SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 20-F
(Mark One)
__ Registration statement pursuant to Section 12(b) or (g) of the Securities
Exchange Act of 1934 or
X Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended November 30, 2002
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________ to _________________
Commission file number
ALBERTA STAR DEVELOPMENT CORP.
------------------------------
(Exact name of registrant as specified in this charter)
Province of Alberta, Canada
---------------------------
(Jurisdiction of incorporation or organization)
200 - 675 West Hastings Street, Vancouver, British Columbia Canada V6B 1N2
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(Address of principal executive offices)
Securities registered or to be registered pursuant to section 12(b) of the Act:
None None
------------------- ----------------------
(Title of each class) (Name of each exchange
on which registered)
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Shares Without Par Value
-------------------------------
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:
None
----------------
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
9,826,169
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- --
Indicate by check mark which financial statement item the registrant has
elected to follow.
Item 17 X Item 18
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TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Identity of Directors, Senior Management and Advisors 1
ITEM 2. Offer Statistics and Expected Timetable 1
ITEM 3. Key Information 1
3.1 Selected Financial Data 1
3.2 Risk Factors 3
ITEM 4. Information on the Company 7
4.1 History and Development 7
4.2 Longtom Property 7
4.3 Competition 10
4.4 Management & Employees 10
4.5 Office Space 10
4.6 Environmental Regulations 10
ITEM 5. Operating and Financial Review and Prospects 11
5.1 Results of Operations 11
5.2 Liquidity 11
ITEM 6. Directors, Senior Management and Employees 12
6.1 Directors and Senior Management 12
6.2 Compensation of Directors 13
6.3 Board Practices 14
6.4 Employees 14
6.5 Share Ownership of Directors and Officers 15
ITEM 7. Major Shareholders and Related Party Transactions 15
7.1 Beneficial Ownership 15
7.2 Related Party Transactions 16
7.3 Interests of Experts and Counsel 17
ITEM 8. Financial Information 17
8.1 Legal Proceedings 17
8.2 Significant Changes 18
ITEM 9. The Offer and Listing 18
9.1 Offering and Listing Details 18
ITEM 10. Additional Information 19
10.1 Share Capital 19
10.2 Bylaws and Articles 19
10.3 Material Contracts 20
10.4 Exchange Controls and other Limitations Affecting
Security Holders 21
10.5 Certain Canadian Federal Income Tax Consequences
to U.S. Investors 21
10.6 Documents on Display 22
ITEM 11. Quantitative and Qualitative Disclosures About Market Risk 22
ITEM 12. Descriptions of Securities Other than Equity Securities 23
12.1 Warrants 23
12.2 Stock Options 23
PART II
ITEM 13. Defaults, Dividend Arrearages and Delinquencies 23
ITEM 14. Material Modifications to the Rights of Security Holders and
Use of Proceeds 23
PART III
ITEM 17. Financial Statements
ITEM 18. Financial Statements
ITEM 19. Exhibits
SIGNATURE
FORWARD-LOOKING STATEMENTS
--------------------------
We caution you that certain important factors (including without limitation
those set forth in this Form 20-F) may affect our actual results and could
cause such results to differ materially from any forward-looking statements
that may be deemed to have been made in this Form 20-F registration statement,
or that are otherwise made by or on our behalf. For this purpose, any
statements contained in this registration statement that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the generality of the foregoing, words such as "may," "except,"
"believe," "anticipate," "intend," "could," estimate," or "continue," or the
negative or other variations of comparable terminology, are intended to
identify forward-looking statements.
PART I
Item 1. Identity of Directors, Senior Management and Advisors
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable
Item 3. Key Information
3.1. Selected Financial Data
The following tables set forth the data of the Company for the fiscal years
ended November 30, 2002, 2001, 2000, 1999 and 1998. We derived all figures
from our financial statements which were examined by our independent auditor.
This information should be read in conjunction with our financial statements
included in this registration statement.
Our financial statements included in this registration statement and the table
set forth below gave been prepared in accordance with accounting principles
generally accepted in Canada. A reconciliation to United States generally
accepted accounting principles is included in Note 14 to our audited financial
statements. All amounts are expressed in Canadian dollars. The first table
presents this financial data in accordance with United Statements generally
accepted accounting principles. The second table presents the data in
accordance with Canadian generally accepted accounting principles.
-1-
U.S. Generally Accepted Accounting Principles
- ---------------------------------------------------------------------------------------------------------------------
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal year
ended Nov. 30, ended Nov. 30, ended Nov. 30, ended Nov. 30, ended Nov.30,
2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
Net
Operating NIL NIL NIL NIL NIL
Revenue
- ---------------------------------------------------------------------------------------------------------------------
Loss ($746,145) ($520,432) ($160,037) ($148,786) ($780,116)
from
operations
- ---------------------------------------------------------------------------------------------------------------------
Loss per ($0.126) ($0.153) ($ 0.014) ($0.015) ($0.088)
common
share
- ---------------------------------------------------------------------------------------------------------------------
Total assets $184,409 $20,365 $97,153 $7,922 $35,368
- ---------------------------------------------------------------------------------------------------------------------
Net assets ($19,034) ($24,481) $775 ($120,279) ($12,843)
- ---------------------------------------------------------------------------------------------------------------------
Long term NIL NIL NIL NIL NIL
debt
- ---------------------------------------------------------------------------------------------------------------------
Cash NIL NIL NIL NIL NIL
dividends per
common share
- ---------------------------------------------------------------------------------------------------------------------
Deficit ($2,322,310) ($1,616,165) ($1,095,733) ($935,696) ($786,910)
- ---------------------------------------------------------------------------------------------------------------------
Capital $2,341,344 $1,591,684 $1,096,508 $815,417 $774,067
stock
- ---------------------------------------------------------------------------------------------------------------------
Weighted 5,936,358 3,396,738 11,750,416 10,125,836 8,876,014
average
number
of common shares
- ---------------------------------------------------------------------------------------------------------------------
Canadian Generally Accepted Accounting Principles
- ---------------------------------------------------------------------------------------------------------------------
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal year
ended Nov. 30, ended Nov. 30, ended Nov. 30, ended Nov. 30, ended Nov. 30,
2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
Net
Operating NIL NIL NIL NIL NIL
Revenue
- ---------------------------------------------------------------------------------------------------------------------
Loss ($608,910) ($403,950) ($143,787) ($291,216) ($72,773)
from
operations
- ---------------------------------------------------------------------------------------------------------------------
Loss per ($0.10) ($0.12) ($0.011) ($0.024) ($0.007)
common
share
- ---------------------------------------------------------------------------------------------------------------------
Total assets $184,409 $20,365 $658,410 $571,079 $740,955
- ---------------------------------------------------------------------------------------------------------------------
Net assets $73,034 ($10,481) $562,032 $442,878 $692,744
- ---------------------------------------------------------------------------------------------------------------------
Long term NIL NIL NIL NIL NIL
debt
- ---------------------------------------------------------------------------------------------------------------------
Cash NIL NIL NIL NIL NIL
dividends per
common share
- ---------------------------------------------------------------------------------------------------------------------
Deficit ($2,081,893) ($1,472,983) ($507,776) ($363,989) ($72,773)
- ---------------------------------------------------------------------------------------------------------------------
Capital $2,154,927 $1,462,502 $1,069,808 $806,867 $765,517
stock
- ---------------------------------------------------------------------------------------------------------------------
Weighted 6,074,336 3,562,607 13,102,809 12,250,836 11,001,014
average
number
of common shares
- ---------------------------------------------------------------------------------------------------------------------
-2-
Since June 1, 1970, the government of Canada has permitted a floating exchange
rate to determine the value of the Canadian dollar as compared to the United
States dollar. On April 4, 2003, the exchange rate in effect for Canadian
dollars exchanged for United States dollars, expressed in terms of Canadian
dollars was $1.4720. This exchange rate is based on the noon buying rates in
New York City, for cable transfers in Canadian dollars, as certified for
customs purposes by the Federal Reserve Bank of New York. For the past fiscal
years ended November 30 and for the six month period between October 31, 2002
and March 31, 2003, the following exchange rates were in effect for Canadian
dollars exchanged for United States dollars, calculated in the same manner as
above:
Period Average
Year ended Nov 30, 1998 $1.4804
Year ended Nov 30, 1999 $1.4905
Year ended Nov 30, 2000 $1.4824
Year ended Nov 30, 2001 $1.5441
Year ended Nov 30, 2002 $1.5713
Period Low - High
Month ended Oct 31, 2002 $1.5607 - $1.5943
Month ended Nov 30, 2002 $1.5528 - $1.5903
Month ended Dec 31, 2002 $1.5478 - $1.5792
Month ended Jan 31, 2003 $1.5220 - $1.5750
Month ended Feb 28, 2003 $1.4880 - $1.5315
Month ended March 31, 2003 $1.4659 - $1.4905
3.2. Risk Factors
Any investment in our common shares involves a high degree of risk. You
should consider carefully the following information before you decide to buy
our common shares. If any of the events discussed in the following risk
factors actually occurs, our business, financial condition or results of
operations would likely suffer. In this case, the market price of our common
shares could decline, and you could lose all or part of your investment in our
shares. In particular, you should consider carefully the following risk
factors:
We have a history of losses.
We have incurred losses in our business operations since inception, and we
expect that we will continue to lose money for the foreseeable future. Since
our incorporation on September 6, 1996, we have incurred losses totalling
$2,362,310. Very few junior resource companies ever become profitable.
Failure to achieve and maintain profitability may adversely affect the market
price of our common stock.
-3-
We have limited financial resources and no source of cash flow.
We have limited financial resources, no source of operating cash flow and no
assurance that additional funding will be available to us for further
exploration of our projects or to fulfil our obligations under any applicable
agreements. Failure to obtain such additional financing could result in delay
or indefinite postponement of further exploration of our projects with the
possible loss of such properties.
Very few mineral properties are ultimately developed into producing mines.
The business of exploration for minerals and mining involves a high degree of
risk. Few properties that are explored are ultimately developed into producing
mines. At present, our mineral properties have no known body of commercial
ore. Most exploration projects do not result in the discovery of commercially
mineable deposits of ore.
Substantial expenditures are required for us 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, no assurance can be given that we will discover minerals in
sufficient quantities to justify commercial operations or that we can obtain
the funds required for development on a timely basis. The economics of
developing precious and base metal 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 other factors
such as government regulations, including regulations relating to royalties,
allowable production, importing and exporting of minerals and environmental
protection. We have no producing mines at this time.
If we do not obtain additional financing, our business will fail.
Our current operating funds are less than necessary to complete exploration of
our mineral claims, and therefore we will need to obtain additional financing
in order to complete our business plan. As at November 30, 2002, we had
$161,408 in cash on hand. Our business plan calls for significant expenses in
connection with the exploration of our mineral claims. We will require
additional financing in order to complete these activities. In addition, we
will require additional financing to sustain our business operations if we are
not successful in earning revenues once exploration is complete. We do not
currently have any arrangements for financing and we can provide no assurance
to investors that we will be able to find such financing if required.
-4-
We believe the only realistic source of future funds presently available to us
is through the sale of equity capital. Any sale of share capital will result
in dilution to existing shareholders. The only other alternative for the
financing of further exploration would be the offering by us of an interest in
our properties to be earned by another party or parties carrying out further
exploration thereof.
Because management has only limited experience in resource exploration, the
business has a higher risk of failure.
Our management, while experienced in business operations, has only limited
experience in resource exploration. None of our directors or officers have any
significant technical training or experience in resource exploration or mining
We rely on the opinions of consulting geologists that we retain from time to
time for specific exploration projects or property reviews. As a result of
our management's inexperience, there is a higher risk of our being unable to
complete our business plan.
Mineral exploration involves a high degree of risk against which we are not
currently insured.
Unusual or unexpected rock formations, formation pressures, fires, power
outages, labour disruptions, flooding, cave-ins, landslides and the inability
to obtain suitable or adequate machinery, equipment or labour are risks
involved in the operation of mines and the conduct of exploration programs.
We have relied on and will continue to rely upon consultants and others for
exploration expertise.
It is not always possible to fully insure against such risks and we 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 our common stock. We do not currently maintain insurance against
environmental risks relating to our Longtom property.
There is no assurance of the title to or boundaries of our resource properties.
Our Longtom property may be subject to prior unregistered agreements or
transfers or native land claims and title may be affected by undetected
defects. We have not conducted surveys on the property and there is a risk
that the boundaries could be challenged.
We may require permits and licenses that we may not be able to obtain.
Our operations may require licenses and permits from various governmental
authorities. There can be no assurance that we will be able to obtain all
necessary licenses and permits that may be required to conduct exploration,
development and mining operations at our projects.
-5-
Metal prices fluctuate widely.
Factors beyond our control may affect the marketability of any resource we
discover. Metal prices have fluctuated widely, particularly in recent years.
The effect of these factors cannot accurately be predicted.
The resource industry is very competitive.
The resource industry is intensely competitive in all its phases. We compete
with many companies possessing greater financial resources and technical
facilities than us for the acquisition of mineral concessions, claims, leases
and other mineral interests as well as for the recruitment and retention of
qualified employees.
Our operations may be adversely affected by environmental regulations.
Our operations may be subject to environmental regulations promulgated by
government agencies from time to time. Environmental legislation provides
for restrictions and prohibitions on spills, release 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 the
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 that standards,
enforcement, fines and penalties for non-compliance are more stringent.
Environmental assessments of proposed projects carry a heightened degree of
responsibility for us and our directors, officers and consultants. The cost
of compliance with changes in governmental regulations has a potential to
reduce the profitability of our operations. We do not maintain environmental
liability insurance.
The trading market for our shares is not always liquid.
Although our shares trade on the TSX Venture Exchange, the volume of shares
traded at any one time can be limited, and, as a result, there may not be a
liquid trading market for our shares.
Our securities may be subject to penny stock regulation.
Because the current market price of our common stock is below US$5.00 per
share, we are subject to "penny stock" regulation. "Penny stock" rules impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited
investors(generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with a spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker - dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the
"penny stock" rules restrict the ability of broker-dealers to sell our shares
of common stock.
-6-
Enforcement of legal process may be difficult.
All members of our Board of Directors and management reside in Canada. As
well, our address for service is a Canadian address. Accordingly, service of
process upon us, or upon individuals related to us, may be difficult or
impossible to obtain within the United States.
All of our assets are located outside of the United States. Any judgment
obtained in the United States against us may not be collectible within the
United States.
As we are incorporated pursuant to the laws of Alberta, duties of our
directors and officers, and the ability of shareholders to initiate a lawsuit
on our behalf, are governed by the Alberta Business Corporations Act.
Item 4. Information on the Company
4.1. History and Development
We were incorporated under the name "Alberta Star Mining Corp." pursuant to
the Business Corporations Act in the Province of Alberta, Canada by
registration of our Memorandum and Articles of Association and the issuance by
the Registrar of Companies of a Certificate of Incorporation on September 6,
1996. On September 20, 2001, we consolidated our share capital such that
every five common shares in our capital stock pre-consolidation were exchanged
for one post-consolidation common share. Concurrently, we changed our name to
"Alberta Star Development Corp." Our head office is located at 200 - 675 West
Hastings Street, Vancouver, British Columbia, Canada, V6B 1N2. Our telephone
number is (604) 681-3131.
We have not been involved in any bankruptcy, receivership or similar
proceedings, nor have we been a party to any material reclassification,
merger, consolidation or purchase or sale of a significant amount of assets.
We are engaged in the business of acquiring and exploring resource properties.
We currently are the registered owner of a 100% interest, subject to a 2% net
smelter returns royalty, in the Longtom property located in the Northwest
Territories, Canada. We beneficially own 50% of the Longtom property and have
the option to acquire the remaining 50% interest from Tyhee Development Corp.
for $315,000, payable in cash, or at our option, half in cash and half in our
common shares.
The Longtom property is an exploration stage property. There is no assurance
that a commercially viable mineral deposit exists on the property. Further
exploration will be required before a final evaluation as to the economic
feasibility of the Longtom property is determined.
Since our incorporation on September 6, 1996, we have raised and spent a total
of $499,428 on the acquisition and exploration of the Longtom property. All
of this money was raised from the sale of our securities.
-7-
4.2. Longtom Property
By way of an Option Agreement dated February 12, 1998, Mongolia Gold Resources
Ltd., now known as Tyhee Development Corp., granted us an option to acquire a
50% interest, subject to a 2% net smelter royalty in favour of Tyhee
Development Corp., in a group of contiguous mining claims, known as the
Longtom property, covering an area of approximately 14,351.55 hectares which
is located about 350 kilometres north-northwest of Yellowknife, Northwest
Territories, Canada. At the time of the transaction, we did not have any
directors in common with Mongolia Gold Resources Ltd.
We exercised this option by incurring expenditures on the Longtom property of
$200,000, by issuing 4,000,000 common shares in our capital stock to Mongolia
Gold Resources Ltd. and by paying surveying, filing and camp maintenance costs
totalling $30,000. We have the option to acquire the remaining 50% interest,
subject to a 2% net smelter royalty, in the Longtom property from Tyhee
Development Corp. by paying $315,000. We may exercise this option at any time,
though we are compelled to exercise the option within 90 days from the date
that we have incurred $5,000,000 in exploration expenditures on the Longtom
property. At our option, we may pay half of the exercise price in our common
shares. The deemed price of our common shares would be the average TSX Venture
Exchange closing market price of our shares on the five trading days
immediately proceeding and the five trading days immediately following the date
that the option exercise is triggered. We have the right to joint venture the
entire 100% interest in the Longtom property prior to the exercise of the
option.
The Longtom property is located 50 kilometres southeast of Great Bear Lake,
in Northwest Territories, Canada. The area comprising the property was not
explored in detail until 1985 when Central Electricity Generating Board
Exploration (Canada) Ltd. ("CEGB") conducted a three year intensive program.
This company commenced exploration for vein-type uranium/silver deposits.
This exploration led to the discovery of the Damp polymetallic prospect and
the Maia and DW uranium showings on the Longtom property.
In 1986, CEGB mapped the Damp-Fog grid in detail and conducted detailed
radiometric, magnetic and VLF-EM surveys over the area. The mineralized
outcrops were sampled by chipping and coring with a hand drill. Soil samples
were taken in the overburden covered part of the grid. The data was compiled
on 1:1000 scale maps. Additional prospecting and geological mapping on scale
1:12500 were conducted in the surrounding area.
The 1988 exploration program on the Longtom property included drilling of
1,016 metres in 16 holes at Damp-Fog grid. The drilling comprised 12 holes
totalling 808 metres on the exposed part of the Damp breccia zone and its
strike projection to the east, two holes totalling 104 metres on a conductor
zone at the northwest end of Seahorse Lake and one hole of 52 metres on the
Fog and DW uranium showings. Surface working during the year on an island and
west shore of Devil's Lake resulted in the discovery of showings containing
significant amounts of copper, molybdenum, cobalt, gold, silver, arsenic and
nickel. Most of the showings were magnetite-bearing veins, but one occurrence
of copper/molybdenum appears to be granite-related or porphyry copper-type.
The results of the exploration were regarded as not sufficiently encouraging
in view of declining uranium prices at that time. Consequently, CEGB allows
the prospecting permits to lapse, but retained the Damp claim.
-8-
In 1996, Mongolia Gold Resources Ltd. acquired the Longtom property and
conducted a surface exploration program that included examination of old and
new showings, a resampling of the Samp breccia zone and an airborne
multiparameter geophysical survey of the property. Channel cut sampling of
the Damp breccia zone confirmed the polymetallic nature of the prospect, but
gold assays were somewhat lower than the corresponding ones reported by CEGB.
Prospecting and trenching in the Devil's Lake are revealed extensions of
gold-bearing arsenopyrite veins, adding to the exploration potential of the
area.
Mongolia Gold Resources Ltd. drilled four holes totalling 944.6 metres on the
Damp breccia zone in early 1997. Three of the holes intersected
mineralization. The drilling extended the copper-cobalt-silver-uranium-gold
- -bismuth mineralization to a deeper level (150 metres) than tested previously.
The mineralized zone is open at depth. The drilling also encountered several
mineralized intersections in other previously unknown parts of the breccia
zone.
Upon optioning the L ongtom property in 1998, we conducted a Phase I
exploration program on the property consisting of 157 kilometres of line
cutting on a control grid covering a 12 kilometre long "target belt"
originating at the Damp showing. A follow-up ground magnetic survey was also
completed which more precisely defines the magnetic anomalies on the showing.
In October 2002, we conducted a gravity survey of the Longtom Property to
detect potential anomalies caused by the presence of iron oxide, copper and
gold mineralization. The ground-helicopter supported gravity survey was
conducted over selected portions of the 19,642-acre claim-block. The data
obtained from the survey is complimented by gravity data collected for
Hudson's Bay Exploration and Development Co. Ltd. in 2000 along the shores of
Longtom Lake, and by a comprehensive regional (10 kilometer by 10 kilometer
gravity survey completed by the Geological Survey of Canada. The objective of
the survey was to map the distribution of large masses of variable density.
A total of 243 detailed gravity stations were recorded at 500-meter and some
detail infill stations at 250 meters. The gravity survey confirmed the extent
of what may be economic mineralization along a large structurally controlled
faulting system. The results show two significant 2.5-3.0 mGal gravity
anomalies. These two gravity anomalies are coincident with the strong magnetic
anomalies. The gravity anomalies occur along a 7.5 kilometre long trend and
are up to 1.5 kilometres in width. Combined gravity, magnetic and radiometric
anomalies are a common targeting criterion for iron - oxide / copper / gold
mineralization and necessary in identifying an economic ore body.
We intend to continue exploration on the Longtom Property commencing in April
2003 by completing a geolphysical program over selected portions of these
high - amplitude gravity - magnetic anomalies that will include mapping,
prospecting and geochemical sampling, followed by a comprehensive 20 hole
drill program, targeting the high priority areas. We expect to complete this
program by the end of the summer of 2003.
-9-
We have been issued a Class "A" Land Use Permit for the proposed drill program.
This permit is valid until June 25, 2007.
Our emphasis is to search for a large tonnage polymetallic deposit on the
Longtom Property containing such elements as gold, silver, copper, cobalt,
bismuth, tungsten and uranium. Subsequent to our fiscal year ended November
30, 2002, we acquired a 50% interest from in a 1,781.9 hectare mineral
property located adjacent to the Longtom Property from Mr. David G. Lorne.
The property is referred to as the Target 1 claim. In order to acquire the
interest, we paid Mr. Lorne $15,000 and issued 200,000 common shares to him.
4.3 Competition
The mineral property exploration business, in general, is intensively
competitive and there is not any assurance that even if commercial quantities
of ore are discovered, a ready market will exist for sale of same. Numerous
factors beyond our control may affect the marketability of any substances
discovered. These factors include market fluctuations, the proximity and
capacity of natural resource markets and processing equipment, government
regulations, including regulations relating to prices, taxes, royalties, land
tenure, land use, importing and exporting of mineral and environmental
protection. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may make it difficult for us to receive
an adequate return on investment.
We compete with many companies possessing greater financial resources and
technical facilities for the acquisition of mineral concessions, claims,
leases and other mineral interests as well as for the recruitment and
retention of qualified employees. However, due to low metal prices, we do not
anticipate any difficulties retaining geologists or other consultants.
4.4 Management & Employees
We currently have three employees. We have not signed employment agreements
with any of these employees.
Our President and Chief Executive Officer, Tim Coupland devotes 90% of his
business time to our affairs. We have a management agreement dated December 1,
2000 with a private company owned by Mr. Coupland whereby he provides
management services to us for $5,350 per month. The initial term of this
agreement was for one year. Thereafter, it continues in force on a month-to-
month basis until terminated by us or Mr. Coupland on 30 days written notice.
4.5 Office Space
We utilize about 300 square feet of office space in Vancouver, British
Columbia. Our rent and related office expenses total approximately $1,000 per
month.
-10-
4.6 Environmental Regulations
Mineral property exploration in the Northwest Territories is governed by the
Canadian government. The applicable statutes are the Canadian Environmental
Assessment Act and the Canadian Environmental Protection Act.
In order to conduct exploration on our Longtom property, we had to acquire a
land use permit. When exploration ceases on a Northwest Territories property,
the land affected needs to be reclaimed in order to protect public health and
safety, to reduce or prevent environmental degradation and to allow future
productive land use of the property.
The reclamation plan for any property is site specific. In general, the
reclamation plan consists of ensuring that the physical structures that remain
do not impose a l ong-term hazard to public health and safety and the
environment, which includes ensuring that the land and watercourses are
returned to a safe and environmentally sound state. It is estimated that the
cost of reclaiming the Longtom property is approximately $20,000.
Item 5. Operating and Financial Review and Prospects
5.1. Results of Operations
In the fiscal year ended November 30, 2002, we focused our business efforts on
the exploration of the Longtom Property. During the year, we spent $255,171
on exploration including geology and engineering costs of $79,004, travel
costs of $65,880, equipment rental and expenses of $34,260, consulting fees of
$28,533, field expenses of $25,269, wages of $21,837 and drilling costs of
$388.
We incurred administrative expenses for the year ended November 30, 2002 of
$827,577. This amount consisted of exploration expenditures on the Longtom
Property ($255,171), consulting fees ($169,945), compensation expense we
incurred on granting stock options to our directors, officers and employees
($97,235), accounting, audit and legal fees ($90,987), management fees
($64,100), secretarial costs ($43,050), deferred income tax expense related to
flow through shares that we offered pursuant to private placements ($40,000),
transfer agent and shareholder information fees ($18,276), rent and utilities
($12,459), meals and entertainment ($10,792), office and miscellaneous costs
($6,757), regulatory fees ($6,153), travel costs ($4,480), amortization costs
relating to depreciation of computer equipment and website graphics ($3,680),
automotive expenses ($3,522) and interest and bank charges ($970).
These expenses were offset by interest income ($496), the recovery of mineral
property costs ($25,936) and the sale of mineral property interests ($55,000).
Accordingly, we incurred a net loss of $746,145 for the fiscal year ended
November 30, 2002.
At fiscal year end, we had cash on hand of $161,408 and accounts receivable of
$5,892. We also owned computer equipment and website graphics recorded at
$17,109.
-11-
Our net loss during fiscal 2002 increased by $225,713 as compared to fiscal
2001. This was primarily due an increase in consulting fees and mineral
property expenditures relating to exploration of the Longtom Property.
Consulting fees increase from $55,201 in fiscal 2001 to $169,945 in 2002.
Mineral property exploration costs increased from $60,221 in fiscal 2001 to
$225,171 in 2002.
5.2. Liquidity and Capital Resources
Since our incorporation, we have financed our operations almost exclusively
through the sale of our common shares to investors. We expect to finance
operations through the sale of equity in the foreseeable future as we have no
source of revenue from our business operations. There is no guarantee that we
will be successful in arranging financing on acceptable terms.
At November 30, 2002, we had net cash of $161,408. To a significant extent,
our ability to raise capital is affected by trends and uncertainties beyond
our control. These include the market prices for base and precious metals and
results from our exploration programs. Our ability to attain our business
objectives may be significantly impaired if prices for metals such as gold and
copper fall or if results from our intended exploration programs on our
properties are unsuccessful.
Our auditors are of the opinion that if we are unable to raise additional
capital in the near future, due out our liquidity problems, we may need to
curtail operations, liquidate assets, seek additional capital on less
favourable terms and/or pursue other remedial measures. Due to the nature of
our business, there is substantial doubt about our ability to continue as a
going concern.
Item 6. Directors, Senior Management and Employees
6.1. Directors and Senior Management
Directors:
Name of Director Age
- ---------------- ---
Tim Coupland 43
Michael Bogin 57
Lenic Rodriguez 54
Executive Officers:
Name of Officer Age Office
- --------------- ---- ------
Tim Coupland 43 President, Chief Executive Officer
Greg Yanke 33 Secretary
The following describes the business experience of our directors and executive
officers, including other directorships held in reporting companies:
-12-
Tim Coupland
Tim Coupland has acted as our President and Chief Executive Officer since
September 14, 2000. Mr. Coupland graduated from Simon Fraser University in
1983 with a Bachelor of Arts degree in geography. Since 1996, Mr. Coupland
has acted as president, secretary and sole director of T8X Capital Ltd., a
private British Columbia company involved in public company structuring and
reorganization, preparing business plans, sourcing public and private
financing and completing due diligence reviews of companies. From November 1,
1996 to May 31, 1997, Mr. Coupland also provided investor relations services
to CKD Ventures Ltd., a British Columbia reporting company whose shares traded
on the Vancouver Stock Exchange. In 1998, Mr. Coupland acted as a director
of Vescan Equities Inc., a non-reporting junior resource company whose shares
traded on the Canadian Dealer Network. From March 1998 to March 1999, he also
acted as director of Anglo-Sierra Resources Corp., a non-reporting junior
resource company whose shares were quoted on the NASD OTC Bulletin Board.
Michael Bogin
Michael Bogin has over 25 years of diversified experience in short term, long
term, accounts receivable, inventory, fixed asset and trade financing. Since
September 2002, he has acted as Vice-President of asset based lending and
factoring for Kingsdale Capital Corporation. From August 2000 to September
2002, he was employed as the Business Development Manager for TCE Capital
Corporation, a financing company based in Toronto, Ontario. Prior to this,
Mr. Bogin acted as Senior Manager of Laurentian Bank of Canada (January 2000
to May 2000), Vice-President of G.E. Capital Canada (July 1998 to October 1999)
and Vice-President Accord Business Credit Inc. (June 1989 to July 1998).
Lenic Rodriguez
Since 1999, Mr. Rodriguez has acted as managing director of First Access
Financial Group, Inc., a private Bahamian company involved in arranging
financing for private and public businesses. He also acted as manager (from
1992 to 1995) and general manager (from 1998 to 1999) of AmPower S.A. de C.V.,
a private Mexican corporation. From 1996 to 1998, he acted as manager of
Canadian and Mexican operations for Select Capital Advisors, Inc.
Greg Yanke
Since February 2000, Mr. Yanke has been a self-employed securities lawyer and
principal of Gregory S. Yanke Law Corporation. From May, 1996 to February,
2000, he was employed as an associate lawyer with Beruschi & Company,
Barristers and Solicitors, a Vancouver, Canada based law firm that practices
securities and corporate law. Mr. Yanke is a graduate of the University of
British Columbia, receiving Bachelor degrees in Political Science (1991) and
Law (1994). He is a member in good standing with the Law Society of British
Columbia. Mr. Yanke currently acts as a director or officer of seven British
Columbia and Alberta reporting companies in addition to us: LMX Resources
Ltd., Randsburg International Gold Corp., Candorado Operating Company Ltd.,
Iciena Ventures Inc., Big Bar Gold Corporation, Algorithm Media Inc. and
Diamcor Mining Inc. As well, Mr. Yanke acts as secretary of Infinex Ventures,
Inc. and as a director of Surforama.com, Inc., both of which are United States
reporting companies.
-13-
There are no arrangements or understandings between any of our directors or
executive officers, pursuant to which they were selected to be a director or
executive officer, nor are there any family relationships among any of our
directors and officers.
6.2. Compensation of Directors
We are required, under applicable securities legislation in Canada, to
disclose to our shareholders details of compensation paid to our directors.
The following fairly reflects all material information regarding compensation
paid to our directors in our fiscal year ended November 30, 2002.
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
- -------------------------------------------------------- --------------------------------------------------
Awards
Name YEAR Salary Bonus Other Restricted Securities LTIP All
and Annual Stock Underlying payouts Other
Principal Compensation Awards Options Compen
Position SARs sation
- ---------------------------------------------------------------------------------------------------------------
Tim Coupland 2002 Nil NIl Nil Nil 212,000 Nil Nil
President stock
and CEO options
2002
Michael Bogin 2002 Nil Nil Nil Nil 50,000 Nil Nil
Director stock
options
Lenic Rodriguez 2002 Nil NIL Nil Nil Nil Nil Nil
Director
- -----------------------------------------------------------------------------------------------------------------
6.3. Board Practices
Tim Coupland and Michael Bogin have acted as our directors since September 14,
2000. Lenic Rodriguez was appointed as our director on August 2, 2001. The
directors hold office until the next annual general meeting o f the
shareholders at which time they may stand for re-election. We are required to
hold an annual general meeting once in every calendar year and not longer than
thirteen months from the last annual general meeting.
-14-
We are a party to a management contract with a private company owned by Tim
Coupland whereby we pay him $5,350 per month for his management services. No
other directors has a service contracts with us nor are they entitled to any
termination benefits.
Our audit committee is comprised of Tim Coupland, Michael Bogin and Lenic
Rodriguez. We have not appointed a remuneration committee.
6.4. Employees
We currently have three employees who provide their services on a part-time
basis. One provides us with secretarial services and two help us arrange
equity financings and review potential business opportunities. All would be
classified as independent contractors.
When required, we have retained geological and other consultants to conduct
work programs on the Longtom property.
6.5. Share Ownership of Directors and Officers
Our directors and officers own beneficially the following shares as of the
date of this registration statement:
Percentage of Outstanding
Number of Shares Owned Common Shares
---------------------- -------------
Tim Coupland: 1,282,207 8.89%
Greg Yanke: 90,000 0.62%
Lenic Rodriguez: 30,000 0.21%
Michael Bogin: 0 0.00%
The above percentages are based on the number of common shares issued and
outstanding in our capital stock as of the date of this registration statement
which is 14,415,216.
The following incentive stock options are outstanding to our directors and
officers:
Shares that may Exercise Price Expiry Date
be Purchased
Upon Exercise of
Option
Tim Coupland: 100,000 $0.22 February 17, 2006
212,000 $0.15 July 3, 2007
13,812 $0.14 October 30, 2006
Lenic
Rodriguez: 52,808 $0.14 October 30, 2006
Michael Bogin: 50,000 $0.14 January 5, 2006
Greg Yanke: 30,000 $0.15 July 3, 2007
10,000 $0.14 October 30, 2006
10,000 $0.14 January 5, 2006
-15-
Item 7. Major Shareholders and Related Party Transactions
7.1. Beneficial Ownership
As used in this section, the term "beneficial ownership" with respect to a
security is defined by Regulation 228.403 under the Securities Exchange Act of
1934, as amended, as consisting of: (1) any person who, directly or indirectly
through any contract, arrangement, understanding, relationship or otherwise
has or shares voting power (which includes the power to vote, or to direct the
voting of such security) or investment power (which includes the power to
dispose, or to direct the disposition of, such security); and (2) any person
who, directly or indirectly, creates or uses a trust, proxy, power of attorney
pooling arrangement or any other contract, arrangement or device with
the purpose or effect of divesting such person of beneficial ownership of a
security or preventing the vesting of such beneficial ownership.
As of the date of this annual report, 14,415,216 common shares were issued and
outstanding. The Company is authorized to issue an unlimited number of common
shares.
As of the date of this registration statement, the following persons known to
the Company were the beneficial owner of more than five percent of the
outstanding common shares of the Company.
NAME NUMBER OF SHARES PERCENTAGE OF TOTAL
- ---- ---------------- -------------------
Tim Coupland 1,282,207 8.89%
Mr. Tim Coupland, and a private company owned by him, acquired pre-
consolidation 825,000 of our common shares pursuant to an agreement dated
February 22, 2000 with Tyhee Development Corp. At that time Mr. Coupland was
not our director or officer. Subsequently, Mr. Coupland acquired an
additional 850,000 pre-consolidation common shares through private placements
completed between November 1, 2000 and May 28, 2001. Since our share
consolidation on September 20, 2001, Mr. Coupland has acquired additional
common shares in our capital pursuant to the following private placements:
Date of Completion of Private Placement Number of Shares Acquired
- --------------------------------------- -------------------------
October 23, 2001 66,667
February 12, 2002 250,000
April 12, 2002 375,000
Tim Coupland has also acquired an additional 400,000 common shares pursuant
to the exercise of share purchase warrants and incentive stock options.
Each of our issued shares entitles the holder to one vote in general meeting.
There are no disproportionate or weighted voting privileges.
-16-
We are not controlled directly or indirectly by any other corporation or any
other foreign government or by any other natural or legal person, severally or
jointly.
There are no arrangements the operation of which at a subsequent date may
result in a change in our control.
7.2. Related Party Transactions
In the fiscal year ended November 30, 2002, there were no transactions that
materially affected or will materially affect us in which any director,
executive officer or beneficial holder of more than 10% of the outstanding
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest
except as follows:
Private Placements:
on October 23, 2001, T8X Capital Ltd. completed the purchase of
66,667 units in our capital stock at $0.15 each and Greg Yanke, our
secretary, completed the purchase of 100,000 units in our capital
stock at $0.15 each. Each unit consisted of one common share and
one two-year share purchase warrant entitling the holder to
purchase an additional common share for $0.20;
on February 12, 2002, T8X Capital Ltd. completed the purchase of
250,000 units in our capital stock at $0.10 each. Each unit
consisted of one common share and one two-year share purchase
warrant entitling the holder to purchase an additional common share
for $0.10; and
on April 12, 2002, T8X Capital Ltd. completed the purchase of
375,000 units in our capital stock at $0.10 each. Each unit
consisted of one common share and one one-year share purchase
warrant entitling the holder to purchase an additional common
share for $0.14.
Other Transactions:
We paid or accrued $96,600 to private companies owned by Tim
Coupland, our President and a director, for management and
consulting fees. We also paid $43,050 to Mr. Coupland's wife for
secretarial services.
Our bylaws provide that our directors or officers must disclose in writing to
us the nature and extent of any interest he has in a material contract, or
proposed material contract, with us. Such disclosure must be made immediately
after the director or officer becomes aware of the contract or proposed
contract. A director who is required to disclose an interest in a material
contract or proposed material contract may not vote on any resolution to
approve the contract except in very limited circumstances.
7.3. Interests of Experts and Counsel
-17-
Our experts and counsel have no interest in our shareholdings other than our
legal counsel, Mr. Gregory S. Yanke, who owns 90,000 common shares, 100,000
share purchase warrants and 50,000 incentive stock options. The share
purchase warrants entitle him to purchase up to 100,000 common shares at a
price of $0.20 each until October 23, 2003. The terms of the incentive stock
options granted to Mr. Yanke are described in the section above entitled
"Share Ownership of Directors and Officers".
Item 8. Financial Information
8.1. Legal Proceedings
To the best of our knowledge there are no legal or arbitration proceedings
threatened, pending or in progress against us except for a British Columbia
Supreme Court action by Dr. Sunil Gandhi for $24,000 relating to geological
fees and unspecified damages for stock options that he alleges are due to him.
We dispute Dr. Gandhi's claim and have retained litigation counsel in this
regard. Dr. Gandhi has not taken any significant steps to proceed with his
legal claim during the past year.
8.2. Significant Changes
There have been no significant changes since the date of the audited financial
statements included herein.
Item 9. The Offer and Listing
9.1. Offer and Listing Details
Our common shares trade on the TSX Venture Exchange under symbol "ASX" and on
the NASD Over The Counter Bulletin Board under symbol "ASXSF". Our shares
have traded on the TSX Venture Exchange, and on its predecessor, the Alberta
Stock Exchange, since December 5, 1997. The following table sets forth the
high and low closing prices in Canadian funds of our common shares traded on
Period High Low
December 5, 1997 to November 30, 1998 $0.20 $0.03
December 1, 1998 to November 30, 1999 $0.10 $0.025
December 1, 1999 to November 30, 2000 $0.45 $0.02
December 1, 2000 to November 30, 2001 $0.18 $0.04
December 1, 2001 to November 30, 2002 $0.25 $0.10
December 2000 to February 2001 $0.18 $0.06
March 2001 to May 2001 $0.15 $0.06
June 2001 to August 2001 $0.07 $0.04
September 2001 to November 2001 $0.12 $0.04
December 2001 to February 2002 $0.10 $0.10
March 2002 to May 2002 $0.20 $0.13
June 2002 to August 2002$0.25$0.15
September 2002 to November 2002 $0.20 $0.12
December 2002 to February 2003 $0.28 $0.13
September 2002 $0.19 $0.12
October 2002 $0.19 $0.14
December 2002 $0.19 $0.13
January 2003 $0.28 $0.20
February 2003 $0.27 $0.19
March 2003 $0.31 $0.17
-18-
Effective September 20, 2001, our common shares were consolidated such that
every five pre-consolidation common shares were exchanged for one post-
consolidation common share. Concurrently, our name was changed from "Alberta
Star Mining Corp." to "Alberta Star Development Corp."
Our common shares have also been quoted for trading on the Over The Counter
Bulletin Board since July 16, 2002. However, no trades in our common shares
occurred on this quotation system until January 29, 2003. The following sets
forth the high and low closing prices in United States funds of our common
shares traded on the NASD Over The Counter Bulletin Board since this date:
January 2003 US$0.14 US$0.14
February 2003 no trades
March 2003 US$0.20 US$0.132
Item 10. Additional Information
10.1. Share Capital
Not applicable.
10.2. Bylaws and Articles of Association
We were incorporated under the Business Corporations Act of Alberta by
registration of our articles of incorporation and bylaws. Pursuant to the
provisions of the Business Corporations Act,a company may conduct any business
that it is not restricted by th e terms o f its articles or bylaws from
conducting. Our articles and bylaws contain no such restrictions.
Our directors are required to disclose to the board of directors the nature
and extent of their interest in any proposed transaction or contract and must
thereafter refrain from voting in respect thereof. An interested director may
be counted in the quorum when a determination as to such director's
remuneration is being considered but may not vote in respect thereof. The
directors have an unlimited power to borrow money, issue debt obligations and
mortgage or charge our assets provided such actions are conducted bona fide
and in the best interests of the Company. There are no mandatory retirement
ages for directors or any required shareholdings.
-19-
All holders of common shares are entitled to receive dividends out of assets
legally available therefor at such times and in such amounts as the board of
directors may from time to time determine. All holders of common shares will
share equally on a per share basis in any dividend declared by the board of
directors. The dividend entitlement time limit will be fixed by the board of
directors at the time any such dividend is declared. Each outstanding common
share is entitled to one vote on all matters submitted to a vote of our
shareholders in general meeting. There are no cumulative voting rights
attached to any of our shares and, accordingly, the holders of more than half
of the shares represented at a general meeting can elect all of the directors
to be elected in a general meeting. All directors stand for re-election
annually. Upon any liquidation, dissolution or winding up, all common
shareholders are entitled to share ratably in all net assets available for
distribution after payment to creditors. The common shares are not
convertible or redeemable and have no preemptive, subscription or conversion
rights. In the event of a merger or consolidation, all common shareholders
will be entitled to receive the same per share consideration.
The rights of shareholders may only be altered by the shareholders passing a
special resolution at a general meeting. A special resolution may only be
passed when it has been circulated to all shareholders by way of an
information circular and then must be passed by seventy-five percent of the
votes cast at the general meeting.
The board of directors may call annual and extraordinary general meetings when
required. One or more shareholders holding in aggregate five percent or more
of our issued shares may requisition an extraordinary meeting and the
directors are required to hold such meeting within four months of s uch
requisition. Only registered shareholders or persons duly appointed by proxy
may be admitted to meetings unless otherwise permitted by the chairman of the
meeting.
There are no national limitations or restrictions on the right to own our
common shares.
There are no provisions in our bylaws or articles of association that would
have the effect o f delaying, deferring or preventing a change in control.
There are no provisions in our bylaws or articles of association that
establish any threshold for disclosure of ownership. However, the Alberta
Securities Commission requires that persons that are the registered owners of,
and/or have voting control over 10% or more of our common shares must file
insider reports disclosing securities holdings.
10.3. Material Contracts
We are a party to the following material contracts, all of which are referred
to in the exhibits section of this registration statement:
-20-
Management Agreement dated December 1, 2000 with T8X Capital Ltd.,
a private company owned by Mr. Tim Coupland, our president and
chief executive officer. Pursuant to the agreement, Mr. Coupland
provides his management services to us for consideration of $5,000
per month for a period of one year. Thereafter, the agreement
continues from month to month until terminated by either party on
30 days written notice.
Option Agreement dated February 12, 1998, as amended with Mongolia
Gold Resources Ltd., now known as Tyhee Development Corp. whereby
we have the option to acquire the remaining 50% interest in the
Longtom property located in the Northwest Territories, Canada for
$315,000. At our option, we may pay half of the exercise price in
our common shares.
Mineral Property Purchase Agreement dated January 27, 2003 whereby
we have acquired a 50% interest in the Target 1 claim, a 1,781.9
hectare mineral property located adjacent to the Longtom Property
for $15,000 and 200,000 common shares in our capital.
Mineral Property Purchase Agreement dated February 17, 2003
whereby we have acquired a 50% interest in the Target 2 claim, a
2,530.8-hectare mineral property located adjacent to the Longtom
Property for $15,000 and 200,000 common shares in our capital.
Investor Relations Agreement dated February 17, 2003 whereby we
have retained National Media Associates of La Canada, California
to conduct media awareness programs on our behalf.
Investor Relations Agreement dated March 15, 2003 whereby we have
retained Clive Massey of Vancouver, British Columbia to provide
investor relations services to us.
10.4. Exchange Controls and other Limitations Affecting Security Holders
There is no law or governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of common shares, other
than withholding tax requirements. See "Item 10.5. Taxation"
There is no limitation imposed by Canadian law or by our constituent documents
on the right of a non-resident to hold or vote common shares, other than are
provided in the Investment Canada Act (Canada). The following summarizes the
principal features of the Investment Canada Act (Canada).
The Investment Canada Act (Canada) requires certain "non-Canadian" individuals,
governments, corporation or other entities who wish to acquire a "Canadian
business" (as defined in the Investment Canada Act), or establish a "new
Canadian business" (as defined in the Investment Canada Act) to file either a
notification or an application for review with a governmental agency known as
"Investment Canada". The Investment Canada Act requires that certain
acquisition of control of Canadian business by a "non - Canadian" must be
reviewed and approved by the Minister responsible for the Investment Canada Act
on the basis that the Minister is satisfied that the acquisition is "likely to
be of net benefit to Canada", having regard to criteria set forth in the
Investment Canada Act. Only acquisitions of control are reviewable under the
Investment Canada Act; however, the Investment Canada Act provides detailed
rules for the determination of whether control has been acquired and, pursuant
to those rules, the acquisition of one-third or more of the voting shares of a
corporation may, in some circumstances, be considered to constitute an
acquisition of control. Certain reviewable acquisitions of control may not be
implemented before being approved by the Minister; if the Minister does not
ultimately approve a reviewable acquisition, which has been completed, the
acquired Canadian business must be divested. Failure to comply with the review
provisions of the Investment Canada Act could result in, amongst other things,
an injunction or a court order directing disposition of assets of shares.
-21-
10.5. Canadian Federal Income Tax Consequences to United States
Investors
A brief description of certain provisions of the tax treaty between Canada and
the United States is included below, together with a brief outline of certain
taxes,including withholding provisions to which United States security holders
are subject under existing laws and regulations of Canada and United States;
the consequences, if any, of state and local taxes are not considered. The
following information is general and security holders are urged to seek the
advice of their own tax advisors, tax counsel or accountants with respect to
the applicability or effect on their own individual circumstances of not only
the matters referred to herein, but also any state or local taxes.
Canadian federal tax legislation generally requires a 25% withholding from
dividends paid or deemed to be paid to the Company's nonresident shareholders.
However, shareholders resident in the United States will generally have this
rate reduced to 15% through the tax treaty between Canada and the United
States. The amount of stock dividends paid to non-residents of Canada will be
subject to withholding tax at the same rate as cash dividends. The amount of
stock dividend (for tax purposes) would generally be equal to the amount by
which our stated capital has increased by reason of the payment of such
dividend. We will furnish additional tax information to shareholders in the
event of such a dividend. Interest paid or deemed to be paid on our debt
securities held by non-Canadian residents may also be subject to Canadian
withholding tax, depending upon the terms and provisions of such securities
and any applicable tax treaty. Under present legislation in the United States,
we are generally not subject to United States back up withholding rules, which
would require withholding at a rate of 20% on dividends and interest paid to
certain United States persons who have not provided us with a taxpayer
identification number.
Gains derived from a disposition of shares of the company by a non-resident
shareholder will be subject to tax in Canada only if not less than 25% of any
class of our shares was owned by the nonresident shareholder and/or persons
with whom the nonresident did not deal at arm's length at any time during the
five-year period immediately preceding the disposition. In such cases gains
derived by a U.S. shareholder from a disposition of our shares would likely be
exempt from tax in Canada by virtue of the Canada-U.S. tax treaty.
-22-
ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES.
10.6. Documents on Display
You may review a copy of our filings with the SEC, including exhibits and
schedules filed with it, at the SEC's public reference facilities in Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. The SEC maintains a Web site (HTTP://WWW.SEC.GOV) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC .
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 12. Descriptions of Securities Other than Equity Securities
Not applicable.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not applicable
Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
Not applicable
Item 15.
Not applicable
Item 16.
Not applicable
PART III
-23-
Item 17.Financial Statements
Our audited financial statements include:
- our balance sheet as at November 30, 2002 and November 30, 2001;
- the following statements for the fiscal years ended November 30, 2002,
2001 and 2000, as well as from our inception to November 30, 2002:
- statements of operations and deficit
- statements of cash flow; and
- statement of changes in shareholders' equity
All of these were prepared by our auditor, James Stafford,
Chartered Accountants.
The financial statements are prepared in accordance with generally accepted
accounting principles in Canada and are reconciled to United States generally
accepted accounting principles in Note 14. All figures are expressed in
Canadian dollars.
Item 18.Financial Statements
See "Item 17 Financial Statement"
--------------------
Item 19. Exhibits
Exhibit 1: Financial Statements
Exhibit 2: Certificate of Incorporation and Certificate of Amendment and
Registration of Restated Articles *
Exhibit 3: Bylaws *
Exhibit 4: Articles of Association *
Exhibit 5: Opinion of Gregory S. Yanke Law Corporation
Exhibit 6: Option Agreement dated February 12, 1998 between Alberta Star
Mining Corp. and Mongolia Gold Resources Ltd. *
Exhibit 7: Amending agreement between Alberta Star Development
Corp. and Tyhee Development Corp.
Exhibit 8: Mineral Property Purchase Agreement dated January 27, 2003 between
Alberta Star Development Corp. and Mr. David G. Lorne.
Exhibit 9: Mineral Property Purchase Agreement dated February 17, 2003
between Alberta Star Development Corp. and Mr. David G. Lorne.
Exhibit 10: Investor Relations Agreement dated February 17, 2003 between
Alberta Star Development Corp. and National Media Associates.
Exhibit 11: Investor Relations Agreement dated March 15, 2003 between Alberta
Star Development Corp. and Mr. Clive Massey.
Exhibit 12: Management Agreement dated December 1, 2000 between Alberta Star
Mining Corp. and Tim Coupland *
Exhibit 13: Consent of James Stafford, Chartered Accountants
Exhibit 99.1:Cerification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 99.2:Cerification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
* incorporated by reference from our Form 20-F that was originally filed with
the commission on June 8, 2001.
-24-
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly cause and authorized the undersigned
to sign this statement on its behalf.
ALBERTA STAR DEVELOPMENT CORP.
Dated: April 7, 2003
By: /s/ Tim Coupland
-----------------------
Tim Coupland, President