EXHIBIT 10.3
XTRA-GOLD RESOURCES CORP.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx
X0X 0X0
CONFIDENTIAL
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February 16, 0000
Xxxxxxxx-Xxxxxxx Xxxx Xxxxx Inc.
00 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxx, President
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Dear Sirs:
RE: OFFER TO PURCHASE
As you are aware, Xtra-Gold Resources Corp. ("Xtra") is interested in acquiring
all outstanding shares of Goldenrae Mining Company Limited (the "Goldenrae
Shares") owned by Akrokeri-Xxxxxxx Gold Mines Inc. ("AAGM"). We understand that
the Goldenrae Shares have been pledged as security for the repayment of the 14%
convertible debentures (the "Debentures") issued by AAGM, of which approximately
$4.2 million principal amount of the Debentures are outstanding and are
currently in default. We also understand that the holders of the Debentures have
subordinated their right to repayment to the holders of the 18% secured notes
(the "Notes") issued by AAGM, of which approximately $1.2 principal amount of
Notes are outstanding and in default. We have had preliminary discussions with
some of the holders of the Debentures and Notes in regards to the purchase of
the Goldenrae Shares from them following a foreclosure of their security
interests and are confident that a transaction on this basis can be concluded.
It is intended that the proposed transaction would result in the extinguishment
of all amounts owing by AAGM and its subsidiaries to the holders of the
Debentures and Notes.
Before investing the time, effort and money that will be required to complete
the proposed transaction, we want to ensure that we can acquire all of the
outstanding shares (the "Shares") of Canadiana Gold Resources Limited
("Canadiana"), which we understand holds a Prospecting Licence on two distinct
areas named Banso and Muoso (the "Licence") which are contiguous with the
Goldenrae Mining Leases at Kwabeng and Pameng, as well as any indebtedness owing
by Goldenrae to Canadiana to AAGM and affiliated companies (the "Debt").
We hereby offer to purchase the Shares for a purchase price of U.S.$25,000
payable in cash at closing. Closing will take place on February 16, 2004 or such
earlier or later date as we may mutually agree (the "Closing").
You represent, warrant and covenant the following, which shall be true and
correct on Closing, and acknowledge that we are relying on these
representations, warranties and covenants in entering into this agreement:
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1. you have the full power and authority to enter into this agreement and all
other agreements, documents and instruments to be executed and delivered
by you in connection herewith, and to carry out the transactions described
herein and therein;
2. at Closing all necessary corporate action shall have been taken to
transfer the Shares to Xtra;
3. the Shares consist of 50,000 ordinary common shares of Canadiana which are
issued and outstanding as fully paid and non-assessable and there are no
other shares of Canadiana issued and outstanding nor does any person, firm
or corporation have any right, option or privilege to acquire the Shares
or any securities of Canadiana;
4. there is no Debt other than indebtedness owing from Goldenrae to AAGM
representing advances made by AAGM (or one of its subsidiaries on its
behalf) and indebtedness acquired by AAGM from former creditors of
Goldenrae, all of which have been pledged as security for the Debentures;
5. the Shares will be conveyed to Xtra at Closing free and clear of all
liens, encumbrances and adverse claims; and
6. other than approvals of the Government of Ghana, no authorization, consent
or approval of any third party or any public or governmental body or
authority is necessary for the transfer of the Shares to Xtra.
We covenant and agree that:
1. in the event that Xtra abandons its bid to acquire the Goldenrae Shares or
is unable to acquire the Goldenrae Shares for any reason whatsoever on or
before December 31, 2004, then the transfer of the Shares contemplated by
this agreement shall be considered null and void, and Xtra shall reconvey
the Shares to AAGM for nil consideration;
2. following the acquisition of Canadiana, Xtra will transfer for nominal
consideration or cause Canadiana to forgive approximately U.S.$175,000 of
indebtedness owed by AAGM's Ghanaian subsidiary, Bonte Gold Mines Limited
to Canadiana;
3. we will not option, sell, pledge, trade or otherwise dispose of all or
portions of the Licence, or permit any adverse material change to occur in
the business or property of Canadiana, with the exception of any
Government of Ghana ruling, order or seizure, prior to the completion of
the acquisition of the Goldenrae Shares under the terms of this agreement;
and
4. we will use our best efforts to conclude a transaction with the holders of
the Debentures and Notes that will result in the extinguishment of all
amounts owing by AAGM and its subsidiaries to the holders of Debentures
and Notes.
At Closing you will provide certificates representing the Shares duly endorsed
for transfer to Xtra, against payment of the purchase price by bank draft.
- 3 -
You also agree that, after Closing you will execute and deliver or cause to be
executed and delivered, such instruments and take, or cause to be taken, such
other actions as Xtra may reasonably require in order to carry out the intent of
this agreement and the transfer of the Shares to Xtra, including the necessary
consents of the Government of Ghana.
If the foregoing is acceptable to you, please sign and return the duplicate copy
of this letter to us, whereupon a binding agreement between us relating to the
subject matter hereto shall be formed.
DATED this 16th day of February, 2004.
XTRA-GOLD RESOURCES CORP.
Per: /s/ Xxxx Xxxx
Xxxx Xxxx, President
The foregoing is agreed to this 16th day of February, 2004.
AKROKERI-XXXXXXX GOLD MINES INC.
Per: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, President
