UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 30, 2005 333-101960
Date of Report Commission File Number
(Date of earliest event reported)
YUKON GOLD CORPORATION, INC.
(Exact name of registrant as specified in its charter)
Delaware 98-0413063
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
347 Bay Street
Suite 408
Toronto, Ontario M5H 2R7
(Address of Principal Executive Offices) (Zip Code)
(416) 865-9930
(Registrant's telephone number, including area code)
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Item 8.01 Other Events
On July 7, 2002, Yukon Gold Corp., our wholly owned subsidiary ("YGC"), entered
into an option agreement with the Hinton Syndicate to acquire a 75% interest in
the 273 unpatented mineral claims covering approximately 14,000 acres in the
Mayo Mining District of the Yukon Territory, Canada. This agreement was replaced
with a revised and amended agreement dated as of July 7, 2005 among Yukon Gold
Corporation, Inc., YGC and the Hinton Syndicate and is referred to herein as the
"Hinton Option Agreement." The Hinton Option Agreement superseded the original
agreement and amendments thereto.
YGC must make scheduled cash payments and perform certain work commitments to
earn up to a 75% interest in the mineral claims, subject to a 2% net smelter
return royalty in favor of the Hinton Syndicate, as further described below.
The schedule of Property Payments and Work Programs are as follows:
PROPERTY PAYMENTS
a. On execution of the July 7, 2002 Agreement $ 25,000 Paid
b. On July 7, 2003 $ 75,000 Paid
c. On July 7, 2004 $ 150,000 Paid
d. On January 2, 2006 $ 150,000
e. On July 7, 2006 $ 150,000
f. On July 7, 2007 $ 150,000
g. On July 7, 2008 $ 150,000
TOTAL $ 850,000
WORK PROGRAM-expenditures to be incurred in the following periods;
a. July 7/02 to July 6/03 $ 150,000 Incurred
b. July 7/03 to July 6/04 $ 250,000 Incurred
c. July 7/04 to July 6/05 $ 325,000 Incurred
d. July 7/05 to Dec.31/06 $ 750,000
e. Jan. 1/07 to Dec 31/07 $1,000,000
f. Jan. 1/08 to Dec 31/08 $1,250,000
g. Jan 1/09 to Dec 31/09 $1,500,000
TOTAL $5,225,000
All Property Payments and Work Programs due to date of this report have been
made and incurred. Work Program expenditures have exceeded those required by
approximately $75,000.
Provided all Property Payments have been made that are due prior to the Work
Program expenditure levels being attained, Yukon Gold shall have earned a:
25% interest upon Work Program expenditures of $1,500,000
50% interest upon Work Program expenditures of $2,500,000
75% interest upon Work Program expenditures of $5,225,000
In some cases, payments made to service providers include amounts advanced to
cover the cost of future work. These advances are not loans but are considered
"incurred" exploration expenses under the terms of the Hinton Option Agreement.
Section 2.2(b) of the Hinton Option Agreement defines the term, "incurred" as
follows: "Costs shall be deemed to have been "incurred" when YGC has
contractually obligated itself to pay for such costs or such costs have been
paid, whichever should first occur." Consequently, the term, "incurred" includes
amounts actually paid and amounts that YGC has obligated itself to pay. Under
the Hinton Option Agreement there is also a provision that requires YGC to have
raised and have available the Work Program funds for the period from July 7,
2005 to December 31, 2006, by May 15 of 2006.
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The Hinton Option Agreement contemplates that upon the earlier of: (i) a
production decision or (ii) investment of CDN$5.225 million or (iii) YGC has a
minority interest and decides not to spend any more money on the project, YGC's
relationship with the Hinton Syndicate will become a joint venture for the
further development of the property. Under the terms of the Hinton Syndicate
Agreement, the party with the majority interest would control the joint venture.
Once the 75% interest is earned, as described above, YGC has a further option to
acquire the remaining 25% interest in the mineral claims for a further payment
of CDN$5,000,000.
The Hinton Option Agreement provides that the Hinton Syndicate receive a 2% "net
smelter returns royalty." In the event that we exercise our option to buy-out
the remaining 25% interest of the Hinton Syndicate (which is only possible if we
have reached a 75% interest, as described above) then the "net smelter return
royalty" would become 3% and the Hinton Syndicate would retain this royalty
interest only. The "net smelter return royalty" is a percentage of the gross
revenue received from the sale of the ore produced from our mine less certain
permitted expenses.
The Hinton Option Agreement entitles the Hinton Syndicate to recommend for
appointment one member to the board of directors of the Yukon Gold.
The Hinton Syndicate Agreements provides both parties (YGC and Hinton Syndicate)
with rights of first refusal in the event that either party desires to sell or
transfer its interest.
The Hinton Syndicate members, each has the option to receive their share of
property payments in stock of Yukon Gold at a 10% discount to the market and
once Yukon Gold has obtained a listing on a Canadian stock exchange YGC and
Yukon Gold have a further option to pay 40% of any property payment due after
the payment on January 2, 2006 with common stock of Yukon Gold.
The Mount Hinton Property is located approximately 6 miles southeast of Keno
City and 150 north of Whitehorse in the Yukon Territory Canada.
The Hinton Property is located within the Tombstone Gold Belt immediately to the
east of the Keno-Elsa Silver Camp. Recognized as one of the more prospective
gold regions in the world, the Tombstone Gold Belt is comprised of several
mineral rich districts that extend more than 1000 km across the North American
Cordillera (Alaska and Yukon). Though mineralization types vary they are all
related to a distinctive northwest trending belt of plutonic intrusions termed
the Tombstone Suite.
The Mt. Hinton gold veins and silver deposits of the Keno Hill Silver Camp occur
within the Keno Hill Quartzite where brittle failure has created major fracture
zones for mineral deposition. The brittle quartzite represents a tectonic sheet
or bed separated by two major faults called the Tombstone and Robert Service
thrusts. The Keno Hill Quartzite is 600 metres thick in the silver zones and as
much as 2000 metres thick on the Mt. Hinton property
Economic silver deposits in the Keno Hill are best developed within the
relatively brittle Keno Hill Quartzite. Within productive areas the ore zones
occur throughout the full quartzite bed from hanging wall to footwall. Strike
lengths of individual ore shoots range from 30 to 335 metres, with thicknesses
ranging from 0.3 to 30 metres. The Hinton gold zones mirror the physical
characteristics of the Keno Hill silver zones although they are much more
enriched in gold.
Over 50 mineralized gold veins, vein segments and float trains have been
identified on the Mount Hinton Property. These veins form a broad vein fault
system, (Mt. Hinton Gold Trend), 300 metres wide and 3000 metres long. To date
gold mineralization has been found over a vertical distance of 426 metres. The
extent of this system may encompass the entire lateral and vertical extent of
the Keno Hill Quartzite bound by the Tombstone and Robert Service thrust faults.
From footwall to hanging wall the relatively shallow dipping quartzite unit
represents better then 2000 metres of thickness and 8000 metres of strike length
where it is intersected by the Mount Hinton vein fault system. Parallel vein
fault systems may also be present.
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The two strongest veins, the 19 and 52 vein systems represent the key target
area. The 19 vein has been traced through mapping, trenching and a defined air
photo lineament for 366 metres. Current exploration has extended the 52 vein for
1000 metres. Geochemical sampling has outlined a highly anomalous gold and
pathfinder element anomaly representing the projected westerly strike of the 52
Vein.
Gold and silver mineralization occurs within quartz veins as well as clay-rich
fault gouge zones that bound the veins. These clay-rich zones were never
historically sampled by previous operators whereas recent sampling by Yukon Gold
has shown that significant gold and silver values may be present across the
entire vein structures and, therefore, relatively well developed precious metal
mineralization may be present over greater widths than previously thought. Grab
samples of 52 Vein material exposed intermittently by hand trenching and machine
trenching on a steep north facing slope assayed up to 6.0 g/t Au with 2350 g/t
Ag and 127.5 g/t Au with 1575 g/t Ag and a 1.30 m channel sample ran 9.0 g/t Au
with 39.0 g/t Ag. Results of 2003 and 2004 exploration on the Mt. Hinton
property suggest that the 52 vein system may be well-mineralized with
significant gold and silver mineralization along its entire strike length.
Other veins of merit within the same area are:
o 21 vein, weighted average of samples over a 22 metre strike length
ran 42.5 g/t Au and 319 g/t Ag over average width of 105 cm.
o 35 vein, weighted average of samples over a 6.1 metre strike length
ran 16.80 g/t Au and 614 g/t Ag over average width of 183 cm.
These individual veins delineate continuous gold mineralization over the
distances sampled and sampling was terminated because of talus thicknesses.
The two bulk metallurgical samples taken from the 15 and 21 veins by United Keno
Hill Mines Ltd. in 1967/68 returned head grades of 50.88 g/t Au, 144.96 g/t Ag
and 72.32 g/t Au, 659.2 g/t Ag respectively. The geological and structural model
developed from 100 years of mining similar structures in the Keno area,
demonstrates the potential for continuity of gold mineralization in the Mount
Hinton trend. There is a very high probability of locating economic gold lenses
of such grade that direct shipping is possible. All attempts to further
delineate the ore shoots contained within the system have been thwarted by
coarse talus, permafrost, steep terrain and the difficulty in sampling clay
mineralization. Because of the physical setting of the known veins, the most
cost effective way to test the Mount Hinton trend is via underground
development.
Item 9.01 Financial Statements and Exhibits.
Exhibits
99.1 Hinton Option Agreement dated with an effective date of July 7, 2005 and
executed on August 22, 2005.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
YUKON GOLD CORPORATION, INC.
Date: August 30, 2005 By: /s/ W. Warren Holmes
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Name: W. Warren Holmes
Title: Chairman and CEO
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