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Exhibit 8
Opal Option to Purchase Agreement
April 10, 1996
and
Prospector's Agreement
October 1, 1993
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THIS AGREEMENT effective as of the 10th day of April, 1996 is made
BETWEEN;
OKANAGAN OPAL INC., a company duly incorporated under the laws of the
Province of British Columbia, having an office at 000 Xxxxxxxx Xxxxxx,
in the City of Revelstoke, British Columbia
(hereinafter referred to as "OOI")
OF THE FIRST PART
AND;
CANADIAN NORTHERN LITES INC., a company duly incorporated under the
laws of the State of Texas, in the United States of America and having
an office located at 000 Xxxxxxxx, Xxxxx 000, XXXXXX XXXXX, XXXXXXXXXX
00000
(hereinafter referred to as "CANADIAN")
A. Okanagan Opal Inc., under and subject to the terms
and conditions of the October 1, 1993 created Prospectors Agreement, has
acquired a legal and equitable 100% right, title and interest in and to the
Xxxxxxx and Xxxx mineral claims located in the Vernon Mining Division of British
Columbia which constitute the Xxxxxxx Property as described in Schedule "A"
attached hereto ("the Property"), subject only to the obligations expressed
therein;
B. Canadian desires to acquire a sole and exclusive Option to Purchase the
Xxxxxxx Property from Okanagan Opal Inc. and is prepared to pay the full
purchase price demanded for the Xxxxxxx-Property by OOI, being $8,000,000.00 and
20% of outstanding shares of Canadian; however, Canadian wishes first to see
further development of the "opal deposit" and the related "opal business"
currently being developed by OOI; and if Canadian wishes, to have the
opportunity to see further exploration work conducted on the property in order
to further define the full economic potential of the opal deposits which occur
on the property prior to Canadian Exercising the Option to Purchase the Xxxxxxx
Property.
C. Therefore, in a Joint Letter of Intent signed January 7, 1996, between OOI
and XXX XXXX (Public Company) now known as "Canadian", the intent and integrity
of which will survive the signing of this agreement, insofar as may be required
for the interpretation only of the terms of this agreement, where the context of
the Joint Letter of Intent does not indicate a direct contradiction of the terms
of this agreement, Okanagan Opal Inc. has agreed to grant an option to Canadian
whereby Canadian can purchase all of OOI's interest in the Xxxxxxx Property in
accordance with and under the terms of this "Option to Purchase Agreement".
Canadian is prepared to make "Option Payments" and other payments and
commitments to OOI in order to maintain a sole and exclusive "Option to
Purchase" for the given period of time and under the terms and conditions as
hereinafter described.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the terms,
conditions, covenants, representations, promises, warranties and agreements
hereinafter set forth and made in mutual consideration each to the other and in
reliance thereon; and in consideration of the sum of ten dollars ($10.00) each
to the other paid, the receipt of which is mutually acknowledged; and for other
good and valuable considerations hereinafter contained, the sufficiency of which
is mutually acknowledged and accepted, the parties agree as follows:
1.0 DEFINITIONS
1.1 For the purposes of this Agreement the following words and phrases shall
have the following meanings;
a) "Agreement" means this Option to Purchase Agreement, as the same may
be amended, supplemented or modified from time to time.
b) "Property" means those certain mineral claims which are listed and
shown in Schedule "A" annexed hereto.
c) "Option" means the option granted by OOI to Canadian to acquire a one
hundred percent (100%) right, title and interest from OOI in and to
the Property in accordance with specified terms and conditions of this
agreement and the Prospectors Agreement.
d) "Option Period" means the period during the term of this Agreement
from Commencement Date hereof up to and including the date of
"Exercise of the Option", or the earlier termination of this
Agreement.
e) "Commencement Date" is the date first appearing above.
f) "Option Term" is the period of time commencing on the Commencement
Date and ending January 15, 1998
g) "Termination Date" is January 15, 1998, or as otherwise expressly
provided for herein.
h) "Exercise of Option to Purchase" means that Canadian having been
provided ample opportunity prior to the Termination Date to assess the
Property and the related "Opal Business" in order to determine and
resolve its interest in and desire to purchase the Xxxxxxx Property;
will, prior to the expiry of the Option Term, make the "Initial
Purchase Payment" to OOI and will declare in writing its "Intent to
Purchase" the Xxxxxxx Property in order to "Exercise the Option to
Purchase" a full 100% interest in the property in accordance with the
terms and conditions of the Agreement, including the obligation to
complete OOI's obligations under the Prospector's Agreement.
i) "Payment(s), means shares or cash payable to OOI under the terms and
conditions of this Agreement.
j) "Shares" means common shares, share options, share purchase warrants
or other stock instruments which might be presently authorized or
imminently contemplated for acquisition, allocation or distribution to
the Company, Canadian.
k) "Minerals" means those substances defined as minerals under the
Mineral Act of British Columbia which includes all metallic and
non-metallic minerals; and for the purposes hereof specifically
includes "Precious Opal" and the rocks in which they are hosted and
any associated minerals which might be of economic value; and includes
those rocks which occur on the claims which might be required for use
in the mining, concentrating and disposal of waste or tailings related
to production from the property; or, rocks and minerals which
themselves may have a market value as an Industrial Mineral as
interpreted under the Mineral Act.
l) "Exploration and Development" means all direct or indirect
examination, interpretation and analysis conducted on Canadian's
behalf and intended to determine and fully evaluate the economic
potential of any mineral deposits found on the Property and the
preparation of those deposits for production.
M) "Exploration and Development Expenditures" means all expenses incurred
in direct connection with conducting pre-approved, budgeted
exploration and development programs conducted on the Opal Project at
the request of and deemed to be for the purpose of allowing Canadian
to assess the Opal Business.
n) "Exploration and Development Programs" means plans, including budgets,
for every kind of work done on or in respect of the Opal Project by or
under the direction of OOI for assessment of the
Opal Business for the purposes of Canadian and without limiting the
generality of the foregoing, includes geophysical, geochemical,
geological surveys and such other physical and technical fieldwork
studies and mapping that are necessary to explore the Property,
including drilling, surface and underground exploration and
development, designing, examining, investigating, interpreting all
information and data gathered related to the evaluation of the
economic potential of the Property and the Opal Business and all other
work usually considered to be development and evaluation work
conducted for the purpose of determining the economic viability of the
Opal Business.
o) "Production" or "Mining" means the act by the parties hereto of
recovering marketable minerals through excavation and processing
activities conducted on the Property.
p) "Operator" means OOI or its appointed representative under this
Agreement.
q) "Earned Interest" or "Retained Interest" means a percentage ownership
in the Property as may be deemed to be held from time to time by the
parties hereto under the terms of this Agreement; with the
understanding that these Interests are "Participating Interest" as
defined below.
r) "Participating Interest" except as otherwise provided herein, means
that the party owning such interest must contribute its proportionate
share of the opal business costs in order to maintain such interest
and that party would be subjected to dilution of its deemed interest
in the property for non-participation on those costs.
s) "Dilution" means to have ones earned or retained interest reduced in
accordance with a dilution formula to be adopted from a dilution
clause generally accepted in the industry.
t) "Joint Letter of Intent" means that document jointly signed on January
7, 1996 which outlines the intent upon which this "Option to Purchase
Agreement" has been based; a copy of which is included herein as
Schedule B.
u) "Prospectors Agreement" means that Agreement between the original
prospectors and Okanagan Opal Inc. signed on October 1, 1993; a copy
of which is included herein as Schedule C, as amended by the document
included herein as Schedule D.
v) "Opal Business" means the business of mining, sorting, concentrating,
grading, cutting, processing and mounting opal from the Xxxxxxx
Property to create opal product and further means the business of
selling rough opal or opal product at the wholesale and/or retail
level as is deemed appropriate from time to time; which is being
developed by and for the benefit of the parties hereto. Under this
Agreement Canadian does not acquire an interest in the Company
"Okanagan Opal Inc." but will participate in the Opal Business which
OOI is developing except as expressly described in paragraph 6.7.
w) "Net Profits" and "Net profit after taxes" means the residual amount
of the gross revenue generated by the opal business which remains
after the sale of opal product produced from the Xxxxxxx Property
after all operating costs, depreciation, capitalized exploration and
development costs and
applicable taxes, including corporate income taxes, have been
deducted.
1.2 Included Words: This Agreement shall read with such changes in gender or
number as the context shall require.
1.3 Headings: The headings to the articles, paragraphs parts or clauses of the
Agreement are inserted for convenience only and shall not affect the
construction or intent hereof.
1.4 References: Unless otherwise stated, a reference herein to a numbered or
lettered article, paragraph, clause or schedule refers to the specific item
bearing that number or letter in this Agreement. A reference to "this
Agreement", "hereof", "hereunder", "herein" or words of similar meaning, refer
specifically and exclusively to this Agreement including the schedules hereto,
together with any amendments thereof.
1.5 Schedules: the following schedules are incorporated into this Agreement by
reference;
Schedule Description
-------- -----------
A Property Description
B Joint Letter of Intent
C Prospectors Agreement
D Amendment to the Prospectors' Agreement
1.6 Severability: If any provision of this Agreement is or shall become illegal,
invalid, or unenforceable, in whole or in part, the remaining provisions shall
nevertheless be and shall remain valid and subsisting and the said remaining
provisions shall be interpreted considering the original intent of the whole
Agreement and will be construed as if this Agreement had been executed without
the illegal, invalid or unenforceable portion.
2.0 REPRESENTATIONS AND WARRANTIES
2.1 OOI makes representation and warrants to Canadian that the mineral claims
comprising the Property are in good standing as of the date hereof; and that-OOI
is the legal and beneficial owner of the Property having complied with the terms
and conditions contained in the Prospectors Agreement; that OOI has the right to
enter into this Agreement and to dispose of the Property; that OOI has good
title to the Property; and that the Property is clear of encumbrances, save the
royalty requirement under the Prospectors Agreement and the Property is clear of
adverse claims or challenges.
2.2 Canadian has or shall have at the requisite times the financial resources to
discharge their obligations in respect to this Agreement. It is intended by the
parties that Public funds raised by Canadian prior to exercise of this Option to
Purchase shall be used primarily for conducting the required engineering or
exploratory programs to determine viability of exercise of this option and
secondarily for day to day operations of Canadian and for accumulating funds for
purchase of the Xxxxxxx Property.
2.3 The parties will diligently and in good faith perform their duties and
obligations under this Agreement in keeping with good industry standards and in
the event of a party conducting or supervising Exploration and Development, then
it shall conduct or supervise the same in a careful, diligent, efficient and
professional manner, shall file eligible work for assessment credits with the
appropriate authorities as required to maintain the Property in good standing
under the terms and conditions of the Agreement.
2.4 OOI will release to Canadian and the Operator copies of all available data
and information with respect to the Property including copies of all reports,
maps, analytical/mineralogical results and other technical data as it becomes
available from time to time.
2.5 OOI will provide assistance to Canadian in the promotion of Canadian as a
publicly traded company, and will give all reasonable truthful declarations and
data and estimates as may be required for that purpose.
3.0 OPTION CONSIDERATIONS
3.1 Canadian will make payments to OOI as provided for below. The continuation
of the "Option to Purchase Agreement" will be subject to the timely receipt of
all of the "Option Payments" listed below:
a) Interim Option Payment of $10,000.00 due on or before January 17, 1996;
b) Option Payment of $20,000.00 due on or before March 1, 1996;
c) Option Payment of $30,000.00 due on or before March 31, 1996;
d) Option Payment of $100,000.00 due on or before April 30, 1996;
e) Option Payment of $400,000.00 due on or before July 31, 1996;
the option payments so described shall not constitute advances paid toward the
purchase price, and more specifically, shall not constitute part payment of the
payment described in paragraph 4.2(a).
3.2 In addition to the "Option Payments" and the other terms and conditions
contained in this agreement, Canadian will also be required to make the "stock
payment" outlined below on or before two days following execution of this
agreement.
i) On signing and in consideration for signing, this agreement, Canadian
will transfer to OOI at Nominal Value, that number of shares which
represents a full undivided 20% portion of the outstanding issued or
committed shares of Canadian representing a full 20% interest in the
shares of the company after any restructuring or dilution of Canadian
stock, at present represented at not less than 2,000,000 shares out of
total issued shares of 10,000,000;
3.3 Each payment as set out in paragraph 3.1 shall be considered a
non-refundable deposit; however, having paid the full cash and share payments
due by July 31, 1996 Canadian will be deemed to have earned a 20% participating
interest in and to the Xxxxxxx Property and will be eligible to receive a 20%
interest in net profits after taxes from the "Opal Business" after the
commencement date upon execution of this agreement; provided full and final
payment of those cash and share payments due on or before July 31, 1996 (see
Items 3.1 and 3.2 above) are received by OOI.
3.4 OOI as operator and utilizing the Option Payment funds provided under
Paragraph 3.1 will pursue the development of its vertically integrated "Opal
Business" plan in regards to Mining and will pursue product and market
development during the Option Period. Gross revenue generated during the Option
Period will firstly be allocated to the costs associated with those portions of
the "Opal Business" which generated the revenue with any residual revenue being
declared as Net Profits.
3.5 Should the parties hereto, in the interests of speedy completion of the
development of the property decide that additional exploration work, product or
market development, mine expansion, production expansion or other variation or
changes to the OOI "Business Plan" is warranted, the costs of which exceed the
$560,000.00 paid pursuant to paragraph 4.2, then Canadian will be required, with
reasonable notice given under the terms and conditions of this agreement, to
finance these additional costs, and Canadian will receive no further interest in
the project for having provided the additional financing.
3.6 Canadian, at Canadian's sole expense and with OOI as operator; will have the
period of time from commencement of this agreement to January 15, 1998 to
conduct Exploration and Development Programs to assist Canadian in assessing the
overall potential of the Opal Business and to determine whether Canadian plans
to exercise its Option to Purchase.
3.7 During the Option Period OOI or its appointed representative will be the
operator. In consultation with a Consulting Geological /Mining Engineer,
mutually acceptable to Canadian and OOI, the Operator shall determine the
budgets and the details for the Exploration and Development Programs on the
Property which Programs will take into consideration the overall size of the
Property and the diversity of the Opal Business so as to examine all reasonable
exploration targets and business aspects.
3.8 Canadian having fully met or completed its commitments under Section 3.1 and
3.2 to acquire a 20% participating interest in the property would have until
January 15, 1998 the sole right and discretion to, in writing, terminate its
option to acquire any further interest in the property, whereupon this agreement
would terminate and a Joint Venture as evidenced pursuant to paragraphs 3.9 and
3.10 would be created with interest at 80% to OOI and 20% to Canadian.
3.9 Canadian, upon failure to Exercise its Option to Purchase on or before
January 15, 1998, under the terms and conditions-herein outlined; will result in
termination of the agreement. Thereafter an 80% OOI/20% Canadian Joint Venture
would be formed with both parties earned interest, being a participating
interest. OOI would remain as the operator and managing venturer under any joint
venture and said joint venture would be structured in accordance with acceptable
industry standards, including the formation of a management committee.
3.10 Under said 80% OOI/20% Canadian Joint Venture either parties failure to
provide their percentage portion of operating funds to advance the property
development or the opal business, based upon recommendation made by the mutually
appointed independent consultant, or the management committee, will signify an
act of non-participation and will result in the non-participating party being
declared delinquent for failure to perform its financial obligations under the
joint venture. The delinquent party's earned percentage interest in the property
will then be subject to dilution by way of an industry standard "dilution
formula" for non-participations, such standard to be determined in accordance
with paragraph 9.8.
3.11 The parties hereto agree that Canadian will ensure that the board of
directors will consist of not less than 5 individuals and that OOI will have the
right to appoint 2 directors to the board of Canadian.
3.12 In the event that a Joint Venturers interest shall fall at or below 3%, the
Venturer shall have no right to further participate in the "Opal Business" or
Xxxxxxx Property, and shall have been deemed to have transferred its remaining
interest in the Joint Venture and the property to the other Venturer, and the
Joint Venture shall be thereupon deemed to have ceased and dissolved.
3.13 After exercise and completion of "Purchase Obligations", any assets which
may have accrued to OOI during the-period of this Agreement and are not
transferred pursuant to this agreement, if jointly owned, shall be transferred
at fair market value unless otherwise agreed between the parties.
4.0 EXERCISE OF OPTION TO PURCHASE
4.1 On or before January 15, 1998, Canadian having conducted all necessary and
sufficient exploration and development programs, and having concluded all
necessary studies, and having used good and sound business processes and
practices to satisfy itself of the Xxxxxxx Property and Opal Business potential
must make a decision whether or not to "Exercise" its "Option to Purchase". Upon
Canadian having made the decision to "Exercise the Option to Purchase", Canadian
will give notice in writing to OOI of its intent to Purchase the Xxxxxxx
Property under the following terms and conditions and the general provisions of
this Agreement.
4.2 Therefore, on or before January 15, 1998, having made the decision and in
writing the commitment to Exercise the Option to Purchase the Xxxxxxx Property;
Canadian will be obligated to complete the property purchase subject to
termination of the agreement as hereinafter provided, together with such sums or
"interest reductions"
as are set out hereafter which the parties agree are to be considered a true
pre-estimation of costs occasioned by noncompliance, for failure to complete the
purchase under the terms and conditions set forth herein. Canadian, having
exercised it option to purchase would be required to make the following mutually
agreed to and accepted "Purchase Payments" which would be due and payable in
cash to OOI as follows:
a) $1,600,000 due and payable on or before January 15, 1998 to earn an
additional 16% participating interest in the Xxxxxxx Property with
said, additional interest being only a deemed interest subject to a
"interest reduction" reducing this additional interest from 16% to an
earned 5% participating interest in the "Opal Business" from the
Xxxxxxx Property if the full purchase price is not paid as outlined
herein. Canadian, would, having commenced the purchase of the Xxxxxxx
Property, be eligible to receive 36% of the net profits after taxes
from the "Opal Business" as conducted by the operator provided the
next payment towards the full purchase price is received by January
15, 1999 and provided the full purchase price of $8,000,000 is paid as
required herein;
b) $1,600,000 due and payable on or before January 15, 1999 to earn an
additional 16% participating interest in the Xxxxxxx Property with
said additional interest being only a deemed interest subject to a
"interest reduction" reducing this additional interest from 16% to an
earned 5% participating interest in the "Opal Business" from the
Xxxxxxx Property if the full purchase price is
not paid as outlined herein. Canadian would, having continued the
purchase of the Xxxxxxx Property, be eligible to receive 52% of the
net profits after taxes from the "Opal Business" as conducted by the
operator provided the next payment towards the full purchase price is
received by January 15, 2000 and provided the full purchase price of
$8,000,000 is paid as required herein;
c) $1,600,000 due and payable on or before January 15, 2000 to earn an
additional 16% participating interest in the Xxxxxxx Property with
said additional interest being only a deemed interest subject to a
"interest reduction" reducing this additional interest from 16% to an
earned 5% participating interest in the "Opal Business" from the
Xxxxxxx Property if the full purchase price is not paid as outlined
herein. Canadian would, having continued the purchase of the Xxxxxxx
Property, be eligible to receive 68% of the net profits after taxes
from the "Opal Business" as conducted by the operator provided the
nest payment towards the full purchase price is received by January
15, 2001, and provided the full purchase price of $8,000,000 is paid
as required herein.
d) $1,600,000 due and payable on or before January 15, 2001 to earn an
additional 16% participating interest in the Xxxxxxx Property with
said additional interest being only a deemed interest subject to a
"interest reduction" reducing this additional interest from 16% to an
earned 5% participating interest in the "Opal Business" from the
Xxxxxxx Property if the full purchase price is
not paid as outlined herein. Canadian would, having continued the
purchase of the Xxxxxxx Property, be eligible to receive 84% of the
net profits after taxes from the "Opal Business" as conducted by the
operator provided the next payment towards the full purchase price is
received by January 15, 2002 and provided the full purchase price of
$8,000,000 is paid as required herein.
e) The final payment of $1,600,000; for a cumulative purchase payment of
$8,000,000 due and payable on or before January 15, 2002, would earn
Canadian the final 16% interest in the Xxxxxxx Property; would remove
the subject to "interest reduction" under Items 4.1(a) to (d) above
and would trigger the conversion of all of the participating interests
referred to above to fully earned interests in the Xxxxxxx Property.
The payment of the full $8,000,000 purchase price would therefore earn
Canadian a 100% right, title and interest to the Xxxxxxx Property
subject to Prospectors Agreement.
4.3 It is understood and agreed by the parties hereto that, considering the 20%
participating interest in the Xxxxxxx Property earned for the transfer of 20% of
Canadian's shares and considering the cash option payments made under Section 3
above; Canadian can only earn up to an additional 20% interest in and to the
Xxxxxxx Property to hold only a maximum of a 40% participating interest in the
"Opal Business" from the Xxxxxxx Property if Canadian does not fully exercise
its Option to Purchase by paying the full Purchase Price of $8,000,000 on or
before January 15, 2002 Canadian would have the option, at its sole discretion,
accelerate the purchase of the Xxxxxxx Property in order more quickly purchase
the 100% interest in the Xxxxxxx
Property and to then be eligible to earn the full net profits from the full
"Opal Business" as it relates to the Xxxxxxx Property. Once the payment schedule
is advanced all subsequent payments must be equally advanced.
4.4 Canadian, upon raising public funds for the express purpose of purchasing
the Xxxxxxx Property, after those expenses listed in paragraph 2.2 would be
required to have said funds placed into a trust fund with OOI's designated
lawyer, or such party as may be mutually agreed in writing by both parties, to
be designated and held exclusively for that purpose.
4.5 After Canadian has Exercised its option to Purchase the costs of conducting
the "Opal Business" will be proportionately funded by the parties hereto out of
Gross revenue generated by the "Opal Business". The scope of the "Opal Business"
and expansion thereof will be determined by the cash flow generated by the "Opal
Business". The purchase payments to be received by OOI under Section 4.2 are not
expected to contribute to the "Opal Business" operating costs.
4.6 Having Exercised its Option to Purchase the Xxxxxxx Property under 4.2 it is
agreed by the Prospectors and OOI that Canadian will have also assumed the
responsibility to pay the royalties due to the Prospectors under the Prospectors
Agreement. Canadian may elect to do this in one of the following alternative
ways;
a) By making annual "advanced royalty payments" to the Prospectors, at
the same time as the annual purchase payments are made to OOI under
4.2 above, a total of five annual payments each in the sum of
$100,000.00 cash and 30,000 free trading shares of the Company
Canadian for a total "advance royalty buy-out" of $500,000.00 cash and
150,000 free trading shares of the Company, Canadian, or,
b) By making a one time "advance royalty payment" of $750,000.00 cash and
200,000 free trading shares of the Company, Canadian to the
Prospectors at the time the final payment is made towards the purchase
price under 4.2(e) above.
c) By electing to accept and meet any and all of the remaining terms and
conditions under the Prospectors Agreement at such time as Canadian
earns a full 100% interest in the property under 4.2 above.
in the interim period, prior to Canadian having exercised its rights hereunder
to Purchase the Property and to pay out the Prospectors Royalties in advance,
and particularly during the period prior to 1998, it will be OOI's on going
responsibility to make royalty payments to the prospectors in accordance with
the terms and conditions of the Prospectors Agreement. This will be considered
an operating expense and Prospectors Royalties would continue as an operating
expense upon Canadian's election of alternate 4.6(c) above until all royalty
obligations are meet (see iii below).
i) In the event Canadian elects to make five advance royalty payments as
a pay out under 4.6(a) above then these cash and stock payments will
be made in lieu of royalty payments from production.
ii) In the event Canadian elects to make a single advance royalty payment
as a payout under 4.6(b) above then regular royalty payments will be
made from production as an ongoing operating expense in accordance
with the Prospectors Agreement. It is understood and accepted by
Canadian and OOI that this could result in the prospectors receiving
cash and royalty payments which may exceed the original cash payable
under the Prospectors Agreement.
iii) In the event Canadian elects to accept and take on OOI's royalty
responsibilities under the Prospectors Agreement under 4.6(c) above
then Canadian will continue to pay royalties on production under the
terms and conditions of the Prospectors Agreement after having earned
its 100% interest in the property which would be subject to the
payment of royalties until the full amount of the royalty due is paid;
and Canadian will, upon making the final royalty payments from
production, arrange to transfer 300,000 shares of Canadian to the
prospectors so as to meet the obligation which Canadian assumed from
OOI under the terms and conditions of this agreement. Having completed
these payments to the Prospectors, Canadian will be deemed to have met
all of the remaining terms and conditions and requirements including
any and all unpaid Prospectors Royalties relating to the Prospectors
Agreement.
In the event that Canadian fails to complete the property purchase as outlined
in 4.2 above, any and all cash and shares received by the Prospectors as advance
royalty payments would be credited as outlined below; and would be considered as
advances towards the full royalty amounts payable under the Prospectors
Agreement. Thereafter OOI would re-assume the remaining royalty and share
payments due under the terms of the Prospectors Agreement and the royalty
payments would once again become an operating expense until the full amount is
paid out.
- Cash payments made as advance royalty payments will reduce the total
cash amount due dollar for dollar
- share payments made under 4.6 (a) and (b) will be credited on a two
for one basis (ie each share received from Canadian as part of an
advance royalty payment will reduce OOI's ongoing obligation by two
shares).
Canadian will not be allowed to buy-out the Prospectors Royalties in a manner
disproportionate with or in preference to its paid interest earned in the
property from time to time under 4.2 above.
The Prospectors shall acknowledge adhesion to this amendment to the Prospectors
Agreement by signing acknowledgement and agreement to this paragraph 4.6 to be
affixed as Schedule "D" to this Agreement.
5.0 TRANSFER OF TITLE OF MINERAL CLAIMS
5.1 A full 20% participating interest in the Property will be deemed to have
been conveyed and transferred to Canadian effective immediately upon signing
this Agreement; subject only to the terms and conditions as outlined herein.
5.2 A further 5% participating interest in the Property will be deemed to have
been conveyed and transferred to Canadian effective immediately upon having made
each of the required Purchase Payments anticipated under Items 4.2(a) to (d)
above.
5.3 The final 60% participating interest in the Property will be deemed to have
been conveyed and transferred to Canadian effective immediately upon having made
the required final purchase payment anticipated under Item 4.2(e) above.
5.4 As previously outlined in Section 3.0, in the event Canadian provides
funding equal to a minimum of $560,000.00 on or before July 31, 1996 but does
not continue to exercise the option beyond that point; Canadian's earned
interest will be fixed at a maximum of a 20% participating interest level and
the option to Purchase will terminate. A Joint Venture would then be formed
under which the interests of
both parties would be subject to dilution for nonparticipation. OOI would be the
designated operator of the Joint Venture. Budgets would be based on
recommendations made by a mutually designated consultant. Title to the property
would be registered proportionately in the names of the Joint Venture Partners
and would be managed and administered by OOI.
5.5 In the event Canadian fails to complete the purchase of the property after
having Exercised its Option to Purchase and after having made one or more
payments towards the ultimate purchase price as envisioned under Section 4.2
then Canadian's earned interest would be fixed at the maximum of a deemed earned
interest between 25% and 40% depending upon the number of payments made towards
the purchase price; and the Option to Purchase will terminate. The interest in
the Joint Venture would be established in accordance with the following formula;
Venturer's Interest =
Deemed Interest + Actual Contribution of Venturer Total Deemed Interest + Actual
Contribution by both Venturers
times 100
A Joint Venture Partnership would then be formed under which the interests of
both parties would be subject to dilution for non-participation. OOI would be
the designated operator of the Joint Venture. Budgets would be based on
recommendations made by a mutually designated consultant. Title to the property
would be registered proportionately in the names of the Joint Venture Partners
and would be managed and administered by OOI.
5.6 In the event this agreement terminates prior to completion of the proposed
payments as set forth in Paragraph 3. 1, sub paragraphs (a) through (e) and in
Paragraph 3.2 hereof, one hundred per cent (100%) rights, title and interest in
the Property shall revert to OOI; with no interest being retained by Canadian.
5.7 In the period of time between the events specified in paragraph 5.1 and the
event specified in paragraph 4.2(e) the property and "Opal Business" shall
continue to be operated and managed by OOI.
5.8 OO agrees with Canadian that during the period set out in 5.7 that Canadian
will receive its pro-rata share of net profits after taxes, pursuant to the
option, for sales generated by the "Opal Business". The $560,000.00 option
payment received pursuant to paragraph 3~1 will accrue as expenses to OOI to be
deducted from earnings prior to distribution of profits. OOI shall be permitted
to characterize the nature of regulate the sum to minimize payment of taxes and
has deferred expenses against future income over such period of time as shall be
selected by OOI.
5.9 During the period prior to January 15, 1998 the payments received pursuant
to paragraph 3.1 will be utilized to develop the "Opal Business" but shall not
be utilized for any purposes concerned with exploration. Any and all exploratory
functions or engineering studies shall be conducted by OOI under contract to
Canadian, and at the sole expense of Canadian for purposes of determination of
the advisability of exercise of the option herein, or as may be required by
regulatory authorities pursuant to statute. All remuneration accruing to OOI
shall be billed and agreed at prevailing industry rates and in accordance with
good practice and standards as set within the industry or by legislation.
5.10 All corporate and promotional expenses incurred by Canadian shall be
considered as solely to the account of Canadian and not in any way against OOI.
All information obtained as part of the property and project assessment during
the currency of this agreement is to be communicated openly, freely and
completely between-the parties.
6.0 OTHER CONSIDERATIONS & PROTECTION OF THE PARTIES
6.1 The parties hereto agree that each may protect their individual interests
under this Agreement by registering this Agreement or any other document which
they may consider advisable against the titles of the Xxxxxxx Property.
6.2 Canadian hereby.covenants and agrees to indemnify and save harmless OOI,
their successors and assigns, against and from any and all action, damages,
debts, accounts, claims and demands of any nature whatsoever at law or in equity
which may be brought against Canadian arising from the acquisition of the
company Canadian from its previous owners and shareholders; or subsequently as a
result of the day to day business of Canadian as a public company.
6.3 Canadian, hereby covenants and agrees to indemnify and save harmless OOI,
their successors and assigns, against and from any and all action, damages,
debts, accounts, claims and demands of any nature whatsoever at law or in equity
which may be brought against Canadian arising from the acquisition of a
percentage interest in the Xxxxxxx Property and from Canadian's actions or
business dealings after the date first above written.
6.4 The parties hereto agree that during the currency of this agreement Canadian
will have the right, at all reasonable times, but wholly at their own risk and
expense, to examine the property and data therefrom and in particular that
information relating to production from the property and information relating to
the "Opal Business".
6.5 The parties hereto acknowledge that any and all information received must
be treated with discretion and that portions of said information must be
treated as proprietary and confidential in nature and as such said information
is to be retained in the strictest confidence. It is therefore agreed by the
parties hereto that, in order to protect the various rights, interests and
entitlements of each of the parties hereto and in particular to protect the
confidentiality of certain information which will necessarily be disclosed by
and between the parties hereto in order that each might assess and determine
the viability and integrity of their respective roles under the agreement, each
of the' parties hereto will have the right to, in writing, place express and
specific restrictions on the use and dissemination of information which they
feel is of a proprietary and confidential nature and the recipient of said
information will be bound to maintain the confidential and proprietary nature
of such information.
6.6 OOI, or the designated operator, must be given the opportunity and
responsibility to review for accuracy only and the final authority to approve,
change or disapprove of any and all news or information releases about the
property for accuracy only and/or "Opal Business" which are considered by OOI
to be of a promotional or technical nature.
6.7 The "Tourist Segment" of the "Opal Business" as developed to date by OOI
will remain solely the property of OOI. OOI has included in its "tourist
market" development numerous items other than opal from which sales revenue is
generated. The revenues from the "tourist business" which will include some
Okanagan opal products will be solely owned by OOI and Canadian will not
participate in the net profits from this business which will be separately and
clearly documented and accounted for by OOI. Canadian, at its own expense would
have the right at all reasonable times to inspect the books of OOI's tourist
business.
6.8 It will be OOI's intent to pursue its present tourist oriented retail
marketing plan in conjunction with "tourist fee digging". OOI or its assignees
must be deemed to have free and sole rights and exclusive access to "dumped"
materials for "tourist fee digging activities" and will have the right to
freely collect "dumped" material for its sole use and gain in the manufacture
of tourist items and jewelry. OOI would at all times have the right to purchase
rough opal from the operator at fair market value. A "fair market value" will
be determined for the rough opal purchased by the OOI Tourist business based on
the formulas which have been developed for payment of "Prospectors Royalties".
Canadian would not participate in the profits from the "Tourist Business" which
will in itself be a fully integrated "Opal Business" having a base of
operations limited to the Vernon/North Okanagan Area.
7.0 PROPERTY MAINTENANCE/AREA OF COMMON INTEREST
7.1 Prior to the date that the Option to Purchase is fully exercised and prior
to Canadian having earned a full 100% right, title and interest in the property
as herein provided for it is the undertaking of OOI, as the operator, to ensure
maintenance of the mineral claims in accordance with all applicable regulations
during the currency of this agreement and under the terms and conditions
specifically outlined in the Agreement.
7.2 An area of common interest is acknowledged by the parties hereto which
provides for the inclusion under the general terms and conditions of this
Agreement of all properties acquired by the parties hereto within a two and one
half (2.5) kilometer radius around the perimeter of the original claim block;
whether by staking or by option or purchase from others after the commencement
date.
8.0 NOTICE
8.1 Any notice to be given or any delivery to be made hereunder shall be in
writing and shall be deemed to be well, sufficiently and duly given or made if;
a) delivered in person and left with a secretary or other office employee at the
relevant address set forth below; or
b) telegraphed, telexed, faxed or sent by other wire communication and
confirmed by prepaid registered letter; or
c) sent in a prepaid registered letter deposited in a Canadian Post
Office; if sent to Canadian; addressed to it at;
000 Xxxxxxxx
Xxxxx 000
XXXXXX XXXXX, XXXXXXXXXX
XXX 00000
and if sent to OOI; addressed to it at;
Okanagan Opal Inc.
X.X. Xxx 000
XXXXXX, X.X.
XxX 0X0
and any notice or delivery so given or made is deemed to have been received on
the fifth day after mailing thereof if sent by prepaid registered mail, or on
the day of delivery in person, or on the day of telegraphing, telexing or
communication by other wire service, provided that the same is a business day
and if not, on the next business day.
8.2 Any party hereto may from time to time, by notice in writing, change its
address for the purpose of Section 8.0.
9.0 GENERAL
9.1 No party shall have the right to assign all or any portion of its interests
under this agreement without the prior written consent and approval of the
other parties; which consent shall not be unreasonably withheld.
9.2 This Option to Purchase is non-transferable without the written consent and
full approval of OOI. In the event Canadian attempts to sell, transfer or
otherwise convey its rights hereunder to a third party without- first obtaining
written consent and approval from OOI; will result in the full purchase price
immediately becoming due and payable to OOI and any delay or failure to pay the
full purchase price as would then be required will result in immediate
termination of the agreement which could result in penalties resulting in a
loss to Canadian of all or part of the earned percentage interest in the
property from time to time as herein described.
9.3 With respect to the Property, all negotiations, understandings and
agreements, heretofore had between the parties hereto, are merged in this
Agreement which when considered in the context of the Letter of Intent dated
January 7, 1996 (see Schedule B hereto) and in consideration of the ongoing
royalty commitments under the Prospectors Agreement (see Schedule C and D
hereto) solely and completely expresses all of the understandings and/or
agreements had between the parties. This Agreement complete with the attached
Schedules shall supersede and replace any other agreement or arrangement,
whether oral or written heretofore existing between the parties in respect of
the subject matter of this Agreement.
9.4 It is not the purpose of intention of the parties hereto to create, and
this Agreement does not create and is not to be construed as creating, a mining
joint venture, or other partnership, association or any other relationship
rendering either party liable for the debts of the other; save as to the
commitments obliged under the terms and conditions of this Agreement.
9.5 A Joint Venture Partnership will be formed only in the event that the
Option to Purchase is terminated and then only if Canadian has earned a
retained participating interest as provided for in this Agreement.
9.6 This Agreement shall terminate;
a) at the end of the day on which any payment due or obligation required
under Section 3.0 or Section 4.0 of this Agreement has not been paid
or otherwise met; subject only to paragraph 10.1; or
b) On Canadian giving notice of termination to OOI which it shall be at
liberty to do at anytime.
c) As elsewhere herein specifically described for failure to comply with
the terms and conditions of this Agreement.
9.7 Any reference to money amounts in this agreement shall mean lawful currency
of Canada.
9.8 The parties hereto agree that all disputes or adverse claims which arise
with respect to this agreement shall be submitted to binding arbitration before
a single arbitrator, or if the parties cannot agree upon a single arbitrator,
then such arbitration shall be before a board of three
arbitrators and such arbitration shall be in accordance with the provisions of
the Commercial Arbitration Act, Xxxx 221986, and any amendments thereto or
replacements thereof. The cost of arbitration shall be borne by the parties as
the arbitrators may direct.
9.9 The parties hereto, hereby covenant that;
a) no act or thing will be done that will adversely affect the rights,
title or interest of others hereunder,
b) from time to time and at all times required, to do such further acts
and execute such documents as shall be reasonably required in order to
fully perform and carry out and implement the provisions of or the
intent of the agreement.
10.0 ENFORCEABILITY
10.1 Any default or breach or non-performance of any of the covenants,
agreements and conditions to be performed and observed on the part of Canadian
or OOI shall not automatically terminate this agreement and said party will
have thirty (30) days from receipt of written notice of such default, breach or
non-performance in which to rectify same or to have commenced meaningful and
progressive curative action.
10.2 FORCE MAJEURE - Except as provided herein, time is of the essence in this
agreement;
a) Notwithstanding anything herein contained to the contrary, if any of
the parties hereto is prevented
from or delayed in performing any
obligation under this agreement and such failure is occasioned by any
cause beyond said parties control, including, without limiting the
generality of the foregoing, the operation of any law, regulation or
order of the Government or constituted authority, inability to secure
any necessary permit, license or other authorization from the
Government or constituted authority, labour disturbance or dispute,
strike, lockout, riot, explosion, war, invasion, inability to obtain
material, supplies, power, fuel or labour, interference by civil or
military authority or acts of God, then, subject to subparagraph
10.2(b) below, the time for the observance of the condition or
performance of the obligation in question shall be extended for a
period equivalent to the total period the cause of the prevention or
delay persists or remains in effect regardless of the length of such
total period;
b) If any party hereto claims suspension of its obligations as aforesaid,
it shall promptly notify the other parties to that effect and shall
take all reasonable steps to remove or remedy the cause and effect of
the force majeure described in the said notice insofar as it is
reasonably able so to do and as soon as possible.
c) Poor market conditions or other limiting financial conditions
resulting in a lack of ability by Canadian to raise and provide the
funds necessary to make the cash payments required under this
agreement will not be deemed as a Force Majeure but is rather an
economic factor which must be resolved by Canadian.
10.3 This agreement shall enure to the benefit of, and be binding upon the
parties hereto and their respective successors and assigns.
10.4 This agreement shall be governed by and interpreted in accordance with the
laws of the Province of British Columbia and in accordance with acceptable
mineral industry standards.
IN WITNESS WHEREOF THE CORPORATE SEAL of CANADIAN NORTHERN LITES INC. has been
hereto affixed in the presence of its duly qualified officers on such behalf,
all as of the day and year first above written.
The Common Seal of the Company,
CANADIAN NORTHERN LITES INC.
was hereunto affixed in the
presence of;
------------------------------
AUTHORIZED SIGNATORY
------------------------------
AUTHORIZED SIGNATORY
IN WITNESS WHEREOF THE CORPORATE SEAL of OKANAGAN OPAL INC. has been hereto
affixed in the presence of its duly qualified officers on such behalf, all as
of the day and year first above written.
The Common Seal of the Company,
OKANAGAN OPAL INC. was hereunto
affixed in the presence of:
------------------------------
AUTHORIZED SIGNATORY
------------------------------
AUTHORIZED SIGNATORY
SCHEDULE A
To the Agreement entered into between CANADIAN NORTHERN LITES INC. and the
property owners, namely OKANAGAN OPAL INC.; dated April 10/96.
PROPERTY DESCRIPTION
--------------------
XXXXXXX PROPERTY MINERAL CLAIMS
Claim Name Units Record #s Expiry Date
---------- ----- --------- -----------
Xxxxxxx 1 1 302379 July 7, 2003
Xxxxxxx 2 1 302280 July 7, 2003
Xxxx 1 1 307237 Jan. 12, 2003
Xxxx 2 1 307238 Jan. 12, 2003
Xxxx 3 1 307239 Jan. 13, 2003
Xxxx 4 1 307240 Jan. 13, 2003
Xxxx 5 1 307241 Jan. 13, 2003
Xxxx 6 1 307242 Jan. 13, 2003
Xxxx 7 1 307243 Jan. 13, 2003
Xxxx 8 1 307244 Jan. 13, 2003
Xxxx 9 1 307245 Jan. 13, 2003
Xxxx 10 1 318280 June 9, 2003
Xxxx 11 1 307246 Jan. 13, 2003
Xxxx 12 1 307247 Jan. 13, 2003
Xxxx 13 1 307248 Jan. 13, 2003
Xxxx 14 1 307249 Jan. 13, 2003
Xxxx 15 1 307250 Jan. 13, 2003
Xxxx 16 1 307251 Jan. 13, 2003
Xxxx 17 1 307252 Jan. 13, 2003
Xxxx 18 1 307253 Jan. 13, 2003
Xxxx 19 1 307254 Jan. 13, 2003
Xxxx 20 1 307255 Jan. 13, 2003
Xxxx 21 1 307256 Jan. 13, 2003
Xxxx 22 1 307258 Jan. 13, 2003
Xxxx 23* 1 338119 July 16, 2003
Xxxx Fr.* 1 326981 June 17, 2003
Xxxx 2 Fr.* 1 333923 Jan. 26, 2003
Xxxxxxx Fr.* 1 338117 July 16, 2003
Xxxxxxx #2 Fr.* 1 338118 July 16, 2003
Light* 1 342130 Nov. 3, 1997
*These claims, which may acquire some ground as a result of the Section 35
Complaint filed by Okanagan Opal Inc., are considered part of the agreement. It
is not possible at this time to determine how much ground, if any, these claims
presently control or may acquire. See map on Page 2 of Schedule "A" attached.
* Title to these claims is recorded in the name Xxxxxx X. Xxxxx-Xxxxx, Box 298,
Vernon, B.C. and are held in trust by, him for Okanagan Opal Inc. The expiry
dates shown herein assumes acceptance of the application of assessment work
from the 1995 program. The claims are all located and recorded in the Vernon
Mining Division of British Columbia. All claims have been located in accordance
with the requirements of the Mineral Act of British Columbia.
Title to the balance of the claims is recorded in the name of Xxxxxx X.
Xxxxx-Xxxxx and Xxxx Xxxxxxxxxxx of Xxxxxx, British Columbia, and are held in
trust by them for Okanagan Opal Inc. The expiry dates shown herein assumes
acceptance of the application of assessment work from the 1995 program. The
claims are all located and recorded in the Vernon Mining Division of British
Columbia. All claims have been located in accordance with the requirements of
the Mineral Act of British Columbia.
Map of Xxxxxxx Property
Page 1
SCHEDULE 'D'
Being the excerpt from the Option Agreement between OKANAGAN OPAL INC. (OOI)
and CANADIAN NORTHERN LITES INC. (CANADIAN), constituting an amendment to the
Opal claims agreement dated October 1, 1993 generally, and paragraph 3.0
specifically.
4.6 Having Exercised its Option to Purchase the Xxxxxxx Property under 4.2 it
is agreed by the Prospectors and OOI that Canadian will have also assumed the
responsibility to pay the royalties due to the Prospectors under the
Prospectors Agreement. Canadian may elect to do this in one of the "following
alternative ways;
a) By making annual "advanced royalty payments" to the Prospectors, at
the same time as the annual purchase payments are made to OOI under
4.2 above, a total of five annual payments each in the sum of
$100,000.00 cash and 30,000 free trading shares of the Company
Canadian for a total "advance royalty buy-out" of $500,000.00 cash and
150,000 free trading shares of the Company, Canadian, or,
b) By making a one time "advance royalty payment" of $750,000.00 cash and
200,000 free trading shares of the Company, Canadian to the
Prospectors at the time the final payment is made towards the purchase
price under 4.2(e) above.
c) By electing to accept and meet any and all of the remaining terms and
conditions under the Prospectors Agreement at such time as Canadian
earns a full 100% interest in the property under 4.2 above.
Page 2
In the interim period, prior to Canadian having exercised its rights hereunder
to Purchase the Property and to pay out the. Prospectors Royalties in advance,
and particularly during the period prior to 1998, it will be OOI's on going
responsibility to make royalty payments to the prospectors in accordance with
the terms and conditions of the Prospectors Agreement. This will be considered
an operating expense and Prospectors Royalties would continue as an operating
expense upon Canadian's election of alternate 4.6(c) above until all royalty
obligations are meet (see iii below).
i) In the event Canadian elects to make five advance royalty payments as
a pay out under 4.6(a) above then these cash and stock payments will
be made in lieu of royalty payments from production.
ii) In the event Canadian elects to make a single advance royalty payment
as a payout under 4.6(b) above then regular royalty payments will be
made from production as an ongoing operating expense in accordance
with the Prospectors Agreement. It is understood and accepted by
Canadian and OOI that this could result in the prospectors receiving
cash and royalty payments which may exceed the original cash payable
under the Prospectors Agreement.
iii) In the event Canadian elects to accept and take on OOI's royalty
responsibilities under the Prospectors Agreement under 4.6(c) above
then Canadian will continue to pay royalties on production under the
terms and conditions of the Prospectors Agreement after having earned
its 100% interest in the property which would be subject to
Page 3
the payment of royalties until the full amount of the royalty due is paid; and
Canadian will, upon making the final royalty payments from production, arrange
to transfer 300,000 shares of Canadian to the prospectors so as to meet the
obligation which Canadian assumed from OOI under the terms and conditions of
this agreement. Having completed these payments to the Prospectors, Canadian
will be deemed to have met all of the remaining terms and conditions and
requirements including any and all unpaid Prospectors Royalties relating to the
Prospectors Agreement.
In the event that Canadian fails to complete the property purchase as outlined
in 4.2 above, any and all cash and shares received by the Prospectors as
advance royalty payments would be credited as outlined below; and would be
considered as advances towards the full royalty amounts payable under the
Prospectors Agreement. Thereafter OOI would re-assume the remaining royalty and
share payments due under the terms of the Prospectors Agreement and the royalty
payments would once again become an operating expense until the full amount is
paid out.
- Cash payments made as advance royalty payments will reduce the total
cash amount due dollar for dollar
- share payments made under 4.6 (a) and (b) will be credited on a two
for one basis (ie each share received from Canadian as part of an
advance royalty payment will reduce OOI's ongoing obligation by two
shares).
Canadian will not be allowed to buy-out the Prospectors Royalties in a manner
disproportionate with or in preference, to its paid interest earned in the
property from time to time under 4.2 above.
Page 4
The Prospectors shall acknowledge adhesion to this amendment to the Prospectors
Agreement by signing acknowledgement and agreement to this paragraph 4.6 to be
affixed as Schedule 'D' to this Agreement.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
) ---------------------------
--------------------------- ) XXXXXX X. XXXXX-XXXXX
)
--------------------------- )
)
--------------------------- )
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)---------------------------
--------------------------- ) XXXX XXXXXXXXXXX
)
--------------------------- )
)
--------------------------- )
--------------------------------------------------------------------------------
Exhibit 9
Map of Opal Claims
per
April 10, 1996 Agreement
--------------------------------------------------------------------------------
Map of Xxxxxxx Property
--------------------------------------------------------------------------------
Exhibit 10
Opal Claims / Xxxxxxx Project
Exploration Budget
for Third Quarter 1996
--------------------------------------------------------------------------------
XXXXXXX PROJECT 1996
EXPLORATION BUDGET
(Period from June to September)
Phase 1:
Field Management and Administration:
------------------------------------
Y-H Technical Services Ltd. (part time daily) to
a cumulative total of 10 days per month @$300/day $ 3,000
Camp and Field Equipment & Field Supplies Expenses:
---------------------------------------------------
- includes field office, camp trailer, safety gear,
hand tools and equipment, site vehicles (Jeep & ATV),
radio and cell phone, food & general camp supplies
for up to 4 people, first aid and fire fighting
equipment gas and propane, diesel, flagging, topo
thread, office supplies, field books, etc.
31 days per month @ $250/day $ 7,750
Equipment Rentals:
------------------
- 3 water pumps with hoses @ $1,000/mo
- 5,000 waft generator @ $ 500/mo
- 170 cfm compressor c/w
hoses, xxxx xxxxxx, @ $1,700/mo
chisels and oiler $3,200/mo. $ 3,200
Bobcat w/ buckets and breaker (part time) to a
cumulative total of 10 days/mo. (based on $5,000/mo.) $ 1,700
Vehicle (4X4 crew cab or van) ------- $ 1,800
----------
$ 17,450
Wages and Sub-Contracts:
Geologist 21 days/mo. @ $250/day $ 5,250
Geologist 21 days/mo. @ $225/day $ 4,725
Lead hand - $ 4,000
Helper - $ 2,500
Weekend watchman -- part time 4 days/mo $ 750
----------
$ 17,225
Sub Total -- $34,675 per month.
10% Continqency $ 3,465
----------
Monthly Total $ 38,140
Assuming a project duration will be 4 month then total costs for the above
portions of the project will be:
$38,140/mo. X 4 = $152,560 $152,560
Other Costs:
------------
Government Bond and fees - $ 7,500
Airborne Lineation Study Contract - $ 3,000
Grid preparation -
- 50 kilometres of chained & compassed grid - 35 lines @ 50 $ 15,000
metre spacings, - stations on lines @ 10 metre spacings.
Geochemical Analyses -
250 soil geochem $ 6,250
250 rock geochem $ 6,250
Geophysical Surveys (including independent reports)
50 kilometres of magnetometer $ 7,500
50 kilometres of VLF-EM (2 channels) $ 7,500
ground penetrating radar or gravity surveys - test area $ 15,000
Small excavator for exploration stripping -
- 10 days/mo. X $600/day X 4 months $ 24,000
Ongoing Costs: (October 1, 1996 to March 31, 1997)
--------------------------------------------------
Data compilation and report preparations
Geologist -
6 months @ $5,250/mo. $ 31,500
Geologist -
3 months @ $4,725/mo. $ 14,175
Management and Administration - (part time)
6 months @ $1,500/mo. $ 9,000
----------
Sub Total -- $146,675
10% Contingency $ 14,667
Total $161,342
TOTAL PHASE 1 $313,902
Phase 2: (Contingent on Phase 1 results)
Large excavator with rock breaker for bulk sampling
- 10 days @ $1,500/day $ 15,000
Drilling -
Diamond drilling HQ core
- 2000 feet @ $30/ft. $ 60,000
Percussion drilling 6" holes
- 5000 feet @ $10/ft. $ 50,000
Sub Total - $125,000
20% Contingency $ 25,000
----------
Total $150,000
TOTAL PHASE 1 & 2 $463,902
GST $ 32,473
----------
GRAND TOTAL $496,375
--------------------------------------------------------------------------------
Exhibit 11
Specimen Stock Certificate
Canadian Northern Lites, Inc.
--------------------------------------------------------------------------------
Sample Stock Certificate
Front
Sample Stock Certificate
Back
--------------------------------------------------------------------------------
Exhibit F1
Unimex Transnational Consultants, Inc.'s
Audited Financial Statements
as of
December 31, 1995 and 1994
--------------------------------------------------------------------------------
Unimex Transnational Consultants, Inc.
(A Development Stage Company)
Consolidated Financial Statements
December 31, 1995 and 1994
CONTENTS
Accountants' Report ......................................................3
Consolidated Balance Sheets ..............................................4
Consolidated Statements of Operations ....................................5
Consolidated Statements of Stockholders' Equity...........................6
Consolidated Statements of Cash Flows ....................................7
Notes to the Consolidated Financial Statements............................8
XXXXXX BIERWOLF & XXXXXXXX
Certified Public Accountants
00 Xxxx Xxxxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Unimex Transnational Consultants, Inc.
We have audited the accompanying consolidated balance sheets of Unimex
Transnational Consultants, Inc. (A Development Stage Company), as of December
31, 1995 and 1994, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1995, 1994
and 1993, and from Inception on June 18, 1990 through December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Unimex
Transnational Consultants, Inc. (A Development Stage Company) as of December
31, 1995 and 1994, and the results of its operations and cash flows for the
years ended December 31, 1995, 1994 and 1993 and from inception on June 18,
1990 through December 31, 1995 in conformity with generally accepted accounting
principles.
Salt Lake City, Utah
March 8, 1996
Unimex Transnational Consultants, Inc.
(A Development Stage Enterprise)
Consolidated Balance Sheets
December 31,
--------------------------
1995 1994
----------- -----------
Assets
Current assets
Cash $ 2,250 $ -
Prepaid expenses $ 1,700 -
----------- -----------
Total Current Assets 3,950 -
----------- -----------
Other assets
Organization cost (Note 1) 6,000 -
----------- -----------
Total Assets $ 9,950 $ -
=========== ===========
Liabilities and Stockholders Equity
Liabilities $ - $ -
----------- -----------
Stockholders' Equity
Common Stock, authorized
100,000,000 shares of $.001
par value, issued and
50,000 and 30,000, respectively 50 30
Additional Paid in Capital 12,950 2,970
Deficit Accumulated During the
Developmental Stage (3,050) (3,000)
----------- -----------
Total Equity 9,950 -
----------- -----------
Total Liabilities and Stockholders' Equity $ 9,950 $ -
=========== ===========
The accompanying notes are an integral part of these
financial statements.
Unimex Transnational Consultants, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
Cumulative
Total
Since
For the Years ended December 31, Inception
---------------------------------- ----------
1995 1994 1993
Revenues: $ - $ - $ - $ -
Expenses:
Bank charges 50 - - 50
Amortization - 3,000 - 3,000
-------- -------- -------- --------
Total Expenses 50 3,000 - -
Net Loss $ (50) $(3,000) $ - $(3,050)
Net Loss Per Share $ (.002) $ (.10) $(.000) $ (.099)
======== ======== ======== ========
The accompanying notes are an integral part of these
financial statements.
Unimex Transnational Consultants, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholder' Equity
From Inception on June 18, 1990 through December 31, 1995
Additional Deficit accumulated
Common Stock Paid-in during the
Shares Amount Capital Development Stage
-------- -------- ---------- --------------------
Issuance of stock to officers, 30,000 $ 30 $ 2,970 $ -
directors and other
individuals for
organization costs
on April 10, 1991
Net Loss from inception
through December 31, 1992 - - - -
Net Loss for the years ended
December 31, 1993 - - - -
--------- --------- --------- ---------------------
Balance at
December 31, 1993 30,000 $ 30 2,970 $ -
Net Loss for the year ended (3,000)
December 31, 1994 --------- --------- --------- ---------------------
Balance at
December 31, 1994 30,000 30 2,970 (3,000)
Issuance of common stock to
the public for cash on
October 31, 1995 8,000 8 3,992 -
Issuance of common stock
for services 12,000 12 5,988 -
Net Loss for the year
ended December 31, 1995 (50)
--------- --------- --------- ---------------------
Balance December 31, 1995 50,000 $ 50 $ 12,950 $ (3,050)
The accompanying notes are an integral part of these
financial statements.
Unimex Transnational Consultants, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flow
Cumulative
Total
Since
For the Years ended December 31, Inception
---------------------------------- ----------
1995 1994 1993
Cash Flows From
Operating Activities:
Net Loss $ (50) $ (3,000) $ - $ (3,050)
-------- -------- -------- ----------
Less non-cash items:
Amortization - 3,000 - 3,000
-------- -------- -------- ----------
Net Cash Used by Operating
Activities (50) - - (50)
-------- -------- -------- ----------
Cash flow from Investing
Activities:
Cash paid for prepaid
expenses (1,700) - - (1,700)
-------- -------- -------- ----------
Net cash used in Investing
Activities (1,700) - - (1,700)
-------- -------- -------- ----------
Cash Flows From Financing
Activities:
Proceeds From Issuance of
Common Stock 4,000 - - 4,000
-------- -------- -------- ----------
Net Cash Provided by 4,000 - - 4,000
Financing Activities -------- -------- -------- ----------
Net Increase (Decrease) in Cash
and Cash Equivalents 2,250 - - 2,250
-------- -------- -------- ----------
Cash and Cash Equivalents at
Beginning of Year - - - -
-------- -------- -------- ----------
Cash and Cash Equivalents at
End of Year $ 2,250 $ - $ - $ 2,250
======== ======== ======== ==========
The accompanying notes are an integral part of these financial
statements.
Unimex Transnational Consultants, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
NOTE 1 - Summary Of Significant Accounting Policies
a. Organization
Unimex Transnational Consultants, Inc. (the Company) was first
incorporated in the State of Nevada on June 18, 1990 as QQQ-Huntor Associates,
Inc., On July 21, 1995 the Company changed its domicile to the State of Texas
and merged into a Texas Corporation Unimex, Transnational Consultants, Inc.
Neither company has any operating activity and is in the development stage.
b. Accounting Method
The Company recognizes Income and expense on the accrual basis of accounting.
C. Earnings (Loss) Per Share -
The computation of earnings per share of common stock is based on
the weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The company considers all highly liquid Investments with
maturities of three months or less to be cash equivalent-..
e. Provision for Income Taxes
No provision for income taxes have been recorded due to net
operating loss carryforwards totaling approximately $3,000 that will be offset
against future taxable income. These NOL carryforwards begin to expire in the
year 2009. No tax benefit has been reported in the financial statements because
the Company believes there is a 50% or greater chance the carryforward will
expire unused.
f. Organization Expenses
Expenses incurred in the organization or reorganization of the
Company have been capitalized and are being amortized over a 60 month period.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming
that the company will continue as a going concern. The company has no assets
and has had recurring operating losses for the past several years and is
dependent upon financing to continue operations. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. It is management's plan to find an operating company to merge
with, thus creating necessary operating revenue.
NOTE 4
Unimex Transnational Consultants, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995, August 31, 1995 and 1994
NOTE 3 - Capitalization & Stock Split
On April 10, 1991 the Company issued 30,000 shares of its common
stock to officers, directors and other individuals for services performed in
the organization of the Company.
In October 1995 the Company completed a limited public offering
of 12,000 shares of its previously authorized, but unissued common stock. Gross
proceeds from the offering were $4,000.
Also in October 1995, the Company Issued 5,000 shares for
services provided in connection with the reorganization of the Company. A value
of $6,000 was assigned to the services by tile board of director
NOTE 4 - Development Stage Company
The Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. It is concentrating
substantially all of its efforts in raising capital and searching for a
business operation with which to merge, or assets to acquire, In order to
generate significant operations.
NOTE 5 - Related Party Transactions
The Company prepaid $1,700 to HIS Financial Services for
management and consulting services to be performed in 1996. HIS Is partially
owned by a major shareholder and officer of the Company.
--------------------------------------------------------------------------------
Exhibit F2
Dakota Mining and Exploration Ltd.
Audited Financial Statements
as of
January 31, 1996
--------------------------------------------------------------------------------
DAKOTA MINING & EXPLORATION LTD.
FINANCIAL STATEMENTS
JANUARY 31, 1996
DAKOTA MINING & EXPLORATION LTD.
JANUARY 31, 1996
CONTENTS
Page
AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of loss and deficit 3
Statement of Changes in Financial Position 4
Notes to Financial Statements 5-6
XXXXXXXX & COMPANY
CHARTERED ACCOUNTANTS
XXXXXXXX & COMPANY CHARTERED ACCOUNTANTS
Page 1
AUDITOR'S REPORT
To the Shareholders of
Dakota Mining & Exploration Ltd.
We have audited the balance sheet of Dakota Mining & Exploration Ltd. as at
January 31, 1996, and the statements of loss and deficit and changes in
financial position for the year then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
we conducted our audit in accordance with generally accepted standards. Those
standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at January 31, 1996 and the
results of operations and changes in financial position of the company for the
year then ended, in accordance with generally accepted accounting principles.
Kelowna, B.C.
March 7, 1996
CHARTERED ACCOUNTANTS
#101 - 3140 Lakeshore Road, Kelowna, B.C. VlW 3T1
Phone: (604) 861-3255p Fax: (000) 000-0000
Page 2
DAKOTA MINING & EXPLORATION LTD.
BALANCE SHEET
AS AT JANUARY 31, 1996
(with comparative figures for 1995)
1996 1995
---- ----
ASSETS
OPTIONS (Note 3) $ 125,938 $ -
CAPITAL ASSETS 475 -
INCORPORATION COSTS 1,219 1,219
---------- ----------
$ 127,632 $ 1,219
========== ==========
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 26,139 $ 2,400
---------- ----------
SHAREHOLDERS' EQUITY
CAPITAL STOCK (Note 5) 210,718 200
DEFICIT (109,225) (1,381)
---------- ----------
101,493 (1,181)
---------- ----------
$ 127,632 $ 1,219
========== ==========
APPROVED ON BEHALF OF THE BOARD:
Director
----------------------------------
Director
----------------------------------
Page 3
DAKOTA MINING & EXPLORATION LTD.
STATEMENT OF LOSS AND DEFICIT
FOR THE YEAR ENDED JANUARY 31, 1996
(with comparative figures for 1995)
1996 1995
---- ----
REVENUE
Consulting $ - $ 29,700
------------ ------------
EXPENSES
Consulting fees 41,946 -
General and
administrative expenses 65,898 31,081
------------ ------------
107,844 31,081
------------ ------------
LOSS BEFORE INCOME TAXES (107,844) (1,381)
------------ ------------
NET LOSS (107,844) (1,381)
DEFICIT, beginning of year (1,381) -
------------ ------------
DEFICIT, end of year $ (109,225) $ (1,381)
============ ============
XXXXXXXX & COMPANY
CHARTERED ACCOUNTANTS
Page 5
DAKOTA MINING & EXPLORATION LTD.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 1996
1. CHANGE OF NAME
The company changed its name to Dakota Mining & Exploration Ltd.from Eagle
Ridge Manufacturing on July 27, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Nature of business
The company is in the business of developing mining properties.
(b) The company is incorporated in the Province of British Columbia
(c) Capital Assets
Capital assets are recorded at cost. Amortization is provided annually at
rates calculated to write-off the assets over their estimated useful lives.
3. OPTIONS
In the year prior to January 31, 1996, the company negotiated and signed a
"Letter of Intent". During the year non-refundable option payments of
$100,000 were made with a further $20,000 payable at year end. Subsequent
option payments are due as follows:
on or before March 31, 1996 $ 30,000
on or before April 30, 1996 100,000
on or before July 31, 1996 400,000
The letter of intent terminates whenever an option payment is not made on
the appointed date. Related direct costs have also been capitalized and
included.
In addition, the company holds the patent rights for manufacture and
distribution in Canada of a disposable cat litter house. As the future
valuation of this product is unknown the patent is assigned a valuation of
$1.
XXXXXXXX & COMPANY
CHARTERED ACCOUNTANTS
Page 6
DAKOTA MINING & EXPLORATION LTD.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 1996
4. LOSS CARRY FORWARD
The company has losses to be carried forward for income tax purposes in the
amount of $102,943 of which $163 expires in 2002 and $102,780 in 2003.
Estimated income tax recoveries have not been recorded in the financial
statements as their realization is not virtually certain.
5. CAPITAL STOCK
10,000 Class A voting common shares without par value;
100,000 Class B voting common shares without par value;
10,000 Class C Non-voting common shares without par value;
10,000 Class D Non-voting redeemable preferred shares with
a par value of $10.00 each.
1996 1995
------ ------
Stated capital:
10,000 Class A common shares $ 210,718 $ 200
6. SUBSEQUENT EVENTS.
On March 1, 1996 the company negotiated and signed an addendum to the
"Letter of Intent" paying $20,000 previously due and owing at January 31,
1996.
XXXXXXXX & COMPANY
CHARTERED ACCOUNTANTS
--------------------------------------------------------------------------------
Exhibit F3
Combined and Consolidated
Unaudited Financial Statements
as of
April 30,1996
--------------------------------------------------------------------------------
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Financial Statements
April 30, 1996, December 31, 1995 and 1994
CONTENTS
Accountants' Report . . . . . . . . . . . . . . . . . . . . . .3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . .4
Consolidated Statements of Operations . . . . . . . . . . . . .6
Consolidated Statements of Stockholders' Equity . . . . . . . .7
Consolidated Statements of Cash Flows . . . . . . . . . . . . .9
Notes to the Consolidated Financial Statements . . . . . . . .10
XXXXXX, BIERWOLF & XXXXXXXX
Certified Public Accountants
00 Xxxx Xxxxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of Canadian Northern Lites. Inc.
formerly Unimex Transnational Consultants, Inc.
We have audited the accompanying consolidated balance sheets of Canadian
Northern Lites, Inc. (A Development Stage Company), as of December 31, 1995 and
1994. and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1995, 1994 and 1993, and
from inception on June 18, 1990 through December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion,
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Canadian Northern
Lites, Inc. (A Development Stage Company) as of December 31, 1995 and 1994, and
the results of its operations and cash flows for the years ended December 31,-
1995, 1994 and 1993 and from inception on June 18, 1990 through December 31,
1995 in conformity with generally accepted accounting principles.
The financial statements for the period April 30, 1996 were not audited by us
and accordingly, we express no opinion or other form of assurance on them.
Salt Lake City, Utah
March 8, 1996
Jun-06-96 04:21P
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
Assets
April 30, December 31,
---------------------
1996 1995 1994
---------- -------- --------
(Unaudited)
Current assets
Cash $ 1,150 $ 2,250 $ -
Prepaid expenses - 1,700 -
---------- --------- ---------
Total Current Assets $ 1,150 $ 2,250 $ -
---------- --------- ---------
Fixed assets 340 - -
---------- --------- ---------
Other assets
Mining claims (Note 6) 111,450 - -
Organization cost (Note 1) 6,471 6,000 -
---------- --------- ---------
Total other assets 117,921 6,000 -
---------- --------- ---------
Total $ 119,411 $ 9,950 $ -
========== ========= =========
The accompanying notes are an integral part of these financial statements
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
April 30, December 31,
---------------------
1996 1995 1994
---------- -------- --------
(Unaudited)
Liabilities
Accounts Payabel $ 4,388 $ - $ -
Loans payable -
shareholders (Note 5) 35,735 - -
---------- ---------- ----------
Total Liabilities 40,123 - -
---------- ---------- ----------
Stockholders' Equity
Common Stock, authorized
100,000,000 shares of $.001
par value, issued and
outstanding 10,400,000,
200,000 and 120,000,
respectively 10,400 200 120
Additional Paid in Capital 150,352 12,800 2,880
Deficit Accumulated During the
Developmental Stage (81,464) (3,050) (3,000)
---------- ---------- ----------
Total Equity 79,288 9,950 -
---------- ---------- ----------
Total Liabilities and
Stockholders' Equity $ 119,411 $ 9,950 $ -
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
For the Cumulative
four months Total
ended April For the years ended December 31, Since
30, 1996 1995 1994 1993 Inception
----------- -------- -------- -------- -----------
(Unaudited)
Revenues: $ - $ - $ - $ - $ -
Expenses:
Consulting 1,900 - - - 1,900
Bank charges - 50 - - 50
Professional fees 1,100 - - - 1,100
Amortization 400 - 3,000 - 3,400
--------- --------- -------- -------- ---------
Total Expenses . 3,400 50 3,000 - 6,450
Net Loss $ (3,400) $ (50) $(3,000) $ - $(6,450)
========= ========= ======== ======== =========
Net Loss Per Share $ (.008) $(.000) $ (.25) $(.000) $ (.024)
The accompanying notes are an integral part of the financial statements.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
From Inception on June 18, 1990 through April 30, 1996
Additional Deficit accumulated
Common Stock Paid-in during the
Shares Amount Capital Development Stage
-------- -------- ---------- --------------------
Issuance of stock to officers,
directors and other individuals
for organization costs on
April 10, 1991 120,000 $ 120 $ 2,880 $ -
Net Loss from inception
through December 31, 1992 - - - -
Net Loss for the years ended
December 31, 1993 - - - -
--------- --------- ---------- --------
Balance at December 31, 1993 120,000 120 2,880 -
Net Loss for the year ended
December 31, 1994 - - - (3,000)
--------- --------- ---------- --------
Balance at December 31, 1994 120,000 120 2,880 (3,000)
Issuance of common stock to
the public for cash on
October 31, 1995 32,000 32 3,968 -
Issuance of common stock
for services 48,000 48 5,952 -
Net Loss for the year
ended December 31, 1995 - - - (50)
--------- --------- ---------- --------
Balance at December 31, 1995 200,000 200 12,800 (3,050)
The accompanying notes are an integral part of the financial statements.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
From Inception on June 18, 1990 through April 30. 1996
Additional Deficit accumulated
Common Stock Paid-in during the
Shares Amount Capital Development Stage
-------- -------- ---------- --------------------
Balance at December 31, 1995 200,000 $ 200 $ 12,800 $ (3,050)
Issuance of common stock
for services 200,000 200 - -
Stock issued for acquisition
of Dakota Mining &
Exploration, LTD. 10,000,000 10,000 62,538 -
Reorganization of retained
earnings due to reverse
acquisition - - 75,014 (75,014)
Net loss for the four months
ended April 30, 1996 - - - (3,400
---------- --------- --------- ---------
Balance at April 30, 1996
(Unaudited) 10,400,000 $ 10,400 $150,352 $ 81,464
========== ========= ========= =========
The accompanying notes are an integral part of the financial statements.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flow
For the Cumulative
four months Total
ended April For the years ended December 31, Since
30, 1996 1995 1994 1993 Inception
----------- -------- -------- -------- -----------
(Unaudited)
Cash Flows From Operating
Activities:
Net loss $ (3,400) $ (50) $ (3,000) $ $ (6,450)
Less non-cash items
Amortization 400 - 3,000 - 3,400
Stock issued for services 200 - - - 200
(Increase)/decrease in
prepaid expenses 1,700 (1,700) - - (2,850)
-------- ------- --------- -------- ----------
Net Cash Used by Operating
Activities (1,100) (1,750) - - (2,850)
-------- ------- --------- -------- ----------
Cash Flows from Financing
Activities:
Proceeds from issuance of
common stock - 4,000 - - 4,000
-------- ------- --------- -------- ----------
Net Cash Provided by
Financing Activities - 4,000 - - 4,000
-------- ------- --------- -------- ----------
Net increase/(decrease) in
cash and cash equivalents (1,100) 2,250 - - 1,150
Cash and cash equivalents at
beginning of year 2,250 - - - -
Cash and cash equivalents at
end of year $ 1,150 $ 2,250 $ - $ - $ 1.150
======== ======= ========= ======== ==========
The accompanying notes are an integral part of the financial statements.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants. Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 1996 (Unaudited), December 31, 1995, and 1994
NOTE I - Summary of Significant Accounting Policies
a. Organization
Canadian Northern Lites. Inc. (the Company) was first incorporated in
the State of Nevada on June 18, 1990 as QQQ-Huntor Associates, Inc. On July
21, 1995 the Company changed its domicile to the State of Texas and merged
into a Texas Corporation Unimex Transnational Consultants, Inc. On April
26, 1996, the Company reorganized and acquired all the issued and
outstanding stock of Dakota Mining & Exploration LTD. (Dakota) for
10,000.000 shares of the Company's common stock. and change the name of the
Company to Canadian Northern Lites. Inc. Dakota is a British Columbia
Corporation, organized on January 12, 1994, as Eagle Ridge Manufacturing
LTD. In July of 1995 it changed its name to Dakota. In January 1996, Dakota
signed a letter of intent with Okanagan Opal, Inc. to enter on "option to
purchase agreement." This agreement gives Dakota the option to purchase a
100% interest in the Xxxxxxx Properties, which consists of 30 mining claims
in the Vernon Mining Division of British Columbia, Canada. These mines
contain precious opals which the Company intends to extract.
b. Accounting Method
The Company recognizes income and expense on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes have been recorded due to net operating
loss carry forwards totaling approximately $6,000 that will be offset
against future taxable income. These NOL carryforwards begin to expire in
the year 2009. No tax benefit has been reported in the financial statements
because the Company believes there is a 50% or greater chance the
carryforward will expire unused.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 1996 (Unaudited), December 31, 1995, and 1994
NOTE I - Summary of Significant Accounting Policies (Continued)
f. Organization Expenses
Expenses incurred in the organization or reorganization of the Company
have been capitalized and are being amortized over a 60 month period.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that
the company will continue as a going concern. The Company currently has no
operating revenues and is dependent on financing to continue to make
payments on the option agreement discussed in Note 6. The realization of
the mining claims recorded is also dependent upon the successful mining of
the mining claims discussed. Because these mining operations have not yet
commenced, it is uncertain the Company can continue as a going concern. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
NOTE 3 - Capitalization & Stock Split
On April 10, 1991 the Company issued 120,000 shares of its common
stock to officers, directors and other individuals for services performed
in the organization of the Company.
In October 1995 the Company completed a limited public offering of
48,000 shares of its previously authorized, but unissued common stock.
Gross proceeds from the offering were $4,000.
Also in October 1995, the Company issued 32.000 shares for services
provided in connection with the reorganization of the Company. A value of
$6,000 was assigned to the services by the board of directors.
In January 1996, the Company issued 200,000 shares for services
rendered.
On April 26, 1996, the Board authorized the issuance of 10,000,000
shares of common stock for all the issued and outstanding stock of Dakota
Mining. The net equity of Dakota was $72,538 at the time of acquisition.
On April 17, 1996. the Company effected a 4 for I forward stock split.
These financial statements have been retroactively restated to reflect the
split.
Canadian Northern Lites, Inc.
(formerly Unimex Transnational Consultants, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 1996 (Unaudited), December 31, 1995, and 1994
NOTE 4 - Development Stage Company
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating
substantially all of its efforts in raising capital and developing its
business operation in order to generate significant revenues.
NOTE 5 -Related Party Transactions
The Company paid $1,700 to HJS Financial Services for management and
consulting services performed in 1996. HJS is partially owned by a major
shareholder and officer of the Company.
Shareholders of the Company have advanced $35,735 to the Company to
pay the required option payments on the mining claims discussed in Note 6.
NOTE 6 - Mining Claims/Option Agreement
As discussed in, Note 1. the Company entered into an "option to
purchase agreement," whereby the Company may purchase a 100% interest in
several opal mining claims in B.C. Canada. The option provides the Company
to purchase a 20% interest in the properties for payments of $400,235, due
at various times through July 31, 1996. The Company has the option to
remain a 20% interest in what will then become a joint venture, or purchase
additional interests each year for five years for a 100% interest. The five
annual payments are for $1,143,530, beginning January 15, 1998, for a total
purchase price of $6.117,883.
At April 30, 1996 $111,450 in option payments had been made and
subsequent to April 30, an additional $71,470 was made.
