UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of MARCH, 2006.
Commission File Number: 0-30390
ROCHESTER RESOURCES LTD
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(Translation of registrant's name into English)
#1305 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7, Canada
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: FORM 20-F [X] FORM 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
ROCHESTER RESOURCES LTD
Date: March 17, 2006 /s/ Douglas Good
----------------------------- -------------------------------------
Doug Good,
President
THE SECURITIES OFFERED HEREUNDER ARE SPECULATIVE IN NATURE. INFORMATION
CONCERNING THE RISKS INVOLVED MAY BE OBTAINED BY REFERENCE TO THIS DOCUMENT;
FURTHER CLARIFICATION, IF REQUIRED, MAY BE SOUGHT FROM THE AGENT OR AN ADVISER
REGISTERED UNDER THE SECURITIES LAWS ("THE SECURITIES LAWS") OF BRITISH
COLUMBIA, ALBERTA AND SASKATCHEWAN (TOGETHER, THE "PARTICIPATING
JURISDICTIONS").
NEITHER THE TSX VENTURE EXCHANGE NOR ANY SECURITIES REGULATORY AUTHORITY HAS IN
ANY WAY PASSED UPON THE MERITS OF THE SECURITIES OFFERED UNDER THIS OFFERING
DOCUMENT.
SHORT FORM OFFERING DOCUMENT
FORM 4H
Dated: February 23, 2006
ROCHESTER RESOURCES LTD.
(the "Issuer")
Suite 400, 535 Howe Street
Vancouver, British Columbia V6C 2Z4
AGENT
Canaccord Capital Corporation
2200 - 609 Granville Street
Vancouver, BC V7Y 1H2
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of Canada
510 Burrard Street
Vancouver, British Columbia V6C 3B9
Up to 1,000,000 Units
Price $0.72 per Unit
TOTAL OFFERING: Up to $720,000
This Short Form Offering Document (the "Offering Document") qualifies for
distribution up to 1,000,000 units (the "Units") of the Issuer at a purchase
price of $0.72 per Unit (the "Offering"). Each Unit consists of one common share
in the capital of the Issuer (a "Share") and one transferable common share
purchase warrant (a "Warrant"), each whole Warrant entitling the holder to
acquire one additional common share (a "Warrant Share") in the capital of the
Issuer for a period of two years from the closing of the Offering at an exercise
price of $0.80 per Warrant Share. Subject to the approval of the TSX Venture
Exchange (the "Exchange"), including meeting the minimum distribution
requirements, the Issuer intends to list the Warrants for trading on the
Exchange. There is no minimum subscription for this Offering.
AGENT'S NET PROCEEDS TO THE
NUMBER OF UNITS PRICE PER UNIT (1) COMMISSION(2) ISSUER (3)
--------------- ------------------ ------------------ -------------------
Per Unit 1 $0.72 $0.072 $0.648
Maximum Offering: 1,000,000 $720,000 $72,000 $648,000
========= ======= ====== =======
(1) The price of the Units offered has been established by negotiation between
the Issuer and Canaccord Capital Corporation (the "Agent").
(2) Pursuant to an agency agreement between the Issuer and the Agent dated for
reference February 21, 2006 (the "Agency Agreement"), the Issuer has agreed
to pay to the Agent a cash commission equal to 10% of the gross proceeds
raised under the Offering. The Agent will also be paid a corporate finance
fee payable by the issuance of an aggregate of 25,000 common shares (the
"Corporate Finance Shares") in the capital of the Issuer. In addition, the
Issuer will issue to the Agent a non-transferable common share purchase
warrant (the "Agent's Warrant") entitling the Agent to purchase up to such
number of common shares (the "Agent's Warrant Shares") in the capital of
the Issuer as is equal to 10% of the aggregate number of Units sold under
the Offering for a period of two years from the closing of the Offering at
an exercise price of $0.80 per Warrant Share. The Issuer will also pay to
the Agent an administration fee (the "Administration Fee") of $7,500 and
all of the expenses incurred by the Agent in connection with the Offering.
See "Plan of Distribution".
(3) Before deducting the costs of this Offering, estimated to be $72,500, which
consists of the Administration Fee and includes the Agent's expenses and
the Issuer's legal, accounting and other offering expenses. See "Use of
Proceeds".
The information provided in this Offering Document is supplemented by disclosure
contained in the documents listed below (the "Incorporated Documents") which are
incorporated by reference into this Offering Document. The Incorporated
Documents must be read together with the Offering Document in order to provide
full, true and plain disclosure of all material facts relating to the securities
offered by this Offering Document. The Incorporated Documents are not contained
within, or attached to, the Offering Document and will be provided by the
Issuer, at no charge, upon request. Alternatively, the Incorporated Documents
may be accessed by the reader of the Offering Document at the following
locations:
LOCATION AT
WHICH DOCUMENT
TYPE OF DOCUMENT DATE OF DOCUMENT CAN BE ACCESSED
- ---------------- ---------------- ---------------
Material Change Report February 21, 2006(1) www.sedar.com
News Release February 21, 2006(1) www.sedar.com
Annual Information Form February 20, 2006(1) www.sedar.com
Technical Report on the Mina Real Property dated January 22, 2006 January 22, 2006(1) www.sedar.com
prepared by Victor Jaramillo, M.Sc. (A), P.Geo
Consent of Victor Jaramillo, M.Sc. (A), P.Geo to filing of Technical January 22, 2006(1) www.sedar.com
Report on the Mina Real Property
Audited Annual Financial Statements May 31, 2005(1) www.sedar.com
MD&A May 31, 2005(1) www.sedar.com
(1) All documents may be viewed by visiting the Issuer's registered and records
office during normal business hours at Suite 1305 -1090 West Georgia
Street, Vancouver, British Columbia V6E 3V7 or electronically through the
System for Electronic Document Analysis and Retrieval ("SEDAR") by
arrangement with a filing service user registered under the SEDAR system or
through the SEDAR website at WWW.SEDAR.COM.
Any material change report or other continuous disclosure document filed with
the securities regulatory authorities in the Participating Jurisdictions
subsequent to the date on which this Offering Document is certified and prior to
a purchaser entering into an agreement of purchase and sale under this Offering
Document (a "Subsequently Triggered Report") will be deemed to be incorporated
by reference into this Offering Document.
Securities offered by this Offering Document are being offered under an
exemption from prospectus requirements. Subscribers may not receive all of the
information required by or have all of the rights available to a purchaser under
a prospectus.
-ii-
The information contained in this Offering Document as well as the information
contained in the Incorporated Documents or any Subsequently Triggered Report are
accurate as of the date of the respective document. To the extent that there are
conflicts between information in this Offering Document and an Incorporated
Document, the information in this Offering Document should be relied upon. To
the extent that there are conflicts between information in this Offering
Document and information in any Subsequently Triggered Report, the information
in the Subsequently Triggered Report should be relied upon.
The Incorporated Documents contain meaningful and material information relating
to the Issuer and prospective purchasers of the Units should review all
Incorporated Documents before making an investment decision.
Subscribers for Units hereunder may be required to pay commissions at the rates
charged by their brokers.
This Offering Document may contain forward-looking statements, including
statements regarding the business and anticipated financial performance of the
Issuer which involve risks and uncertainties. These risks and uncertainties may
cause the Issuer's actual results to differ materially from those contemplated
by the forward-looking statements. Factors that might cause or contribute to
such differences include, among others, competitive pressures, the growth rate
of demand for air and rail freight services and market acceptance of the
Issuer's services. Investors are also directed to consider the other risks and
uncertainties under the heading "Risk Factors" herein.
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TABLE OF CONTENTS
PLAN OF DISTRIBUTION...........................................................1
THE OFFERING................................................................1
APPOINTMENT OF AGENT........................................................1
EXEMPTIONS..................................................................2
USE OF PROCEEDS................................................................4
FUNDS AVAILABLE.............................................................4
PRINCIPAL PURPOSES..........................................................4
BUSINESS OF THE ISSUER.........................................................5
GENERAL.....................................................................5
MINA REAL PROPERTY..........................................................5
RISK FACTORS...................................................................8
RISKS RELATING TO THE BUSINESS OF THE ISSUER................................8
RISKS RELATING TO THE OFFERING.............................................12
OTHER RISKS................................................................13
ACQUISITIONS..................................................................13
CORPORATE INFORMATION.........................................................14
DIRECTORS, OFFICERS, PROMOTERS AND PRINCIPAL HOLDERS OF VOTING SECURITIES.....14
CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES...............................15
PENALTIES OR SANCTIONS.....................................................15
PRINCIPAL SHAREHOLDERS.....................................................15
OPTIONS TO PURCHASE SECURITIES OF THE ISSUER..................................15
SECURITIES OF THE ISSUER HELD IN ESCROW.......................................16
PARTICULARS OF ANY OTHER MATERIAL FACTS.......................................17
LEGAL PROCEEDINGS..........................................................17
OTHER PROPERTIES...........................................................17
FINANCIAL POSITION.........................................................17
OTHER MATERIAL FACTS.......................................................17
CONTRACTUAL RIGHTS OF ACTION..................................................17
CONTRACTUAL RIGHTS OF WITHDRAWAL..............................................17
CERTIFICATE OF THE ISSUER....................................................C-1
CERTIFICATE OF THE AGENT.....................................................C-2
PLAN OF DISTRIBUTION
THE OFFERING
The Issuer, through its Agent, Canaccord Capital Corporation, offers up to
1,000,000 Units at the offering price of $0.72 per Unit. Each Unit consists of
one Share and one Warrant, each Warrant being exercisable to acquire one
additional common share for a period of two years following the closing of the
Offering at an exercise price of $0.80 per share. Subject to the approval of the
Exchange, including meeting the minimum distribution requirements, the Issuer
intends to list the Warrants for trading on the Exchange. There is no minimum
subscription for this Offering.
The Offering will be made in accordance with the rules and policies of the
Exchange and will take place on a day, as determined by the Agent and the Issuer
within a period of 60 days from the date of acceptance of this Offering Document
by the Exchange (the "Offering Day"). The closing of the Offering (the
"Closing") is anticipated to take place on the day which falls five days after
the Offering Day. THIS DISTRIBUTION IS BEING MADE ONLY TO RESIDENTS OF BRITISH
COLUMBIA, ALBERTA AND SASKATCHEWAN AND SUCH OTHER JURISDICTIONS WHERE THE UNITS
MAY LAWFULLY BE SOLD.
The Warrants will contain, among other things, provisions for appropriate
adjustment of the class, number and price of shares issuable pursuant to any
exercise thereof upon the occurrence of certain events including any
subdivision, consolidation or reclassification of the common shares of the
Issuer, the payment of stock dividends or the reorganization or amalgamation of
the Issuer.
APPOINTMENT OF AGENT
Pursuant to the Agency Agreement, the Agent has agreed to act as agent of the
Issuer to offer for sale, on a commercially reasonable efforts basis, the Units
offered herein subject to the terms and conditions of the Agency Agreement. The
Agent will receive a cash commission of 10% of the gross proceeds of the
Offering, a corporate finance fee payable by the issuance of an aggregate of
25,000 Corporate Finance Shares, and an Agent's Warrant entitling it to purchase
up to that number of Agent's Warrant Shares at an exercise price of $0.80 per
share for a period of two years from the closing date. The Issuer has also
agreed to pay to the Agent an Administration Fee of $7,500.
The Agent will solicit subscriptions for Units only in the provinces of Alberta,
British Columbia and Saskatchewan and such other jurisdictions where the Units
may lawfully be sold. The Agent reserves the right to offer selling group
participation, in the normal course of the brokerage business to selling groups
of other licensed broker dealers, brokers and investment dealers who may or may
not be offered part of the commission or Agent's Warrants derived from this
Offering. THE PURCHASERS OF ANY UNITS UNDER THE OFFERING MAY BE REQUIRED TO PAY
COMMISSIONS AT THE RATES CHARGED BY THEIR BROKERS.
The Agent may terminate its obligations under the Agency Agreement at any time
before the Closing if, among other things, there is an occurrence of any nature
which, in the opinion of the Agent, seriously affects or will seriously affect
the financial markets, the business of the Issuer or the ability of the Agent to
perform its obligations under the Agency Agreement or an investor's decision to
purchase the Units. The Agent may also terminate its obligations under the
Agency Agreement if the Units cannot, in the opinion of the Agent, be profitably
marketed due to the state of the financial markets.
The Issuer has granted the Agent a right of first refusal to provide any
brokered equity financing, or brokered financing of securities convertible into
equity, to the Issuer for a period of 12 months from the Closing.
The "Professional Group" (defined as a group consisting of the Agent, any
employee, partner, officer, director and affiliate of the Agent; and any
associated party of all such persons or companies or the Agent) beneficially
owns, directly or indirectly, 82,722 common shares of the Issuer. The Agent also
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owns an aggregate of 4,500 common share purchase warrants of the Issuer and a
warrant that entitles the Agent to acquire 150,000 common shares of the Issuer
and 75,000 common share purchase warrants of the Issuer.
EXEMPTIONS
The Units in this Offering are being distributed pursuant to Part 5 of National
Instrument 45-106 - Prospectus and Registration Exemptions ("NI 45-106") of the
Canadian Securities Administrators which become effective on September 14, 2005
and which provides an exemption from the prospectus requirements of the British
Columbia, Alberta and Saskatchewan Securities Acts and the rules and regulations
thereto on the terms contained in NI 45-106.
In order to rely on the exemption provided in NI 45-106, the following
provisions will apply to the Offering:
(a) the Issuer has filed an annual information form ("AIF") in a
jurisdiction of Canada;
(b) the Issuer is a SEDAR filer;
(c) the Issuer is a reporting issuer in a jurisdiction of Canada and has
filed with the securities regulatory authority of that jurisdiction:
(i) an Exchange offering document;
(ii) all documents required to be filed under securities
legislation of that jurisdiction; and
(iii) any Subsequently Triggered Report.
(d) the distribution is of listed securities or units consisting of listed
securities and warrants;
(e) the Issuer has filed with the Exchange an Exchange offering document in
respect of the distribution that:
(i) incorporates by reference the following documents of the
Issuer filed with the securities regulatory authority in any
jurisdiction of Canada:
(A) the AIF;
(B) the most recent annual financial statements and, for
financial years starting on or after January 1, 2004,
the MD&A relating to those financial statements;
(C) all unaudited interim financial statements and, for
financial years starting on or after January 1, 2004,
the MD&A relating to those financial statements,
filed after the date of the AIF but before or on the
date of the Exchange offering document;
(D) all material change reports filed after the date of
the AIF but before or on the date of the Exchange
offering document; and
(E) all documents required under NI 43-101 and NI 51-101
filed on or after the date of the Exchange offering
document.
(ii) deems any Subsequently Triggered Report required to be
delivered to a purchaser under this Part to be incorporated by
reference;
(iii) grants to purchasers contractual rights of action in the event
of a misrepresentation, as required by the Exchange policy;
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(iv) grants to purchasers contractual rights of withdrawal, as
required by the Exchange policy; and
(v) contains all the certificates required by the Exchange policy.
(f) the distribution is conducted in accordance with the Exchange policy,
(g) the Issuer or the underwriter delivers the Exchange offering document
and any Subsequently Triggered Report to each purchaser:
(i) before the Issuer or the underwriter enters into the written
confirmation of purchase and sale resulting from an order or
subscription for securities being distributed under the
Exchange offering document; or
(ii) not later than midnight on the 2nd business day after the
agreement or purchase and sale is entered into.
(h) the listed securities issued under the Exchange offering document, when
added to the listed securities of the same class issued under prior
Exchange offerings do not exceed:
(i) the number of securities of the same class outstanding
immediately before the Issuer distributes securities of the
same class under the Exchange offering document; or
(ii) the number of securities of the same class outstanding
immediately before a prior exchange offering.
(i) the gross proceeds under the Exchange offering document, when added to
the gross proceeds from prior Exchange offerings do not exceed $2
million;
(j) no purchaser acquires more than 20% of the securities distributed under
the Exchange offering document; and
(k) no more than 50% of the securities distributed under the Exchange
offering document are subject to a restricted hold period as set out in
section 2.5 of National Instrument 45-102 - RESALE OF SECURITIES ("NI
45-102").
Pursuant to section 2.5 of NI 45-102, the following securities will be subject
to a four-month hold period:
(a) all securities acquired by a purchaser who is, at the time of
closing, an insider or promoter of the Issuer (as defined in
applicable securities legislation), the Agent, or a member of
the Agent's Professional Group (as defined in National
Instrument 33-105 UNDERWRITING CONFLICTS); and
(b) all securities acquired by any purchaser in excess of
$40,000.
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USE OF PROCEEDS
FUNDS AVAILABLE
The following table provides a brief summary of the expected funds available to
the Issuer, assuming completion of the entire Offering, but before exercise of
any Warrants and the Agent's Warrants:
ASSUMING
ENTIRE
OFFERING
----------
Gross proceeds from Offering $ 720,000
Agent's commission 72,000
Administration Fee 7,500
Payment of Agent's expenses 25,000
Payment of Issuer's expenses in connection with the Offering 40,000
----------
Net proceeds from Offering 575,500
Working capital as at January 31, 2006 2,340,348
----------
FUNDS AVAILABLE $ 2,915,848
==========
PRINCIPAL PURPOSES
The following table provides a description of each of the Principal Purposes for
which the funds available will be used:
PRINCIPAL PURPOSE AMOUNT
- ----------------- ----------
Complete the Phase 1 work program on the Mina Real property,
consisting of diamond drilling and 500 metres of exploration
drifting(1) $ 567,000
Phase 2 work program on the Mina Real property(2) 1,364,149
New property investigations and acquisitions 100,000
Property Option Payments(3) 517,538
Working capital including corporate overhead 367,161
----------
TOTAL $ 2,915,848
==========
(1) Please see "Business of the Issuer - Mina Real Property - 2006 Work
Program: Mina Real Property - Phase 1" for a full description of the
work to be conducted under the Phase 1 work program on the Mina Real
property.
(2) Please see "Business of the Issuer - Mina Real Property - 2006 Work
Program: Mina Real Property - Phase 2" for a full description of the
work that may be conducted under the Phase 2 work program on the Mina
Real property.
(3) Allows for the payment and possible prepayment by the Company of
minimum monthly option payments on the Mina Real Property of US$75,000
(Cdn$86,256) per month, scheduled to commence on or about July 1, 2006.
Please see the section entitled "General Development of the Business -
Three Year History: Significant Acquisitions/Dispositions" of the
Annual Information Form of the Company dated February 20, 2006 for a
description of the property option payments on the Mina Real Property.
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The Issuer intends, in the event the maximum amount under the Offering is not
completed, to spend the funds available in the priority and order listed in the
above table.
Although it is the Issuer's intention to apply the funds available as set forth
above, there may be circumstances where, for sound business reasons, a
re-allocation of funds may be necessary.
BUSINESS OF THE ISSUER
GENERAL
The Issuer is a development-stage company that is in the business of acquiring,
exploring and developing mineral resource properties, principally gold and
silver properties in Mexico. Properties under consideration for acquisition must
meet the Issuer's criteria for near term production and must also hold
significant exploration potential.
In January 2006, the Issuer acquired an interest in the gold/silver Mina Real
Property, which the Issuer intends to focus its exploration and development
activities on during 2006. The Issuer acquired an interest in this property as
it meets the Issuer's criteria for near term production. The Issuer expects that
this property can be brought into production in the very near term, subject to
the results from its initial work program.
MINA REAL PROPERTY
The following information pertaining to the Mina Real Property is based, in
part, upon a technical report dated January 22, 2006 entitled "The Mina Real
Gold-Silver Property" (the "Technical Report") prepared by Mr. Victor Jaramillo,
M.Sc.(A), P.Geo, the Issuer's "Qualified Person" for the purposes of NI 43-101.
The Technical Report is incorporated herein by reference and the full text is
available on SEDAR at www.sedar.com.
The Mina Real Property is located in the state of Nayarit, Mexico, on the
Pacific coast approximately 50 kilometers southeast from the city of Tepic and
within the Santa Maria del Oro District, State of Nayarit, Mexico. It comprises
four mineral claims that total approximately 3,377.33 hectares. The mineral
rights to 2,387 hectares of these concessions are currently owned by a Mexican
company "Desarrollos Mineros de Occidente" (DMO), a subsidiary of ALB Holdings
Ltd. ("ALB"), a Canadian private company at arms length to the Issuer. DMO
intends to transfer these concessions to Mina Real, a new recently incorporated
Mexican corporation formed to hold the Mina Real Property. Mina Real holds two
adjoining claims totaling an additional 990 hectares. The surface rights to
these properties are held mainly by local farmers, and therefore negotiations
are required in order to gain access to the property in order to build roads,
drill pads, and dig trenches.
The Mina Real Property is an advanced property on which the owner has spent over
US$3 million to fund the initial high-risk exploration and development costs,
including over 1,500 meters of mine development, involving five separate drifts
at different elevations ranging from the 1,140 meter elevation to the 1,260
meter elevation as set out in the following diagram of the underground workings:
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[GRAPHIC OMITTED][GRAPHIC OMITTED]
Omitted graphic is diagram of of the underground workings showing
levels 1115 through level 1260 and the tunnels, etc.
In April through June of 2005, approximately 4,400 tonnes of gold-silver bearing
quartz material was mined from the aforenoted segment of the Florida Vein
structure.
Access is good to the mine location through 2.5 kilometers of recently developed
road with water and power sources close to the proposed site for construction of
an initial milling operation capable of processing 200-300 tonnes per day.
To date four veins have been identified on the Mina Real Property. The Florida
quartz veins 1, 2 and 3 and the Tajos Cuates vein. Other veins are known to
exist but require exploration mapping and sampling. Initial development at the
property consists of five portals ranging from 20 to 50 meters apart at
different elevations of the Florida vein system.
Recent geological field work, such as geological mapping, limited trenching and
drill core examination, indicate that the Florida Vein system may have good
continuity to the northwest for at least another kilometer from the mine area
and may have a vertical continuity of over 250 meters, as observed from surface
outcrop to the bottom lowermost developed adit. Though there has been limited
diamond drilling on the property one hole, F2-03, was drilled through the lower
levels of the area designated by the above workings diagram. All three veins
were intersected at elevations below the lowermost development adits with
intersections ranging in width from 1.1 to 2.5 meters with grades of 0.52 g/t Au
and 93.54 g/t Ag in the first vein, 12.73 g/t Au and 172 g/t Ag in the second
vein and 5.50 g/t Au and 171 g/t Ag in the third vein.
As part of its due diligence at the Mina Real Property, Mr. Jaramillo, the
author of the Technical Report has taken 51 chip vein samples, 1 grab sample, 4
duplicates, 3 blanks and 6 standards. Also, 20 pulp samples were assayed. Some
highlights of the underground chip vein samples taken include:
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- --------------------------------------------------------------------------------
SAMPLE NO. VEIN WIDTH GOLD SILVER DESCRIPTION
(M) (G/T) (G/T)
- --------------------------------------------------------------------------------
387322 Florida 3 1.00 8.4 226 Quartz Vein Level 260
387324 Florida 3 0.98 9.62 67.2 Quartz Vein Level 260
387325 Florida 3 1.07 11.5 123 Quartz Vein Level 260
387334 Florida 2 0.70 2.44 848 Quartz Vein Level 210
387339 Florida 3 2.10 9.61 202 Quartz Vein Level 160
387342 Florida 3 1.30 14.25 260 Quartz Vein Level 160
387362 Florida 2 1.55 6.27 501 Quartz Vein Level 185
387367 Florida 2 1.10 14.55 336 Quartz Vein Level 185
387369 Florida 3 1.60 9.15 119 Quartz Vein Level 185
387393 Florida 3 0.80 16.80 115 Quartz Vein Level 140
387397 Florida 3 1.13 4.66 723 Quartz Vein Level 140
387398 Tajo Cuates 1.70 2.77 1330 Quartz Vein 1 - Main adit
- --------------------------------------------------------------------------------
A vein system called Tajos Cuates, located just south of the Florida Veins, has
also been visited and sampled by the Issuer's qualified person. The vein where
sampled has a true width of 1.70 meters and is composed of fractured quartz and
concentrations of limonite and manganese oxides. The vein appears to be a large
zone of secondary enrichment. The assay returned 2.77 g/t Au and 1,330 g/t Ag.
The Mina Real Property has no mineral resources or mineral reserves which are
compliant with the reporting requirements of National Instrument 43-101
The following surface and underground exploration program at an estimated cost
of US$1,679,260 (which based on an exchange rate of Cdn$0.8695 to US$1.00, is
equivalent to approximately Cdn$1,931,149) was recommended by Mr. Jaramillo:
- geological mapping, trenching sampling
- access road and drill pad construction
- 1,600 meters of HQ3 diamond drilling on selected targets
- 3,000 meters in exploration development (drifting)
2006 WORK PROGRAM: MINA REAL PROPERTY
The Issuer plans to proceed with the recommended work program at an aggregate
acquisition cost of US$1,679,260 (Cdn$1,931,149) as recommended in the Technical
Report, commencing as soon as possible. The Issuer has broken down the
recommended work program into two Phases as follows:
PHASE 1: ESTIMATED COST: CDN$567,000
- Continuation of the underground development program which should see
approximately 500 additional meters of drifts, raises and ramps
developed over a two month period.
- Complete a 1,600 meter initial drill program to test high grade vein
outcroppings located in the Tajos Cuates structure.
- Obtain environmental approvals for mill.
- 7 -
The initial work under Phase 1 of the work program is expected to start upon the
closing of this Offering. The diamond drill program and underground drifting are
each estimated by the issuer to take about two months to complete. The Issuer
has obtained all permits to allow the Phase 1 work program to commence. A
contractor for the exploration drifting has been sourced, but as of the date of
this Offering Document a drill contractor has not been identified. While the
Issuer does not anticipate delays in obtaining a drill contractor, the
implementation of the drill program could be delayed if a rig is not contracted.
PHASE 2: ESTIMATED COST: CDN$1,364,149
At the completion of Phase 1 of the work program, the Issuer will have remaining
a recommended work program budgeted at $1,364,149, principally for exploration
drifting of 2,500 meters as set out in the Technical Report.
At the completion of Phase 1 of the work program the Issuer will assess the
results and either continue with the underground work program or if the results
are sufficiently positive make a decision to defer the balance of the
recommended exploration drifting and proceed to complete costing and planning to
assess the feasibility of establishing a 200-300 tonne per day conventional
cyanidation plant, the cost for which would be funded from the Issuer's
available working capital.
RISK FACTORS
Investment in the Units offered under this Offering Document involves a
significant degree of risk. The following risk factors are material to a
potential investor and should be reviewed in their entirety, together with other
information contained elsewhere in this Offering Document.
RISKS RELATING TO THE BUSINESS OF THE ISSUER
The financing and exploration and development of any of the Issuer's properties
is subject to a number of factors including commodity prices, laws and
regulations, political conditions, currency fluctuations, hiring qualified
people and obtaining necessary services in jurisdictions where the Issuer
operates. The current trends relating to these factors are favorable but could
change at any time and negatively affect the Issuer's operations and business.
The Issuer has, in the past, conducted business in the petroleum and natural gas
industry and computer software industry. As of the date of this Offering
Document, the Issuer no longer is active in these industries, and instead
currently conducts mineral exploration activities. The following is a brief
discussion of those distinctive or special characteristics of the Issuer's
operations and industry which may have a material impact on, or constitute risk
factors in respect of the Issuer's future financial performance:
THE ISSUER'S PROPERTIES ARE LOCATED IN MEXICO AND ARE SUBJECT TO CHANGES IN
POLITICAL CONDITIONS AND REGULATIONS.
In the past, Mexico has been subject to political instability, changes and
uncertainties, which may cause changes to existing governmental regulations
affecting mineral exploration and mining activities. The Issuer's operations and
properties are subject to a variety of governmental regulations including, among
others: regulations promulgated by Secretaria del Medio Ambiente, Recursos
Naturales y Pesca ("SEMARNAP"), Mexico's environmental protection agency; the
Mexican Mining Law; and the regulations of the Comision National del Aqua with
respect to water rights. The Issuer's mineral exploration and any future mining
activities in Mexico may be adversely affected in varying degrees by changing
government regulations relating to the mining industry or shifts in political
conditions that increase the costs related to the Issuer's activities or
maintaining its properties. Operations may also be affected in varying degrees
by government regulations with respect to restrictions on production, price
controls, export controls, income taxes, expropriation of property,
environmental legislation and mine safety. The Issuer does not carry political
risk insurance.
- 8 -
In addition, the Issuer's properties may be affected by government regulations
and treaties, as well as by laws and policies of Canada affecting foreign trade,
investment and taxation. In addition, it may be difficult to enforce judgments
obtained in Canadian courts against assets located outside of Canada.
THE BUSINESS OF EXPLORATION FOR MINERALS AND MINING INVOLVES A HIGH DEGREE OF
RISK, AS FEW PROPERTIES THAT ARE EXPLORED ARE ULTIMATELY DEVELOPED INTO
PRODUCING MINES
Continued exploration of the Issuer's project depends on satisfactory
exploration results. Mineral exploration involves a high degree of risk and few
properties which are explored are ultimately developed into producing mines. The
long-term profitability of the Issuer's operations will be, in part, directly
related to the cost and success of its exploration programs, which may be
affected by a number of factors beyond the Issuer's control.
Operations in which the Issuer has a direct or indirect interest will be subject
to all the hazards and risks normally incidental to exploration for gold ("Au"),
silver ("Ag") and other metals, any of which could result in work stoppages,
damage to property, and possible environmental damage. Substantial expenditures
are required to establish ore reserves through drilling, to develop
metallurgical processes to extract the metal from the ore and, in the case of
new properties, to develop the mining and processing facilities and
infrastructure at any site chosen for mining. Although substantial benefits may
be derived from the discovery of a major mineral deposit, the Issuer may not be
able to raise sufficient funds for development. The economics of developing
gold, silver and other mineral properties is affected by many factors including
the cost of operations, variations in the grade of ore mined, fluctuations in
metal markets, costs of processing equipment and such other factors as
government regulations, including regulations relating to royalties, allowable
production, importing and exporting of minerals and environmental protection.
Unusual or unexpected formations, formation pressures, fires, power outages,
labour disruptions, flooding, explorations, cave-ins, landslides and the
inability to obtain suitable adequate machinery, equipment or labour are other
risks involved in the operation of mines and the conduct of exploration
programs.
The Issuer does not have producing mines at this time. Properties on which
mineral reserves are not found will have to be discarded causing the Issuer to
write each respective property off thus sustaining a loss.
NO ASSURANCE CAN BE GIVEN REGARDING THE COMMERCIAL VIABILITY OF MINERAL DEPOSITS
No assurance can be given that any particular level of recovery of minerals will
in fact be realized or will ever qualify as a commercially mineable (or viable)
deposit which can be legally and economically exploited. In addition, the grade
of mineralization ultimately mined may differ from that indicated by the mining
and processing of bulk samples or drilling results, and such differences could
be material. Production can be affected by such factors as permitting
regulations and requirements, weather, environmental factors, unforeseen
technical difficulties, unusual or unexpected geological formations, inaccurate
or incorrect geologic, metallurgical or engineering work, and work
interruptions, among other things. Short term factors, such as the need for
orderly development of deposits or the processing of new or different grades,
may have an adverse effect on mining operations or the results of operations.
There can be no assurance that minerals recovered in small scale laboratory
tests will be duplicated in large scale tests under on-site conditions or in
production scale operations. Material changes in reserves or resources, grades,
stripping ratios or recovery rates may affect the economic viability of
projects.
The Issuer has engaged expert independent technical consultants to advise it
with respect to the potential of its various mineral property interests and
project engineering, among other things. The Issuer believes that those experts
are competent and that they have carried out their work in accordance with all
internationally recognized industry standards. However, if the work conducted by
those experts is ultimately found to be incorrect or inadequate in any material
respect, the Issuer may experience delays and increased costs in developing its
properties.
- 9 -
THE ISSUER MAY NOT HAVE PROPER TITLE TO ITS PROPERTIES AND, AS A RESULT, MAY
INCUR SIGNIFICANT EXPENSES TO OBTAIN PROPER TITLE, OR MAY HAVE TO ABANDON ANY
SUCH PROPERTY.
The Issuer has under option mineral claims or concessions which constitute the
Issuer's property holdings. The ownership and validity of mining claims and
concessions are often uncertain and may be contested. In those jurisdictions
where the Issuer has property interests, the Issuer makes a search of mining
records in accordance with mining industry practices to confirm that it has
acquired satisfactory title to its properties but does not obtain title
insurance with respect to such properties. The possibility exists that title to
one or more of its concessions, particularly title to undeveloped claims, might
be defective because of errors or omissions in the chain of title, including
defects in conveyances and defects in locating or maintaining such claims, or
concessions. The boundaries of some of the Issuer's property interests have not
been surveyed and, therefore, the precise location and area of these mining
properties may be in doubt. The Issuer is not aware of challenges to the
location or area of its unpatented mining claims. The Issuer does not have title
to the surface rights to the Mina Real Property. The surface rights to the
property are mostly held by local farmers. The Issuer will need to enter into
agreements with the holders of the title to the surface rights in order to
obtain such surface rights to the property. There can be no assurance that these
surface rights will be secured on terms acceptable to the Issuer.
MEXICO IS A DEVELOPING COUNTRY AND OBTAINING FINANCING OR FINDING OR HIRING
QUALIFIED PEOPLE OR OBTAINING ALL NECESSARY SERVICES FOR THE ISSUER'S OPERATIONS
IN MEXICO MAY BE DIFFICULT
The Issuer's principal project is located in Mexico, which is a developing
country, and it may be difficult for the Issuer to obtain necessary financing
for its planned exploration or development activities in Mexico. The Issuer also
plans to hire some of its employees or consultants in Mexico to assist the
Issuer to conduct its operations in accordance with local laws in Mexico. The
Issuer also plans to purchase certain supplies and retain the services of
various companies in Mexico to meet its future business plans. It may be
difficult to find or hire qualified people in the mining industry who are
situated in Mexico or to obtain all of the necessary services or expertise in
Mexico or to conduct operations on its projects at reasonable rates. If
qualified people and services or expertise cannot be obtained in Mexico, the
Issuer may need to seek and obtain those services from people located outside of
Mexico which will require work permits and compliance with applicable laws and
could result in delays and higher costs to the Issuer to conduct its operations
in Mexico.
THE ISSUER'S ACTIVITIES ARE SUBJECT TO ENVIRONMENTAL REGULATIONS
The operations of the Issuer are subject to environmental regulations
promulgated by government agencies from time to time. Specifically, the Issuer's
activities are subject to regulation by SEMARNAP, the environmental protection
agency of Mexico. Regulations require that an environmental impact statement,
known in Mexico as a Manifesto Impacto Ambiental, be prepared by a third-party
contractor for submission to SEMARNAP. Studies required to support the Manifesto
Impacto Ambiental include a detailed analysis of the following areas: soil,
water, vegetation, wildlife, cultural resources and socio-economic impacts. The
Issuer must also provide proof of local community support for a project to gain
final Manifesto Impacto Ambiental approval. Environmental legislation provides
for restrictions and prohibitions on spills, releases or emissions of various
substances produced in association with certain mining industry operations, such
as seepage from tailings disposal areas, which would result in environmental
pollution. A breach of such legislation may result in imposition of fines and
penalties. In addition, certain types of operations require the submission and
approval of environmental impact assessments. Environmental legislation is
evolving in a manner which means stricter standards, and enforcement, fines and
penalties for non-compliance are more stringent. Environmental assessments of
proposed projects carry a heightened degree of responsibility for companies and
directors, officers and employees. The cost of compliance with changes in
governmental regulations has a potential to reduce the profitability of
operations.
- 10 -
AMENDMENTS TO CURRENT LAWS, REGULATIONS AND PERMITS GOVERNING ACTIVITIES OF
MINERAL EXPLORATION COMPANIES OR MORE STRINGENT IMPLEMENTATION THEREOF COULD
REQUIRE INCREASES IN EXPLORATION EXPENDITURES, OR REQUIRE DELAYS IN EXPLORATION
OR ABANDONMENT OF NEW MINERAL PROPERTIES
Compliance with new requirements could impose costs on the Issuer in the future,
the materiality of which cannot reasonably be predicted at this time. Any change
in the applicable laws or regulations could have an adverse effect on any mining
project which the Issuer might undertake. Also, the Issuer may require
additional permits for its future operations, which may or may not be obtainable
on reasonable terms.
THE VOLATILITY OF THE PRICE OF GOLD AND SILVER COULD HAVE AN IMPACT ON THE
ISSUER'S FUTURE OPERATIONS
The commercial feasibility of the Issuer's properties and its ability to raise
funding to conduct its planned exploration projects is dependent on the price of
gold, silver and other precious metals. The price of gold and silver may also
have a significant influence on the market price of the Issuer's common shares
and the value of the Issuer's properties. A reduction in the price of gold or
silver may prevent the Issuer's properties from being economically mined or
result in the write-off of assets whose value is impaired as a result of low
metal prices.
THE ISSUER HAS LIMITED FINANCIAL RESOURCES AND IF THE ISSUER IS UNABLE TO SECURE
ADDITIONAL FUNDING AND/OR IF THE ISSUER'S EXPLORATION PROGRAMS ARE UNSUCCESSFUL,
THE ISSUER MAY FAIL.
The Issuer's options in unproved mineral claims are without a known body of
commercial ore and the proposed programs are an exploratory search for ore. The
Issuer is presently carrying out exploration and development work with the
objective of establishing an economic body of ore. If the Issuer's exploration
programs are successful, additional funds will be required for the development
of an economic ore body and to place it into commercial production. The only
sources of future funds presently available to the Issuer are the sale of equity
capital, the exercise of warrants and options or the offering by the Issuer of
an interest in the mineral claim to be earned to another party or parties. If
the Issuer is unable to secure additional funding, the Issuer may lose its
interest in one or more of its mineral claims and/or may be required to cease
operations.
BECAUSE THE ISSUER HAS LIMITED FINANCIAL RESOURCES AND HAS NOT GENERATED ANY
REVENUE FROM ITS OPERATIONS, AN INVESTMENT IN THE ISSUER'S COMMON SHARES MAY BE
WORTHLESS.
The Issuer has limited financial resources, has a history of losses, has no
immediate source of operating cash flow and has not generated any revenues from
its existing mineral interests. Any further additional equity financing
undertaken by the Issuer would cause dilution to its shareholders.
THE PRICE OF THE ISSUER'S COMMON SHARES IS SUBJECT TO MARKET FLUCTUATIONS AND
VOLATILITY WHICH MAY NOT BE RELATED TO THE ISSUER'S OPERATIONS AND SUCH
FLUCTUATIONS MAY IMPACT THE ISSUER'S ABILITY TO COMPLETE EQUITY FINANCINGS.
In recent years, the securities markets in Canada have experienced a high level
of price and volume volatility, and the market price of securities of many
companies, particularly junior natural resources exploration companies, have
experienced wide fluctuations in price which have not necessarily been related
to the operating performance, underlying asset values or prospects of such
companies. In particular, the per share price of the Issuer's common shares
fluctuated from a high of $0.90 to a low of $0.30 during the 12-month period
ending January 31, 2006. Continued price fluctuations will have a significant
impact on the Issuer's ability to complete equity financings.
THE ISSUER'S OPERATION IN MEXICO SUBJECTS THE ISSUER TO FOREIGN CURRENCY
FLUCTUATIONS WHICH MAY INCREASE THE ISSUER'S EXPENSES AND, IN THE EVENT THE
ISSUER ACHIEVES PROFITABILITY, REDUCE THE ISSUER'S PROFITABILITY
The Issuer's operation in Mexico makes it subject to foreign currency
fluctuation and such fluctuation may adversely affect the Issuer's financial
position and results. The Canadian dollar varies under market conditions. The
Issuer maintains its cash and cash equivalent amounts primarily in Canadian and
U.S. denominated currencies. The currency exchange rate between U.S. dollars and
- 11 -
Canadian dollars fluctuated between US$0.7872 and US$0.8690 for one Canadian
dollar during 2005. The Issuer does not currently engage in hedging activities.
THE ISSUER IS DEPENDENT ON KEY PERSONNEL AND THE ABSENCE OF ANY OF THESE
INDIVIDUALS COULD RESULT IN A SIGNIFICANTLY NEGATIVE EFFECT ON THE ISSUER
The Issuer strongly depends on the business and technical expertise of its
management and key personnel. There is little possibility that this dependence
will decrease in the near term. As the Issuer's operations expand, additional
general management resources will be required, especially if the Issuer
encounters risks that are inherent in doing business in foreign countries. The
Issuer is dependent, in particular, on Douglas Good, President and CEO of the
Issuer, the experience and expertise of its board of directors and advisory
committee, and the expertise and experience of Mr. Alfredo Parra the current
President of Mina Real S.A. de C.V., the private Mexican company formed to hold
the Mina Real property. The Issuer does not maintain key-man life insurance on
any personnel. If the services of the Issuer's management and key personnel were
lost, it could have a material adverse effect on future operations.
THE ISSUER IS IN COMPETITION WITH OTHER MINING COMPANIES THAT HAVE GREATER
RESOURCES AND EXPERIENCE
The mineral exploration and development business is intensely competitive, and
the Issuer competes with other exploration and mining companies, many of which
have greater resources and experience. Competition in the precious metals mining
industry is primarily for mineral rich properties which can be developed and
produced economically; the technical expertise to find, develop, and produce
such properties; the labour to operate the properties; and the capital for the
purpose of financing development of such properties. Many competitors not only
explore for and mine precious metals, but conduct refining and marketing
operations on a world-wide basis and some of these companies have much greater
financial and technical resources than the Issuer. Such competition may result
in the Issuer being unable to acquire desired properties, recruit or retain
qualified employees or acquire the capital necessary to fund its operations and
develop its properties. The Issuer's inability to compete with other mining
companies for these mineral deposits could have a material adverse effect on the
Issuer's results of operation and business.
THE ISSUER MAY INCUR LIABILITY FOR CERTAIN RISKS AGAINST WHICH THE ISSUER DOES
NOT HAVE INSURANCE, WHICH COULD REDUCE OR ELIMINATE ANY FUTURE PROFITABILITY AND
NEGATIVELY IMPACT THE PRICE OF THE ISSUER'S SHARES.
In the course of exploration of mineral concessions, certain risks, and in
particular, unexpected or unusual geological operating conditions including rock
bursts, cave-ins, fires, flooding and earthquakes may occur. It is not always
possible to fully insure against such risks and the Issuer may decide not to
take out insurance against such risks as a result of high premiums or other
reasons. Should such liabilities arise, they could reduce or eliminate any
future profitability and result in increasing costs and a decline in the value
of the securities of the Issuer
THE ISSUER'S SHAREHOLDERS WILL EXPERIENCE DILUTION FROM THE EXERCISE OF STOCK
OPTIONS
The Issuer may in the future grant to some or all of its directors, officers,
insiders and key employees additional options to purchase the Issuer's common
shares as non-cash incentives to those employees. Such options may be granted at
exercise prices equal to market prices, or at prices as allowable under the
policies of the Exchange, when the public market is depressed. To the extent
that significant numbers of such options may be granted and exercised, the
interests of then existing shareholders of the Issuer will be subject to
additional dilution.
THE ISSUER DOES NOT PAY DIVIDENDS ON ITS COMMON SHARES; THEREFORE, INVESTORS
SEEKING DIVIDEND INCOME SHOULD NOT PURCHASE THE COMMON SHARES
The Issuer has never declared or paid cash dividends on its common shares and
does not anticipate doing so in the foreseeable future. Additionally, the
determination as to the declaration of dividends is within the discretion of the
Issuer's Board of Directors, which may never declare cash dividends on the
Issuer's common stock. Investors cannot expect to receive a dividend on the
Issuer's common shares in the foreseeable future, if at all.
- 12 -
LACK OF LIQUIDITY
Persons purchasing shares of the Issuer may not be able to easily sell their
shares.
RISKS RELATING TO THE OFFERING
ADDITIONAL FINANCING
There can be no assurance that the Issuer will be able to obtain adequate
financing in the future, or that the terms of such financing will be favourable,
for further exploration and development of its projects. Failure to obtain such
additional financing could result in delay or indefinite postponement of further
exploration and development of the property interests of the Issuer with the
possible dilution or loss of such interests. Further, revenues, financings and
profits, if any, will depend upon various factors, including the success, if
any, of exploration programs and general market conditions for natural
resources.
OFFERING PRICE
The price of the Units offered hereunder was determined by negotiation between
the Issuer and the Agent, and may not reflect the actual value of the Issuer's
securities.
PRICE FLUCTUATIONS & SHARE PRICE VOLATILITY
The market price of a publicly-traded stock is affected by many variables not
directly related to the corporate performance of the Issuer, including the
market in which it is traded, the strength of the economy generally, the
availability and attractiveness of alternative investments, and the breadth of
the public market for the stock. The effect of these and other factors on the
market price of the Issuer's common shares on the Exchange in the future cannot
be predicted.
DIVIDENDS
Investors cannot expect to receive a dividend on the Issuer's common shares in
the foreseeable future.
DILUTION
The financial risk of the Issuer's future activities will be borne to a
significant degree by holders of its common shares. If the Issuer issues
treasury shares for financing purposes, control of the Issuer may change and
shareholders may suffer dilution.
OTHER RISKS
CONFLICTS OF INTEREST
The directors and officers of the Issuer will not be devoting all of their time
to the affairs of the Issuer. Conflicts of interest may arise among the members
of the board of directors and such conflicts may cause the Issuer to enter into
transactions on terms which are not beneficial to the Issuer
Certain of the Issuer's directors are also directors, officers or shareholders
of other companies that are engaged in the business of acquiring, developing and
exploiting natural resource properties. Such associations may give rise to
conflicts of interest from time to time. Such a conflict poses the risk that the
Issuer may enter into a transaction on terms which place the Issuer in a worse
position than if no conflict existed.
The directors and officers of the Issuer are aware of the existence of laws
governing accountability of directors and officers for corporate opportunity and
requiring disclosures by directors of conflicts of interest and the Issuer will
- 13 -
rely upon such laws in respect of any directors' and officers' conflicts of
interest or in respect of any breaches of duty by any of its directors or
officers.
The Issuer has no specific internal policy governing conflicts of interest.
ACQUISITIONS
In January 2006, the Issuer acquired an interest in the gold/silver Mina Real
Property, which the Issuer intends to focus its exploration and development
activities on during 2006. See "Business of the Issuer - Mina Real Property".
The Issuer does not intend to finance any new acquisitions from the proceeds of
this Offering.
CORPORATE INFORMATION
The Issuer has an authorized share capital that consists of an unlimited number
of common shares without par value, of which an aggregate of 7,267,735 common
shares are issued and outstanding at the date hereof.
Each common share entitles the holder to one vote at all meetings of the
shareholders. The holders of the common shares, subject to the prior rights, if
any, of any other class of shares of the Issuer, are entitled to receive such
dividends in any financial year as the Board of Directors of the Issuer may by
resolution determine. In the event of liquidation, dissolution or winding-up of
the Issuer, whether voluntary or involuntary, the holders of the common shares
are entitled to receive, subject to the prior rights, if any, of the holders of
any other class of shares of the Issuer, the remaining property and assets of
the Issuer.
DIRECTORS, OFFICERS, PROMOTERS AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table provides select information regarding the directors,
officers and promoters of the Issuer:
NUMBER OF
FULL NAME AND COMMON SHARES
MUNICIPALITY OF DIRECTOR(1)/ OWNED UPON
RESIDENCE AND POSITION OFFICER COMPLETION OF PRINCIPAL OCCUPATION DURING
WITH THE ISSUER SINCE OFFERING(2) THE PAST FIVE YEARS
- ----------------------- ---------------- -------------- ------------------------------------
DOUGLAS GOOD, Nov. 25, 2005 100,000 (1.4%) Corporate director and executive of
New Westminster, BC various public and private companies
PRESIDENT, CEO, CFO AND in the healthcare, software, mining
DIRECTOR and automotive industries.
WILLIAM LEE,(3) September 8, 1995 32,650 (0.45%) Chartered Accountant; Chief Financial
Delta, BC Officer of Jinshan Gold Mines Inc.
DIRECTOR January 2006 - present; Business
Analyst, Ivanhoe Energy Inc. and
Ivanhoe Mines Ltd., July 2004 -
December 2005; Chief Financial
Officer, IMA Exploration Inc. 1996 -
April 2004.
ANDREW CARTER,(3) October 15, 2003 35,000 (0.48%) President of Tinka Resources Ltd.
North Vancouver, BC from Feb. 2003 to present.
DIRECTOR Businessman and independent corporate
consultant.
- 14 -
NUMBER OF
FULL NAME AND COMMON SHARES
MUNICIPALITY OF DIRECTOR(1)/ OWNED UPON
RESIDENCE AND POSITION OFFICER COMPLETION OF PRINCIPAL OCCUPATION DURING
WITH THE ISSUER SINCE OFFERING(2) THE PAST FIVE YEARS
- ----------------------- ---------------- -------------- ------------------------------------
GIL LEATHLEY, January 17, 2006 80,000 (1.1%) Independent consultant to several
West Vancouver, BC senior and junior mining companies
DIRECTOR since 2000.
HARVEY LIM, September 8, 1995 45,500 (0.6%) Chartered Accountant; Controller of
Burnaby, BC Chase Management Ltd.
CORPORATE SECRETARY
(1) Each director holds office until the next annual meeting of shareholders of
the Issuer or until his successor is appointed, unless such office is
vacated in accordance with the articles of the Issuer or in accordance with
the BRITISH COLUMBIA BUSINESS CORPORATIONS ACT.
(2) The information as to shares beneficially owned, not being within the
knowledge of the management of the Issuer, has been furnished by the
respective individuals or has been extracted from the register of
shareholdings maintained by the Issuer's transfer agent. These
post-Offering shareholdings presume no participation by the individual in
the Offering and that no Warrants or Agent's Warrants are exercised.
(3) Denotes member of the Audit Committee
CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES
Other than as set out below, no current director, officer or promoter of the
Issuer is, or within five years prior to the date of this Offering Document has
been, a director, officer or promoter of any other issuer that, while such
person was acting in that capacity, was the subject of a cease trade or similar
order or an order that denied the Issuer access to any statutory exemptions for
a period of more than 30 consecutive days, or was declared bankrupt or made a
voluntary assignment in bankruptcy, made a proposal under any legislation
relating to bankruptcy or insolvency, or has been subject to or instituted any
proceedings, arrangement or compromise with creditors or had a receiver,
receiver manager or trustee appointed to hold the assets of that person.
In approximately 2002, Douglas Good was engaged as a Director and Officer of
ComWest Capital Corp. (formerly Dynasty Motorcar Corporation) ("ComWest") to
assist in the reorganization of ComWest's financial affairs. This financial
reorganization was made by way of a proposal under the Bankruptcy and Insolvency
Act (Canada) that was approved by the creditors and ultimately the Supreme Court
of British Columbia on September 25, 2002. The proposal was certified by the
trustee as being fully performed on February 18, 2003. Full particulars of this
matter can be found on SEDAR under "ComWest Capital Corp."
PENALTIES OR SANCTIONS
No current director, officer or promoter of the Issuer has, within the ten years
prior to the date of this Offering Document, been subject to any penalties or
sanctions imposed by a court or securities regulatory authority relating to
trading in securities, promotion or management of a publicly traded issuer, or
theft or fraud.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Issuer's directors and officers, there are no persons or
companies who or which beneficially own, directly or indirectly, or exercise
control or direction over 10% or more of the Issuer's common shares .
- 15 -
OPTIONS TO PURCHASE SECURITIES OF THE ISSUER
The following table provides select information regarding the options and share
purchase warrants to acquire securities of the Issuer granted to insiders or
promoters of the Issuer as at the date hereof:
EXERCISE
NAME SECURITY NUMBER PRICE EXPIRY DATE
- ------------- -------- ------- -------- -----------------
Andrew Carter Options 27,500 $0.50 November 10, 2008
Options 27,500 $0.62 January 17, 2009
Warrants 2,500 $1.50 February 2, 2007
Warrants 15,000 $0.65 January 16, 2008
Gil Leathley Options 30,000 $0.50 November 10, 2008
Options 30,000 $0.62 January 17, 2009
Warrants 40,000 $0.65 January 16, 2008
William Lee Options 27,500 $0.50 November 10, 2008
Options 17,500 $0.62 January 17, 2009
Warrants 2,500 $1.50 February 2, 2007
Warrants 10,000 $0.65 January 16, 2008
Harvey Lim Options 27,500 $0.50 November 10, 2008
Options 22,500 $0.62 January 17, 2009
Warrants 20,000 $0.65 January 16, 2008
Douglas Good Options 60,500 $0.50 November 10, 2008
Options 192,500 $0.62 January 17, 2009
Warrants 50,000 $0.65 January 16, 2008
The Issuer has not granted any stock options to employees. The Issuer has
granted an aggregate of 107,000 stock options to persons other than insiders,
promoters or employees of the Issuer. An aggregate of 47,000 of such stock
options are exercisable at a price of $0.50 per share, of which 22,000 expire on
January 4, 2007 and 25,000 expire on November 10, 2008. The balance of 60,000
stock options are exercisable at a price of $0.62 per share and expire on
January 17, 2009.
The Issuer has issued an aggregate of 2,684,500 common share purchase warrants
to persons others than insiders, promoters or employees. An aggregate of 142,500
of these warrants are exercisable at a price of $3.10 per share and expire on
March 4, 2006; an aggregate of 177,000 are exercisable at a price of $2.00 per
share and expire on February 2, 2007 and an aggregate of 2,365,000 are
exercisable at a price of $0.65 per share and expire on January 16, 2008. The
Agent holds an aggregate of 4,500 of the warrants that expire on February 7,
2007 which are exercisable at a price of $2.00 per share.
The Agent also holds a non-transferable warrant that entitles it to purchase
150,000 units of the Company at a price of $0.50 per unit at any time until
January 16, 2008. Each unit consists of one common share in the capital of the
Company and one half of one common share purchase warrant. One whole warrant
will entitle the Agent to purchase an additional common shares at a purchase
price of $0.65 per share at any time until January 16, 2008.
Pursuant to an agreement (the "Accent Agreement") between the Issuer and Accent
Marketing Ltd. ("Accent") dated for reference February 28, 2006, the Issuer has
engaged Accent as its European investor relations representative. Pursuant to
the Accent Agreement, the Issuer has retained Accent for an initial term of six
- 16 -
months, and thereafter on a month to month basis. The Issuer will pay to Accent
a fee of 4,500 Euros per month, and has granted to Accent a stock option to
purchase up to 150,000 common shares of the Company at an exercise price of
$0.80 per share. The options vest as to 25,000 shares every three months
commencing on May 28, 2006, and will expire on August 28, 2007, subject to
earlier termination in accordance with the terms of the Accent Agreement.
All of the stock options referred to above have been granted pursuant to the
stock option plan of the Company which permits the Company to grant options to
purchase up to 10% of the Company's issued and outstanding common shares on the
date of grant of the options. As at the date of this Offering Document the
Company has granted stock options, as set out above, to purchase up to an
aggregate of 720,000 common shares in the capital of the Company.
SECURITIES OF THE ISSUER HELD IN ESCROW
As at the date hereof, the Issuer has no common shares subject to escrow.
PARTICULARS OF ANY OTHER MATERIAL FACTS
LEGAL PROCEEDINGS
The Issuer is not aware of any actual or pending material legal proceedings to
which the Issuer is or is likely to be a party or of which any of its business
or property interest is or is likely to be subject.
OTHER PROPERTIES
Except as disclosed herein, there are no properties proposed to be acquired by
the Issuer for which regulatory approval is not presently being sought.
FINANCIAL POSITION
The liabilities (including bonds, debentures, notes or other debt obligations)
of the Issuer have not significantly increased or altered subsequent to the date
of the most recent financial statements filed with the securities commissions of
the jurisdictions where the Issuer is a reporting issuer.
OTHER MATERIAL FACTS
The Issuer is not aware of any other material facts not previously disclosed
herein.
CONTRACTUAL RIGHTS OF ACTION
If this Offering Document, together with any Subsequently Triggered Report
contains a "misrepresentation" as that term is defined in the Securities Laws of
the applicable Participating Jurisdictions, and it was a misrepresentation on
the date of investment, the purchaser will be deemed to have relied on the
misrepresentation and will have a right of action, either for damages against
the Issuer and its directors, and every person, except the agent, who signed the
Offering Document, (the "Issuer Representatives") or alternatively for
rescission of the agreement of purchase and sale for the securities. In any such
action, parties against whom remedies are sought shall have the same defenses as
are available in the Securities Laws of the applicable Participating
Jurisdictions, as if the Offering Document were a prospectus.
A purchaser is not entitled to commence an action to enforce this right after
the limitation periods as set out in the Securities Laws of the applicable
Pa
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The contractual rights provided herein are in addition to and without derogation
from any other right the purchaser may have at law.
CONTRACTUAL RIGHTS OF WITHDRAWAL
An order or subscription for the securities offered under this Offering Document
is not binding on a purchaser if the dealer from whom the purchaser purchased
the security (or the Issuer if the purchaser did not purchase the securities
from a dealer), receives, not later than two business days after the receipt by
the purchaser of the Offering Document and any Subsequently Triggered Report,
written notice sent by the purchaser evidencing the intention of the purchaser
not to be bound by the agreement.
The foregoing right of withdrawal does not apply if the purchaser is a member of
a "professional group" as defined under National Instrument 33-105 -
UNDERWRITING CONFLICTS or any successor policy or instrument, or if the
purchaser disposes of the beneficial ownership of the security (otherwise than
to secure indebtedness) before the end of the withdrawal period.
The onus of proving that the time for giving notice of withdrawal has ended is
on the dealer from whom the purchaser has agreed to purchase the security, or if
the purchaser did not purchase from a dealer, such onus is on the Issuer.
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CERTIFICATE OF THE ISSUER
The foregoing, including the documents incorporated by reference constitute
full, true and plain disclosure of all material facts relating to the securities
offered by this Offering Document. The standard for full, true and plain
disclosure is the same as that required for prospectuses by the SECURITIES ACT
(British Columbia) or the SECURITIES ACT (Alberta) or the SECURITIES ACT
(Saskatchewan), as applicable, and the regulations thereunder.
DATED: February 23, 2006
/s/ DOUGLAS GOOD /s/ HARVEY LIM
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DOUGLAS GOOD HARVEY LIM
President and Chief Executive Officer Corporate Secretary
ON BEHALF OF THE BOARD OF DIRECTORS OF THE ISSUER
/s/ ANDREW CARTER /s/ GIL LEATHLEY
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ANDREW CARTER GIL LEATHLEY
Director Director
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CERTIFICATE OF THE AGENT
We have reviewed this Offering Document and the information it incorporates by
reference. Our review consisted primarily of enquiry, analysis and discussion
related to the information supplied to us by the Issuer and information about
the Issuer in the public domain.
We have not carried out a review of the type that would be carried out for a
prospectus filed under the SECURITIES ACT (British Columbia), the SECURITIES ACT
(Alberta) or the SECURITIES ACT (Saskatchewan) of the applicable Participating
Jurisdictions as applicable. Therefore, we cannot certify that this document and
the information it incorporates by reference constitutes full, true and plain
disclosure of all material facts relating to the Issuer and the securities
offered by it.
Based on our review, nothing has come to our attention that causes us to believe
that this Offering Document and the information that it incorporates by
reference: (1) contains an untrue statement of a material fact; or (2) omits to
state a material fact necessary to prevent a false statement or misleading
interpretation of any other statement.
DATED: February 23, 2006
CANACCORD CAPITAL CORPORATION
/s/ MICHAEL G. GREENWOOD
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MICHAEL G. GREENWOOD
President and Chief Operating Officer
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