UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED): JULY 15, 2004
COMMISSION FILE NO.: 000-50541
DRAGON GOLD RESOURCES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0507007
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
REGENTS PLACE, 338 EUSTON ROAD, LONDON, UNITED KINGDOM NW1 3BT
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
44-207-416-4920
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(ISSUER TELEPHONE NUMBER)
205-1072 DAVIE STREET, VANCOUVER, BRITISH COLUMBIA, CANADA V6E 1M3
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(FORMER ADDRESS)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
As a result of the acquisition of Dragon Minerals Holdings Inc., an
International Business Company incorporated under the laws of the British Virgin
Islands ("Dragon"), as discussed below under "Item 2. Acquisition or Disposition
of Assets," Gregory Corcoran's ownership has decreased with the issuance of
shares to the former shareholder of Dragon. The following individuals will
exercise control over the Registrant:
Name No. of Shares Percentage
---- --------------- ----------
Greg Corcoran 28,000,000 41.9%
Raoul Tsakok 11,500,000 17.2%
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 15, 2004, the Registrant acquired 100% of the issued and
outstanding common stock of Dragon in exchange for 16,500,000 newly issued
shares of the Registrant's common stock pursuant to an Exchange Agreement
whereby Dragon became a wholly-owned subsidiary of the Registrant (the
"Exchange"). At closing, there were 66,896,794 issued and outstanding shares of
the Registrant following the issuance to the Dragon shareholder.
Subsequent to the Exchange, the Registrant entered into an agreement with
Gregory Corcoran whereby the Registrant transferred certain assets held
immediately prior to the Exchange, and the Registrant's then existing
liabilities related thereto, to Gregory Corcoran, the Registrant's former
President and Chief Executive Officer, in consideration for $1,000. The
Registrant is transferring the following assets to Mr. Corcoran: the tangible
assets excluding cash and the intangible assets including i) the right to the
name "Folix Technologies, Inc."; ii) the right to operate the business of
developing a Linux based application server and thin client system; and iii) any
contracts, agreements, rights or other intangible property, owned by the
Registrant immediately prior to the Exchange (collectively referred to as the
"Assets"). The Registrant also transferred the liabilities that relate to the
Assets to Mr. Corcoran.
The Registrant is a holding company for Dragon which in turn holds all of
the common stock of Dragon Minerals Inc., an International Business Company
incorporated under the laws of the British Virgin Islands ("Dragon Minerals").
The term "Company" as used in this report includes Dragon and Dragon Minerals
unless specifically stated otherwise. The business operations discussed herein
are those contemplated by the Company.
BUSINESS DEVELOPMENT
Dragon Minerals Holdings, Inc. was incorporated on February 25, 2004 as an
International Business Company incorporated under the laws of the British Virgin
Islands. Dragon owns 100% of the common stock of Dragon Minerals, Inc. On July
15, 2004, the Registrant acquired 100% of the issued and outstanding common
stock of Dragon, as discussed above. The Company is headquartered in London,
UK. The Company intends to engage in gold exploration and development
activities in the Southern Shaanxi Province of China ("Shaanxi").
DESCRIPTION OF THE PRINCIPAL PRODUCTS AND SERVICES
The Company does not currently offer any products or services. The Company
has signed two letters of intent (the "Letters of Intent") to enter into two (2)
joint ventures for gold exploration and potential development on a choice of
properties located in Shaanxi, discussed in more detail below under the heading
"Description of Property." The Letters of Intent anticipate that the Company
will contribute cash to the joint ventures. The other parties to the joint
ventures would contribute permits for exploration and development on an
aggregate of up to thirteen (13) properties (the "Permits"). The government of
China owns the properties to which the Permits relate. The Permits grant the
right to the mineral resources found below the surface of the properties.
The Letters of Intent contemplate two phases of activities: the exploration
phase and the development phase. The development phase is contingent on, and
will not proceed unless there are, positive results from the exploration phase.
At this time, the Company has not entered into any joint ventures, raised any
cash or contributed any cash to any joint ventures, or selected any properties
for gold exploration and potential development.
MARKET OVERVIEW
Most multi-metallic and gold deposits in the Shaanxi Province of China are
located in the Qinling Mountain belt and surrounding regions. The gold deposits
can be divided into three (3) gold provinces: Xiao Qinling, Qinling and Southern
Shaanxi gold provinces. The Xiao Qinling gold province is currently the second
largest gold producing area in China. The Qinling gold province is west of the
Xiao Qinling gold province. Explorers unrelated to the Company have recently
discovered gold deposits in the Qinling gold province. The Company has entered
into two (2) agreements whereby the Company will enter into two (2) joint
ventures for the exploration and development of up to thirteen (13) properties.
One (1) of the properties covered by the agreements to enter into joint ventures
is located within the Xiao Qinling gold province. Seven (7) of the properties
are located within the Qinling gold province. Four (4) of the properties are
located within the Southern Shaanxi gold province. A fifth (5th) property is
also located within the Southern Shaanxi gold province, but more specifically,
in an area called Chuan-Shaan-Gan gold triangular zone.
COMPETITIVE BUSINESS CONDITIONS
The gold exploration and development industry in the Southern Shaanxi
Province of China is very competitive with well established companies that have
more experience and resources than the Company. These companies are generally
better able to compete than the Company.
COPYRIGHTS, PATENTS, TRADEMARKS & LICENSES
The Company does not have any copyrights, patents, trademarks, license or
other types of intellectual property.
NEED FOR GOVERNMENTAL APPROVAL AND THE EFFECTS OF REGULATIONS
The Bureau and Northwest are local government departments that have
exploration permits from the Chinese government regarding the properties subject
to the Letters of Intent and have also carried out previous exploratory work on
the properties. The Permits grant the right to the mineral resources found
below the surface of the properties. Actual exploration and development on the
property will require additional governmental permits such as certain
environmental permits.
RESEARCH & DEVELOPMENT OVER THE PAST TWO YEARS
The Company has not conducted any research and development activities since
inception. The Company does not have plans to conduct any research and
development during the next twelve months. The Company does however intend to
conduct exploration and development activities on up to thirteen (13) properties
in Shaanxi during the next twelve months.
EMPLOYEES
The Company does not currently have any employees on either a part-time or
full-time basis. The Company intends to use consultants and other forms of
contract or outsourced labor during the next twelve months.
DESCRIPTION OF PROPERTY
The Company has entered into two Letters of Intent whereby the Company
would enter into two (2) joint ventures for the exploration and development of
up to thirteen (13) properties in Shaanxi (the "Shaanxi Property"). Pursuant to
one Letter of Intent, the Company would enter into a Sino-Foreign cooperative
joint venture company with the Bureau of Geology and Mineral Exploration &
Development of Shaanxi Province (the "Bureau") for the exploration and
development of up to twelve (12) properties. Pursuant to the other Letter of
Intent, the Company would enter into a Sino-Foreign cooperative joint venture
company with Northwest Geology and Exploration Bureau for Nonferrous Metals
("Northwest") for exploration and development of one (1) property. Pursuant to
the Letters of Intent, the Company would contribute cash to the joint ventures.
The other parties to the joint ventures would contribute the Permits and their
previous exploratory finding for up to thirteen (13) properties (listed below)
on which the Company intends to conduct gold exploration and potential
development activities.
The Company has not completed any work on any of the properties or otherwise
confirmed the rock formations thereon. Any work done on the properties will be
exploratory in nature.
Permits to be contributed by the Bureau
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Shaliangzi Silver - Gold Multi-Metallic Ore Deposits. This property is
located in the Qinling gold province. It is accessible by roads or country
highways. Previous work on the property consisted of a geological and ore
deposit survey. The Company's understanding based on the previous work is that
exposed rocks include marble and metamorphosed sandstone in the north and
phyllite, metamorphosed sandstone, and biotite-plagionite rocks in the south.
Xunyang Huijiagou Gold Deposit. This property is located in the Southern
Shaanxi gold province. It is accessible by country roads. Geologically it is
situated in the subsidence center of the Shan-za-xun basin. Previous work on the
property consisted of geochemical prospecting, ore deposit survey, surface
trenching and shallow aditting. The Company's understanding based on the
previous work is that Upper Devonian clastic rocks and carbonates are the rocks
that are mainly exposed.
Xunyang Xiaohe Gold Deposit. This property is located in the Southern
Shaanxi gold province. It is accessible by county roads. Geologically it is
situated in the subsidence center of the Shan-za-xun basin. Previous work on the
property consisted of geochemical prospecting, surface trenching and limited
drilling. The Company's understanding based on the previous work is that there
are middle Devonian silty phylites with occurrence of gold mineralization.
Wangjiaping - Xinchang Copper Ore Deposit. This property is located in the
Southern Shaanxi gold province. It is located tectonically in the
Chuan-Shaan-Gan triangular zone, within Guanping-Yangpingguan brittle-ductile
deformation zone. It is accessible by country highways. Previous work on the
property consisted of drilling, aditting, trenching, comprehensive geophysical
prospecting and geochemical prospecting. The Company's understanding based on
the previous work is that the exposed rocks are marine volcanic sedimentary
rocks with an intrusion of quartz diorite.
Anjiaqi Gold Deposit. This property is located in the Qinling gold
province. It is accessible by state highway. Previous work on the property
consisted of a geological survey, identification of geological structures,
characteristics of rock and minerals and dressing and recovery. The Company does
not have information regarding the rock formations on this property regarding
the rock formations.
Shuimoping Silver - Arsenic Ore Deposit. This property is located in the
Qinling gold province. It is accessible by highway. Previous work on the
property consisted of a regional survey, geological mapping and geochemical
prospecting in major mineralization zones, and preliminary trenching and
aditting. The Company's understanding based on the previous work is that the
exposed rocks include Carboniferous slate and Devonia slate and limestone.
Yinpan Silver - Stibium Ore Deposit. This property is located in the
Qinling gold province. The property has an area of 15 square kilometers. It is
accessible by unpaved road. Previous work done on the property consisted of
systematic, geochemical and geological measurements, cumulative aditting and
trenching. The Changping - Yakou fault passes through the ore district. The
Company's understanding based on this previous work is that to the north of the
fault Devonian and Triassic carcalcous classtic rocks are mainly exposed, and
that to the south, middle - upper Silurian meta-classtic rocks are mainly
exposed. Granites intrude the area and various type veins occur.
Aigaogou Gold Ore Deposit. This property is located in the Qinling gold
province. It is accessible by highway. Previous work done on the property
consisted of trenching in which a 12 kilometer long, 10 to 500 meter wide
gold-bearing zone was discovered, limited aditting and small scale heap leaching
on surface gold ores. The Company's understanding based on the previous work is
that the major gold-bearing rocks are breccia.
Huangbaiyuan Gold Deposit. This property is located in the Qinling gold
province. It is accessible by highways. The ore district is situated in the
middle part of Southern Qinling gold mineralization belt. Previous work done on
the property consisted of a regional geological survey, geochemical prospecting
and trenching and aditting in mineralization zones. The Company's understanding
based on the previous work is that the exposed rocks are Devonian breccia and
carbonates.
Yingchanggou - Gumugou Multi-metallic Ore Deposit. This property is
located in the Southern Shaanxi gold province. The property has an area of 160
square kilometers. It is accessible by four roads. It is situated in the
eastern part of the Qinling Lead, Zinc, Silver, Mercury, and Stibium
mineralization belt. Previous work done on the property consisted of testing and
verification of anomalies and local survey and explorations. The Company's
understanding based on the previous work is that the exposed rocks include
breccia and limestone.
Huangjinmei Gold Ore Deposit. This property is located in the Qinling gold
province. It is accessible by road. Previous work done on the property
consisted of a district survey, identification of geological structures,
characteristics of rocks and minerals, and ore dressing and recovery. The
Company does not have any information on this property regarding the rock
formations.
Taiyu Gold Deposit. This property is located in the Xiao Qinling gold
province. It is accessible by a simple road. The ore district is situated at
the southern wing of Dayueping - Jingluoban anticline. Previous work done on
the property consisted of local surface trenching. It is the Company's
understanding based on the previous work that acidic granites commonly occur on
the property, and that faults are the major ore control structures.
Permit to be contributed by Northwest
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Shiquan Yangpinwuan Gold Ore Deposit. This property is located in
Yangpinwan, Shiquan County, Southern Shaanxi gold Province. Previous work done
on the property consisted of trenching. The Company's understanding based on
the previous work is that ore bodies occur in carbonaceous silicilites and
meta-clastic rocks.
The Company has not currently entered into any definitive agreements or
joint ventures. The Company is in continued negotiations with the Bureau and
Northwest regarding contributions of the properties and the Company's
contribution of cash. Currently, the joint ventures have not been formed, the
Company has not raised or contributed any cash, none of the properties have been
contributed, and there is no program of exploration and development. The
Company will be required to contribute cash to the joint ventures on a
continuing basis, however, the amount of continued capital commitment required
by the Company is not known at this time.
LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding.
RISK FACTORS
Risks Related to Our Business
LETTERS OF INTENT. The Company has entered into two (2) letters of intent
whereby the Company will enter into two (2) joint ventures for the exploration
and development of up to thirteen (13) properties in Shaanxi. Pursuant to one
letter of intent, the Company will enter in a Sino-Foreign cooperative joint
venture company with the Bureau for the exploration and development of up to
twelve (12) properties. Pursuant to the other letter of intent, the Company
will enter into a Sino-Foreign cooperative joint venture company with Northwest
for exploration and development of one (1) property. Pursuant to the letters of
intent, the Company will contribute cash to the joint ventures. The other
parties to the joint ventures will contribute up to thirteen (13) properties on
which the gold exploration and potential development will be conducted. The
Company has not currently entered into any definitive agreements or joint
ventures. The Company is in continued negotiations with the other parties to
the letters of intent regarding contributions of the properties and the
Company's contribution of cash. Currently, the joint ventures have not been
formed, the Company has not raised or contributed any cash, none of the
properties have been contributed, and there is no program of exploration and
development. There can be no assurance that the Company will enter into any
definitive agreements or joint ventures, that the Company will make any cash
contributions or that other parties to the letters of intent will contribute any
property. In the event that any of the foregoing events do not occur, the
Company's business will fail.
NEED FOR ADDITIONAL FINANCING. The Company will be required to contribute
cash to the joint ventures on a continuing basis, however, the exact amount of
continued capital commitment required by the Company is not known at this time.
The Company does not have any commitments or identified sources of capital from
third parties or from the Company's officers, directors or majority
shareholders. There is no assurance that financing will be available on
favorable terms, if at all. If the Company is unable to raise such financing,
it will not be able to enter into the joint ventures and its business will fail.
TITLE TO THE PROPERTIES. The government of China owns the land on which
the Company intends to conduct exploration and development through a joint
venture with the Bureau and a joint venture with Northwest. The Bureau and
Northwest are local government departments. They have permits that give them
the right to the mineral resources found under the surface of the properties.
Pursuant to the letters of intent, the Bureau and Northwest will contribute
Permits for up to an aggregate of thirteen (13) properties and the Company will
contribute cash to the joint venture. The Company has not currently entered
into any definitive agreements or joint ventures. The Company is in continued
negotiations with the Bureau and Northwest regarding contributions of the
properties and the Company's contribution of cash. Currently, the joint
ventures have not been formed, the Company has not raised or contributed any
cash, none of the properties have been contributed, and there is no program of
exploration and development. If the Company, the Bureau or Northwest do not
make the contributions contemplated under the letters of intent, the Company
will not have any rights with respect to the properties.
RELIANCE ON KEY MANAGEMENT. The Company's success depends upon the
personal efforts and abilities of Johannes Petersen, a Director of the
Registrant and the Registrant's Chief Executive Officer and President, and
Xiaojun ("Albert") Cui, a Director of the Registrant. The Company's ability to
operate and implement its business plan is heavily dependent on the continued
service of Messrs. Petersen and Cui, and the Company's ability to attract,
retain and motivate qualified consultants and other outsourced labor,
particularly in the area of gold exploration and development. The Company faces
aggressive and continued competition for such personnel, qualified consultants
and other outsourced labor. The Company cannot be certain that it will be able
to attract, retain and motivate such personnel, qualified consultants and other
outsourced labor. The loss of Mr. Petersen or Mr. Cui, or the Company's
inability attract, retain and motivate such personnel, qualified consultants and
other outsourced labor would have a material adverse effect on the Company's
business and operations.
BECAUSE MESSRS. CORCORAN AND TSAKOK OWN AN AGGREGATE OF 59.1% OF THE
REGISTRANT'S OUTSTANDING COMMON STOCK, THEY WILL EXERCISE CONTROL OVER CORPORATE
DECISIONS THAT MAY BE ADVERSE TO OTHER MINORITY SHAREHOLDERS. Gregory Corcoran,
a former Director of the Registrant and the Registrant's former President, Chief
Executive Officer, Secretary, Treasurer and Chief Financial Officer, and Raoul
Tsakok beneficially own an aggregate of 59.1% of the issued and outstanding
shares of the Registrant's common stock. Accordingly, they will exercise
control in determining the outcome of all corporate transactions or other
matters, including mergers, consolidations and the sale of all or substantially
all of our assets, and also the power to prevent or cause a change in control.
The interests of Messrs. Corcoran and Tsakok may differ from the interests of
the other stockholders and thus result in corporate decisions that are adverse
to other shareholders.
Risks Related to Our Common Stock
IF THERE'S A MARKET FOR OUR COMMON STOCK, OUR STOCK PRICE MAY BE VOLATILE.
If there's a market for our common stock, we anticipate that such market would
be subject to wide fluctuations in response to several factors, including, but
not limited to:
(1) actual or anticipated variations in our results of operations;
(2) our ability or inability to generate new revenues;
(3) increased competition; and
(4) conditions and trends in the gold exploration, development and
production industry.
Further, because our common stock is traded on the NASD over the counter
bulletin board, our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price of our common stock.
ITEM 5. OTHER EVENTS
Effective June 14, 2004, the Registrant changed its name to Dragon
Gold Resources, Inc., affected a 7:1 forward stock split, increased the
amount of authorized shares to Five Hundred Million (500,000,000) shares of
common stock, and reauthorized the par value of $.001 per share of
common stock. Approximately 50,396,794 shares of common stock were outstanding
following the forward stock split. As a result of the name change, the
Registrant's common stock trades under the new stock symbol "DRGO.
On July 15, 2004, Gregory Corcoran, acting as the sole Director of the
Registrant, increased the number of directors from one to three. On July 15,
2004, the Registrant's Board of Directors appointed Johannes Petersen and
Xiaojun ("Albert") Cui to fill vacancies created thereon. On July 15, 2004,
Gregory Corcoran resigned as a Director and as President, Chief Executive
Officer, Secretary, Treasurer and Chief Financial Officer of the Registrant On
that same day, the Registrant's Board of Directors appointed Johannes Petersen
as the President, Chief Executive Officer, Secretary, Treasurer and Chief
Financial Officer of the Registrant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
2.1* Exchange Agreement
* Filed herein.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dragon Gold Resources, Inc.
July 29, 2004
/s/ Johannes Petersen
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Johannes Petersen
Chief Executive Officer
EXHIBIT 2.l
EXCHANGE AGREEMENT
Between
DRAGON GOLD RESOURCES, INC.
and
DRAGON MINERALS HOLDINGS INC.
Dated July 15, 2004
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 15th day of July, 2004, by and between DRAGON GOLD
RESOURCES, INC., a Nevada corporation (hereinafter referred to as the
"Company"), DRAGON MINERALS HOLDINGS INC., an International Business Company
incorporated under the laws of the British Virgin Islands (hereinafter referred
to as "Dragon"), the person executing this Agreement listed on the signature
page hereto (hereinafter referred to as the "Dragon Shareholder") who owns one
hundred percent (100%) of the outstanding shares of Dragon, upon the following
premises:
Premises.
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WHEREAS, the Dragon Shareholder owns one hundred percent (100%) of the
issued and outstanding shares of the capital stock of Dragon;
WHEREAS, the Company is a publicly held corporation whose common stock is
quoted on the OTC Bulletin Board under the symbol "DRGO";
WHEREAS, Dragon is a privately held corporation organized under the laws of
the British Virgin Islands;
WHEREAS, the Company desires to acquire 100% of the issued and outstanding
shares of Common Stock of Dragon in exchange for unissued shares of its Common
Stock (the "Common Stock") (the "Exchange Offer"), so that Dragon will become a
wholly owned subsidiary of the Company; and
WHEREAS, the Dragon Shareholder desires to exchange all of their
shares of capital stock of Dragon solely in exchange for the shares of
authorized but unissued Common Stock, $.001 par value, of the Company.
Agreement
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NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF DRAGON
AND THE DRAGON SHAREHOLDER
As an inducement to and to obtain the reliance of the Company, except as
set forth on the Dragon Schedules (as hereinafter defined), Dragon and the
Dragon Shareholder represent and warrant as follows:
Section 1.01 Organization. (i) Dragon is an International Business
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Company duly organized, validly existing, and in good standing under the laws of
the British Virgin Islands and has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation in
the states or countries in which the character and location of the assets owned
by it or the nature of the business transacted by it requires qualification,
except where failure to be so qualified would not have a material adverse effect
on its business. Included in the Dragon Schedules are complete and correct
copies of the Memorandum of Association and Articles of Association of Dragon as
in effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of Dragon's Memorandum of Association or Articles of
Association. Dragon has taken all actions required by law, its Memorandum of
Association or otherwise to authorize the execution and delivery of this
Agreement. Dragon has full power, authority, and legal right and has taken all
action required by law, its Memorandum of Association, and otherwise to
consummate the transactions herein contemplated.
Section 1.01(ii) For purposes of this Agreement the terms "shareholder" or
"shareholders" when used in connection with Dragon shall have the same
meaning as the term "member" as defined in the British Virgin Islands
International Business Companies Act of 1984.
Section 1.02 Capitalization. The authorized capitalization of Dragon
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consists of One Hundred (100) shares of common stock, $1.00 par value
per share, of which One Hundred (100) shares are currently issued and
outstanding and no shares of preferred stock. All issued and outstanding
shares are legally issued, fully paid, and non-assessable and not issued in
violation of the preemptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Dragon does
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not have any predecessor corporation(s) or subsidiary(ies), and does
not own, beneficially or of record, any shares of any other corporation,
unless otherwise disclosed to the Company in writing.
Section 1.04 Other Information.
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(a) Except as otherwise provided in the Dragon Schedules, Dragon has no
liabilities with respect to the payment of any federal, state, county,
local or other taxes (including any deficiencies, interest or penalties),
except for taxes accrued but not yet due and payable.
(b) Dragon has filed all state, federal or local income and/or franchise tax
returns required to be filed by it from inception to the date hereof. Each
of such income tax returns reflects the taxes due for the period covered
thereby, except for amounts which, in the aggregate, are immaterial.
(c) The books and records of Dragon are in all material respects complete and
correct and have been maintained in accordance with good business and
accounting practices.
(d) Dragon has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise in excess of Twenty-Five Thousand
Dollars ($25,000), except as disclosed in writing to the Company on
Schedule 1.04.
Section 1.05 Information. The information concerning Dragon set forth in
-----------
this Agreement and in the Dragon Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made,
in light of the circumstances under which they were made, not misleading.
In addition, Dragon has fully disclosed in writing to the Company (through
this Agreement or the Dragon Schedules) all information relating to matters
involving Dragon or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the
existence of a greater than Twenty-Five Thousand Dollars ($25,000)
liability or diminution in value, (ii) have led or may lead to a
competitive disadvantage on the part of Dragon, or (iii) either alone or in
aggregation with other information covered by this Section, otherwise have
led or may lead to a material adverse effect on the transactions
contemplated herein or on Dragon, its assets, or its operations or
activities as presently conducted or as contemplated to be conducted after
the Closing Date, including, but not limited to, information relating to
governmental, employee, environmental, litigation and securities matters
and transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of Dragon of any character relating to
the authorized and unissued Dragon shares of common stock, except options,
warrants, calls or commitments, if any, to which Dragon is not a party and
by which it is not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
------------------------------------------
in this Agreement or the Dragon Schedules, since inception on February
25, 2004:
(a) there has not been (i) any material adverse change in the proposed
business, operations, properties, assets, or condition of Dragon or (ii)
any damage, destruction, or loss to Dragon (whether or not covered by
insurance) materially and adversely affecting the business or financial
condition of Dragon;
(b) Dragon has not (i) amended its Memorandum of Association or Articles of
Association (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of value which in the
aggregate are outside of the ordinary course of business or material
considering the business of Dragon; (iv) made any material change in its
method of management, operation or accounting; (v) entered into any other
material transaction other than sales in the ordinary course of its
business; (vi) made any accrual or arrangement for payment of bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its salaried employees whose monthly compensation
exceeds Ten Thousand Dollars ($10,000); or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made
to, for, or with its officers, directors, or employees;
(c) Dragon has not (i) borrowed or agreed to borrow any funds or incurred, or
become subject to, any material obligation or liability (absolute or
contingent) in excess of $25,000 except as disclosed herein and except
liabilities incurred in the ordinary course of business; (ii) paid or
agreed to pay any material obligations or liability (absolute or
contingent) other than current liabilities, and current liabilities
incurred in the ordinary course of business and professional and other fees
and expenses in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than Twenty-Five
Thousand Dollars ($25,000)), or canceled, or agreed to cancel, any debts or
claims (except debts or claims which in the aggregate are of a value of
less than Twenty-Five Thousand Dollars ($25,000)); or (iv) made or
permitted any amendment or termination of any contract, agreement, or
license to which it is a party if such amendment or termination is
material, considering the business of Dragon; and
(d) To the best knowledge of Dragon, Dragon has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or
condition of Dragon.
Section 1.08 Title and Related Matters. No third party has any right
----------------------------
to, and Dragon has not received any notice of infringement of or
conflict with asserted rights of others with respect to, any product,
technology, data, trade secrets, know-how, proprietary techniques,
trademarks, service marks, trade names, or copyrights which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on the proposed business,
operations, financial condition, income, or business prospects of Dragon or
any material portion of its properties, assets, or rights. Dragon has
signed a letter of intent to acquire the following twelve (12) mineral
claims in Shaanxi Province, China as more fully provided in Schedule 1.08:
Xiao Qinling Gold Province, Qinling Gold Province, Southern Shaanxi Gold
Province, Ore District Geology of Gold Deposits, Shaliang Zi Silver-Gold
Multi-Metallic Ore Deposits, Northern Xunyang Gold Ore Field, Wangjia Ping
- Xinchang Copper Ore Deposit, Anjia Qi Gold Deposit, Shuimo Ping Au-As Ore
Deposit, Yinpan Ag-Sb Ore Deposit, Aigao Gou Gold Ore Deposit, Huangbai
Yuan Gold Deposit, Yingchang Gou - Gumu Gou Multi-metallic Ore Deposit,
Huangjinmei Gold Ore Deposit, Shiquan Yangpin Wuan Gold Ore Deposit, Taiyu
Gold Deposit.
Section 1.09 Litigation and Proceedings. Except as provided in the
----------------------------
Dragon Schedules, there are no actions, suits, or proceedings pending
or, to the knowledge of Dragon after reasonable investigation, threatened
by or against Dragon or affecting Dragon or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Dragon does not
have any knowledge of any material default on its part with respect to any
judgment, order, injunction, decree, award, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.10 Contracts.
----------
(a) There are no material contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Dragon is a
party or by which it or any of its assets, products, technology, or
properties are bound other than those incurred in the ordinary course of
business (as used in this Agreement, a "material" contract, agreement,
franchise, license agreement, debt instrument or commitment is one which
(i) will remain in effect for more than six (6) months after the date of
this Agreement and (ii) involves aggregate obligations of at least
Twenty-Five Thousand Dollars ($25,000) unless otherwise disclosed pursuant
to this Agreement;
(b) All contracts, agreements, franchises, license agreements, and
other commitments, if any, to which Dragon is a party and which are
material to the operations of Dragon taken as a whole are valid and
enforceable by Dragon in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally;
(c) Dragon is not a party to or bound by, and the properties of Dragon
are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment,
order, writ, injunction, decree, or award which materially and adversely
affects, the business operations, properties, assets, or condition of
Dragon; and
(d) Except as included or described in the Dragon Schedules, Dragon is
not a party to any oral or written (i) contract for the employment of any
officer or employee which is not terminable on thirty (30) days, or less
notice; (ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan; (iii) agreement,
contract, or indenture relating to the borrowing of money; (iv) guaranty of
any obligation, other than one on which Dragon is a primary obligor, for
the borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations which, in the aggregate do
not exceed more than one (1) year or provide for payments in excess of
Twenty-Five Thousand Dollars ($25,000) in the aggregate; (v) collective
bargaining agreement; or (vi) agreement with any present or former officer
or director of Dragon.
Section 1.11 Material Contract Defaults. Dragon is not in default in
-----------------------------
any material respect under the terms of any outstanding material
contract, agreement, lease, or other commitment which is material to the
business, operations, properties, assets or condition of Dragon and there
is no event of default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which Dragon has not
taken adequate steps to prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
---------------------------------------
Agreement and the consummation of the transactions contemplated by
this Agreement will not result in the breach of any term or provision of,
constitute an event of default under, or terminate, accelerate or modify
the terms of any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which Dragon is a party or
to which any of its properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
----------------------------
Dragon Schedules, Dragon has all licenses, franchises, permits, and
other governmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted on the date
hereof. Except for compliance with federal and state securities and
corporation laws, as hereinafter provided, no authorization, approval,
consent, or order of, or registration, declaration, or filing with, any
court or other governmental body is required in connection with the
execution and delivery by Dragon of this Agreement and the consummation by
Dragon of the transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
----------------------------------------
in the Dragon Schedules, to the best of its knowledge Dragon has
complied with all applicable statutes and regulations of any federal,
state, or other governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Dragon or except to the
extent that noncompliance would not result in the occurrence of any
material liability for Dragon.
Section 1.15 Approval of Agreement. The Board of Directors of Dragon
------------------------
has authorized the execution and delivery of this Agreement by Dragon
and has approved this Agreement and the transactions contemplated hereby,
and will recommend to the Dragon Shareholder that the Exchange Offer be
accepted by him.
Section 1.16 Material Transactions or Affiliations. Set forth in the
----------------------------------------
Dragon Schedules is a description, if applicable, of every contract,
agreement, or arrangement between Dragon and any predecessor and any person
who was at the time of such contract, agreement, or arrangement an officer,
director, or person owning of record, or known by Dragon to own
beneficially, five percent (5%) or more of the issued and outstanding
common stock of Dragon and which is to be performed in whole or in part
after the date hereof or which was entered into not more than three (3)
years prior to the date hereof. Except as disclosed in the Dragon Schedules
or otherwise disclosed herein, no officer, director, or five percent (5%)
shareholder of Dragon has, or has had since inception of Dragon, any known
interest, direct or indirect, in any transaction with Dragon which was
material to the business of Dragon. There are no commitments by Dragon,
whether written or oral, to lend any funds, or to borrow any money from, or
enter into any other transaction with, any such affiliated person.
Section 1.17 Dragon Schedules. Dragon will deliver to the Company the
------------------
following schedules, if such schedules are applicable to the business
of Dragon, which are collectively referred to as the " Dragon Schedules"
and which consist of separate schedules dated as of the date of execution
of this Agreement, all certified by the principal executive officer of
Dragon as complete, true, and correct as of the date of this Agreement in
all material respects:
(a) a schedule containing complete and correct copies of the Memorandum of
Association in effect as of the date of this Agreement;
(b) a schedule containing complete and correct copies of the Articles of
Association of Dragon in effect as of the date of this Agreement;
(c) a schedule containing any Corporate Resolutions of the Dragon Shareholder;
(d) a schedule containing Minutes of meetings of the Board of Directors of
Dragon;
(e) a schedule listing any and all federal, state and local tax identification
numbers of Dragon and containing complete and correct copies of all
federal, state and local tax returns filed by Dragon; and
(f) a schedule setting forth any other information, together with any required
copies of documents, required to be disclosed by Dragon. Any fact known to
be, or to the best knowledge of Dragon or the Dragon Shareholder after
reasonable investigation, reasonably believed to be, contrary to the
representations, covenants, and warranties made in Article I are required
to be disclosed in the Dragon Schedules pursuant to this Section 1.17(f).
Dragon shall cause the Dragon Schedules and the instruments and data
delivered to the Company hereunder to be promptly updated after the date hereof
up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by Dragon. Dragon shall
have until July 28, 2004 to provide such schedules. If Dragon cannot or fails
to do so, or if the Company acting reasonably finds any such schedules or
updates provided after the date hereof to be unacceptable according to the
criteria set forth herein, the Company may terminate this Agreement by giving
written notice to Dragon within five (5) days after the schedules or updates
were due to be produced or were provided. For purposes of the foregoing, the
Company may consider a disclosure in the Dragon Schedules to be "unacceptable"
only if that item would have a material adverse impact on the financial
condition of Dragon, taken as a whole.
Section 1.18 Valid Obligation. This Agreement and all agreements and
------------------
other documents executed by Dragon in connection herewith constitute
the valid and binding obligation of Dragon, enforceable in accordance with
its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and subject to the qualification that the availability of
equitable remedies is subject to the discretion of the court before which
any proceeding therefor may be brought.
Section 1.19 Acquisition of the Shares by the Dragon Shareholder. The
-----------------------------------------------------------
Dragon Shareholder is acquiring the Shares for their own account
without the participation of any other person and with the intent of
holding the Shares for investment and without the intent of participating,
directly or indirectly, in a distribution of the Shares, or any portion
thereof, and not with a view to, or for resale in connection with, any
distribution of the Shares, or any portion thereof. The Dragon Shareholder
has read, understands and has consulted with his legal counsel regarding
the limitations and requirements of Section 5 of the 1933 Act. The Dragon
Shareholder will offer, sell, pledge, convey or otherwise transfer the
Shares, or any portion thereof, only if: (i) pursuant to an effective
registration statement under the 1933 Act and any and all applicable state
securities or Blue Sky laws or in a transaction which is otherwise in
compliance with the 1933 Act and such laws; or (ii) pursuant to a valid
exemption from registration.
Section 1.20 Exemption from Registration. The Exchange and the
------------------------------
transactions contemplated thereby, meet an exemption from registration
pursuant to Rule 506 of Regulation D promulgated under the 1933 Act.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of Dragon and the Dragon
Shareholder, except as set forth in the Company Schedules (as hereinafter
defined), the Company represents and warrants as follows:
Section 2.01 Organization. The Company is a corporation duly
-------------
organized, validly existing, and in good standing under the laws of
the State of Nevada and has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties
and assets, to carry on its business in all material respects as it is now
being conducted, and except where failure to be so qualified would not have
a material adverse effect on its business, there is no jurisdiction in
which it is not qualified in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification. Included in the Company Schedules are complete and correct
copies of the Articles of Incorporation and Bylaws of the Company as in
effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will
not, violate any provision of the Company's Articles of Incorporation or
Bylaws. The Company has taken all action required by law, its Articles of
Incorporation, its Bylaws, or otherwise to authorize the execution and
delivery of this Agreement, and the Company has full power, authority, and
legal right and has taken all action required by law, its Articles of
Incorporation, Bylaws, or otherwise to consummate the transactions herein
contemplated.
Section 2.02 Capitalization. The Company is authorized to issue
--------------
500,000,000 shares of Common Stock, par value $.001 per share, of
which 50,396,794 post 7:1 forward split ("Post-Split") shares will be
issued and outstanding on the closing date prior to the issuance of the
shares to the Dragon Shareholder as set forth in Section 3.01(ii), as
defined herein, and no shares of preferred stock. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and
not issued in violation of the preemptive or other rights of any person. On
June 14, 2004, prior to the execution of this Agreement, the Company
amended its articles of incorporation to change its name from Folix
Technologies, Inc. to Dragon Gold Resources, Inc. At that time, the Company
also amended its capitalization to reflect a 7:1 forward stock split, to
increase the authorized shares to 500,000,000 shares of Common Stock and to
reauthorize the par value $.001 per share of Common Stock.
Section 2.03 Subsidiaries and Predecessor Corporations. The Company does
-------------------------------------------
not have any predecessor corporation(s) or subsidiaries, and does not
own, beneficially or of record, any shares of any other corporation.
Section 2.04 Financial Statements.
----------------------
(a) Included in the Company Schedules are (i) the audited balance sheets of the
Company and the related statements of operations and cash flows as of and
for the twelve (12) months ended March 31, 2004, and (ii) the unaudited
balance sheet of the Company and the related statement of operations and
cash flows for the three (3) months ended June 30, 2004, to be provided
within the time period specified in the flush language of Section 2.17.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved. The Company balance sheets present fairly as of their
respective dates the financial condition of the Company. As of the date of
such balance sheets, except as and to the extent reflected or reserved
against therein, the Company had no liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheets or the notes
thereto prepared in accordance with generally accepted accounting
principles, and all assets reflected therein are properly reported and
present fairly the value of the assets of the Company, in accordance with
generally accepted accounting principles. The statements of operations,
stockholders' equity and cash flows reflect fairly the information required
to be set forth therein by generally accepted accounting principles.
(c) The Company has no liabilities with respect to the payment of any federal,
state, county, local or other taxes (including any deficiencies, interest
or penalties), except for taxes accrued but not yet due and payable.
(d) The books and records, financial and otherwise, of the Company are in all
material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(e) All of the Company's assets are reflected on its financial statements, and,
except as set forth in the Company Schedules or the financial statements of
the Company or the notes thereto, the Company has no material liabilities,
direct or indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning the Company set
-----------
forth in this Agreement and the Company Schedules is complete and
accurate in all material respects and does not contain any untrue
statements of a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under which they
were made, not misleading. In addition, the Company has fully disclosed in
writing to Dragon (through this Agreement or the Company Schedules) all
information relating to matters involving the Company or its assets or its
present or past operations or activities which (i) indicated or may
indicate, in the aggregate, the existence of a greater than One Thousand
Dollars ($1,000) liability or diminution in value, (ii) have led or may
lead to a competitive disadvantage on the part of the Company or (iii)
either alone or in aggregation with other information covered by this
Section, otherwise have led or may lead to a material adverse effect on the
transactions contemplated herein or on the Company, its assets, or its
operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to,
information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
Section 2.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of any character relating to the
authorized and unissued stock of the Company.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
------------------------------------------
in Schedule 2.07, or permitted in writing by Dragon, since the date of
the most recent Company balance sheet:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of the Company or (ii) any
damage, destruction or loss to the Company (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets or condition of the Company;
(b) The Company has not and will not (i) amend its Articles of Incorporation or
Bylaws except to complete the performance of the Company as set forth
herein; (ii) declare or make, or agree to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchase or redeem, or agree to purchase or redeem, any of
its capital stock; (iii) waive any rights of value which in the aggregate
are outside of the ordinary course of business or material considering the
business of the Company; (iv) make any material change in its method of
management, operation, or accounting; (v) enter into any transaction or
agreement other than in the ordinary course of business; (vi) make any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee; (vii) increase the rate of compensation payable or to
become payable by it to any of its officers or directors or any of its
salaried employees whose monthly compensation exceed One Thousand Dollars
($1,000); or (viii) make any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees;
(c) The Company has not (i) granted or agreed to grant any options or warrants;
(ii) borrowed or agreed to borrow any funds or incurred, or become subject
to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or
agreed to pay any material obligations or liabilities (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent Company balance sheet and current liabilities incurred since
that date in the ordinary course of business and professional and other
fees and expenses in connection with the preparation of this Agreement and
the consummation of the transaction contemplated hereby; (iv) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than One Thousand
Dollars ($1,000)), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value less than One
Thousand Dollars ($1,000)); and (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a party
if such amendment or termination is material, considering the business of
the Company; and
(d) The Company has not become subject to any law or regulation which
materially and adversely affects, or in the future, may adversely affect,
the business, operations, properties, assets or condition of the Company.
Section 2.08 Title and Related Matters. The Company has good and
----------------------------
marketable title to all of its properties, inventory, interest in
properties, and assets, real and personal, which are reflected in the most
recent Company balance sheet or acquired after that date (except
properties, inventory, interest in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and
clear of all liens, pledges, charges, or encumbrances except (a) statutory
liens or claims not yet delinquent; (b) such imperfections of title and
easements as do not and will not materially detract from or interfere with
the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties; and (c) as described in the Company Schedules. Except as set
forth in the Company Schedules, the Company owns, free and clear of any
liens, claims, encumbrances, royalty interests, or other restrictions or
limitations of any nature whatsoever, any and all products it is currently
manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with the Company's
business. Except as set forth in the Company Schedules, no third party has
any right to, and the Company has not received any notice of infringement
of or conflict with asserted rights of others with respect to any product,
technology, data, trade secrets, know-how, proprietary techniques,
trademarks, service marks, trade names, or copyrights which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse effect on the business,
operations, financial condition, income, or business prospects of the
Company or any material portion of its properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
----------------------------
proceedings or investigations pending or, to the knowledge of the
Company after reasonable investigation, threatened by or against the
Company or affecting the Company or its properties, at law or in equity,
before any court or other governmental agency or instrumentality, domestic
or foreign, or before any arbitrator of any kind. The Company has no
knowledge of any default on its part with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court,
arbitrator, or governmental agency or instrumentality, or any circumstance
which after reasonable investigation would result in the discovery of such
default.
Section 2.10 Contracts.
---------
(a) The Company is not a party to, and its assets, products, technology and
properties are not bound by, any material contract, franchise, license
agreement, agreement, debt instrument or other commitments whether such
agreement is in writing or oral.
(b) All contracts, agreements, franchises, license agreements, and other
commitments to which the Company is a party or by which its properties are
bound and which are material to the operations of the Company taken as a
whole are valid and enforceable by the Company in all respects, except as
limited by bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally;
(c) The Company is not a party to or bound by, and the properties of the
Company are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment,
order, writ, injunction, decree, or award which materially and adversely
affects, the business operations, properties, assets, or condition of the
Company; and
(d) Except as included or described in the Company Schedules or reflected in
the most recent Company balance sheet, the Company is not a party to any
oral or written (i) contract for the employment of any officer or employee
which is not terminable on thirty (30) days, or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay, pension
benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, other
than one on which the Company is a primary obligor, for the borrowing of
money or otherwise, excluding endorsements made for collection and other
guaranties of obligations which, in the aggregate do not exceed more than
one (1) year or provide for payments in excess of Twenty-Five Thousand
Dollars ($25,000) in the aggregate; (v) collective bargaining agreement; or
(vi) agreement with any present or former officer or director of the
Company.
Section 2.11 Material Contract Defaults. The Company is not in default
-----------------------------
in any respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of the Company and there is no event of
default in any material respect under any such contract, agreement, lease,
or other commitment in respect of which the Company has not taken adequate
steps to prevent such a default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
---------------------------------------
Agreement and the consummation of the transactions contemplated by
this Agreement will not result in the breach of any term or provision of,
constitute a default under, or terminate, accelerate or modify the terms
of, any indenture, mortgage, deed of trust, or other material agreement or
instrument to which the Company is a party or to which any of its assets or
operations are subject.
Section 2.13 Governmental Authorizations. The Company has all
-----------------------------
licenses, franchises, permits, and other governmental authorizations,
that are legally required to enable it to conduct its business operations
in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, as
hereinafter provided, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental
body is required in connection with the execution and delivery by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
-----------------------------------------
knowledge, the Company has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity
or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties,
assets or condition of the Company or except to the extent that
noncompliance would not result in the occurrence of any material liability.
This compliance includes, but is not limited to, the filing of all reports,
filings and schedules to date with federal and state securities
authorities.
Section 2.15 Approval of Agreement. The Board of Directors of the
-----------------------
Company has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement and the transactions contemplated
hereby.
Section 2.16 Material Transactions or Affiliations. Except as
----------------------------------------
disclosed herein and in the Company Schedules, there exists no
contract, agreement or arrangement between the Company and any predecessor
and any person who was at the time of such contract, agreement or
arrangement an officer, director, or person owning of record or known by
the Company to own beneficially, five percent (5%) or more of the issued
and outstanding Common Stock of the Company and which is to be performed in
whole or in part after the date hereof or was entered into not more than
three (3) years prior to the date hereof. Neither any officer, director,
nor five percent (5%) shareholder of the Company has, or has had since
inception of the Company, any known interest, direct or indirect, in any
such transaction with the Company which was material to the business of the
Company. The Company has no commitment, whether written or oral, to lend
any funds to, borrow any money from, or enter into any other transaction
with, any such affiliated person.
Section 2.17 The Company Schedules. Within ten (10) days following the
-----------------------
Closing, the Company will deliver to Dragon the following schedules,
which are collectively referred to as the "Company Schedules" and which
consist of separate schedules, which are dated the date of this Agreement,
all certified by the principal executive officer of the Company to be
complete, true, and accurate in all material respects as of the date of
this Agreement:
(a) a schedule containing complete and accurate copies of the Articles of
Incorporation and Bylaws of the Company as in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of the Company identified
herein;
(c) a certified list from the Company's Transfer Agent setting forth the name
and address of each shareholder of the Company together with the number of
shares owned by him, her or it;
(d) a schedule containing a description of all real property owned by the
Company, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any
nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental authorizations (or
requests or applications therefor) pursuant to which the Company carries on
or proposes to carry on its business (except those which, in the aggregate,
are immaterial to the present or proposed business of the Company);
(f) a schedule listing the accounts receivable and notes and other obligations
receivable of the Company as of June 30, 2004, or thereafter other than in
the ordinary course of business of the Company, indicating the debtor and
amount, and classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and amount of any
refunds, set offs, reimbursements, discounts, or other adjustments which
are in the aggregate material and due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and other obligations
payable of the Company as of June 30, 2004, or that arose thereafter other
than in the ordinary course of the business of the Company, indicating the
creditor and amount, classifying the accounts to show in reasonable detail
the length of time, if any, overdue, and stating the nature and amount of
any refunds, set offs, reimbursements, discounts, or other adjustments,
which in the aggregate are material and due to or claimed by the Company
respecting such obligations;
(h) a schedule setting forth a description of any material adverse change in
the business, operations, property, inventory, assets, or condition of the
Company since March 31, 2004;
(i) a schedule listing any and all federal, state and local tax identification
numbers of the Company and containing complete and correct copies of all
federal, state and local tax returns filed by the Company; and
(j) a schedule setting forth any other information, together with any required
copies of documents, required to be disclosed by the Company. Any fact
known to be, or to the best knowledge of the Company after reasonable
investigation, reasonably believed to be, contrary to the representations,
covenants, and warranties made in Article II are required to be disclosed
in the Company Schedules pursuant to this Section 2.17(j).
The Company shall cause the Company Schedules and the instruments and data
delivered to Dragon hereunder to be promptly updated after the date hereof up to
and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by the Company. The
Company shall have until July 28, 2004 to provide such schedules, except in the
case of providing the unaudited balance sheet of the Company and the related
statement of operations and cash flows for the three (3) months ended June 30,
2004 and the schedules listing accounts receivable and accounts payable as of
such date, the Company shall have until August 23, 2004. If the Company cannot
or fails to provide the schedules required by this Section, or if Dragon or the
Dragon Shareholder find any such schedules or updates provided after the date
hereof to be unacceptable, Dragon or the Dragon Shareholder may terminate this
Agreement by giving written notice to the Company within five (5) days after the
schedules or updates were due to be produced or were provided. For purposes of
the foregoing, the Dragon may consider a disclosure in the Company Schedules to
be "unacceptable" only if that item would have a material adverse impact on the
financial condition of the Company, taken as a whole.
Section 2.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by the Company in connection herewith
constitute the valid and binding obligation of the Company, enforceable in
accordance with its or their terms, except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefor may be brought.
Section 2.19 Liabilities. The Company acknowledges that it will
-----------
have no liabilities outstanding on the Closing Date.
Section 2.20 Reporting Requirements of the Company. The Company is
------------------------------------------
subject to the reporting and filing requirements of the Securities
Exchange Act of 1934 ("the Exchange Act') including (1) the periodic
reporting requirements and (2) the Proxy Rules set forth thereunder. The
Company and its officers, directors, and beneficial owners are subject to
the provisions of the Exchange Act Section 16 relating to short-swing
profit recapture, reports of beneficial ownership and short sale
prohibitions and the Company and its officers, directors, and beneficial
owners have timely complied in all respects with the filing requirements of
the Exchange Act.
Section 2.21 Quotation on the OTC Bulletin Board. The Company's Common
----------------------------------------
Stock is quoted on the OTC Bulletin Board under the symbol "DRGO" and
the Company will retain such quotation on the OTC Bulletin Board until the
Closing of the transactions contemplated herein.
Section 2.22 Approval of the Exchange by the Company's Shareholders. The
--------------------------------------------------------
transactions contemplated by this Agreement do not require the
approval of the Company's shareholders and the Company is not required to
file a Schedule 14A or 14C with the Securities and Exchange Commission as a
result of this Agreement.
Section 2.23 The Directors of the Company shall have approved the Exchange Offer
and the related transactions described herein.
Section 2.24 Approval of the Exchange Offer and related transactions by the
Company's shareholders is not required by Nevada law or the Company's
Articles of Incorporation or Bylaws or any amendments thereto.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. (i) On the terms and subject to the
-------------
conditions set forth in this Agreement, on the Closing Date (as
defined in Section 3.02), each Dragon Shareholder who shall elect to accept
the Exchange Offer described herein shall assign, transfer and deliver,
free and clear of all liens, pledges, encumbrances, charges, restrictions
or known claims of any kind, nature, or description, the number of shares
of common stock of Dragon set forth herein, in the aggregate constituting
100% of the issued and outstanding shares of common stock of Dragon. After
the acquisition of 100% of the outstanding shares of Dragon, Dragon shall
become a wholly or majority owned subsidiary of the Company.
Section 3.01(ii) The Dragon Shareholder will receive 165,000 Post-Split share(s)
of the Company's common stock for every one (1) share of Dragon common
stock held or an aggregate amount of 16,500,000 Post-Split shares of the
Company's Common Stock. Following the execution of this Agreement and the
Stock Purchase Agreement, the Dragon Shareholder shall own 16,500,000
Post-Split shares out of 66,896,794 Post-Split shares outstanding in the
Company, representing Twenty-Four and Sixty-Six One Hundredths percent
(24.66%) of the Company's then outstanding Common Stock.
Section 3.02 Closing. The closing ("Closing") of the transaction
-------
contemplated by this Agreement shall be on a date and at such time as
the parties may agree ("Closing Date") but not later than July 19, 2004,
subject to the right of the Company or Dragon to extend such Closing Date
by up to an additional ten (10) days. Such Closing shall take place at a
mutually agreeable time and place. At Closing, or immediately thereafter,
the following will occur:
a) The Dragon Shareholder shall surrender the certificates evidencing at least
100% of the shares of Dragon stock, duly endorsed so as to make the Company
the sole owner thereof;
b) The Company will issue and deliver 16,500,000 newly issued Post-Split
treasury shares of the Company's Common Stock in the name of the Dragon
Shareholder in accordance with this Agreement;
c) At Closing, the sole Director of the Company shall increase the number of
Directors to three (3) Directors and appoint Johannes Petersen and Xiaojun
("Albert") Cui as Directors to fill vacancies created by such increase.
After making these appointments, the sole Director shall resign and the
remaining Directors shall decrease the number of Directors from three (3)
to two (2) Directors;
d) At Closing, the sole Director of Dragon shall appoint Johannes Petersen to
serve as a Director and as President and then the sole Director Dragon
shall resign; and
e) At the Closing, the Company, Dragon and each of the Dragon Shareholder
shall execute, acknowledge, and deliver (or shall ensure to be executed,
acknowledged, and delivered) any and all certificates, opinions, financial
statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or prior to
the Closing, together with such other items as may be reasonably requested
by the parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby. Among other
things, the Company shall provide an opinion of counsel acceptable to
Dragon as to such matters as Dragon may reasonably request, which shall
include, but not be limited to, a statement, to the effect that to such
counsel's best knowledge, after reasonable investigation, from inception
until the Closing Date, the Company has complied with all applicable
statutes and regulations of any federal, state, or other applicable
governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of the Company or except to the
extent that noncompliance would not result in the occurrence of any
material liability (such compliance including, but not being limited to,
the filing of all reports to date with federal and state securities
authorities).
Section 3.03 Name Change. Prior to the Closing, the Company
-------------
changed its name from Folix Technologies, Inc. to Dragon Gold
Resources, Inc., pursuant to a Certificate of Amendment to Articles of
Incorporation filed with the Nevada Secretary of State on June 1, 2004,
that took effect on June 14, 2004.
Section 3.04 Tradability of Shares. The shares of the Common Stock of
------------------------
the Company to be issued to the Dragon Shareholder have not been
registered under the 1933 Act, nor registered under any state securities
law, and are "restricted securities" as that term is defined in Rule 144
under the 1933 Act. The securities may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the 1933 Act, or pursuant to an exemption from registration
under the 1933 Act. The shares to be issued to the Dragon Shareholder will
bear the following restrictive legend: "THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i) REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF
ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933
AND APPLICABLE STATE SECURITIES LAWS."
Section 3.05 Anti-Dilution. The number of shares of the Company's
-------------
Common Stock issuable upon the Exchange Offer shall be appropriately
adjusted to take into account any other stock split, stock dividend,
reverse stock split, recapitalization, or similar change in the Company's
Common Stock which may occur (i) between the date of the execution of this
Agreement and the Closing Date.
Section 3.06 Termination.
------------
(a) This Agreement may be terminated by the Board of Directors of either the
Company or Dragon or by the Dragon Shareholder at any time prior to the
Closing Date if:
(i) there shall be any actual or threatened action or proceeding before any
court or any governmental body which shall seek to restrain, prohibit, or
invalidate the transactions contemplated by this Agreement and which, in
the judgment of such Board of Directors, made in good faith and based upon
the advice of its legal counsel, makes it inadvisable to proceed with the
Exchange;
(ii) any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such
transactions (which does not include the Securities and Exchange
Commission) or in the judgment of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the Exchange; or
(iii) if less than one hundred percent (100%) of the Dragon
Shareholders agree to the Exchange Offer.
In the event of termination pursuant to this paragraph, no obligation, right or
liability shall arise hereunder, and each party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting, and execution of
this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated by the Board of Directors of the Company
at any time prior to the Closing Date if:
(i) the Board of Directors of the Company determines in good faith that one or
more of the Company's conditions to Closing has not occurred, through no
fault of the Company.
(ii) The Company takes the termination action specified in Section 1.17 as a
result of Dragon Schedules or updates thereto which the Company finds
unacceptable; or
(iii) Dragon shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Dragon contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder, except that Dragon shall bear the costs in connection with the
negotiation, preparation, and execution of this Agreement and qualifying the
offer and sale of securities to be issued in the Exchange under the registration
requirements, or exemption from the registration requirements, of state and
federal securities laws.
(c) This Agreement may be terminated by the Board of Directors of Dragon or by
the Dragon Shareholder at any time prior to the Closing Date if:
(i) there shall have been any change after the date of the latest balance sheet
of the Company in the assets, properties, business or financial condition
of the Company which could have a material adverse effect on the financial
statements of the Company listed in Section 2.04(a) and 2.04(b) taken as a
whole, except any changes disclosed in the Company Schedules;
(ii) the Board of Directors of Dragon determines in good faith that one or more
of Dragon's conditions to Closing has not occurred, through no fault of
Dragon;
(iii) Dragon takes the termination action specified in Section 2.17 as a result
of the Company Schedules or updates thereto which Dragon finds
unacceptable;
(iv) on or before July 8, 2004, if Dragon notifies the Company that Dragon's
investigation pursuant to Section 4.01 below has uncovered information
which it finds unacceptable by the same criteria set forth herein; or
(v) The Company shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of the Company contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder.
No revenue ruling or opinion of counsel will be sought as to the tax-free
nature of the subject Exchange and such tax treatment is not a condition to
Closing herein.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. The Company and Dragon will
------------------------------------
each afford to the officers and authorized representatives of the
other full access to the properties, books and records of the Company or
Dragon, as the case may be, in order that each may have a full opportunity
to make such reasonable investigation as it shall desire to make of the
affairs of the other, and each will furnish the other with such additional
financial and operating data and other information as to the business and
properties of the Company or Dragon, as the case may be, as the other shall
from time to time reasonably request. Any such investigation and
examination shall be conducted at reasonable times and under reasonable
circumstances, and each party hereto shall cooperate fully therein. No
investigation by a party hereto shall, however, diminish or waive in any
way any of the representations, warranties, covenants or agreements of the
other party under this Agreement. In order that each party may investigate
as it may wish the business affairs of the other, each party shall furnish
the other during such period with all such information and copies of such
documents concerning the affairs of it as the other party may reasonably
request, and cause its officer, employees, consultants, agents,
accountants, and attorneys to cooperate fully in connection with such
review and examination, and to make full disclosure to the other parties
all material facts affecting its financial condition, business operations,
and the conduct of operations. Without limiting the foregoing, as soon as
practicable after the end of each fiscal quarter (and in any event through
the last fiscal quarter prior to the Closing Date), the Company shall
provide Dragon with quarterly internally prepared and unaudited financial
statements for all periods up to the date of Closing.
Section 4.02 Delivery of Books, Recordsand Accounts. At the Closing,
------------------------------------------
Dragon shall deliver to the Company copies of the corporate minute
books, books of account, contracts, records, and all other books or
documents of Dragon now in the possession of Dragon or its representatives.
At the Closing, the Company shall execute such documents as are necessary
to make Johannes Petersen or such other person or persons designated by
Dragon, the authorized signor on all of the Company's bank accounts or
other accounts maintained by the Company at financial institutions.
Section 4.03 Third Party Consents and Certificates. The Company and
------------------------------------------
Dragon agree to cooperate with each other in order to obtain any
required third party consents to this Agreement and the transactions herein
contemplated.
Section 4.04 Consent of Dragon Shareholder. Dragon shall use its best
--------------------------------
efforts to obtain the consent of the Dragon Shareholder to participate
in the Exchange.
Section 4.05 Exclusive Dealing Rights. Until 5:00 P.M. Eastern Daylight
--------------------------
Time on July 18, 2004.
(a) In recognition of the substantial time and effort which the Company has
spent and will continue to spend in investigating Dragon and its business
and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities,
neither Dragon, nor any of its officers, employees, representatives or
agents will directly or indirectly solicit or initiate any discussions or
negotiations with, or, except where required by fiduciary obligations under
applicable law as advised by counsel, participate in any negotiations with
or provide any information to or otherwise cooperate in any other way with,
or facilitate or encourage any effort or attempt by, any corporation,
partnership, person or other entity or group (other than the Company and
its directors, officers, employees, representatives and agents) concerning
any merger, sale of substantial assets, sale of shares of capital stock,
(including without limitation, any public or private offering of the common
stock of Dragon) or similar transactions involving Dragon (all such
transactions being referred to as " Dragon Acquisition Transactions"). If
Dragon receives any proposal with respect to a Dragon Acquisition
Transaction, it will immediately communicate to the Company the fact that
it has received such proposal and the principal terms thereof.
(b) In recognition of the substantial time and effort which Dragon has spent
and will continue to spend in investigating the Company and its business
and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities,
neither the Company, nor any of its officers, employees, representatives,
shareholders or agents will directly or indirectly solicit or initiate any
discussions or negotiations with, or, except where required by fiduciary
obligations under applicable law as advised by counsel, participate in any
negotiations with or provide any information to or otherwise cooperate in
any other way with, or facilitate or encourage any effort or attempt by,
any corporation, partnership, person or other entity or group (other than
Dragon and its directors, officers, employees, representatives and agents)
concerning any merger, sale of substantial assets, sale of shares of
capital stock, (including without limitation, any public or private
offering of the Common Stock of the Company or similar transactions
involving the Company (all such transactions being referred to as "Company
Acquisition Transactions"). If the Company receives any proposal with
respect to a Company Acquisition Transaction, it will immediately
communicate to Dragon the fact that it has received such proposal and the
principal terms thereof.
Section 4.06 Actions Prior to Closing.
----------------------------
(a) From and after the date of this Agreement until the Closing Date and except
as set forth in the Company Schedules or Dragon Schedules or as permitted
or contemplated by this Agreement, the Company and Dragon respectively
(subject to paragraph (b) below), will each:
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and condition as
at present, except for depreciation due to ordinary wear and tear and
damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount and in
scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under material
contracts, leases, and instruments relating to or affecting its assets,
properties, and business;
(v) use its best efforts to maintain and preserve its business organization
intact, to retain its key employees, and to maintain its relationship with
its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date, neither
the Company nor Dragon will:
(i) make any changes in their Articles of Incorporation, Memorandum of
Association, Bylaws or Articles of Association, as the case may be,, except
as otherwise provided in this Agreement;
(ii) take any action described in Section 1.07 in the case of Dragon, or in
Section 2.07, in the case of the Company (all except as permitted therein
or as disclosed in the applicable party's schedules);
(iii) enter into or amend any contract, agreement, or other instrument of any of
the types described in such party's schedules, except that a party may
enter into or amend any contract, agreement, or other instrument in the
ordinary course of business involving the sale of goods or services; or
(iv) sell any assets or discontinue any operations, sell any shares of capital
stock or conduct any similar transactions other than in the ordinary course
of business.
Section 4.07 Indemnification.
----------------
(a) The Company hereby agrees to indemnify Dragon and each of the officers,
agents, and directors of Dragon and the Dragon Shareholder as of the date
of execution of this Agreement against any loss, liability, claim, damage,
or expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever), to which it
or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made by the Company under this Agreement.
The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement.
Section 4.08 Indemnification of Subsequent Corporate Actions.
---------------------------------------------------
(a) No officer, director, controlling shareholder, agent or representative of
the Company, or any other person currently affiliated with the Company, has
offered or agreed to assist in the promotion, market making, development,
enhancement, or support of the Company's business, capital raising, or
securities market.
(b) Dragon hereby represents and warrants that it will indemnify and hold
harmless any officer, director, controlling shareholder, agent or
representative of the Company, or any other person affiliated with the
Company, from any decisions, activities, or conduct of the Company
contemporaneous with, or subsequent to this Agreement.
Section 4.09 Audited Financial Statements. The Company shall file
-------------------------------
audited financial statements of Dragon as required by the Securities
and Exchange Commission within seventy-five (75) days from the date of
Closing.
Section 4.10 Blue Sky Manual Exemption. The Company shall file with
-----------------------------
Standard & Poor's or Moody's within one hundred twenty (120) days from
the date of Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and - Performance of Covenants.
-----------------------------------------------------------------
The representations and warranties made by Dragon in this Agreement
were true when made and shall be true at the Closing Date with the same
force and effect as if such representations and warranties were made at and
as of the Closing Date (except for changes therein permitted by this
Agreement). Dragon shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by
Dragon prior to or at the Closing. The Company shall be furnished with a
certificate, signed by a duly authorized executive officer of Dragon and
dated the Closing Date, to the foregoing effect.
Section 5.02 Officer's Certificate. The Company shall have been
-----------------------
furnished with a certificate dated the Closing Date and signed by a
duly authorized officer of Dragon to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge
of Dragon threatened, which might result in an action to enjoin or prevent
the consummation of the transactions contemplated by this Agreement, or, to
the extent not disclosed in the Dragon Schedules, by or against Dragon,
which might result in any material adverse change in any of the assets,
properties, business, or operations of Dragon.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
------------------------------
there shall not have occurred any material change in the financial
condition, business, or operations of Dragon nor shall any event have
occurred which, with the lapse of time or the giving of notice, is
determined to be unacceptable using the criteria set forth in Section 1.17.
Section 5.04 Approval by Dragon Shareholder. The Exchange shall have
---------------------- -----------
been approved, and shares delivered in accordance with Section 3.01,
by the holders of not less than eighty percent (80%) of the outstanding
common stock of Dragon.
Section 5.05 No Governmental Prohibition. No order, statute, rule,
------------------------------
regulation, executive order, injunction, stay, decree, judgment or
restraining order shall have been enacted, entered, promulgated or enforced
by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other
intangibles in connection with the transactions contemplated herein, or for
the continued operation of the Company and Dragon after the Closing Date on
the basis as presently operated shall have been obtained.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DRAGON
AND THE DRAGON SHAREHOLDER
The obligations of Dragon and the Dragon Shareholder under this Agreement
are subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
-----------------------------------------------------------------
The representations and warranties made by the Company in this
Agreement were true when made and shall be true as of the Closing Date
(except for changes therein permitted by this Agreement) with the same
force and effect as if such representations and warranties were made at and
as of the Closing Date. Additionally, the Company shall have performed and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by the Company and shall have satisfied all
conditions set forth herein prior to or at the Closing. Dragon shall have
been furnished with a certificate, signed by duly authorized executive
officers of the Company and dated the Closing Date, to the foregoing
effect.
Section 6.02 Officer's Certificate. Dragon shall have been furnished
----------------------
with a certificate dated the Closing Date and signed by the duly
authorized executive officer of the Company, to the effect that no
litigation, proceeding, investigation or inquiry is pending, or to the best
knowledge of the Company threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by this
Agreement or, to the extent not disclosed in the Company Schedules, by or
against the Company, which might result in any material adverse change in
any of the assets, properties or operations of the Company.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
------------------------------
there shall not have occurred any change in the financial condition,
business or operations of the Company nor shall any event have occurred
which, with the lapse of time or the giving of notice, is determined to be
unacceptable using the criteria set forth in Section 2.17.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
------------------------------
regulation, executive order, injunction, stay, decree, judgment or
restraining order shall have been enacted, entered, promulgated or enforced
by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other
intangibles in connection with the transactions contemplated herein, or for
the continued operation of the Company and Dragon after the Closing Date on
the basis as presently operated shall have been obtained.
Section 6.06 Other Items. Dragon shall have received further opinions,
------------
documents, certificates, or instruments relating to the transactions
contemplated hereby as Dragon may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 No Bankruptcy and No Criminal Convictions. None of the
-----------------------------------------------
Parties to the Agreement, nor their officers, directors or affiliates,
promoters, beneficial shareholders or control persons, nor any predecessor
thereof have been subject to the following:
(a) Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer within the past five (5)
years;
(b) Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(c) Being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; and
(d) Being found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission (the "SEC") or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended, or
vacated.
Section 7.02 Broker/Finder's Fee. No broker's or finder's fee will be
--------------------
paid in connection with the transaction contemplated by this Agreement
other than fees payable to persons registered as broker-dealers pursuant to
Section 15 of the Securities Exchange Act of 1934. The Company and Dragon
agree that, except as set forth herein and on Schedule 7.02 attached
hereto, there were no brokers or finders involved in bringing the parties
together or who were instrumental in the negotiation, execution or
consummation of this Agreement. The Company and Dragon each agree to
indemnify the other against any claim by any third person other than those
described above for any commission, brokerage, or finder's fee arising from
the transactions contemplated hereby based on any alleged agreement or
understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
Section 7.03 Governing Law and Arbitration. This Agreement shall be
--------------------------------
governed by, enforced, and construed under and in accordance with the
laws of the United States of America and, with respect to the matters of
state law, with the laws of the State of Texas without giving effect to
principles of conflicts of law thereunder. All controversies, disputes or
claims arising out of or relating to this Agreement shall be resolved by
binding arbitration. The arbitration shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association.
All arbitrators shall possess such experience in, and knowledge of, the
subject area of the controversy or claim so as to qualify as an "expert"
with respect to such subject matter. The governing law for the purposes of
any arbitration arising hereunder shall be in Texas. The prevailing party
shall be entitled to receive its reasonable attorney's fees and all costs
relating to the arbitration. Any award rendered by arbitration shall be
final and binding on the parties, and judgment thereon may be entered in
any court of competent jurisdiction.
Section 7.04 Notices. Any notice or other communications required or
-------
permitted hereunder shall be in writing and shall be sufficiently
given if personally delivered to it or sent by telecopy, overnight courier
or registered mail or certified mail, postage prepaid, addressed as
follows:
If to the Company, to: Gregory Corcoran
Dragon Gold Resources, Inc.
205-1072 Davie Street
Vancouver, British Columbia
Canada V6E 1M3
If to Dragon, to: Raoul Tsakok
Dragon Minerals Holdings Inc.
900-789 West Pender Street
Vancouver, British Columbia
Canada V6C 1H2
With copies to: David M. Loev, Attorney at Law
2777 Allen Parkway
Suite 1000
Houston, Texas 77019
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party
----------------
institutes any action or suit to enforce this Agreement or to secure
relief from any default hereunder or breach hereof, the prevailing party
shall be reimbursed by the losing party for all costs, including reasonable
attorney's fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other
---------------
that, unless and until the transactions contemplated by this Agreement
have been consummated, it and its representatives will hold in strict
confidence all data and information obtained with respect to another party
or any subsidiary thereof from any representative, officer, director or
employee, or from any books or records or from personal inspection, of such
other party, and shall not use such data or information or disclose the
same to others, except (i) to the extent such data or information is
published, is a matter of public knowledge, or is required by law to be
published; or (ii) to the extent that such data or information must be used
or disclosed in order to consummate the transactions contemplated by this
Agreement. In the event of the termination of this Agreement, each party
shall return to the other party all documents and other materials obtained
by it or on its behalf and shall destroy all copies, digests, work papers,
abstracts or other materials relating thereto, and each party will continue
to comply with the confidentiality provisions set forth herein.
Section 7.07 Public Announcements and Filings. Unless required by
------------------------------------
applicable law or regulatory authority, none of the parties will issue
any report, statement or press release to the general public, to the trade,
to the general trade or trade press, or to any third party (other than its
advisors and representatives in connection with the transactions
contemplated hereby) or file any document, relating to this Agreement and
the transactions contemplated hereby, except as may be mutually agreed by
the parties. Copies of any such filings, public announcements or
disclosures, including any announcements or disclosures mandated by law or
regulatory authorities, shall be delivered to each party at least one (1)
business day prior to the release thereof.
Section 7.08 Schedules; Knowledge. Each party is presumed to have full
---------------------
knowledge of all information set forth in the other party's schedules
delivered pursuant to this Agreement.
Section 7.09 Third Party Beneficiaries. This contract is strictly
----------------------------
between the Company and Dragon and the Dragon Shareholder, and, except
as specifically provided, no director, officer, stockholder (other than the
Dragon Shareholder), employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.10 Expenses. The Company and Dragon each hereto agree to pay
---------
its own costs and expenses incurred in negotiating this Agreement
including legal, accounting and professional fees, incurred in connection
with the Exchange or any of the other transactions contemplated hereby, and
those costs and expenses incurred in consummating the transactions
described herein. The Company and Dragon specifically agree that Dragon
will complete an audit of Dragon's financial statements pursuant to form
and content of and requirements for financial statements as provided in
Regulation S-X promulgated by the Securities and Exchange Commission (the
"Audit") within seventy-five (75) days of July 8, 2004, and that Dragon
will pay all expenses, fees and other costs associated with the Audit.
Section 7.11 Entire Agreement. This Agreement represents the entire
------------------
agreement between the parties relating to the subject matter thereof
and supersedes all prior agreements, understandings and negotiations,
written or oral, with respect to such subject matter.
Section 7.12 Survival; Termination. The representations, warranties,
-----------------------
and covenants of the respective parties shall survive the Closing Date
and the consummation of the transactions herein contemplated for a period
of two (2) years.
Section 7.13 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original and all of
which taken together shall be but a single instrument.
Section 7.14 Amendment or Waiver. Every right and remedy provided
----------------------
herein shall be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any obligation
by the other shall be construed as a waiver of the same or any other
default then, theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may by amended by a writing
signed by all parties hereto, with respect to any of the terms contained
herein, and any term or condition of this Agreement may be waived or the
time for performance may be extended by a writing signed by the party or
parties for whose benefit the provision is intended.
Section 7.15 Best Efforts. Subject to the terms and conditions herein
-------------
provided, each party shall use its best efforts to perform or fulfill
all conditions and obligations to be performed or fulfilled by it under
this Agreement so that the transactions contemplated hereby shall be
consummated as soon as practicable. Each party also agrees that it shall
use its best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective this
Agreement and the transactions contemplated herein.
Section 7.16 Faxed Copies. For purposes of this Agreement, a
--------------
faxed signature will constitute an original signature.
Section 7.17 Severability. The invalidity or unenforceability of
-------------
any term, phrase, clause, paragraph, restriction, covenant, agreement
or other provision of this Agreement shall in no way affect the validity or
enforcement of any other provision or any part thereof.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first-above written.
Dragon Gold Resources, Inc.
BY: /s/ Gregory Corcoran
Gregory Corcoran, Chief Executive Officer
Dragon Minerals Holdings Inc.
BY: /s/ Raoul Tsakok
Raoul Tsakok
DRAGON SHAREHOLDER:
/s/ Raoul Tsakok_______________________________________
Raoul Tsakok 100 shares
Schedule 1.08
GEOLOGY OF GOLD DEPOSITS IN SHAANXI PROVINCE, CHINA
TABLE OF CONTENT
1. INTRODUCTION
2. REGIONAL GEOLOGY OF GOLD PROVINCE
2.1. Xiao Qinling Gold Province
2.2. Qinling Gold Province
2.3. Southern Shaanxi Gold Province
3. Ore District Geology of Gold Deposits
3.1. Shaliang Zi Silver-Gold Multi-Metallic Ore Deposits
3.2. Northern Xunyang Gold Ore Field
3.3. Wangjia Ping - Xinchang Copper Ore Deposit
3.4. Anjia Qi Gold Deposit
3.5. Shuimo Ping Au-As Ore Deposit
3.6. Yinpan Ag-Sb Ore Deposit
3.7. Aigao Gou Gold Ore Deposit
3.8. Huangbai Yuan Gold Depositt
3.9. Yingchang Gou - Gumu Gou Multi-metallic Ore Deposit
3.10. Huangjinmei Gold Ore Deposit
3.11. Shiquan Yangpin Wuan Gold Ore Deposit
3.12. Taiyu Gold Deposit
TABLES
TABLE 1. Summary of gold ore properties in Shaanxi province, China
ILLUSTRATIONS
FIGURE 1. Regional geological setting of gold deposits in Shaanxi Province,
China
FIGURE 2. Location of gold ore deposits in southern Shaanxi Province,
China.
1. INTRODUCTION
Most multi-metallic and gold deposits in Shaanxi province, China, are
located in the Qinling mountain belt and surrounding regions (Figure 1). The
gold deposits can be divided approximately into three gold provinces, namely
Xiao Qinling, Qinling, and Southern Shaanxi gold provinces. The No. 12 gold
property is located within the Xiao Qinling gold province, the Qinling gold
province include the No. 1, 4, 5, 6, 7, 8, and 10 gold properties, and the other
ore properties of No. 2, 9, and 11 belong to the Southern Shaanxi gold province
(Figure 1).
2. REGIONAL ORE GEOLOGY OF GOLD PROVINCES
2.1. Xiao Qinling Gold Province (No. 12)
The Xiao Qinling gold province, located between Tongguan in Shaanxi and
Lingbao in Henan province (Figure 1), is currently the second largest gold
producing area in China. Annual production is about 15-23 t Au. The Xiao Qinling
area is underlain by gneiss, marble, quartzite, migmatite, and amphibolite of
the Late Archean Taihua Group. Indosinian alkalic porphyries and dykes and
Yanshanian granites are widespread. The Wenyu granite (just west of Tongguan)
intruded the central part of the gold-rich area, and is exposed over an area of
about 20 km2. Regional structures are dominated by the E-W-trending,
north-dipping, 60-km-long Maxundao deep fault zone (from Tongguan to Lingbao).
A series of large gold deposits, with total resources of 300-450 t Au, occur at
intersections of second-order WNW-EW-striking faults with NE- and NW-striking
faults to the north of the first-order Maxundao fault zone. From west to east in
the Xiao Qinling gold province, gold deposits hosted in rocks of the Taihua
Group are concentrated in three gold fields, i.e., the Tongyu, Wenyu and gold
fields. A series of 4- to 20-m-wide and 4-km-long quartz veins lie within
second-order faults. Lesser amounts of gold occur in altered rocks along
ductile-brittle shear zones and in breccia bodies. More than 1,200 gold-bearing
quartz veins have been discovered in this part of the Qinling gold province.
Ores are noted to contain pyrite, galena, sphalerite, and minor magnetite,
scheelite, wolframite, molybdenite, stibnite, pyrrhotite, and gold. The gangue
minerals comprise quartz, calcite, ankerite, minor rutile, barite, siderite, and
fluorite. The alteration halos around quartz veins or shear zones comprise
mainly quartz, sulfide minerals, white mica, and carbonate minerals, with lesser
chlorite, epidote, and biotite.
A few large gold deposits in areas of Proterozoic basement in the Xiao Qinling
area, i.e., Kangshan, Shanggong, and Qiyugou, are controlled by a group of
NE-striking faults and shear zones, which are the second-order structures to
another major E-W-striking fault zone. The Shanggong ( 30 t Au) and Kangshan
( 20 t Au) deposits are located in the 33-km-long, NE-trending Kangshan-Qiliping
ductile-brittle shear. Mineralization is hosted in Mesoproterozoic felsic to
intermediate volcanic rocks. The steeply dipping orebodies are 250- to
750-m-long and 1- to 2.8-m-wide veins filling brittle structures, lenses in
tension gashes, alteration bands along shear zones, and brecciated country rock.
The ores commonly contain anomalous Ag, Te, and Pb concentrations. Alteration
halos around the orebodies are characterized by a 1- to 3-m-wide proximal
sulfide-ankerite-muscovite zone, a 1- to 20-m-wide
pyrite-ankerite-muscovite-chlorite transitional zone, and a 50-m-wide distal
chlorite-calcite zone.
2.2. Qinling Gold Province (No. 1, 4, 5, 6, 7, 8, and 10)
In the Qinling gold province, to the west of the Xiao Qinling gold
province, many recently discovered orogenic gold deposits occur in the Qinling
Mountain (Figure 1). The ores are confined to an ENE trending belt of Devonian
and Carboniferous flysch, which was highly-deformed and regionally-metamorphosed
during Indosinian collision between the North China and Yangtze cratons.
Granites, mainly granodiorites and monzogranites, also were intruded throughout
the western Qinling province between 240 and 180 Ma. The belt extends from near
Lixian in Gansu Province to Zhenan in Shaanxi Province (Figure 2), over an area
600 km long and 3 km wide. A resource exceeding 300 t Au has been identified in
the Liuba Pangjiahe, Baguamiao, Shuangwang, and Maanqiao orogenic gold deposits
(Figures 1 and 2), as well as many smaller deposits. The major ore bodies are
localized by the intersection of NE and NW structures with the regional
EW-WNW-striking fold and shear zones, mostly dipping 50-70N. Gold occurs in
small quartz stockworks and veinlets along major ductile shear zones (e.g.,
Baguamiao), disseminated in wall rocks along brittle fractures in hornfels zones
(e.g., Liuba), or in large breccia zones (e.g., Shuangwang).
2.3. Southern Shaanxi Gold Province (No. 2, 3, 9, and 11)
The southern Shaanxi Gold Province is located tectonically in the eastern
part of Liuba-Baihe rift-sedimentary basin, at which the southern Qinling
Indosinian fold belt merges with the northern Daba Shan fold belt and the
northern margin of the Yangtz platform. Multiple stage structures on different
scales were developed because of the late Caledonian regional uplift, the
horizontal shearing of Hercynian extension, Indo-China orogenesis, and
Indo-China-Yanshanian thrust faulting. Gold ores are mainly hosted by
carbonate, siliciclastic, tuffaceous sedimentary or meta-sedimentary rocks,
particularly argillaceous limestone, calcareous sillstone, and silty argillite
of early Paleozoic to Triassic age, controlled by secondary geological
structures such as folds, faults, and shear fractures. The gold properties No.
2, 9, and 11 are located within this gold province (Figures 1 and 2). Though the
property No. 3 is also in the southern Shaanxi province, it is located
tectonically in an area called Chuan-Shaan-Gan gold triangular zone.
3. ORE DISTRICT GEOLOGY OF GOLD DEPOSITS
The available geology features of individual gold ore deposits are
described in the following section. The order or number of each ore deposit is
labeled the same as in Figures and 2 (see Table 1 for other information of these
gold deposits).
3.1. Shaliang Zi Silver-Gold Multi-Metallic Ore Deposits
This ore deposit is located in the Qinling gold province, along the both sides
of the Shang-dan fault. Major exposed formations consist of amphibolite, marble,
and argillaceous meta-sandstone, calcareous sillstone, and quartz
meta-sandstone. Shear zones were well developed locally and folds are complex.
3.2. Northern Xunyang Gold Ore Field
The gold field geologically is located in the eastern part of Liuba-Baihe
rift-sedimentary basin (Southern Shaanxi gold Province). The multiple geological
events provided the environment for the gold and other ore mineralizations. The
northern gold mineralization belt is 55-km long in east-west direction and 5-8
km wide, mainly controlled by fracture zones associated with Nanyang fault.
Three gold ore deposits, Xiaohe, Huijia Gou, Qingtong Gou deposits, and seven
gold ore sites occur in this major metallogenic belt. The southern belt is about
25-km long in east-west direction and 2-3.5 km wide, mainly controlled by upper
Silurian silty phyllite. Along the southern wing of the Nangyang Shan
synclinorium, the Xiangling gold deposit, Shuishi Gou, Gongjia Shan, Caojia Gou,
and Jiaosha Zai gold ore sites occur in this belt. For Huijia Gou and Xiaohe
gold deposit, gold-bearing minerals are pyrite and asernopyrite, gold occurs
mainly as submicron grains in host minerals, and some in interstititial spaces
between mineral grains or in microfractures, and the hosting rocks are silty
phyllite, quartz/dolomite vein, and breccis, having features of "Carlin-type"
gold deposits. Preliminary dressing test results in a refined-gold grade of 45
g/T from the original grade of 3.2 g/T, with 80% recovery. Large Hg-Sb and
Pb-Zn ore deposits occur in the ore field, associated with the gold
mineralization zones.
Ore bodies vary in shape and size, normally from tens upto two hundred meters
long and one meter thick, occurring along bedding or in fracture zones.
Controlled gold reserve is 14.58 tonnes of grade C+D+E (80x80 m or coarser ore
control), with gold grade of 0.8-56 g/T. Additional perspective potential gold
resource is speculated as 117 tonnes.
3.3. Wangjia Ping - Xinchang Copper Ore Deposit
It is located tectonically in the Chuan-Shaan-Gan Triangular zone, within the
Guanping-Yangpingguan brittle-ductile deformation zone. The upper Proterozoic
marine-volcanic sediments were exposed in the area, with intrusions of quartz
diorites. Alterations that are well consistent with the copper anomalies occur
with high concentration, well-zoned, in a large area. About 10 sites of
multi-metallic ores have been discovered.
3.4. Anjia Qi Gold Deposit
This gold ore deposit is controlled by the Shangdan fault and the secondary
fracture and foliation zones with east-west strike. The eastern part dips 70-85
N and the western part dips 60-82 S. Eight gold ore bodies were discovered in
the district.
3.5. Shuimo Ping Au-As Ore Deposit
The ore deposit is located within the occurrence zone of Caboniferous slates and
Devonian argillaceous slates, controlled by the Guanlingzi - Dashishang fault.
The Au-As anomaly occurs in zones intensively.
3.6. Yinpan Ag-Sb Ore Deposit
The Changpin-Yakoushi fault cut through the ore district in east-west direction.
The middle to upper Devonian and lower Triassic carbonaceous clastic rocks are
extensively exposed on the northern side of the fault and low-grade middle-upper
Silurian meta-clastic rocks occur in the southern wing of the fault. The
Guandoushan granites and Jiuzigou granitic porphyry occur in the region. Various
types of veins were well developed and ore alternations occur in zones.
3.7. Aigao Gou Gold Ore Deposit
A gold-bearing structured breccia zone extends 12 km with a width of 10-500 m
in the area.
3.8. Huangbai Yuan Gold Dpeosit
The gold district is located in the middle part of the Hercynian - Indosinian
gold mineralization zones in Southern Qinling. The exposed formations include
Devonian clastic rocks and carbonates, and lamprophyre veins also occur. The
region has undergone strong mineralization and tectonic activities with good
zonation of gold anomaly. Gold mineralization zone is 12 km long, controlled
by brittle-ductile fractures and along-bed shear structures.
3.9. Yingchang Gou - Gumu Gou Multi-metallic Ore Deposit
This ore deposit is located in the eastern part of the Pb, Zn, Au, Hg, Sb
mineralization belt of the Indosinian Qinling fold belt. The Silurian -
Carboniferous clastic and limestone were exposed in the region with
well-developed E-W extending folds and faults. The gold-mineralization was
controlled by formations, folds, and fault breccia zones.
3.10. Huangjinmei Gold Ore Deposit
No geology information is available. Five ore bodies were discovered with length
of 60 - 890 m and thickness of 0.56 - 6.18 m, extending in depth of 126 - 493 m.
3.11. Shiquan Yangpin Wuan Gold Ore Deposit
The ore-bearing formations are the Silurian Meiyazi group. Ore bodies occur in
the carbonaceous silicalites, meta-clastic rocks. Gold ores are mainly hosted in
sulphide-bearing two-mica quartz schist and carbonaceous two-mica quartzite.
Gold-bearing minerals are pyrite, quartz, chalcopyrite, and pyrrhotite. Wallrock
alternations mainly are silicification and pyritization. Near the surface were
discovered three gold-mineralization zones with eight ore bodies. The ore bodies
have 350 - 1300 m long, 0.4 - 7 m thick, with an average gold grade of 1.0 - 11
g/t.
3.12. Taiyu Gold Deposit
The ore deposit is located in the southern wing of the Dayueping - Jinnuoban
fold. The mainly exposed rocks include Taihuaqun group. The magmatites are
mainly acidic and intruded as plutons. Also basic magmatites occur in veins.
Faults and fractures are the major ore-control structures in NE, near SN and EW
strikes. The SN group of structures was most developed, in which most ore bodies
occur. In part of the whole region, three gold ore quartz veins were discovered
with control length of 700 - 900 m. Ore bodies have been delineated in the three
veins with thickness of 0.5 - 2 m, length of 60 - 90 m, and average gold grade
of 8-25 g/t.
GOLD ORE DEPOSITS IN SOUTHERN SHAANXI PROVINCE, CHINA*
*see map for ore deposit numbers and locations
(1 t = 32151 oz = 2681 lb; 1 oz = 31.103 g; t - tonne; oz - ounce; pound - lb)
# NAME RESOURCE / RESERVE PREVIOUS WORK FUTURE WORK
------------------ ----------------------------------------- --------------------------------- ----------------------
1 Shaliang Zi Ag- Three paralleling E-W Au-Ag-Cu 1:10,000 Aditting 500 m,
Au Multi- mineralization zones; about 20 Au- geological and ore trenching 5000 m3,
metallic Ore mineralization sites; Locally estimated deposit survey geochemical
Deposits D-E grade gold reserve of 50 T (1.60 prospecting section
Exploration, MILLION OZ). of 20 km.
Zhouzhi County (type ?)
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
2 Nothern Coarsely controlled gold reserve 14.6 T District Densify deep
Xunyang (0.45 MILLION OZ) and perspective gold geochemical gold controls, local
Deposits resource of 117 T (3.7 MILLION OZ) prospecting; gold detailed exploration;
Exploration (type: likely lode and Carlin type) ore deposit survey drilling 8000 m;
pitting 4000 m;
See " (Arsenic micro-grained disseminated trenching 5000 m3;
PRELIMINARY gold ores)
EVALUATION
REPORT ON THE
NORTHEN
XUNYANG GOLD
FIELD, SHAANXI,
CHINA" for details
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
3 Wangjia Ping - 8 Cu ore bodies with grade of 1.24- drilling of 6080 m, Drilling 10,000 m,
Xinchang 5.34%, average 3%. Controlled C, D, aditting of 2104 m, pitting 8000 m,
Copper Ore E grade Cu of 0.11 MILLION T (294.9 trenching of 16000 trenching 6000 m3
Deposit MILLION LB); perspective Cu resources m; 1:10000 with geophysical and
Exploration, of 0.6 MILLION T (1,608.5 MILLION LB) comprehensive geochemical
Ningqiang Cu, 20 THOUSAND T (53,619,000 LB) Pb- geophysical explorations.
County Zn, minor Au-Ag ores. (type ?) prospecting of 28
km2 and
geochemical
prospecting of 35
km2.
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
4 Aijia Qi Gold 8 delineated gold ore bodies with Geological survey; Drilling 10,000 m,
Ore Exploration, length of 200-1528 m and thickness of identification of pitting 5000 m,
Zhouzhi County 0.8-4.8 m; gold grade - 3.46-28.33 g/t, geological trenching 50,000 m3
Ag grade - 18.40-96.44 g/t; controlled structures, for surface and deep
gold resource 24 T (0.77 MILLION OZ); characteristics of controls.
50-T (1.6 MILLION OZ) perspective gold rocks and minerals
resource and 15-T (0.48 MILLION OZ) and dressing and
recoverable gold. recovery.
(type: fault and foliation controlled)
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
5 Shuimo Ping Sb- Delineated 5 ore blocks of 1000-3000- 1:50,000 regional Drilling 4000 m and
Au-As Ore m long, 400-m wide, and 35 Sb-Au-As survey and aditting 2000 m.
Deposit mineralization zones of 120-400-m 1:10,000
Exploration long and 1.72-7.21-m thick; Sb grade geological mapping
of 0.51-41.91%, gold grade of 0.30- and geochemical
21.58 g/t, and As grade of 5-36%; prospecting in
perspective controllable 0.1 million t major
(268.0 MILLION LB) Sb resource and 6-T mineralization
(0.19 MILLION OZ) gold resource. (type: zones; preliminary
fracture controlled) trenching, aditting,
and drilling;
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
6 Yingpan Ag-Sb 16-km-long and 5-km-wide Systematic Drilling 4000 m,
Ore Exploration, mineralization zone; one Ag-Sb and 1:50,000 and pitting 2000 m, and
Liuba County one Ag-Cu ore deposits with multiple 1:10,000 trenching 6000 m3.
mineralization sites; controlled 170-T geochemical and
(5.4 MILLION OZ) Ag reserve with geological
average grade of 386-485 g/t, 20,000 T measurements;
(53.6 MILLION LB) Cu reserve with of 1300 m and
average grade of 1.69-4.3% and 7200-t trenching of 15000
Sb with average grade of 1.81%; m3.
perspective reserves of 2000-T (64.3
MILLION OZ) AG, 0.3 MILLION T (804.2
MILLION LB) CU, 0.1 MILLION T (268.1
MILLION LB) SB, AND 5-T (0.16 MILLION
OZ) GOLD. (type ?)
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
7 Aigao Gou Gold 10 T (0.3 MILLION OZ) of D+E grade Trenching Experiments on ore
Mine gold reserve; 3.3 million t of ores with discovered the 12- dressing and gold
Exploration and average grade of 3.6 g/t km-long, 10 to recovery; exploration
Development 500-m-wide gold- and mining
(type:?) bearing zones; engineering;
adits were partly developing mining
done in middle parts; factory
small scale
of heap leaching
was conducted on
surface gold ores.
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
8 Huangbai Yuan E-W 15-km-long and S-N 2-km-wide 1:50000 regional Drilling 2500 m and
Gold Ore mineralization zone; a number of pyrite geological survey aditting 800 m.
Exploration, and magnetite mineralization and and geochemical
Taibei County quartz veins, bearing gold with grade of prospecting;
0.3 - 126.03 g/t; delineated 4 ore trenching and
blocks with length of 30-88 m, aditting in
thickness of 2-5m, and grade of 2-4 g/t. mineralization
perspective gold reserve 5-10 T (0.16 - zones.
0.32 MILLION OZ).
(type: hydrothermal veins)
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
9 Yinchang Gou - Many Cu (Ag), Pb (Zn) ore bodies; Test and Drilling 20,000 m,
Gumu Gou Cu- seven ore bodies occur in eastern part verification of pitting 10,000 m,
Ag Multi- of mineralization zone, with length of anomalies; local trenching 50,000 m3;
metallic Ore 100-1000 m, thickness of 1-5.22 m, and survey and geological,
Deposits Pb grade of 3.395-36.38%, Cu grade of explorations. geophysical and
Exploration, 0.2-5.32%, Ag grade of 20-474 g/t; Co- geochemical
Shanyang occurrence of Ni, Co etc ores; prospecting;
County perspective of 1-2, large to middle petrologic and
scale, Cu-Ag ore deposits. mineral
measurements and
(Type: formation, fold and fault assays.
controlled)
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
10 Huangjing Mei Five delineated gold ore bodies with Conduction of ore Pitting 800 m,
Gold Ore length of 70-890 m, thickness of 0.56- district survey; trenching 6000 m3 for
Exploration, 6.18 m, extension of 126-493 m, and identification of ore body control and
Ningshaan grade of 2.75-8.49 g/t; D+E grade gold geological gold reserve; feasible
County reserve of 5 T (0.16 MILLION OZ) structure, to build 10,000 t/year
characteristics of heap leaching, or 50
(type ?) rocks and minerals, t/day flotation.
and ore dressing
and recovery.
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
11 Shiquan County Delineated two major gold Surface trenching; Ore engineering
Yangpingwuan mineralization zones and 8 ore bodies, the total control 4000 m. control in depth.
Gold Ore with potential gold resources of 40 t lengths of the
Deposit (1.28 million oz) claimed by the bodies are about
original report, with average grade of
1.2 - 3.9 g/t. However, with about
4000 m control length of ore bodies,
the gold resource would only about
21.6 T (0.69 MILLION OZ) if they extend
about 500 m in depth.
(sediment-hosted gold type)
-- ------------------ ----------------------------------------- --------------------------------- ----------------------
12 Deposit Delineated three gold ore veins; The
Taiyu Gold accumulative length of ore bodies in
the three ore veins is about 380 m, the
average thickness is about 0.4 m, and
the average grade is 14.5 g/t. If the
extension of ore bodies in depth is 5
times of its horizontal extension, then
the total gold resource would be about
11 T (0.36 MILLION OZ). Near surface
gold ores have been mined by local
people.
-- ------------------ ----------------------------------------- --------------------------------- ----------------------