As filed with the Securities and Exchange Commission on July ___, 2002.
Registration No. ___
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
STERLING GROUP VENTURES, INC.
(Name of small business issuer in its charter)
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Nevada 1040 ________
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(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Organization) Classification Code) Identification #)
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Sterling Group Ventures, Inc. Brian McDonald, Esq.
12880 Railway Avenue, Unit 35 5781 Cranley Drive
Richmond, B.C., Canada V7E 6G4 West Vancouver, B.C. Canada V7W 1T1
(604) 644-5139 (604) 925-3099
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(Address and telephone of (Name, address and telephone
registrant's executive office) number of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
If this Form is filed to register additional common stock for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
-------------------------------
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Securities To Amount To Be Offering Price Aggregate Registration
Be Registered Registered Per Share Offering Price Fee [1]
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Common Stock: 2,000,000 $0.05 $100,000 $9.20
Shares
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Page 2
[1] Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c).
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
==========
STERLING GROUP VENTURES, INC.
SHARES OF COMMON STOCK
----------------------
No Minimum - 2,000,000 Maximum
Prior to this offering, there has been no public market for the common stock.
We are offering up to a total of 2,000,000 shares of common stock on a best
efforts basis, no minimum, 2,000,000 shares maximum. The offering price is $0.05
per share. There is no minimum number of shares that we have to sell. There
will be no escrow account. All money received from the offering will be
immediately used by us and there will be no refunds. The offering will be for a
period of 90 days from the effective date and may be extended for an additional
90 days if we so choose to do so.
Investing in the common stock involves certain risks. See "Risk Factors"
starting at page 5.
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Price Per Share Aggregate Offering Price Net Proceeds to Sterling
================================================================================
Common Stock $0.05 $100,000 $85,000
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is July 24, 2002.
Page 3
TABLE OF CONTENTS
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Page No.
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SUMMARY OF PROSPECTUS 4
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RISK FACTORS 5
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USE OF PROCEEDS 10
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DETERMINATION OF OFFERING PRICE 12
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CAPITALIZATION 13
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DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES 13
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PLAN OF DISTRIBUTION; TERMS OF THE OFFERING 15
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BUSINESS 17
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 24
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MANAGEMENT 27
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EXECUTIVE COMPENSATION 28
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PRINCIPAL STOCKHOLDERS 29
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DESCRIPTION OF SECURITIES 30
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CERTAIN TRANSACTIONS 31
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LITIGATION 32
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EXPERTS 32
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LEGAL MATTERS 32
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FINANCIAL STATEMENTS 32
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Other
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Articles Of Incorporation
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Bylaws
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Specimen Stock Certificate
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Opinion of Bernard Pinsky regarding the legality of the
Securities being issued
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Geological Report on the Bell Mineral Claims
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Option to Purchase and Royalty Agreement
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Trust Agreement
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Consent of Cordovano & Harvey, P.C, Certified Public Accountants
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Subscription Agreement
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SUMMARY OF PROSPECTUS
---------------------
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This summary provides an overview of selected information contained in this
prospectus. It does not contain all the information you should consider before
making a decision to purchase the shares we are offering. You should very
carefully and thoroughly read the more detailed information in this prospectus,
and particularly the Risk Factors section, review our financial statements and
review all other information that is incorporated by reference in this
prospectus.
Page 4
Summary Information about Our Company
- -------------------------------------
We incorporated in the State of Nevada on September 13, 2001 and we have not
generated any revenues from operations. See the "Business" section for a more
detailed description of our business operations.
On September 23, 2001, we issued 1,500,000 shares of common stock to Brian C.
Doutaz, our president, chief executive officer and director in consideration of
services rendered in the raising of seed capital, negotiating an agreement and
to organize the Corporation; on September 23, 2002 we issued a further 3,500,000
shares of common stock to Brian C. Doutaz for cash consideration of $3,500; in
each case pursuant to the exemption from registration contained in Section 4(2)
of the Securities Act.
In October, 2001, we issued 2,500,000 shares of common stock to 5 arms-length
individuals on a private placement basis pursuant to the exemption from
registration contained in Section 504D of the Securities Act of 1933; none of
the individuals owns 5% or greater of the issued and outstanding stock.
In November, 2001, we issued 2,800,000 shares of common stock to 6 arms-length
individuals on a private placement basis pursuant to the exemption from
registration contained in Section 504D of the Securities Act of 1933; none of
the individuals owns 5% or greater of the issued and outstanding stock.
Our administrative office is located at 12880 Railway Avenue, Unit 35, Richmond,
British Columbia, Canada V7E 6G4, telephone (604) 644-5139 and our registered
statutory office is located at 2267 Aria Drive, Henderson, Nevada 89052. Our
fiscal year end is May 31.
The Offering
- ------------
The following is a brief summary of this offering. Please see the "Plan of
Distribution; Terms of the Offering" in this prospectus for a more detailed
description of the terms of the offering.
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Securities Being Offered: Up to 2,000,000 shares of common stock,
par value $0.001.
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Offering Price per Share: $0.05
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Offering Period: The shares are being offered for a period
not to exceed 90 days, unless extended by
our board of directors for an additional
90 days.
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Net Proceeds to Our Company: Approximately $85,000. See "Use of
Proceeds."
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Use of Proceeds: We will use the proceeds to pay for
offering expenses, exploration and
working capital. See "Use of Proceeds."
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Number of Shares Outstanding Before 10,300,000 See "Description of
the Offering: Securities."
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Number of Shares Outstanding After 12,300,000 See "Description of
the Offering: Securities."
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Page 5
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RISK FACTORS
------------
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AN INVESTMENT IN THESE SECURITIES INVOLVES AN EXCEPTIONALLY HIGH DEGREE OF RISK
AND IS EXTREMELY SPECULATIVE. IN ADDITION TO THE OTHER INFORMATION REGARDING
OUR COMPANY CONTAINED IN THIS PROSPECTUS, YOU SHOULD CONSIDER MANY IMPORTANT
FACTORS IN DETERMINING WHETHER TO PURCHASE THE SHARES BEING OFFERED. THE
FOLLOWING RISK FACTORS ARE SOME OF THE POTENTIAL AND SUBSTANTIAL RISKS WHICH
COULD BE INVOLVED IF YOU DECIDE TO PURCHASE SHARES IN THIS OFFERING.
RISKS ASSOCIATED WITH OUR COMPANY:
1. We Have No Operating History; Have a History of Losses and Expect Losses
------------------------------------------------------------------------
to Continue
-----------
We were incorporated in September 2001 and we have not started our proposed
business operations or realized any revenues. We have no operating history
upon which an evaluation of our future success or failure can be made. Our
ability to achieve and maintain profitability and positive cash flow is
dependent upon:
* our ability to locate a profitable mineral property;
* our ability to generate revenues; and
* our ability to reduce exploration and development costs.
Based upon current plans, we expect to incur operating losses in future
periods. This will happen because there are expenses associated with the
exploration of our mineral properties. We cannot guarantee that we will be
successful in generating revenues in the future. Failure to generate
revenues will cause us to go out of business. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Business".
2. Title to Our property is Registered in the Name of Another Person
-----------------------------------------------------------------
Title to our property is not registered in our name but is registered in
the name of Angel Jade Mines Ltd., a privately held British Columbia
company which holds title to the claims on behalf of Mayan Minerals Ltd,
also a private British Columbia company, each at arms length to Sterling;
Brian C. Doutaz, one of our directors, is acting as trustee for us under
the Option To Purchase And Royalty Agreement (the "Agreement"). In the
event Angel Jade were to grant another person a deed of ownership which was
subsequently registered prior to our deed, the third party would obtain
good title and we would have nothing. Similarly, if Mayan were to grant an
option to another party, that party would be able to enter the property,
carry out certain work commitments and earn right and title to the property
and we would have little recourse as we would be harmed, will not own any
property and would have to cease operations. However, in either event,
Mayan would be liable to us for monetary damages for breach of the
Agreement. The extent of that liability would be for our out of pocket
costs for expenditures on the property, if any, in addition to any lost
opportunity costs if the property proved to be of value in the future. It
is our intention to incorporate a Canadian subsidiary corporation and
record the deed of ownership in the name of our subsidiary if gold or
silver is discovered on the property and it appears that it would be
economical to commercially mine the property.
Page 6
3. Speculative Nature of Mineral Exploration Industry; Exploration Stage;
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and No Known Ore Reserves
-------------------------
Gold and silver metal exploration is highly speculative. We are in the very
early exploration stage and are dependent on the proceeds from this
offering to start our exploration program. We cannot guarantee that:
* our exploration will be successful;
* any production will be obtained;
* or that production, if obtained, will be profitable.
4. Price of Gold is Low
--------------------
The price of gold is currently low to moderate. When general economic
conditions are good, the price of gold tends to be down. Currently, the
mining industry remains somewhat depressed and mineral values have been
very low over the last several years, making it difficult to conduct
operations profitably. See "Business."
5. Transportation Difficulties and Weather Interruptions
-----------------------------------------------------
Our proposed exploration work can only be performed four to five months out
of the year. This is because rain and snow cause roads leading to our
claims to be impassible during seven to eight months of the year. When
roads are impassible, we are unable to work. See "Business."
6. Our Small Size and Lack of Capital
----------------------------------
There is competition in the mineral exploration and development industry.
Because we are small and do not have much capital, we must limit our
exploration and development; as a result, we may not have enough money to
complete our exploration of the property. Because we are exploring raw
undeveloped land, we do not know how much we will have to spend to find out
if there is mineralized material on our property. It could cost as little
as $29,000 or as much as $180,000 for the first three phases alone to find
out. The first $15,000 we raise will be used to cover the cost of this
offering before we spend any money on the projected exploration program. In
addition, we do not know how much money we will be able to raise in this
offering. If it turns out we have not raised enough money to complete at
least the first stage of our exploration program, we will try to raise
additional funds from a second public offering, a private placement or
loans. At the present time we have not made any plans to raise additional
money and there is no assurance that we would be able to raise additional
money in the future. If we need additional money and cannot raise it, we
will have to suspend or cease our operations. Further, there are other
larger mining companies that could and probably would spend more time and
money in exploring our property. As a result of our limited capital, we may
not be able to hire qualified employees.
7. Supply Factors
--------------
Competition and unforeseen limited sources of supplies in the industry
could result in occasional shortages of supplies of certain products,
equipment or materials we may use in our operations. We cannot guarantee we
will be able to obtain certain products, equipment and/or materials which
we require, without interruption. See "Business."
Page 7
8. Factors Affecting Our Operations
--------------------------------
Our success depends on a number of factors, many of which are beyond our
control. These factors are:
* the rates of and costs associated with the exploration of our
properties;
* capital expenditures and other costs relating to the expansion of
our business;
* fluctuations in the price of minerals;
* changes in operating expenses;
* changes in our exploration and development strategy;
* personnel changes;
* the introduction of alternative mining technologies;
* the effect of other potential property acquisitions; and
* increased competition in our current and prospective markets.
Our success will also depend on our ability to identify, produce and market
minerals located on our properties. If minerals are not located, we will
cease exploration activities . If minerals are located, but we can't market
them, we will cease mining operations. Due to these factors, our operating
results and/or growth rate may be below the expectations of our management
and investors, which could adversely affect the value of any shares you
purchase in this offering. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business".
9. The Risks of Buying Low-Priced Stocks
-------------------------------------
Our common stock is defined as a "penny stock" under the Securities and
Exchange Act of 1934, and its rules. The Exchange Act and the penny stock
rules impose additional sales practice and disclosure requirements on
broker-dealers who sell our securities to persons other than certain
accredited investors. Accredited investors are:
* institutions with assets in excess of $5,000,000;
* individuals with net worth in excess of $1,000,000; or
* individuals with income exceeding $200,000, or $300,000 jointly
with a spouse.
For transactions covered by the penny stock rules, a broker-dealer must
make a suitability determination for each purchaser and receive the
purchaser's written agreement prior to the sale. In addition, the broker-
dealer must make certain disclosures in penny stock transactions,
including:
* the actual sale or purchase price;
* the actual bid and offer quotations;
* the compensation to be received by the broker-dealer and certain
associated persons, and;
* deliver certain disclosures required by the Securities and Exchange
Commission.
Because of the foregoing additional obligations imposed upon brokers, some
brokers will not buy or sell our common stock. This means that you will not
be able to sell your shares as easily as shares in larger corporations.
Page 8
10. Control of Our Company After the Offering
-----------------------------------------
If all the shares we are offering in this prospectus are sold, which we
can't guarantee, new shareholders will own approximately 16.26% of our
outstanding common stock. Our existing stockholders will own approximately
83.74% of the outstanding shares. As a result, after completion of this
offering, regardless of the number of shares we sell, our existing
stockholders will be able to elect all of our directors and control our
operations. Our Articles of Incorporation do not provide for cumulative
voting. Cumulative voting is a process that allows a shareholder to
multiply the number of shares he owns times the number of directors to be
elected. That number is the total votes a person can cast for all of the
directors. Those votes can be allocated in any manner to the directors
being elected. Cumulative voting, in some cases, will allow a minority
group to elect at least one director to the board. Our existing
stockholders do not intend to purchase any shares in this offering. This
means that existing shareholders will not be expanding their ownership. See
"Principal Stockholders" and "Description of Securities."
11. Further Dilution of Your Investment
-----------------------------------
Further dilution is likely if we issue additional shares at a lower price
than the current offering price and either no trading market exists for our
stock or the trading is at a price substantially lower than this offering
price. See "Dilution of the Price You Pay for Your Shares".
12. Benefits to the Company's Present Shareholders
----------------------------------------------
This offering will result in certain benefits to Brian C. Doutaz who is a
senior officer and director. Mr. Doutaz owns 5,000,000 of the total
10,300,000 outstanding shares of our company. He paid a cash consideration
of $3,500 for 3,500,000 shares and was issued 1,500,000 shares in lieu of
payment for services rendered in organizing the Corporation and for
negotiating an agreement. You, on the other hand, will be providing the
majority of the cash for our company's operations. See "Principal
Stockholders".
13. No Public Trading Market for the Shares
---------------------------------------
There is currently no trading in our common stock. We cannot guarantee you
that an active trading market in our shares will develop in the near
future, even if this offering is successfully completed. Even if a trading
market is developed, we cannot guarantee that it will be sustained for any
period of time. See "Plan of Distribution".
14. There is No Minimum Number of Shares that Must Be Sold and No Escrow
--------------------------------------------------------------------
Account
-------
There is no minimum number of shares that must be sold in this offering.
Any money we receive will be immediately appropriated by the Company for
the uses set forth in the Use of Proceeds section of this prospectus. No
funds will be placed in an escrow account during the offering period and no
money will be returned once the subscription has been accepted by us.
Page 9
15. You Will Incur Immediate and Substantial Dilution
-------------------------------------------------
Our existing stockholders acquired their shares at a cost substantially
less than that which you will pay for the shares you purchase in this
offering. Accordingly, any investment you make in these shares will result
in the immediate and substantial dilution of the net tangible book value of
those shares. See "Dilution of the Price You Pay for Your Shares".
16. We Do Not Pay Cash Dividends on Our Common Stock
------------------------------------------------
We have not paid any cash dividends on our common stock to date and we will
not be paying cash dividends to stockholders in the foreseeable future. Any
income we receive from operations will be reinvested and devoted to our
future business operations and/or to expansion. See " Description of
Securities".
17. Impact of Potential Future Sales of our Common Stock
----------------------------------------------------
A total of 5,000,000 shares of stock were issued to a senior officer and
director. He paid an average price of $0.001. He will likely sell a portion
of his stock if the market price goes above $0.05. If he does sell his
stock into the market, the sales may cause the market price of the stock to
drop. See "Principal Stockholders".
CAUTIONARY STATEMENT REGARDING FORWARDING-LOOKING STATEMENTS
============================================================
Some discussions in this prospectus may contain forward-looking statements that
involve risks and uncertainties. A number of important factors could cause our
actual results to differ materially from those expressed in any forward-looking
statements made by us in this prospectus. Such factors include, those discussed
in "Risk Factors", "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" as well as those discussed elsewhere
in this prospectus. Forward-looking statements are often identified by words
like: believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events.
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USE OF PROCEEDS
---------------
- --------------------------------------------------------------------------------
Our offering is being made on a best efforts - no minimum basis. The net
proceeds to us from the sale of up to 2,000,000 shares offered at a public
offering price of $0.05 per share will vary depending upon the total number of
shares sold. Regardless of the number of shares sold, we expect to incur
offering expenses estimated at $15,000 for legal, accounting, printing and other
costs in connection with this offering.
The table below shows how proceeds from this offering would be used for
scenarios where our corporation sells various amounts of the shares and the
priority of the use of net proceeds in the event actual proceeds are not
sufficient to accomplish the uses set forth.
Page 10
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Percent of total shares offered 25% 50% 75% 80%
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Shares Sold 500,000 1,000,000 1,500,000 2,000,000
- ----------------------------------------------------------------------------------------
$ $ $ $
Gross Proceeds from offering 25,000 50,000 75,000 100,000
Less Offering expenses 15,000 15,000 15,000 15,000
------- ------ ------ -------
Net Offering proceeds 10,000 35,000 60,000 85,000
Use of Net Proceeds
Wages & Fees 10,000 10,000 10,000 10,000
Grid Materials 500 500 500 500
Geological & Geochemical Supplies 300 300 300 300
Assaying 1,000 1,000 1,000 1,000
EM Survey 2,000 2,000 2,000 2,000
Camp Equipment, Operation 2,000 2,000 2,000 2,000
Helicopter 10,000 10,000 10,000 10,000
Diamond Drilling 10,200 10,200 10,200 10,200
Contingencies 5,000 5,000 5,000 5,000
Working Capital (18,000) 7,000 32,000 57,000
------- ------ ------ -------
Total Use of Proceeds 10,000 35,000 60,000 85,000
========================================================================================
The net proceeds from this offering will be as much as $85,000, assuming all
shares are sold, which we can't guarantee, after deducting $15,000 for estimated
offering expenses including legal and accounting fees. We will use the proceeds
for exploration and working capital. We expect to spend between $29,000, based
on completing only the first phase of a three phase exploration program, and
$165,000 to fully complete our initial exploration activities. Our exploration
expenditures could vary from $29,000 to $180,000 depending upon what we
encounter in the exploration process and how far we progress on the scheduled
three phase exploration program. If it turns out that we have not raised enough
money to complete our exploration program, we will try to raise additional funds
from a second public offering, a private placement or loans. At the present
time, we have not made any plans to raise additional money and there is no
assurance that we would be able to raise additional money in the future. If we
need additional money and can't raise it, we will have to suspend or cease
operations.
The use of net proceeds table above describes the expenses that will be incurred
in association with Phase 1 of the projected exploration program. Phases 2 and 3
of the exploration program will not be implemented until the success of Phase 1
has been evaluated to determine whether further exploration work is warranted.
For this reason we will retain as working capital any sums not utilized in Phase
1 until further financing is obtained for Phases 2 and 3 assuming further
exploration work is warranted.
Phase 1 of our exploration program will cost $29,000. If justified we will then
continue on to Phase 2 at a cost of $67,000. If the results of Phase 2 warrant
further work, Phase 3 will be implemented at a cost of $84,000. If economically
viable mineralization is found, of which there is no assurance, we anticipate
that overall development costs would range between $5,000,000 and $15,000,000,
depending upon the type of mineralization, the rate of return, the production
rate and the type of mining and ore processing that would be utilized.
Page 11
Although we have a wide ranging projected exploration program, we do not know
how much money will ultimately be needed for exploration. We believe that the
required exploration work for the projected initial three phase program will
cost up to $180,000 and will take up to three years (three working seasons) to
complete. Further work must then be carried out to determine the extent of the
gold and silver bearing ores and whether they might be economically viable to
mine over the long term. Therefore, costs of exploration are not limited to the
initially described three phase exploration program. Assuming minerals are found
that would indicate long term development of the property was warranted, we are
a junior resource company without the necessary financial resources or contacts
to be able to bring the property through its development stage, let alone
complete environmental impact studies that would be required by various
authorities both provincially and federally. We would then be required to locate
working partnerships with other mineral exploration companies and have them
contribute financially to the exploration and development plans. In the long
term, we would look to sell the property to a major resource development company
with the intention of keeping a small carried interest in the property or we
would sell our interest in the Claims for cash and shares.
Working capital includes the cost of our office operations including telephone,
printing, faxing, the use of secretarial services and administrative expenses
such as office supplies, postage and delivery charges. We do not pay rent as Mr.
Doutaz provides office space at no charge to us.
Our offering expenses are comprised of an SEC filing fee, legal and accounting
expenses, printing and transfer agent fees and any necessary state registration
fees. Mr. Doutaz will not receive any compensation for his efforts in selling
our shares.
We will not be able to conduct meaningful exploration activities unless
approximately 25% of the offering is sold. In addition, unless approximately 25%
of the offering is sold, all of our paid in capital will have been utilized to
pay the expenses of this offering. It is possible that no proceeds may be raised
from this offering. It is also possible that some, but not all of the 2,000,000
shares offered will be sold. If fewer than 50% of the shares are sold, we will
have to delay or modify our plan. There can be no assurance that any delay or
modification will not adversely affect our development. If we require additional
funds, as noted above, in order to develop our plan, such funds may not be
available on terms acceptable to us.
Any funds not used for the purposes indicated will be used for general working
capital. If less than the entire offering is completed, funds will be applied
according to the priorities outlined above. For example, if less than $10,000 is
received, the entire amount will be applied toward legal and accounting fees for
this offering as well as quarterly and annual reports required under the
Securities Exchange Act of 1934.
While we currently intend to use the proceeds of this offering substantially in
the manner set forth above, we reserve the right to reassess and reassign such
use if, in the judgement of our board of directors, such changes are necessary
or advisable. At present, no material changes are contemplated. Should there be
any material changes in the above projected use of proceeds in connection with
this offering, we will issue an amended prospectus reflecting the same.
Page 12
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DETERMINATION OF OFFERING PRICE
-------------------------------
- -
- -------------------------------------------------------------------------------
The price of the shares we are offering was arbitrarily determined in order for
us to raise up to $100,000 in this offering. The offering price bears no
relationship whatsoever to our assets, earnings, book value or other criteria of
value. Among the factors considered were:
* our lack operating history;
* the proceeds to be raised by the offering;
* the amount of capital to be contributed by purchasers in this offering in
proportion to the amount of stock to be retained by our existing
Stockholders, and;
* our relative cash requirements. See "Plan of Distribution ".
- -
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CAPITALIZATION
--------------
- -
- -------------------------------------------------------------------------------
The following table sets forth our capitalization at May 31, 2002, on a
historical basis and as adjusted to reflect the sale of the shares.
This table should be read in conjunction with the section entitled,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", our Financial Statements and Notes; and other financial and
operating data included elsewhere in this prospectus.
================================================================================
May 31, 2002 Actual As Adjusted After Offering
================================================================================
Stockholder's Equity:
- -
- -------------------------------------------------------------------------------
Common Stock:
- -
- -------------------------------------------------------------------------------
500,000,000 shares
authorized, par value $0.001
- -
- -------------------------------------------------------------------------------
10,300,000 issued and $ 10,300
outstanding
- -
- -------------------------------------------------------------------------------
12,300,000 issued and $ 12,300
outstanding
- -
- -------------------------------------------------------------------------------
Additional Paid-in Capital $ 26,000 $109,000
- -
- -------------------------------------------------------------------------------
Deficit accumulated during the $ (8,056) $ (8,056)
development stage
- -
- -------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' $ 28,244 $113,244
EQUITY (deficit)
================================================================================
- -
- -------------------------------------------------------------------------------
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
---------------------------------------------
- -
- -------------------------------------------------------------------------------
"Dilution" represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering.
"Net tangible book value" is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a result of
the lower book value of the shares held by our existing stockholders. See
"Principal Stockholders."
Page 13
Our net book value prior to the offering, based on our May 31, 2002 financial
statements was $28,244 or approximately $0.0027 per common share. Prior to
selling any shares in this offering, we had 10,300,000 shares of common stock
outstanding, 5,000,000 shares ($0.001 per share)of which were purchased by the
founding shareholder for $3,500 in cash and $1,500 in services rendered
pertaining to the organization of the Corporation and the raising of initial
seed capital, 2,500,000 shares of which were purchased by five arms length
individuals for $2,500 in cash ($0.001 per share) and 2,800,000 shares which
were purchased by six arms length individuals for $25,000 in cash ($0.01 per
share). We are now offering up to 1,000,000 shares at a price of $0.05 per
share. If all shares being offered are sold, we will have 12,300,000 shares
outstanding upon completion of the offering. Our post offering pro forma net
book value, which gives effect to the receipt of the net proceeds from the
offering on all shares sold but does not take into consideration any other
changes in our net tangible book value, will be $113,244 or approximately
$0.0092 per share. This would result in dilution to investors in this offering
of $0.0408 per share, or approximately 82% from the public offering price of
$0.05 per share. Net tangible book value per share would increase $0.0065 per
share for our current shareholders.
The following table sets forth the estimated net tangible book value (the
"NTBV") per share after the offering and the dilution to persons purchasing
shares based upon various levels of sales achieved:
Dilution Table
================================================================================
Percent of Offering Sold 25% 50% 75% 100%
- --------------------------------------------------------------------------------
Shares sold 500,000 1,000,000 1,500,000 2,000,000
================================================================================
Public offering price/share $0.05 $0.05 $0.05 $0.05
- --------------------------------------------------------------------------------
NTBV/share prior to offering $0.0027 $0.0027 $0.0027 $0.027
- --------------------------------------------------------------------------------
Net proceeds to Sterling * $10,000 $35,000 $60,000 $85,000
- --------------------------------------------------------------------------------
Total shares outstanding 10,800,000 11,300,000 11,800,000 12,300,000
- --------------------------------------------------------------------------------
Increase due to new shareholders $0.0008 $0.0029 $0.0048 $0.0065
- --------------------------------------------------------------------------------
Post offering pro forma NTBV/ share $0.0035 $0.0056 $0.0075 $0.0092
================================================================================
* It is possible that we may not sell any of the shares, in which case the
proceeds to Sterling will be $0.
Comparative Data
- ----------------
The following table sets forth with respect to existing shareholders and new
investors, a comparison of the number of shares of common stock acquired from
our company, the percentage ownership of such shares, the total consideration
paid, the percentage of total consideration paid and the average price per share
- --------------------------------------------------------------------------------------------------------
Shares Purchased Total Consideration Average Price
- --------------------------------------------------------------------------------------------------------
Number Percent Amount Percent Per Share
========================================================================================================
Founding shareholder 5,000,000 40.7% $ 3,500 2.6% $0.001
- --------------------------------------------------------------------------------------------------------
Existing shareholders 5,300,000 43.1% $ 30,500 22.8% $0.01
- --------------------------------------------------------------------------------------------------------
New shareholders 2,000,000 16.2% $100,000 74.6% $0.05
- --------------------------------------------------------------------------------------------------------
Total 12,300,000 100% $134,400 100% $0.0109
========================================================================================================
Page 14
Upon completion of this offering the net tangible book value of the 12,300,000
shares to be outstanding, assuming all shares are sold, will be $113,244, or
approximately $0.0092. The net tangible book value of the shares held by our
existing stockholders will be increased by $0.0065 per share without any
additional investment on their part. You will incur an immediate dilution from
$0.05 per share to $0.0092 per Share.
After completion of this offering, new shareholders will own approximately
16.26% of the total number of shares then outstanding shares for which you will
have made a cash investment of $100,000, or $0.05 per Share. Our existing
stockholders will own approximately 83.74% of the total number of shares then
outstanding, for which they have made contributions of cash and/or services
and/or other assets, totaling $34,000, or approximately $0.0033 per share.
The following table compares the differences of your investment in our shares
with the investment of our existing stockholders.
================================================================================
Existing Stockholders
- ---------------------
- --------------------------------------------------------------------------------
Price per Share $ 0.0033
- --------------------------------------------------------------------------------
Net tangible book value per Share before Offering $ 28,244
- --------------------------------------------------------------------------------
Net tangible book value per Share after Offering $ 113,244
- --------------------------------------------------------------------------------
Increase to present Stockholders in net tangible book $ 0.0066
value per Share after Offering
- --------------------------------------------------------------------------------
Capital contributions $ 134,000
- --------------------------------------------------------------------------------
Number of Shares Outstanding before the Offering 10,300,000
- --------------------------------------------------------------------------------
Number of Shares after Offering held by Existing Stockholders 10,300,000
- --------------------------------------------------------------------------------
Percentage of ownership after Offering 83.74%
- --------------------------------------------------------------------------------
Purchasers of Shares in This Offering
- -------------------------------------
- --------------------------------------------------------------------------------
Price per Share $ 0.05
- --------------------------------------------------------------------------------
Dilution per Share $ 0.0408
- --------------------------------------------------------------------------------
Capital contributions $ 100,000
- --------------------------------------------------------------------------------
Number of Shares after Offering held by Public Investors 2,300,000
- --------------------------------------------------------------------------------
Percentage of ownership after Offering 16.2%
================================================================================
- --------------------------------------------------------------------------------
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
-------------------------------------------
- --------------------------------------------------------------------------------
The Offering Will Be Sold By One of Our Officers
- ------------------------------------------------
We are offering up to a total of 2,000,000 shares of common stock on a best
efforts basis, no minimum, 2,000,000 shares maximum. The offering price is
$0.05 per share. There is no minimum number of shares that we have to sell.
There will be no escrow account. All money received from the offering will be
immediately used by us and there will be no refunds. The offering will be for a
period of 90 days from the effective date and may be extended for an additional
90 days if we so choose to do so.
Page 15
There is no minimum number of shares that must be sold in this offering. Any
money we receive will be immediately appropriated by the Company for the uses
set forth in the Use of Proceeds section of this prospectus. No funds will be
placed in an escrow account during the offering period and no money will be
returned once the subscription has been accepted by us.
We will sell the shares in this offering through Brian C. Doutaz, one of our
officers and directors. Mr. Doutaz will receive no commission from the sale of
any shares. Mr. Doutaz will not register as a broker-dealer pursuant to Section
15 of the Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule
3a4-1 sets forth those conditions under which a person associated with an Issuer
may participate in the offering of the Issuer's securities and not be deemed to
be a broker-dealer. The conditions are that:
1. None of such persons is subject to a statutory disqualification, as that
term is defined in Section 3(a)(39) of the Act, at the time of his
participation; and,
2. None of such persons is compensated in connection with his or her
participation by the payment of commissions or other remuneration based
either directly or indirectly on transactions in securities; and
3. None of such persons is, at the time of his participation, an associated
person of a broker-dealer; and
4. All of such persons meet the conditions of Paragraph (a)(4)(ii) of Rule
3a4-1 of the Exchange Act, in that they (A) primarily perform, or are
intended primarily to perform at the end of the offering, substantial
duties for or on behalf of the Issuer otherwise than in connection with
transactions in securities; and (B) are not a broker or dealer, or an
associated person of a broker or dealer, within the preceding twelve (12)
months; and (C) do not participate in selling and offering of securities
for any Issuer more than once every twelve (12) months other than in
reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
We intend to advertise and hold investment meetings in various states where the
offering will be registered. We will also distribute the prospectus to
potential investors at the meetings and to our friends and relatives who are
interested in us and a possible investment in the offering.
Offering Period and Expiration Date
- -----------------------------------
This offering will commence on the date of this prospectus and continue for a
period of 90 days. We may extend the offering period for an additional 90 days
unless the offering is completed or otherwise terminated by us.
Procedures for Subscribing
- ----------------------------
If you decide to subscribe for any shares in this offering, you must
1. execute and deliver a subscription agreement; and
2. deliver a check or certified funds to us for acceptance or rejection.
All checks for subscriptions must be made payable to "Sterling Group Ventures,
Inc."
Right to Reject Subscriptions
- -----------------------------
We have the right to accept or reject subscriptions in whole or in part, for any
reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours after
we receive them.
Page 16
- --------------------------------------------------------------------------------
BUSINESS
--------
- --------------------------------------------------------------------------------
General
- -------
We were incorporated in the State of Nevada on September 13, 2001. We are
engaged in the acquisition, exploration and development of mining properties. We
maintain our statutory registered agent's office at 2267 Aria Drive, Henderson,
Nevada 89052 and our business office is located at 12880 Railway Avenue, Unit
35, Richmond, British Columbia, Canada V7E 6G4. Our telephone number is (604)
644-5139.
Background
- ----------
In May 2002, Brian C. Doutaz, our President and a member of the board of
directors, acting as Trustee on our behalf, acquired one mineral property
containing four mining claims in British Columbia, Canada by entering into an
Option To Purchase And Royalty Agreement with Mayan Minerals Ltd. the beneficial
owner of the Claims, title of which is held by Angel Jade Mines Ltd., each
private arms-length British Columbia companies, to acquire the claims by making
certain expenditures and carrying out certain exploration work on the claims
through a third party. A Trust Agreement between Sterling and Mr. Doutaz was
established to avoid having to pay additional fees and establish a subsidiary at
this early stage of our corporate development. In the event Angel Jade were to
grant another deed which is subsequently registered prior to our deed, the third
party would obtain good title and we would have nothing. Similarly, if Mayan
were to grant an option to another party, that party would be able to enter the
property, carry out certain work commitments and earn right and title to the
property; we would have little recourse as we would be harmed, will not own any
property and would have to cease operations. However, in either event, Mayan
would be liable to us for monetary damages for breach of the Agreement. The
extent of that liability would be for our out of pocket costs for expenditures
on the property, if any, in addition to any lost opportunity costs if the
property proved to be of value in the future.
Under British Columbia law, if the ownership of the property were to be passed
to us and the deed of ownership were to be recorded in our name, we would have
to pay a minimum of $500 and file other documents since we are a foreign
corporation in Canada. We would also be required to form a British Columbia
corporation that contains a board of directors, a majority of which will have to
be British Columbia residents and obtain audited financial statements for that
corporation. We have decided that if gold and silver is discovered on the Claims
and it appears that it will be economical to remove the gold and silver, we will
record the deed of ownership, pay the additional tax and file as a foreign
corporation or establish a corporate subsidiary in British Columbia. The
decision to record or not record is solely within our province.
All Canadian lands and minerals which have not been granted to private persons
are owned by either the federal or provincial governments in the name of Her
Majesty. Ungranted minerals are commonly known as Crown minerals. Ownership
rights to Crown minerals are vested by the Canadian Constitution in the province
where the minerals are located. In the case of our property, that is the
province of British Columbia. In the 19th century the practice of reserving the
minerals from fee simple Crown grants was established. The legislation ensures
that minerals are reserved from Crown land dispositions. The result is that the
Crown is the largest mineral owner in Canada, both as fee simple owner of crown
lands and through mineral reservations in Crown grants. Most privately held
mineral titles are acquired directly from the Crown. Our property is one such
acquisition. Accordingly, fee simple title to our property resides with the
Page 17
Crown. Our Claims are mining leases issued pursuant to the British Columbia
Mineral Act. The lessee has exclusive rights to mine and recover all of the
minerals contained within the surface boundaries of the lease continued
vertically downward.
The property is unencumbered and there are no competitive conditions which
affect the property. Further, there is no insurance covering the property and we
believe that no insurance is necessary since the property is unimproved and
contains no buildings or improvements.
The names, tenure numbers, date of recording and expiration date of the Claims
is as follows:
================================================================================
Claim Name Tenure Number Recording Date Expiry Date
================================================================================
Bell 1 362113 April 24, 1998 April 24, 2004
- --------------------------------------------------------------------------------
Bell 2 362114 April 24, 1998 April 24, 2004
- --------------------------------------------------------------------------------
Bell 3 362115 April 24, 1998 April 24, 2004
- --------------------------------------------------------------------------------
Bell 4 362116 April 24, 1998 April 24, 2004
================================================================================
Our property consists of the above-described four claims which total
approximately 250 acres. The property was selected for acquisition due to its
cost, previously recorded exploration work, and because the property is not
located in an environmentally sensitive region. This information was determined
by reviewing the British Columbia government website located at
http://www.gov.bc.ca/em . This website contains a detailed description of the
rock formation and mineralization of all staked lands in British Columbia. The
information can be viewed by clicking on "The Map Place", then, after
downloading "Autodesk Mapguide", by clicking on "Available Maps" and then
"Mineral Titles Map". You can then enter in one of our four claim tenure numbers
in the "Zoom GoTo" search window to view the area of our property. For title
information you can go back to the "Mineral Titles Map" in the lower window,
under the heading "Contents" and then "Database Searches" click on "Tenure
Number" and enter one of the four claim tenure numbers as indicated above to
view the Mineral Titles Tenure Detail. This website database contains a detailed
description of the rock formation, mineralization and ownership of all staked
lands in British Columbia.
To keep the Claims in good standing, such that they do not expire on the dates
indicated in the paragraph above, we must begin exploration on or before April
24, 2004 or pay $150 per claim to prevent the property from reverting to the
Crown.
The claims are held in trust by Mr. Doutaz on behalf of the Corporation. To
date we have not performed any work on the property.
It is our intention to incorporate a Canadian subsidiary corporation and record
the deed of ownership in the name of our subsidiary if gold and silver are
discovered on the property and it appears that it would be economically viable
to commercially mine the property.
Page 18
Physiography
- ------------
The property is located approximately 25 miles south west of Telkwa, B.C., at 54
37' north latitude and 127 40' west longitude, one-half mile north of Milk
Creek, at an approximate median elevation of six thousand feet.
Access can be obtained by four-wheel drive vehicle from Telkwa along the B.C.
Hydro power line access road that extends through Telkwa Pass. The centre of the
property lies approximately one mile west of the 25-mile point from Telkwa.
Access can also be gained by helicopter from Smithers, B.C., approximately 30
miles.
The existing roads leading to our property are rough-graded dirt. During rainy
weather the roads are sometimes inaccessible or washed out. During the winter
months there is too much snow cover to be able to access the property.
General Geology
- ---------------
The Smithers map-area is underlain by the Lower and Middle Jurassic, essentially
volcanic Hazelton Group; by the Middle and Upper Jurassic mainly sedimentary
Bowser Lake Group; by the Volcanic and sedentary Lower Cretaceous Skeena Group;
and, by the Tertiary volcanic Endako and Ootsa Lake Groups. The Early Jurassic
Topley Intrusions cut the lower part of the Hazelton Group and a variety of
intermediate to acidic plutons of Late Cretaceous to Eocene age intrude most
older units throughout the area.
Structurally the area is dominated by a multitude of steep normal faults. Few
contacts between map-units are unfaulted and these are mainly intrusive or
contacts between younger map-units. Folding is common only in the few
sedimentary units and is spatially and genetically related to the Eocene thrust
faults." (Tipper, 1976)
Local Geology
- -------------
The oldest rocks in the area of the project are Hazelton Group volcanics of
Middle Jurassic age. The oldest, Telkwa Formation of variegated red, maroon,
grey-green breccia, tuff and flows of basaltic to rhyolitic composition are
found in fault contact with a red tuff member of the Nilkitwa Formation, a red
to brick red, fine-grained tuff and fine breccia.
Nakina Intrusions of Eocene age are found in outcrop as a small plug in the
center of the claim group. These intrusions are composed of quartz monzonite
and felsite, in part porphyritic.
The normal fault, which virtually cuts the project area is half, has been traced
north - south for 50 miles. This fault, in combination with the intrusions, was
probably the heat source for the mineralizing fluids.
Mineralization
- --------------
The mineralization is hosted in quartz veins and altered members of a
metasedimentary - volcanoclastic package. Detailed mapping has yet to be
carried out on the property. The gold and silver values often occur in
association with a sulphide mix of galena, sphalerite, chalcopyrite, pyrite and
pyrrhotite.
Page 19
Sample Results
- --------------
Bulk Sample - smelter shipment - 1929
- -------------------------------------
36 sacks - no weights. Smelter assay - 0.60 ounces per ton gold, 375.00 ounces
per ton silver and 2.4% copper
Lacana Mining Corporation - 1981
- --------------------------------
Lacana has reported the assay results from 37 samples of representative material
collected near old workings and channeled from veins. The Lacana methodology
was to remove continuous chip samples using two rock picks, one as a moil and
one as a striking hammer. Samples were collected in plastic sample bags, tagged
and flown to Min-En Laboratories' facility in Smithers where they were crushed,
pulverized and analyzed using standard fire-assay and chemical techniques for
gold, silver and lead. Some check assays were performed at Bondar Clegg
Laboratories on rejects supplied by Min-En, on those samples that reported high
values on the initial assay returns. The assays ranged from 0.001 to 0.880
ounces per ton gold, 0.02 to 113.06 ounces per ton silver and 0.01% to 7.92%
lead in chip and grab samples across intervals as much as 3 meters.
R. T. Heard & Associates Ltd. - 1997
- ------------------------------------
During a re-examination of the property in 1997, Mr. Heard, the author of the
report on the property, re-sampled the main pit area - samples 119001 and 002
and the inclined shaft dump 19011. As well, two trenches were dug along strike
from the pit area, chip sampled and analyzed using a 30 element induced coupled
plasma (ICP) procedure which provided results of 0.012 to 0.593 ounces per ton
of gold, 3.05 to 223.32 ounces per ton of silver and 0.17% to 2.06% lead.
Our Proposed Exploration Program - Plan of Operation
- ----------------------------------------------------
Our business plan is to proceed with initial exploration of the Bell mineral
Claims to determine if there are commercially exploitable deposits of gold and
silver. Mt R.T. Heard, P. Eng., authored the "Geological Report On The Bell 1-4
Minerals Claims (the "Report"), dated May 31, 2002 in which is recommended a
three phase exploration program to properly evaluate the potential of the
Claims. We must conduct exploration to determine what minerals, if any, exist on
our properties and if any minerals which are found can be economically extracted
and profitably processed. We anticipate that Phase 1 of the recommended
geological exploration program will cost $29,000. We had $28,244 in cash
reserves as of May 31, 2002. Accordingly, we will not be able to proceed with
the exploration program without additional financing. Mr. Heard, our geologist,
will be engaged to complete the first phase of the work program. It is the
intention of the Corporation to carry out the work in late September or October,
2002, predicated on completion of the offering described in this document. We
will assess the results of this program upon receipt of Mr. Heard's report.
We do not claim to have any ores or reserves whatsoever at this time on any of
our properties.
Phase 1 will begin by establishing a base line with 25-meter stations and cross
lines run every 50 meters for 100 meters each side of the baseline. We will
then geologically map the grid and conduct an electromagnetic survey over the
grid with readings taken every 25 meters along the lines followed by rock and
geochemical sampling of those areas determined by the geological and EM surveys.
This will entail taking rock samples from the property to a laboratory where a
determination of the elemental make up of the sample and the exact
concentrations of gold, silver and lead will be made. We will then compare the
relative concentrations of gold, silver and lead in samples so the results from
different samples can be compared in a more precise manner and plotted on a map
to evaluate their significance.
Page 20
Where available, existing trenches, prospect pits and the like will be examined.
If an apparent mineralized zone is identified and narrowed down to a specific
area by the studies, we may then employ minor trenching of the areas. Trenches
are generally 100 feet in length and 10 to 20 feet wide. These dimensions allow
for a thorough examination of the surface of the vein structure types generally
encountered in the area. They also allow easier restoration of the land to its
pre-exploration condition when we conclude our operations. Once excavation of a
trench is completed, samples are then taken and analyzed for economically
valuable minerals that are known to have occurred in the area. Trench and rock
samples as well as diamond drilled samples will be tested for traces of gold,
silver, lead, copper, zinc, iron and other minerals; however, our primary focus
is the search for gold and silver.
The Report calls for approximately 600 feet of diamond drilling in Phase 1 which
is an essential component of exploration and aids in the delineation and
definition of any deposits. The geophysical work gives a general understanding
of the location and extent of mineralization at depths that are unreachable by
surface excavations and provides a target for more extensive trenching and core
drilling. We expect the costs of the geophysical work to be approximately $2,000
and the diamond drilling to be $7,000. Trenching and other work done in
previously recorded exploration programs will be the guide for the locations of
the diamond drilling program.
These surveys will require one week for the base work and an additional two to
three months for analysis and the preparation of a report on the work
accomplished along with an evaluation of the work and will bear an estimated
total cost of $29,000. This cost is made up of wages and fees, grid materials
(pickets, paint, flagging etc.), helicopter and EM survey costs, diamond
drilling, geological and geochemical supplies, assaying, camp equipment and
operation costs. It is the intention of the Corporation to carry the work out
in September or October, 2002, predicated on completion of the offering
described in this document.
Phase 2 will not be carried out until the summer of 2003 and will be contingent
upon favourable results from Phase 1 and any specific recommendations of Mr.
Heard, our geologist. It will be directed towards the continuation of the
diamond drilling. It is anticipated that some additional geological mapping,
prospecting and some geochemical sampling will take place as the drilling
progresses but separate funding for that is not contemplated here. The second
phase will require approximately two weeks work and will cost approximately
$67,000 comprised of wages, fees and camp operations, diamond drilling assays
and related. A further three months will be required for analysis and the
preparation of a report on the work accomplished along with an evaluation of the
work.
We have contemplated a third phase of exploration which would continue the
diamond drill program if results from the phase 2 program remain positive. Cost
of the third phase of exploration is estimated to be $83,000 and will take two
weeks to complete during the summer of 2004 with an additional three months
required to complete the analysis and the preparation of a report on the work
accomplished along with an evaluation of the work and further recommendations.
Mr. Heard will conduct all three phases of the exploration program
Initially, we do not intend to interest other companies in the property if we
find mineralized materials. We intend to try to develop the property ourselves.
Page 21
Competitive Factors
- -------------------
The gold mining industry is highly fragmented. We are competing with many other
exploration companies looking for gold and silver. We are among the smallest
exploration companies in existence and are an infinitely small participant in
the gold mining business which is the foundation of the founding and early stage
development of the mining industry. While we generally compete with other
exploration companies, there is no competition for the exploration or removal of
minerals from our property. Readily available gold and silver markets exist in
Canada and around the world for the sale of gold and silver. Therefore, we will
likely be able to sell any gold and silver that we are able to recover.
Regulations
- -----------
Our mineral exploration program is subject to the Mineral Tenure Act (British
Columbia) and Regulation. This act sets forth rules for:
* locating claims;
* posting claims;
* working claims; and
* reporting work performed
We are also subject to the British Columbia Mineral Exploration Code (the
"Code") which tells us how and where we can explore for minerals. We must
comply with these laws in order to operate our business. The purpose of the Code
is to assist persons who wish to explore for minerals in British Columbia to
understand the process whereby exploration activities are permitted and
regulated. The Code establishes province wide standards for mineral exploration
and development activities. The Code also manages and administers exploration
and development activities to ensure maximum extraction with a minimum of
environmental disturbance. The Code does not apply to certain exploration work
we will be conducting; specifically, work that does not involve mechanical
disturbance of the surface including:
* prospecting using hand-held tools;
* geological and geochemical surveying;
* airborne geophysical surveying (e.g. EM surveys);
* hand-trenching without the use of explosives; and
* the establishment of grid lines that do not require the felling of
trees.
Exploration activities that we intend to carry out which are subject to the
provisions of the code are as follows:
* drilling, trenching and excavating using machinery;
* disturbance of the ground by mechanical means; and
* blasting.
Compliance with these rules and regulations will require us to meet the minimum
annual work requirements. Also, prior to proceeding with any exploration work
subject to the Code we must apply for a notice of work permit. In this notice we
will be required to set out the location, nature, extent and duration of the
proposed exploration activities. This notice is submitted to the British
Columbia Regional Office of the Mines Branch, Energy Division.
Page 22
In order to explore for gold and silver on our property we must submit the plan
contained in this prospectus for review and pay a fee of $150. We believe that
the plan as contained in this prospectus will be accepted and an exploration
permit will be issued. The exploration permit is the only permit or license we
will need to explore for gold and silver on our property.
Compliance with these rules and regulations will not affect our operations.
Environmental Law
- -----------------
We are also subject to the Health, Safety and Reclamation Code for Mines in
British Columbia. This code deals with environmental matters relating to the
exploration and development of mining properties. Its goals are to protect the
environment through a series of regulations affecting:
* health and safety;
* archaeological sites; and
* exploration access.
We are responsible to provide a safe working environment, to not disrupt
archeological sites and to conduct our activities to prevent unnecessary damage
to the property.
We anticipate no discharge of water into active streams, creeks, rivers, lakes
or any other body of water regulated by environmental law or regulation. No
endangered species will be disturbed. Restoration of the disturbed land will be
completed according to law. All holes, pits and trenches will be recovered prior
to abandonment of the property. It is difficult to estimate the cost of
compliance with the environmental law since the full nature and extent of our
proposed activities cannot be determined until we start our operations and know
what that will be involved from an environmental standpoint.
We are in compliance with the foregoing act and will continue to comply with the
act in the future. We believe that compliance with the act will not adversely
affect our business operations in the future.
Employees
- ---------
Initially, we intend to use the services of subcontractors for manual labor
exploration work on our properties and Mr. R.T. Heard, our geological consultant
to manage the exploration program as outlined in his Report. Our only technical
employee will be Brian C. Doutaz, a senior officer and director.
At present, we have no employees, other than Messrs. Doutaz and Hutchison, our
officers and directors. Messrs. Doutaz and Hutchison do not have employment
agreements with us. We presently do not have pension, health, annuity,
insurance, stock options, profit sharing or similar benefit plans; however, we
may adopt such plans in the future. There are presently no personal benefits
available to any employees.
We intend to hire geologists, engineers and excavation subcontractors on an as
needed basis. We have not entered into negotiations or contracts with any of
them although it is our intention to retain Mr. Heard as senior geological
consultant. We do not intend to initiate negotiations or hire anyone until we
receive proceeds from our offering.
Page 23
Legal Proceedings
- ------------------
We are not involved in any pending legal proceeding.
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
- --------------------------------------------------------------------------------
We are a start-up, exploration stage company and have not yet generated or
realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means that our auditors
believe there is doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we begin removing and selling minerals. Accordingly, we must raise cash from
sources other than the sale of minerals found on our property. That cash must
be raised from other sources. Our only other source for cash at this time is
investments by others in our company. We must raise cash in order to implement
our project and stay in business.
In order to meet our need for cash we are attempting to raise money from this
offering. There is no assurance that we will be able to raise enough money
through this offering to stay in business. Whatever money we do raise, will be
applied first to exploration and then to development, if development is
warranted. If we do not raise all of the money we need from this offering, we
will have to find alternative sources, such as a second public offering, a
private placement of securities, or loans from our officers or others. We have
discussed this matter with our officers; however, our officers are unwilling to
make any commitment to loan us any money at this time. At the present time, we
have not made any arrangements to raise additional cash, other than through this
offering. If we need additional cash and can't raise it we will either have to
suspend operations until we do raise the cash, or cease operations entirely.
We are not going to buy or sell any plant or significant equipment. We do not
expect a change in our number of employees.
Over the next twelve months, we intend to complete the first phase exploration
stage of our mining operations on our first and only property. Our property was
obtained through an Option To Purchase And Royalty Agreement with Mayan Minerals
Ltd. at no cost other than for minor office expenses in producing the Geological
Report of R.T. Heard. Mr. Doutaz is acting as trustee under a Trust Agreement
for the holing of the property. Under British Columbia law title to British
Columbia mining claims can only be held by British Columbia residents. In the
case of corporations, title must be held by a British Columbia corporation. In
order to comply with the law we would immediately have to incorporate a British
Columbia wholly owned subsidiary corporation and obtain audited financial
statements. We believe those costs would be a waste of our money at this time.
In the event that we find mineralized material and the mineralized material can
be economically extracted, we will form a wholly owned British Columbia
subsidiary corporation and the title will be conveyed to that subsidiary. Should
Angel Jade Mines Ltd. transfer title to another person and the deed is recorded
before we record our documents, that other person will have superior rights and
title and we will have none. If that event occurs, we will have to cease or
suspend operations. However, Angel Jade and Mayan Minerals Ltd. will be liable
to us for monetary damages for breaching the terms of the agreement with us. To
date we have not performed any work on the property.
Page 24
If our initial exploration efforts are successful, we intend to proceed with
longer term development of the Claims. We may acquire additional mining
properties during the next twelve months if we are able to do so.
If we raise the maximum of $100,000 in this offering, we believe that we can pay
for our offering expenses and satisfy our cash requirements without having to
raise additional funds for the next twelve months. If we raise less than
$100,000 we may have to raise additional financing or we may not be able to
continue our proposed business operations.
We do not expect to purchase or sell any plant or significant equipment. We
intend to lease or rent any equipment such as a diamond drill machine, that we
may need in order to carry out our exploration operations.
Phase 1 of our plan of operations involves examination of the property,
electromagnetic surveys, geological and geochemical analysis and diamond
drilling. Phase 1 will take about 3 months in total, including preparation of a
report on the work completed with further recommendations and cost about
$29,000. We have not commenced Phase I. We anticipate that the proceeds of this
offering will be use to cover the costs of the first phase of the exploration
plan.
Phase 2 will be directed towards a continuation of the diamond drilling. It is
anticipated that some additional geological mapping, prospecting and some
geochemical sampling will take place as the drilling progresses. The second
phase will take three months to complete and will have an estimated cost of
$67,000.
We have contemplated a third phase of exploration which would continue the
diamond drill program if results from the phase 2 program remain positive. Cost
of the third phase of exploration is estimated to be $83,000 and will require
three to four months to complete.
If we are unable to complete any phase of exploration because we don't have
enough money, we will cease operations until we raise additional funds. If we
can't or don't raise more money, we will cease operations. If we cease
operations. We don't know what we will do and we don't have any plans to do
anything in that event.
We cannot provide a more detailed discussion of how our exploration program will
work and what we expect will be our likelihood of success. That is because we
have a piece of raw land and we intend to look for gold and silver. We may or
may not find any mineralized material. We hope we do, but it is impossible to
predict the likelihood of such an event.
We will not move on to a subsequent phase of the exploration program until the
phase we are working on is completed and the evaluation has been rendered. We
will determine when that occurs.
We do not have any plans to take the Corporation from Phase 3 exploration to
revenue generation. This is because we have not yet found anything and it is
impossible to project revenue from nothing.
We expect to start exploration operations within thirty days of the completion
of this offering.
Page 25
Limited Operating History; Need for Additional Capital
- ------------------------------------------------------
There is no historical financial information about our company upon which to
base an evaluation of our performance. We are an exploration stage company and
have not generated any revenues from operations. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration and/or development of our
properties, and possible cost overruns due to price and cost increases in
services.
To become profitable and competitive, we must conduct further research and
exploration of our properties before we commence production of any minerals we
may find. We are seeking equity financing in order to provide for the capital
required to implement our research and exploration phases.
We have no assurance that future financing will be available to us on acceptable
terms. If such financing is not available on satisfactory terms, we may be
unable to continue, develop or expand our operations. Equity financing could
result in additional dilution to existing shareholders.
If our initial exploration efforts are successful, we intend to proceed with
longer term development of the Claims. We may acquire additional mining
properties during the next twelve months if we are able to do so.
If we raise the maximum of $100,000 in this offering, we believe that we can pay
for our offering expenses and satisfy our cash requirements without having to
raise additional funds for the next twelve months. If we raise less than
$100,000 we may have to raise additional financing or we may not be able to
continue our proposed business operations.
Results of Operations
- ---------------------
From Inception on September 13, 2002
We just recently acquired our first property and are commencing the research and
exploration stage of our mining operations on that property at this time.
Since inception, we have used our common stock to raise money for our property
acquisition, for corporate expenses and to repay outstanding indebtedness. Net
cash provided by financing activities from inception on September 13, 2001 to
May 31, 2002 was $34,000, as a result of proceeds received from sales of our
common stock.
Liquidity and Capital Resources
- -------------------------------
As of the date of this registration statement, we have yet to generate any
revenues from our business operations.
We issued 5,000,000 shares of common stock through a Section 4(2) offering in
September 2001 for cash consideration of $3,500 and as payment in lieu of $1,500
in cash for services rendered in organizing the corporation and negotiating an
agreement.
Page 26
We issued 2,500,000 shares of common stock through a Rule 504D offering in
October, 2001 for cash consideration of $2,500.
We issued 2,800,000 shares of common stock through a Rule 504D offering in
November, 2001 for cash consideration of $28,000.
As of May 31, 2002, our total assets were $30,374 and our total liabilities
were $2,130.
- --------------------------------------------------------------------------------
MANAGEMENT
----------
- --------------------------------------------------------------------------------
Officers and Directors
- ----------------------
Each of our directors is elected by the Stockholders to a term of one (1) year
and serves until his or her successor is elected and qualified, or until he or
she resigns or is removed from office. Each of our officers is elected by the
board of directors to a term of one (1) year and serves until his or her
successor is duly elected and qualified, or until he or she resigns or is
removed from office. The board of directors has no nominating, auditing or
compensation committees.
The name, address, age and position of our present officers and Directors are
set forth below:
================================================================================
Name and Address Age Position(s)
================================================================================
Brian C. Doutaz 56 President, Chief Executive Officer and a
35 - 12880 Railway Ave. member of the Board of Directors
Richmond, B.C. Canada V7E 6G4
- --------------------------------------------------------------------------------
James M. Hutchison 44 Secretary, Treasurer, Chief Financial
4 - 19158 - 94 Avenue Officer and a member of the Board of
Surrey, B.C. Canada V3A 6L4 Directors
================================================================================
The persons named above has held his office/position since inception of our
company and is expected to hold his office/position until the next annual
meeting of our stockholders.
Background of Officer and Director
- ----------------------------------
Brian C. Doutaz, a director serving as President and Chief Executive Officer is,
and has been, a management and business consultant since 1980. He is President
of Anina International Capital Corp., a private British Columbia corporation
which is in the business of providing management and consulting services to
start-up and development stage businesses and has been performing such services
from 1993 to present. Mr. Doutaz also provides compliance services to publicly
listed corporations in Canada and the United States and sits on the Boards of a
number of public and private corporations. He has acted as senior officer and
director of a number of publicly traded companies since 1970 and has gained an
extensive knowledge of natural resource exploration ventures over the past 30
years.
Page 27
* Mr. Doutaz is currently, and has been since 1986, president and a
director of Adda Resources Ltd., a mineral and petroleum exploration
company formerly publicly traded on the TSX Venture Exchange;
* Between March 1999 and April 2000 he served as a director and Treasurer
of Kidstoysplus.com, Inc., an Internet retailer of children's toys and
products which is quoted on the OTC-BB;
* From May, 1999 to October, 2001 Mr. Doutaz served as President and
director of Reward Enterprises, Inc., an internet gaming operation,
quoted on the OTC-BB;
* Mr. Doutaz became a director of Talon Ventures, Inc. on September 06,
2001 and Blue Hawk Ventures, Inc. on May 02, 2002. Each of these
Nevada based privately held companies is engaged in mineral or
petroleum exploration and development.
James M. Hutchison is Secretary, Treasurer and Chief Financial Officer and a
director of the Corporation. Mr. Hutchison is President of Precision Injection
Molding, Inc., a private British Columbia company which specializes in the
injection moulding of thermoplastic components, parts and assemblies to specific
and exacting requirements in conjunction with product design and development,
which he started in 1997. He was a director of Adda Resources Ltd. from May,
1998 to May, 2001 which is involved in the mineral and petroleum exploration
business and which formerly traded on the TSX Venture Exchange.
Conflicts of Interest
- ---------------------
We believe that Brian C. Doutaz will be subject to conflicts of interest. The
conflicts of interest arise from Mr. Doutaz's relationship with other public
corporations. In the future, Mr. Doutaz will continue to be involved in the
mining and petroleum businesses for other entities and such involvement could
create conflicts of interest. At the present time, we do not foresee a direct
conflict of interest because we do not intend to acquire any additional mining
properties. The only conflict that we foresee is Mr. Doutaz's devotion of time
to resource projects that do not involve us.
Specifically, Brian C. Doutaz is an officer and director of Adda Resources
Ltd., Talon Ventures, Inc., and Blue Hawk Ventures, Inc., all of which are
engaged in the resource exploration and development business. This is a
potential conflict of interest because Mr. Doutaz devotes approximately 5% of
his professional time to each of those three corporations which he could
otherwise devote to us and because those companies are engaged in resource
exploration, similar to us. Presently, none of the foregoing operate mines or
receive royalties from properties operated by others. In the future, however,
such corporations could begin operating mines.
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
----------------------
- --------------------------------------------------------------------------------
Messrs. Doutaz and Hutchison, our officers and directors, have received no
compensation for their time or services rendered to the Corporation and there
are no plans to compensate them in the near future, unless and until we begin to
realize revenues and become profitable in our business operations.
Page 28
Option/SAR Grants
- -----------------
We do not currently have a stock option plan. No individual grants of stock
options, whether or not in tandem with stock appreciation rights known as SARs
and freestanding SARs have been made to any executive officer or any director
since our inception; accordingly, no stock options have been granted or
exercised by any of the officers or directors since we were founded.
Long-Tem Incentive Plans
- ------------------------
We do not have any long-term incentive plans that provide compensation intended
to serve as incentive for performance.
Compensation of Directors
- -------------------------
The members of the Board of Directors are not compensated by us for acting as
such.
Indemnification
- ---------------
Pursuant to the Articles of Incorporation and Bylaws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably believed to be in our best interest. In certain cases, we
may advance expenses incurred in defending any such proceeding. To the extent
that the officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of
1933, as amended, which may be permitted to directors or officers pursuant to
the foregoing provisions, we are informed that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy, as
expressed in the Act and is, therefore, unenforceable.
- --------------------------------------------------------------------------------
PRINCIPAL STOCKHOLDERS
----------------------
- --------------------------------------------------------------------------------
The following table sets forth, as of the date of this prospectus, the total
number of shares owned beneficially by each of our directors, officers and key
employees, individually and as a group, and the present owners of 5% or more of
our total outstanding shares. The table also reflects what such ownership will
be assuming completion of the sale of all shares in this offering, which we
can't guarantee. The stockholder listed below has direct ownership of his
shares and possesses sole voting and dispositive power with respect to the
shares.
Page 29
==============================================================================================
Name and Address Of Number of Shares Number of Shares Percentage of
Beneficial Owner [1] Before Offering After Offering Ownership After
Offering
==============================================================================================
C>
Brian C. Doutaz 5,000,000 5,000,000 40.65%
35, 12880 Railway Ave.
Richmond, B.C. V7E 6G4
- ----------------------------------------------------------------------------------------------
James M. Hutchison 0 0 0.00%
4 - 19158 - 94 Avenue
Surrey, B.C. V3A 6L4
==============================================================================================
All Officers and Directors 5,000,000 5,000,000 40.65%
as a Group
==============================================================================================
[1] The persons named above may be deemed to be a "parent" and "promoter"
of our company, within the meaning of such terms under the Securities
Act of 1933, as amended, by virtue of his/its direct and indirect
stock holdings. Messrs. Doutaz and Hutchison are the only "promoters"
of our company.
Future Sales by Existing Stockholders
- -------------------------------------
A total of 10,300,000 shares of common stock were issued to the existing
Stockholders, all of which are "restricted securities", as that term is defined
in Rule 144 of the Rules and Regulations of the SEC promulgated under the
Securities Act. Under Rule 144, such shares can be publicly sold, subject to
volume restrictions and certain restrictions on the manner of sale, commencing
one (1) year after their acquisition.
Shares purchased in this offering, which will be immediately resalable, and
sales of all of our other shares after applicable restrictions expire, could
have a depressive effect on the market price, if any, of our common stock and
the shares we are offering. See "Dilution of the Price You Pay for Your Shares".
- --------------------------------------------------------------------------------
DESCRIPTION OF SECURITIES
-------------------------
- --------------------------------------------------------------------------------
Common Stock
- ------------
Our authorized capital stock consists of 500,000,000 shares of common stock, par
value $0.001 per share. The holders of our common stock:
* have equal ratable rights to dividends from funds legally available
therefor, when, as and if declared by our board of directors;
* are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs;
* do not have preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions or rights; and
* are entitled to one non-cumulative vote per share on all matters on which
stockholders may vote.
All shares of common stock now outstanding are fully paid for and non-assessable
and all shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable. We refer you to our Articles
of Incorporation, Bylaws and the applicable statutes of the State of Nevada for
a more complete description of the rights and liabilities of holders of our
securities.
Page 30
Non-cumulative Voting
- ---------------------
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in such event, the holders of the remaining shares will not
be able to elect any of our directors. After this offering is completed, the
present stockholders will own approximately 86% of our outstanding shares. See
"Principal Stockholders."
Cash Dividends
- --------------
As of the date of this prospectus, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our board of directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present intention not to
pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, in our business operations.
Reports
- -------
After we complete this offering, we will be subject to certain reporting
requirements and will furnish annual financial reports to you certified by our
independent accountants, and may, in our discretion, furnish unaudited quarterly
financial reports.
Stock Transfer Agent
- --------------------
Our stock transfer agent for our securities is Pacific Stock Transfer Company,
500 E. Warm Springs Road, Suite 240, Las Vegas, Nevada 89119; telephone (702)
361-3033.
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
--------------------
- --------------------------------------------------------------------------------
In September 2001 we issued a total of 5,000,000 shares of restricted common
stock to Brian C. Doutaz, the senior officer and director of our company. The
fair market value of the shares, $5,000, was paid in cash ($3,500) and in lieu
of a cash payment ($1,500) for services rendered in organizing the Corporation
and negotiating an agreement.
In May 2002, we entered into an Option To Purchase And Royalty Agreement with
Mayan Minerals Ltd., an unrelated third party, and acquired an option to acquire
100% of the four Bell Claims which make up our property contingent upon us doing
certain exploration work and making certain expenditures on the property. The
consideration for the property was a commitment of performing future exploration
work on the Bell Claims.
Page 31
- --------------------------------------------------------------------------------
LITIGATION
----------
- --------------------------------------------------------------------------------
We are not a party to any pending litigation and none is contemplated or
threatened.
- --------------------------------------------------------------------------------
EXPERTS
-------
- --------------------------------------------------------------------------------
Our financial statements for the period from inception to May 31, 2002, included
in this prospectus have been audited by Cordovano & Harvey, P.C., Independent
Certified Public Accountants, 201 Steele St., Suite 300, Denver, Colorado
80206-5221, as set forth in their report included in this prospectus.
- --------------------------------------------------------------------------------
LEGAL MATTERS
-------------
- --------------------------------------------------------------------------------
Conrad C. Lysiak, Attorney at Law, 601 West First Avenue, Suite 503, Spokane,
Washington 99201, telephone (509) 624-1475 has acted as legal counsel for our
company.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
--------------------
- --------------------------------------------------------------------------------
Our fiscal year end is May 31. We will provide audited financial statements to
our stockholders on an annual basis, which statements will be prepared by an
Independent Certified Public Accountant.
Our audited financial statement from inception to May 31, 2002 immediately
follows:
financial statements
====================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
- -----------------------------------------------
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ---------------------------------------------------
The only statute, charter provision, bylaw, contract, or other arrangement under
which any controlling person, director or officer of the Registrant is insured
or indemnified in any manner against any liability which he may incur in his
capacity as such, is as follows:
1. Article XII of the Articles of Incorporation of the company, filed as
Exhibit 3.1 to the Registration Statement;
2. Article IX of the Bylaws of the company, filed as Exhibit 3.2 to the
Registration Statement; and
3. Nevada Revised Statutes, Chapter 78.
The general effect of the foregoing is to indemnify a control person, officer or
director from liability, thereby making the company responsible for any expenses
or damages incurred by such control person, officer or director in any action
brought against them based on their conduct in such capacity, provided they did
not engage in fraud or criminal activity.
Page 32
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
- -----------------------------------------------------
The estimated expenses of the offering (whether or not all shares are sold), all
of which are to be paid by the registrant, are as follows:
=======================================================================
Accounting Fees and Expenses $ 2,000.00
-----------------------------------------------------------------------
Legal Fees and Expenses 5,000.00
-----------------------------------------------------------------------
Transfer Agent Fees 1,000.00
-----------------------------------------------------------------------
SEC Registration Fee 100.00
-----------------------------------------------------------------------
Printing Expenses 200.00
-----------------------------------------------------------------------
Blue Sky Fees/Expenses 5,000.00
-----------------------------------------------------------------------
Miscellaneous Expenses 1,700.00
=======================================================================
TOTAL $15,000.00
=======================================================================
STERLING GROUP VENTURES, INC.
Financial Statements
May 31, 2002
(With Report of Independent Auditors Thereon)
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Index to Financial Statements
PAGE
----
Report of Independent Auditors F-2
Balance Sheet at May 31, 2002 F-3
Statement of Operations for the period from
September 13, 2001(date of inception) through May 31, 2002 F-4
Statement of Changes in Shareholders' Equity for the period from
September 13, 2001(date of inception) through May 31, 2002 F-5
Statement of Cash Flows for the period from
September 13, 2001(date of inception) through May 31, 2002 F-6
Notes to Financial Statements F-7
Page F-2
Report of Independent Auditors
The Board of Directors and Shareholders
Sterling Group Ventures, Inc.:
We have audited the accompanying balance sheet of Sterling Group Ventures, Inc.
as of May 31, 2002, and the related statements of operations,
stockholders equity, and cash flows for the period from September 13, 2001
(inception) through May 31, 2002. These financial statements are the
responsibility of the Company management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about 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. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sterling Group Ventures, Inc.
as of May 31, 2002, and the results of its operations and its cash flows for the
period from September 13, 2001 (inception) through May 31, 2002 in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company significant operating loss raises substantial
doubt about the ability to continue as a going concern. Management plan in
regard to this matter is also discussed in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Cordovano and Harvey, P.C.
Cordovano and Harvey, P.C.
Denver, Colorado
24-Jun-02
Page F-3
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Balance Sheet
May 31, 2002
ASSETS
Cash $ 30,374
============
LIABILITIES AND SHAREHOLDERSEQUITY
Liabilities:
Accounts payable and accrued expenses $ 2,130
-------------
Total liabilities 2,130
-------------
Commitment and contingency (Note 5)
Shareholders equity (Note 3):
Common stock, $.001 par value; authorized 500,000,000
shares, issued and outstanding 10,300,000 shares. 10,300
Additional paid-in capital 26,000
Deficit accumulated during the development stage (8,056)
-------------
Total shareholders' equity 28,244
-------------
$ 30,374
=============
See accompanying notes to financial statements
Page F-4
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Statement of Operations
September 13, 2001 (date of inception) through May 31, 2002
Costs and expenses:
General and administrative $ 5,078
Rent contributed by affiliate (Note 2) 800
Office expense, related party (Note 2) 678
Stock-based compensation (Notes 2&5):
Organization expenses. 1,500
-------------
8,056
Loss before income taxes (8,056)
Income tax provision (Note 4) -
-------------
Net loss $ (8,056)
=============
See accompanying notes to financial statements
Page F-5
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Statement of Changes in Shareholders' Equity
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
--------------------------------
Shares Par Value Capital Stage Total
-------------- -------------- -------------- -------------- --------------
Balance at September 13, 2001
(date of inception). - $ - $ - $ - $ -
September 2001, issuance of
Common stock to Founder
($.001 per share) in
exchange for organizing
the Company (Note 2). 1,500,000 1,500 - - 1,500
October 2001, sale of common
stock to Founder ($.001
per share) 3,500,000 3,500 - - 3,500
October 2001, sale of common
stock pursuant to private
offering memorandum ($.001
per share) (Note 5). 2,500,000 2,500 - - 2,500
November 2001, sale of common
stock pursuant to private
offering memorandum ($.01
per share) (Note 5). 2,800,000 2,800 25,200 - 28,000
Value of rent contributed by
An affiliate (Note 2). - - 800 - 800
Net loss for the period - - - (8,056) (8,056)
---------- ----------- ----------- ----------- -----------
Balance at May 31, 2002 10,300,000 $ 10,300 $ 26,000 $ (8,056) $ 28,244
========== =========== =========== =========== ===========
See accompanying notes to financial statements
Page F-6
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Statement of Cash Flows
September 13, 2001 (date of inception) through May 31, 2002
Cash flows from operating activities:
Net loss $ (8,056)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock issued in exchange for services and the
payment of expenses on behalf of the Company (Note 2) 1,500
Value of office space contributed by an affiliate
(Note 2) 800
Changes in operating assets and liabilities:
Accounts payable and accrued expenses 2,130
-------------
Net cash used in
operating activities (3,626)
-------------
Cash flows from financing activities:
Proceeds from the sale of common stock. 34,000
Offering costs -
-------------
Net cash provided by
financing activities 34,000
-------------
Net change in cash. 30,374
=============
Cash, beginning of period -
-------------
Cash, end of period $ 30,374
=============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ -
=============
Interest $ -
=============
See accompanying notes to financial statements
Page F-7
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
Sterling Group Ventures, Inc. (the "Company") was incorporated in the state of
Nevada on September 13, 2001 to engage in the acquisition, exploration and
development of natural resource properties of merit. The accompanying financial
statements have been prepared assuming that the Company will continue as a going
concern.
The Company's significant operating loss raises substantial doubt about the
ability to continue as a going concern. Inherent in the Company's business are
various risks and uncertainties, including its limited operating history,
historical operating losses, dependence upon strategic alliances, and the
historical success rate of mineral exploration. Management's plan is to acquire
right, title and interest in certain mining claims situated in the Omineca
Mining District in the Province of British Columbia. Once the rights are
acquired, the Company plans to explore for minerals.
The Company's future success will be dependent upon its ability to raise
sufficient capital to fund its exploration program and, if minerals are
discovered, to mine the discovery on a timely and cost-effective basis.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of
three months or less when acquired to be cash equivalents. There were no cash
equivalents at May 31, 2002.
Earnings (loss) per Common Share
Basic net income per share is computed by dividing the net income available to
common shareholders (the numerator) for the period by the weighted average
number of common shares outstanding (the denominator) during the period. The
computation of diluted earnings is similar to basic earnings per share, except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if potentially dilutive common shares
had been issued.
At May 31, 2002, there was no variance between basic and diluted loss per share
as there were no potentially dilutive common shares outstanding.
The weighted average number of shares outstanding was computed using the rules
of the Securities and Exchange Commission. Such rules require that any stock
sold at a nominal value, as compared to the Public Offering, should be
considered outstanding for all periods presented.
Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109).
SFAS 109 requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Page F-8
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
Financial Instruments
At May 31, 2002, the fair value of the Company's financial instruments
approximate their carrying value based on their terms and interest rates.
Stock Based Compensation
The Company accounts for stock-based compensation arrangements in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," which permits entities to recognize as expense
over the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of Accounting Principle Board ("APB") Opinion No. 25 and provide pro
forma net earnings (loss) disclosures for employee stock option grants as if the
fair-value-based method defined in SFAS No. 123 had been applied. The Company
has elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123.
(2) Related Party Transactions
An affiliate contributed office space to the Company at no charge for the period
from October 1, 2001 through May 31, 2002. The use of such office space was
valued in the accompanying financial statements based on rates for similar space
in the local area.
An Officer organized the Company, raised the initial seed capital and negotiated
an agreement in exchange for 1,500,000 shares of the Company's common stock.
The transaction was valued based on the costs for such services in the local
area.
On May 17, 2002, the Company and its president entered into a trust agreement
whereby the president of the Company will hold the Mineral Claims (See Note 5)
on behalf of the Company until the initial exploration program is completed.
The Company reimbursed an affiliate $678 for office expenses used during the
period from September 13, 2001 through May 31, 2002.
(3) Shareholders' Equity
During October 2001, the Company offered for sale up to 10,000,000 shares at of
its $.001 par value common stock at a price of US $0.001 per share. The Company
closed the offering after selling 2,500,000 shares for gross proceeds of $2,500.
During November 2001, the Company offered for sale up to 3,000,000 shares at of
its $.001 par value common stock at a price of US $0.01 per share. The Company
closed the offering after selling 2,800,000 shares for gross proceeds of
$28,000.
Each offering was made in reliance on an exemption from registration of a trade
in the United States under the Securities Act of 1933, as amended, and in the
Province of British Columbia under Section 61 of the Securities Act (British
Columbia) pursuant to the exemption contained in Sections 128 (a), (b) and (h)
of the Rules to the B.C. Act.
(4) Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under this method, deferred income taxes are provided on temporary differences
between the financial reporting bases and income tax bases of the Company's
assets and liabilities and unused net operating loss carryforwards. A valuation
allowance for net deferred taxes is provided unless realizability is judged by
management to be more likely than not. The effect on deferred taxes from a
change in tax rates is recognized in income in the period that includes the
enactment date.
Page F-9
STERLING GROUP VENTURES, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
A reconciliation of U.S. statutory federal income tax rate to the effective rate
follows for the period from September 13, 2001 (inception) through May 31, 2002:
U.S. statutory federal rate 34.00%
Non-U.S. 0.00%
Net operating loss for which no tax
Benefit is currently available (37.14)%
--------
(3.14)%
At May 31, 2002, the Company has a net operating loss carryforward for federal
income tax purposes of approximately $1,089, which was fully allowed for in the
valuation allowance of $1,089. The valuation allowance offsets the net deferred
tax asset for which there is no assurance of recovery. The change in the
valuation allowance for period from September 13, 2001 (inception) through May
31, 2002 was $1,089.
Because of various stock transactions during the period from September 13, 2001
(inception) through May 31, 2002, management believes the Company may have
undergone an "ownership change" as defined by Section 382 of the Internal
Revenue Code. Accordingly, the utilization of a portion of the net operating
loss carryforward may be limited. Due to this limitation, and the uncertainty
regarding the ultimate utilization of the net operating loss carryforward, no
tax benefit for losses has been provided by the Company in the accompanying
financial statements. The net operating loss carryforward will expire in 2022.
(5) Commitment and Contingency
On May 17, 2002, the Company and Mayan Minerals Ltd., a British Columbia
corporation, (Mayan), entered into an Option to Purchase and Royalty Agreement
(the "Agreement"). Under the terms of the Agreement, Mayan granted to the
Company the sole and exclusive right and option to acquire an undivided 100
percent of the right, title and interest of Mayan in the Bell 1-4 Mineral
Claims, subject to Mayan receiving annual payments and a royalty, in accordance
with the terms of the Agreement, as follows:
The Company must pay Mayan $100,000 in Canadian funds by January 1, 2003;
The Company must incur exploration expenditures on the Claims of a minimum of
$41,000 in Canadian funds by August 31, 2002;
The Company must incur exploration expenditures on the Claims of a further
$100,000 in Canadian funds (for aggregate minimum exploration expenses of
$141,000 in Canadian funds) by August 31, 2003; and
Upon exercise of the Option, the Company is required to pay to Mayan, commencing
January 1, 2004, the sum of $100,000 in Canadian funds per annum.
At May 31, 2002, the exchange rate was approximately $1.53 (Canadian) to $1.00
(US.)
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
- -------------------------------------------------
During the past three years, the Registrant has sold the following securities
which were not registered under the Securities Act of 1933, as amended.
================================================================================
Name and Address Date Shares Consideration
================================================================================
Brian C. Doutaz 9/28/02 5,000,000 $3,500 cash and $1,500 in
35 - 12880 Railway Avenue services rendered
Richmond, B. C. V7E 6G4
================================================================================
We issued the foregoing restricted shares of common stock to Mr. Doutaz pursuant
to Section 4(2) of the Securities Act of 1933. Mr. Doutaz is a sophisticated
investor, is an officer and director of the company, and was in possession of
all material information relating to the company. Further, no commissions were
paid to anyone in connection with the sale of the shares and general
solicitation was made to anyone.
================================================================================
Name and Address Date Shares Consideration
================================================================================
618951 B.C. Ltd. 10/08/01 500,000 $5,000 Cash
433 West Richards Street,
Nelson, B.C. V3L 3K3
- --------------------------------------------------------------------------------
Kimberley Cooper 11/13/01 500,000 $ 500 Cash
16580 - 78A Ave.
Surrey, B.C. V3S 7V3
- --------------------------------------------------------------------------------
Ian Jackson 10/08/01 500,000 $ 500 Cash
9 - 15151 Buena Vista Ave.
White Rock, B.C. V4B 1Y2
- --------------------------------------------------------------------------------
Ryan Williams 10/04/01 500,000 $ 500 Cash
8796 Squilax Anglemont,
Chase, B.C.
- --------------------------------------------------------------------------------
Sylco Investments Ltd. 10/15/01 500,000 $ 500 Cash
2100 - 1111 West Georgia Street,
Vancouver, B.C. V6E 4M3
================================================================================
Page 33
================================================================================
Name and Address Date Shares Consideration
================================================================================
Sylvia Williams 10/28/01 500,000 $ 500 Cash
12636-57A Ave.
Vancouver, B.C. V3X 3H6
- --------------------------------------------------------------------------------
Colin T. McGlinn 11/05/01 500,000 $5,000 Cash
Box 24140, APO,
Richmond, B.C. V7B 1Y3
- --------------------------------------------------------------------------------
Diane McGlinn 11/05/01 500,000 $5,000 Cash
4 - 6250 - 48A Avenue,
Delta, B.C. V4K 4W2
- --------------------------------------------------------------------------------
HO Argus Ecological Ltd. 11/12/01 500,000 $5,000 Cash
5000 Miller Road,
Richmond, B.C. V7B 1Y3
- --------------------------------------------------------------------------------
Creative Pro-Grams Holdings Ltd. 11/11/01 500,000 $5,000 Cash
5148 Ruby Street,
Vancouver, B.C. V5R 4J6
- --------------------------------------------------------------------------------
G. Olsen Wood 11/06/01 500,000 $5,000 Cash
216 - 8511 Westminster Hwy.,
Richmond, B.C. V6X 3H7
================================================================================
We issued the foregoing restricted shares of common stock to the named
individuals pursuant to Section 504D of the Securities Act of 1933. None of the
above are deemed to be accredited investors and each was in possession of all
material information relating to the company. Further, no commissions were paid
to anyone in connection with the sale of the shares and general solicitation was
made to anyone.
ITEM 27. EXHIBITS.
- ------------------
The following Exhibits are filed as part of this Registration Statement,
pursuant to Item 601 of Regulation K. All Exhibits have been previously filed
unless otherwise noted.
================================================================================
Exhibit No. Document Description
================================================================================
3.1 Articles of Incorporation.
- --------------------------------------------------------------------------------
3.2 Bylaws.
- --------------------------------------------------------------------------------
4.1 Specimen Stock Certificate.
- --------------------------------------------------------------------------------
5.1 Opinion of Bernard Pinsky regarding the legality of the Securities being
registered.
- --------------------------------------------------------------------------------
10.1 Geological Report on the Bell Mineral Claims.
- --------------------------------------------------------------------------------
10.3 Option To Purchase and Royalty Agreement
- --------------------------------------------------------------------------------
10.4 Trust Agreement.
- --------------------------------------------------------------------------------
23.1 Consent of Cordovano & Harvey, P.C., Certified Public Accountants
- --------------------------------------------------------------------------------
23.2 Consent of Bernard Pinsky, Esq.
- --------------------------------------------------------------------------------
99.1 Subscription Agreement.
================================================================================
ITEM 28. UNDERTAKINGS.
- ----------------------
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
Page 34
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
a. To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
b. To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
c. To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any change to such information in the registration statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
- --------------------------------------------------------------------------------
SIGNATURES
----------
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing of this Form SB-2 Registration Statement and has duly
caused this Form SB-2 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Vancouver, British Columbia, on this
24th day of July, 2002.
STERLING GROUP VENTURES, INC.
BY: /s/ Brian C. Doutaz
Brian C. Doutaz, President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Brian C. Doutaz, as true and lawful attorney-in-fact
and agent, with full power of substitution, for his and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
therewith, with the Securities and Exchange Commission, and to make any and all
state securities law or blue sky filings, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying the
confirming all that said attorney-in-fact and agent, or any substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Page 35
Pursuant to the requirements of the Securities Act of 1933, this Form SB-2
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
================================================================================
Signature Title Date
================================================================================
- --------------------------------------------------------------------------------
/s/ Brian C. Doutaz President, Chief Executive July 24, 2002
Officer and a member of the
Board of Directors
- --------------------------------------------------------------------------------
Brian C. Doutaz
================================================================================
- --------------------------------------------------------------------------------
/s/ James M. Hutchison Treasurer, Secretary, Chief July 24, 2002
Financial Officer and a
member of the Board of Directors
- --------------------------------------------------------------------------------
James M. Hutchison
================================================================================
Exhibit 3.1
- -----------
Articles of Incorporation
Exhibit 3.2
- -----------
Bylaws
Exhibit 4.1
- -----------
Specimen Stock Certificate
Exhibit 5.1
- -----------
Opinion of Woodburn and Wedge regarding the legality of the Securities
being registered
Exhibit 10.1
- ------------
Geological Report on the Bell Mining Claims
Exhibit 10.3
- ------------
Option to Purchase and Royalty Agreement
Exhibit 10.4
- ------------
Trust Agreement
Exhibit 23.1
- ------------
Consent of Cordovano & Harvey, P.C., Certified Public Accountants
Exhibit 99.1
- ------------
Subscription Agreement
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
STERLING GROUP VENTURES, INC.
* * * * *
FIRST
The name of the corporation is STERLING GROUP VENTURES, INC.
SECOND
Its principal office in the state of Nevada is located at 3110 E.
Sunset Road, Suite H1, Las Vegas, Nevada 89120 The name and address
of its resident agent is Pacific Corporate Services, Inc., 3110
Sunset Road, Suite H1, Las Vegas, Nevada 89120.
THIRD
The purpose or purposes for which the corporation is organized:
To engage in and carry on any lawful business activity or
trade, and any activities necessary, convenient, or desirable
to accomplish such purposes, not forbidden by law or by these
articles of incorporation.
FOURTH
The amount of the total authorized capital stock of the corporation
is Five Hundred Thousand Dollars ($500,000.00) consisting of Five
Hundred Million (500,000,000) shares of common stock of the par
value of $0.001 each.
FIFTH
A. The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be
increased or decreased in such manner as shall be provided by
the bylaws of this corporation.
B. There is one initial member of the Board of Directors and his
name and address is:
NAME POST-OFFICE ADDRESS
---- -------------------
Brian C. Doutaz 12880 Railway Avenue
Unit 35
Richmond, British Columbia
Canada V7E 6G4
C. The number of members of the Board of Directors shall not be
less than one nor more than thirteen.
SIXTH
The capital stock, after the amount of the subscription price, or
par value, has been paid in shall not be subject to assessment to
pay the debts of the corporation.
Page 2
SEVENTH
The name and addresses of each of the incorporators signing the
Articles of Incorporation are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
Conrad C. Lysiak 601 West First Avenue
Suite 503
Spokane, Washington 99201
EIGHTH
The corporation is to have perpetual existence.
NINTH
In furtherance, and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
A. Subject to the bylaws, if any, adopted by the stockholders, to
make, alter or amend the bylaws of the corporation.
B. To fix the amount to be reserved as working capital over and
above its capital stock paid in, to authorize and cause to be
executed mortgages and liens upon the real and personal
property of this corporation.
C. By resolution passed by a majority of the whole board, to
designate one (1) or more committees, each committee to consist
of one (1) or more of the directors of the corporation, which,
to the extent provided in the resolution or in the bylaws of
the corporation, shall have and may exercise the powers of the
board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as
may be stated in the bylaws of the corporation or as may be
determined from time to time by resolution adopted by the board
of directors.
D. When and as authorized by the affirmative vote of stockholders
holding stock entitling them to exercise at least a majority of
the voting power given at a stockholders' meeting called for
that purpose, or when authorized by the written consent of the
holders of at least a majority of the voting stock issued and
outstanding, the board of directors shall have power and
authority at any meeting to sell, lease or exchange all of the
property and assets of the corporation, including its good will
and its corporate franchises, upon such terms and conditions as
its board of directors deem expedient and for the best
interests of the corporation.
TENTH
Meeting of stockholders may be held outside the State of Nevada, if
the bylaws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the
State of Nevada at such place or places as may be designated from
time to time by the board of directors or in the bylaws of the
corporation.
Page 3
ELEVENTH
This corporation reserves the right to amend alter, change or repeal
any provision contained in the Articles of Incorporation, in the
manner now or hereafter prescribed by statute, or by the Articles of
Incorporation, and all rights conferred upon stockholders herein are
granted subject to this reservation.
TWELFTH
The corporation shall indemnify its officers, directors, employees
and agents to the full extent permitted by the laws of the State of
Nevada.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation pursuant to the General Corporation Law of the State of
Nevada, do make and file these Articles of Incorporation, hereby declaring and
certifying that the facts herein stated are true, and accordingly have hereunto
set my hand this 10th day of September, 2001.
/s/ Conrad C. Lysiak
____________________________________________
CONRAD C. LYSIAK
STATE OF WASHINGTON )
)
COUNTY OF SPOKANE )
On this 10th day of September, 2001 before
me, a Notary Public, personally appeared
CONRAD C. LYSIAK, who severally acknowledged
that he executed the above instrument.
/s/ Judy Terese Lysiak
_____________________________________________
Notary Public, residing in the State of
Washington, residing in Spokane.
My Commission Expires:
October 9, 2002
Exhibit 3.2
BYLAWS
OF
STERLING GROUP VENTURES, INC.
-----------------------------
I. SHAREHOLDER'S MEETING.
.01 Annual Meetings.
The annual meeting of the shareholders of this Corporation, for the purpose
of election of Directors and for such other business as may come before it,
shall be held at the registered office of the Corporation, or such other
places, either within or without the State of Nevada, as may be designated
by the notice of the meeting, on the second week in October of each and
every year, at 1:00 p.m., commencing in 2002, but in case such day shall be
a legal holiday, the meeting shall be held at the same hour and place on
the next succeeding day not a holiday.
.02 Special Meetings.
Special meetings of the shareholders of this Corporation may be called at
any time by the holders of ten percent (10%) of the voting shares of the
Corporation, or by the president, or by the Board of Directors or a
majority thereof. No business shall be transacted at any special meeting of
shareholders except as is specified in the notice calling for said meeting.
The Board of Directors may designate any place, either within or without
the State of Nevada, as the place of any special meeting called by the
president or the Board of Directors, and special meetings called at the
request of shareholders shall be held at such place in the State of Nevada,
as may be determined by the Board of Directors and placed in the notice of
such meeting.
.03 Notice of Meeting.
Written notice of annual or special meetings of shareholders stating the
place, day, and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called shall be given by
the secretary or persons authorized to call the meeting to each shareholder
of record entitled to vote at the meeting. Such notice shall be given not
less than ten (10) nor more than fifty (50) days prior to the date of the
meeting, and such notice shall be deemed to be delivered when deposited in
the United States mail addressed to the shareholder at his/her address as
it appears on the stock transfer books of the Corporation.
.04 Waiver of Notice.
Notice of the time, place, and purpose of any meeting may be waived in
writing and will be waived by any shareholder by his/her attendance thereat
in person or by proxy. Any shareholder so waiving shall be bound by the
proceedings of any such meeting in all respects as if due notice thereof
had been given.
.05 Quorum and Adjourned Meetings.
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. A majority of the shares represented at a meeting, even if
less than a quorum, may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified. The shareholders
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum.
.06 Proxies.
At all meetings of shareholders, a shareholder may vote by proxy executed
in writing by the shareholder or by his/her duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the Corporation
before or at the time of the meeting. No proxy shall be valid after eleven
(11) months from the date of its execution, unless otherwise provided in
the proxy.
Page 2
.07 Voting of Shares.
Except as otherwise provided in the Articles of Incorporation or in these
Bylaws, every shareholder of record shall have the right at every
shareholder's meeting to one (1) vote for every share standing in his/her
name on the books of the Corporation, and the affirmative vote of a
majority of the shares represented at a meeting and entitled to vote
thereat shall be necessary for the adoption of a motion or for the
determination of all questions and business which shall come before the
meeting.
II. DIRECTORS.
.01 General Powers.
The business and affairs of the Corporation shall be managed by its Board
of Directors.
.02 Number, Tenure and Qualifications.
The number of Directors of the Corporation shall be not less than one nor
more than thirteen. Each Director shall hold office until the next annual
meeting of shareholders and until his/her successor shall have been elected
and qualified. Directors need not be residents of the State of Nevada or
shareholders of the Corporation.
.03 Election.
The Directors shall be elected by the shareholders at their annual meeting
each year; and if, for any cause the Directors shall not have been elected
at an annual meeting, they may be elected at a special meeting of
shareholders called for that purpose in the manner provided by these
Bylaws.
.04 Vacancies.
In case of any vacancy in the Board of Directors, the remaining Director,
whether constituting a quorum or not, may elect a successor to hold office
for the unexpired portion of the terms of the Director whose place shall be
vacant, and until his/her successor shall have been duly elected and
qualified.
.05 Resignation.
Any Director may resign at any time by delivering written notice to the
secretary of the Corporation.
.06 Meetings.
At any annual, special or regular meeting of the Board of Directors, any
business may be transacted, and the Board may exercise all of its powers.
Any such annual, special or regular meeting of the Board of Directors of
the Corporation may be held outside of the State of Nevada, and any member
or members of the Board of Directors of the Corporation may participate in
any such meeting by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time; the participation by such
means shall constitute presence in person at such meeting.
A. Annual Meeting of Directors.
Annual meetings of the Board of Directors shall be held immediately
after the annual shareholders' meeting or at such time and place as
may be determined by the Directors. No notice of the annual meeting of
the Board of Directors shall be necessary.
B. Special Meetings.
Special meetings of the Directors shall be called at any time and
place upon the call of the president or any Director. Notice of the
Page 3
time and place of each special meeting shall be given by the
secretary, or the persons calling the meeting, by mail, radio,
telegram, or by personal communication by telephone or otherwise at
least one (1) day in advance of the time of the meeting. The purpose
of the meeting need not be given in the notice. Notice of any special
meeting may be waived in writing or by telegram (either before or
after such meeting) and will be waived by any Director in attendance
at such meeting.
C. Regular Meetings of Directors.
Regular meetings of the Board of Directors shall be held at such place
and on such day and hour as shall from time to time be fixed by
resolution of the Board of Directors. No notice of regular meetings of
the Board of Directors shall be necessary.
.07 Quorum and Voting.
A majority of the Directors presently in office shall constitute a quorum
for all purposes, but a lesser number may adjourn any meeting, and the
meeting may be held as adjourned without further notice. At each meeting of
the Board at which a quorum is present, the act of a majority of the
Directors present at the meeting shall be the act of the Board of
Directors. The Directors present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough Directors to leave less than a quorum.
.08 Compensation.
By resolution of the Board of Directors, the Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as Director. No such payment shall preclude
any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
.09 Presumption of Assent.
A Director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his/her dissent shall
be entered in the minutes of the meeting or unless he/she shall file his/
her written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent
by registered mail to the secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
.10 Executive and Other Committees.
The Board of Directors, by resolution adopted by a majority of the full
Board of Directors, may designate from among its members an executive
committee and one of more other committees, each of which, to the extent
provided in such resolution, shall have and may exercise all the authority
of the Board of Directors, but no such committee shall have the authority
of the Board of Directors, in reference to amending the Articles of
Incorporation, adoption a plan of merger or consolidation, recommending to
the shareholders the sale, lease, exchange, or other disposition of all of
substantially all the property and assets of the dissolution of the
Corporation or a revocation thereof, designation of any such committee and
the delegation thereto of authority shall not operate to relieve any member
of the Board of Directors of any responsibility imposed by law.
.11 Chairman of Board of Directors.
The Board of Directors may, in its discretion, elect a chairman of the
Board of Directors from its members; and, if a chairman has been elected,
he/she shall, when present, preside at all meetings of the Board of
Directors and the shareholders and shall have such other powers as the
Board may prescribe.
.12 Removal.
Directors may be removed from office with or without cause by a vote of
shareholders holding a majority of the shares entitled to vote at an
election of Directors.
Page 4
III. ACTIONS BY WRITTEN CONSENT.
Any corporate action required by the Articles of Incorporation, Bylaws, or the
laws under which this Corporation is formed, to be voted upon or approved at a
duly called meeting of the Directors or shareholders may be accomplished without
a meeting if a written memorandum of the respective Directors or shareholders,
setting forth the action so taken, shall be signed by all the Directors or
shareholders, as the case may be.
IV. OFFICERS.
.01 Officers Designated.
The Officers of the Corporation shall be a president, one or more vice
presidents (the number thereof to be determined by the Board of Directors),
a secretary and a treasurer, each of whom shall be elected by the Board of
Directors. Such other Officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any
Officer may be held by the same person, except that in the event that the
Corporation shall have more than one director, the offices of president and
secretary shall be held by different persons.
.02 Election, Qualification and Term of Office.
Each of the Officers shall be elected by the Board of Directors. None of
said Officers except the president need be a Director, but a vice president
who is not a Director cannot succeed to or fill the office of president.
The Officers shall be elected by the Board of Directors. Except as
hereinafter provide, each of said Officers shall hold office from the date
of his/her election until the next annual meeting of the Board of Directors
and until his/her successor shall have been duly elected and qualified.
.03 Powers and Duties.
The powers and duties of the respective corporate Officers shall be as
follows:
A. President.
The president shall be the chief executive Officer of the
Corporation and, subject to the direction and control of the
Board of Directors, shall have general charge and supervision
over its property, business, and affairs. He/she shall, unless a
Chairman of the Board of Directors has been elected and is
present, preside at meetings of the shareholders and the Board of
Directors.
B. Vice President.
In the absence of the president or his/her inability to act, the
senior vice president shall act in his place and stead and shall
have all the powers and authority of the president, except as
limited by resolution of the Board of Directors.
C. Secretary.
The secretary shall:
1. Keep the minutes of the shareholder's and of the Board of
Directors meetings in one or more books provided for that
purpose;
2. See that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
3. Be custodian of the corporate records and of the seal of the
Corporation and affix the seal of the Corporation to all
documents as may be required;
4. Keep a register of the post office address of each
shareholder which shall be furnished to the secretary by
such shareholder;
5. Sign with the president, or a vice president, certificates
for shares of the Corporation, the issuance of which shall
have been authorized by resolution of the Board of
Directors;
Page 5
6. Have general charge of the stock transfer books of the
corporation; and,
7. In general perform all duties incident to the office of
secretary and such other duties as from time to time may be
assigned to him/her by the president or by the Board of
Directors.
D. Treasurer.
Subject to the direction and control of the Board of Directors,
the treasurer shall have the custody, control and disposition of
the funds and securities of the Corporation and shall account for
the same; and, at the expiration of his/her term of office, he/
she shall turn over to his/her successor all property of the
Corporation in his/her possession.
E. Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the Board of
Directors, may sign with the president or a vice president
certificates for shares of the Corporation the issuance of which
shall have been authorized by a resolution of the Board of
Directors. The assistant treasurers shall, respectively, if
required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as
the Board of Directors shall determine. The assistant secretaries
and assistant treasurers, in general, shall perform such duties
as shall be assigned to them by the secretary or the treasurer,
respectively, or by the president or the Board of Directors.
.04 Removal.
The Board of Directors shall have the right to remove any Officer whenever
in its judgment the best interest of the Corporation will be served
thereby.
.05 Vacancies.
The Board of Directors shall fill any office which becomes vacant with a
successor who shall hold office for the unexpired term and until his/her
successor shall have been duly elected and qualified.
.06 Salaries.
The salaries of all Officers of the Corporation shall be fixed by the Board
of Directors.
V. SHARE CERTIFICATES
.01 Form and Execution of Certificates.
Certificates for shares of the Corporation shall be in such form as is
consistent with the provisions of the Corporation laws of the State of
Nevada. They shall be signed by the president and by the secretary, and the
seal of the Corporation shall be affixed thereto. Certificates may be
issued for fractional shares.
.02 Transfers.
Shares may be transferred by delivery of the certificates therefor,
accompanied either by an assignment in writing on the back of the
certificates or by a written power of attorney to assign and transfer the
same signed by the record holder of the certificate. Except as otherwise
specifically provided in these Bylaws, no shares shall be transferred on
the books of the Corporation until the outstanding certificate therefor has
been surrendered to the Corporation.
.03 Loss or Destruction of Certificates.
In case of loss or destruction of any certificate of shares, another may be
issued in its place upon proof of such loss or destruction and upon the
giving of a satisfactory bond of indemnity to the Corporation. A new
certificate may be issued without requiring any bond, when in the judgment
of the Board of Directors it is proper to do so.
Page 6
VI. BOOKS AND RECORDS.
.01 Books of Accounts, Minutes and Share Register.
The Corporation shall keep complete books and records of accounts and
minutes of the proceedings of the Board of Directors and shareholders and
shall keep at its registered office, principal place of business, or at the
office of its transfer agent or registrar a share register giving the names
of the shareholders in alphabetical order and showing their respective
addresses and the number of shares held by each.
.02 Copies of Resolutions.
Any person dealing with the Corporation may rely upon a copy of any of the
records of the proceedings, resolutions, or votes of the Board of Directors
or shareholders, when certified by the president or secretary.
VII. CORPORATE SEAL.
The following is an impression of the corporate seal of this Corporation:
VIII. LOANS.
Generally, no loans shall be made by the Corporation to its Officers or
Directors, unless first approved by the holder of two-third of the voting
shares, and no loans shall be made by the Corporation secured by its shares.
Loans shall be permitted to be made to Officers, Directors and employees of
the Company for moving expenses, including the cost of procuring housing. Such
loans shall be limited to $25,000.00 per individual upon unanimous consent of
the Board of Directors.
IX. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
.01 Indemnification.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a
Director, Trustee, Officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a Director, Trustee,
Officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgment, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed
to be in or not opposed to the best interests of the Corporation, and with
respect to any criminal action proceeding, had reasonable cause to believe
that such person's conduct was unlawful.
.02 Derivative Action.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment
in the Corporation's favor by reason of the fact that such person is or was
a Director, Trustee, Officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a Director, Trustee,
Officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees) and amount paid in settlement actually and reasonably incurred by
Page 7
such person in connection with the defense or settlement of such action or
suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to amounts paid in settlement, the
settlement of the suit or action was in the best interests of the
Corporation; provided, however, that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for gross negligence or willful misconduct in
the performance of such person's duty to the Corporation unless and only to
the extent that, the court in which such action or suit was brought shall
determine upon application that, despite circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper. The termination of any action or suit by
judgment or settlement shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation.
.03 Successful Defense.
To the extent that a Director, Trustee, Officer, employee or Agent of the
Corporation has been successful on the merits or otherwise, in whole or in
part in defense of any action, suit or proceeding referred to in Paragraphs
.01 and .02 above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection
therewith.
.04 Authorization.
Any indemnification under Paragraphs .01 and .02 above (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the Director, Trustee,
Officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth in Paragraphs
.01 and .02 above. Such determination shall be made (a) by the Board of
Directors of the Corporation by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (b)
is such a quorum is not obtainable, by a majority vote of the Directors who
were not parties to such action, suit or proceeding, or (c) by independent
legal counsel (selected by one or more of the Directors, whether or not a
quorum and whether or not disinterested) in a written opinion, or (d) by
the Shareholders.
Anyone making such a determination under this Paragraph .04 may determine
that a person has met the standards therein set forth as to some claims,
issues or matters but not as to others, and may reasonably prorate amounts
to be paid as indemnification.
.05 Advances.
Expenses incurred in defending civil or criminal action, suit or proceeding
shall be paid by the Corporation, at any time or from time to time in
advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided in Paragraph .04 above upon receipt of an
undertaking by or on behalf of the Director, Trustee, Officer, employee or
agent to repay such amount unless it shall ultimately be by the Corporation
is authorized in this Section.
.06 Nonexclusivity.
The indemnification provided in this Section shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any
law, bylaw, agreement, vote of shareholders or disinterested Directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a Director, Trustee, Officer, employee or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
.07 Insurance.
The Corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a Director, Trustee, Officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, Trustee, Officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
Page 8
any liability assessed against such person in any such capacity or arising
out of such person's status as such, whether or not the corporation would
have the power to indemnify such person against such liability.
.08 "Corporation" Defined.
For purposes of this Section, references to the "Corporation" shall
include, in addition to the Corporation, an constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had the
power and authority to indemnify its Directors, Trustees, Officers,
employees or agents, so that any person who is or was a Director, Trustee,
Officer, employee or agent of such constituent corporation or of any entity
a majority of the voting stock of which is owned by such constituent
corporation or is or was serving at the request of such constituent
corporation as a Director, Trustee, Officer, employee or agent of the
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Section with
respect to the resulting or surviving Corporation as such person would have
with respect to such constituent corporation if its separate existence had
continued.
X. AMENDMENT OF BYLAWS.
.01 By the Shareholders.
These Bylaws may be amended, altered, or repealed at any regular or special
meeting of the shareholders if notice of the proposed alteration or
amendment is contained in the notice of the meeting.
.02 By the Board of Directors.
These Bylaws may be amended, altered, or repealed by the affirmative vote
of a majority of the entire Board of Directors at any regular or special
meeting of the Board.
XI. FISCAL YEAR.
The fiscal year of the Corporation shall be set by resolution of the Board of
Directors.
XII. RULES OF ORDER.
The rules contained in the most recent edition of Robert's Rules or Order, Newly
Revised, shall govern all meetings of shareholders and Directors where those
rules are not inconsistent with the Articles of Incorporation, Bylaws, or
special rules or order of the Corporation.
XIII. REIMBURSEMENT OF DISALLOWED EXPENSES.
If any salary, payment, reimbursement, employee fringe benefit, expense
allowance payment, or other expense incurred by the Corporation for the benefit
of an employee is disallowed in whole or in part as a deductible expense of the
Corporation for Federal Income Tax purposes, the employee shall reimburse the
Corporation, upon notice and demand, to the full extent of the disallowance.
This legally enforceable obligation is in accordance with the provisions of
Revenue Ruling 69-115, 1969-1 C.B. 50, and is for the purpose of entitling such
employee to a business expense deduction for the taxable year in which the
repayment is made to the Corporation. In this manner, the Corporation shall be
protected from having to bear the entire burden of disallowed expense items.
Exhibit 4.1
SAMPLE SHARE CERTIFICATE
STERLING GROUP VENTURES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
AUTHORIZED SHARES $0.001 PAR VALUE
================================================================================
NUMBER SHARES
================================================================================
CUSIP
- --------------------------------------------------------------------------------
See Reverse For Certain Definitions
================================================================================
THIS CERTIFIES THAT
Is The Owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF $0.001 PAR VALUE COMMON
STOCK OF
STERLING GROUP VENTURES, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This Certificate
and the shares represented hereby are subject to the laws of the State of
Nevada, and to the Articles of Incorporation and Bylaws of the Corporation, as
now or hereafter amended. This certificate is not valid unless countersigned by
the Transfer Agent.
WITNESS, the facsimile seal of the Corporation and the signatures of its duly
authorized officers.
Dated:
================================================================================
========================= =========================
Secretary Seal President
================================================================================
STERLING GROUP VENTURES, INC.
The following abbreviations when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable law or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
In common
UNIF GIFT MIN ACT - __________ Custodian ___________ (Minor) under
Uniform Gifts to Minors Act ____________ (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, ___________________________ hereby sell, assign and transfer
unto _______________ (Please insert Social Security or other identifying number
of Assignee).
________________________________________________________________________________
(Please print or typewrite name and address, including zip code of Assignee)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________ shares of the capital
stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
____________________________________________ Attorney to transfer the said stock
on the books of the within-named Corporation, with full power of substitution in
the premises.
Dated: _________________
X ______________________________________________________________________________
Notice: The signature to this Assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration or enlargement or any change whatsoever. The signature(s) must be
guaranteed by an eligible guarantor institution (Banks, Stockbrokers, Savings
and Loan Associations and Credit Unions with membership
Signature(s) Guaranteed:
___________________________
TRANSFER FEE WILL APPLY
Exhibit 5.1
July 26, 2002
Sterling Group Ventures, Inc.
12880 Railway Avenue, Unit No. 35,
Richmond, B.C. V7B 1Y3
Re: Common Stock of Sterling Group Ventures, Inc.
Registered on Form SB-2 filed July 26, 2002
Gentlemen:
We have acted as special Nevada counsel to Sterling Group Ventures, Inc. (the
"Company"), a Nevada corporation, in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act") of 2,000,000 shares of
the Company's Common Stock (the "Shares"), as further described in a
registration statement on Form SB-2 filed under the Securities Act (the
"Registration Statement") on July 26, 2002.
In connection with this opinion, we have examined the following documents:
A. Articles of Incorporation of the Company, as amended to date, on file
with the Nevada Secretary of State;
B. Bylaws of the Company, as amended to date;
C. Resolutions adopted by the Board of Directors of the Company
pertaining to the Shares;
D. The Registration Statement; and
E. The Prospectus / Information Statement constituting a part of the
Registration Statement.
In addition, we have examined such other documents as we have deemed necessary
or appropriate as a basis for the opinions hereinafter expressed.
As to certain questions of fact, we have relied, without further investigation,
upon certificates of governmental authorities and of officers of the Company.
Additionally, we have assumed that the signatures on all documents examined by
us are genuine, that all documents submitted to us as originals are authentic
and that all documents submitted to us as copies or as facsimiles of copies or
originals, conform with the originals, which assumptions we have not
independently verified.
Based on the foregoing and the examination of such legal authorities as we have
deemed relevant, and subject to the qualifications and further assumptions set
forth below, we are of the opinion that (i) the Board of Directors of the
Company has authorized the issuance and sale of the Shares; and (ii) when issued
and sold against payment therefor in accordance with the provisions of the
Registration Statement and for such consideration not less than that established
by the Board of Directors, the Shares will be duly authorized and validly issued
and will be fully paid and non-assessable.
The foregoing opinions are limited to the matters expressly set forth herein and
no opinion may be implied or inferred beyond the matters expressly stated. We
disclaim any obligation to update this letter for events occurring after the
date of this letter, or a s a result of knowledge acquired by us after that
date, including changes in nay of the statutory or decisional law after the date
of this letter. We are members of the bar of the State of Nevada. We express no
opinion as to the effect and application of any United States federal law, rule
or regulation or any securities or blue sky laws of any state, including the
State of Nevada. We are not opining on, and assume no responsibility to or the
effect on any of the matters covered herein of the laws of any other
jurisdiction, other than the laws of Nevada as presently in effect.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our name in the prospectus constituting a part
of such Registration Statement under the heading "Legal Matters:
Very truly yours,
WOODBURN and WEDGE
/s/ Kirk S. Schumacher
By: Kirk S. Schumacher
Woodburn and Wedge,
Attorneys and Counsellors at Law,
Sierra Plaza,
Reno, Nevada 89511-1149
Exhibit 10.1
GEOLOGICAL REPORT
ON THE
BELL 1-4 MINERAL CLAIMS
OMINECA MINING DIVISION
BRITISH COLUMBIA, CANADA
FOR
STERLING GROUP VENTURES, INC.
UNIT 35, 12880 RAILWAY AVE.
RICHMOND, BRITISH COLUMBIA
V7E 6G4
BY
R.T. HEARD, P. ENG.
10881 SUNSHINE COAST HIGHWAY
HALFMOON BAY, BRITISH COLUMBIA
V0N 1Y2
MAY 31, 2002
APPENDIX
- --------
Assay Certificates
and
30 Element ICP Analysis
Page i
SUMMARY
-------
The Bell Property, discovered in 1914, has been sporadically prospected and
sampled since that time and has produced a small smelter shipment that averaged
0.6 ounces per ton gold, 375 ounces per ton silver and 2.4% copper.
Sampling has verified significant concentrations of precious and base metals
outcropping over an aerial extent of 400 meters on strike and 200 meters
vertically. This mineralization suggests the possibility that the property could
produce economic grades over sizeable widths.
A three-phase exploration program to evaluate and test this thesis is
recommended at a cost of $251,000.
Page ii
TABLE OF CONTENTS
- -----------------
Location
--------
SUMMARY Page i
TABLE OF CONTENTS Page ii
LIST OF FIGURES ii
INTRODUCTION
Location and Access 1
Mineral Property 1
History 1
GEOLOGY
General Geology 2
Local Geology 2
Mineralization 2
Sample Results
a. Bulk Sample - 1929 2
b. Lacana Mining Corporation - 1981 2
c. Teck Corporation - 1989 4
d. Thomas/Baker - 1992 4
e. R. T. Heard & Associates Ltd. - 1993 5
f. R. T. Heard & Associates Ltd. - 1997 5
CONCLUSIONS 6
RECOMMENDATIONS 6
SELECTED REFERENCES 8
AUTHOR'S QUALIFICATIONS 9
LIST OF FIGURES
- ---------------
Location
--------
FIGURE 1 Location Map After Page 1
FIGURE 2 Property Location 1: 250,000 After Page 1
FIGURE 3 Topographic Map Showing Claim Location 1: 50,000 After Page 1
FIGURE 4 Sample Plan After Page 4
FIGURE 5 Sample Location Sketch After Page 5
Page 1
INTRODUCTION
Location and Access
- -------------------
The property is located approximately 25 miles south west of Telkwa, B.C.,
at 54 37' north latitude and 127 40' west longitude, one-half mile north of
Milk Creek, at an approximate median elevation of six thousand feet. (Figures 1
and 2)
Access can be obtained by four-wheel drive vehicle from Telkwa along the
B.C. Hydro power line access road that extends through Telkwa Pass. The centre
of the property lies approximately one mile west of the 25-mile point from
Telkwa. Access can also be gained by helicopter from Smithers, B.C.,
approximately 30 miles.
Mineral Property
- ----------------
The BELL property consists of four - two post mineral claims. (Figure 3)
They were staked and recorded April 24, 1998. The registered owner is Angel
Jade Mines (Free Miner's Certificate 13115). Claim details are as shown below.
CLAIM NAME TENURE NUMBER DATE OF EXPIRY
---------- ------------- --------------
Bell 1 362113 April 24, 2004
Bell 2 362114 April 24, 2004
Bell 3 362115 April 24, 2004
Bell 4 362116 April 24, 2004
All recorded on NTS map sheet 093L, 12E
History
- -------
The property was first staked in 1914. During the period from 1927 to
1929, thirty-six sacks of ore were produced and shipped to the smelter.
Average assay grades of this shipment were 0.6 ounces per ton gold, 375.0 ounces
per ton silver and 2.4% copper. The property was restaked in the thirties by
Jack Hemelspech, a local prospector, who kept the ground in good standing up to
the time of his death in 1974. In 1981 the ground was staked by David Price and
examined in detail by Lacana Mining Corporation in September of that year.
Lacana staff collected 37 rock samples from outcrop and float during a two-day
examination. Although 13 of these samples assayed in excess of 0.05 ounces per
ton gold and 15.0 ounces per ton silver, Lacana does not appear to have optioned
the property and Mr. Price allowed it to lapse in 1989.
In 1989, the property was staked as the Mel claims and in 1998 restaked as
the Bell claims by Angel Jade Mines. Teck Corp. examined the property in 1989.
This author performed limited sampling over parts of the property in 1993
and 1997. He visited the property in September 2001 to confirm staking of the
Bell claims and verify claim post locations.
Page 2
GEOLOGY
-------
General Geology
- ---------------
"The Smithers map - area is underlain by the Lower and Middle Jurassic
essentially volcanic Hazelton Group; by the Middle and Upper Jurassic mainly
sedimentary Bowser Lake Group; by the Volcanic and sedentary Lower Cretaceous
Skeena Group; and, by the Tertiary volcanic Endako and Ootsa Lake Groups. The
Early Jurassic Topley Intrusions cut the lower part of the Hazelton Group and a
variety of intermediate to acidic plutons of Late Cretaceous to Eocene age
intrude most older units throughout the area
Structurally the area is dominated by a multitude of steep normal faults.
Few contacts between map-units are unfaulted and these are mainly intrusive or
contacts between younger map-units. Folding is common only in the few
sedimentary units and is spatially and genetically related to the Eocene thrust
faults." (Tipper, 1976)
Local Geology
- -------------
The oldest rocks in the area of the project are Hazelton Group volcanics of
Middle Jurassic age. The oldest, Telkwa Formation of variegated red, maroon,
grey-green breccia, tuff and flows of basaltic to rhyolitic composition are
found in fault contact with a red tuff member of the Nilkitwa Formation, a red
to brick red, fine-grained tuff and fine breccia.
Nakina Intrusions of Eocene age are found in outcrop as a small plug in the
center of the claim group. These intrusions are composed of quartz monzonite
and felsite, in part porphyritic.
The normal fault, which virtually cuts the project area is half, has been
traced north - south for 50 miles. This fault, in combinations with the
intrusions, was probably the heat source for the mineralizing fluids.
Mineralization
- --------------
The mineralization is hosted in quartz veins and altered members of a
metasedimentary - volcanoclastic package. Detailed mapping has yet to be
carried out on the property. The gold and silver values often occur in
association with a sulphide mix of galena, sphalerite, chalcopyrite, pyrite and
pyrrhotite.
Sample Results
- --------------
(a.) Bulk Sample - smelter shipment 1929
------------------
36 sacks - no weights
Smelter assay - 0.60 ounces per ton gold
375.00 ounces per ton silver
2.4% copper
(b.) Lacana Mining Corporation - 1981
--------------------------------
Lacana has reported the assay results from 37 samples of
representative material collected near old workings and
channelled from veins. The Lacana methodology was to remove
continuous chip samples using two rock picks, one as a moil
and one as a striking hammer. Samples were collected in
plastic sample bags, tagged and flown to Min-En Laboratories
Page 3
facility in Smithers where they were crushed, pulverized and
analyzed using standard fire-assay and chemical techniques for
gold, silver and lead. Some check assays were performed at
Bondar Clegg Laboratories on rejects supplied by Min-En, on
those samples that reported high values on the initial assay
returns. The sample locations are shown on Figure 4, Sample
Plan.
LACANA - ASSAY RESULTS
- --------------------------------------------------------------------------------
Sample Au Ag Pb SampleType/Width
o/t o/t %
- --------------------------------------------------------------------------------
1800 .021 0.20 0.01 Grab
- --------------------------------------------------------------------------------
1801 .001 0.02 0.01 Grab
- --------------------------------------------------------------------------------
1802 .121 113.06 7.92 Chip/0.8m
- --------------------------------------------------------------------------------
.210 103.15 7.68
- --------------------------------------------------------------------------------
1803 .098 19.15 1.56 Chip/1.0m
- --------------------------------------------------------------------------------
.095 17.60 1.41
- --------------------------------------------------------------------------------
1804 .036 48.00 0.38 Chip/0.5m
- --------------------------------------------------------------------------------
.064 50.50 0.38
- --------------------------------------------------------------------------------
1805 .002 0.49 0.08 Chip/0.2m
- --------------------------------------------------------------------------------
1806 .035 10.50 0.40 Chip/1.0m
- --------------------------------------------------------------------------------
.063 10.00 0.35
- --------------------------------------------------------------------------------
1807 .002 .18 0.02 Chip/2.0m
- --------------------------------------------------------------------------------
1808 .360 43.30 2.96 Chip/2.0m
- --------------------------------------------------------------------------------
.410 44.10 2.65
- --------------------------------------------------------------------------------
1809 .005 0.63 0.08 Chip/0.5m
- --------------------------------------------------------------------------------
1810 .003 0.18 0.01 Grab
- --------------------------------------------------------------------------------
1811 .007 2.38 0.19 Chip/1.0m
- --------------------------------------------------------------------------------
.110 2.15 0.18
- --------------------------------------------------------------------------------
1812 .08 26.90 0.17 Chip/0.5m
- --------------------------------------------------------------------------------
.15 26.43 0.19
- --------------------------------------------------------------------------------
1813 .079 34.60 4.42 Grab
- --------------------------------------------------------------------------------
.095 34.63 3.98
- --------------------------------------------------------------------------------
1814 .046 22.65 4.93 Grab
- --------------------------------------------------------------------------------
.073 20.97 4.20
- --------------------------------------------------------------------------------
1815 .052 9.20 0.48 Grab
- --------------------------------------------------------------------------------
.110 8.46 0.45
- --------------------------------------------------------------------------------
1816 .070 20.50 1.70 Selected Grab
- --------------------------------------------------------------------------------
.073 18.57 1.62
- --------------------------------------------------------------------------------
1817 .870 52.80 1.69 Composite
- --------------------------------------------------------------------------------
.880 49.90 1.52
- --------------------------------------------------------------------------------
1818 .003 0.19 0.02 Chip/3.0m
- --------------------------------------------------------------------------------
1819 .002 0.06 0.01 Channel / 0.3 x 1.0m
- --------------------------------------------------------------------------------
1820 .021 1.22 0.13 Chip/0.5m
- --------------------------------------------------------------------------------
.006 1.41 0.15
- --------------------------------------------------------------------------------
1821 .015 0.30 0.03 Chip/0.8m
- --------------------------------------------------------------------------------
1822 .012 0.63 0.05 Chip/0.8m
- --------------------------------------------------------------------------------
1823 Lost Sample Chip/0.3m
- --------------------------------------------------------------------------------
1824 .176 38.20 4.42 Representative Dump
- --------------------------------------------------------------------------------
Page 4
- --------------------------------------------------------------------------------
Sample Au Ag Pb SampleType/Width
o/t o/t %
- --------------------------------------------------------------------------------
1825 .004 0.34 0.08 Random Chip/0.5x4.0m
- --------------------------------------------------------------------------------
1826 .030 2.80 0.21 Random Chip/0.5x4.0m
- --------------------------------------------------------------------------------
.083 2.34 0.21
- --------------------------------------------------------------------------------
1827 .051 16.00 1.28 Chip/0.5 x 2m
- --------------------------------------------------------------------------------
.081 15.03 1.22
- --------------------------------------------------------------------------------
1828 .001 0.22 0.01 Random Chip/25.0m
- --------------------------------------------------------------------------------
1829 .002 0.07 0.01 Random Chip/25.0m
- --------------------------------------------------------------------------------
1830 .036 1.93 4.41 Chip/0.5m
- --------------------------------------------------------------------------------
.047 1.78 4.20
- --------------------------------------------------------------------------------
1831 .001 0.08 0.04 Chip/5.0m
- --------------------------------------------------------------------------------
1832 .003 0.39 0.01 Grab
- --------------------------------------------------------------------------------
1833 .011 0.14 0.01 Grab
- --------------------------------------------------------------------------------
MoS2- 1.27%
- --------------------------------------------------------------------------------
1834 .318 31.95 7.38 Grab
- --------------------------------------------------------------------------------
MoS2-.017%
- --------------------------------------------------------------------------------
.440 30.65 7.25
- --------------------------------------------------------------------------------
1000 .003 0.13 0.02 Grab
- --------------------------------------------------------------------------------
1001 .435 179.00 1.43 Grab
- --------------------------------------------------------------------------------
(c.) Teck Corporation - 1989 Assay Results
--------------------------------------------
- --------------------------------------------------------------------------------
Sample Description Au Ag Cu % Pb % Zn %
No. (opt) (opt)
- --------------------------------------------------------------------------------
T-277-A Selected Grab-Dump Material .017 27.80 1.95 16.70 1.20
5 x 5 Pit
- --------------------------------------------------------------------------------
T-278-A Selected Grab, dump material, .260 114.0 1.83 19.80 0.18
inclined shaft area, Quartz,
feldspar
- --------------------------------------------------------------------------------
T-279-A Chip Sample,2.5m vein, 250NW .088 28.20 1.64 3.14 0.10
of T-278-A, White quartz,
malachite stain, few sulphides
- --------------------------------------------------------------------------------
T-280-A Selected Higrade from T-279-A .046 13.24 1.10 49.42 0.14
- --------------------------------------------------------------------------------
D-216-A Hand selected, dump material .091 11.12 1.52 4.03 0.04
- --------------------------------------------------------------------------------
D-217-A Hand selected, dump material .024 72.00 1.14 7.28 1.52
- --------------------------------------------------------------------------------
*Results supplied via personal communication
(d.) Mel Property - Jim Thomas / John Baker - 1992
----------------------------------------------------
Mel-Pit 1-Dump material .410 opt gold
133.29 opt silver
2.32 % copper
11.80 % lead
1.05 % zinc
Page 5
(e.) R. T. Heard &Associates Ltd. - 1993 Assay Results
--------------------------------------------------------
- --------------------------------------------------------------------------------
Sample No. Description Au (opt) Ag (opt)
- --------------------------------------------------------------------------------
Mel - A Pit, NW of vein,2.0ft .005 0.37
- --------------------------------------------------------------------------------
Mel - B Pit, Chip - 6" vein .137 70.32
- --------------------------------------------------------------------------------
Mel - B2 Dump - selected grab .188 127.60
- --------------------------------------------------------------------------------
Mel - C Decline area, selected dump material .193 58.79
- --------------------------------------------------------------------------------
A 30-element ICP analysis of these samples is located in the Appendix.
(f.) R. T. Heard & Associates Ltd. - 1997 Assay Results
---------------------------------------------------------
During a re-examination of the property in 1997, this author re-sampled the
main pit area - samples 119001 and 002 and the inclined shaft dump 19011. As
well, two trenches were dug along strike from the pit area, chip sampled and
analyzed using a 30 element induced coupled plasma (ICP) procedure.
- --------------------------------------------------------------------------------
Sample No. Description Au (opt) Ag (opt) Cu % Pb % Zn %
- --------------------------------------------------------------------------------
119001 Pit #1, 2' chip .196 223.32 1.89 7.98 2.06
along 6" vein
- --------------------------------------------------------------------------------
119002 Pit #1 - Grab .012 3.06 1.25 1.71 0.17
- --------------------------------------------------------------------------------
119011 Decline - Grab .593 112.81 2.34 15.90 0.34
- --------------------------------------------------------------------------------
The ICP analysis is located in the Appendix of this report. A description
of sample locations follows:
- --------------------------------------------------------------------------------
Sample No. Description-Location Sample Length Assay - Ag grams
- --------------------------------------------------------------------------------
119003 Trench 1 0-5 feet 2.3
- --------------------------------------------------------------------------------
119004 " 5-10 feet 2.1
- --------------------------------------------------------------------------------
119005 " 10-15 feet 7.5
- --------------------------------------------------------------------------------
119006 " 15-20 feet 2.6
- --------------------------------------------------------------------------------
119007 " 20-25 feet 7.5
- --------------------------------------------------------------------------------
119008 " 25-30 feet 17.4
- --------------------------------------------------------------------------------
119009 " 30-35 feet 6.0
- --------------------------------------------------------------------------------
119010 Trench 2 0-15 feet 20.3
- --------------------------------------------------------------------------------
These results show an elevation of silver and iron values along strike. An
electromagnetic survey should be able to map any structures through this area
and is therefore recommended.
See Figure 5, Sample Location Sketch for the location of the Teck, Thomas/
Baker and Heard samples.
Page 6
CONCLUSIONS
-----------
The Bell property contains significant concentrations of precious metals
hosted by and adjacent of flat lying quartz veins. These veins outcrop over a
vertical distance in excess of 200 meters with strike lengths over 400 meters.
Preliminary sampling by Lacana, Teck, Thomas/Baker and Heard suggests that
the mineralization could approach economic grades over sizeable widths. A
three-phase exploration program is proposed, using geological mapping,
prospecting, geochemical sampling, electromagnetic survey and diamond drilling
to further evaluate this prospect. The estimated cost of the recommended
program is $251,000.
RECOMMENDATIONS
---------------
A three-phase exploration program is proposed.
Phase 1. Establish a base line with 25-meter stations and cross lines run
every 50 meters for 100 meters each side of the baseline.
Geologically map the grid. Conduct an electromagnetic survey over the
grid with readings taken every 25 meters along the lines. Rock and
geochemical sample those areas determined by the geological and EM
surveys.
These surveys will require two to three weeks. The estimated cost is
as follows:
Grid materials (pickets, paint, flagging etc.) 500
Geological and Geochemical supplies 300
EM Survey (5.2 km x 200/km) 2,000
Wages and fees 10,000
Camp equipment, operation 2,000
Helicopter costs 10,000
Diamond drilling, (600 ft x $17/ft) 10,200
Assaying 1,000
Sub Total 36,000
Contingencies 5,000
Cost for Phase 1 41,000
Page 7
Phase 2. Contingent upon favourable results from Phase 1, a second phase of
exploration will be directed towards the continuation of the diamond
drilling. It is anticipated that some additional geological mapping,
prospecting and some geochemical sampling will take place as the
drilling progresses but separate funding for that is not identified
here.
Cost to complete Phase 2 is estimated to be:
Transportation 3,000
Wages and fees 13,000
Camp equipment and operation 16,500
Helicopter costs 15,000
Diamond drilling (1500 ft x $17/ft) 25,500
Assaying 4,500
Camp cook, Industrial First Aid 5,000
Field costs, including drill fuel ($5.00/ft.) 7,500
Subtotal 90,000
Contingencies 10,000
Total Costs for Phase 2 100,000
Phase 3. The third phase of exploration will continue the diamond drill
program if results from the phase 2 program remain positive. Cost of
the third phase of exploration is estimated to be as follows:
Wages and fees 15,000
Camp equipment, operation 20,000
Helicopter costs 15,000
Diamond drilling (2000 ft x $17/ft) 34,000
Assaying and ICP Analyses 11,000
Camp cook, Industrial First Aid 5,000
Field costs ($5.00/ft) 10,000
Subtotal 110,000
Contingencies 15,000
Total Costs for Phase 3 125,000
Page 8
SELECTED REFERENCES
-------------------
Armstrong, J. E. (1944): Smithers, British Columbia; Geological Survey of
Canada, Preliminary Map, Paper 44-23.
Carter, N.C. (1973): Geology of the Northern Babine Lake Area, B.C.; Department
of Mines and Petroleum Resources, Preliminary Map No.12.
Carter, N.C. (1974): Geology and Geochronology of Porphyry Copper and Molybdenum
Deposits in West - Central British Columbia; University of British Columbia,
Phd Thesis.
Gower, S.C. (1982): A Report on the Trenching, Sampling and Related Geological
Mapping on the Dome #1 Group Mineral Claims; Assessment Report 10, 152.
Jones, R.H.B. (1926): Geology and Ore Deposits of Hudson Bay Mountain, Coast
District, British Columbia; Geological Survey of Canada, Summary Report,
1925, Part A.
Kirkham, R.V. (1969): A Mineralogical and Geochemical Study of the Zonal
Distribution of Ores in the Hudson Bay Range, British Columbia; University
of Wisconsin Doctoral Thesis.
Leach, W.W. (1907A): The Telkwa Mining District, British Columbia; Geological
Survey of Canada, Summary Report, 1906.
Leach, W.W. (1907B): Telkwa River and Vicinity; Geological Survey of Canada,
Separate Report, 988.
Leach, W.W. (1908): The Bulkley Valley, British Columbia; Geological Survey of
Canada, Summary Report,1907.
Leach, W.W. (1909): The Bulkley Valley and Vicinity; Geological Survey of
Canada, Summary Report, 1908.
Richards, T.A. (1976): Takla Project; McConnell Creek East - Half Map Area;
Geological Survey of Canada, in Report of Activities, Paper 76-1, Part A.
Tipper, H.W. (1971): Smithers Map Area, British Columbia; Geological Survey of
Canada, Report of Activities, Paper 71-1, Part A; pages 34-37.
Tipper,H.W. (1976): Smithers Map 93L. Geological Compilation by H.W. Tipper,
1976, Field Work T.A. Richards (1970-71) and H.W. Tipper, Geological Survey
of Canada, Open File 351.
Tipper, H.W. and T.A. Richards (in press): Jurassic Stratigraphy and History of
North-Central British Columbia; Geological Survey of Canada, Bulletin.
Page 9
AUTHOR'S QUALIFICATIONS
-----------------------
I, RICHARD T. HEARD, of 10881 Sunshine Coast Highway, Halfmoon Bay, British
Columbia, do hereby certify that:
1. I am a registered Professional Engineer in good standing in the
Association of Professional Engineers and Geoscientists of British
Columbia.
2. I am a graduate of Haileybury School of Mines, 1958 and of the Montana
College of Mineral Science and Technology, Butte, Montana with BSc in
Geological Engineering, 1971.
3. I have been practising my profession as an Exploration Geologist for more
than 40 years and as a Professional Engineer for the past 28 years.
4. This report is based on a search of published literature as well as a
personal knowledge of the area. I have visited the property on those times
listed herein.
5. I do not beneficially own, directly or indirectly, any securities of
Sterling Group Ventures, Inc. or any affiliate, nor do I expect to receive
any interest, direct or indirect in Sterling Group Ventures, Inc. or any of
its affiliates.
6. I hereby grant my permission for Sterling Group Ventures, Inc. to use this
report for any legal purposes normal to the business of Sterling Group
Ventures, Inc.
Dated at Vancouver, British Columbia this 31st day of May, 2002.
/s/ R.T. Heard
--------------------------------
R.T. Heard, P. Eng.
Exhibit 10.3
OPTION TO PURCHASE AND ROYALTY AGREEMENT
THIS AGREEMENT made as of the 17th day of May, 2002.
BETWEEN:
MAYAN MINERALS LTD., a company duly incorporated under the laws of the
-------------------
Province of British Columbia, having its register office at Suite 1650
- 999 West Hastings Street, Vancouver, BC, V6C 2W2
(hereinafter called "Mayan")
OF THE FIRST PART
AND:
BRIAN DOUTAZ, Trustee for STERLING GROUP VENTURES INC., a company duly
incorporated under the laws of the State of Nevada, both an office at
Unit 35, 12880 Railway Avenue, Richmond, BC, V7E 6G4
(hereinafter called "Doutaz" and "Sterling" respectively)
OF THE SECOND PART
WHEREAS:
A. Mayan is the sole beneficial owner of 100% of the right, title and interest
in and to the Bell 1-4 Mining Claims, which are situated in the Omineca
Mining District, which mining claims are more particularly described in
Schedule "A" attached hereto and forming part hereof (hereinafter together
with any form of successor or substitute mineral tenure called the
"Claims").
B. Angel Jade Mines Ltd. ("Angel Jade") is the recorded owner of the Claims,
and holds title to the Claims on the behalf of Mayan.
C. The parties now wish to enter into an agreement granting to Sterling the
exclusive right and option to acquire an undivided 100% of the right, title
and interest in and to the Claims on the terms and conditions as
hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual promises, covenants and agreements herein contained, the parties
hereto agree as follows:
1. INTERPRETATION
1.1 In this Agreement:
Page 2
(a) "Effective Date" means the date that both parties have signed this
Agreement;
(b) "Angel Jade" means Angel Jade Mines Ltd., a company incorporated
under the laws of the Province of British Columbia.
(c) "Mineral Products" means the products derived from operating the
Claims as a mine.
(d) "Net Smelter Returns" means the proceeds received by Sterling from
any smelter or other purchaser from the sale of any ores,
concentrates or minerals produced from the Claims after deducting
from such proceeds the following charges only to the extent that
they are not deducted by the smelter or other purchaser in computing
the proceeds:
(i) the cost of transportation of the ores, concentrates or
minerals from the Claims to such smelter or other purchaser,
including related transport;
(ii) smelting and refining charges including penalties;
(iii) marketing costs.
(e) "Option" means the option granted by Mayan to Sterling pursuant to
Section 3.
(f) "Operating the Claims as a mine" or "Operation of the Claims as a
mine" means any or all of the mining, milling, smelting, refining or
other recovery of ores, minerals, metals or concentrates or values
thereof, derived from the Claims.
(g) "Royalty" means the royalty to be paid by Sterling to Mayan pursuant
to Subsection 9.1.
(h) "Dollars ($)" means legal currency of Canada.
2. REPRESENTATIONS AND WARRANTIES
2.1 Doutaz and Sterling represent and warrant to Mayan that:
(a) Sterling is a body corporate duly incorporated, organized and
validly subsisting under the laws of its incorporating jurisdiction;
(b) Sterling has full power and authority to carry on its business and
to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement;
(c) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby contemplated will conflict
with, result in the breach of or accelerate the performance required
by any agreement to which Sterling is a party; and
(d) the execution and delivery of this Agreement and the agreements
contemplated hereby will not violate or result in the breach of laws
of any jurisdiction applicable or pertaining thereto or of
Sterling's constating documents.
Page 3
2.2 Mayan represents and warrants to Sterling:
(a) the Claims consist of the Bell 1-4 Mineral Claims which have been
duly and validly staked and recorded, are accurately described in
Schedule "A", are presently in good standing under the laws of the
jurisdiction in which they are located and, except as set forth
herein, are free and clear of all liens, charges and encumbrances;
(b) Mayan is the sole beneficial owner of a 100% interest in and to the
Claims and has the exclusive right to enter into this Agreement and
all necessary authority to dispose of an undivided 100% interest in
and to the Claims in accordance with the terms of this Agreement;
(c) Angel Jade is the registered owner of the Claims and holds title to
the Claims on behalf of Mayan;
(d) no person, firm or corporation has any proprietary or possessory
interest in the Claims other than Mayan and Angel Jade and no person
is entitled to any royalty or other payment in the nature of rent or
royalty on any minerals, ores, metals or concentrates or any other
such products removed from the Claims;
(e) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby contemplated will conflict
with, result in the breach of or accelerate the performance required
by any agreement to which Angel Jade is a party or by which it is
bound;
(f) the execution and delivery of this Agreement and the agreements
contemplated hereby will not violate or result in the breach of the
laws of any jurisdiction applicable or pertaining thereto.
2.3 The representations and warranties hereinbefore set out are conditions
on which the parties have relied in entering into this Agreement and will
survive the acquisition of any interest in the Claims by Sterling and each
party will indemnify and save the other party harmless from all loss,
damage, costs, actions and suits arising out of or in connection with any
breach or any representation, warranty, covenant, agreement or condition
made by the other party and contained in this Agreement.
3. OPTION
3.1 Mayan hereby gives and grants to Sterling the sole and exclusive right and
option to acquire an undivided 100% of the right, title and interest of
Mayan in and to the Claims, subject only to Mayan receiving the annual
payments and the Royalty, in accordance with the terms of this Agreement
for and in consideration of the following:
(a) payment of $100,000 by Sterling to Mayan on or before January 1,
2003;
Page 4
(b) Sterling, or its permitted assigns, incurring exploration
expenditures on the Claims of a minimum of $41,000 on or before
August 31, 2002; and
(c) Sterling, or its permitted assigns, incurring exploration
expenditures on the Claims of a further $100,000 (for aggregate
minimum exploration expenses of $141,000) on or before August 31,
2003.
3.2 Upon exercise of the Option, Sterling agrees to pay Mayan, commencing
January 1, 2004, the sum of $100,000 per annum for so long as Sterling, or
its permitted assigns, hold any interest in the Claims. Failure to make
any such annual payment shall result in termination of this Agreement in
accordance with Section 5.1.
4. RIGHT OF ENTRY
4.1 Until such time as the Option has been exercised, Sterling, its employees,
agents and independent contractors, will have the sole and exclusive
right and option to:
(a) enter upon the Claims;
(b) have exclusive and quiet possession thereof;
(c) do such prospecting, exploration, development or other mining work
thereon and thereunder as Sterling in its sole discretion may
consider advisable; and
(d) bring and erect upon the Claims such facilities as Sterling may
consider advisable.
5. TERMINATION
5.1 Subject to Section 8, this Agreement and the Option will terminate:
(a) on October 31, 2002 at 11:59 P.M., unless on or before that date,
Sterling has incurred exploration expenditures of a minimum of
$41,000 on the Claims;
(b) on January 1, 2003 at 12:01 A.M., unless Sterling has paid to Mayan
the further sum of $100,000;
(c) on October 31, 2003 at 11:59 P.M., unless Sterling has incurred a
further $100,000 of exploration expenditures on the Claims (for an
aggregate of $141,000); or
(d) at 12:01 A.M. on January 1 of each and every year, commencing on
January 1, 2004, unless Sterling has paid to Mayan the sum of
$100,000 on or before that date.
6. COVENANTS OF MAYAN
6.1 Mayan will:
(a) not do any act or thing which would or might in any way adversely
affect the rights of Sterling hereunder;
Page 5
(b) make available to Sterling and its representatives all records and
files in the possession of Mayan or Angel Jade relating to the
Claims and permit Sterling and its representatives at its own
expense to take abstracts therefrom and make copies thereof; and
(c) promptly provide Sterling with any and all notices and
correspondence from government agencies in respect of the Claims.
7. COVENANTS OF STERLING
7.1 Sterling will:
(a) keep the Claims free and clear of all liens, charges and
encumbrances arising from their operations hereunder and in good
standing by the doing and filing of all necessary work and by the
doing of all other acts and things and making all other payments
which may be necessary in that regard;
(b) permit Mayan, or its representatives duly authorized by it in
writing, at their own risk and expense, access to the Claims at all
reasonable times and to all records prepared by Sterling in
connection with work done on or with respect to the Claims;
(c) conduct all work on or with respect to the Claims in a careful and
minerlike manner and in compliance with all applicable Federal,
Provincial and local laws, rules, orders and regulations, and
indemnify and save Mayan harmless from any and all claims, suits,
actions made or brought against it as a result of work done by
Sterling on or with respect to the Claims; and
(d) obtain and maintain, or cause any contractor engaged hereunder to
obtain and maintain, during any period in which active work is
carried out hereunder, adequate insurance.
8. EXERCISE OF OPTION
8.1 Once Sterling has incurred the exploration expenditures, and made the
payments set out in Section 3.1, Sterling will, subject to the right of
Mayan to receive the Royalty and the obligation of Sterling to make the
annual payments set out in Section 3.2, own an undivided 100% of Mayan's
right, title, and interest in and to the Claims.
9. ROYALTY
9.1 Sterling will pay to Mayan an annual royalty equal to four percent (4%)
of Net Smelter Returns, subject to Section 9.4.
9.2 After the exercise of the Option, payment of the Royalty will be made
quarterly within 30 days after the end of each yearly quarter based upon a
year commencing on the 1st day of January and expiring on the 31st day of
December in any year in which production occurs. Within 60 days after the
end of each year for which the Royalty is payable, the records relating to
the calculation of Net Smelter Returns for such year will be audited by
Sterling and any adjustments in the payment of the Royalty will be made
forthwith after completion of the audit. All payments of the Royalty for a
year will be deemed final and in full satisfaction of all obligations of
Sterling in respect thereof if such payments or calculations thereof are
not disputed by Mayan within 60 days after receipt by Mayan of the said
Page 6
audit statement. Sterling will maintain accurate records relevant to the
determination of Net Smelter Returns and Mayan, or its authorized agent,
shall be permitted the right to examine such records at all reasonable
times.
9.3 The determination of Net Smelter Returns royalty hereunder is based on the
premise that production will be developed solely on the Claims except that
Sterling will have the right to commingle ore mined from the Claims with
ore mined and produced from other properties provided Sterling will adopt
and employ reasonable practices and procedures for weighing, sampling and
assaying, in order to determine the amounts of products derived from, or
attributable to commingled ore mined and produced from the Claims.
Sterling will maintain accurate records of the results of such sampling,
weighing and analysis with respect to any commingled ore mined and
produced from the Claims. Mayan or its authorized agents will be permitted
the right to examine at all reasonable times such records pertaining to
comingling of ore or to the calculation of Net Smelter Returns.
9.4 Sterling shall have the right at any time to purchase one-half of the
Royalty by paying to Mayan the sum of $1,000,000 per Royalty percentage
point.
10. OBLIGATIONS OF STERLING AFTER TERMINATION
10.1 In the event of the termination of the Option, Sterling will:
(a) leave the Claims in good standing for a minimum of one (1) year
under all applicable legislation, free and clear of all liens,
charges and encumbrances arising from this Agreement or their
operations hereunder and in a safe and orderly condition;
(b) deliver to Mayan within 60 days of its written request a
comprehensive report on all work carried out by Sterling on the
Claims (limited to factual matter only) together with copies of all
maps, drill logs, assay results and other technical data compiled by
Sterling with respect to the Claims;
(c) have the right, and obligation on demand made by Mayan, to remove
from the Claims within six (6) months of the effective date of
termination all facilities erected, installed or brought upon the
Claims by or at the instance of Sterling provided that at the option
of Mayan, any or all of facilities not so removed will become the
property of Mayan; and
(d) deliver to Mayan a duly executed transfer in registrable form of an
undivided 100% right, title and interest in and to the Claims in
favour of Mayan, or its nominee.
11. TRANSFER OF TITLE
11.1 Upon the request of Sterling, Mayan will deliver to Sterling a duly
executed transfer in registrable form of an undivided 100% of Mayan's
right, title and interest in and to the Claims in favour of Sterling which
Sterling will be entitled to register against title to the Claims provided
that transfer of legal title to the Claims as set forth in this Subsection
11.1 is for administrative convenience only and beneficial ownership of an
undivided 100% interest in the Claims will pass to Sterling only in
accordance with the terms and conditions of this Agreement.
Page 7
12. REGISTRATION OF AGREEMENT
12.1 Notwithstanding Section 11 of this Agreement, Sterling or Mayan will have
the right at any time to register this Agreement or a Memorandum thereof
against title to the Claims.
13. DISPOSITION OF CLAIM
13.1 Sterling may at any time sell, transfer or otherwise dispose of all or any
portion of its interest in and to the Claims and this Agreement provided
that, at any time, Sterling has first obtained the consent in writing of
Mayan, such consent not to be unreasonably withheld and further provided
that, at any time during the currency of this Agreement, any purchaser,
grantee or transferee of any such interest will have first delivered to
Mayan its agreement related to this Agreement and to the Claims,
containing:
(a) a covenant with Mayan by such transferee to perform all the
obligations of Sterling to be performed under this Agreement in
respect of the interest to be acquired by it from Sterling, and
(b) a provision subjecting any further sale, transfer or other
disposition of such interest in the Claims and this Agreement or any
portion thereof to the restrictions contained in this Subsection
13.1.
13.2 The provisions or Subsection 13.1 of this Agreement will not prevent
either party from entering into an amalgamation or corporate
reorganization which will have the effect in law of the amalgamated or
surviving company possessing all the property, rights and interests and
being subject to all the debts, liabilities and obligations of each
amalgamating or predecessor company.
14. ABANDONMENT OF PROPERTY
14.l Sterling shall have the unfettered right at any time after the exercise of
the Option to abandon all or any part of its interest in the Claims by
delivering a notice in writing of their intention to do so to Mayan, such
notice to list the part or parts of the Claims to be abandoned, and if
within 30 days of receipt of such notice Mayan delivers to Sterling a
notice ("Reacquisition Notice") stating its intention to reacquire all or
part or parts of the Claims, Sterling will deliver to Mayan duly executed
recordable transfers of its interest in such part or parts of the Claims
as Mayan has set forth in the Reacquisition Notice, such part or parts to
be in good standing for at least one year beyond the date of delivery of
such transfers and to be free and clear of all liens, charges, and
encumbrances arising from the operations of Sterling or its agents or
subcontractors hereunder.
15. CONFIDENTIAL NATURE OF INFORMATION
15.1 The parties agree that all information obtained from the work carried out
hereunder and under the operation of this Agreement will be the exclusive
property of the parties and will not be used other than for the activities
contemplated hereunder except as required by law or by the rules and
regulations of any regulatory authority having jurisdiction, or with the
written consent of both parties, such consent not to be unreasonably
withheld. Notwithstanding the foregoing, it is understood and agreed that
a party will not be liable to the other party for the fraudulent or
negligent disclosure of information by any of its employees, servants or
agents, provided that such party has taken reasonable steps to ensure the
preservation of the confidential nature of such information.
Page 8
16. FURTHER ASSURANCES
16.1 The parties hereto agree that they and each of them will execute all
documents and do all acts and things within their respective powers to
carry out and implement the provisions or intent of this Agreement.
17. NOTICE
17.1 Any notice, direction or other instrument required or permitted to be
given under this Agreement will be in writing and will be given by the
delivery or the same or by mailing the same by prepaid registered or
certified mail in each case addressed as follows:
(a) if to Mayan Mining Ltd.
1650 - 999 West Hastings Street
Vancouver, BC V6C 2W2
Attention: David J. McCue
---------
(b) if to Sterling Group Ventures Inc.
Unit 35, 12880 Railway Avenue
Richmond, BC V7E 6G4
Attention: Brian Doutaz
---------
l7.2 Any notice, direction or other instrument aforesaid will, if delivered, be
deemed to have been given and received on the day it was delivered, and if
mailed, be deemed to have been given and received on the tenth business
day following the day of mailing, except in the event of disruption of the
postal services in which event notice will be deemed to be received only
when actually received.
17.3 Any party may at any time give to the other notice in writing of any
change of address of the party giving such notice and from and after the
giving of such notice, the address or addresses therein specified will be
deemed to be the address of such party for the purpose of giving notice
hereunder.
18. HEADINGS
18.1 The headings to the respective sections herein will not be deemed part of
this Agreement but will be regarded as having been used for convenience
only.
19. DEFAULT
19.1 If any party (a "Defaulting Party") is in default of any requirement
herein set forth other than the provisions of Section 5 for which notice
of default need not be given, the party affected by such default will give
written notice to the defaulting Party specifying the default and the
Defaulting Party will not lose any rights under this Agreement, unless
within 30 days after the giving of notice of default by the affected party
the Defaulting Party has cured the default by the appropriate performance
and if the Defaulting Party fails within such period to cure any such
default, the affected party will be entitled to seek any remedy it may
have on account of such default.
Page 9
20. PAYMENT
20.1 All references to monies hereunder will be in Canadian funds except where
otherwise designated. All payments to be made to any party hereunder will
be mailed or delivered to such party at its address for notice purposes as
provided herein, or for the account of such party at such bank or banks in
Canada as such party may designate from time to time by written notice.
Said bank or banks will be deemed the agent of the designating party for
the purpose of receiving and collecting such payment.
21. ENUREMENT
21.1 Subject to Section 13, this Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors and
permitted assigns.
22. TERMS
22.1 The terms and provisions of this Agreement shall be interpreted in
accordance with the laws of British Columbia.
23. FORCE MAJEURE
23.1 No party will be liable for its failure to perform any of its obligations
under this Agreement due to a cause beyond its control (except those
caused by its own lack of funds) including, but not limited to acts of
God, fire, flood, explosion, strikes, lockouts or other industrial
disturbances, laws, rules and regulations or orders of any duly
constituted governmental authority or non-availability of materials or
transportation (each an "Intervening Event").
23.2 All time limits imposed by this Agreement, other than those imposed by
Section 5, will be extended by a period equivalent to the period of delay
resulting from an Intervening Event described in Subsection 23.1.
23.3 A party relying on the provisions of Subsection 23.1 will take all
reasonable steps to eliminate an Intervening Event and, if possible, will
perform its obligations under this Agreement as far as practical, but
nothing herein will require such party to settle or adjust any labour
dispute or to question or to test the validity of any law, rule,
regulation or order of any duly constituted governmental authority or to
complete its obligations under this Agreement if an Intervening Event
renders completion impossible.
24. ENTIRE AGREEMENT
24.1 This Agreement constitutes the entire agreement between the parties and
replaces and supersedes all prior agreements, memoranda, correspondence,
communications, negotiations and representations, whether verbal or
written, express or implied, statutory or otherwise between the parties
with respect to the subject matter herein.
Page 10
25. TIME OF ESSENCE
25.1 Time will be of the essence in this Agreement.
26. ENFORCEMENT OF AGREEMENT
26.1 The covenants, promises, terms and conditions contained herein will be
binding upon the parties jointly and severally and may be enforced by each
as against each other inter se.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
MAYAN MINERALS LTD.
/s/ R.T. Heard
Per:____________________________________________
by its Authorized Signatory
STERLING GROUP VENTURES INC.
/s/ Brian C. Doutaz
Per:____________________________________________
by its Authorized Trustee, Brian Doutaz
This is SCHEDULE "A" to an Agreement made as of the 17th day of May, 2002
between MAYAN MINERALS LTD. and STERLING GROUP VENTURES INC.
Claim Name Tenure Number Expiry Date
---------- ------------- -----------
Bell 1 362113 April 24, 2004
Bell 2 362114 April 24, 2004
Bell 3 362115 April 24, 2004
Bell 4 362116 April 24, 2004
Omineca Mining District
Exhibit 10.4
TRUST AGREEMENT
THIS AGREEMENT made as of the 17th day of May, 2002.
BETWEEN:
STERLING GROUP VENTURES, INC., a company duly incorporated under the
-----------------------------
laws of the State of Nevada and having an office at Unit 35, 12880
Railway Avenue, Richmond, BC, V7E 6G4
(hereinafter called "Sterling")
OF THE FIRST PART
AND:
BRIAN C. DOUTAZ, businessman, having an office at Unit 35, 12880
---------------
Railway Avenue, Richmond, BC, V7E 6G4
(hereinafter called the "Trustee")
OF THE SECOND PART
WHEREAS:
A. Sterling is desirous of acquiring an option to purchase and explore
certain mineral claims in the Province of British Columbia but does not
wish to incur the cost or liability incurred through the establishment of a
subsidiary foreign corporation at this early stage of its corporate
development;
B. Trustee is willing and legally capable of acting as a trustee for Sterling
to holding the mineral claims on behalf of Sterling until such time as the
initial three phase exploration program is completed and the Company is
properly able to evaluate the merits of owning the claims in its own name
or that of a subsidiary;
C. Sterling and Trustee, acting as Trustee, are prepared to enter into an
option to purchase and royalty agreement with Mayan Minerals Ltd., a
private British Columbia company, which is the sole beneficial owner of
100% of the right, title and interest in and to the Bell 1-4 Mining Claims,
which are situated in the Omineca Mining District, British Columbia, which
mining claims are more particularly described in Schedule "A" attached
hereto (hereinafter called the "Claims"); and
D. Sterling and Trustee now wish to enter into a trust agreement whereby
Trustee would hold title in trust for Sterling to the Claims on the terms
and conditions as hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual promises, covenants and agreements herein contained, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES
1.1 Sterling represents and warrants to Trustee that:
Page 2
(a) Sterling is a body corporate duty incorporated, organized and
validly subsisting under the laws of its incorporating jurisdiction;
and
(b) Sterling has full power and authority to carry on its business and
to enter into this Agreement and any agreement or instrument
referred to or contemplated herein.
1.2 Trustee represents and warrants to Sterling:
(a) Trustee is legally capable and has the full power and authority to
carry on as a trustee and to hold the mineral claims as a trustee on
behalf of Sterling and to enter into this Agreement and any
agreement or instrument referred to or contemplated herein.
1.3 The representations and warranties hereinbefore set out are conditions
on which the parties have relied in entering into this Agreement and each
party will indemnify and save the other party harmless from all loss,
damage, costs, actions and suits arising out of or in connection with any
breach or any representation, warranty, covenant, agreement or condition
made by the other party and contained herein.
2. TERMINATION
2.1 This Agreement will terminate on:
(a) January 01, 2005, unless on or before that date, Sterling terminates
in writing that certain Option To Purchase And Royalty Agreement
dated May 17, 2002 between Mayan Minerals Ltd., Brian C. Doutaz and
Sterling Group Ventures, Inc.
(b) on the date that Sterling terminates in writing the option to
purchase and royalty agreement; or
(c) the date on which Sterling incorporates a British Columbia
subsidiary to hold Sterling's interest in the Claims and transfers
such interest to the subsidiary.
3. COVENANTS OF STERLING
3.1 Sterling will keep the Claims free and clear of all liens, charges and
encumbrances arising from their operations hereunder and in good standing
by the doing and filing of all necessary work and by the doing of all
other acts and things and making all other payments which may be necessary
in that regard.
4. COVENANTS OF TRUSTEE
4.1 Trustee will not do any act or thing which would or might in any way
adversely affect the rights of Sterling hereunder.
5. FURTHER ASSURANCES
5.1 The parties hereto agree that they and each of them will execute all
documents and do all acts and things within their respective powers to
carry out and implement the provisions or intent of this Agreement.
Page 3
6. NOTICE
6.1 Any notice, direction or other instrument required or permitted to be
given under this Agreement will be in writing and will be given by the
delivery or facsimile transmission or the same or by mailing the same by
prepaid registered or certified mail in each case addressed as follows:
(a) if to Sterling Group Ventures, Inc.
Unit 35, 12880 Railway Avenue
Richmond, BC V7E 6G4
Attention: James M. Hutchison
---------
(b) if to Brian C. Doutaz
Unit 35, 12880 Railway Avenue
Richmond, BC V7E 6G4
6.2 Any notice, direction or other instrument aforesaid will, if delivered by
courier or facsimile transmission, be deemed to have been given and
received on the next business following the day on which it was delivered
or sent by facsimile, and if mailed, be deemed to have been given and
received on the tenth business day following the day of mailing, except in
the event of disruption of the postal services in which event notice will
be deemed to be received only when actually received.
6.3 Any party may at any time give to the other notice in writing of any
change of address of the party giving such notice and from and after the
giving of such notice, the address or addresses therein specified will be
deemed to be the address of such party for the purpose of giving notice
hereunder.
7. HEADINGS
7.1 The headings to the respective sections herein will not be deemed part
of this Agreement but will be regarded as having been used for convenience
only.
8. ENUREMENT
8.1 This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
9. TERMS
9.1 The terms and provisions of this Agreement shall be interpreted in
accordance with the laws of British Columbia.
10. ENTIRE AGREEMENT
10.1 This Agreement constitutes the entire agreement between the parties and
replaces and supersedes all prior agreements, memoranda, correspondence,
communications, negotiations and representations, whether verbal or
written, express or implied, statutory or otherwise between the parties
with respect to the subject matter herein.
Page 4
11. TIME OF ESSENCE
11.1 Time will be of the essence in this Agreement.
12. ENFORCEMENT OF AGREEMENT
12.1 The covenants, promises, terms and conditions contained herein will be
binding upon the parties jointly and severally and may be enforced by each
as against each other inter se.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
STERLING GROUP VENTURES, INC.
/s/ James M. Hutchison
Per:____________________________________________
by its Authorized Signatory
BRIAN C. TRUSTEE
/s/ Brian C. Doutaz
--------------------------------------------
This is SCHEDULE "A" to a Trust Agreement made as of the 17th day of May, 2002
between STERLING GROUP VENTURES, INC. and BRIAN C, TRUSTEE
Claim Name Tenure Number Expiry Date
---------- ------------- -----------
Bell 1 362113 April 24, 2004
Bell 2 362114 April 24, 2004
Bell 3 362115 April 24, 2004
Bell 4 362116 April 24, 2004
Omineca Mining District, British Columbia
Exhibit 23.1
Securities & Exchange Commission,
Washington, D.C.
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this registration statement of Sterling Group Ventures,
Inc. on Form SB-2 of our report dated June 24, 2002, appearing in the
prospectus, which is part of this Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Cordovano and Harvey, P.C.
Cordovano and Harvey, P.C.
Denver Colorado
July 24, 2002
Exhibit 23.2
July 26, 2002
Sterling Group Ventures, Inc.
12880 Railway Avenue, Unit No. 35,
Richmond, B.C. V7B 1Y3
Re: Common Stock of Sterling Group Ventures, Inc.
Registered on Form SB-2 filed July 26, 2002
Gentlemen:
We have acted as special Nevada counsel to Sterling Group Ventures, Inc. (the
"Company"), a Nevada corporation, in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act") of 2,000,000 shares of
the Company's Common Stock (the "Shares"), as further described in a
registration statement on Form SB-2 filed under the Securities Act (the
"Registration Statement") on July 26, 2002.
In connection with this opinion, we have examined the following documents:
A. Articles of Incorporation of the Company, as amended to date, on file
with the Nevada Secretary of State;
B. Bylaws of the Company, as amended to date;
C. Resolutions adopted by the Board of Directors of the Company
pertaining to the Shares;
D. The Registration Statement; and
E. The Prospectus / Information Statement constituting a part of the
Registration Statement.
In addition, we have examined such other documents as we have deemed necessary
or appropriate as a basis for the opinions hereinafter expressed.
As to certain questions of fact, we have relied, without further investigation,
upon certificates of governmental authorities and of officers of the Company.
Additionally, we have assumed that the signatures on all documents examined by
us are genuine, that all documents submitted to us as originals are authentic
and that all documents submitted to us as copies or as facsimiles of copies or
originals, conform with the originals, which assumptions we have not
independently verified.
Based on the foregoing and the examination of such legal authorities as we have
deemed relevant, and subject to the qualifications and further assumptions set
forth below, we are of the opinion that (i) the Board of Directors of the
Company has authorized the issuance and sale of the Shares; and (ii) when issued
and sold against payment therefor in accordance with the provisions of the
Registration Statement and for such consideration not less than that established
by the Board of Directors, the Shares will be duly authorized and validly issued
and will be fully paid and non-assessable.
The foregoing opinions are limited to the matters expressly set forth herein and
no opinion may be implied or inferred beyond the matters expressly stated. We
disclaim any obligation to update this letter for events occurring after the
date of this letter, or a s a result of knowledge acquired by us after that
date, including changes in nay of the statutory or decisional law after the date
of this letter. We are members of the bar of the State of Nevada. We express no
opinion as to the effect and application of any United States federal law, rule
or regulation or any securities or blue sky laws of any state, including the
State of Nevada. We are not opining on, and assume no responsibility to or the
effect on any of the matters covered herein of the laws of any other
jurisdiction, other than the laws of Nevada as presently in effect.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our name in the prospectus constituting a part
of such Registration Statement under the heading "Legal Matters:
Very truly yours,
WOODBURN and WEDGE
/s/ Kirk S. Schumacher
By: Kirk S. Schumacher
Woodburn and Wedge,
Attorneys and Counsellors at Law,
Sierra Plaza,
Reno, Nevada 89511-1149
Exhibit 99.1
HOW TO SUBSCRIBE
A. Instructions.
------------
Each person considering subscribing for the Shares should review the following
instructions:
Subscription Agreement: Please complete, execute and deliver to the Company the
- ----------------------
enclosed copy of the Subscription Agreement. The Company will review the
materials and, if the subscription is accepted, the Company will execute the
Subscription Agreement and return one copy of the materials to you for your
records.
The Company shall have the right to accept or reject any subscription, in whole
or in part.
An acknowledgment of the acceptance of your subscription will be returned to you
promptly after acceptance.
Payment: Payment for the amount of the Shares subscribed for shall be made by
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delivery by the earlier of October __, 2002 or such date as the Company shall
specify by written notice to subscribers (unless such period is extended in the
sole discretion of the President of the Company), of a certified or cashier's
cheque or wire transfer of immediately available funds to the Company at the
address set forth below or an account specified by the Company. The closing of
the transactions contemplated hereby (the "Closing") will be held on October __,
2002 or such earlier date specified in such notice (unless the closing date is
extended in the sole discretion of the Company). There is no minimum aggregate
amount of Shares which must be sold as a condition precedent to the Closing, and
the Company may provide for one or more Closings while continuing to offer the
Shares that constitute the unsold portion of the Offering.
B. Communications.
--------------
All documents and cheques should be forwarded to:
STERLING GROUP VENTURES, INC.
Unit 35 - 12880 Railway Avenue
Richmond, British Columbia V7E 6G4
Attention: Brian C. Doutaz
THE SHARES OF STERLING GROUP VENTURES, INC. HAVE BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, BUT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT (BRITISH COLUMBIA). THERE WILL BE FURTHER RESTRICTIONS
ON THE TRANSFERABILITY OF THE SHARES DESCRIBED HEREIN FOR RESIDENTS OF BRITISH
COLUMBIA.
THE PURCHASE OF SHARES OF STERLING GROUP VENTURES, INC. INVOLVES A HIGH DEGREE
OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE
LOSS OF THEIR ENTIRE INVESTMENT.
STERLING GROUP VENTURES, INC.
Unit 35 - 12880 Railway Avenue
Richmond, British Columbia V7E 6G4
SUBSCRIPTION AGREEMENT
The undersigned (the "Subscriber") hereby irrevocably subscribes for that number
of Shares set forth below, upon and subject to the terms and conditions set
forth in the Corporations SB-2 Registration Statement dated July __, 2002 which
the Subscriber acknowledges that the Subscriber has carefully read.
Total Number of Shares to be Acquired:_____________________________ . Amount to
be Paid (price of $0.05 per Share): ____________________________
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
this _______ of _________, 2002.
- --------------------------------------------------------------------------------
Signature Subscriber's Social Security or Tax
Identification Number:
- --------------------------------------------
Print Name:
- --------------------------------------------------------------------------------
Print Title: Signature of Co-owners if
applicable:
- --------------------------------------------
Address:
- --------------------------------------------------------------------------------
Number and Street
-----------------------------------
- --------------------------------------------------------------------------------
City, State, Zip
-----------------------------------
- --------------------------------------------------------------------------------
Name as it should appear on the Certificate:____________________________________
If Joint Ownership, check one (all parties must sign above):
[ ] Joint Tenants with Right of Survivorship
[ ] Tenants in Common
[ ] Community Property
If Fiduciary or Business Organization, check one:
[ ] Trust
[ ] Estate
[ ] Power of Attorney[ ]
Name and Type of Business Organization:_________________________________________
ACCEPTANCE OF SUBSCRIPTION
The foregoing Subscription is hereby accepted for and on behalf of STERLING
GROUP VENTURES, INC. this _____ day of __________, 2002.
STERLING GROUP VENTURES, INC.
By _____________________________________
Brian C. Doutaz, President