,
cylindrical sample of the material drilled.
"G AU/T" means grams of gold per metric tonne.
"GRADE" means the amount of valuable mineral in each ton of mineralized
material, expressed as troy ounces (or grams) per ton or tonne of gold or as a
percentage of copper and other base metals.
"GRAMS PER CUBIC METRE" means alluvial mineralization measured by grams of
gold contained per cubic metre of material, a measure of weight of gold per
volume of material.
"HEAP LEACHING" means a method of gold and silver extraction in which
mineralized material is heaped on an impermeable pad and sodium cyanide solution
is applied to the material. The gold and silver are dissolved out of the
material as the solution percolates down through the heap, the pregnant solution
is collected from below the heap and the gold and silver are precipitated from
the pregnant solution in vessels or columns containing activated carbon or zinc
powder.
"HECTARE" or "HA" means measurement of an area of land equivalent to 10,000
square metres or 2.47 acres.
"LEACH PAD" means a large, impermeable foundation or pad used as a base for
ore during heap leaching. The pad prevents the leach solution from escaping out
of the circuit.
"LODE MINING CLAIM" means a mining claim located on a vein or lode of
quartz or other rock in place, bearing gold, silver, cinnabar, tin, lead,
copper, or other valuable deposits.
"MINERAL DEPOSIT, DEPOSIT OR MINERALIZED MATERIAL" means a mineralized body
which has been physically delineated by sufficient drilling, trenching, and/or
underground work, and found to contain a sufficient average grade of metal or
metals to warrant further exploration and/or development expenditures. Such a
deposit does not qualify under Commission standards as a commercially minable
ore body or as containing ore reserves, until final legal, technical, and
economic factors have been resolved.
"MIXED ORE" means a mixture of oxidized and unoxidized ore.
"NET PROFITS INTEREST ROYALTY" means a royalty payment made by the producer
of metals, usually to a property owner or Governmental authority, based on the
value of gross metal production from the property, less deduction of certain
costs including smelting, refining, transportation and insurance costs (often
referred to as realization costs) plus direct operating costs associated with
the mining and treatment of ore and the mining of associated waste.
1
"NET SMELTER RETURN ROYALTY" means a royalty payment made by a producer of
metals, usually to a previous property owner or Governmental authority, based on
the value of gross metal production from the property, less deduction of certain
limited costs including smelting, refining, transportation and insurance costs.
"OPEN PIT MINING" means the process of mining ore body from the surface in
progressively deeper steps. Sufficient waste rock adjacent to the ore body is
removed to maintain mining access and to maintain the stability of the resulting
pit.
"ORE" means a natural aggregate of one or more minerals which, at a
specified time and place, may be mined and sold at a profit, or from which some
part may be profitably separated.
"OUNCE (OZ)" means a Troy ounce.
"OXIDIZED ORE" (also referred to as "oxide ore") means mineralized rock
which can be profitably mined and in which some of the original minerals have
been oxidized by natural processes. Oxidation tends to make the ore more porous
and permits a more complete permeation of cyanide solutions so that minute
particles of gold in the interior of the rock will be more readily dissolved.
"OZ/TON (OPT)" means Troy ounces per short ton.
"PATENTED MINING CLAIM" means a mining claim on the public land of the
United States or Canada, under the mining laws, for which a patent has been
issued conveying the title of the United States or Canada to the patentees.
"PORPHYRY DEPOSIT" means a disseminated mineral deposit often closely
associated with porphyritic intrusive rocks.
"PORPHYRITIC" means a rock texture in which one mineral has a larger grain
size than the accompanying minerals.
"PROBABLE RESERVES" means reserves for which quantity and grade and/or
quality are computed from information similar to that used for proven reserves,
but the sites for inspection, sampling and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower than
that for proven reserves, is high enough to assume continuity between points of
observation.
"PROVEN/PROBABLE RESERVES" means a term used if the difference in degree of
assurance between the proven and probable categories cannot be reliably defined.
"PROVEN RESERVES" means reserves for which (a) quantity is computed from
dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or
quality are computed from the results of detailed sampling; and (b) the sites
for inspection, sampling and measurement are spaced so closely and the
geological character is so well defined that size, shape, depth and mineral
content of reserves are well established.
"RESERVE" means that part of a mineral deposit which can be economically
and legally extracted or produced at the time of the reserve determination.
Reserves are customarily stated in terms of "ore" when dealing with
metalliferous minerals.
"STRIKE LENGTH" means the longest horizontal dimensions of a body or zone
of mineralization.
"STRIPPING RATIO" means the ratio of waste material to ore that is
experienced in mining an ore body.
"TON" means a short ton (2,000 pounds).
"TONNE" means a metric tonne (2,204.6 pounds).
"UNPATENTED MINING CLAIM" means a mining claim located on the public lands
of the United States or Canada, for which a patent has not been issued. An
unpatented mining claim is a possessory interest only, subject to the paramount
title of the United States or Canada. The validity of an unpatented mining
claim depends upon the existence of a valuable mineral deposit within the
boundaries of the claim and compliance with mining codes.
2
CURRENCY
UNLESS OTHERWISE SPECIFIED, ALL DOLLAR AMOUNTS IN THIS REPORT ARE EXPRESSED IN
CANADIAN DOLLARS.
-----------------
EXCHANGE RATES
The following table sets forth certain exchange rates based on the noon
buying rate in New York City for cable transfers as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"). Such
rates are set forth as United States dollars per Cdn$1.00 and are the inverse of
rates quoted by the Federal Reserve Bank of New York for Canadian dollars per
US$1.00.
YEARS ENDED DECEMBER 31,
------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
(US$PER CDN$1.00)
High for period 0.6903 0.6925 0.7105 0.7487 0.7513
Low for period 0.6483 0.6535 0.6341 0.6945 0.7235
End of period 0.6571 0.6925 0.6504 0.07 0.7301
Average for period (1) 0.6732 0.6744 0.6714 0.722 0.7329
<FN>
(1) The average of the exchange rates for each month in the applicable period.
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
Certain statements in this document, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements include without limitation statements
regarding planned levels of exploration and other expenditures, anticipated mine
lives, timing of production and schedules for development. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements or industry results to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, among others, the following:
inability to acquire financing, unanticipated grade, geological, metallurgical,
processing or other mining-related problems, conclusions of feasibility studies,
changes in project parameters as plans continue to be refined, the timing of
receipt of governmental permits, the failure of plant, equipment or processes to
operate in accordance with specifications or expectations, results of current
exploration activities, accidents, delays in start-up dates, environmental costs
and risks, changes in metal prices, the results of financing efforts and other
risk factors detailed or referenced in this document. See "Risk Factors"and
"Liquidity and Capital Resources". Most of these factors are beyond Globex's
ability to control or predict.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
Globex is a Canadian gold and base metal and industrial mineral company
engaged in the acquisition, exploration and development of mineral properties.
Globex has an interest over 108 North American exploration properties in its
portfolio. Globex's exploration activities are concentrated in Quebec, Ontario,
British Columbia and Nova Scotia, Canada, as well as Nevada, Arizona and
Washington in the United States.
3
To date, Globex's sources of revenue have been the receipt of option
payments from joint venture partners and interest income. Government grants
have assisted exploration financing. It is not engaged in mining operation or
mineral production.
Globex was incorporated on October 21, 1949, pursuant to the Mining
Companies Act (Quebec) under the name Lyndhurst Mining Company Limited (No
Personal Liability). On June 4, 1974, the corporate name was changed to Globex
Mining Enterprises Inc. On November 4, 1985, Globex was continued under Part IA
of the Companies Act (Quebec). On January 21, 1988, Globex completed an initial
public offering by prospectus in the Province of Quebec and was listed on the
ME. Globex Nevada, Inc. ("Globex Nevada"), a wholly owned subsidiary of Globex,
was incorporated on November 4, 1988 under the laws of the State of Nevada.
Globex was listed on TSE on December 27, 1995 and delisted from The Montreal
Exchange on December 12, 1997. Globex listed on the CDNX on September 9, 2000.
The principal executive offices of Globex are located at 146-14th Street,
Rouyn-Noranda, Quebec, Canada J9X 2J3, telephone number (819) 797-5242.
Gold Capital Corporation, a subsidiary of Globex was organized under the
laws of the State of Colorado on December 10, 1993. It is an exploration
company, whose principal asset, the Tonkin Springs Project in Eureka County,
Nevada (the "Tonkin Springs Project")was sold in early 1999.
Gold Capital Corporation is currently inactive.
The offices of Gold Capital Corporation are located at Parker, PMB 433 -
9815 South Parker Road, Parker, Colorado 80134, USA.
2000 SUMMARY
2000 has been a terrible year for the mining industry in general and Canada in
particular. Despite significant price increases in many minerals such as
platinum, palladium, rhodium, tantalum, etc. and the discovery of diamonds
and/or kimberlites in Quebec and Ontario, the industry is wallowing at the base
of extended depression. It seems that the prolonged low gold price, despite
significant increases in consumption has overridden any good news or optimism.
Having said the above, Globex has had an interesting and productive year
although it is not reflected in our stock price. Below, I discuss what we
accomplished over the last year in point form as there were so many things going
on.
(a) LYNDHURST MINE PROJECT, QUEBEC - Globex received a grant from the Quebec
Ministry of Natural Resources for $280,000 which we coupled with $60,000 of our
own funds to drill our deep massive sulphide discovery. We succeeded in better
defining the shape of the zone and delimited the upper north-east edge with a
drill hole which intersected 18 feet (5 metres) of massive sulphides containing
up to 8.5% zinc. We now must move to the west and drill the western plunge of
the sulphide ore body where it's believed to be largest and possibly richest in
copper, zinc and silver.
(b) GLOBEX ACQUIRED TWO PROPERTIES IN LA MOTTE AND PREISSAC TOWNSHIPS, QUEBEC
FOR NICKEL, PLATINUM, PALLADIUM AND RHODIUM EXPLORATION. We joint ventured the
properties with Aurogin Resources who flew them with their exclusive AEROTEM
system. Numerous anomalies were indicated and ground truthing was completed.
An area on the La Motte claims was stripped and channel sampled. Assays up to
4.15% nickel, 1.15% copper, 0.75% g/t combined platinum, palladium and rhodium
were encountered with loose material giving up to 4.6% nickel, 0.96% cobalt and
1.5 g/t PGE's. Early in 2001, follow up ground geophysics and first phase
diamond drilling were completed.
4
(c) IN ROUYN AND BEAUCHASTEL TOWNSHIPS, QUEBEC GLOBEX HAS PUT TOGETHER A
MASSIVE LAND POSITION SPANNING NUMEROUS BASE METAL AND GOLD BEARING HORIZONS.
We agreed to option the claims to Aurogin Resources who flew complete AEROTEM
coverage over the claims. About a dozen priority targets were outlined and
ground follow up has been completed. Several drill ready targets will be tested
by our partners in 2001. One of the high points of the new results was the
discovery that the gold localizing Cadillac Fault which was thought to traverse
the southern end of the property at a depth of greater than 1000 metres now
looks like it is only 200 to 300 metres below surface and affords us 5.5 km of
prime, hitherto unexplored prime gold hunting geology.
d) IN WASHINGTON STATE, recent sampling by Echo Bay Minerals on our COMSTOCK
CLAIMS has returned platinum values of up to 20.6 g/t, palladium of up to 2.24
g/t and copper up to 5.19%. As a result of this sampling, Globex signed an
option agreement with Latitude Minerals Corporation in early 2001 and will
receive cash and stock payments and work commitments over 5 years with a gross
royalty on production assuming the option goes to fruition.
e) IN THE WEMINDJI AREA ON THE EAST SIDE OF JAMES BAY, QUEBEC, Globex in
partnership with Aurogin Resources Ltd. and Sparton Resources Inc. acquired some
74,600 acres (30,200 hectares) of claims covering magnetic signatures which may
be related to diamond bearing kimberlite bodies. Majescor Resources Inc.
announced in late 2000 that they had discovered huge numbers of indicator
minerals and kimberlite fragments in till samples from the area. Majescor
intends to drill approximately 8 to 10 prime magnetic features, probably in
early spring. If kimberlite bodies and/or diamonds are intersected, this area
may develop into one of Canada's most important diamond plays with Globex being
positioned to be an important player.
f) IN ONTARIO, GLOBEX DRILLED TWO MORE HOLES ON OUR HUGE MAGNESITE-TALC-SILICA
DEPOSIT NEAR TIMMINS. The ore body is probably North America's largest
undeveloped magnesite-talc-silica deposit. Studies of all the available
engineering, geological and metallurgical data show that the deposit can be
mined by cheap open pit methods and the mineral constituents can be economically
separated and refined to produce saleable dead burn magnesite, magnesium metal,
high quality talc for the cosmetic and fine paper industries and silica most
likely for use in local smelting processes. A consulting engineer who reviewed
the data, has indicated that at production we should be in the lowest quartile
to world producers at a capital cost of roughly half of what Noranda spent to
get Magnola up and running. We will be making a major effort to move this
project forward over the next 12 months.
g) IN VAUQUELIN TOWNSHIP, QUEBEC, GLOBEX HAS ACQUIRED 100% INTEREST IN THE
NORDEAU EAST AND WEST GOLD ZONES. Previous drilling has indicated a resource of
715,299 tonnes grading 6.3 g/t. A review of the data by an exploration company
may result in an agreement whereby the exploration company will do all work
necessary to evaluate, prepare a positive feasibility study and finance the
project to production in exchange for a 50% interest in the project subject to
clear title being provided by Globex. Evaluation work is presently underway.
h) AT THE DUQUESNE WEST PROPERTY NORTH OF ROUYN-NORANDA, QUEBEC, negotiations
were entered into regarding an option to explore and if warranted open pit mine,
the top 30 metres of the Fox and Shaft Zones. If an agreement is reached,
Globex will receive option payments and a net smelter return from gold produced
from within 30 metres of surface. The rest of the property below 30 metres
shall remain the sole property of Globex and G oconseils Jack Stoch Ltee.
i) IN JOUTEL TOWNSHIP, QUEBEC, GLOBEX DRILLED TWO HOLES ON GEOPHYSICAL TARGETS
AT THE POIRIER MINE PROPERTY. One hole hit disseminated and semi massive
sulphides with low zinc values in excellent geology. In 2001, Globex will try
to drill several other priority near surface targets. The at depth potential
below the old mine and mineral inventory of 2,334,000 tonnes of copper-zinc
mineralization has, as of yet, not been adequately tested.
j) SOUTH OF SENNETERRE IN TIBLEMONT TOWNSHIP, QUEBEC, GLOBEX ACQUIRED THE
SMITH-ZULAPA PROPERTY. Included in the land package is the Smith Gold Zone and
shaft. A gold bearing quartz vein system has been outlined by diamond drilling
and is open for further definition and expansion. A copper-nickel zone called
the Zulapa Zone also occurs on the property. Previous drilling has outlined a
zone of 3.8 million tonnes grading 0.39% copper and 0.38% nickel with possible
platinum group minerals being present. The sulphide body is wide and open at
depth. Further investigation of the PGE potential of the Zulapa Zone is
proposed for 2001.
5
k) AN AEROTEM SURVEY WAS FLOWN OVER THE VAUZE PROPERTY NEAR ROUYN-NORANDA,
QUEBEC. A few low priority anomalies were found and remain to be ground
truthed.
l) IN LIGNERIS TOWNSHIP, QUEBEC, A MAGNETOMETER SURVEY WAS COMPLETED OVER
GLOBEX'S TUT GOLD SHOWING AREA. Sections and plans were also compiled of all
the available previous diamond drilling and show that the deepest of the series
of relatively shallow holes is one of the best returning 6.29g/t Au over 5.7
metres. The mineralization which is reported to have been followed over a
strike length of 900 metres and a width of up to 30 metres needs significant
follow up.
m) GLOBEX HAS ALSO BEEN KEEPING ITS EYES OPEN FOR GOOD INEXPENSIVE ACQUISITIONS.
Of particular note are the following acquisitions, the former Agnico Eagle gold
mine at Joutel, the former Normetal base metal mine at Normetal, the
Smith-Zulapa Property (discussed in (j) above), the westward extension of our La
Motte Property (discussed in (b) above) to include the Atman nickel(possibly
PGE) showing area and strike extension of the Marbridge Nickel Mine geology, the
Laguerre-Knutson gold property near Larder Lake, Ontario including the Laguerre
shaft and underground workings and the Knutson surface gold zone and down plunge
extension.
In Beauchastel Township, Globex acquired a 60% interest in the Halliwell
copper-gold property which was flown using the AEROTEM system with our partner
Aurogin Resources Ltd., and a group of claims, the BM group, which fills in the
gap between the Halliwell and Beauchastel-Rouyn properties.
n) SUBSEQUENT TO YEAR END, GLOBEX ALSO ACQUIRED THE DUVERNY TOWNSHIP, QUEBEC,
DUVAY GOLD ZONE. A large low grade gold resource is indicated in previously
published literature. Globex intends to recompile the existing geological and
metallurgical data and decide if further work is warranted in the present gold
environment.
Globex has maintained most of its other properties but has and will drop some
low priority claims (ex.: Lyndhurst, Rouyn-Beauchastel, Bell Mountain) in order
to rationalize our massive land position in the context of the present
exploration environment.
Globex presently has 105 properties in 35 projects. Globex owns 100% of most of
its projects except the Wemindji Project in which its owns a 33 1/3 % interest,
the Duquesne West Project 50% and the Wood Gold Mine in which we have 50%
back-in-right. Fourteen (14) of our projects have significant zones of
mineralization delineated by diamond drilling.
In 2001, Globex intends, subject to available funds to drill select targets for
gold, platinum, palladium, rhodium, nickel and base metals. We intend to move
the Timmins Magnesite-Talc-Silica project forward and will continue to evaluate
and acquire new undervalued assets. Globex will also manage our joint ventures,
seek new joint ventures and will advance our present assets by diamond drilling,
geophysics, geological studies and compilations.
BUSINESS AND PRINCIPAL EXPLORATION PROPERTIES
Globex has three principal corporate objectives with respect to its mining
business. First, Globex seeks to acquire properties of high-quality exploration
merit at moderate prices and subsequently enter into joint ventures with respect
to such properties at higher prices. Globex attempts to minimize economic risks
in the exploration and development stages by having joint venture partners
undertake the more expensive drilling and development work as part of their
responsibility under the applicable joint venture. Second, Globex is focused on
the acquisition of properties with minable deposits that can be upgraded with a
view toward becoming producing properties. Finally, Globex will endeavor to
achieve its true market value in order to realize gains for its equity
shareholders.
6
RECLAMATION
Reclamation bonds have been posted by the Globex to secure clean-up
expenses if various properties are closed or abandoned.
EMPLOYEES
As of May 25, 2001, Globex has two full-time employees. The officers of
Globex, Mr. Stoch and Ms. Stoch, are paid consultants to Globex. Mr. Stoch,
through his consulting firm, was paid C$25,000 to May 31, 2001 while Dianne
Stoch received C$7,500 for the same period.
RISK FACTORS
IMMEDIATE NEED FOR CASH
Continued frugal management is essential to the Company's survival, because
of the prevailing negative mining and exploration financing markets. The
Company has required recent financing and is actively seeking additional cash to
ensure ongoing exploration activities.
OPERATING LOSSES, NEGATIVE CASH FLOW FROM MINING OPERATIONS AND FINANCING
RISKS
Historically, Globex has generated an operating loss and has never
generated cash flow from mining operations. As a result, the Company has relied
on the issuance of equity securities and funding from other sources to satisfy
cash requirements. Additional financing will be required for certain ongoing
Globex projects and to ensure sufficient working capital in the future. There
can be no assurance of obtaining funds from other sources in the future.
FLUCTUATIONS IN THE MARKET PRICE OF GOLD, MAGNESIUM, TALC AND BASE METAL
The profitability of gold , magnesium, talc and base metal mining
operations and thus the value of the mineral properties of Globex is directly
related to the market price of the various minerals. The market prices of gold,
magnesium, talc and base metals fluctuates widely and are affected by numerous
factors beyond the control of any mining company. These factors include
expectations with respect to the rate of inflation, the exchange rates of the
dollar and other currencies, interest rates, demand, global or regional
political, economic or banking conditions, and a number of other factors. As
the market prices of gold and base metals have declined dramatically, the value
of the mineral properties of Globex have also decreased dramatically, and
Globex might not be able to recover its investment in those interests or
properties. The selection of a property for exploration or development, the
determination to construct a mine and place it into production, and the
dedication of funds necessary to achieve such purposes are decisions that must
be made long before the first revenues from production will be received. Price
fluctuations between the time that such decisions are made and the commencement
of production can drastically affect the economics of a mine.
EXPLORATION RISKS
Mineral exploration is highly speculative and capital intensive. Most
exploration efforts are not successful, in that they do not result in the
discovery of mineralization of sufficient quantity or quality to be profitably
mined. The economic feasibility of any individual project is based upon, among
other things, the interpretation of geological data obtained from drill holes
and other sampling techniques, feasibility studies (which derive estimates of
cash operating costs based upon anticipated tonnage and grades of ore to be
mined and processed), the configuration of the ore body, expected recovery rates
of metals from the ore, comparable facility and equipment costs, anticipated
climatic conditions, estimates of labor productivity, royalty burdens and other
factors. As a result, it is possible that the actual operating cash costs and
economic returns of Globex's properties may differ materially from the costs and
returns estimated initially.
7
DEVELOPMENT AND OPERATING RISKS
The operations of Globex are also subject to all of the hazards and risks
normally incident to developing and operating mining properties. These risks
include: under capitalization, insufficient ore reserves; fluctuations in
production costs that may make mining of reserves not economical; significant
environmental and other regulatory restrictions; labor disputes; unanticipated
variations in grade and other geological problems; water conditions; surface or
underground conditions; metallurgical and other processing problems; mechanical
and equipment performance problems; failure of pit walls or dams; force majeure
events, including natural disasters; and the risk of injury to persons, property
or the environment, any of which can materially and adversely affect, among
other things, the development of properties, production quantities and rates,
costs and expenditures and production commencement dates.
UNCERTAINTY OF RESERVES AND MINERALIZATION ESTIMATES
There are numerous uncertainties inherent in estimating proven and probable
reserves and mineralization, including many factors beyond any company's
control, such as falling metal prices which could cause reclassification of
reserves to a mineral deposit. The estimation of reserves and mineralization is
a subjective process and the accuracy of any such estimate is a function of the
quality of available data and of engineering and geological interpretation and
judgment. Results of drilling, metallurgical testing and production and the
evaluation of mine plans subsequent to the date of any estimate may justify
revision of such estimates. No assurances can be given that the volume and
grade of reserves recovered and rates of production will not be less than
anticipated. Assumptions about prices are subject to greater uncertainty.
If current prices continue or if there are declines in the market prices of
gold, magnesium, talc, base metals or other precious metals, reserves or
mineralization may be rendered uneconomic to exploit. Changes in operating
and capital costs and other factors including, but not limited to, short-term
operating factors such as the need for sequential development of ore bodies and
the processing of new or different ore grades, may materially and adversely
affect reserves. Considering the sustained low prices for gold and base metals
and possible future fluctuations in the price of metals, some reserves will
most likely have to be reevaluated from reserves to mineral deposit.
COMPETITION
Globex competes with major mining companies and other natural resource
companies in the acquisition, exploration, financing and development of new
properties and projects. Many of these companies are more experienced, larger
and better capitalized than Globex. The competitive position of Globex depends
upon its ability to obtain sufficient funding and to explore, acquire and
develop new and existing mineral resource properties or projects in a successful
and economic manner. Some of the factors which allow producers to remain
competitive in the market over the long term are the quality and size of the ore
body, cost of production and operation generally, and proximity to market.
Globex also competes with other mining companies for skilled geologists and
other technical personnel.
REGULATION
Globex's activities in Canada and the United States are subject to various
federal, provincial, state and local laws and regulations governing prospecting,
development, production, labor standards, occupational health, mine safety,
control of toxic substances, other matters involving environmental protection,
and taxation. The environmental protection laws address, among other things,
the maintenance of air and water quality standards, the preservation of
threatened and endangered species of wildlife and vegetation, the preservation
of certain archaeological sites, reclamation, and limitations on the generation,
transportation, storage and disposal of solid and hazardous wastes. There can
be no assurances that all the required permits and governmental approvals can be
obtained on a timely basis and maintained as required. Globex believes that the
properties and operations in which it retains interests are currently for the
most part in material compliance with applicable laws and regulations. For a
discussion of proposals to amend the U.S. General Mining Law which may adversely
impact Globex's properties in the United States, see "Risk Factors - Proposed
Federal Legislation."
8
FOREIGN OPERATIONS
Globex conducts operations on numerous mineral properties in both Canada
and the United States. Globex's activities in the United States are subject to
the risks normally associated with conducting business in foreign countries,
including exchange controls and currency fluctuations, foreign taxation, and
other risks that could cause exploration or development difficulties or
stoppages or restrict the movement of funds. Globex's operations could also be
adversely impacted by laws and policies of the United States and Canada
affecting foreign trade, investment and taxation. These factors may result in
foreign currency exchange gains and losses due to the fluctuation in the
relative values of the currencies involved. Globex does not currently own any
mineral properties outside of Canada and the United States, although Globex may
acquire other foreign properties in the future.
DEPENDENCE ON KEY PERSONNEL
Globex is dependent on the services of certain key officers and employees,
including Globex's President, Jack Stoch. Globex does not have an employment
agreement with Mr. Stoch and does not carry key man life insurance on him.
Competition in the mining exploration industry for qualified individuals is
intense and the loss of any key officer or employee if not replaced could have a
material adverse effect on the business and operations of Globex.
NO OPERATING HISTORY
Globex is an exploration company and currently owns no mineral property
that has reached the production stage. There are no revenues from the sale of
metals and no operating history upon which to base estimates of future cash
operating costs and capital requirements.
REGULATORY COMPLIANCE, PERMITTING RISKS AND ENVIRONMENTAL LIABILITY
Exploration, development and mining activities are subject to extensive
Canadian and U.S. federal, state and local laws and regulations governing
exploration, development, production, taxes, labor standards, waste disposal,
protection and remediation of the environment, reclamation, historic and
cultural preservation, mine safety and occupational health, toxic substances and
other matters. The costs of discovering, evaluating, planning, designing,
developing, constructing, operating and closing a mine and other facilities in
compliance with such laws and regulations is significant. The costs and delays
associated with compliance with such laws and regulations could become such that
Globex would not proceed with the development or operation of a mine.
Mining in particular (and the ownership or operation of properties upon
which historic mining activities have taken place) is subject to potential risks
and liabilities associated with pollution of the environment and the disposal of
waste products occurring as a result of mineral exploration and production.
Insurance against environmental risks (including potential liability for
pollution or other hazards as a result of the disposal of waste products
occurring from exploration and production) is not generally available to Globex
(or to other companies within the mineral industry) at a reasonable price. To
the extent that Globex become subject to environmental liabilities, the
satisfaction of any such liabilities would reduce funds otherwise available to
Globex and could have a material adverse effect on Globex. Laws and
regulations intended to ensure the protection of the environment are constantly
changing, and are generally becoming more restrictive.
In the context of environmental permitting, including the approval of
reclamation plans, Globex must comply with standards, laws and regulations that
may entail greater or fewer costs and delays depending on the nature of the
activity to be permitted and how stringently the regulations are implemented by
the permitting authority. It is possible that the costs and delays associated
with compliance with such laws, regulations and permits could become such that
Globex would not proceed with the development of a project or the operation or
further development of a mine. Globex has made, and expects if required, to
make significant future expenditures to comply with permitting obligations and
environmental laws and regulations although no such requirements currently
exist.
9
LACK OF PRODUCTION EXPERIENCE
Globex principal mining-related activities to date have consisted of
acquiring, exploring, and developing mineral properties. The Company has never
been involved in operating mineral producing properties or producing or
extracting minerals. The expertise required for operation and extraction of
minerals is different from the expertise required for acquisition, exploration,
and development. There can be no assurance that Globex will ever be successful
in operating mines and producing minerals.
VOLATILITY OF STOCK PRICE AND LIMITED LIQUIDITY
Globex Common Stock is listed on TSE and CDNX. Globex Common Stock has
experienced significant volatility in price and limited trading volume over the
last several years. See "Comparative Market Price Data". There can be no
assurance of adequate liquidity in the future for Globex Common Stock.
TITLE TO PROPERTIES
The validity of unpatented mining claims, which constitute a significant
portion of the property holdings of Globex, is often uncertain, and such
validity is often subject to contest. Unpatented mining claims are unique
property interests in the United States and Canada and are generally considered
subject to greater title risk than patented mining claims or real property
interests that are owned in fee simple. The validity of unpatented mining claim
in the United States, in terms of both its location and maintenance, is
dependent on strict compliance with a complex body of federal and state
statutory and case law. In addition, there are few public records that
definitively control the issues of validity and ownership of unpatented mining
claims. Globex has not filed patent applications for many of its properties
that are located on federal public lands in the United States, and, under
proposed legislation to revise the General Mining Law, patents may be difficult
to obtain in the United States. Although Globex has attempted to acquire
satisfactory title to its properties consisting of unpatented mining claims in
the United States, Globex does not generally obtain title opinions until
financing is sought to develop a property, with the attendant risk that title to
some properties, particularly title to undeveloped properties, may be defective.
See "Risk Factors - Immediate Need For Cash".
10
ITEM 2. DESCRIPTION OF PROPERTIES
GLOBEX MINERAL EXPLORATION PROPERTIES
The following table is a guide to Globex's current portfolio of mineral
properties. The nature of the exploration business is such that this
information changes continually as new properties are identified and acquired,
and existing ones mature for development, are sold or are released.
AREA -
PROPERTY LOCATION COMMODITY HECTARES OWNERSHIP
- ---------------------- ------------ ----------------------- -------- ----------
PRINCIPAL EXPLORATION PROPERTIES
--------------------------------
Lyndhurst Property Quebec, Copper, Zinc 1877 100%
Canada
Poirier Mine Quebec, Polymetallic 267 100%
Canada
Bateman Bay Quebec, Gold, Copper 86 100%
Canada
Duquesne West Quebec, Gold 300 50%
Canada
Mooseland Nova Scotia, Gold 648 100%
Canada
Wood Mine Quebec, Gold 184 0% (1)
Canada
Nordeau Gold Quebec, Gold 298 100%
Canada
Timmins Magnesite-Talc Ontario, Magnesite, 304 100%
Canada Talc, Silica
LESS SIGNIFICANT PROPERTIES WITH PAST PRODUCTION
------------------------------------------------
Suffield Mine Quebec, Polymetallic 617 100%
Canada
Normetal Mine Quebec, Polymetallic 156 100%
Canada
Agnico Eagle Mine Quebec, Polymetallic 77 100%
Canada
Vauze Mine Quebec, Polymetallic 231 100%
Canada
Vulcan Property Washington, Gold 307 100%
U.S.
<FN>
(1) Globex does not currently own any portion of the Wood Mine property but it
has contractual rights to acquire a 50% interest in such properties upon
Globex's completion of certain exploration activities and expenditures.
11
OTHER EARLY/IMMEDIATE STAGE EXPLORATION PROPERTIES
------------------------------------------------------
AREA
PROPERTY LOCATION COMMODITY (HECTARES) OWNERSHIP
- ----------------- ------------------- ------------------- ---------- ----------
Rouyn-Beauchastel Quebec, Gold, Copper, Zinc 3717 100%
Canada
Buckell Lake Quebec, Gold 96 100%
Canada
Lac Simon Quebec, Gold 240 100%
Canada
Tarmac Quebec, Gold 64 100%
Canada
Victoria West Quebec, Gold 724 100%
Canada
Louvicourt Quebec, Polymetallic 1344 100%
Canada
Duvay Quebec, Gold 65 100%
Canada
Aumaque Quebec, Gold 63 100%
Canada
La Motte Quebec, Nickel, Platinum, 1606 100%
Canada Palladium, Rhodium
Preissac Quebec, Nickel 944 100%
Canada
Tut Quebec, Gold 160 100%
Canada
Wemindji Quebec, Diamond 34600 33a%
Canada
Smith-Zulapa Quebec, Gold, Copper-Nickel 418 100%
Canada
Halliwell Quebec, Gold 314 65%
Canada
Laguerre-Knutson Ontario, Gold 64 100%
Canada
Jacobie Copper British Columbia, Copper 64 100%
Canada
Bell Mountain Nevada, Gold 416 100%
U.S.
Sheep Mountain Arizona, Copper, Molybdenum 144 100%
U.S
____________________________
Globex believes its most significant mineral properties are as follows:
Timmins Magnesite-Talc, Nordeau Gold, Lyndhurst, Bateman Bay, Bell Mountain,
Duquesne West, Mooseland, Wood Mine, Sheep Mountain and Poirier Mine. Each of
these mining properties is described below. These descriptions include
information as to historic mining and exploration activity by third parties that
is believed to be reliable, but have not been confirmed by Globex. There can be
no assurance that any of these properties will contain adequate mineralization
to justify a decision to construct a mine. See "Risk Factors --Exploration,
Development, Mining and Processing Risks," "--Uncertainty of Reserves and
Mineralization Estimates," and other mining-related risks factors in the "Risk
Factors" section.
12
PRINCIPAL EXPLORATION PROPERTIES
LYNDHURST PROPERTY
The Lyndhurst property is located approximately 22 miles due north of
Rouyn-Noranda, Quebec. The property is accessed by driving 25 miles north on
provincial highway and a gravel road. There are 99 claims totaling 1,631
hectares plus one mining concession of 236 hectares. Globex has a 100%
ownership interest in the Lyndhurst property. On September 1, 1985, Globex
acquired 96 claims and one mining concession from Stoch Lt e, John Archibald,
Chris Bryan and Dianne Stoch in exchange for 750,000 escrowed shares of Globex
Common Stock, a 1.5% net smelter return and C$15,000. See "Management of
Globex-Interest of Management in Certain Transactions." Globex subsequently
acquired additional claims by staking while over the years acquiring and
dropping claims as a result of exploration results.
GEOLOGY. The Lyndhurst property covers a 10-kilometer strike length of the
Hunter Group. The property is mostly underlain by the Hunter and Kinoj vis
Volcanic Groups which belong to the southern part of the Archean Abitibi
lithotectonic Subprovince. Regional multiphase deformation affects all the
rocks and most of these two volcanic groups are metamorphosed to greenschist
facies. This group, composed mainly of felsic volcanics, has been intruded by
the Poularies and Palmarolle Batholiths, forming the heart of the Lac Abitibi
Antiform. The Hunter Group is believed to be older than the predominately mafic
Kinoj vis Group which is overlying in discordance to the south. The regional
east-west Lyndhurst Shear Zone crosses the southern half of the property and may
have been responsible for the shearing often noted at the contact point between
the two volcanic groups. A large mineralized alteration zone has been followed
down plunge from the mine to the west and is open at depth.
MINING HISTORY. The Lyndhurst property hosts the past copper producing
Lyndhurst Mine (reportedly 200,000 tons at 2% copper) and has been worked
piecemeal by numerous companies since its discovery in 1928. In 1955, Lyndhurst
Mining Co. Ltd. sank a 215 metre shaft with five levels and began limited
production after an extensive program of underground diamond drilling. Further
exploration, principally diamond drilling, was undertaken by various companies
until 1988 when Minnova conducted an input survey, deep EM survey, geological
and lithogeochemical sampling, mapping, stripping and diamond drilling. From
1991 to 1993, Noranda Exploration undertook mapping, stripping, induced
polarization and horizontal-loop electromagnetic surveys, and shallow and deep
diamond drilling.
In 1995, Globex drilled one hole on the Lyndhurst property. In January
1997, Amblin Resources Ltd. conducted a Gutierrez airborne electromagnetic
survey and a ground gravity survey. In June 1998, in drill hole LY98-5A, Amblin
discovered a new body of massive sulphide, including 18.79 metres of .45% Cu,
1.51% Zn and 12.7 gm/tonne Ag. Later in 1998, Amblin drilled two holes into
the new sulphide body, both of which intersected significant massive sulphide
mineralization:
HOLE NO. LENGTH (M) CU% ZN% AG G/T AU G/T
-------- ---------- ----- ----- ------ ------
LY98-5A 2.61 3.62 2.94 159.3 0.6
LY98-6 8.4 3.14 0.07 28.8 -
11.3 0.1 2.04 15.8 -
3.5 1.2 - - -
2.35 2.77 - 17.8 -
13
In 2000, Globex drilled two exploration holes and one deep hole, L00-8B to
test the up dip potential of the massive sulphide zone. The hole intersected
two sections of massive sulphides, 3.36 m and 2.98 metres. Included in the
zones are the following assays:
HOLE NO. LENGTH (M) CU% ZN% AG G/T
-------- ---------- ----- ----- ------
LY00-8B 2.9 0.49 0.13 53.8
0.46 0.35 6.77 33
2.98 0.19 5.16 35.6
Downhole geophysics in the five deepest holes shows the massive sulphide
zone extends as far as the system is able to detect both below the present
drilling and particularly strongly to the west.
POIRIER MINE
LOCATION. The Poirier Mine property consists of 10 claims covering 267
hectares straddling the Joutel and Poirier township line in northwest Quebec, 7
km to the west of the site of the former town of Joutel and covers the area of
the former Poirier Mining Concession #516. A 100% interest in claims was
purchased in 1998.The mine area is accessible from Amos (120 km south) or
Matagami (80 km northeast) by paved highway 109. A road extends westward for 25
km from highway 109 passing near the mine site as it connects to the Selbaie
Mine site.
HISTORY. The Poirier Mine was discovered with airborne geophysics by Rio Algom
in 1959. Following three and a half years of follow up work, including ground
based geophysical and geochemical surveys and an extensive diamond drilling
program, a 1860 foot three compartment shaft was sunk and two levels (1000 and
1150) were developed to carry out detailed work on an ore zone indicated by
surface diamond drilling.
In 1964, a decision was made to construct a mining and milling plant to
process 1500 tons per day of copper and zinc ore from the Poirier property. In
1965, an agreement was reached with Joutel Copper Mines to expand the Poirier
concentrator to handle up to 700 tons per day of their ore on a custom milling
basis.
Commercial production started in January 1966. Over a period of nine years
4,670,000 tons of copper ore grading 2.22% copper and 748,000 tons of zinc ore
grading 5.58% zinc were mined and milled to produce 94,580 tons of copper,
29,300 tons of zinc and 285,000 ounces of silver from the Poirier mine. The
shaft was extended to a depth of 2849 feet in 1968 and by the closure of the
mine in July 1975 some 63,000 feet of drifting on 18 levels had been completed.
Cut and fill, shrinkage and blast hole stoping methods were used to extract the
reserves with an estimated 60% of the production coming from cut and fill
stopes.
Official reserves reported to the government at closure were 763,000 tons
of copper ore at 2.20% copper and 716,500 tons of zinc ore at 10.44% zinc.
The infrastructure was dismantled and sold in late 1976. Mine archives are
reported to have been burnt except for those filed with the Quebec Ministry of
Energy and Resources.
Bonanza Metals Inc. (Forbex, Fieldex) acquired the property in 1986 and
undertook a program of compilation and shallow drilling. Bharti Engineering
Associates Inc. was hired in 1989 to prepare a pre-feasibility study which was
delivered in May 1990.
In 2000, Globex did several small geophysical grids and drilled two
exploration targets.
14
GEOLOGY-REGIONAL. The Poirier Mine property is located within the
Joutel-Poirier mining camp. The known sulphide deposits of the camp include the
Poirier, Joutel Copper and Explo-Zinc zone and occur on the east side of
calc-alkaline felsic volcanic sequence surrounding the Mistawack granitoid
batholith. The carbonated sulphide deposits of the Agnico-Eagle and Telbel gold
mines are located about 6 km to the north in what appear to be the top of the
same rhyodacitic rocks which consist of argillaceous tuffs, cherts, breccias and
associated rhyolites. These rocks are cut by numerous dioritic and felsic
dykes. The east-west trending, steeply dipping felsic horizons hosting the
deposits strike onto and across the Poirier Mine property.
GEOLOGY-LOCAL. The following description of the local geology is an
excerpt from a report titled "Mine de Poirier Rio Algom" written in 1974 of 1975
by Rio Algom personnel."The rock sequence on the Poirier property starts at the
north with granite and moves south through rhyolite then dacite and finally down
to porphyritic rhyolites towards the south of the property. This rock sequence
strikes approximately east-west and dips about 75 degrees to the south.
Although a large gabbro dyke cuts the property in a north easterly direction,
the most important dyke on the property is a large northwest trending complex
feldspar dyke which is epidote rich in the centre and siliceous at the edges and
which separates the East and Main Zones from the West Zone.
Three types of ore occur: ification zones hosting 1% to 20% disseminated
sulfides and locally up to 10% tourmaline.chalcopyrite rich zones of chlorite in
the central (main) zone; sphalerite rich massive pyrrhotite and pyrite with some
chlorite in the central (main) and West Zones with the same massive sulphides
containing copper rich mineralization in the West Zone; and chalcopyrite rich
zones in a mineralized cherty dacite formation in the lower zones of the mine.
The copper and zinc zones are fairly distinct from each other although they
carry a little copper and zinc respectively. The ore occurs toward the contact
of the dacite volcanic pile with the footwall rhyolite in folded and sheared
beds of chlorite. These chlorite beds are thought to have been originally fine
tuffs that were selectively and almost completely chloritized.
The mineralized zones at Poirier are volcanogenic lenses of massive
sulphides enriched in copper and/or zinc with typical zoning of metal
concentrations due to the hydrothermal mineral deposition."
ORE RESERVES. The original mine records are reported lost or burnt and no
core from the mine is available. The records used to calculate the mineral
reserve estimation of the West (copper and zinc) and Q (zinc) Zones were
reconstructed from microfilms of sections and logs deposited in the archives at
the Ministry of Mines and Resources by Rio Algom before closure. About 30% of
the original drill logs have been located and another 30% reconstructed from
information visible on drafted drill sections.
The reserves were largely developed by Rio Algom and a significant
percentage of the ore is located in pillars adjacent to stopes. The major zinc
lenses of the Q Zone were partially developed prior to shutdown but no mining
was carried out. The Q Zone zinc lenses occur as two and occasionally three
en-echelon lenses plunging to the east at 60-70 degrees and dipping to the south
at 75 degrees. Lense separation varies from a few feet up to 50 feet, widths
vary up to 100 feet over typical strike lengths of 100 to 200 feet. Vertical
continuity and continuity from section to section is difficult to establish
because of the intense folding even with closely spaced drilling (50 foot
centres).
A mineral inventory was calculated for the West and Q Zone using
reconstructed cross sections on 50 foot spacing. Polygons were created on the
cross sections using the bisectrices of between adjacent drill holes, geological
contacts and assay cutoffs. Each polygon was assigned a tonnage based on the
area of the polygon multiplied by the distance between sections (50 ft.) and the
assumed density of the rock (8.4 cu. ft. per ton for massive sulphides).
An undiluted mineral inventory was calculated for the West and Q Zones
grading 1.24% Cu and 8.77% Zn and totalled 1,400,863 tons. In addition to the
mineral inventory shown on Table I, some 300,000 tons at 8.06% Zn are contained
in the East Lens and 534,000 tons at 2.5% Cu in the Main Lens. Gold values were
not recorded but previous production indicated a grade of over 0.5 oz per ton
gold.
From an exploration point of view, the property has excellent depth
potential as there has been no exploration below the 2500 foot level.
Similarly, more drilling is needed above the 850 foot level and about known ore
shoots. Previous exploration was directed principally at outlining copper ore
and zinc bodies were not a priority. Gold was not systematically analysed for.
15
BATEMAN BAY
The Bateman Bay property is centered on the Gouin Peninsula, which
separates Lac Chibougamau from Lac aux Dor s and is located about eight
kilometres east-southeast of the town of Chibougamau, Quebec. Access is provided
by three miles of paved provincial highways and then three miles of local paved
roads in the immediate area of the town of Chibougamau, Quebec or by boat on Lac
aux Dores. The property consists of two unpatented mining claims on Canadian
crown land, totalling 86 hectares in size.
GEOLOGY. The Bateman Bay property is located within the Dore Lake Complex,
a layered intrusive made up of anorthosite, gabbro, pyroxenite, granophyre and
transition rock. A minor band of mafic volcanics and related sediments crosses
the center of the property in an east-west direction. The north boundary of
this volcanic horizon is marked by the Dor Lake Fault, a brittle structure
generally thought to be a primary ore controlling feature for the Chibougamau
Camp. A northwest trending shear zone runs from the area of the Bateman Bay
shaft to the Jaculate Mine to the northwest. This structure hosts the "A" Zone.
Two additional zones termed the "B" and "C" occur within parallel, en echelon,
northwest trending shears to the northeast.
MINING HISTORY. Norlake Mining Corporation completed 3 drill holes
totalling 337 metres and an electromagnetic survey on the area of the property
in 1936. During 1955-1956, 64 drill holes were completed for a total of 12,641
metres. This was accompanied by magnetometer, electromagnetic and resistivity
surveying. During 1957, an additional 108 holes totalling 23,753 metres were
completed. An underground development program was initiated and completed by
1960. This consisted of shaft sinking to a depth of 160 metres and the
development of three levels, the lowest being at 152 metres from which 33
underground drill holes were completed. Two chalcopyrite bearing structures were
defined by this work.
During 1964-1968, Patino Mining Corporation Limited ("Patino") completed an
additional nine drill holes. Subsequently, the shaft was deepened and the
property was linked to the Jaculet Mine at the 274 meter level. In 1970, Patino
completed one additional surface drill hole and an additional 18 underground
holes on the 274 meter level for a total of 695 metres. The Bateman Bay shaft
is reported to have been used by Patino as production shaft for the Jaculet
Mine. Globex has no rights to minerals in the Jaculet Mine.
In 1991, after compiling all previous geological work, drilling 9 holes for
2,966 metres and re-interpreting the results, Robex Resources Inc. announced
that gold and copper mineralization was present in the "A" Zone to a depth of
811 feet. Subsequently, the Province of Quebec rehabilitated the mine site and
ultimately revoked the then-existing mining concessions.
Except for lateral development and a small bulk sample, no mining
production is known to have occurred on the Bateman Bay property. The 810-foot
deep Bateman Bay Shaft has been capped, the headframe and all mine buildings
have been removed and the site has been contoured to acceptable standards.
In 1997, a grid was cut over the property and detailed E.M. and
magnetometer surveys were completed.
DUQUESNE WEST
The Duquesne West property is located 25 kilometres northwest of the town
of Rouyn-Noranda, Quebec, and four kilometres from the town of Duparquet in
Abitibi West County. The property consists of 20 contiguous unsurveyed claims,
totalling 289 hectares. Access to the mine is by highway for approximately 22
miles.
Globex acquired a 50% interest in the property pursuant to an agreement
dated December 19, 1986 with Jacques Viau. In order to acquire the interest,
Globex issued 200,000 shares of Globex common stock to Mr. Viau, granted him a
1% net smelter return and agreed to expend C$600,000 on the property (a
condition which was subsequently waived).
The remaining 50% interest in the property is owned by G oconseils Jack
Stoch Lt e ("Stoch Lt e"), which is controlled by Jack Stoch, the President of
Globex.
16
GEOLOGY. The Duquesne West property lies on the east-west striking
southern limb of the Lepine Lake regional syncline within the Abitibi Greenstone
Belt. The underlying rocks are all Precambrian in age and range from older
volcanics of the Kinoj vis Group followed by Clericy Sediments, younger
volcanics of the Blake River Group and finally sediments of the Duparquet Group
(Temiscaming-type). A major period of folding and faulting post-dated the final
period of deposition and resulted in the development of the aforementioned
Lepine Lake Syncline and other folds in the area as well as the Main
Porcupine-Destor Break, a large regional gold-bearing structure which stretches
east from the Timmins camp into Destor Township in Quebec. This was followed
closely by the development of subsidiary splays and parallel shears and the
intrusion of acid porphyries, granites and aplites and later basic dikes and
lamprophyres, primarily along the faults.
MINING HISTORY. The Duquesne West property was originally staked in
1923-1925 followed by extensive stripping, trenching and limited diamond
drilling. In the 1930s, 38 diamond drill holes were drilled, totalling
approximately 12,200 feet, and the Shaft and South Zones were discovered.
Fifteen more diamond drill holes totalling 9,929 feet were drilled from
1944-1949. From 1973-1982, extensive diamond drilling and geophysics were
conducted on the property. In 1983, Claremont Mines Limited drilled an 80-foot
shaft and took a 425-ton bulk sample from Shaft Zone. In 1990 and 1991, Noranda
Exploration conducted diamond drilling (13 holes) and did geological and
geophysical exploration on the property.
In 1994, Globex undertook extensive geophysical coverage of the claims and
drilled seven short holes totalling 440 metres. Between 1994 and 1997, Santa
Fe has conducted a further 78,000 feet of drilling. In 1996, Santa Fe also
performed a real-time induced polarization survey and located an additional
anomaly located between the Shaft Zone and the Fox Zone. Santa Fe drilled
another hole in February 1997.
Numerous intersections of gold mineralization were intersected with values
reaching 1.56 oz per ton Au over 35 feet. Santa Fe (now Newmont) outlined
numerous gold zones and delineated a significant geological resources in wide
spaced drilling.
MOOSELAND
The Mooseland property is located approximately 70 kilometres northeast of
Halifax, and about 1 kilometre south of the village of Mooseland, Nova Scotia.
Access to the Mooseland property is via about 70 miles of paved highway and
about 30 miles along paved road. The Mooseland property consists of 40 claims
in Halifax County, Nova Scotia.
Globex holds a 100% interest in the property, which it acquired by taking
over the $37,000 provincial environmental bond from Acadia Minerals Corporation
in November 1996. The property is subject to a 1.5% net smelter return royalty,
divided equally among three parties, namely 160880 Canada Inc., 160881 Canada
Inc. and 160891 Canada Inc., all of which companies are owned by prospectors who
initially sold the property.
No significant exploration of development work has been conducted on the
Mooseland property since 1989.
GEOLOGY. The Mooseland property is underlain by both the Goldenville and
Halifax sedimentary formations of the Maguma Group. The lower southwest corner
of the property is underlain by granitoids of the Musquodoboit Pluton. The
Maguma group sediments are arranged about a shallow east plunging fold
structures called the Mooseland-Gegogan Anticline. Fold limbs appear to dip on
average from 50 to 75 either to the north or south depending on location
relative to the fold axes. Locally beds may steepen to subvertical and are
subhorizontal at fold hinges. A sericitic shear zone is developed at the hinge
of this structure.
The anticline structure is the primary controlling feature of the property.
Mineralization consists of auriferous quartz veins developed on the flanks and
in the crest of this structure. Two main areas of mineralization have been
identified on the property. These are termed the West and East zones, and are
separated by a young northwest trending brittle structure called the Tangier
River Fault. Gold mineralization is associated with quartz veining and occurs
within the zone as coarse free grains and irregular masses ranging from
pin-points to match-head in size. Gold grain distribution is reported to be
irregular within the quartz veins. The veins in the West and East zones consist
of 85% to 95% massive quartz, white to pale grey in color. The veins contain 5%
to 10% wall rock inclusions and minor sulfides.
17
The West Zone covers a strike extent of 3,000 feet in an east-west
direction. The western extent of the zone abuts against the local granite
intrusive. The east end of the zone is cut off by the northwest trending
Tangier Fault. A short fault block segment of the zone was found several hundred
feet north of this cross-cutting fault and was mined in the Brunswick Mine
during the late 1890s. Overburden is said to average five feet in depth on the
West Zone, and the crest of the fold is well exposed in a trench immediately
west of the highway that transects the property. At least eleven separate
quartz veins have been identified on both limbs of the fold. Gold is
interpreted to occur in small shoots that plunge at 10 to 30 to the east. The
individual veins average from three inches to three feet and occasionally are up
to eight feet in width. The East Zone was discovered by Acadia during a 1987
diamond drilling program. The area is covered by 50 to 100 feet of glacial
drift, in the form of a drumlin. The East Zone is located approximately 1,100
feet north-northwest of the West Zone. The two zones are separated by a wide
zone of multiple northwest faults. The axis of the anticline strikes 40 to 50
to the north near the crosscutting fault zone, which curves to an east-west
altitude at the eastern limits of the zones. The fold appears to be tighter
than at the West Zone and shows a greater degree of faulting and gouge.
Developed quartz veins appear to be fewer in number, but, wider and higher in
grade.
MINING HISTORY. During the period of 1860-1870, production began on the
Furnace lead on the Mooseland property, a stamp mill was erected, the district
was opened up to road access, several shafts were developed on the Furnace,
Cummings and Specimen leads, and the Irving belt and Little North lead were
discovered. In 1884, gold bearing boulders were found on the west bank of the
Tangier River and the Bismark lead was discovered in 1890. The Mooseland Gold
Mining Company carried out minor production until 1895. From 1896 to 1914,
minor sporadic work was carried out on the Cummings lead.
From 1937 to 1938, nine diamond drill holes were completed by Compagnie
Belgo-Canadien de Prospection Miniere Limit e while testing a 1,200 foot strike
length of the anticlinal hinge and the Irving and Cummings leads. In 1974,
Stuart Avril completed a geological mapping program. From 1978 to 1981, Cuvier
Mines Inc. carried out surface sampling, trenching and diamond drilling. A
total of 21 drill holes for a drilled footage of 1,150 feet were completed.
In 1987, Acadia Mineral Ventures Limited ("Acadia") had an induced
polarization survey conducted which covered the western mineralized zone.
Acadia completed 65 diamond drill holes for a total length of 43,946 feet.
Three areas of gold mineralization were recognized based on past exploration
activities and the Acadia work. These were termed the Main Mooseland, North
Mooseland and Otter Pond areas. Sampling in the Main Mooseland area indicated
the presence of mineralization in seven separate zones. Initial drill results
for the Otter Pond area were reported to be higher in grade and thicker in width
than most intersections obtained in the Main Mooseland area. By March 1988,
Acadia had completed 135 drill holes totalling approximately 104,000 feet, of
which 85 drill holes totalling 68,398 feet were completed on the West Zone.
In 1988, Hecla Mining Company of Canada ("Hecla") in partnership with
Acadia and Biron Bay Resources initiated an underground exploration program
relating to the Mooseland property. Work completed by Hecla in 1989 consisted
of site preparation, temporary surface plant set-up, establishment of a 24-foot
concrete shaft collar, installation of a 60-foot high steel headframe and a
skid-mounted double drum hoist; and shaft sinking to a depth of 410 feet. A
small shaft station was established at the 160-foot level and a full station was
cut at 320 feet. A stratigraphic study re-logged 76 Acadia drill holes and
refined the geological interpretation. In May 1989, while shaft sinking was in
progress, Hecla suspended its work. The planned underground lateral development
and bulk sampling program was not carried out. The 410-foot deep Hecla Shaft
has been capped. A steel headframe is still in place as well as the portable
steel building which serves as the hoist room.
WOOD MINE
The Wood Mine property is located 50 kilometres east of the city of
Rouyn-Noranda, Quebec, and 3 kilometres east of the village of Cadillac, Quebec.
The property is 184 hectares in size and consists of eight contiguous,
unpatented mining claims. The property straddles paved provincial highway and
is reached by driving 1.5 miles east of the village of Cadillac, Quebec.
Globex had a limited right to form a 50% joint venture with another company
if Globex brings it into an exploration program.
18
GEOLOGY. The property is located on a southern flank of the Cadillac
Syncline. The main lithologies are Archean in age and are arranged as a
subvertical to steep south dipping, overturned homocline which strikes
approximately east-west. These lithologies, from north to south, consist of
greywackes and minor bands of lean magnetite iron formations of the Cadillac
Group, mafic and felsic volcanics of the Piche Group and greywackes of the
Pontiac Group. An east-west trending, narrow, 15 to 50 meter thick subvertical
band of carbonate-talc-chlorite schists cuts through the Piche and Cadillac
groups at a low angle. This is historically referred to as the Cadillac Break,
a shear structure of crustal proportions.
Gold mineralization associated with the Cadillac Break structure occurs in
three separate forms: (I) narrow, shallow south dipping
quartz-tourmaline-sulfide-scheelite-native gold veins which are typically 2 to
20 centimetres in thickness and occur as stacked sets adjacent to the Cadillac
Break, mainly in Piche Group volcanics; (ii) lenticular sulfide zones, 0.1 to
1.5 meter thick, consisting of 1% to 30% pyrite and subvertical quartz veining
developed at either or both margins of a series of three or four banded magnetic
iron formation units; and (iii) biotitic silic
Currently there are two main areas of gold mineralization recognized on the
property. The "W" Zone (Wood Zone) consists of a series of stacked sulfide ore
and quartz-tourmaline vein zones which are developed in the area of the Wood
Shaft, to depth and on strike to areas which have previously been mined. The
"P" Zone (Pandora Zone) consists of silicified, biotitic sediments and a mafic
tuff. The "P" Zone straddles the property's eastern boundary with the former
Pandora Mine and resembles zones which have been investigated on the Pandora and
Tonawanda properties to the east.
MINING HISTORY. The Wood Mine property was originally acquired around
1927. Three drill holes were completed under option by Canadian Enterprises,
Limited in 1934. Wood-Cadillac diamond drilled during 1936 and put down a
three-compartment shaft to 522 feet in 1937. From 1937 to 1938, lateral work
was carried out on the 250, 375 and 500 foot levels. Several ore bodies were
developed. A 200 ton-per-day mill was built in 1939. In 1941, a 500 foot deep
winze was sunk from the 500 foot level in an area 400 feet west of the shaft,
with lateral work carried out on the 625, 750 and 875 foot levels and a station
cut at 1,000 feet. This lower level development of ore did not come on stream
soon enough to feed the mill at capacity, forcing mine closure in 1942. Total
production from the upper three levels was reported to be 27,213 ounces of gold
and 4,519 ounces of silver from 179,400 tons of milled ore. In 1942, 431 pounds
of hand cobbed scheelite grading 20.05% WO3 was also shipped. During 1945,
Central Cadillac Mines, Limited completed rehabilitation on both the Wood Mine
property and the nearby Central Cadillac Mine. In 1946, underground work began
again and the two mines were linked. Capacity of the Wood mill was increased to
350 tons per day and milling resumed in 1947. The Wood shaft was deepened to
875 feet in 1948. Milling stopped in 1949 due to lagging ore development and
drops in grades. Production from the consolidated properties for the 1947-1949
period was reported to be 32,479 ounces gold and 4,167 ounces silver from
257,254 milled tons.
The consolidated property lay idle until 1965, when 5 drill holes were
completed on an area east of the Wood Shaft. In 1969, Gold Hawk Exploration
Limited drilled 8 holes for a total length of 5,522 feet, testing a 700 foot
strike length of mineralization located 700 feet east of the shaft. In 1973,
Hawk Mines Limited drilled between the Wood Shaft and the west boundary. In
1975, the property was optioned by Gallant Gold Mines Limited which later
conducted diamond drilling totalling some 2,000 metres and a very low frequency
electromagnetic surveying program. During 1984, La Compagnie de Gestion Miniere
Louvicourt Ltee completed 19 drill holes totalling 4,930 metres in the areas of
the Wood Shaft (W Zone) and eastern boundary (P Zone). These claims lapsed and
were re-staked in 1995. Amblin Resources Inc. drilled nine widely spaced holes
in 1997, eight of which encountered visible gold. However, the option was
terminated due to a lack of funds. Globex has managed to retain its back in
right through negotiations with the underlying prospector group.
As for the current state of the property, the Wood Shaft is capped and the
headframe and buildings have been removed.
19
NORDEAU GOLD
LOCATION. The Nordeau Gold deposits are located on two claim blocks.
The eastern block consists of 16 claims totalling 243.6 hectares and the western
block consist of 5 claims totalling 54.4 hectares. Title to several claims are
subject to verification of claim post locations.
The 21 claims are located in Range 1, southeastern Vauquelin Township,
Quebec approximately 50 km east southeast of Val d'Or, NTS 32C/3. The property
is easily accessible from paved highway 117. At a point, approximately 6 km
south of the town of Louvicourt, an all season gravel road leads eastward to the
Chimo Gold Mine and Mill as well as lumbering operations further to the east.
Numerous secondary seasonal roads lead southward from this road providing access
to both claim blocks.
GEOLOGY. The Nordeau gold zones occur in the Archean, Trivio Formation
which consists of both sedimentary and basic volcanic units. Gold
mineralization is associated with a shear corridor believed to be the eastern
extension the prolific Cadillac-Larder, gold localizing, break.
In the mineralized areas, the Trivio Formation consists of a band of basic
volcanics (Chimo Volcanic Unit) up to 400 metres wide which separates two
sedimentary horizons composed principally of greywacke, siltstones and lesser
conglomerate. A magnetite iron formation traverses both claim blocks within the
northern sedimentary unit and previous calculations based upon diamond drilling
have delineated approximately 90 million tons of +25% iron bearing material.
Metamorphism is within the limits of the greenschist facies but is near the
amphibolite metamorphic facies. Stratigraphy trends N295 , dips are roughly 70
to the north and tops face southward. Lineations, crenulations and small folds
within the shear zones, plunge, give or take, 80 to the west.
Gold mineralization occurs in shear zones within the basic volcanic unit
(Chimo Volcanics), in sediments at or near the northern volcanic-sedimentary
contact and in association with magnetite iron formations within the northern
sedimentary unit.
The gold is associated with quartz veins of various widths and is usually
in the form of free gold at both the megascopic and microscopic scale.
Associate sulphide minerals are common in particular, pyrite, arsenopyrite and
pyrrhotite, varying from 1% to 5% in quartz veins and from 20% to 50% in
association with sections the magnetite iron of formation.
Various drill programs have delineated gold bearing quartz vein systems on
both the eastern and western blocks. The most recent gold resource figures were
published in 1990 by the previous owner Vauquelin Mines Ltd. and are as follows;
Nordeau East Zone: - 178,428 tons grading 0.194 oz/ton Au probable.
- 202,061 tons grading 0.175 oz/ton Au possible.
Nordeau West Zone: - 110,700 tons grading 0.154 oz/ton Au probable.
- 198,000 tons grading 0.160 oz/ton Au possible.
Total probable & possible resource: 689,259 tons @ 0.173 oz/ton Au.
20
TIMMINS MAGNESITE-TALC PROJECT
LOCATION. The property consist of 17 patented surface rights claims and
19 mineral claims situated in the south half of Deloro Township, Porcupine
Mining District, 13 km southeast of the City of Timmins, Ontario. Access is via
Pine Street in Timmins which extends southward into northern Ogden Township. A
gravel bush road trends eastward from Ogden Township just below the township
line (Odgen - Montjoy) into Adams Township. After the road crosses the regional
powerline, a branch trends northward directly across the centre of the property
in Deloro Township.
GEOLOGY AND METALLURGY. The area is underlain by Archean intrusive and
extrusive units and sediments including large masses of altered ultramafic
(serpentinized peridotites) and at least one east-west diabase dyke. Strikes
are generally east-west, dips near vertical or steeply to the north. The
magnesite-talc-quartz rock unit is exposed on surface as large areas of outcrop
10 to 20feet above a sand plain floor. The property contains a large body of
magnesite, talc and quartz reported to be in the order of +100,000,000 million
tonnes in the limited area previously tested by widely spaced drill holes. The
potential orebody is made up of roughly 54% magnesite (MgCO3), 27% talc and 16%
quartz with 3% accessory iron oxides. Pilot plant flotation tests indicate that
65-70% of the magnesite can be recovered in a flotation concentrate which is 99%
acid soluble. Iron has replaced some magnesia in the crystal lattice of the
magnesite resulting in a high iron product. The iron can be removed by chemical
processes.
The carbonate concentrate is calcined to produce a caustic calcined
magnesia having the following chemical properties:
Magnesia (MgO) 92.5%
Iron Oxide (Fe2O3) 6.0%
Silica (SiO2) 1.0%
Lime (CaO) 0.1%
Miscellaneous 0.4%
Extensive bench pilot research has confirmed that the iron in the caustic
calcined MgO can be reduced from 6.0% to 0.4% (Fe2O3) or lower, by a simple
chlorine roast. The chlorine roast will remove the iron as volatilized ferric
chloride (FeCl3) itself a saleable chemical byproduct used in water
purification.
The analysis of the low iron product is:
Magnesia (MgO) 98.3%
Iron Oxide (Fe2O3) 0.4%
Silica (SiO2) 0.8%
Lime (CaO) 0.1%
Miscellaneous 0.4%
Talc is recovered as a first stage in the flotation process, and after
cleaning and re-cleaning in additional flotation cells, is dried and processed
by fine grinding to produce a high purity, fibre free, low arsenic talc,
suitable for the paper, paint and cosmetic industries. The 30-35% of the
magnesite lost to tailings in the second stage of the flotation process can be
chemically recovered by dissolving in hydrochloric acid and burning the MgCl2 to
produce high purity magnesia (MgO). Testing has indicated that the tailing from
the flotation make an excellent feed which will produce a high purity product
(99% MgO) with iron and calcium each less than 0.1%.
Also, the quartz in the rock can be recovered in the flotation process and
possibly sold as Flux to local smelters.
21
LESS SIGNIFICANT PROPERTIES WITH PAST PRODUCTION OR RESOURCES
SUFFIELD MINE
The Suffield Mine property is located four miles southwest of the city of
Sherbrooke, Quebec and is accessible by secondary provincial highway. The claim
group consists of nine unpatented mining claims, covering 617 hectares. The
property is owned 100% by Globex, which acquired the ground by purchase and
staking. A 5% net profit interest royalty is held by Waldo Investments Inc. No
significant exploration activity has occurred on the Suffield Mine property
since 1990 and Globex has no immediate exploration plans.
GEOLOGY. The Suffield Mine property is situated on the northwest flank of
the Sherbrooke Anticline. This structure is overturned to the northwest and is
dissected by series of thrust faults. There are two distinctive lithological
formations in the area; the Ordovician-aged Ascot Formation of felsic to
intermediate volcanics and schists and, the Siluro-Devonian-aged Francis Group
of sediments. Both units are intruded by small ultramafic, granite, diorite and
lamprophyre bodies. The property's stratigraphic sequence, from west to east,
consists of a large band of phyllites, followed by a chert, siltstone and iron
formation sedimentary unit and finally a capping of thick sequence of sericite
schists and porphyritic rhyolite. Disseminated and volcanic massive sulfide
mineralization occurs at the sediment-volcanic contact. Mineralization consists
chiefly of sphalerite and pyrite and appears to be controlled in part by rolls
and dips in the contact surface.
MINING HISTORY. The Suffield Mine property contains two past mineral
producers -- the Suffield King and Howard Mines -- and several prospects -- the
Silver Star, North Howard and No.4 Shaft zones. The property experienced
intermittent mining activities over the period from 1863 to 1956. Until 1949,
mining consisted of small scale production from prospect pits and shafts. From
1949 to 1956, Ascot Metals Corporation developed the Suffield Mine No.3 Shaft.
Production reportedly totalled 600,000 tons grading 6.5% zinc, 0.8% copper,
0.45% lead, 2.5 opt silver, and 0.007 opt gold. The mine closed prior to the
completion of the No.4 Shaft, which saw little or no production. SOQUEM carried
out geological mapping, geochemical and geophysical surveys and diamond drilling
in 1968 and 1969. In 1972, Lynx Canada Exploration drilled three short holes
which reportedly confirmed previously defined Suffield work.
In 1985, Copper Stack Resources Ltd. completed geophysics and drill
follow-up on the Silver Star zone. A total of 2,116 feet in six drill holes were
put down. An induced polarization survey was carried out by Spartan Mining Ltd.
and the holdings were geologically reviewed by G oconseils Jack Stoch Lt e in
1987. The property was optioned in 1989 by Noranda Exploration Company, Ltd.,
which completed a program of combined geophysical (magnetometer and very low
frequency electromagnetic), geochemical and geological surveying, trenching and
diamond drilling for a total of 2,632 metres in 19 drill holes. During 1990, an
additional 1,627 metres of drilling was completed with four drill holes.
VULCAN PROPERTY
The Vulcan property, also known as Gold Dike, is located in Ferry County,
Washington, two miles from the Canada-U.S. border and four miles southwest of
Grand Forks, British Columbia. Access to the property is provided by five miles
of unpaved county roads and an unpaved drivable trail. Globex Nevada owns 100%
of 8 patented claims, 100% of 34 unpatented claims, and 11 unpatented claims
optioned (with no cash payments or work requirements).
Globex Nevada acquired the Vulcan property on August 18, 1995 pursuant to
an agreement with N.A. Degerstrom, Inc. and Gold Express Communications Inc. for
a purchase price of one dollar and the assumption of all liabilities in
connection with the property. To date, Globex has paid more than $38,000 with
respect to liabilities incurred by the previous owners. In addition, Globex has
posted a $75,000 bond with the State of Washington with respect to certain
environmental matters.
22
In 1996, Globex conducted exploration on the Vulcan property in the process
of reassessing the property's geologic potential. During 2000, select sampling
was done south of the previously known gold zone on a previously known copper
dyke. Significant values were returned for platinum and palladium as well as
copper. Globex has since signed an option agreement with Latitude Minerals
Corporation.
GEOLOGY. With respect to the geology of the Vulcan property, Permian to
Triassic sedimentary and volcaniclastic rocks crop out near Danville in the
northern portion of the Republic graben. Near the Gold Dike mine, interbedded
units of argillite, siltite, limestone, and quartzite have been recrystallized
to the hornblende hornfels metamorphic facies by later intrusion of Creataceous
(?) alkalic rocks of the Shasket Creek complex. The Shasket Creek alkalic
complex was originally mapped as two phases -- monzonite to shonkinite (with
possible nepheline syenite), and syenite porphyry (a more leucocratic phase with
orthoclase phenocrysts).
MINING HISTORY. Early exploration and mining took place near the turn of
the century on the Vulcan property. Small amounts of high grade copper ore were
hand-cobbed from the Comstock Vein and shipped directly to the smelters.
Exploration for gold on the property and surrounding areas took place on an
intermittent basis. This consisted of various forms of sampling and drilling,
and at least two small audits into the Gold Dike Vein. The property came under
the control of Vulcan Mountain Mining Company, which commenced to mine the Gold
Dike by open-pit methods. Approximately 150,000 tons of ore were reportedly
extracted and processed using cyanide heap leaching to extract the gold from the
ore with an average recovered grade of approximately 0.10 opt gold and 0.15 opt
silver. Diamond drilling on the property has occurred intermittently since
1963. During 1996, Globex completed geological mapping and induced polarization
surveys on the claims, as well as 14 diamond drill holes completed for a total
length of 7,272 feet.
BELL MOUNTAIN
The Bell Mountain property is located in Churchill County, Nevada,
approximately 63 kilometres southeast of Fallon and there are 26 lode claims
Bureau of Land Management land. The property is most easily accessed from Reno,
Nevada via paved highway to a point 10 miles east of Frenchman's Station and
then nine miles of gravel road to the mine. The claims are owned 100% by Globex
Nevada. All claims are unpatented and are located on federal land.
Globex Nevada acquired the property on November 14, 1994 pursuant to an
agreement with N.A. Degerstrom, Inc. ("Degerstrom") for a purchase price of one
dollar. Pursuant to the agreement, Degerstrom retained a 2% net smelter return
royalty on all metals, minerals, ores or other materials mined or taken from the
property. Globex Nevada has the option to buy-out the net smelter return by
paying $167,000 to Degerstrom within 90 days of commencement of commercial
production.
GEOLOGY. The host rocks on the Bell Mountain property are siliceous
pyroclastic rhyolites and the two major vein systems identified on the property
can be classified in the volcanic-hosted epithermal quartz-adularia deposits.
The veins contain gold and silver as electrum and silver as chlorargyrite and
argentite. The vein systems on the property have been identified over a total
area of 2.34 km2 with only 0.09 km2 tested by drilling to an average depth of 25
metres, leaving a large area open to exploration.
MINING HISTORY. The property was originally staked in 1914. In 1918,
Tonopah Mining Co. conducted underground development and sampling. The property
was then mainly idle until some sampling was conducted in 1948. It then fell
idle again until the 1970s when a 270-meter long adit was driven. In 1978, Bell
Mountain Mining Co. did a substantial sampling program including driving the
180-meter Varga adit. A geology professor wrote a summary on all the existing
data in 1978.
In 1984, Santa Fe Mining Co. drilled 51 reverse circulation holes
principally in the Varga area including 10 holes in the Sphinx area. In 1985,
Alhambra Mines reopened the underground workings and resampled and mapped them.
Metallurgical tests were undertaken and 18 drill holes completed in the Spurr
adit area. Between 1988 and 1993, Degerstrom drilled 104 holes, completed a
technical feasibility study and permitted the property for open-pit mining and
heap leaching.
In 1996, ECU completed a first phase drill program on the Bell Mountain
property. ECU drilled five holes in three zones for 2,388 feet. The property
was also mapped and an airborne magnetic survey was completed.
23
SHEEP MOUNTAIN
The Sheep Mountain property is located 50 miles northwest of Phoenix,
Arizona and can be reached by paved interstate to the Castle Hot Springs
turn-off, from which gravel roads give ready access to all parts of the claim
group. The property consists of 20 unpatented lode claims covering
approximately 356 acres on federal land in Yavapai County, Arizona. The
property is owned 100% by Globex Nevada which acquired the property by outright
sale.
Globex has not yet conducted any significant exploration work on the Sheep
Mountain property and is in the process of looking for joint venture partners.
Globex believes that this property warrants further definition drilling.
GEOLOGY. The Sheep Mountain property is underlain by Yavapai Series
Precambrian biotite schists which are intruded by granite or diorite of the
Bradshaw Complex. The Laramide-age(?) Sheep Mountain Stock intrudes the
Precambrian lithologies. The property is capped by a 1,500 to 2,000 foot thick
cover of Tertiary volcanics and lesser sediments.
Mineralization is related to the Sheep Mountain Stock intrusion. Primary
hypogene, porphyry copper-molybdenum style mineralization consists principally
of pyrite and lessor quantities of chalcopyrite and molybdenite and trace
galena, sphalerite, magnetite and specularite. This sulfide mineralization is
widespread and underlies an area of three to four square miles. An
enriched-copper supergene blanket is developed at upper reaches of the sulfide
zone. It is assumed that this area of enrichment is tabular in shape. The oxide
zone usually consists of native copper, copper oxides and carbonates (mainly
chalcocite, bornite and covellite) with minor pyrite and molybdenite. In
addition, disseminated chalcocite may be present in minor amounts in the
hypogene mineral zone for several hundred feet below the supergene blanket.
Mineralization is based on four widely spaced drill holes along a 5,500
foot by 1,100 foot wide northwest trending zone, that appears to follow the Cow
Creek Fault. The average zone thickness is 90 feet and occurs at an average
depth of 1,975 feet. Primary sulfide mineralization reportedly underlies the
oxide zone to an average thickness of 390 feet.
MINING HISTORY. The original claims in the Sheep Mountain area were staked
in the early 1960s. Staking was centered on mineralized Precambrian strata
exposed in two small windows showing through Tertiary volcanics in the Sheep
Mountain West area. From 1963 to 1966, Phelps Dodge Corporation completed
44,000 feet of drilling in 38 rotary/core holes testing adjacent to these zones
of mineralization. In 1966 and 1967, Bear Creek Mining Company completed 3,620
feet of drilling in two holes without success. From 1969 to 1981, Utah
International Inc. conducted geological mapping and 21,241 feet of drilling in
eight rotary/core holes.
In 1992, Orcana Resources Ltd. commissioned a geological review and a
conceptual study to estimate the costs of establishing surface plant capital and
operating costs. Subsequently, a preliminary economic evaluation on the project
was completed. Several mining and processing alternatives were investigated. It
was suggested that a ramp accessed, conveyor-based production model using
conventional flotation processing was the most economically attractive mining
method. Diamond drilling of two holes for 5,150 feet later in 1992 confirmed
the geological assessment of the mineralized zone.
OTHER EARLY/IMMEDIATE STAGE EXPLORATION PROPERTIES
ADDITIONAL EARLY STAGE EXPLORATION PROPERTIES
In addition to the properties described above, Globex owns 18 other early
stage exploration properties (up to 75 claim groups in the Wemindji property)
all of which are referenced in the "Globex Mineral Properties" table at the
beginning of this section. Globex has varying degrees of information on these
properties. These properties are in the early stages of exploration and any
future potential production from these properties is highly speculative at this
point in time.
24
ITEM 3. LEGAL PROCEEDINGS
As of the date of this statement, Globex is not a party to any legal
proceeding.
ITEM 4. CONTROL OF REGISTRANT
The following table sets out, as of May 25 , 2001 the name of each person
who, to the knowledge of the senior executives of the Company, exercises control
or direction over more than 10% of the issued and outstanding common shares:
NUMBER OF PERCENTAGE OF
NAME AND MUNICIPALITY OF RESIDENCE COMMON SHARES COMMON SHARES
---------------------------------- ------------- -------------
Geoconseils Jack Stoch Ltee *
Rouyn-Noranda, Quebec 2020486 16.5
---------------------------------- ------------- -------------
* GEOCONSEILS JACK STOCH LTEE IS WHOLLY-OWNED BY JACK STOCH, THE PRESIDENT
AND A DIRECTOR OF THE COMPANY.
As of May 25, 2001 the following sets out the ownership of Common Shares,
the registrant's only voting shares, by all directors and officers of Globex as
a group.
All Directors & Officers (3 persons) own 2,599,133 common shares, 21.3% .
At May 25, 2001, there were 12,211,785common shares issued and outstanding.
ITEM 5. NATURE OF TRADING MARKET
COMPARATIVE MARKET PRICE DATA
GLOBEX COMMON STOCK. Globex Common Stock is listed on the TSE and CDNX and
trades under the stock symbol "GMX." Globex delisted from the Montreal Stock
Exchange December 12, 1997 and listed on the CDNX on September 9, 2000. The
following table sets forth certain information as to the sale prices per share
of Globex Common Stock as traded on the TSE , ME and CDNX for each calendar
quarter since January 1997. Globex's fiscal year ends on December 31 of each
year.
Fiscal Year Globex Common Stock Price per Share (In Canadian dollars)
- ------------------ ------------------------------------------------------------
2001 (to April 30) First Quarter Second Quarter Third Quarter Fourth Quarter
- ------------------ ------------- -------------- ------------- --------------
High 0.25 0.30 N.A. N.A.
- ------------------ ------------- -------------- ------------- --------------
Low 0.16 0.25 N.A. N.A.
- ------------------ ------------- -------------- ------------- --------------
2000
- ------------------
High 0.90 0.55 0.40 0.40
- ------------------ ------------- -------------- ------------- --------------
Low 0.09 0.21 0.24 0.13
- ------------------ ------------- -------------- ------------- --------------
1999
- ------------------
High 0.34 0.29 0.30 0.25
- ------------------ ------------- -------------- ------------- --------------
Low 0.12 0.16 0.15 0.10
- ------------------ ------------- -------------- ------------- --------------
1998
- ------------------
High 2.10 1.90 1.00 0.65
- ------------------ ------------- -------------- ------------- --------------
Low 1.30 1.30 0.28 0.12
- ------------------ ------------- -------------- ------------- --------------
1997
- ------------------
High 6.00 5.95 4.85 3.75
- ------------------ ------------- -------------- ------------- --------------
Low 3.60 4.50 4.75 1.51
- ------------------ ------------- -------------- ------------- --------------
2,713,387 Globex shares are owned by 706 record holders in the U.S. That
represents 22% of the total share issuance to date.
25
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There are no governmental laws, decrees or regulations of Canada that would
prohibit the export or import of capital, or affect the remittance of dividends,
interest or other payments to a non-resident holder of Globex Common Stock,
other than withholding tax requirements (see "Certain Federal Income Tax
Consequences"), the Investment Canada Act ("ICA") in certain circumstances where
a non-Canadian has acquired control of Globex in violation of the ICA, laws
relating to national security, insofar as the holder of Globex Common Stock is
from a country on an export control list and other laws applicable only under
extraordinary conditions, such as insolvency, or other laws applicable to a
restricted class of persons, such as a party to a merger in respect of which a
prohibition or similar order has been rendered.
Except as stated above, there are no limitations imposed under the laws of
Canada, the Province of Quebec or by the constituent documents of Globex on the
rights of a non-resident to hold or vote Globex Common Stock.
The ICA, which became effective on June 30, 1985, regulates the acquisition
by non-Canadians of control of a Canadian business enterprise. In effect, the
ICA requires review by Investment Canada, the agency which administers the ICA,
and approval by the Canadian government, in the case of an acquisition of
control of a Canadian business by a non-Canadian where: (I) in the case of a
direct acquisition (for example, through a share purchase or asset purchase),
the assets of the business are C$5,000,000 or more in value; or (ii) in the case
of an indirect acquisition (for example, the acquisition of the foreign parent
of the Canadian business), the Canadian business has assets of C$50,000,000 or
more in value or the Canadian business represents more than 50% of the assets of
the original group and the Canadian business has assets of C$5,000,000 or more
in value. Review and approval are also required for the acquisition or
establishment of a new business in areas concerning "Canada's cultural heritage
or national identity" such as book publishing, film production and distribution,
television and radio production and distribution of music, and the oil and
natural gas industry, regardless of the size of the investment.
As applied to an investment in Globex, three methods of acquiring control
of a Canadian business would be regulated by the ICA: (I) the acquisition of
all or substantially all of the assets used in carrying on the Canadian
business; (ii) the acquisition, directly or indirectly, of voting shares of a
Canadian corporation carrying on the Canadian business; or (iii) the acquisition
of voting shares of an entity which controls, directly or indirectly, another
entity carrying on a Canadian business. An acquisition of a majority of the
voting interests of an entity, including a corporation, is deemed to be an
acquisition of control under the ICA. An acquisition of less than one-third of
the voting shares of a corporation is deemed not to be an acquisition of
control. An acquisition of less than a majority, but one-third or more, of the
voting shares of a corporation is presumed to be an acquisition of control
unless it can be established that on the acquisition the corporation is not, in
fact, controlled by the acquirer through the ownership of voting shares. For
partnerships, trusts, joint ventures or other unincorporated entities, an
acquisition of less than a majority of the voting interests is deemed not to be
an acquisition of control.
In 1988, 1994 and 1995, the ICA was amended to relax the restrictions of
the ICA on "Americans," "NAFTA-investors" and "WTO-investors." As a result of
these amendments, except where the Canadian business is in the cultural, oil and
gas, uranium, financial services or transportation sectors, the threshold for
direct acquisition of control by investors from a country that is a member of
the World Trade Organization and other foreign investors acquiring control of a
Canadian business from an investor from a country that is a member of the World
Trade Organization has been raised from $5 million to $150 million of gross
assets (adjusted annually to account for inflation), and indirect acquisitions
are not reviewable.
In addition to the foregoing, the ICA requires that all other acquisitions
of control of Canadian businesses by non-Canadians are subject to formal
notification to the Canadian government. These provisions require a foreign
investor to give notice in the required form, which notices are for information,
as opposed to review, purposes.
26
ITEM 7. CANADIAN FEDERAL INCOME TAX INFORMATION FOR
UNITED STATES RESIDENTS
The following is a summary of the principal Canadian federal income tax
provisions applicable to United States security holders of Globex Common Stock.
This summary is based upon the provisions of the Income Tax Act (Canada) (the
"Canadian Tax Act") and, for those persons who are residents of the United
States ("U.S. Residents") for the purposes of the Canada-U.S. Income Tax
Convention (1980) including all protocols thereto (the "Convention"), the
provisions of the Convention. The summary is based upon the current provisions
of the Canadian Tax Act and their regulations, all proposed changes announced by
the Minister of Finance as of this date, counsel's understanding of Revenue
Canada administrative positions, and the provisions of the Convention as of this
date. No assurance can be given that any of the proposed changes will be
enacted as set out. No assurance can be given that changes announced after this
date could result in different income tax consequences than those described
hereunder.
This summary assumes that (I) Globex Common Stock is and continues to be
listed on a Canadian prescribed stock exchange, which is currently the case,
(ii) the holder does not carry on any business in Canada, and (iii) the holder
owns the shares as capital property.
The Canadian Tax Act subjects persons who are not resident in Canada to
Canadian income tax on any gain arising from the disposition of "taxable
Canadian property." 50% of capital gains are included in computing income which
is taxed at ordinary Canadian income tax rates. Taxable Canadian property
includes shares of a corporation listed on a prescribed Canadian stock exchange
where the non-resident and/or persons with whom he does not deal at arm's length
owns 25% or more of the issued shares of any class of the capital stock of the
corporation during the five-year period preceding the sale. Any person not
resident in Canada who does not own such a percentage of shares of a class of
Globex shares will not be subject to Canadian income tax on any capital gain
arising on a disposition of Globex Common Stock. This applies to persons who
are U.S. Residents or persons who are not resident in Canada and who are not
U.S. Residents.
Should a U.S. Resident hold such percentage of Globex shares, no liability
to pay Canadian income tax on any capital gain will arise unless the person is
an individual who was resident in Canada for 120 months or more during any
20-year period prior to sale and who was resident in Canada at any time during
the 10 years prior to sale. For purposes of the Canadian Tax Act, the tax basis
of Globex Common Stock acquired pursuant to the Merger will be its fair market
value at the Effective Time of the Merger.
Canada does not consider a "limited liability company" to be a U.S.
Resident but it considers a corporation that elects to be an "S" corporation to
be a U.S. Resident.
Globex is required to withhold, pursuant to the Canadian Tax Act, 25% of
any dividends paid or credited or deemed to be paid or credited to a
non-resident person. The Convention reduces this withholding rate to (I) 5% of
the gross dividend if the beneficial owner is a U.S. Resident corporation that
owns at least 10% of the voting shares of Globex, and (ii) 15% for all other
U.S. Residents. The general withholding rate will apply to residents of the
United States who are neither Canadian residents nor a U.S. Resident.
27
ITEM 8. SELECTED CONSOLIDATED FINANCIAL INFORMATION
The consolidated financial data as of December 31, 1996 , 1997, 1998, 1999
and 2000 and for the years then ended were derived from the historical Globex
Consolidated Financial Statements. The selected financial data should be read
in conjunction with "Globex Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations" and with the "Globex Consolidated
Financial Statements" included elsewhere in this document.
FOR THE YEAR ENDED DECEMBER 31,
OPERATING DATA:
- ----------------------
(CANADIAN GAAP) 2000 1999 1998 1997 1996
-------------- ----------- ------------- ------------ ------------
Revenue $ 61,946 $ 124,378 $ 64,969 $ 868,319 $ 358,415
Net income (loss) (398,610) (313,732) (23,709,326) (1,308,126) 56,894
Net income (loss) per
Common Share (0.03) (0.03) (2.23) (0.20) 0.01
Cash dividends per
Common Share - - - - -
OPERATING DATA:
- ----------------------
(U.S. GAAP) 2000 1999 1998 1997 1996
-------------- ----------- ------------- ------------ ------------
Revenue $ 61,946 $ 124,378 $ 64,969 $ 868,319 $ 358,415
Net loss(1) (398,610) (313,732) (23,709,326) (1,456,383) (1,451,010)
Net loss per share(2) (0.03) (0.03) (2.35) (0.24) (0.28)
Cash dividends per
Common Share - - - - -
AS OF DECEMBER 31,
BALANCE SHEET DATA:
- ----------------------
(CANADIAN GAAP) 2000 1999 1998 1997 1996
-------------- ----------- ------------- ------------ ------------
Working capital $ 205,093 $ 737,844 $ 913,240 $ 2,584,408 $ 1,511,621
Total assets 2,283,561 2,425,528 2,898,325 32,418,316 3,223,446
Long-term debt - - - - -
Shareholders' equity 1,977,793 2,371,903 2,696,435 26,169,236 3,144,114
BALANCE SHEET DATA:
- ----------------------
(U.S. GAAP) 2000 1999 1998 1997 1996
------------- ----------- ------------- ------------ ------------
Working capital $ 205,093 $ 737,844 $ 913,240 $ 2,584,408 $ 1,511,621
Total assets 627,400 769,367 1,242,164 30,762,155 1,715,542
Long-term debt - - - - -
Shareholders' equity 321,632 715,742 1,040,274 24,513,075 1,636,210
____________________
(1) Under U.S. GAAP, an impairment of $ - (1999 $ - ) has been recorded against
the carrying value of the mineral properties, reducing the carrying values
to zero.
(2) Under U.S. GAAP, the calculation of primary income (loss) per share is
based on the number of issued and outstanding Common Shares, excluding
shares held in escrow as contingent consideration, plus Common Share
equivalents, including outstanding options and warrants, if they would have
a dilutive effect. Consequently, under U.S. GAAP, the weighted average
number of shares outstanding would be:
FOR THE YEAR ENDED DECEMBER 31,
2000 1999 1998 1997 1996
---------- ---------- ---------- --------- ---------
Weighted average
number of shares
outstanding 12,136,686 12,032,664 10,097,064 6,121,952 5,197,118
28
CURRENCY
Unless otherwise specified, all dollar amounts in this report are expressed
in Canadian dollars.
-----------------
EXCHANGE RATES
The following table sets forth certain exchange rates based on the noon
buying rate in New York City for cable transfers as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"). Such
rates are set forth as United States dollars per Cdn$1.00 and are the inverse of
rates quoted by the Federal Reserve Bank of New York for Canadian dollars per
US$1.00.
YEARS ENDED DECEMBER 31,
------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
(US$PER CDN$1.00)
High for period 0.6903 0.6925 0.7105 0.7487 0.7513
Low for period 0.6483 0.6535 0.6341 0.6945 0.7235
End of period 0.6571 0.6925 0.6504 0.07 0.7301
Average for period (1) 0.6732 0.6744 0.6714 0.722 0.7329
<FN>
(1) The average of the exchange rates for each month in the applicable
period.
DIVIDENDS
The Company has not, during the past previous five fiscal years, declared
or paid any dividends on its Common Shares.
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of consolidated results of operations and
financial condition should be read in conjunction with historical financial
consolidated statements and notes thereto appearing elsewhere in this document.
Factors that could cause actual results to differ materially from year to year
include, among others, general economic conditions, the results of equity and
debt financing efforts, fluctuations in the price of metals, unanticipated
geological or metallurgical problems, delays in exploration or development
activities, personnel problems and other risk factors detailed in "Risk
Factors."
All dollar references in this section refer to CANADIAN dollars unless
otherwise specified.
INTRODUCTION
Globex does not own any mineral properties that are in the production stage
and thus does not have any revenue from the sale of minerals. Exploration
companies operate at a loss and so depend on external financing to survive. To
date, Globex's only sources of funds have been (i) the receipt of payments from
joint venture partners and other mining companies that hold options to earn
interests in certain mineral properties owned by Globex (ii) gain on sale of
marketable securities and (iii) interest income. Consequently, Globex has
limited financial resources, and is particularly vulnerable to general impacts
of the mining industry such as fluctuations in the price of metals, as well as
other market risks.
In early 1999, GCC's share of the Tonkin Springs Project, its only asset,
was sold thereby mitigating some major expenses. GCC is currently inactive.
Globex may withstand the unfavorable conditions of the markets, despite the
current negative environment in the mineral exploration industry. See "Risk
Factors".
29
CONSOLIDATED RESULTS OF OPERATIONS
FISCAL 2000 COMPARED TO FISCAL 1999. For the fiscal year ended December
31, 2000 ("fiscal 2000"), Globex recorded a net loss of ($398,610), an increase
of $84,878 over the net loss of ($313,732) for the fiscal year ended December
31, 1999 ("fiscal 1999"). Of this, the whole amount or ($398,610) resulted from
Continuing Operations.
On February 26,1999, the Company sold its 60% interest in the mining
properties of the Tonkin Springs Venture limited Partnership, held through Gold
Capital Corporation, for cash proceeds of $1,276,190 and common shares of
Sudbury Contact Mines worth $200,000. The purchaser also assumed all
obligations of the Company regarding its 60% interest arising after February 8,
1999 under any assumed contracts and permits.
The sale of this asset resulted in a favourable variance in fiscal 2000
compared to 1999's loss from discontinued operations of ($135,438).
The loss in fiscal 2000 resulted from the normal costs associated with running
an exploration company, with the exception of the write-down of marketable
securities of ($122,500). Exploration companies do not make profits until a
discovery is brought to production.
Total income in fiscal 2000 decreased 50% from $124,378 in fiscal 1999 to
$61,946.
Interest income decreased 24% from $30,761 in fiscal 1999 to $23,292 in
fiscal 2000 due primarily to diminishing funds on deposit. Income from option
payments in fiscal 2000 decreased by 100% to nil from $91,430 in fiscal 1999.
In fiscal 1999, Globex's only source of option payments was Amblin at $91,430.
Zero gain on the sale of marketable securities in fiscal 2000 resulted in a
decrease of 100% over 1999, with a $2,187 gain on marketable securities. Other
revenue in 2000 was $38,654, an increase of 100% over 1999 at nil.
Total consolidated operating costs before taxes in fiscal 2000 increased
53% to $452,716 from $295,602 in fiscal 1999, primarily due to an increase in
write down of marketable securities of $122,500, professional services of
$63,100 and office and general of $25,300 offset by favourable variances in
other and outside services of $62,500.
General and administrative expenses of $294,786 for fiscal 2000 increased
by 12% from $263,770 for fiscal 1999. 2000 professional services are up $63,100
over 1999 offset somewhat by outside services which decreased $31,100 or 30%
from 1999. Travel and automotive and wages and benefits increased 86% in 2000
to $18,285 from $9,855 in 1999. At $9,993 telephone is 51% higher in fiscal
2000 than in 1999 at$6,601. The general and administrative expenses for fiscal
2000 include approximately $90,000 and $106,800 for 1999, paid to Globex's
officers, Jack Stoch and Dianne Stoch, for consulting services including office
rental, electricity, equipment usage etc. See "Management of
Globex-Compensation of Directors and Officers; -Interest of Management in
Certain Transactions."
Interest expense continues at nil in fiscal year 2000.
Amortization increased to $7,103 in fiscal 2000 from $7,091 in fiscal 1999.
Write-down of marketable securities increased 81 times from $1,500 in 1999
to $122,500 in 2000 Sudbury Contact shares, acquired as part of the proceeds
from the sale of GCC's interest in the Tonkin Springs Project, and Ameridex
shares, were allowed to reflect current market conditions.
1999 COMPARED TO FISCAL 1998. For the fiscal year ended December 31, 1999
("fiscal 1999"), Globex recorded net loss of ($313,732) a decrease of
$23,395,594 over the net loss of ($23,709,326) for the fiscal year ended
December 31, 1998 ("fiscal 1998"). Of this amount, ($135,438) was due to Loss
on operations of the Joint Venture while a loss of ($178,294) resulted from
Continuing Operations.
On February 26,1999, the Company completed its sale of its 60% interest in
the mining properties of the Tonkin Springs Venture Limited Partnership, held
through Gold Capital Corporation, for cash proceeds of $1,276,190 and common
shares of Sudbury Contact Mines worth $200,000. The purchaser also assumed all
obligations of the Company regarding its 60% interest arising after February 8,
1999 under any assumed contracts and permits.
30
The sale of this asset resulted in many favourable cost variances in 1999
over 1998.
The loss before discontinued operations in fiscal 1999 resulted from the
normal costs associated with running an exploration company. No profit can be
anticipated before a discovery is brought to production.
Total income in fiscal 1999 increased 91% to $124,378 from $64,969 in
fiscal 1998.
Interest income in fiscal 1999 decreased 22% to $30,761 from $39,551 in
fiscal 1998 due primarily to diminishing funds on deposit. Income from option
payments in fiscal 1999 increased by 480% to $91,430 from $15,750 in fiscal
1998. In fiscal 1999 as was true in 1998, Globex's only source of option
payments was Amblin at $91,430 and $15,750 respectively. A gain on the sale of
marketable securities of $2,187 was realized in 1999, an increase of 100% over
1998, which had a nil gain on marketable securities. Other revenue in 1999 was
nil, a decrease of 100% over 1998 at $9,668.
Total consolidated operating costs before taxes in fiscal 1999 decreased
75% to $295,602 from $1,168,589 in fiscal 1998, primarily due to a decrease in
exploration expenditures and abandoned claims written off of $323,930,
management fees and professional services.
General and administrative expenses of $263,770 for fiscal 1999 decreased
by 65% from $754,855 for fiscal 1998. 1999 management fees and professional
services are down $482,822 over 1998 offset somewhat by outside services which
increased $71,612 or 233% over 1998. Travel and automotive and wages and
benefits decreased 86% in 1999 to $9,855 from $68,778 in 1998. The general and
administrative expenses for fiscal 1999 include approximately $106,800 and
$32,263 for 1998, paid to Globex's officers, Jack Stoch and Dianne Stoch, for
consulting services including office rental, electricity, equipment usage etc.
See "Management of Globex-Compensation of Directors and Officers; -Interest of
Management in Certain Transactions."
Interest expense decreased 100% from $1,509 in 1998 to zero in 1999.
Amortization decreased to $7,091 for fiscal 1999 from $8,760 for fiscal
1998.
Write-down of marketable securities decreased by 97% to $1,500 in 1999 from
$56,294 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL. Globex's primary source of liquidity has been from the issuance
of Globex Common Stock. In August 1995, a net amount of $2,200,000 was raised
through a private placement of 1,100,000 shares of Globex Common Stock at a
price of $2.00 per share. These funds were utilized for exploration and general
corporate purposes. In December 1995, another private placement raised $300,000
for exploration. In addition to sales of Globex Common Stock, Globex has raised
some capital through the exercise of options and warrants to purchase Globex
Common Stock. In July 1997 approximately $15,892,650 was raised through the
issuance of Special Warrants convertible to Globex Common Stock, primarily to
finance the purchase of Gold Capital Corporation, to finance loans to GCC to
perform work at the Tonkin Springs Project.
In April 1997, Gold Capital as borrower, signed a term sheet with Standard
Bank London Limited and Standard New York Inc. for Standard to provide
US$13,000,000 in senior debt and a US$10,000,000 secured hedging line for
development of the Tonkin Springs Project. This offer of financing was
withdrawn due to, amongst other things, the falling price of gold and thus,
severely reduced the viability of the Tonkin Springs Project. The subsequent
sale of GCC's share of the Tonkin Springs Project resulted in a nominal cash
inflow but more importantly dealt with all obligations of the project which,
when coupled with disintegrating gold prices, were onerous.
Globex has also funded its operations and exploration activities through
the receipt of option payments from joint venture partners and other mining
companies that hold options to earn interests in certain mineral properties
owned by Globex.
In fiscal 2000, Globex had nil option income. In 1999, Amblin, no longer
in the mining exploration business, was Globex's only optionee contributing
$91,380 to income. In fiscal 1998 Globex 's only option payment $15,750 also
came from Amblin while in the 1997 fiscal year, total revenue exceeded $868,000
as detailed below. In fiscal 1996 and 1995, Globex received $267,351 and
$59,388 respectively in option payments. In addition, Globex earned interest
income in fiscal 2000 of $23,292, 1999 of $30,761, $39,551 in fiscal 1998,
$226,600 in fiscal 1997and $91,064 in fiscal 1996. In fiscal 2000, other income
contributed $38,654.
31
In recent years, Globex has been essentially free of significant debt with
the exception of 1997, when Globex 's debts included $2,102,692 reclamation
reserve and minority interest in joint venture of $3,483,522. Not including
accounts payable and accrued liabilities, Globex had no outstanding debt in
2000, 1999, 1998 and 1996.
GCC, as a separately administered corporate body, had certain budgetary
obligations related to the Tonkin Springs Project as well as possible
environmental liabilities with annual holding costs of the Tonkin Springs
Project estimated at approximately US$2.0 million including a monthly advance
profit payments of US$60,000 due to US Gold starting September 1998 plus other
payments of approximately US$120,000 due in August 1998 and an additional
minimum advance royalty payment of $150,000 due January 1999. These
obligations were mitigated with the sale of the Tonkin Springs project. GCC is
currently inactive.
In fiscal 2000, other income of $38,654, interest income of $23,292 and
t-bill withdrawals of $347,849 satisfied Globex's liquidity requirements.
Operating activities utilized $323,113 in cash in fiscal 2000.
At December 31, 2000, Globex had current assets of $486,776 compared to
current liabilities of $281,683 for a current ratio of 2 to 1. This compares to
current assets of $775,224 and current liabilities of $37,380 at December 31,
1999, resulting in a ratio of 20 to 1.
During fiscal 1999, liquidity needs were met from: (i) interest income of
$30,761 and (ii) $91,430 in income from receipt of option payments and (iii)
$2,187 gain on sale of marketable securities. Globex's operating activities
employed approximately $288,511 of cash during fiscal 1999.
During 1998, liquidity needs were essentially met through the sale of GCC's
share of the Tonkin Springs Project.
Due to the increasingly unstable and depressed price of metals and
generally worsening market conditions for financing of exploration companies, in
the first quarter 1998 five properties optioned by Globex to other companies
were returned to Globex. Not only did this mean lost revenue but along with the
properties, the cost of holding these properties reverted to Globex. Because of
this negative market, no new options were entered into.
Under the Tonkin Springs Joint Venture, Gold Capital Corporation, as
distinct from Globex which had no direct obligations, had certain contractual
obligations noncompliance of which would likely result in GCC losing all
interest in the Tonkin Springs Project. For example, GCC was informed by US Gold
that it believed GCC must fund $470,000 to cover six months of operations at the
project. Annual holding costs of the Tonkin Springs Project were approximately
US$2.0 million with monthly advance profit payments of US$60,000 due to US Gold
starting September 1998 including other payments of approximately US$120,000
due in August 1998 with an additional minimum advance royalty payment of
$150,000 due January 1999.
Operations at the Tonkin Springs Project were governed by the Mining
Venture Agreement, between TSVLP and GCC. Pursuant to the terms of the Mining
Venture Agreement, GCC, separate and distinct from the parent Globex, was the
manager of operations at the Tonkin Springs Project, and GCC was solely
obligated to fund those operations through the commencement of commercial
production. In return for complying with that funding obligation, GCC was
entitled to recover a disproportionate amount of cash flow from the production
and sale of minerals at the Tonkin Springs Project up to the Recoupable Amount.
Annual holding costs of the Tonkin Springs Project were approximately
US$2,000,000 with monthly payments of US$60,000 due to US Gold, starting
September 1998 including other payments of approximately US$120,000 due in
August 1998 and an additional minimum advanced royalty payment of $150,000 due
January 1999.
Loans by Globex to GCC increased by $2,918,267 in 1998 for a cumulative
total of $12,119,175 at year end, prior to write-offs.
From late 1997, Globex and GCC had been making every effort to obtain
additional financing to bridge the period prior to the completion of positive
column test results and the release of loan dollars from Standard Bank to Gold
Capital with no success. When Standard Bank withdrew its offer to finance the
Tonkin Springs Project in any shape or form, because of deteriorating market
conditions, it became apparent that the project had to be sold quickly. Due to
the onerous payments coming due, GCC lacked the necessary maneuverability in
negotiations with Sudbury Contact. GCC is currently inactive.
32
Globex's current cash position calls for severe rationalization of
properties, to allow for maintenance of core properties. Metal markets have
continued to remain depressed and financing is difficult. Shortage of cash is a
serious impediment to Globex's survival.
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
DIRECTORS AND OFFICERS OF GLOBEX
NAME AND POSITION
WITH COMPANY PRINCIPAL OCCUPATION DIRECTOR SINCE
- ----------------------- ---------------------------------- --------------
JACK STOCH President of the Company 1983
Rouyn-Noranda, Quebec
President and director
DIANNE STOCH Private Consultant 1985
Rouyn-Noranda, Quebec
Secretary-treasurer and
director
CHRIS BRYAN Mining Analyst 1983
Whitby, Ontario
Director
JOEL SCHNEYER President 1997
Parker, Colorado Mercantile Resource Finance, Inc.
Director (advisor - mining sector)
IAN ATKINSON Private Consultant 1987
The Woodlands, Texas
Director
For those directors exercising control or direction over more than 10% of
the issued common shares of the Company, see "Principal Shareholders" - ITEM 4.
Control of Registrant.
The Company is not required to have an Audit Committee and does not have an
Executive Committee.
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
The following table sets out all annual and long term compensation for
services in all capacities to the Company for the fiscal year ended December 31,
2000, of the Chief Executive Officer. Other than as set out below, the Company
did not pay any remuneration to its officers during the fiscal year ended
December 31, 2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ------------------------------
AWARDS PAYOUTS
--------------------- -------
RESTRICTED NUMBER OF
NAME AND OTHER ANNUAL STOCK OPTIONS LTIP ALL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS GRANTED PAYOUTS OTHER
- ------------------------ ---- ------ ----- -------------- ---------- --------- ------- -----
2000 - - $60,000(1) - - - -
Jack Stoch
President and 1999 - - $60,000(1) - - - -
Chief Executive
Officer 1998 - - - - - - -
- ------------------------ ---- ------ ----- -------------- ---------- --------- ------- -----
(1) The foregoing amounts were paid to a company controlled by Mr. Stoch as
consulting and or retainer fees.
33
OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FISCAL YEAR
There were no grants of options made to the Chief Executive Officer during
the fiscal year ended December 31, 2000.
There were no exercises of stock options during the fiscal year ended
December 31, 2000 by Mr. Stoch and the fiscal year-end value of unexercised
options on an aggregated basis at year-end was zero.
REMUNERATION OF DIRECTORS
The Company did not pay any cash remuneration to its directors during the
fiscal year ended December 31, 2000.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
The Company has granted the following options:
NUMBER OF
OPTIONS GRANTED
EXERCISE PRICE PER ----------------
EXPIRY DATE SHARE 2000 1999
- --------------------- ------------------- ------- -------
TO SENIOR EXECUTIVES:
April 2, 2002 $ 0.30 215,000 215,000
December 5, 2004 0.3075 189,000 189,000
October 10, 2002 0.25 225,000 225,000
- --
February 27, 2001 0.25 5,000 5,000
February 6, 2002 0.25 55,000 55,000
TO CONSULTANTS:
December 21, 2003 0.25 60,000 60,000
December 5, 2004 0.3075 25,000 25,000
February 4, 2000 5.00 - 50,000
October 10, 2002 0.25 10,000 10,000
May 19, 2005 0.21 100,000 -
November 21, 2005 0.13 100,000 -
TO EMPLOYEES:
February 21, 2003 0.25 5,000 5,000
May 19, 2005 0.21 5,000 -
------- -------
994,000 839,000
------- -------
During the year Nil (1999 - Nil) options were exercised, 205,000 (1999 - Nil)
were issued, and 50,000 (1999 - 45,456) expired.
34
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The year the company made payments to a shareholder, Dianne Stoch and a
company controlled by a shareholder, Jack Stoch, for management services,
accounting services and office space totaling $90,000 (1999 - $106,800).
PART II
ITEM 14. DESCRIPTION OF SECURITIES REGISTERED
Not applicable.
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES
Not applicable.
PART IV
ITEM 17. FINANCIAL STATEMENTS
The following documents are attached as part of this Annual Report on Form
20-F.
DESCRIPTION OF DOCUMENT
Consent of Independent Auditors
Auditor's Report
Consolidated Balance Sheets At December 31, 2000 and 1999
Consolidated Statements Of Loss and Deficit For The Years Ending
December 31, 2000, 1999 and 1998
Consolidated Statements of Changes in Financial Position for The Years
Ending December 31, 2000, 1999 and 1998
Notes to the Consolidated Financial Statement
Consolidated Schedule of Mineral Properties and Deferred Exploration Costs
ITEM 18. FINANCIAL STATEMENTS
Not applicable.
35
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are filed as part of this Annual Report on Form
20-F.
Exhibit No. Description of Document
- ----------- -------------------------
3.1 Articles of Continuance of Globex, dated November 4, 1985. (1)
3.2 By-Law No. IA of Globex, dated January 27, 1987. (1)
3.5 Consent of McKechnie Moore.
10.1 Agreement concerning Lyndhurst Property, dated September 1, 1985,
among Globex, Stoch Ltee, J. Archibald, C. Bryan, and D. Stoch,
as amended on October 1, 1986. (1)
10.4 Stock Purchase Option Agreement, Agreement Not to Sell Shares, and
Agreement to Vote Shares for Merger, dated as of January 16,
1997, between Globex and U.S. Gold. (1)
10.5 Asset Purchase Agreement between Tonkin Springs Holdings Inc. and
Gold Capital Corporation and Sudbury Contact Mines Limited as of
February 26, 1999. (2)
____________________
Notes:
(1) Incorporated by Reference - Previously filed with Form F-4 filed August
15, 1997
(2) Incorporated by Reference - Previously filed with Form F-4 filed July
14, 1999
36
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F has duly caused this registration statement (annual report)
to be signed on its behalf by the undersigned, thereunto duly authorized.
GLOBEX MINING ENTERPRISES INC.
------------------------------
(REGISTRANT)
/s/ JACK STOCH
---------------------
(SIGNATURE)
JACK STOCH, PRESIDENT
DATE: May 25, 2001
37
ITEM 19
EXHIBIT 3.5 - CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
As independent chartered accountants, we hereby consent to the inclusion in
this Registration Statement of Form 20F of Globex Mining Enterprises Inc. of our
report dated April 10, 2001 related to the consolidated balance sheets of Globex
Mining Enterprises Inc. as at December 31, 2000 and 1999 and the consolidated
statements of loss and deficit and changes in financial position for each of the
years ended December 31, 2000, 1999and 1998 prepared using accounting principles
generally accepted in Canada.
/S/ McKechnie Moore
- ----------------------
McKechnie Moore
Chartered Accountants
Ottawa, Canada
May 25, 2001
38
GLOBEX MINING ENTERPRISES INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000 and 1999
INDEX
Auditor's Report
Consolidated Balance Sheets At December 31, 2000 and 1999
Consolidated Statements Of Loss and Deficit For The Years Ending
December 31, 2000, 1999 and 1998
Consolidated Statements of Changes in Financial Position for The Years Ending
December 31, 2000, 1999 and 1998
Notes to the Consolidated Financial Statement
Consolidated Schedule of Mineral Properties and Deferred Exploration Costs
39
MCKECHNIE MOORE
CHARTERED ACCOUNTANTS
1390 Prince of Wales Drive, Suite 500
Ottawa, Ontario
K2C 3N6 CANADA
AUDITORS' REPORT
TO THE SHAREHOLDERS OF
GLOBEX MINING ENTERPRISES INC.:
We have audited the consolidated balance sheets of Globex Mining
Enterprises Inc. as at December 31, 2000 and 1999 and the consolidated
statements of loss and deficit and changes in financial position for the years
ended December 31, 2000, 1999 and 1998. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 2000
and 1999 and the results of its operations and changes in its financial position
for the years ended December 31, 2000, 1999 and 1998 in accordance with
accounting principles generally accepted in Canada.
/S/ MCKECHNIE MOORE
----------------------
MCKECHNIE MOORE
CHARTERED ACCOUNTANTS
Ottawa, Ontario
April 10, 2001
40
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
GLOBEX MINING ENTERPRISES INC.
INCORPORATED UNDER THE LAWS OF QUEBEC
AS AT DECEMBER 31
IN DOLLARS
--------------------------
2000 1999
------------ ------------
ASSETS
CURRENT
Cash 28,932 37,875
Marketable securities - lower of cost and market
(market value $234,975; 1999 $744,044) 234,975 724,324
Accounts receivable 220,607 11,974
Prepaid expenses 2,262 1,051
------------ ------------
468,776 775,224
RECLAMATION BONDS (NOTE 3) 181,978 171,569
CAPITAL ASSETS (NOTE 4) 19,728 21,601
MINERAL PROPERTIES AND DEFERRED EXPLORATION
EXPENSES (SCHEDULE) 1,595,079 1,457,134
------------ ------------
2,283,561 2,425,528
------------ ------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 281,683 37,380
DEFERRED INCOME TAXES 24,085 16,245
------------ ------------
305,768 53,625
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL
Common shares (NOTES 5 AND 6) 33,395,098 33,390,598
DEFICIT (31,417,305) (31,018,695)
------------ ------------
1,977,793 2,371,903
------------ ------------
2,283,561 2,425,528
------------ ------------
SEE ACCOMPANYING NOTES
ON BEHALF OF THE BOARD:
"SIGNED" JACK STOCH, DIRECTOR
"SIGNED" DIANNE STOCH, DIRECTOR
41
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Loss and Deficit
GLOBEX MINING ENTERPRISES INC.
YEARS ENDED DECEMBER 31
IN DOLLARS
------------
2000 1999 1998
------------ ------------ ------------
INCOME
Interest 23,292 30,761 39,551
Options - 91,430 15,750
Gain on sale of marketable securities - 2,187 -
Other 38,654 - 9,668
Forgiveness of debt - - -
------------ ------------ ------------
61,946 124,378 64,969
------------ ------------ ------------
EXPENSES
Amortization 7,103 7,091 8,760
Capital tax 6,276 12,552 9,052
Exploration expenditures and abandoned claims written off 28,327 23,241 347,171
Interest - - 1,509
Management fees - - 178,261
Office and general 67,618 42,352 92,342
Other - 31,449 -
Outside services 71,225 102,320 30,708
Professional fees 113,225 50,096 354,657
Telephone 9,993 6,601 9,454
Transfer agent fees 8,164 8,545 11,603
Travel and automotive 18,285 9,855 47,929
Wages and benefits - - 20,849
Write-down of marketable securities 122,500 1,500 56,294
------------ ------------ ------------
452,716 295,602 1,168,589
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (390,770) (171,224) (1,103,620)
Deferred income taxes 7,840 7,070 1,739
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (398,610) (178,294) (1,105,359)
------------ ------------ ------------
DISCONTINUED OPERATIONS
Loss from operations of Joint Venture (note 9) - (135,438) (1,382,604)
Loss on disposal of Joint Venture (note 9) - - (21,221,363)
------------ ------------ ------------
- (135,438) (22,603,967)
------------ ------------ ------------
NET LOSS (398,610) (313,732) (23,709,326)
DEFICIT, BEGINNING OF YEAR (31,018,695) (30,704,963) (6,995,637)
Share issue expenses - - -
------------ ------------ ------------
DEFICIT, END OF YEAR (31,417,305) (31,018,695) (30,704,963)
------------ ------------ ------------
LOSS PER SHARE
Basic
- continuing operations (0.034) (0.015) (0.104)
- discontinued operations - (0.012) (2.123)
Fully diluted
- continuing operations (0.032) (0.014) (0.096)
- discontinued operations - (0.011) (1.960)
SEE ACCOMPANYING NOTES
42
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Changes
in Financial Position
GLOBEX MINING ENTERPRISES INC.
YEARS ENDED DECEMBER 31
IN DOLLARS
-----------
2000 1999 1998
--------- ----------- ------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net loss (398,610) (313,732) (23,709,326)
Non-cash items - amortization 7,103 7,091 51,415
- loss on disposal of discontinued
operations - - 21,815,616
- unrealized foreign exchange loss (gain) - 5,559 (806,238)
- exploration expenditures and -
abandoned claims written off - 903 323,388
- gain on sales of assets - (2 ,187) (21,291)
- write down of securities - 1,500 56,294
- deferred income taxes 7,840 7,070 1,739
--------- ----------- ------------
(383,667) (293,796) (2,288,403)
--------- ----------- ------------
Decrease (increase) in non-cash working capital 523,808 (845,857) 2,244,094
--------- ----------- ------------
140,141 (1,139,653) (44,309)
--------- ----------- ------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Share capital 4,500 (10,800) 236,525
Sale of capital assets - - 22,153
Sale of joint venture interest - - 1,474,093
Share issue expenses - - -
--------- ----------- ------------
4,500 (10,800) 1,732,771
--------- ----------- ------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Deferred exploration expenses (110,447) (84,675) (594,654)
Mineral properties (27,498) 28,901 (26,511)
Capital assets (5,230) (6,427) (2,713)
Reclamation bonds (10,409) (9,285) (19,025)
Other assets - 200,000 (424,535)
Reclamation reserve - - -
Minority interest in joint venture - - -
--------- ----------- ------------
(153,584) 128,514 (1,067,438)
--------- ----------- ------------
(DECREASE) INCREASE IN CASH (8,943) (1,021,939) 621,024
CASH, BEGINNING OF YEAR 37,875 1,059,814 438,790
--------- ----------- ------------
CASH, END OF YEAR 28,932 37,875 1,059,814
--------- ----------- ------------
SEE ACCOMPANYING NOTES
43
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
1. NATURE OF OPERATIONS
----------------------
The Company is in the process of exploring its mineral properties and has
not yet determined whether these properties contain ore reserves that are
economically recoverable.
The recoverability of amounts shown for mineral properties and related
deferred costs is dependent upon the discovery of economically recoverable
reserves, confirmation of the Company's interest in the underlying mineral
claims, the ability of the Company to obtain necessary financing to
complete the development, and future profitable production or proceeds from
the disposal thereof.
2. SIGNIFICANT ACCOUNTING POLICIES
---------------------------------
a) Principles of Consolidation
-----------------------------
The consolidated financial statements of Globex Mining Enterprises
Inc. are prepared in accordance with generally accepted accounting
principles applicable in Canada. The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries,
Globex Nevada Inc. and Gold Capital Corporation.
b) Translation of Foreign Currencies
------------------------------------
Monetary assets and liabilities of foreign subsidiaries and foreign
currency denominated monetary assets and liabilities of Canadian
operations are translated into Canadian dollars at exchange rates
prevailing at the balance sheet date and at exchange rates prevailing
at the transaction date for non-monetary items. Revenues and expenses
are converted at the average exchange rate for the year.
c) Capital Assets
---------------
Capital assets are recorded at cost. Amortization charges are recorded
at rates set to charge operations with the cost of depreciable assets
over the estimated useful lives as follows:
Machinery, office equipment and computer equipment, using the straight
line method over periods from three to seven years or the diminishing
balance method at rates varying from 20 to 30 percent. Buildings and
service installations when put in service using the straight line
method over a period of forty years.
44
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
-------------------------------------------
d) Mineral Properties and Deferred Exploration Expenses
---------------------------------------------------------
The Company capitalizes the costs of acquisition of mineral
properties. These costs will be amortized over the estimated
productive lives of the properties upon commencement of production
using the unit-of-production method.
The Company capitalizes all direct costs relating to exploration on
its mineral properties. These costs will be amortized over the
estimated productive lives of the mineral properties upon commencement
of production using the unit-of-production method.
Partial sales of mineral properties are accounted for by applying the
proceeds from such sales to the carrying costs of the property,
reducing these costs to NIL prior to recognizing any gains. Costs
related to abandoned projects will be written off.
e) Values
------
The amounts shown for mineral properties and for deferred exploration
expenses represent costs to date and are not intended to reflect
present or future values.
f) Fair Value of Financial Instruments
---------------------------------------
The carrying value of the Company's financial instruments classified
in the working capital, approximate their fair value due to the
relatively short periods to maturity of the instruments.
g) Use of Estimates
------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates. Management believes the estimates are reasonable.
h) Realization of Assets
-----------------------
Realization of the Company's assets is subject to various risks
including permitting, reserves estimation, gold prices and
environmental factors.
i) Credit Risk
------------
The Company does not believe it is subject to any significant
concentration of credit risk. Cash and short term investments are in
place with major financial institutions and corporations.
3. RECLAMATION BONDS
------------------
Reclamation bonds have been posted by the Company to secure clean-up
expenses if various properties are closed or abandoned.
45
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
4. CAPITAL ASSETS
2000 1999
------------------------------------- ------------
ACCUMULATED NET CARRYING NET CARRYING
COST AMORTIZATION AMOUNT AMOUNT
------- ------------- ------------- ------------
Mining equipment $17,481 $ 16,674 $ 807 $ 1,152
Office equipment 19,399 9,824 9,575 9,736
Vehicles 11,981 9,274 2,707 3,867
Computers 14,514 8,217 6,297 5,886
Software 10,248 9,906 342 960
------- ------------- ------------- ------------
$73,623 $ 53,895 $ 19,728 $ 21,601
------- ------------- ------------- ------------
5. STOCK OPTIONS
--------------
The Company has granted the following options:
NUMBER OF OPTIONS GRANTED
-------------------------
EXPIRY DATE EXERCISE PRICE PER SHARE 2000 1999
- --------------------- ------------------------- ----------- ------------
TO SENIOR EXECUTIVES:
April 2, 2002 $ 0.30 215,000 215,000
December 5, 2004 0.3075 189,000 189,000
October 10, 2002 0.25 225,000 225,000
February 27, 2001 0.25 5,000 5,000
February 6, 2002 0.25 55,000 55,000
TO CONSULTANTS:
December 21, 2003 0.25 60,000 60,000
December 5, 2004 0.3075 25,000 25,000
February 4, 2000 5.00 - 50,000
October 10, 2002 0.25 10,000 10,000
May 19, 2005 0.21 100,000 -
November 21, 2005 0.13 100,000 -
TO EMPLOYEES:
February 21, 2003 0.25 5,000 5,000
May 19, 2005 0.21 5,000 -
----------- -----------
994,000 839,000
----------- -----------
During the year Nil (1999 - Nil) options were exercised, 205,000 (1999 -
Nil) were issued, and 50,000 (1999 - 45,456) expired.
46
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
6. SHARE CAPITAL
--------------
AUTHORIZED: UNLIMITED COMMON SHARES
Issued:
2000 1999
----------------------- ------------------------
BALANCE, BEGINNING OF YEAR 11,625,786 $33,390,598 11,615,786 $33,401,398
SHARES REACQUIRED - - - (12,500)
PRIVATE PLACEMENT 16,000 4,500 10,000 1,700
---------- ----------- ---------- ------------
BALANCE, END OF YEAR 11,641,786 $33,395,098 11,625,786 $33,390,598
---------- ----------- ---------- ------------
411,100 common shares are held in escrow. 375,000 were issued as partial
consideration for the Lyndhurst Property and cannot be released without
consent of the regulatory authorities.
The balance of 36,100 common shares were issued as consideration for a
property which has since been abandoned and thus will not be released from
escrow.
During the year, 16,000 shares were issued in exchange for mineral
properties.
7. INCOME TAXES
-------------
The Company has losses for tax purposes of approximately $1,835,000 (1999 -
$1,398,800) which may be applied to reduce future taxable incomes of the
Company. These losses expire as follows:
$
2001 45,500
2002 109,200
2003 2,200
2004 376,000
2005 427,000
2006 384,000
2007 491,100
The Company has approximately $798,500 of Canadian exploration expenditures
which under certain circumstances, may be utilized to reduce taxable
incomes of future years.
47
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
8. RELATED PARTY TRANSACTIONS
----------------------------
During the year, the Company made payments to a shareholder and a company
controlled by a shareholder for management services, accounting services,
office and storage space totalling $90,000 (1999 - $106,800). These
transactions are in the normal course of business and are measured at the
exchange amount being the amount of consideration established and agreed to
by the parties.
9. DISCONTINUED OPERATIONS
------------------------
On February 26, 1999 , the Company sold its 60% interest in the mining
properties of Tonkin Springs Venture Limited Partnership, held through Gold
Capital Corporation, for cash proceeds of $1,276,190 and common shares of
Sudbury Contact Mines worth $200,000. The purchaser also assumed all
obligations of the Company regarding its 60% interest arising after
February 8,1999 under any assumed contracts and permits.
10. UNITED STATES ACCOUNTING PRINCIPLES
--------------------------------------
The following tables provide summary balance sheet information and
supplementary earnings and cash flow information that would have been
reported had the financial statement been prepared in accordance with U.S.
GAAP:
BALANCE SHEET
DECEMBER 31, DECEMBER 31, DECEMBER 31,
2000 1999 1998
------------------- ------------- -------------
Assets
$ 627,400 $ 769,367 $ 1,242,164
------------------- ------------- -------------
Liabilities $ 305,768 $ 53,625 $ 201,890
=================== ============= =============
Shareholder's equity
Share capital (1) 31,956,376 31,951,876 31,962,676
------------------- ------------- -------------
Deficit (1) (31,634,744) (31,236,134) (30,922,402)
------------------- ------------- -------------
321,632 715,742 1,040,274
------------------- ------------- -------------
Liabilities and shareholders' equity $ 627,400 $ 769,367 $ 1,242,164
=================== ============= =============
48
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
10. UNITED STATES ACCOUNTING PRINCIPLES (CONT'D)
------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE PERIOD
FROM INCEPTION
TO DECEMBER
YEAR ENDED DECEMBER 31, 31, 2000 (3)
--------------------------
2000 1999 1998
---------------- ------------ ----------------- --------------
Net Income (Loss) under
Canadian GAAP $ (398,610) $ (313,732) $ (23,709,326) $ (29,978,583)
Impairment of carrying
values of minerals
properties (4) - - - (1,656,161)
- ------------------------- ---------------- ------------ ----------------- --------------
Net (Loss) under U.S.
GAAP $ (398,610) $ (313,732) $ (23,709,326) $ (31,634,744)
Weighted average number
of shares outstanding (2) (12,136,686) 12,032,664 10,097,064
Primary income (loss)
per share (2) $ (0.03) $ (0.03) $ (2.35)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE PERIOD FROM
INCEPTION TO
DECEMBER 31, 2000
---------------------
Net loss for the period $ (31,634,744)
Non-cash operating items 23,414,050
---------------------
Cash used in operations $ (8,220,694)
Cash used in investing activities (25,202,996)
Cash from financing activities 33,452,622
---------------------
Cash generated $ 28,932
====================
(1) Under U.S. GAAP, the proceeds of share issues are recorded using the
Net to Treasury method whereby all costs of issue are charged directly
to share capital.
(2) Under U.S. GAAP, the calculation of primary income (loss) per share is
based on the number of issued and outstanding common shares, excluding
shares held in escrow as contingent consideration, plus common share
equivalents, including outstanding options and warrants, if they would
have a dilutive effect.
(3) Under U.S. GAAP, companies which are development stage enterprises
must disclose income and cash flow information from the company's
inception up to and including the date of the most recent balance
sheet.
49
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
10. UNITED STATES ACCOUNTING PRINCIPLES (CONT'D)
------------------------------------------------
(4) The Company owns mineral properties in Quebec, Ontario, Arizona and
Washington state. As at December 31, 2000, none of the properties had
any proven reserves, and therefore management has no assurances that
future cash flows generated by these properties, if any, will be
sufficient to cover the costs incurred to date of acquiring and
exploring these mineral rights. Consequently, under U.S. GAAP, the
Company has recorded an impairment against the carrying value of the
properties in the year ended December 31, 2000 of $ - (1999 of $ - ).
Management has performed an assessment of the recoverability of the
carrying values for its exploration properties as of December 31,
2000. Management has estimated future cash flows based on acquisition
costs, exploration and development expenditures incurred to date and
anticipated exploration and development expenditures as well as its
assessment of potential realizable value in the event of the sale of
any of such properties. Management's estimates of future cash flows
were based on assumptions regarding potential metal grades and
recovery rates, gold prices, capital requirements, mining, processing
and other operating costs, metallurgical characteristics and mine
design, among others. None of the Company's current properties are
currently in production. No reserve reports or feasibility studies
were available nor does management have current plans to prepare such
reports or studies. As a result of this assessment, the carrying value
of Globex's properties at December 31, 2000 is zero.
Due to the nature of exploration, it can be anticipated, based on
results of drilling and other exploration activity, that only a
portion of exploration properties will prove feasible to develop. As
the Company acquires additional exploration properties, conducts
exploration and obtains further information regarding its properties,
it will consider whether an impairment of the carrying value of any
mineral property is warranted.
INCOME TAXES
Under U.S. GAAP, income taxes are provided for using the liability method
instead of the deferral method. With the liability method, deferred tax
assets and liabilities are recognized for the difference between the
financial statement carrying amounts and the respective tax basis of assets
and liabilities at enacted rates. Under U.S. GAAP, the income taxes would
be recorded as follows.
Deferred tax asset $ 84,859
Less: Evaluation allowance 84,859
--------
Net deferred tax asset -
========
50
Notes to the Consolidated
Financial Statements
DECEMBER 31, 2000
10. UNITED STATES ACCOUNTING PRINCIPLES (CONT'D)
------------------------------------------------
ACCOUNTING FOR STOCK OPTIONS
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"(SFAS 123). The Company applies Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" in accounting
for its stock option grants and accordingly, because the exercise price of
employees stock options equals the market price of the underlying shares on
the date of grant, no compensation expense has been recognized for grants.
The fair value of options granted during the year 1996 has been estimated
as $2.21 on the date of grant using the Black and Scholes model with the
following assumptions: Risk-free investment rate of 8%; expected volatility
of the market price of the Company's shares of 45%; a dividend growth rate
of 0%; and an expected life of the options of 5 years. For the purpose of
fair value disclosures, the fair value of the options granted is amortized
to income over the vesting period of the options. For the year ended
December 31, 1996 this additional charge against earnings would be $4,400.
The fair value of options granted during the year 1997 has been estimated
as $3.56 on the date of grant using the Black and Scholes model with the
following assumptions: Risk-free investment rate of 6%; expected volatility
of the market price of the Company's shares of 30%; a dividend growth rate
of 0%; and an expected life of the options of 7.6 years. For the purpose of
fair value disclosures, the fair value of the options granted is amortized
to income over the vesting period of the options. For the year ended
December 31, 1997 this additional charge against earnings would be
$231,900.
The fair value of options granted during the year 1998 has been estimated
as $0.04 on the date of grant using the Black and Scholes model with the
following assumptions: Risk-free investment rate of 5.03%; expected
volatility of the market price of the Company's shares of 67.4%; a dividend
growth rate of 0%; and an expected life of the options of 4.83 years. For
the purpose of fair value disclosures, the fair value of the options
granted is amortized to income over the vesting period of the options. For
the year ended December 31, 1998 this additional charge against earnings
would be $915.
No options were granted during the year 1999.
The fair value of options granted during the year 2000 has been estimated
as $0.27 on the date of grant using the Black and Scholes model with the
following assumptions: Risk-free investment rate of 5.4%; expected
volatility of the market price of the Company's shares at 115%; a dividend
growth rate of 0%; and an expected life of the options of 5 years. For the
purpose of fair value disclosures, the fair value of the options granted is
amortized to income over the vesting period of the options. For the year
ended December 31, 2000 this additional charge against earnings would be
$56,000.
51
Consolidated Schedule of Mineral Properties and
Deferred Exploration Expenses
GLOBEX MINING ENTERPRISES INC.
YEAR ENDED DECEMBER 31, 2000 IN DOLLARS
-----------
BALANCE ADDITIONS EXPENSES
BEGINNING OF (WRITTEN OFF & INCURRED BALANCE
YEAR SALES) (INCOME) END OF YEAR
-------------- --------------- --------- -----------
Ascot Twp, Quebec
Acquisition 20,000 - - 20,000
Exploration 3,840 - 396 4,236
Beauchastel & Rouyn Twps, Quebec
Acquisition 9,200 - - 9,200
Exploration 15,519 - 1,354 16,873
Bourlamaque Twp, Quebec
Acquisition - 4,710 - 4,710
Exploration - - 441 441
Cariboo Mining District, British Columbia
Acquisition - - - -
Exploration 8,271 - - 8,271
Clericy Twp, Quebec
Acquisition - - - -
Exploration 1,042 - - 1,042
Deloro Twp, Ontario
Acquisition - 17,544 - 17,544
Exploration - - 11,490 11,490
Desmoloizes Twp, Quebec
Acquisition - - - -
Exploration 487 - - 487
Destor & Poularies Twps, Quebec
Acquisition - - - -
Exploration 2,860 - 32,638 35,498
Dubuisson Twp, Quebec
Acquisition 155,000 - - 155,000
Exploration 314,031 - 88 314,119
Dufresnoy Twp, Quebec
Acquisition 23,404 - - 23,404
Exploration 47,751 - 260 48,011
Duparquet & Destor Twps, Quebec
Acquisition 20,000 - - 20,000
Exploration 57,524 - 880 58,404
Garrison Twp, Ontario
Acquisition 3,700 - - 3,700
Exploration 40,947 - 1,576 42,523
Halifax Twp, Nova Scotia
Acquisition - - - -
Exploration 243 - 1,991 2,234
-------------- --------------- --------- -----------
723,819 22,254 51,114 797,187
-------------- --------------- --------- -----------
52
Consolidated Schedule of Mineral Properties and
Deferred Exploration Expenses
GLOBEX MINING ENTERPRISES INC.
YEAR ENDED DECEMBER 31, 2000 IN DOLLARS
-----------
BALANCE ADDITIONS
BEGINNING OF (WRITTEN OFF & EXPENSES BALANCE
YEAR SALES) INCURRED (INCOME) END OF YEAR
-------------- ---------------- ----------------- -----------
BALANCE FORWARD 723,819 22,254 51,114 797,187
Hearst & McVittie Twps, Ontario
Acquisition - 3,000 - 3,000
Exploration - - 458 458
James Bay Area, Quebec (Wemindji)
Acquisition - - - -
Exploration - - 21,670 21,670
Joutel Twp, Quebec
Acquisition - 1,244 - 1,244
Exploration - - 21 21
Ligneris Twp, Quebec
Acquisition 2,176 - - 2,176
Exploration 1,780 - 4,534 6,314
Louvicourt Twp, Quebec - - 42,468
Acquisition 42,468 254 43,316
Exploration 43,063 -
McKenzie & Roy Twps, Quebec
Acquisition - - - -
Exploration 316 - 66 382
Poirier & Joutel Twps, Quebec
Acquisition 9,000 - - 9,000
Exploration 7,037 - 11,954 18,991
Rouyn Twp, Quebec
Acquisition - - - -
Exploration - - 56 56
Scott Twp, Quebec
Acquisition 5,000 - - 5,000
Exploration 88,503 - 132 88,635
Tiblemont Twp, Quebec
Acquisition - - - -
Exploration - - 568 568
Vauquelin Twp, Quebec
Acquisition 3,000 1,000 - 4,000
Exploration 17,809 - 1,397 19,206
Bell Mountain, Nevada, USA
Acquisition - - - -
Exploration 25,139 - 6,052 31,191
Sheep Mountain, Arizona , USA
Acquisition 55,000 - - 55,000
Exploration 25,611 - 3,230 28,841
Vulcan, Washington, USA
Acquisition 13,887 - - 13,887
Exploration 393,526 - 8,942 402,468
-------------- ---------------- ----------------- -----------
1,457,134 27,498 110,447 1,595,079
-------------- ---------------- ----------------- -----------
53